Many appraisers are under-appraising fairly priced homes because of nearby foreclosures, which, in turn, causes banks to put the brakes on writing mortgages.
Natick, MA (PRWEB) August 20, 2009
Single family home sales activity in each New England state showed double digit increases in June over the previous month, according to RE/MAX of New England, an indication that the housing market is beginning to stabilize and consumer confidence has strengthened as a result of the economy, according to the Housing Market Outlook and Forecast, presented by RE/MAX of New England.
According to the Associated Press-RE/MAX National Housing Report, many of New England's major hubs are far surpassing the national increase. Transactions in Manchester, NH are up 47.2%, Boston, MA is up 40.2%, Hartford, CT is up 26.8%, Augusta, ME is up 21.5%, and Providence, RI, which has the second highest unemployment rate in the nation, reports transactions up 20.6% versus the prior month.
Jay Hummer, Executive Vice President of RE/MAX of New England said, "We've certainly rebounded from the October through March days. And, we have brought back a market similar to last year's market before October's crash. We're actually looking at some semblance of a normal market; the total shut-off that we experienced from October through March is behind us and people are buying homes again. Unfortunately, foreclosures will continue to put pressure on home pricing and value."
An even more positive sign is that months of inventory have begun to decrease. Months of inventory are measured by the number active listings over pending sales. A balanced market is considered five to seven months of inventory.
States hit hardest by the economic downturn - California, Nevada and Florida - are also showing improvement. Los Angeles, CA transactions are up 4.4% (The California Realtors' Association reports that sales in CA as a whole are up 20.1%) and inventory is at 2.7 months; Las Vegas, NV are up 17.3% with 3.0 months of inventory, and Orlando and Tampa, FL are up 14.9% and 17.6% respectively with 5.7 months of inventory in Orlando and 5.9 months in Tampa.
Said Hummer, "Unemployment will continue to be a concern throughout the rest of 2009, and certainly into 2010. However, people with job security are out there buying and with prices still affordable, we're seeing the move-up buyer market expand, as well as those looking for investment opportunities."
Another area to watch according to Hummer is the home appraisal system. On May 1st, the Home Valuation Code of Conduct was created. It's the result of a joint agreement between Freddie Mac, the Federal Housing Finance Agency and the NY State Attorney General that mandates the use of an independent appraisal company to fairly assess the value of a seller's mortgage.
"Pooling appraisers who are not familiar with the area is affecting the marketplace drastically and will continue to affect how smoothly sales take place over the course of the year," continued Hummer. "Many appraisers are under-appraising fairly priced homes because of nearby foreclosures, which, in turn, causes banks to put the brakes on writing mortgages." Hummer anticipates this will be a hot button area to watch as the year progresses and the market gets busier due to the impending First Time Homebuyer Credit deadline.
Please refer to the RE/MAX of New England blog at http://www.remax-newengland.com for the complete report.
About RE/MAX of New England:
RE/MAX of New England is affiliated with RE/MAX International. Since its inception in 1986, RE/MAX of New England has grown to over 250 offices with 3,000 sales associates throughout Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, providing residential and commercial real estate, as well as relocation and referral services. The RE/MAX website is http://www.remax.com.
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