Home Builder Confidence, Does It Get Any Lower

Published on September 20, 2011 by

Home builder confidence 2000-2011

Home builders are less and less confident in the market as time goes on. For all of those talking about a floor or a recovery you may be mistaken. The interest rates continue to go lower and provide all the opportunity in the world for a recovery yet the distressed homes continues to linger and keep the market down.

The risk that builders would have to take on right now simply don't justify the reward. Credit is tight and competition from deeply discounted distressed homes have builders sitting on the sidelines willing to wait for better opportunities in the future. The home builder confidence report is made of 3 different surveys that include the following:

  1. How are market conditions for the sale of new homes today?
  2. How are market conditions for the sale of new homes in 6 months?
  3. How is prospective buyer foot traffic?

The home builder confidence has been extremely low for years now and it looks like it may remain that way for years to come. The last time the confidence number was above 50 was April 2006. If you are shopping for a new home then look for some serious discount and deals because there are so many opportunities available to buyers today.


Home Affordability Still Near All-Time Highs

Published on September 9, 2011 by

Home Opportunity inde 2005-2011

If you are in a position to purchase a home currently then you are in great shape. Home Affordability continues to be extremely high with low sale prices and very little competition in addition to low interest rates.

The National Association of Home Builders is reporting that over 70% of the homes purchased in Q2 were affordable considering the national median income of $64,200. That makes it 10 straight quarters where the mark passed 70% which historically never happens.

Home affordability will vary depending on where you live in the country. The most affordable region is the Midwest and the least affordable was New York and Southern California.

The top 5 most affordable cities in Q2 2011 were:

  1. Kokomo, IN (95.8%)
  2. Wheeling, WV (94.7%)
  3. Lansing, MI; East Lansing, MI (94.4%)
  4. Bay City, MI (94.3%)
  5. Youngstown, OH; Warren, OH; Boardman, OH (93.7%)

The rankings for all 225 metro areas are available for download on the NAHB website.

If you are interested in a no obligation free consultation regarding your possible mortgage opportunities contact a loan officer at (866) 825-6261.


Home Builders Have Little Expectations For The Future

Published on August 16, 2011 by

Homebuilder confidence 2009-2011

Home builders nationwide report that they have very little confidence or change for the better in the short-term or even further out to medium-term. This should tell us all a lot about the current housing market. Do not buy into any of the media hype trying to tell us that there are positive things in the housing market.

A recent headline saying that new build starts are more then expected is just using words to mask the fact that the new housing market is in the dumps and has been for years and will continue to be for years.  If anything positive can be said for the current housing market that would be that prices and interest rates are low so home affordability is at all-time highs!

Many of the media members tried to spin the Housing Market Index into something positive by saying that it was improving two months ago. While it was true it didn’t bother to mention how poor the reading is. For the second straight month the HMI is 15 out of 100! It’s not considered a positive number until it reaches at least 50. Anyone who is trying to tell you the market is recovering or good is flat out wrong. Imagine if you scored 15 out of 100, is there anyway you could really tell your family or friends something positive about it?

Since 2006 the HMI has been under 50 and reflected a strong buyers market for anyone that is considering a new home as opposed to the many great deals currently available with existing homes.

First you had Bernanke saying that interest rates will remain low for another two years and now you have the home builders saying that they don’t expect any changes for years to come. This means that you will have a great buyer opportunity for the next two years. This is fantastic news for anyone that is able to qualify for a mortgage during these difficult times. We may end up seeing a significant increase in VA Home Loans since they are able to qualify for mortgages much easier then civilians that are not eligible for a VA Loan.

This time in history is unique and I’m sure many will wonder why they did not purchase a home during these next couple of years when the variables are so favorable for buyers. If you have any questions about what opportunities may be available to you simply contact a loan officer today and get a free consultation and be prepared to capitalize on the great opportunity of today.

Home Builders Gaining Confidence But Still Dismal

Published on July 19, 2011 by

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Housing Market Index (Homebuilder Confidence)

Yes, home builder confidence is on the rise but take into consideration that it's coming from a long time low and although there was an increase it is still pitifully low.

Last month there was a very sharp drop in confidence so it's welcoming that at least there is positive movement and direction. The home builder confidence is measured on a scale of 100 with 100 being the highest….and today we are at 15. It has also been more then 5 years since we have seen a reading come in at 50 or higher.

The data for the report is based on single-family home sales, projections and foot traffic levels. With mortgage interest rates extremely low and home prices continuing to get hurt by foreclosures you have home affordability at all time highs. This is definitely a time where we will look back and wonder why we didn't purchase a home.

The confusing part about the report is that foot traffic did not increase at all yet the builders think there is going to be a significant increase between now and the end of the year. Current sales were up slightly but why would builders think they are going to sell a bunch of homes when the buying season is past the half way point and you would expect sales to slow.

