Posted by: Clayton-Paul Cormier, Jr. | March 31, 2010

2010 Q1

Signs of Improvement Multiply. Vermont’s Real Estate Market Outlook Warming

vermontbiz.com highlights increasing optimism from Vermont’s leading businesses drawing from a CEO survey on expectations of boosts in sales, capital spending & workforces.

Northeast existing home sales rose 3% and median prices gained 7.5% in February according to the Commerce Department. California home sales were up 8%, and a new study by the FDIC (Federal Deposit Insurance Corp) also show tangible signs of improvement and historically high affordability levels in the US housing market.

Improvement indicators abound including subdued inflation, rising stock prices and a strengthening US Dollar five month rallyAlan Ruskin, head of currency strategy for RBS Capital Markets in Stamford, CT:  “We’ve moved away from the worst fears. In the U.S., the economy picked itself up off the ground. Compared to what it might have looked like from the view of March 2009, March 2010 looks very good.”

Examining The Tree of Life in James Cameron's Avatar, Best Selling Film of All Time

Vermont’s twin and soon to merge multiple listing services show improved first quarter residential sales across the state.

Though there is some overlap and total Vermont mls sales are less than the addition of the two numbers for each year, first quarter sales are up in 2010 50.5% in NNEREN (the Northern New England Real Estate Network), 25.1% in VREIN (the Vermont Real Estate Information Network) and an average of 37.8% over the first quarter of 2009 after having contracted significantly in 2009 compared to 2008.

For 2010/2009/2008 :

NNEREN 265/176/242

VREIN  453/362/534

According to the 42 forecasters surveyed by the Federal Reserve Bank of Philadelphia, the U.S. economy will grow at an annual rate of 2.7 percent over each of the next five quarters with unemployment projected to be an annual average of 9.8 percent in 2010 before falling to 9.2 percent in 2011, 8.3 percent in 2012, and 7.3 percent in 2013.

Others wonder if we’ve hit bottom yet. Joe Morgan, Chief Investment Officer of SVB Asset management writes of “Surviving at the Bottom of the Riverbed” this year, citing ambiguity in the upswing and continued investor challenges.

The narrow passage of the National Health Care Overhaul raised passions on both sides of the political spectrum and will affect real estate markets indirectly given the large segment of the economy affected by the overhaul, and the Obama Administration turned its attention to the next massive and controversial congressional financial fight: overhauling the Fannie Mae (FNM) & Freddie Mac (FRE) public private hybrid structure housing finance system.

Fannie & Freddie ( Government Sponsored Enterprises or GSEs) purchase bank housing loans, package them together with securities and sell them to Wall Street freeing up capital for home loans and extending homeownership opportunities.

GSE Reform is receiving heightened attention 18 months after the GSEs were placed in conservatorship, and is bound to be divisive given the broadly diverging political opinions on how extensive the government subsidy role should be and the risks involved with withdrawing the GSEs from conservatorship for the still fragile housing market.

Treasury Secretary Timothy Geithner this month said “Private gains will no longer be subsidized by public losses, capital and underwriting standards will be appropriate, consumer protection will be strengthened, and excessive risk taking will be restrained.”

Th graph above, from the Wall Street Journal Online, shows the increasingly important role Fannie Mae & Freddie Mac, along with the Federal Housing Authority (FHA)  have come to play in the home loan provision as private investors have been absent during the bust.

First time home buyers and eligible existing home owners are still poised to take advantage of the potential $8,000 and $6,500 tax credits which will continue to boost Vermont residential sales into Q2. These tax credits are available for contracts signed by the end of April and closed on by the end of June. With what many now consider to be an economy already bottomed out and on the rise and 30 year interest rates still hovering around 5%,  these are historic opportunities to buy and take advantage of cheap money,  choose from plentiful inventory and work with some motivated sellers.

Abundant signs of spring and a burgeoning economic recovery point to an ever improving 2010. Vermont property owners and prospective purchasers have a lot to look forward to as Vermont climbs steadily out of the recession, contracts and closings multiply, and property values retake lost ground and appreciate anew.

