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John Connolly

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Good news for sellers

John Connolly According to new figures from the Buffalo Niagara Association of Realtors, the area's unseasonally warm weather pushed home sales 4.2 percent in December. Meanwhile, the number of homes listed for sale increased 13 percent. Sales rose to 774 in the final month of last year, up from 743 a year earlier, and up 10.4 percent from 701 in November. That’s the highest tally for December since the peak selling years of 2006 and 2007, the Realtors' group said.

Similarly, pending sales — in which a contract has been signed but the deal is not yet done — rose 4 percent from a year ago to 441, from 424. That’s the most since 2007 but the lowest in 2011.

Winter months are typically slower because of colder temperatures and snow that deter activity, but this year’s unseasonably warm and dry conditions are allowing more buyers to get out and look. Buyers may also be gaining more confidence in the economy and their own job situations.

For the year to date, however, closed sales are still down 6 percent to 8,757, while pending sales are down 5 percent to 8,873. But that’s a big improvement from the earlier pace. Compared with two years ago, however, sales are down 14 percent, while pending deals are down 12 percent.

The active inventory of all homes for sale is down 1 percent to 5,126, which is almost flat from November. It’s the smallest inventory since January 2010.

For the year to date, new listings are down 6 percent to 16,811. The median price rose 2 percent from a year ago and 6.2 percent from November, to $118,610 — the highest for any month since the summer and the highest for December since at least 1999.

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Prices hold steady but home sales decline

John Connolly New data from the local Realtors' group confirms what most WNY real estate professionals have been saying for months: sales are down but prices are stable. According to the Buffalo Niagara Association of Realltors,  861 transactions closed in June, which was down 38 percent from a year earlier. We've been saying for months that we overstimulated the market with the federal tax credits that were offered in 2009 and 2010. It was the fourth straight month of decline, leaving home sales for the year at the lowest level since 1996. The average price was $140,095, up 1 percent from a year earlier. The median price, however, fell 1 percent to $118,000. In addition, the market is oversaturated with 6,604 active listings, the Realtors' group said. We are seeing homes that we think will sell quickly sit on the market while those we think will take three months or longer or moving sooner. There appears to be no rhyme or reason other than there is a lot of economic uncertainty holding buyers back.

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Does buying really make better sense than renting?

John Connolly The Fannie Mae National Housing Survey shows that four of the biggest reasons people buy a home have nothing at all to do with money, but that they want:

- a place to raise and educate their children,

- a place where their family will feel safe,

- to have plenty of living space,

- to have control over their space

 

Only you can determine what financial and personal benefits you will gain from owning a home. The bottom line is that the cost of a home will remain relatively unchanged even if prices continue to depreciate.

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If it's possible that prices will continue to fall, why should I buy now?

John Connolly While price is important in selling a home, cost should not be your primary concern as a buyer. You need to take into account what your monthly payment will be, considering not only the price of the home, but also the interest rate of your mortgage. Waiting for prices to bottom out while rates rise can cost you more over the life of your loan. Meet with a mortgage professional to help you determine what an interest rate increase will cost you based on the expected size of your loan. These are a few of the mortgage professionals we work with and recommend:

Tom Liolos at Homestead -- 830.4215

Jule Symes at HSBC -- 316.9512

Mike Florczak at First Niagara -- 698.8310

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Rates increase for FHA loans

John Connolly For those approved for or considering an FHA mortgage, you should be aware that the FHA has increased the mortgage insurance premium by 25 basis points for loans with case numbers assigned after 4/18/11. This increase, the third in the last 12 months, will cost the average buyer an extra $30 per month. Existing borrowers are not affected.

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Shop around for a mortgage

John Connolly

I had an interesting conversation with one of our lenders recently. I try to check in with other real estate professionals routinely to see how they view the market, so I'm often chatting with appraisers, home inspectors, attorneys, and Realtors with other brokers and lenders to get their take on the what's happening.

I was talking with Julie Symes, a mortgage specialist at HSBC who we have worked with for years, about credit scores.  I asked her if people could get prequalified for a home purchase with a credit score of less than 620. "Certainly," Julie replied. "Just last week, I worked with someone who was turned down at First Priority, the lending arm of RealtyUSA, who had a 639 credit score. Apparently, First Priority has a cutoff of 640 so they were going to deny this individual since he was one point under."

Julie got the person qualified and they are on their way to purchasing a home. In addition, she said they can get people qualified with credit  scores of 580 at HSBC.

I've had other clients shop around after they purchased a home and finished their home inspection. On most contracts, the purchaser needs to apply for a mortgage within 5 days. I have always advised people to shop around. If a lender is willing to trim one-eighth of a point off your mortgage, think about the savings over 30 years.

