Mortgage Rates Plunge Below 5% – But Does it Help Investors?

From my Daily Realtor news feed:

Mortgage rates declined Tuesday after the Federal Reserve said it would spend $600 billion to support the mortgage securities market.

Rates fell to 4 7/8 percent, a 1 1/8 percentage point decline. David Beadle, president of BestInfo, said it was the sharpest one-day decline since 1988.

“I hope that the effect is that it brings more investors home to investing in housing,” said Alfred DelliBovi, president of the Federal Home Loan Bank of New York. “[Investors] have had a sense in the markets that anything connected with a mortgage is bad” even though most people pay their home loans, he said.

This is great news for buyers, but I have a news flash for Albert, who says “I hope that the effect is that it brings more investors home to investing in housing”.

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Using Twitter as a Focusing and Productivity Tool

I wrote recently about Social Media tools and whether they can aid and assist Realtors in selling homes and acquiring leads. I am skeptical of whether these tools, such as Facebook and Twitter, provide a sufficient return relative to the time invested in using them.

Well, I had enough feedback and counter-points offered to me in the blog comments posted and also in discussing this further with some friends and other agents that I decided to give it a whirl. So, I’ve been Twittering everything I do all week (within reason). I have some initial observations about the experience.

First, and most unexpected, is that this ridiculously stupid activity has caused me to become more focused in my daily tasks. How’s that?

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Austin Real Estate Market Update – Oct 2008 Sales

The number of residential single family home sales in Austin took a 28% dip for Oct 2008 compared to a year ago. The number of “Not Solds” (expired or withdrawn) took a big jump also, to 59% of all listings that departed the Austin MLS in October. These are grim numbers, but the remaining metrics that we track are again holding up pretty well nonetheless. In short, fewer homes are selling, but the ones that do sell are fetching prices near or or above last year’s sales. Most sales currently are for homes selling below $200K.

Let’s look at the breakdown:

• Number of homes sold is down 28% (was down 14% last month) from 1,717 Oct 2007 to 1,227 Oct 2008. Last month (Sept) saw a decrease in the slowing of sales, but this month (Oct) headed back the other way again. I think the remainder of this year is going to be very slow as well.
• Average list prices in Austin were up 1.16% over the same month last year to $259,128.
• Average sold prices in Austin were down 0.29% over the same month last year to $247,687.
• Median sold price was up 5.46% to $195,000.
• Average List to Sold price ratio is 95.58%, down from 96.42% the same month last year.
• Avg sold price per square foot is down 2.13% to $115 compared to $117 a year ago in October.
• Avg days on market is up 4 days (6.15%) from 65 last year to 69 this October.
• Median days on market is up 7 days (16%) from 43 days last year to 50 this year.
• Number of “Not Sold” (exp or withdrawn) is up 29% over the same month last year, to 59% of all removed listings compared to 46% for the same month last year.

The stats outlined above are shown in the chart below.

 

Austin Real Estate Sales Market Update October 2008
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Sep 2008 Oct 2008 Oct 2007 Yr % Change
# Sold 1512 1227 1717 -28.54%
Avg List $257,761 $259,128 $256,148 1.16%
Med List $189,900 $199,900 $189,900 5.27%
Avg Sold $248,026 $247,687 $246,978 0.29%
Med Sold $185,000 $195,000 $184,900 5.46%
Sold/List % 96.22% 95.58% 96.42% -0.87%
Avg SQFT 2131 2156 2104 2.47%
Med SQFT 1924 1986 1919 3.49%
Avg $ SQFT $116.39 $114.88 $117.38 -2.13%
Avg DOM 67 69 65 6.15%
Median DOM 48 50 43 16.28%
# Expired 797 666 628 6.05%
# Withdrawn 891 1070 806 32.75%
Not Sold 1688 1736 1434 21.06%
Not Sold % 52.75% 58.59% 45.51% 28.74%

 The Year-to-Date figures through Oct 2008 tell a similar story, though less pronounced than Oct. See the chart below:

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The true, honest to goodness, Sold to List price ratio for Austin

I noticed something interesting when I was previewing listings yesterday in Austin Lake Estates. Several homes were priced currently at more than $20K below the original list price (which appears at the bottom of the agent listing printout). This made me start wondering about how accurate our reported sold/list price ratio is, so I decide to investigate further. My findings are below.