We still continue to see more foreclosures and the existing previous ones still have not been unloaded by the banks which continues to build up the massive excess of home inventory that is currently available. Although the home builders seem to think things are getting better I would imagine it's much more likely that they are just trying to keep their hopes up and they don't really believe sales will increase through the end of the year.

If you can qualify for a loan at this time you may want to take a serious look and see what opportunities are available to you. If you are eligible for a VA Home Loan then you could have a great opportunity to capitalize on the current situation with no money out of pocket. If you have any questions simply contact a loan officer and find out what opportunities are available to you.


Home Builder Confidence Slip Sliding Away

Published on June 21, 2011 by

Homebuilder confidence slips in June 2011

Just when you thought that the home builders confidence would increase it shocks us all and continues to go lower. Previously there were reports about new home sales increasing and building permits increasing and with those two things you would think the home builder confidence would have followed suit.

In addition to the lower confidence it was also the biggest one-month move since May of 2010 when the federal home buyer tax credits expired. With this in mind any one that is looking to capitalize on the opportunity for a new home may be in a much more superior position. Contact a loan officer and get your finances in order first, this should always be your first step when you consider purchasing a home.

Remember the Housing Market Index is compiled with three different and separate surveys to give us the best idea of the home builder’s businesses. The questions for the home builders are listed below:

How are market conditions for the sale of new homes today?
How are market conditions for the sale of new homes in 6 months?
How is prospective buyer foot traffic?
  1. How are market conditions for the sale of new homes today?
  2. How are market conditions for the sale of new homes in 6 months?
  3. How is prospective buyer foot traffic?

The report is scored based on responses and comes in the form of 1-100. Anytime the report is under 50 it is considered unfavorable conditions for the builder. The readings have been well below 50 for quite some time and the last time it was in favor of builders was more then five years ago.

Home affordability continues to improve as we see the prices and interest rates continue to drop. It was always more difficult to have it apply directly to the new homes but with the builder confidence down so low it may create the best opportunity ever to purchase a new home as well.

Home Affordability Continues Spike To New Highs

Published on May 27, 2011 by

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Home Affordability Q1 2011

Home affordability is through the roof! The reports from the National Association of Home Builders report that in the first quarter of 2011 the index reached an all-time high. With home values continuing to drop nationwide and surprisingly interest rates have remained historically low. Combining the two has created home affordability that we have never seen before.

Almost 3 out of 4 homes sold during the first three months of 2011 were considered “affordable” to households according to the national median income of $64,400. This continues the trend for more then two years where the affordability has been higher then 70 percent as well as the highest measure reading since they started tracking this 20 years ago.

Depending on what part of the country you live in the affordability can be much better as well. For instance if you look at Kokomo, Indiana you will see that 98.6 percent of homes were affordable. Now many will say who wants to live in Indiana, well we all have our own ideals of but realize that the number one big city in affordability and even more so then Kokomo is Syracuse, New York.

Experts are expecting home prices to continue to drop while they are also expecting interest rates to rise. The home affordability may be here on the short-term but won't be here forever. How many of us will look back and say why didn't I purchase when it was such a great deal. If you have any questions contact a loan officer and learn what opportunities may be available to you today.

If you are interested in seeing how your local area is comparing to the others around the country you can see a list of all 225 metro areas from the NAHB website.


Buyers Are Picking Up But Builder Confidence Is Down

Published on April 19, 2011 by

NAHB Homebuilder Confidence Survey

Home builders confidence is falling. It's been low for a few years now. The National Association of Home builders has released the Housing Market Index (HMI) and it shows that the confidence fell in April. The score is currently at 16 on a scale of 1-100. Typically it's not considered a favorable range if you are below 50.

The HMI is really comprised of three individual surveys that focus on the specific aspects of a builders business. The three questions in the surveys are:

  1. How are market conditions for the sale of new homes today?
  2. How are market conditions for the sale of new homes in 6 months?
  3. How is prospective buyer foot traffic?

In April the builders felt like conditions were getting worse for all questions, but did mention they had improved buyer foot traffic. With interest rates rising and home values dropping it will usually encourage many potential home buyers to take some action.

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Home buyers should first contact their loan officer, find out what your financing opportunities are. Secondly use the HMI data to your benefit. When builders are less confident you may be able to negotiate some additional upgrades.


Home Builders Expecting More Sales Volume

Published on March 17, 2011 by

NAHB Housing Market Index (April 2009-March 2011)

Home builders are anticipating more sales volume this year. The builders are very optimistic about the housing market this Spring. The monthly Housing Market Index (HMI) is published by the National Association of Home Builders shows confidence is up and higher then it’s been in more then 10 months.

