Unexpected rise in Feb. home sales
From Staff and Wire Reports
WASHINGTON - Sales of older homes nationally increased unexpectedly in February after six months of decline, coupled with the sharpest percentage plunge in selling prices for older single-family homes in the last 40 years.
In the Philadelphia region, there were signs that the prolonged slide in housing was coming to an end, although economists said the one-month numbers should be viewed cautiously.
Brian Bethune, U.S. chief financial economist for Global Insight Inc., agreed that the February numbers could signal that the decline in existing-home prices and sales would bottom out in the first quarter.
The Philadelphia region's diversified industrial base and strength in pharmaceuticals and health care are helping it weather the current downturn, especially compared with the New York area, which is taking a greater hit because of the deep losses in the financial sector.
"Overall, the lower mortgage rates were a factor, and that comes into play in the Northeast, where the average [home] price tends to be a little higher," Bethune said. "That's the only factor I could come up with to explain the Northeast. The economic base in the Northeast is relatively solid."
Nationally, sales of existing homes rose 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units, the National Association of Realtors said. It marked the first sales increase since July, but even with the gain, sales were still 23.8 percent below where they were a year ago.
But sales were much stronger in the Northeast, surging 11.3 percent. They were up 2.5 percent in the Midwest and 2.1 percent in the South. The only region to see a sales decline was the West, where sales dropped 1.1 percent.
In this area, David Oser, an agent with Re/Max in Bryn Mawr, said that home prices in the parts of Delaware and Montgomery Counties where he worked were at 2005 levels but that the region "didn't get the kind of bloom they had in Las Vegas, or Orlando or California. We didn't get the boom, and we didn't get the bust."
Oser said he had sold houses recently on the Main Line, Collegeville and Lansdowne. "I'm finding some sellers are not realistic, but others are," he said. "Homes that are in good shape and are priced properly are selling fine. I'm having a very good year."
David Lewis, a Moorestown real estate broker, said conditions appeared to be much the same in South Jersey, with home prices flat for the last year, but with visits by would-be buyers picking up.
"I think we're back into a normal market," he said. "It's the same as it's always been. If your house is priced right, it will sell."
Prices nationally continued to slide. The median sales price for single-family homes and condominiums dropped to $195,900, a fall of 8.2 percent from a year ago, the biggest slide in the current housing slump. The median price for just single-family homes was down 8.7 percent from a year ago, the biggest decline in four decades.
Economists, however, said they still believed a sustained nationwide housing rebound was many months away.
"The hemorrhaging has stopped, but the recovery will be long, slow and painful," said Bernard Baumohl, managing director of the Economic Outlook Group. "It's unlikely that we will see any sustained jump in home purchases, much less higher prices, until mid-2009 at the earliest."
Lawrence Yun, chief economist for the Realtors, said some formerly hot markets in California and Florida were seeing significant price declines now, as sellers were cutting prices to attract buyers.
"We are not expecting a notable gain in existing-home sales until the second half of this year," he said.
He said sales should be helped in coming months by recent moves to boost the loan limits on mortgages that could be insured by the Federal Housing Administration and purchased by Fannie Mae and Freddie Mac.
Nationally, the inventory of unsold homes dipped to 4.03 million units in February. That meant it would take 9.6 months to exhaust the supply of homes for sale at the February sales pace. That was down from January's level of 10.2 months, but still about double what the months' supply had been during the peak of the housing boom.
Sales of existing homes fell 12.8 percent in 2007, the biggest decline in 25 years, after an 8.5 percent drop in 2006.
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Housing Market
February percentage changes from January in sales and median prices of existing homes.
Sales
Northeast +11.3%
U.S. +2.9
Midwest +2.5
South +2.1
West -1.1
Prices
South -0.4%
Northeast -1.4
U.S. -1.9
West -2.0
Midwest -3.1
SOURCE: National Association of Realtors
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By Alan J. Heavens
Inquirer Real Estate Writer
The local real estate market is starting to loosen a bit. Showings in some neighborhoods are up substantially this year, agents report, after being down almost 50 percent between August and the end of 2007.
Driving the upsurge in traffic, at least in part, are prospective first-time homeowners, who - in the first true buyers' market of the 21st century - don't have to worry about selling a house.
"On Monday, we received a two-page list of showings," said Kathy Conway, an agent with Prudential Fox & Roach in Center City. "Every day there are 20, compared with the normal of five to seven."
Because so many properties are just sitting, sellers are more willing to deal, said Tim Raybould, 26, of Lansdale, who works for an accounting firm. He and his wife, Jen, 26, a teacher, have been house-hunting in Montgomery County since December.
"We thought about buying two or three years ago but didn't because the rent-vs.-buy numbers made no sense. I just didn't see any appreciation possible at all," Raybould said.
He and his wife are expecting their first child in August, he said, so they hope to be in a house by May or June. So far, they've looked at 20 places, but seriously at only three.