When I post my monthly Austin real estate market stats, one of the data points provided is the sold/list price ratio. That is, the sold price divided by the list price. This tells us, for example, that if a home listed for $200,000 sells for $190,000, that the home sold for 95% of the list price. I track this stat because it informs us of the strength of the seller’s side of the market. As sold/list price ratios trend downward, this tells us that sellers are having a harder time obtaining their asking price, and buyers are experiencing increasing negotiating power. For September 2008, the sold/list price ratio (96.22%) remained about the same as Sept 2007 (96.25%), indicating, at first glance, that sellers are obtaining about the same sold/list ratio as a year ago. Or are they ….?

Let’s look at the chart below, and notice that I’ve added an additional piece of data – Original List Price – to the mix. Note that the chart is for Sept 2007/2008 sales only.


The first word that comes to mind when looking at the 2007 chart, is “ouch”. What the standard sold/list price ratio does not tell us is how far the seller came down from the original list price. But the chart above paints a nice picture of the difference sellers experienced between 2007 and 2008. Let’s take a closer look at this.

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Austin Sales Market Stats by MLS Area – Sept 2008 YTD

Below are the YTD Sept 2008 stats for Austin homes sales, broken out by MLS area as compared to 2007 sold stats.

Here is a quick summary, the full chart is below.

Number of Sales
Of the 42 MLS areas tracked, the number of sales decreased in 41. Only the UT area had more home sale YTD Sept (34 last year, 39 this year). Number of sales are down 15.6% citywide compared to the same period a year ago.

Average Sales
The average sales price increased in 29 of the 42 MLS areas, decreasing in 13 of the MLS areas tracked. Of the 29 areas with appreciating sales prices, 10 have appreciation higher than 5%, and 3 areas appreciated more than 10%. Of the 13 areas that depreciated, 2 have depreciation of more than 5%.

Median Sale Prices
The median sales price increased in 28 of the 42 MLS areas, decreasing in 14 of the MLS areas tracked. Of the 28 areas with appreciating median sales prices, 10 have appreciation higher than 5%, and 4 areas appreciated more than 10%. Of the 14 areas that depreciated, 3 have depreciation of more than 5% in median sales value.

Average Sold price per square foot
The average sales price per square foot increased in 25 of the 42 MLS areas, decreasing in 17 of the MLS areas tracked. Of the 25 areas with appreciating sales prices, 6 have appreciation higher than 5%, and 2 areas appreciated more than 10% in avg price per sqft. Of the 17 areas that depreciated, 3 have depreciation of more than 5% in psf value.

Days on Market
Average and Median days on market increased in most areas. Only 8 out of 42 areas have lower avg dom and only 2 out of 42 have lower median days on market. Citywide, days on market is up 16% to an average of 65 days sold, and 42 median days sold. These are actually very good numbers, but they somewhat mask the high number of failed sales attempts. At present, the average days on market of Active listings in Austin is 97 days and the median is 75 days. More than half of the active listings will fail to sell, most with higher days on market, which leaves the quicker selling homes to set the stats.

The full chart is below. A MLS map is below the chart if you’re not familiar with Austin’s MLS areas. As usual, questions and comments area welcome.

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HOA Violation Leads to Jail Time

This came in my Realtor email newsletter today. It’s a reminder that HOA rules have to be followed, no matter the reaons for not being able to comply. A 66-year-old grandfather in Bayonet Point, Fla., is doing jail time because he couldn’t afford to replace the sod on his lawn in his deed-restricted community after … Read more