Existing Home Sales Skyrocket – What does that mean to your business?
First, I want to congratulate all the real estate professionals out there who helped make this happen.
(Didn’t have a sale last month? Don’t despair – this will be your month!!).
However, as I always say, let’s look behind the headline for the actual news. Sales are up. That’s fantastic. However, sales are NOT up in every price category. We can not allow our sellers to assume that just because sales are up prices will follow.
Let’s look a little closer at the report:
1.) Many of these sales are either investors or first-time homebuyers.
This year 45% of all sales were first-time buyers
2.) Many of the sales are distressed sales (short sales or REOs).
As many as 35% of all sales fell into this category
3.) Many sales were motivated by the $8,000 tax credit
Which will either disappear or, even if renewed, have less of an impact as many of those eligible have already purchased
4.) Many sales were motivated by low interest rates
Rates will start rising as the Fed eases out of their purchases of mortgage backed securities. The New York Times this week said: “One of those things propping up the market has been the Federal Reserve, which has been buying mortgage-backed securities to keep interest rates low. As the Fed begins to wind down its purchases in the next few months, rates will become less enticing. Analysts expect them to rise to at least 6 percent from the current 5 percent.”
I am not trying to rain on anyone’s parade. I know how hard everyone is working to turn this thing around. I just want to make sure everyone realizes our job is far from over. We must continue to give honest counsel to our clients and not let them get intoxicated by the good news a headline sometimes delivers.