Comparing the latest news from Case Shiller and FHFA about home prices to Upstate South Carolina. Plus much more…
Been a super busy week and lots to talk about so let’s dive right into the latest real estate news and what it means for you!
6 Months of Increasing Home Prices
Earlier this week, Case-Shiller released their monthly Home Price Index for September 2012 ( actually a 3 month average of July, August and September) that shows US home prices have increased for the 6th consecutive month. 1 or 2 months is just a blip but 6 consecutive months does look like we are on the way towards recovery in real estate. David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said:
In September’s report all three headline composites and 17 of the 20 cities gained over their levels of a year ago. Month-over-month, 13 cities and both Composites posted positive monthly gains.
The National Composite increased by 3.6% from the same quarter in 2011 and by 2.2% from the second quarter of 2012. The 10- and 20-City Composites have posted positive annual returns for four consecutive months with a +2.1% and +3.0% annual change in September, respectively. Month-over-month, both Composites have recorded increases for six consecutive months, with the most recent monthly gain being +0.3% for each Composite.
Locally things do appear to be getting better. As I wrote the other day when comparing the LPS report on home prices to local market conditions, both the average and median home price in Upstate South Carolina was up if we compare October 2012 to October 2011. Of course that is for the entire WUAR MLS…
Also related is this chart showing home prices that the FHFA released on the same day:
No matter where you look, it seems you see another report about increasing home prices. As the FHFA chart points out, home prices are back to their June 2004 level. Combine today’s prices with the low mortgage rates available and you can see why for many, it is a great time to buy. Is it a great time for you to buy?
Are Low Down Payments a Big Problem?
I know it will not be popular with many real estate professionals but it appears that FHA is having problems because of some of the low down payment loans they allowed in the past. Consider this quote from a recent WSJ article:
One of the biggest reasons the Federal Housing Administration is facing severe financial woes is a problem agency officials identified and sought to correct years ago.
The Federal Housing Administration is facing a capital crunch largely due to loans it guaranteed as the housing bubble deflated from 2007 through 2009, the agency has said.
A big chunk of the losses leading to a $16.3 billion shortfall have come from programs that allowed home sellers to fund down payments via nonprofit groups that provided them to buyers as a “gift.” After trying for years, the FHA finally prevailed on Congress to shut down the programs in late 2008, but not before the agency backed billions in risky no-money-down loans as home prices were dropping fast.
Whether or not you should consider a low down payment is a question you really need to discuss with your mortgage professional. In our area USDA mortgages are popular because they can be used with very little or no down payment. But is this your best choice?
Maybe not if you are going to be selling in just a few years. And if you are struggling to find the down payment or closing costs to buy a home, what will you do when an unexpected expense suddenly appears? Again, talking to a mortgage professional should be one of your first steps in your home buying process. Take your time deciding on which type of mortgage is best for you by discussing your goals and budget with your lender.
However, you may not want to drag your feet for too long since FHA just announced they are raising their Mortgage Insurance Premiums. This could have a dramatic effect on your monthly payment.
South Carolina’s Unemployment Level Drops
Good news for our economy is that the South Carolina Department of Employment and Workforce just announced that in October the unemployment rate dropped to 8.6% from 9.1% in September 2012. And the October 2012 unemployment rate in South Carolina is much better than the 10% level back in October 2011. But let’s look locally:
Obviously the local economy has a dramatic effect on our real estate market. Hopefully we will see even more improvement in 2013 after the Fiscal Cliff is addressed. Well, if the idiots in Washington can figure out how to work together…