Julie Symes can be contacted at 316-9512

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Prices are up 5%, but it's a crazy market out there....

John Connolly

I think the local real estate market has been affected by the weather and there's no other word to describe it but "crazy." The most prolonged winter weather in years has stifled the real estate market locally, and my feelings are shared by Realtors, lenders and other real estate professionals I have talked to in the last month.

Statistically, according to the Buffalo Niagara Association of Realtors, closed sales in February were up 1% from a year earlier, but plunged 24% from the month before. I think there are a number of reasons for this. The weather, of course, has been awful, but people are still unsure of the economy. In addition, gas prices continue to climb above $4/gallon where I think many people are saying, "let's stay here a while longer."

In addition, last year we may have overstimulated the market with the federal tax credit for first-time and move-up buyers. Those credits, $8,000, and $6,500 respectively,  moved many buyers off the fence and led to some inflated statistics for 2010. We have to see what the Realtors' group comes up with when they release March figures in early May. Meanwhile, the Realtors' group figures show that Western New York continues to buck the national trend, with housing prices continuing their year-over-year increase. Prices are up about 5% from last year. And that's always money in the bank for Western New York homeowners.

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Why should you build a Green Home?

  John Connolly

As we discussed on Tuesday, green building is good for the environment. It's energy efficient, which reduces the need to burn fossil fuels and helps fight climate change. It also makes efficient use of water and other resources, minimizes pollution and waste, and reduces overall environmental impact.

Building green demonstrates your commitment to sustainability and gives your company a competitive advantage in the market. There is also peace of mind in knowing that the structures you build are better for the environment, healthier for occupants and save money over the long term.

Green Building Facts:

 

  • The US Department of Energy states that today's buildings consume more energy than any other sector of the U.S. economy, including transportation and industry.
  • Studies indicate that Americans spend up to 90% of their day indoors. According to the US Environmental Protection Agency, air quality inside buildings is sometimes two to five times worse than outside air.

Benefits of Green Homes:

Energy Efficiency

  • Using energy more efficiently
  • Saves operating costs on utility bills over the 30-year life of the building
  • Enhances resale and lease value of the home

Environmental Efficiency

  • Reducing environmental impact
  • Reduces waste materials and disposal costs
  • Reduces water usage
  • Reduces chemical use and disposal costs
  • Encourages recycling and reuse of materials
  • Develops local markets for locally produced materials - saves on transportation costs and develops economy-of-scale price reductions.

Human Efficiency

  • Improves the indoor environment, producing a healthier place to live and work
  • Reduces sicknesses

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Green Building trend estimated to increase in 2011

John Connolly Green buildings increase the efficient use of energy, environmental, and human resources. They also incorporate practices that significantly reduce or eliminate adverse environmental impacts, increase efficiency and translate into an economic benefit. Green buildings cost less to operate because, among other things, they use less energy and water, and require less maintenance. They have better indoor air quality because they minimize chemicals, mold and other harmful substances. And they have excellent resale value-because green buildings are quality buildings and they're built to last.

Making improvements to design when renovating or building is very cost effective. A one-time investment premium of less than 1% has been shown to increase energy efficiency over standard building code practices by 20-30%. Green buildings or buildings that meet the US Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED®) third party certification process, may be built with little increase in first costs. If green concepts are incorporated early in the design process, a certified green building may cost no more to build than a code compliant building.

Green building gives careful consideration to three main elements:

  • Healthy indoor environment
  • Maximum energy efficiency and conservative
  • Conservative and thoughtful use of natural resources

In the United States, and now worldwide, green buildings are certified through an independent third party, the US Green Building Council’s program, Leadership in Energy and Environmental Design (LEED®). More information on LEED can be found at their website.

In the United States, buildings account for:

  • 39% of total energy use
  • 12% of the total water consumption
  • 68% of total electricity consumption
  • 38% of the carbon dioxide emissions

Check back this week for more on Green Building.

 

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Shop around before securing your mortgage

  John Connolly

Did you know only 40% of home buyers obtain only one mortgage loan quote before applying for a mortgage? This could lead to the issue that only 28% of buyers say they are confident they got the best deal based on a poll by Harris Interactive and Lending Tree. The survey of 1317 respondents goes on to show that 75% find mortgage shopping to be a frustrating experience.

 

This doesn't need to be a confusing or unsettling process, but you can find various rates and programs based on whom you speak with. We have various mortgage specialists to speak with when you start considering applying for your mortgage and always offer a list of at least 3 names to our clients.

Contact us if you are thinking about applying for a mortgage.

 

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