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Posted by: Clayton-Paul Cormier, Jr. | December 24, 2009

2009 Year in Review

stands as a beacon of hope and recovery after one of the most challenging years in contemporary Vermont real estate history.  Following the sub-prime mortgage driven precipitous market collapse in the autumn of 2008, 2009 has been a challenging year for all of Vermont, from real estate property holders to the halls of government. Median real estate prices, while formerly lamented only for their slowing levels of appreciation, this year fell.

Record unemployment and foreclosure levels in Vermont which traditionally boasts one of the lowest foreclosure rates in the nation sent jitters throughout real estate markets and boosted inventory and shadow inventory,  the properties that would otherwise already be on the market but whose sellers are holding off given lamentable market conditions. Unemployment, between 4 percent and 6 percent for most of this decade, surged to almost 7.5% percent in May and approached 10 per cent in other states.

According to the Northern New England Real Estate Network mls data, December 2009 new listings in Vermont numbered  254 with 128 sold @ just under 24 and a half million in traded volume and an average of 211 days on the market. December of 2008 by contrast included 336 new listings with 141 sold @ almost 26 million in volume and an average 189 days on the market. State wide median sale prices on residential property this year lies at $169,000, a marked drop from the 2008 median sale price of $182,000.

The Vermont Real Estate Network reports an average 2009 sale price @  $229,431, down from $250,769 in 2008.

There is change in the air.

Today Stock prices rose around the world on news of economic recovery and 30 year mortgage rates rose to 5.25% for the first time since late October as illustrated by this bankrate.com graph.

The successful extension and expansion of the home buyer’s tax credit, at an estimated cost to taxpayers of $10.8 billion and known as the Worker, Home Ownership and Business Assistance Act of 2009 was  signed into law November 6th by President Obama and has spurred sales and help boost the number of residential transactions across the state.

While many prospective purchasers and realtors were rushing against the clock to compete with the November 30th deadline,  the extension covers contracts signed by April 30th of 2010 and related closings by July 1st. With up to an $8,000 non-refundable credit available well into the New Year, prospective purchasers are eyeing the market much more carefully and looking for opportunities to cash in on this substantial potential windfall. With 30 year note interest rates still hovering around 5%, this combination of favorable buyer side conditions is fueling buyer demand in the primary residence market even during one the most enduring and acute of broad economic recessions.

For a detailed summary of the credit which is now available to some existing home owners who’ve been in their homes for five consecutive of the last eight years,  click here to read the related Maple Sweet Real Estate Light Amber blog entry.

Consumer purchasing rose in November along the biggest income gain in six months and an increase in spending as consumers slowly gained confidence in their purchasing comfort although  new home construction hit a nine month low according to bloomberg.com with national sales dropping 11 percent to an annual pace of 355,000.

September home prices rose in 20 US homes rose in September for the fourth consecutive month.

Inman.com: housing is expected to make gains in 2010,  just not explosive ones. The Mortgage Bankers Association (MBA) projects that new-home sales, which declined from 485,000 in 2008 to a projected 391,000 in 2009 — which would be a record low in Census data dating back to 1963 — will climb back to 483,000 in 2010 and 609,000 in 2011. Sales of existing homes, which bottomed at 4.9 million in 2008 and are projected to barely break the 5 million mark in 2009, could be on track to climb to 5.55 million in 2010 and 6 million in 2011, the MBA said.

Not soon to be forgotten was the mortgage landscape this year. Month after month saw record lows, with November boasting the lowest rates on 30 year notes seen in 38 years. Scores of lucky borrowers and refinancers will remember 2009 as they year they scored historically low-interest rates, while many others will try to forget the year in which they were turned down for financing given much more stringent loan qualification requirements and underwriting standards on the coat tails of the sub prime fiasco of 2008.

Federal Housing Administration backed loan demand increased sixfold during the downturn leading to a reduced capitol reserve ration and potentially higher 2010 mortgage insurance premiums. Other tightening could include an increase the amount of upfront cash home buyers must bring to the table, raising minimum FICO scores for new borrowers, and reducing maximum seller concessions from 6 to 3 percent. The credit box, or pool of eligible borrowers, is shrinking.

