Tuesday, July 31, 2012

Planning Ahead For The Federal Reserve's Next Move

Fed Funds Rate v 30-Year Fixed Rate
In Washington, D.C. today, the Federal Open Market Committee (FOMC) begins a 2-day meeting, its fifth of 8 scheduled meetings this year.


Mortgage rates are expected to change upon the FOMC's adjournment. Rate shoppers and home buyers of Metro Atlanta would do well to be alert.

The Federal Open Market Committee is a rotating 12-person subcommittee within the Federal Reserve. It's the group which makes U.S. monetary policy. 

"Making monetary policy" has many meanings but the action for which the FOMC is most well-known is its setting of the Fed Funds Funds. The Fed Funds Rate is the prescribed interest rate at which banks borrow money from each other overnight.

Since late-2008, the Fed Funds Rate has been near zero percent.

The Fed Funds Rate and Freddie Mac's 30-year fixed rate mortgage rate move along different paths. Sometimes, the two converge. Other times, they diverge. They've been separated by as much as 529 basis points in the past 12 years, and they've have been as near to each other as 52 basis points.

Clearly, there's no correlation between the Fed's Fed Funds Rate and the common 30-year mortgage. However, with its words, the Federal Reserve can influence the direction in which mortgage rates move -- on occasion, by a lot.

We'll be witness to this Wednesday.

When the FOMC adjourns, it is expected to announce no change in the Fed Funds Rate. Yet, based on the verbiage of the post-meeting statement, mortgage rates will rise or fall accordingly. If the Fed notes that the economy is sagging and that new stimulus is planned, mortgage rates are expected to drop throughout Georgia. This is because new, Fed-led stimulus would be a boon for mortgage markets which would, in turn, drive mortgage rates down.

Conversely, if the Fed acknowledges growth in the U.S. economy and/or little need for new stimulus, mortgage rates are expected to rise.

Either way, expect rates to change -- we just can't know in what direction. The FOMC adjourns at 2:15 PM Wednesday.




For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Monday, July 30, 2012

How To Beat The Bacteria In Your Kitchen


Within Metro Atlanta homes, the kitchen is often the most "used" room in the house. It's a meeting place for meals, for conversation, and for family. Unfortunately, that makes it a meeting place for bacteria, as well.

Along with bathrooms, kitchens are the most bacteria-heavy rooms in a home. Kitchens require a good, daily cleaning. This 4-minute interview on NBC's The Today Show shows you how to do it.

Using ordinary household cleansers and some elbow grease, you'll learn :
  1. Why sponges should be out of your kitchen and why loofahs should be in
  2. How to catch and trap fruit flies that spread germs and disease
  3. How to clean and disinfect porous cutting boards
You'll also get tips on removing stubborn stains from the bottom side of a frying pan.

The video is loaded with good advice and is worth a watch if only to learn a single sanitizing tip.

For example, did you know that you shouldn't soak wooden bowls or boards in water because the water causes the wood to separate, leaving it "open" to kitchen-borne bacteria? Or that, because of new soap-types, today's dishwashers should be regularly disinfected?  

Keep your kitchen free from bacteria is a constant battle but, using the tips from the video above, you'll give yourself a fighting chance. 




For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Friday, July 27, 2012

Pending Home Sales Index Falls Just Short Of 100

Pending Home Sales Index June 2012
Home sales appear headed for a mid-summer breather. 

One month after posting a multi-year high, the Pending Home Sales Index retreated to 99.3 in June -- a strong reading in its own right.

A "pending home sale" is a home that is under contract to sell, but not yet sold. June's value of 99.3 marks the 14th consecutive month during which the index showed year-to-year gains.

Last year in June, the index read 90.7.

For home buyers in Metro Atlanta and nationwide, the 14-month winning streak is one worth noting -- specifically because the Pending Home Sales Index is different from the other housing market data that tends to make headlines.

Unlike the FHFA's Home Price Index, for example; or the monthly New Home Sales data which both report on how housing performed in the past, the National Association of REALTORS®' Pending Home Sales Index looks at how housing will perform in the future.

With high correlation, the Pending Home Sales Index predicts how Existing Home Sales will perform two months hence. This is because 80% of homes under contract convert to "closed sales" within 60 days of going into contract, and many of the rest convert within Months 3 and 4.

In addition, June's near-100 reading is significant.

