Today's News offers insight on our market:
From Realty Times today we read:
"Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.14 percent with an average 0.4 point for the week ending November 30, 2006, down from last week when it averaged 6.18 percent. Last year at this time, the 30-year FRM averaged 6.26 percent. This is the lowest the 30-year FRM has been since the week ending January 26, 2006, when it averaged 6.12 percent..."
Later it states: "Mortgage rates drifted lower this week, bringing long-term rates to levels below those of this time last year," said Frank Nothaft, Freddie Mac vice president and chief economist. "Mortgage applications for home purchase in November have remained healthy, due largely because of the drop in mortgage rates and a softening in home prices in some areas." (Go to realtytimes.com/rtcpages/20061201_rates.htm to see the full text.)
This bodes well for our market here, as higher rates were one of many factors responsible for buyers sitting on the sidelines and not buying in Harrisonburg and Rockingham County.
In another Realty Times article, we read:
"The National Association of Realtors is reporting that sales of existing homes are holding steady, with indication of a modest gain last month." (Go to: realtytimes.com/rtcpages/20061201_mrktconditions.htm to see the full text.)
Unfortunately, we are not seeing the same here in our area as far as sales volume is concerned. Residential sales peaked at 161 total in June and have been declining ever since, to a total of only 83 in October. However, median sales price for all residences has risen from $214,000 to $253,079 over the same period. In fact, median sales prices have shown a steady upward trend since February, 2004 when they stood at $140,750.
In yet another Realty Times article we read:
"Good Deals Will Begin Disappearing With Lower Inventory
by M. Anthony Carr
It's amazing what buyers can get in today's new home and resale market. Consider some of these recent promotions:
- $8,000 to closing credit to purchaser
- Special pre-construction price with 2.5 percent financing incentive makes this a stunning value
- 5 percent closing cost credit (on $500,000 price = $25,000)
- Free rec room, full bath and $10,000 in closing"
Further down in the article, we read:
"BusinessWeek.com headlined a story last week, "An Awful October for Housing Starts," subheading the story: "With new-home construction dropping to its lowest level in over six years, markets are betting the Fed could start cutting rates by June."
"So should buyers wait for the fed to cut rates in seven months? Sure -- if you want to miss out on the $25,000 closing costs, 2.5 percent special financing, and free rec rooms. Builders aren't stupid (just wanted to mention that at this point in the column)." (Go to realtytimes.com/rtcpages/20061201_gooddeals.htm to see the full text.)
We are seeing this, too, in our local market. Builders are substantially discounting their prices and offering other incentives. However, buyers don't seem to be excited enough about these incentives to get their pens out and sign offers for these houses.
In conclusion, I will have to say again that factors are right for a considerable expansion in home sales early next year. It is my opinion that the next two to three months is the prime time for buying real estate here in Harrisonburg and Rockingham County. Those buyers who set on their hands too long and don't get on the train now may wind up watching the "bargain train" pull out of the station and have to settle for the "not so bargain train" coming down the track next summer.
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