Home sellers wonder: Discount or delay
Posted January 21, 2011
We had some mixed housing data earlier this week. December housing starts were down 4.3 percent versus being up 3.8 percent in November. December building permits were up staggering 16.7 percent. That's a wonderful response to the November number which was down 1.4 percent.
A question that I pose to you is this: Is it better to discount your home to give home sales the necessary traction in the market – all the while helping to increase downward pressure on home values in your neighborhood – or to wait until the natural market forces help (if ever) the market return to its natural state of value? Indications are that more and more sellers are beginning to lower prices across the board throughout the country.
Existing home sales for December were up a strong 12.3 percent, perhaps indicating that the slight increase in interest rates over the past few weeks has been enough of a catalyst to push potential buyers into actual buyers. This will hopefully be good news for early 2011 housing as we head into the spring selling season.
Even though we’ve had a slight uptick in mortgage interest rates, we must remember that mortgage interest rates are still strong and hovering around historic lows.
So while the number of eligible customers is smaller than it was for the refinance side of things a few months ago, as exhibited by this week’s new data, it seems as though the number of people interested in purchasing a home is really starting to pick up steam.
Corporate confidence seems to be picking up some steam as well. While the inflationary conversation goes in and out of favor each week, for right now things seem to be holding in check.
Foreclosures are also back in the headlines this week – both nationally and here in North Carolina. 2010 was quite the year for foreclosures, and some experts are predicting that 2011 may be the year that we see foreclosure numbers begin to crest.
Depending upon the actual number of bank-held properties that haven’t yet been put back on the market, we could see a serious erosion of values in areas where supply is significantly increased, and where demand simply cannot keep up with the number of homes being offered. When you couple that with tighter underwriting standards and fewer eligible, qualified borrowers, you have a formula which doesn’t bode well for stability in housing.
Speaking of stability in housing, those government-sponsored enterprises Fannie Mae and Freddie Mac are increasing their fees to lenders effective immediately, which unfortunately means that consumers will also feel the increase in some form or fashion going forth this spring. They have increased what are known as their LLPA’s or Loan Level Price Adjusters to lenders across the board. These adjustments take into consideration different variables when evaluating a loan for its servicing value.
Here in the triangle, SAS was just ranked the No. 1 company in the US to work for - again! We’re so fortunate to have such entrepreneurial leadership right here in our own backyard. The good news with SAS is that they also announced that they’ll be adding approximately 300 new jobs to their payroll providing continued support for our economy.
And to make viewing this blog that much easier, Time Warner recently announced that the Triangle will soon be getting their “Wideband” Internet product which will offer download speeds as high as 50 Mbps and upload speeds as fast as 5 Mbps – crushing current available speeds and bringing a much more positive internet experience to all of us here in the Triangle.