Crystal Coast, Fannie Mae, Freddie Mac & More
Analysis of 2nd Quarter Real Estate Sales and Trends
The Crystal Coast MLS Area
Generally speaking-It is a bad idea to compare market stats on a month by month basis. Especially in a small market like the Crystal Coast and especially one that is so seasonally affected. Too much can happen too quick which often times skews/distorts the real picture. Here we highlight the second quarter and compare it with the second quarter of 2007
http://www.hitchcockrealty.net/July11_1.jpg (broken link)
14% of all residential properties on the market during the 2nd quarter sold. This in comparison to 17% sold during the same time period in 2007. The benchmark year for all time high sales along the Crystal Coast was 2005. 2nd quarter of that year saw 47% of all residential properties sold.
The majority of homes bought (22%) fell within the $160K-$200K price range. The second largest purchase price range (19%) fell was $200-$240K.
http://www.hitchcockrealty.net/July11_2.jpg (broken link)
Housing and Lending Has Just Reached Critical Mass
By: Bill Hitchcock
The big real estate, mortgage news at the time of this writing is whether or not the financial health of Fannie Mae and Freddie Mac is in serious trouble or not.
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are secondary mortgage market lenders which “replenish the supply of lendable money for mortgages and ensure that money continues to be available for new home purchases”
How important is this? As Charles Duhigg of the New York Times says, “Fannie Mae and Freddie Mac own or guarantee roughly half of the nation's $12 trillion mortgage market. Virtually every home mortgage lender, from giants like Citigroup to the smallest local banks, relies on Fannie Mae and Freddie Mac to grease the wheels of the mortgage market. Virtually every Wall Street bank does business with them. And investors around the world own $5.2 trillion of the debt securities backed by the companies.”
So while the news organizations are reporting on their stability and viability, I thought it would be beneficial to see what Fannie Mae and Freddie Mac think is our immediate Housing and Lending future.
Information provided by Fannie Mae's Economics & Mortgage Market Analysis Group
The total number of unsold homes remains near record levels and the number of vacant homes for sale is at an all-time record. The months supply (inventory/sales ratio) is also still at very high levels. These elements will continue to put downward pressure on house prices and this pressure is likely to extend through mid-2009. The tight credit conditions, which have started to ease in non-mortgage market segments, will continue to be a drag on the inventory reduction process.
We do not expect any further easing in the Federal Funds Rate in the forecast horizon. The current funds rate is accommodative, and therefore we expect that the Federal Reserve will gradually begin to increase rates near the middle of 2009 once the economic recovery has taken hold.
http://www.hitchcockrealty.net/July11_3.jpg (broken link)
The indicator I believe to be the most significant to watch is over-all home sales. After all, everything else is pretty much a moot point if nothing gets sold. According to Freddie Mac-Right now is the absolute worst point in time for home sales nationally with improvement starting in the 4th qtr. of this year.
http://www.hitchcockrealty.net/July11_4.jpg (broken link)
So what does all this mean? If you, I, Freddie Mac and Fannie Mae can just hold on for a very short while longer-This 3 year period off sales decline will have soon passed.