The Pending Home Sales Index is normalized to 100, a value which corresponds to the average home contract activity in 2001, the index’s first year of existence. 2001 was an historically-strong year for the housing market which means that June's market action was also strong.

For today's home buyers, the Pending Home Sales Index implies that the current market is somewhat "soft" as compared to May, a scenario which lends itself to buyer-friendly negotiations. Plus, with mortgage rates at all-time lows, home affordability has never been higher.

It's an opportune time to buy a home. By next month, the market may look different.




For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Thursday, July 26, 2012

New Home Sales Slow After Fast Start To 2012

New Home Supply 2010-2012
The number of newly-built homes sold slipped 8 percent in June from the month prior, says the U.S. Census Bureau in its latest New Home Sales report. The June data shows 350,000 homes sold nationwide on a seasonally-adjusted, annualized basis.

The home sale tally fell short of Wall Street expectations but the Census Bureau revised higher its previously-released results for March, April and May by a collective 33,000 units. This left the June New Home Sales report as the weakest of the last five months, yet still stronger than the 21 months preceding February.

In other words, despite retreating from May, the June New Home Sales data was still quite strong. As compared to June of last year, sales of newly-built homes are higher by 15% and the national inventory of new homes for sale is down to 144,000 units.

This marks a 13 percent inventory reduction in just twelve months.

At the current sales pace nationwide, the complete stock of new homes would "sell out" in 4.9 months, a noteworthy data point because analysts believe that a 6.0-month supply of homes marks a market in balance. Home supplies of below 6.0 months suggest a "seller's market" where sellers have pricing power and excess leverage in negotiations. 

Home supplies have been south of 6.0 months since October 2011. This is the same month that marked a shift with other housing data points, too, including Existing Home Sales and the Home Price Index.

Since October 2011, the average new home sale price is higher by 6% nationwide, a trend that should continue in Metro Atlanta through the end of 2012 and into 2013 -- especially with mortgage rates at new all-time lows and home affordability at all-time highs. As more buyers enter the market amid limited supply, prices are expected to rise.

If you're a home buyer in search of new construction, therefore, the best new home "deals" you may find may be the ones you find today.




For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Wednesday, July 25, 2012

Home Values Rise 0.8% In May 2012

Home Price Index from peak
The housing market's bottom is 9 months behind us. Home values continue to climb nationwide.

According to the Federal Home Finance Agency's Home Price Index, home values rose 0.8% in May on a monthly, seasonally-adjusted basis. May's reading marks the sixth time in seven months that home values rose.

Values are now higher by 4 percent since the market's October 2011 bottom.

As a Metro Atlanta home buyer or seller, though, it's important to understand what the Home Price Index measures. Or, more specifically, what the Home Price Index doesn't measure.

Although widely-cited, the HPI remains widely-flawed, too. It should not be your sole source for real estate data.

As one example of how the Home Price Index is flawed, consider that the HPI only tracks the values of homes with an associated Fannie Mae- or Freddie Mac-backed mortgages. Homes with mortgages insured by the FHA are excluded, as are homes paid for with cash.

5 years ago, this wasn't a big deal; the FHA insured just 4 percent of the housing market and cash sales were relatively small. Today, though, the FHA is estimated to insure more than 30% of new purchases and cash sales topped 17 percent in May 2012.

That's a sizable subset of the U.S. housing market.

A second flaw in the Home Price Index is that it tracks home resales only and ignores new home sales. New home sales represent roughly 10% of the today's housing market, so that's a second sizable subset excluded from the HPI.

And, lastly, we can't forget that the Home Price Index is on a 60-day publishing delay.

It's nearly August, yet we're only now receiving home valuation data from May. A lot can change in the housing market in 60 days, and it often does. The HPI is not reporting on today's market conditions, in other words -- it's reporting on conditions as they existed two months ago. Information like that is of little use to today's buyers and sellers.

For local, up-to-the-minute housing market data, skip the national data. Talk with a local real estate agent instead.

Since peaking in April 2007, the FHFA's Home Price Index is off 16.0 percent.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Tuesday, July 24, 2012

Mortgage Rates Down 1 Percent In One Year

Freddie Mac Mortgage Rates
Another week, another new low for mortgage rates. 

