In my reading of current real estate news, I read about two trends that favor today’s real estate buyer. News out of the National Association of Realtors in Washington, DC indicate that the Pending Home Sales Index is on a record-setting roll having risen for six consecutive months. Regular readers of my newsletter and blogs may remember past references to the Pending Home Sales Index. However, for new readers the “Index” we are talking about began in 2001. It has become a leading indication of real estate activity. Pending home sales indicate that a sales contract has been signed, but it is not officially a closed transaction. Generally these pending sales are finalized in 1-2 months of signing. This index is compiled from a big national sample, typically about 20% of the total national existing home sales transactions. An index reading of 100 is equal to the average level of real estate contrast activity that occured in 2001. This was the first year to be examined and it turned out to be the beginning of a 5 year period for consecutive record setting in existing-home sales. The great news for the Pending Home Sales Index is that it has never increased for 6 consecutive months in its entire history and it is at the highest level (100.7) since June of 2007.
According to chief economist Lawrence Yun of the NAR, the index and other factors are showing a shift in housing markets for the better. The second gift that current real estate news unveiled is that the Housing Affordability Index is remaining high. In July 09 it was 158.5. The index is now not at its peak, but indicates that buyers will still find housing affordable. The HAI uses data going back to 1970 and this index was utilized beginning in 1981. This index at a value of 100 means that a median-income family has adequate income to qualify for a mortgage on a median-priced existing single family home. The HAI factors in: home prices, closing costs, mortgage interest rates, etc. and assumes a 20% down payment with a qualifying ratio of 25% gross income for mortgage principle and interest. Essentially the higher the HAI number the more affordable housing is for most people.
Here is my perspective on these two good aspects for real estate. It is still too early to know for certain if the real estate market has bottomed . However, there is plenty of housing inventory available with good mortgage rates and a potential tax credit for qualified buyers who purchase before December of this year. Prices on the entire market are being kept off their high by an influx of bargain priced foreclosures. So for buying or selling homes there are opportunities available. To explore the real estate market in the Smokies contact The Jason White Team today and see how we can assist you to buy or sell in today’s unique real estate market.