Cleveland, Northeast OH Area Real Estate Market December 2013

According to the Northeast Ohio Regional Multiple Listing Service (NORMLS) and an article from the Cleveland Plain Dealer newspaper, annual homes sales in the region increased overall in 2013 from 2012 by 11.8%. Lower home inventory, higher rental prices and higher buyer demand due to low (but climbing) interest rates, have been driving this increase in activity and increase in sales prices over the past year or so.
Sales comparing December 2012 to December 2013 slid slightly.  Among the 15 counties in Northeast Ohio, single family home sales were down a percentage points. 

By comparison, Northeast Ohio is showing a 6.1% price increase from last year (3.1% for condos), with the state of Ohio's at 5.2%. Ohio's sales volume increase was also up by over 14.7% compared to 2012.  The US market saw a 11.5% increase in sales price from 2012 to 2013, and is showing a sales volume increase of 9.1%.  Ohio and Northeast Ohio's price increases have stabilized/slow down recently, while the US sales prices continue to rise at a higher rate, which has been historically the case in our area compared with the nation.  There is still a concern that home prices are rising faster than income growth.

Nationally, "Existing-home sales have risen nearly 20 percent since 2011, with job growth, record-low mortgage interest rates and large pent-up demand driving the market," said Lawrence Yun, chief economist for the national Realtors. "We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population."

The key point here is that the market is starting to stabilize and shifting to a seller's market.  Sellers are getting more for their homes than last year, with buyers paying a bit more to purchase a home to take advantage of the low interest rates.  Buyers should note that interest rates have decreased slightly, hovering around 4.5%. 

This is a great time for buyers who also have a home to sell, because rates are still relatively low on the buying side, but home values have risen in many areas to improve the financial return on the selling side.  If the economy continues to improve, buyers in the current market will be able to realize value gains for the homes they purchase as well.

Mortgage Rates Expected to Increase, Fed To Reduce Bond Purchases

Ben Bernake announced yesterday that the Federal Reserve will begin reducing the amount of bonds it will purchase, from $85 billion per month to $75 billion.  This is the first step taken to "take off the training wheels" on the federal stimulus it created to get the United States out of it's recession.  The Fed’s purchases will be divided between $40 billion in Treasuries and $35 billion in mortgage bonds starting in January, Bernanke said.

“Reflecting cumulative progress and an improved outlook for the job market, the committee decided today to modestly reduce the monthly pace at which it is adding to the longer-term securities on its balance sheet,” Bernanke said at a press conference in Washington today after a meeting of the Federal Open Market Committee.

Stocks rallied on the good news reported regarding the improved economy and reduced unemployment figures.  The Fed said its benchmark interest rate is likely to stay low “well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation continues to run below” the Fed’s 2 percent goal.

Since the Fed began signaling in May that it may soon begin to dial down the purchases, interest rates have drifted higher, with the average 30-year fixed mortgage rate rising to 4.42% from 3.35% in May. The rising rates helped convince the Fed to delay tapering in September.  Rates are expected to continue to increase, but not at an immediate, drastic amount.  However, it will have an affect on the purchasing power for home buyers.

Further complicating the picture is that Fed Chairman Ben Bernanke plans to step down when his term ends in January. Vice Chair Janet Yellen, who has been nominated to succeed him, has expressed an even more pro-growth approach but must deal with a policymaking committee with diverse views of the stimulus.

*Information source from Bloomberg News and USA Today

New Home Construction - Reasons To Have Realtor Representation

Buying a new home is exciting, and home construction is on the rise. You get to build your home the way you want it to be. But like any home purchase, new construction is an expensive transaction with many financial implications.

Here's why it’s a good idea to obtain representation from a Realtor when considering new construction:

Sales Reps Work For The Builder. Builders usually have their own agents or representatives on site to discuss the home construction process, and help with a potential purchase. They can explain how the builder compares to competitors, differences between models and floor plans, go over your financing options, upgrades and specials, etc. But it’s important to know that builder reps represent the builder.

Fiduciary Duties. When you use Realtor representation, their responsibility is to you. You have a local expert who is looking out for your best interests, who’s contractually obligated to protect you. A buyer's agent can help you navigate the contract and help you understand the specific clauses, riders and upgrade, making sure you know what you need to before you sign on the dotted line.

Negotiating. Finding the right model and choosing your upgrades is fun, and you should truly try to enjoy the experience. The contracts and negotiating terms and options is the not-so-fun part, and can be quite daunting.  Most buyers don't know they can even negotiate with a builder. Your agent can also present other financing options or possibly work with the builder’s lender directly to get you a better rate for your mortgage.

Navigating You to Closing. Signing a contract with a builder is step one in the process. You must also line up financing, work with title companies, attend numerous inspections and make sure completion of the home meets the deadline. Your Realtor can manage that process to ensure you’re not missing anything at each stage of your new home's construction.