The work of appraisers in a sliding economy has been made more challenging, with some trades being negatively affected or even lost due to unduly low appraisals derailing sales.

Short sales were up over 125% nationally as compared to a year ago with many Vermont homeowners walking away from the closing table with damaged credit scores and either without any equity or an obligation to repay shortfalls in coming years, capping many months of frustration in finally closing.  Worse even other sellers ended up with foreclosed property after lethargic mishandling of the proposed short sale by the bank that left prospective purchasers in no position but to cancel their contracts.

2009 also witnessed the rise of social media, evidenced by www.maplesweet.com Who in 2008 had ever heard of Twitter? For millions across the land, its a staple of communication and aptly reflective of our national gypsy psychology. That’s right, it’s time to establish a presence; remember, it’s recorded for posterity.

Q4 offers the first real hope of a sustained recovery after months of expectation and false predictions. At last it seems, as we break into 2010, the bottom of the market has been reached and passed. While 2010 will pose its own challenges, the Vermont real estate market is bound for better days.

To take advantage of the extraordinary opportunities this nexus offers for both buyers and sellers, connect to www.maplesweet.com, e-mail info@maplesweet.com or call toll-free 1-800-525-7965 to list your property, arrange for showings, or look into the market in other ways.

Happy New Year!

Posted by: Clayton-Paul Cormier, Jr. | October 7, 2009

2009 Q3

konishiki

Oct. 1 (Bloomberg) — The number of contracts to buy previously owned homes in the U.S. increased more than forecast in August, reinforcing signs of a rebound in housing, industry figures showed today.

The index of signed purchase agreements, or pending home sales, rose 6.4 percent after a 3.2 percent gain in July, the National Association of Realtors announced in Washington. The gain was the seventh in a row. Compared with a year earlier, pending sales rose 12.4 percent.

Home Sales Contracts in 7 Month Rally. One problem in extrapolating future closings from contract signings, however, is that there are continuing problems obtaining mortgages that may scuttle many deals, according to Yun. “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules,” he said.

Home Sales Up; Home Prices Down. It is becoming increasingly clear that a two-headed housing recovery is underway. Unfortunately, unlike Siamese twins, the heads will not be arriving at the same time. Recent reports on housing activity strongly indicate that a home sales recovery is now underway, while a home price recovery continues to be far off; perhaps not until the middle of 2010.

Q3 real estate market activity was clearly affected by the race to capitalize on the First Time Home Buyer’s Tax Credit as first time home buyers intensified their house hunts.

Bloomberg: existing U.S. home sales jump to highest level in 2 years.

Crain’s: Suburban landlords see third quarter uptick in vacant office space.

National 30-year Fixed Mortgage Rate Falls Below 5 Percent.

15 year mortgage rates fell to lowest point in 15 years.

investors run

DOW, Up 15%, Has Best Quarter since ’98: The big gains followed a brutal bear market that hit hardest those companies with the shakiest balance sheets, heavy debt loads and high fixed costs. The Fed responded by cutting interest rates essentially to zero and flooded the credit markets with additional money, buying up Treasuries, government-backed mortgage securities and agency debt.

Gold Prices Hit Record High.

Apartment Glut Expands.

The Two Headed Housing Recovery. In the past, housing contractions and recoveries were measured by a drop or rise in home sales and housing construction activity. It was uncommon for home values to drop in a housing contraction, at least on a national scale. But today’s housing recession is an exception-both home sales/construction and home prices have fallen precipitously during the past 3 years. Thus, for us to proclaim a complete recovery in the today’s housing sector, both home sales/construction and home prices must stabilize and begin their ascent.

Residential & Commercial Real Estate Headed in Different Directions. The good news is that after a prolonged contraction, residential construction is finally going in the right direction and is expected to meaningfully contribute to GDP growth in the third quarter of this year. The bad news is that commercial construction is moving in the opposite direction.