According to Freddie Mac's weekly Primary Mortgage Market Survey, the 30-year fixed rate mortgage rate fell 3 basis points to 3.53% last week nationwide. The 3.53% mortgage rate is available to mortgage applicants who are willing to pay 0.7 discount points, on average, plus a full set of closing costs.

One year ago, the 30-year fixed rate mortgage rate was 4.52%. Today, it's nearly one percent lower. For every $100,000 borrowed at today's rates as compared to July 2011, a mortgage applicant will save $57 per $100,000 borrowed, or $684 per year.

Over 30 years of a loan, those savings add up.

30-year fixed rate mortgage rates have now dropped through 5 consecutive weeks, and in 11 of the last 12 weeks, a streak dating back to late-April. Depending where you live, however, you may not get access to 3.53% mortgage rates. As Freddie Mac's survey reveals, mortgage rates vary by region.

Last week, mortgage rates by region were listed as follows :
  • Northeast Region : 3.56% with 0.7 discount points 
  • West Region : 3.49% with 0.7 discount points
  • Southeast Region : 3.58% with 0.7 discount points
  • North Central Region : 3.52% with 0.7 discount points
  • Southwest Region : 3.56% with 0.7 discount points
Homeowners and home buyers in California, Oregon and Washington, therefore, received the lowest rates in the country, on average. Owners and buyers in Florida and Georgia, by contrast, received the highest rates.

This week, though, mortgage rates are lower everywhere.

With Spain at risk for a sovereign default and China warning of slow growth, mortgage rates began the week by falling yet again. If you're eligible to refinance, therefore, the timing may be right to lock a mortgage rate. Similarly, if you're an active home buyer in Metro Atlanta , today's low rates will bolster your maximum purchasing power.

Talk to your loan officer about capitalizing on the lowest rates of all-time. Rates throughout Georgia may not rise beginning next week, but when they do rise, they'll likely rise quickly.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Monday, July 23, 2012

How To Clean A Water Aerator

How to clean an aerator
Typically found at the tip of indoor water faucets, water aerators split a single water stream into droplets, slowing the overall water flow and reducing the degree of "splashing".

Homes in Metro Atlanta with aerated faucets use up to 50% less water than homes without. However, aerated faucets can lose their effectiveness over time if they're not cleaned at least periodically.

This is because aerators can collect and trap particles including minerals deposits and grit, depending on the make-up of your home's water supply.

The good news is that cleaning your faucet aerator is a do-it-yourself job that requires no technical plumbing skills, and takes less than 5 minutes to complete. 

Here's how to clean your home's water aerators.

First, close or cover the drain of your sink. This will prevent pieces or parts from getting lost. Then, unscrew the aerator from the tip of your faucet. You may be able to turn the aerator with your fingers. If you cannot, and need to use pliers, wrap the faucet with a towel to prevent damage to the faucet from the pliers.

Also, don't squeeze harder than necessary -- you may bend the aerator casing.

Next, on a small towel, separate the parts of the aerator and lay them flat.

Then, using your finger, poke the mesh filter out from the aerator, being careful not to bend it. Use tap water to rinse sediment from the filter or, in extreme build-up cases, place the filter in a small cup of vinegar, soak it for an hour, then clean it with a small brush.

At this point, your aerator is clean. Replace the parts as you found them, and twist the water aerator back onto the faucet tip. If you use pliers for this step, remember to protect your faucet's finish with a towel.

There is no specific rule for how often an aerator should be cleaned. In some areas, it's twice yearly. In other areas, it's every 5 years. If you've never cleaned your water aerators, though, make today your first time.


For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Friday, July 20, 2012

Existing Home Supply Ticks Higher To 6.6 Months Nationwide

Existing Home Supply
Home resales slipped more than 5 percent last month, putting a damper on recent housing market enthusiasm.

According to the National Association of REALTORS®, Existing Home Sales fell to 4.37 million units in June 2012 on a seasonally-adjusted, annualized basis. This is 250,000 fewer home sales per year as compared May's figures which NAR has revised 2 percentage points higher.

The pace at which homes are selling has slowed, too. As compared to May, the Existing Home Supply rose 0.2 months. At the current pace of sales nationwide, the national home supply would now be exhausted in 6.6 months.

A home supply of 6.0 months is believed to mark a market in balance. There are currently 2.39 million homes for sale nationwide -- the lowest total in 3 months and more than 24% below than the listed inventory at this point last year.