"I'm willing to put in some sweat equity, but so far I haven't liked the ones that aren't move-in ready," Raybould said.
He declined to specify a price range because, he said, negotiating would be difficult if sellers knew what they were willing to pay. Financing should be no problem; his firm has an employee mortgage program through Wells Fargo.
Matthew Cardinal, 28, a construction-company project manager, and Blair Kahora, 26, who works in public relations, grew up in older houses, so they're targeting Queen Village for their search "but keeping an open mind about what to buy."
"I've rented for six years in Center City, and I'm pretty tired of it," Cardinal said. "We've saved enough money to start looking."
In the last month, they have seen six houses in their $250,000-to-$400,000 range, but nothing worth a second look, he said. "Our lease isn't up till August, so we have time."
Kahora's credit union offers mortgages. "We'll get the rates, and then we'll start going to mortgage brokers to see what they are willing to do," Cardinal said.
Though the credit market is tighter than it was a year ago, first-time buyers have ways to obtain financing without too much long-term risk - primarily through Federal Housing Administration and Veterans Administration programs and some others underwritten by Fannie Mae and Freddie Mac, which are being allowed to increase their portfolios to accommodate more home loans.
FHA's single-family loan limits have been raised to $420,000 for metropolitan Philadelphia. And Freddie Mac reported Thursday that 30-year fixed-interest rates had begun to fall on bad economic news, to 6.03 percent from 6.24 percent the previous week.
"Borrowers with good credit and a down payment will continue to see some flexibility," said Jerome Scarpello of Leo Mortgage in Spring House. "But for those who are credit-challenged and have little or no down payment, lenders will just say no."
Sometimes, credit scores can be tweaked to help first-time buyers qualify for the mortgages they need.
SEPTA bus driver William Coates, for example, had been approved by his bank for an $80,000 mortgage, but that amount limited his search "to areas of the city where I didn't want to live."
"I wanted a house with a big backyard and nice front yard, but I also didn't want to pay $300,000 for it," said Coates, a Philadelphian in his 40s who last thought about buying a house 20 years ago.
His agent, Cheryl Miller of Long & Foster's Lower Gwynedd office, had him contact a lender she knows, who found that Coates' credit score was just shy of FHA loan requirements. By paying off some small debts, he qualified for a $100,000 loan from his bank.
In the meantime, he completed a six-hour buyer-education course with a home-counseling agency, which entitled him to an $800 city grant toward closing costs.
Coates found a house in East Mount Airy listed at $109,900 and offered $93,000. An agreement of sale was signed for $101,100, with a 6 percent seller assist. He had to come up with only $3,500 out of pocket. Closing is expected March 25.
"I wasn't excited at first," Coates said, "but as we get closer to closing, I'm getting really excited."
For some, the mortgage process isn't quite as smooth.
After 12 years in England, Northeast Philadelphia native Michele Wellard, 36, returned to the city in October when her London-born husband, Martin, 36, got a job as a senior software developer.
"It took two years just to get him a green card, and when we arrived, we found that his credit history in Britain wasn't acceptable in the United States," she said. "Since I left right after college, I had no time to develop credit, so we have been living with my mother."
The couple had enough for a sizable down payment on a house, so they contacted Realtor and mortgage broker Fred Glick in Center City. He had them apply for a Freddie Mac Home Possibles Neighborhood Solutions loan, a first-time-buyer program comparable to FHA's. It allows for limited credit, 10 percent down, and a seller assist of $4,000.
"We put an offer on the first house we saw," Wellard said: a semidetached three-bedroom and two-bath house in Roxborough listed at $269,000. Closing is set for March 28.
"Now we are waiting for final approval on the loan," she said. "I still haven't bought any furniture. I may be worrying too much, but I don't want the rug pulled out from under us."
Lawyers Maxwell and Amal Kennerly, both 27, had been looking at lofts in Washington Square when Amal's mother mentioned a stone single for sale in Elkins Park, where Amal had grown up.
Conway, the agent working with the couple, shifted gears to the suburbs.
"From what I've observed, sellers in the city are unwilling to negotiate price, but that doesn't seem to be true in the suburbs," Maxwell Kennerly said. "Real estate agents in the suburbs seem to be more eager to talk."
An agreement of sale on the Elkins Park house for $365,000 (list price $389,000) was reached the day Amal Kennerly gave birth to twin girls, Maram and Samira. Right now, Maxwell is hunting for financing.
"I don't think I'll have any trouble, but I've noticed a big difference in responses from brokers in the last year," he said. "Last year, I received a lot of responses. This year, what I'm getting is offers of three-year fixed, and then they adjust.
"Knowing what I know about" adjustable-rate mortgages, he said, "it would be a bad idea."
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Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.
http://www.philly.com/philly/news/homepage/16440936.html
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