Snapshot of September New Construction and Existing Home Sales

Hi Everyone,
   Welcome back to a beautiful Fall day with the potential for a substantial amount of pumpkin picking in the forecast.

   The September figures for both New Residential Construction and Existing Home Sales were released this week, and aside from fluctuations over the past few months, things look solid when compared side-by-side with the same time 12-months ago.

   New Residential Construction, as you might be aware, is broken down into 3 parts; Building Permits, Housing Starts, and Housing Completions. Housing Starts (Privately-owned housing starts), were up 15% from August, and 10.2% Above September 2010. This is very encouraging, especially for the Western Region of the U.S., which had figures that were substantially higher than the average (over both the 1-month and the 12-month periods). Building Permits and Housing Completions were also up over the longer-term, but not at the elevated levels as were the Housing Starts.

   Existing-Home Sales, which includes completed transactions for single-family, townhomes, condominiums and co-ops, dropped 3% from August, but are up over 11% from September 2010, per the National Association of Realtors® (NAR). In terms of regional variations, the long-haul big winner was the Midwest, checking in with in excess of a 17% jump in Existing Home Sales from September 2010 through September 2011.

   The chief economist for the NAR, Lawrence Yun, said that, “Existing-home sales have bounced around this year, staying relatively close to the current level in most months”, and he calls it "Irony" that the "affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes", but, "the share of contract failures is double the level of September 2010", and he interpreted this as pointing to "an unfulfilled demand". Contract failures, incidentally, can result from a declined mortgage application, appraisal values below the negotiated price, issues resulting from the home inspection report, job loss, etc.

   In sum, Housing Starts up 10.2% from a year ago, coupled with a 11% increase in Existing-Home Sales from a year ago, would tend to point to improving market conditions. Do you agree? Do you disagree? Please explain - we'd love to hear your angle on these figures.

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #NewConstruction #ExistingHomeSales #Residential #Housing #Building #Permits #singlefamily #cancellations #townhome #condo #Realtor #appraisal #NAR

The Connection Between The Producer Price Index And Housing

Hi Folks,
   As another week draws to a close, we take a look at an indicator that we have not discussed here, and that is the Producer Price Index (PPI), which basically looks at goods in varying stages of production. The Producer Price Index for finished goods rose 0.2% in May (following increases of 0.8% in April and 0.7% in March), so it appears things are headed in the right direction, however, what does this mean for the Housing Market?

   "On the surface the Housing Market should have the potential of having a large impact on PPI since it represents a large portion of the U.S. economic engine", says Lynn Grantham of St. Johns, FL. Grantham points to the "lack of strength in the Housing Market since 2008", and says that the remaining inventory of unsold homes, "including the large number of foreclosed properties that lenders are still sitting on should translate into a dampening impact on the PPI."

   Another point, which was raised by Barry of Alvic Management, is that higher producer prices, "increase the cost of construction materials and should slow new construction, which may make existing homes more valuable because it's harder to recreate them."

   What is your view on this index? How inter-related is it to the Housing Market and the Real Estate Industry? We'd love to hear your opinion.

Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #PPI #realestate #foreclosed #construction

Buy an Existing Home or a New Construction Home?

Hi Folks,
   Welcome back. I missed all of you !

   Today, we will tackle the question that you may or may not have pondered before: Should You Buy a Resale or a New Construction Home?

   Many factors that need to be taken into account revolve around you, the buyer. Jennifer A. Chiongbian, an SVP and Associate Broker of Sales, Rentals & Investment Properties, says that she believes that the buyer should, "first and foremost consider what is most important, space, prestige of living in a new building and/or amenities."

   In terms of purchasing a resale home (existing home), let's look at some advantages and disadvantages. As Chiongbian says, some advantages of a resale home include the fact that perhaps, "the building is more established; and will be easier for your bank to ascertain the viability of a loan since it will be much more stable, in terms of its capital reserves, determining the amount of sponsor units left in the building; and generally will have an established history of primary residents, investors, renters." Additionally, she says that the re-sale units of old post war buildings tend to have more "space friendly layouts without all the pomp and circumstance.", including larger sized bedrooms, better use of layout and windows that are, "not as attractive as the floor to ceiling windows offered in new construction, but much more user friendly." Doug Andraka, a Mortgage Banker and Host of "Real Estate Radio - Philadelphia", mentions some other advantages, such as, "typically" a much lower sale price, lower real estate taxes, negotiating power with the current seller, who may be very motivated to sell.

   "With a re-sale, the disadvantage is you stand a good chance of having to renovate something in the apartment" says Chiongbian, who adds that, "this includes you being responsible for finding your own reputable contractor, and possibly living in the unit while the construction is going on; because the buyer will not be able to touch the unit until title is fully turned over." Andraka also says that, "there may be more maintenance, more fix-up work, and the house may not be just the way you like it (colors, floors, tile, etc.)"

   In terms of new construction homes and properties, Chiongbian says that, "One obvious advantage to new construction is that they can be turn key properties with out having to do any renovations", and that, "the builder is more open to doing combined units, semi-customizing your wants with their own team in place, and all you need is your imagination as to what you would like or how the actual finished product will be envisioned". Andraka adds that, "everything is new. Maintenance should be low. Buyers have their choice of appliances, paint colors, carpets, tiles, etc."

   As for disadvantages, Andraka mentions a higher price, higher real estate taxes, and a longer process (6-12 months) for delivery. This can add an interest rate risk as well.

   Overall, summarizes Julie Vanderblue of the Vanderblue Team, it "depends", and she says that, "In this market, there is amazing opportunity in both...finished new construction just sitting there with the builder sweating bullets...you may want to rent to own or buy at discount...half finished new construction offers great opportunity....resale of a few years young is great as the property has already gotten the kinks out and settled...and if the sellers are getting out so soon their is usually a financial motivation..."

   What are your thoughts on this? Would you like a brand new home or an existing/resale home based on this information? We'd love to hear from you.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #realestate #newconstruction