Saturday, January 26, 2008

Is it time to buy in Longmeadow?

Here are the latest stats…
  • The National Association of Realtors (NAR) released data that showed that existing home sales nationwide fell 13 percent in 2007 from 2006 levels.
  • The December 2007 rate was 22.0 percent lower than the December 2006 rate.
  • The latest housing sales for the Northeast region were similar to the national results with December 2007 results 22.4 percent lower vs. December 2006.
  • National median prices for existing homes decreased by 1.4% when comparing 2007 vs. 2006 results.

As was pointed out in our last commentary, the real estate market for Longmeadow is doing much better than the national results.

  • Longmeadow 2007 sales were 4.8% higher than 2006.
  • Median sales prices for Longmeadow were relatively stable showing a slight increase in 2007 vs. 2006.

There may be some light at the end of the tunnel

Fixed rate mortgage rates have already dropped to their lowest levels in almost four years.

Here are some typical rates quoted recently for conforming loans < $417,000 ...

15 year fixed mortgage- 5.0%
30 year fixed mortgage- 5.6%

Mortgage rates in September 2007 were significantly higher than they are today:

15 year fixed mortgage- 6.0%
30 year fixed mortgage- 6.4%

Note: The current credit situation may cause some borrowers to find it difficult to get financing for jumbo loans (> $417,000) and if they are successful, contracted mortgage rates are likely to be higher (+1.0% or more) than those quoted above.

However, Federal Reserve policy in the near term while not specifically targeted at long term rates, will likely help to further reduce fixed mortgage rates in 2008 to their lowest level in over 40 years.

See Historical Graphs for Mortgage Rates

Now back to the original question… IS IT TIME TO BUY A HOUSE IN LONGMEADOW?

Many potential buyers who have been sitting on the fence waiting for prices to come down may find that once the housing market stabilizes, both mortgage rates and housing prices will increase significantly resulting in decreased affordability.

At this point average supply (100 – 130 homes) vs. sales (198 in 2007) suggest it takes 6 – 8 months to sell a home. Many current sellers have had their homes on the market for 12-18 months or longer and are very anxious to make a sale. A wide range of homes are up for sale, particularly in the 200-350K range and asking prices have been coming down.

With the likelihood of mortgage rates coming down to their lowest level in over 30 years and house affordability at some of its best levels in recent history, timing is pretty good for families to purchase a new home- particularly if they plan to stay for more than 5 years.

Note to our Buzz @ Biz blog readers: We welcome commentary from our readers including local realtors as well as home buyers and sellers. Please feel free to post your comments.