Anyway you cut it, November was a tough month all around. Along with the stock market, housing numbers took some sharp turns. Finding the bright spots was challenging at best if you are or were trying to sell into this market. Buyers, on the other hand, had their pick of the litter.
In the Cincinnati area, the level of inventory vs. sales was up steeply to 12.2 months in November, while the number of residential sales fell to levels not seen in quite some time. (See the monthly absorption rate and residential sales charts for a detailed snapshot.) The area's performance was in line with national statistics published by the National Association of Realtors.
December seems to be regaining some footing with the significant drop in mortgage rates causing some folks that were sitting on the sidelines to begin looking. Foreclosures and distressed sales are still carrying the day though, accounting for more than a third of sales nationwide. We should see that trend continue for some time until inventory levels are more balanced.
Anectdotal evidence from talking to other agents and clients suggests we will see some a more stabilized market when December's numbers are tallied. Additionally, if mortgage rates stay low through the next couple of months, we ought to see some price stabilization as well given the impact on overall housing affordability. I'm encouraged that many folks are beginning to see homes have reached "bargain value" levels and want to see what's available. The coming spring market should prove interesting.
Sunday, December 28, 2008
Saturday, December 20, 2008
Assessing impacts of falling mortgage rates
Since Treasury announced a $600 Billion effort to buy Fannie and Freddie mortgage-backed securities and the Federal Reserve dropped the federal funds target rate, mortgage rates have dropped like a stone to levels not seen since the 1960’s. This past week saw occasions where conventional mortgage rates were below 5% and FHA rates were in the low 5’s. Refinancing spiked on the news as many lenders and title companies I’ve talked to indicate a definite uptick in activity.
If you are thinking of refinancing a mortgage or even buying a home, here are some things to consider:
The fact is it takes a little calculating to determine if refinancing makes sense for you. Check with two or three lenders to see what they can offer you for a monthly payment and expected closing costs. If the amount you save per month will pay for the closing costs within the time you anticipate living in the home, then you may want to consider refinancing.
Another perspective on refinancing – can you shorten the term of your mortgage and keep your payments the same?
If you are looking for an investment property loan? Good luck. That is one area where the credit spigot seems close to being shut off. While it is still possible to get an investment property loan, the restrictions are pretty onerous. Some of the issues you might encounter include: no more than 75% of the property value, no cash out refinancing, no more than 4 investment property mortgages, and no financing of properties less than $125,000. Different lenders may have different restrictions, but expect to meet resistance in one form or another.
This is like trying to time the bottom in the stock market. The people who get in at the absolute bottom usually do so with a certain amount of luck. Those who wait usually just end up missing it. Some have seen news reports that the government will try to push rates to 4.5%, but keep in mind that this is not a given AND the fine print is that this will likely be only for new owner-occupied purchases.
Aside from high inventory levels, home prices fell in large part because affordability had risen to unsustainable levels. Mortgage rates at these lower levels mean more people can qualify to purchase a home (or more than they originally thought they could afford). This is undoubtedly one of the effects the government is seeking to help stabilize home prices. Although the Cincinnati area hasn’t been impacted by falling prices to the extent that other areas have seen, you could reasonably expect to see increased competition for the best of available properties on the market.
Bottom line –
This is a time of unprecedented opportunity if you are in a position to take advantage of lower rates and the large inventory of homes in the market. Take the time to do your due diligence to determine if refinancing or purchasing a new home makes sense for you now.
If you’d like additional information on lender resources, market conditions in your neighborhood, or other real estate questions, feel free to contact me via e-mail or phone.
If you are thinking of refinancing a mortgage or even buying a home, here are some things to consider:
- Forget the “rules of thumb” that say it’s time to refinance when rates are 1 or 2 points below your current rate.
The fact is it takes a little calculating to determine if refinancing makes sense for you. Check with two or three lenders to see what they can offer you for a monthly payment and expected closing costs. If the amount you save per month will pay for the closing costs within the time you anticipate living in the home, then you may want to consider refinancing.
Another perspective on refinancing – can you shorten the term of your mortgage and keep your payments the same?
- Not everyone will get to benefit.
If you are looking for an investment property loan? Good luck. That is one area where the credit spigot seems close to being shut off. While it is still possible to get an investment property loan, the restrictions are pretty onerous. Some of the issues you might encounter include: no more than 75% of the property value, no cash out refinancing, no more than 4 investment property mortgages, and no financing of properties less than $125,000. Different lenders may have different restrictions, but expect to meet resistance in one form or another.
- Don’t postpone simply because you think rates will go lower.
This is like trying to time the bottom in the stock market. The people who get in at the absolute bottom usually do so with a certain amount of luck. Those who wait usually just end up missing it. Some have seen news reports that the government will try to push rates to 4.5%, but keep in mind that this is not a given AND the fine print is that this will likely be only for new owner-occupied purchases.
