September's Case-Shiller Index and Yardley, Newtown, Bucks County.
Standard & Poors released the September Case-Shiller Index Tuesday. The Case-Shiller Index is a home-value tracker. The report shows home prices down 0.7% from August and values fading, in general. As you can see from the above chart, Yardley and other areas, in Bucks County, do not appear anywhere on this chart. That’s the problem with using these national statistics, to try and predict or even understand where the real estate market is heading, in your back yard.
I am met with several prospective sellers both in Yardley and Newtown in Bucks County, over the past few days, and the question always is, first, should we put our house on the market during the holidays, and second, whats the market doing?
If you rely on broad, national statistics, like the Case-Shiller index, you will not understand what is going on locally.
Case-Shiller representatives assessed the findings as “another weak report; weaker than last month”, citing deterioration in 18 of 20 tracked markets. Upward pricing momentum from the summer is slowing and values remain 30% off the market’s June 2006 peak.
Depsite the somewhat depressing numbers nationally, prices in Bucks County, overall, have actually increased by 4.4% through October! Clearly, as I have reported on numerous occassions, it is a tough market for sellers. However, please keep in mind that homes in Yardley, Newtown and all over Bucks County, that are priced correctly and marketed properly, are selling. I will explain a bit about why the Case-Shiller index is imperfect and flawed.
The Case-Shiller Index is imperfect; its methodology flawed. The index is not meant for use by individual buyers or sellers — for 3 reasons.
First, the Case-Shiller Index reports on a 2-month delay. Today is December 1 and we’re discussing data from September. In the 8 weeks since, the economy has shifted to a net jobs gainer, and the Federal Reserve has committed to $600 billion in re-investment. These are major developments that weren’t a part of September’s housing market, but are relevant today.
Especially because employment is largely believed to be a keystone to housing.
Second, the Case-Shiller sample set is limited to just 20 cities nationwide. This means that most U.S. home sales are specifically not included in the Case-Shiller Index’s monthly findings.
And that ties into reason number three — all real estate is local. No matter what the Case-Shiller Index says about the country, what matters to your local market is what’s happening in your local market. Each neighborhood has its own housing economy and that’s something that can’t be captured by a national report.
If you want to understand what is happening in your neighborhood, email me and request a market snapshot of your neighborhood. I will email a report that will show you exactly what has sold in your specific neighborhood. It will include homes for sale, as well as what has sold, including days on the market, and discounts from asking price. Only by looking at very local information, can you truly understand what is happening with real estate in your back yard.Continue Reading > Add a Comment
Mortgage financing in Yardley, Newtown & Bucks County, fed guidelines are being tightened.
If you are interested in buying a house in Yardley, Newtown or anywhere in Bucks County, or if you are interested in refinancing your current mortgage, please note that the lending guidelines are continuing to get tighter.
This should not come as a surprise to anyone, and it also should not be interpreted to mean that no one is able to obtain financing. It just means, as the survey below points out, that the qualifying guidelines are continuing to get more difficult.
In addition, the paperwork requirements, along with appraisal hurdles, continue to create additional challenges. Again, these challenges are not at all insurmountable. I have a number of transactions that have closed recently, and in each case our buyers were able to get mortgages at incredibly low rates.
It does pay to be prepared, though. Do everything possible to get your financial house in order. In addition, allow plenty of time, for the loan process to take place.
Lenders are constantlly adding to requirements. For example, many lenders are now requiring that any repairs mentioned in a home inspection report, be completed prior to closing. In some cases, those repairs are different from repairs that the buyers and sellers negotiate. Again, it pays to be prepared, and to allow enough time to work through any potential issues.
In its quarterly survey of senior loan officers around the country, the Federal Reserve asked whether “prime” residential mortgage guidelines” have tightened in the prior 3 months.
A “prime” borrower typically carries a well-documented credit history with high credit scores, has a low debt-to-income ratio, and uses a traditional fixed-rate or adjustable-rate mortgage.
For the period July-September 2010, 52 of 54 responding loan officers admitted to tightening their prime guidelines, or leaving them “basically unchanged”.
Just 4% of banks loosened their lending standards.
If you’ve applied for a home loan lately — for either purchase or refinance — you’ve likely experienced the effects of the last 4 years. Because of delinquencies and defaults, today’s mortgage underwriters are forced to scrutinize income, assets and credit scores, among other facets of an home loan application.
As I mentioned, mortgage applicants in Newtown, Yardley and all over Bucks County, have higher hurdles to clear:
- Minimum credit scores are higher versus last year
- Downpayment/equity requirements are larger versus last year
- Debt-to-Income ratios must be lower versus last year
In other words, although mortgage rates are the lowest they’ve been in history, qualification standards are not. Minimum eligibility requirements are tougher, and appear to be toughening still.
If you’re among the many people wondering if now is the right time to join the Refinance Boom, or to buy a home, consider that, while mortgage rates may fall further, eligibility standards may not.
Most importantly, people are still able to obtain mortgage financing. Rates are at all time historic lows, so it may be a great time to consider buying a house, or refinancing your current mortgage.
If you would like some direction, regarding financing options, please contact me.Continue Reading > Add a Comment