Existing and New Home Sales Down Again

Month-over-month sales of previously owned homes, including single-family homes, townhomes, condominiums and co-ops, fell 8 percent in September, according to the Existing Home Sales report issued recently by the National Association of Realtors (NAR).

With last month's sales figures, NAR reports the annual rate of existing home sales is on pace to hit an eight-year low of 5.04 million units. In addition, the inventory of unsold homes rose to an eight-year high.

The latest reading on the state of the battered market for new homes was pretty bad as well.  New home sales in September came in at an annual pace of 770,000.  That's up from the revised 735,000 rate in August, but it's down from the original August reading and just below the forecast of economists surveyed by Briefing.com, who had been looking for sales to slow to a pace of 775,000 in the month.

The one sign of some strength in the report is that the median price of new home sales was up about 5 percent from year-ago levels to $238,000.

But that reading does not take into account the incentives builders are offering buyers, such as picking up closing costs or adding extra features for free.  The sales price in the report is not adjusted for the value of those incentives.  The price reading can also be affected by the shift in sales geographically, such as the questionable pick-up in sales in the West, where prices are more expensive than in some other markets.

Some economists agreed that the report also suggests the market has yet to hit bottom, despite the slight uptick.

When Will We Hit Bottom?

Are you getting as tired of hearing about this as we are telling about it?  The housing market is just getting worse.  Home resales tumbled 8% in September to the lowest levels of the decade, prompting the obvious question:  When will it all end?

The REAL answer is:  NO ONE KNOWS!. 

Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.

So far, the pessimists have been right about the weakness in the housing market, but their forecast that the collapse in housing would lead to a general economic recession has, at least so far, failed to happen.  The economy has slowed, but has not fallen into recession, as consumers and investors adjust to a world in which home prices don't automatically rise 5% or 10% a year.

What do you think?  Have we hit bottom?  Is there still more fall to come?  Click the comment link below and let us know.  Your email address is required to comment, but we DO NOT allow your email address to show up with your comment for your privacy protection.  We'd love to hear your thoughts about the real estate and mortgage markets.

Staging Your Home

With the number of homes for sale out numbering the amount of home buyers, your home needs to be clearly the better choice and priced competitively with the competition.  You should think about the home for sale next door and making sure it doesn't shine brighter than yours.

Your home needs to appeal to all the senses of potential home buyers.  Proper staging will help it to stand out from the crowd and get it sold.

Staging doesn't just mean minor repairs, remodeling or getting rid of the clutter.  It means making your home appeal to visitors, feel inviting and comfortable.  Proper staging can help achieve good results.

Staging itself may cost you several hundred to several thousand dollars depending on many factors.  It is a short term investment in the sale of your home which can help it sell faster and for top dollar.  Proper staging is vital to selling your home.

The techniques for staging your home vary.  Many times it is a simple process that only takes a couple days.  Remove unnecessary items that clutter your home to create space and create an open feel.  Move furniture or replace it to create themes that are welcoming to prospective home buyers.  Open blinds, add brighter light bulbs, paint, clean the carpet, prune bushes and play soft music for showings.

Staging needs to be evaluated on an individual basis, but it's critical in selling your home in a shorter time for top dollar.

Have you ever staged a home for sale?  Leave us your comment and experience and any other things you might suggest to someone who is thinking of selling their home.  Just click the comment link below.

Carrying a Home Loan Into Retirement?

Start with this question: Should your goal be to pay off your home loan so you can live mortgage-free in retirement, or instead, should you aim to reduce your monthly loan payments, thus freeing up cash that can then be used for other things?

If you have a large savings nest-egg and a modest mortgage, go for the loan payoff.  You might also think about trading down to a smaller home or, alternatively, work part time until you're rid of the mortgage.

One scenario, if you have cash sitting in a money-market fund held in a regular taxable account, also consider using these savings to reduce your loan balance.  Your mortgage may be costing you just 6% and the interest might be tax-deductible, but your money-market fund is likely yielding only 5% — and you have to pay tax on that income.

One thing you DON'T want to do is cash out a 401(k) to pay down debt.  A big 401(k) withdrawal would likely trigger a huge income-tax bill.  You'd be better off slowly tapping your 401(k) or IRA to make your regular monthly mortgage payments.  That way, you would also continue to enjoy the mortgage-interest tax deduction.

There are other options.  If you don't think you'll ever get to live mortgage-free, consider getting the mortgage payment down as low as possible by refinancing or trading down to a smaller home.  You might even refinance again later in retirement, further shrinking your monthly payment by extending your loan over 30 years.

Do you have any other suggestions or comments you might add to this article about carrying a home loan into retirement years?  We'd love to hear your feedback.  Leave us your comments by clicking the comment link below.

Existing Home Sales Expected to Decline 10.8%

This year's decline in existing home sales will be steeper than previously anticipated. The eighth straight downwardly revised forecast from the National Association of Realtors calls for U.S. existing home sales to be 10.8 percent below last year as housing market woes persist. Sales of new homes, meanwhile, are expected to finish 2007 at the lowest level in a decade.

The trade group's outlook for 2007 homes sales has grown more pessimistic through the year as foreclosures soared, credit market troubles developed and sales fell. Back in February, the group forecast an annual decline in existing home sales of only 0.6 percent.

Despite the bleaker outlook, the group maintains an optimistic message. NAR senior economist, Lawrence Yun, noted in a statement…"The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

The median U.S. existing home price edged up slightly in August to $224,500, an increase of 0.2 percent from August 2006. It marked the first year-over-year price increase after a record 12 straight months of declining prices.