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Housing stat’s were just released for November home sales.  While the news isn’t great, it isn’t a surprise to anyone either.   The question is, do these numbers signal the bottom?  Is now the time to buy?

Here is a look at the numbers for November 2008:

• At the end of November the supply of unsold homes on the market was at 11.2 months.  (A healthy housing market has a 5-6 month supply of unsold homes.)  While the inventory of unsold homes number is twice what it should be, there is No surprise here.   Buyers:  Keep a close eye on your local market housing supply to determine if your town has reached a bottom. 
• The average home sales price dipped to $181,300, which represents a decline of 13.2 percent from 2007 levels.
• New home sales declined to a level last seen in 1997.

Do these numbers Signal a BUY?

• Interest rates on a 30 year fixed mortgage were quoted at 4.75 percent today, compared to 6+ percent one year ago. 
• Prices have declined another 13 percent from 2007-2008.
• Builder incentives and free upgrades are at record highs.

Our Opinion:  While we can’t promise that home prices are at their rock bottom, they are close.  More bullish news for buyer’s is that low interest rates and steep price declines mean that housing is more affordable than we have seen in years.  In addition, plentiful home inventory means it is a fantastic time to select the home of your dreams.  

With prices and interest rates at rock bottom, what we need is a clear signal from the government to get the market moving.   Buyer’s and investor’s need to know what buying incentive’s will be going forward, before they will buy.  They also need reassurance that the government isn’t going to force  interest rates lower, before they jump off the sidelines.

Our wish for this holiday season is decisive action in Washington that will end the meaningless, negative speculation and shut down the rantings of the news pundits.  If we get our wish, thousand’s of would be home owners and investor’s will snap up the deals of a lifetime, improving our economy as they do.

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Directors for the National Association Realtors (N.A.R.) formally agree on a real estate stimulus proposal.

The proposal calls on congress to use a portion of the $700 billion dollar bailout package to provide a temporary $7,500 first-time home buyer tax credit that does not have to be repaid.  In addition, they advised that the fed, should temporarily buy-down mortgage rates to 4.5 percent or less.

NAR, CEO Dale Stinton, said the  proposal would cost an estimated $100 billion per year and recommended that the temporary relief  remain in place for two years.

Stinton said NAR arrived at the 4.5 percent or lower interest-rate buy-down level as “a result of some surveys and focus groups and talking to some brokers around the country,” and the research indicates that a buying down  interest rates to 3 percent to 4.5 percent would get the market rolling again. 

“We think in a couple years things will come back to where they should be,” Stinton said.  “It’s a small price to pay, in my opinion, to stop the hemorrhaging,” he said, as much longer real estate slump could prove far more costly.  ”We have to find a bottom to this market, from the real estate point of view and from an economic point of view,” he said.

Realogy Corp., which owns Century 21, Coldwell Banker, ERA and other household franchise names, recommended the idea of government financed interest rate buy downs in October, saying the buy downs would unleash consumer demand for housing.  

Buy downs are not a new idea for increasing buyer activity.   Buy downs have been used successfully for years as an incentive.   To buy down a rate, sellers pay lenders extra points up front to obtain a reduced interest rate for a buyer, often for the first two or three years of a loan.

The NAR plan also stressed that the federal government should permanently increase in FHA, Fannie Mae and Freddie Mac loan limits to $729,750 in high-cost areas. Effect January 1, 2009, the limits are scheduled to roll back to $625,000.

The proposal from the NAR is on target in terms of what is needed to get things moving on Main Street.  And hopefully, when Congress is back in session, they will seriously heed the advise of the real estate community before more damage is done to homeowners.

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