Although the reading is still very low and not considered anywhere near favorable it is an improvement. It has been almost five years since the HMI has had a reading considered favorable. Contact a loan officer today and learn more about the housing market and be prepared to maximize any new reports and time lines.

Keep in mind that the Housing Market Index is comprised of different regions. So although the overall national indication is showing improvement that doesn’t mean that your region showed improvement.

The HMI report is primarily calculated on three separate home builder surveys. The three reports are single-family sales, current buyer foot traffic and projected single family sales for the next 6 months.

Here is a brief breakdown of the three separate reports to make the HMI report.

  • Single-Family Sales : 17 (Unchanged from February)
  • Buyer Foot Traffic : 12 (Unchanged from January)
  • Projected Single-Family Sales : 27 (+2 from February)

If you are looking to purchase a New Home and you buy the information in the HMI report then you may anticipate that builder discounts and upgrades will start to disappear. If you believe the overall housing market is still struggling and will continue to struggle then you may have quite a bit of time to be specific to your needs and wants.

Keep in mind that as time continues to pass there will be new loan costs and higher interest rates. If you have any questions you should contact a loan officer immediately. The new loan costs and changes will take place April 2011. Even if you decide not to purchase it may be a great time to refinance your existing loan and save money until you do decide to make your move to another home.

Home Affordability Peaks; Purchasing Power Drops 10%

Published on March 8, 2011 by

Home Opportunity Index 2004-2010

This report showcasing the Home Opportunity Index or to most people simply the home affordability is good and bad. Good in that home affordability reached an all-time high in the fourth quarter of 2010. Bad news is that its old news and the market has changed significantly since then.

Rising mortgage interest rates have taken more then 10% out of your purchase power which in turn has made the home affordability drop from it’s highs. Speak with a loan officer today if you plan to purchase or refinance your home this year.

Almost 74 percent of the homes sold between October and December of 2010 were to families of the national median income or lower ($64,400).

This is valuable information since the housing affordability prior to 2009 rarely was over 65 percent. To have a report of over 70% is considered good and valuable.

The national numbers and reports are nice to see but in reality like everything else in real estate it comes down to a very specific local event. Some areas in the country have experienced even more shocking numbers such as Elkhart/Goshen area of northern Indiana which showed during the same time period that 97 percent of homes met their median income levels.

For the past 5 years if you’ve been looking for an area that has a great affordability rating it has been Indianapolis. It has been 22 straight quarters of high ratings and they led all major metropolitan areas recently with a 93.5 percent affordability rating.

So while Indianapolis continues to rank high that must mean there are some that are dragging down the national average. Look no further then New York-White Plains and New York-Wayne and New Jersey for the least affordable major cities. For the 11th consecutive quarter they have sold only 25.5 percent of homes to households earning the median income for the area.

If you would like to see where your local metropolitan area ranks you can see them here, all 225 metro areas are viewable on the NAHB website. Remember that regardless of where you live you are seeing rising interest rates that will have an impact on affordability nationwide.

Having lost over 10 percent of your purchase power due to rising interest rates, keep in mind that the rates are expected to higher and continue the rising trend. If you plan to purchase a home this year or refinance you may want to speed up your time lines. If you have any questions about all of these things simply take the first step and contact a loan officer today. Whether you’re purchasing or refinancing your first step is to always contact a loan officer first.

Home Builders Slowed By Economy, But Seeing More Foot Traffic

Published on January 19, 2011 by

National Association of Home Builders Housing Market Index (Nov 2009-Dec 2010)Homebuilder confidence held firm for the second straight month this month, according to the National Association of Home Builders.

The monthly Housing Market Index registered 16 out of a possible 100. January’s reading is three points higher than the 2010 low-point, set in September, and in-line with last year’s average reading.

According to the NAHB, the market for newly-built, single family homes remains relatively weak “following a below-expectations finish in 2010″. Builders expect a better 2011.

The Housing Market Index dates to 1985. It’s a composite of surveys which gauge the builders’ perceptions of the new home-buying market.

There are 3 surveys and they ask:

  1. How would you rate market conditions for sales of new homes today?
  2. How would you rate market conditions for sales of new homes 6 months from now?
  3. How would you rate the foot traffic of prospective buyers of new homes?

The answers are then collated and weighted, and used to produce the Housing Market Index.

In January, market conditions for current and future sales were deemed to be flat. Foot traffic is seen as increasing. For homebuyers of new homes , this data may foretell of more bidding wars in the months ahead.

More active buyers means more competition for homes. It may also mean fewer concessions from builders as confidence starts rising.

If you’re in the market for a newly-built home, watching the Housing Market Index may be sensible. Each builder is different, of course, but as the overall market sentiment falls, buyers can be more likely to get “a deal”. That’s not the case once confidence is rising.

The HMI is plateaued. If it resumes rising later this year, expect new homes to get more costly.