Other noteworthy statistics from the Existing Home Sales report include :
  • First-time buyers accounted for 32% of all purchasers in June, down from 34% in May
  • Real estate investors accounted for 19% of all purchasersin June, up from 17% in May
  • Cash buyers accounted for 29% of all purchasers in June, up from 28% in May
In addition, distressed sales as a percentage of all sales was unchanged in June as foreclosures sold for an average discount of 18 percent below market value. Short sales nationwide sold at an average 15 percent discount.

More on "distressed sales" : In June, distressed homes accounted for 25% of all home resales, the smallest percentage of homes sold with such status since the real estate trade group began tracking the data in 2008.

Despite falling home sales and rising home supplies, however, home resales are expected to return to growth in July. Last month's Pending Home Sales Index spiked to a 2-year high, and 80% of homes under contract close within 60 days. This portends well for July's Existing Home Sales data, due in 4 weeks.

Low mortgage rates and rising rents in Metro Atlanta and in many U.S. cities continue to fuel the U.S. housing market. Home buyers should expect higher home prices ahead.




For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Thursday, July 19, 2012

Single-Family Housing Starts Rise For 4th Straight Month

Housing Starts
New construction housing is in a post-recession rally.

As reported by the Census Bureau, on a seasonally-adjusted, annualized basis, last month's Single-Family Housing Starts rose 5 percent to 539,000 units nationwide. This is the highest reading since April 2010, the last month of that year's federal home buyer tax credit.

A "housing start" is a new home on which construction has started.
June's strong numbers also mark the fourth consecutive month during which Single-Family Housing Starts have climbed. This, too, has not occurred since April 2010.

The data is yet one more signal to Metro Atlanta home buyers that today's new construction market has its worst days behind it.

Home builders think so, too.

Earlier this week, the National Association of Homebuilders released its monthly Housing Market Index, a metric which tracks homebuilder confidence. Home builders report higher sales levels and massive foot traffic as compared to just 12 months ago. They also expect second-half sales in 2012 to climb sharply.
It's no wonder that home builder confidence rose to a 5-year high. Builders are building homes and buyers are buying them.

Today's market for new homes has been spurred forward by low mortgage rates, but rising rents have played a part, too. In many parts of the country, a comparable home is less expensive to own than to rent, which creates an incentive for renters to buy homes instead.

The availability of low downpayment mortgage programs via the FHA and other government agencies helps as well.

It's a good time to be home buyer. Mortgage rates are at all-time records, home prices remain low nationwide, and the real estate market is believed to be entering the beginning of a sustained, multi-year recovery.  

If you're undecided about whether now is a good time to buy a new home, speak with your real estate agent. The cost of home ownership may never be as low as it is today.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Wednesday, July 18, 2012

Homebuilder Confidence Doubles In 12 Months

NAHB Housing Market Index
Homebuilder confidence is soaring.

For the second time in three months, the National Association of Homebuilders reports that the Housing Market Index made sizable gains. 

The Housing Market Index measures homebuilder confidence in the new construction market and is scored between 1-100. Readings above 50 indicate favorable conditions in the single-family new home market. Readings below 50 indicate poor conditions.

The Housing Market Index leaped to 35 in July, a 6-point improvement and the index's biggest one-month gain since September 2002.

The HMI is now up 14 points this year and is more than double its value of one year ago.

The Housing Market Index itself is a composite of three separate survey questions sent to NAHB members monthly. The questions are basic :
  1. How are market conditions for the sale of new homes today?
  2. How are market conditions for the sale of new homes in 6 months?
  3. How is prospective buyer foot traffic?
For July 2012, home builders reported huge gains. Current home sales are up 6 points; sales expectations for the next six months are up 11 points; and buyer foot traffic is up 6 points.

All three survey answers made 5-year highs. Not since 2007 has sales volume and foot traffic been as strong, and over the next 6 months, builders expect a blow-out finish to the year.

It's no surprise, either.

Low mortgage rates throughout Georgia have lowered monthly housing payments to levels below monthly rent for a comparable home. Plus, programs such as the FHA 3.5% downpayment program continue to help first-time buyers get in homes.

There is a downside to rising homebuilder confidence, however. When builders feel more comfortable about their business and the prospects for the future, they're less likely to make sales concessions to to offer free upgrades. If you're shopping for new construction, therefore, consider moving up your time frame.

Home affordability remains historically high today. It may not be so tomorrow.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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