Bear market rally or recovery? Bearish Paul Tudor Jones vs bullish Goldman Sachs.”We are much closer to a housing bottom than many believe.” Joseph Lavorgna, chief US economist at Deutsche Bank Securities Inc. in New York.  Combined sales of new and existing homes were up 15 percent in August from January, when they reached the lowest level since comparable records began in 1999, according to figures from the Commerce Department and the National Association of Realtors.

For more information go to www.maplesweet.com www.lightamber.wordpress.com e-mail us at info@maplesweet.com or call 1-800-525-7965. Thank you very much for your interest. To a great Halloween, Thanksgiving, Christmas, Hanukkah & New Year’s Eve.

Posted by: Clayton-Paul Cormier, Jr. | June 29, 2009

2009 Q2

National market optimism from realtytimes.com: three consecutive improved single family housing starts are reported with single family May starts up 7 and a half per cent, and total starts, including multi-family and condos up 17 and a half per cent. Single family housing permits also rose 8 per cent boding well for new housing construction, the weakest housing sector since 2007.

The University of Michigan’s Consumer Sentiment Survey showed consumer confidence up for the fourth consecutive month and retail sales have risen slightly. While gas prices have risen in Q2, the inflation indexes are down slightly and 30 year notes remain well under 6%, with this week’s rate hovering around 5 and a half per cent as shown in the bankrate.com graph below. All in all, quite a bit to smile about and further evidence the last six months of 2009 promise a more solid upswing in real estate markets across the country and in Vermont.

april may june mortgage rate graph from bankrate.com 6.29.09

Prospective purchasers are eying these signs of recovery and taking action. To take advantage of the still large inventories and motivated sellers, some purchasers are opting to forgo their inspection as an inducement to sale, others presenting offers free of other contingencies to make them more attractive to the sellers and still take advantage of the more reasonable and competitive asking prices which abound.

President Obama unveiled his US financial regulatory system overhaul plan including changes aimed at protecting mortgagees with a new super department called the Consumer Financial Protection Agency. Watch this Bloomberg Obama interview & Treasury Secretary Timothy Geithner testifying the day after Obama unveiled the plan.

On the first time home buyer’s tax credit, new bills have been introduced in both the House & the Senate to open up the credit to all buyers, keep it on the books through the next year and take away the current income limitations which currently start reducing credit eligibility for individuals with income over $75,000 and married couples over $150,000.

Zillow.com offers a sobering assessment of the second quarter with double digit depreciation, values slipping back to 2004 levels, and some sellers closing at prices lower than they paid. While Vermont has trailed the west coast & major national market trends, the second Green Mountains quarter has seen continuing high inventories, dramatically fewer purchasers than a year ago, and further price adjustments.

The National Association of Realtors reported Tuesday June 23rd in a CNN Money article that sales of single family residence properties rose 2.4% in May, as prices fell nearly 17% from a year ago along with some sales being stalled by inadequate appraisals. With the still large existing housing inventories and moderated prices, “Newly constructed homes simply cannot compete with the values found in the existing home market,” said Bob Walters, chief economist at Quicken Loans.

Here in central & northern Vermont, we’re seeing fantastic existing housing values available while new home construction prices have continued to climb with increasing building supply costs. A 2,200 square foot home, at $150 a square foot, comes in at $380,000 in addition, at least, to the cost of the land.  Even a small lot puts the construction cost well into the mid $400k range which will buy you a lot if you purchase existing construction. For a selection of outstanding values in existing Vermont housing, check the Newest Listings, Our Listings, and Residential Properties tabs at www.maplesweet.com or use the google map to discover your options at the bottom of the top page.

Also hopeful, the New York State housing market posts gains for second consecutive month with a nearly 14% increase in single family closed sales in April from March as outlined in this Real Estate Rama article.

new-york-city

In Vermont the Vermont Real Estate Information Network, as of June 29th, posts 675 residential (excluding condos) units sold across the state in the second quarter, compared with 381 in the first quarter, a dramatic almost 80% increase. The Northern New England Real Estate Network lists 321 closed in Q2  & 175 in Q2, also a laudable  increase amounting to over 83%.

