The U.S. housing market continues its gradual and uneven progress, despite the expiration of the home buyer tax credit. The remarkable rebound in housing activities from the initial drop following the end of the home buyer tax credit this past July adds to the belief that the risk of a double-dip downturn in housing may be disappearing.
As the housing market
continues to work through the excess supply overhang, a result from the
glut of foreclosed properties which is keeping home prices below their
long-term trend growth, economists anticipate mortgage rates at or above
6% by the end of 2012 and expect buying activity to continue its upward
The number of homes home sales in April were down 12.9% compared to the same time last year when the impact of the tax credit was at its peak. Sales were relatively stable compared to the previous month: less than a 1% decline. NAR Chief Economist Lawrence Yun states that “given great affordability conditions and job creation, home sales should be stronger” and cites unnecessarily tight credit for limiting sales. Gradual but uneven improvement is expected to continue. In fact, home sales have increased six of the past nine months.
Inventory- Month's Supply
The supply of homes measured in months on the market, if sales continue at their current pace, inched up during April compared to March. Inventory levels remained 26% below the peak of 12.5 months in July and only 11% above April of 2010 when the tax credit was in full swing.
Source: National Association of Realtors
Rates have reached a new record low after steadily declining throughout May, primarily due to uncertainty in the global and domestic economies. Rates are still expected to follow an upward trend as the year progresses. As overall economic activity gets back on track, rates will likely rise to keep inflation in check. This window of opportunity for buyers to lock in these historically low interest rates may not remain open much longer.
Following in the footsteps of its counterpart Fannie Mae, Freddie Mac is offering a summer sales promotion for buyers who purchase a home from its inventory of foreclosures or HomeSteps properties. Since banks typically sell foreclosures “as-is” without incentives, warranties, or repairs, this incentive could help buyers view a HomePath property more like a traditional sale, and less like a distressed property, during their search process.
For offers received by July 31 that close by September 30, Freddie Mac is offering:
This is on top of the incentives already being offered:
Note that this program comes with a few eligibility requirements, which includes the home must be a single-family, owner-occupied, financed dwelling used solely for residential purposes.
Kauai real estate continues to be a good market for buyers and no-so-good for sellers. There has been a move back towards a balanced market from that of the prior 2 years. Inventory continues to decline from its peak at the end of 2008 but is still double that at during the market frenzy of 2004 & 2005.
Absorption rates for the different market areas continues to decline with residential housing doing better than condos except in the Lihue zone where condos are actually in the green band signifying a balanced market.. The Lihue condo market is much more heavily weighted to residential than vacation use. A significant exception to that is Kauai Beach Resort, which has seen such steep price declines that investors have swooped in and paid cash for distressed properties.
Kauai inventory continues to come down...
Kauai absorption rates are showing less stress than years past...
Additional Kauai sales information is available upon request.
Kauai is the oldest, 4th largest, and furthest north of the Hawaiian islands. Kauai’s climate is tropical and world-class beaches include Poipu Beach Park and Hanalei Bay, honored as America’s #1 beaches in 2001 & 2009.
Richard Dolbeare is a Kauai real estate agent with Keller Williams Realty, the 2nd largest real estate franchise in the nation and a source of many buyer referrals.
He is the author of Kauai’s #1 real estate blog and is the Localism Community Leader for Poipu. His Kauai community reviews include videos, descriptions, and sales data popular with buyers searching for homes on the internet.
Richard is available by phone, text, email, or personal appointment.
Richard T. Dolbeare (RA)
Keller Williams Realty
ABR, CRS, e-PRO, RSPS, SFR, BS/MS
Living and working on the island of Kauai
Keller Williams Realty, 1819 S. Kihei Rd., Ste. D-110, Kihei, HI 96753,
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