- Lower rates increase affordability
Aside from high inventory levels, home prices fell in large part because affordability had risen to unsustainable levels. Mortgage rates at these lower levels mean more people can qualify to purchase a home (or more than they originally thought they could afford). This is undoubtedly one of the effects the government is seeking to help stabilize home prices. Although the Cincinnati area hasn’t been impacted by falling prices to the extent that other areas have seen, you could reasonably expect to see increased competition for the best of available properties on the market.
Bottom line –
This is a time of unprecedented opportunity if you are in a position to take advantage of lower rates and the large inventory of homes in the market. Take the time to do your due diligence to determine if refinancing or purchasing a new home makes sense for you now.
If you’d like additional information on lender resources, market conditions in your neighborhood, or other real estate questions, feel free to contact me via e-mail or phone.
Saturday, December 13, 2008
LEDs: the next wave in efficient home lighting?
Many folks have discovered the energy and safety benefits of LED (light-emitting diode) Christmas lights this season, but what about their use for other home lighting purposes? With more LED lighting products entering the market, maybe it’s time to evaluate whether they make sense for your use around the house.
First, consider that compact fluorescent lightbulbs (CFLs) have made significant improvements the past few years and now come in a variety of shapes and sizes with a cost that’s acceptable to most buyers. (I’ve personally seen 6-packs under the $10 mark.) The time to earn back the extra cost over a conventional bulb through energy savings makes them very nearly a no-brainer. They are likely to be around for quite some time.
On the other hand, while LEDs are still very expensive and their application is mostly limited, the benefits are substantial. A typical LED bulb will last on the order of 30,000 hours (that’s over 3 years at 24 hours per day) and use about 1/3rd the wattage of a comparable CFL or 1/30th of an incandescent bulb. Given the low wattage, they also don’t produce the waste heat of a conventional bulb. They’ve already proven useful for recessed lighting, task lights, and accent or decorative lighting (such as Christmas lights and under cabinet lighting). You can also gain some dramatic effects through the ability to change the color of installed lights.
Widespread use of LEDs has some significant hurdles to overcome though. Much like CFLs in their early adoption period, the cost of an LED bulb can be hard to swallow. A single 2 watt bulb that you might use as a porch light could run about $30 compared to $1.50 for a 13-watt CFL. At 12 cents a kilowatt (close to the going Duke rate in Cincinnati), it would take a bit under 3 years burning at 24 hours a day to make up the cost difference. Bulbs that can replace a conventional 60-watt bulb are still very new and are likely to cost over $100. I don’t know about you, but I don’t know too many people that are willing to plunk down that much for a light bulb in their home.
If LEDs don’t yet make economical sense for home use, they are being adopted in commercial buildings where lighting is a significant business expense and replacing lights can practically be a full time job (think large shopping malls and grocery stores). As their use in commercial buildings becomes more common, it’s not unrealistic to see them driving the cost down quickly and making them a viable option in the average home.
To find out more about lighting with LEDs and available products, visit
C.CRANE company,
Best Home LED lighting, or
Commercial LED lighting
First, consider that compact fluorescent lightbulbs (CFLs) have made significant improvements the past few years and now come in a variety of shapes and sizes with a cost that’s acceptable to most buyers. (I’ve personally seen 6-packs under the $10 mark.) The time to earn back the extra cost over a conventional bulb through energy savings makes them very nearly a no-brainer. They are likely to be around for quite some time.
On the other hand, while LEDs are still very expensive and their application is mostly limited, the benefits are substantial. A typical LED bulb will last on the order of 30,000 hours (that’s over 3 years at 24 hours per day) and use about 1/3rd the wattage of a comparable CFL or 1/30th of an incandescent bulb. Given the low wattage, they also don’t produce the waste heat of a conventional bulb. They’ve already proven useful for recessed lighting, task lights, and accent or decorative lighting (such as Christmas lights and under cabinet lighting). You can also gain some dramatic effects through the ability to change the color of installed lights.
Widespread use of LEDs has some significant hurdles to overcome though. Much like CFLs in their early adoption period, the cost of an LED bulb can be hard to swallow. A single 2 watt bulb that you might use as a porch light could run about $30 compared to $1.50 for a 13-watt CFL. At 12 cents a kilowatt (close to the going Duke rate in Cincinnati), it would take a bit under 3 years burning at 24 hours a day to make up the cost difference. Bulbs that can replace a conventional 60-watt bulb are still very new and are likely to cost over $100. I don’t know about you, but I don’t know too many people that are willing to plunk down that much for a light bulb in their home.
If LEDs don’t yet make economical sense for home use, they are being adopted in commercial buildings where lighting is a significant business expense and replacing lights can practically be a full time job (think large shopping malls and grocery stores). As their use in commercial buildings becomes more common, it’s not unrealistic to see them driving the cost down quickly and making them a viable option in the average home.
To find out more about lighting with LEDs and available products, visit
C.CRANE company,
Best Home LED lighting, or
Commercial LED lighting
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