The Mad River Valley Northern New England Real Estate mls closed home sales numbers: five in Q1, eight in Q2.  Looking back a year, 2008 Q1: 10 closings &  ’08 Q2: 14,  nearly double this year’s volume. Happily though, there are all of eleven residential Mad River Valley homes under contract as of this writing.

In conclusion, we’re seeing mixed news. While some see solid real estate market improvement, the bears continue to lament the sluggish economy, high unemployment & pregnant inventories. With Q2 sales nearly double those in Q1, there is ample cause for optimism and action.

My instincts are Q3 & Q4 will continue to show marked improvement on the seller side and, coupled with likely mortgage interest rate inflation, furnish more impetus to buyers poised to make their moves on so many historic opportunities that, if viewed too passively, may evaporate as the tide turns. For sellers & prospective purchasers, it’s an exciting period of change, redirection and opportunity.

For more information go to www.maplesweet.com www.lightamber.wordpress.com e-mail us at info@maplesweet.com or call 1-800-525-7965. Thank you very much for your interest. To a wondrous summer.

Posted by: Clayton-Paul Cormier, Jr. | April 29, 2009

2009 Q1

maple-sweet-quarterly-market-report1 The Vermont real estate 2009 Q1 market opens amidst tumultuous circumstances after the stunning autumn Wall Street denouements affecting all of the United States and much of the globe. While Vermont largely escapes the snowballing foreclosures resulting from the credit market crash, the state enters 2009 feeling the crunch more acutely with real estate prices falling, tightened lending standards, and dramatically reduced buyer activity. Those buyers still in the game are more cautious in their plays and coming in with offers further off the mark in light of the  supply and demand changes. Many see this downturn as the most dramatic since the great depression.

The unprecedented $700 billion rescue plan following the implosion of giants Merrill Lynch, Lehman Brothers and Bear Stearns coupled with 2008’s historic lows in the Dow’s 112 year history set the tone for early ’09, in spite of the much needed optimism ushered in by the election of President Baraq Obama. While local Vermont Real Estate markets were more measured in their slowing last year than in many other states, the crank down is much more acutely felt in Q1 of ’09 with fewer properties under contract across the state than a year ago and sellers making more significant price adjustments to help entice the limited buyer pool.

Interest rates fall reaching similarly dramatic levels, but on the low side much to the pleasure of  home buyers, savvy investors, and legions of home owners snapping up re-fi’s. With 30 year fixed rates dipping to well under five per cent for buyers with solid credit, the dire economic news comes hand in hand with historic opportunities.

By March,  subtle but significant harbingers of optimism surface. Bloomberg News reports April 24 that national home sales in March exceed expectations, a sign of early recovery.: http://www.bloomberg.com/apps/news?pid=20601206&sid=aW6U5CyDQxLM&refer=realestate London luxury property prices see an uptick for the first time in 12 months. Despite Bernie Madoff making the papers and gossip columns as our own American pirate of infamy, it seems this is an economic spring after a long cold winter.

stationary-logo-300-shadow-centered2 Maple Sweet Real Estate is born in late February with an ambitious new approach to marketing and trading north country real estate. Following focused and protracted research and development, maplesweet.com is set to launch in May, following the publishing of www.lightamber.wordpress.com, the bog including a twitter feed.

syrup-being-poured-6002Syrup prices skyrocket, up 70% from last year thanks to a dramatic drop in supply coupled with mushrooming international demand, up to $44 a gallon. Mad River Valley Sugarers Eastman Long & John Goss had fairly good sugaring seasons. Lenny Robinson, without resorting to modern vacuum tapping, was happy to have a yield of about a gallon per two taps, outstanding by traditional measure. Given the extraordinarily labor intensive nature of sugaring, even at $44 a gallon, it’s a trade of romance and affection that most are in for the ride rather than return on investment. Global demand is up from 80 to 120 million pounds in five years with Vermont the leading US state in production at about 500,000 gallons.

Sweet indeed!

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