Better Housing Affortabilty for the 4 Q 2011
According to FloridaRealtors.org, due to lower interest rates and lower housing prices sales rose and inventories declined in quarter 4 of 2011. Read full article below . . . .
NAR: 4Q sales up, prices slightly lower
WASHINGTON – Feb. 9, 2012 – Housing affordability improved in most metropolitan areas thanks to softer existing-home prices and record-low mortgage interest rates in the fourth quarter. Rising sales and lower inventories resulted in a better balance overall, according to the latest quarterly report by the National Association of Realtors® (NAR).The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas (MSAs) in the fourth quarter from a year earlier; two were unchanged and 118 areas had price declines.“Sales have risen strongly in lower price ranges from one year ago, while sales at the upper end remain sluggish,” says Lawrence Yun, NAR chief economist. “More importantly, we’re seeing a consistent trend of declining inventory, which means supply and demand conditions are becoming more balanced in more areas, which will help stabilize home prices.”The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2 percent from $170,600 in the fourth quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes – foreclosures and short sales that sold at discounts averaging 15 to 20 percent – accounted for 30 percent of fourth quarter sales; they were 34 percent of sales one year earlier.
At the end of the fourth quarter, 2.38 million existing homes were available for sale, which is 21.2 percent lower than the close of the fourth quarter of 2010 when 3.02 million homes were on the market.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, says market conditions vary widely around the country. “Even with record high housing affordability conditions, all real estate is local,” he said. Both buyers and sellers need to be aware of what works in their local market, and Realtors are the best resource because they have unparalleled knowledge of local market conditions and options.”
NAR’s national Housing Affordability Index rose to a record high 184.5 in 2011. An index of 100 is the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. In addition to local incomes and home prices, the number takes into account the current average mortgage interest rate.
The higher the index, the greater the household purchasing power; recordkeeping began in 1970. Only 24 out of 152 metros measured had an affordability index below 100 in 2011.
For first-time buyers making small downpayments, affordability levels are relatively lower.
“Clearly, the Midwest has the greatest concentration of areas where home buyers have the strongest purchasing power, followed by the South,” Yun says. “Metros on the West Coast and along the Northeastern seaboard have generally higher-priced homes, which account for lower affordability.”
Between 2010 and 2011, in markets where comparisons are available, all but 2 out of 148 areas showed improvement in housing affordability, and 69 MSAs had double-digit increases in affordability conditions.
The share of all-cash home purchases in the fourth quarter was 29 percent, unchanged from the third quarter; they were 30 percent in the fourth quarter of 2010. Investors –drawn by bargain prices and usually cash purchasers – accounted for 19 percent of transactions in the third quarter; they were 20 percent in the third quarter and 19 percent a year ago.
First-time buyers purchased 33 percent of homes in the fourth quarter; they were 32 percent in both the third quarter and the fourth quarter of 2010.
In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $160,800 in the fourth quarter, which is 1.7 percent below the fourth quarter of 2010. Ten metros showed increases in their median condo price from a year ago, one was unchanged and 43 areas had declines.
Regionally, existing-home sales in the Northeast rose 6.3 percent in the fourth quarter and are 3.7 percent above the fourth quarter of 2010. The median existing single-family home price in the Northeast fell 4.6 percent to $229,200 in the fourth quarter from a year ago.
In the Midwest, existing-home sales increased 7.0 percent in the fourth quarter and are 14.1 percent higher than a year ago. The median existing single-family home price in the Midwest declined 3.3 percent to $134,100 in the fourth quarter from the fourth quarter in 2010.
Existing-home sales in the South rose 3.8 percent in the fourth quarter and are 9.1 percent above the same quarter in 2010. The median existing single-family home price in the South was $146,500 in the fourth quarter, down 3.8 percent from a year earlier.
Existing-home sales in the West increased 8.1 percent in the fourth quarter and are 8.4 percent higher than a year ago. The median existing single-family home price in the West declined 4.2 percent to $205,200 in the fourth quarter from the fourth quarter of 2010.
© 2012 Florida Realtors®