February home sales were just about where we expected them to be: down 19.9% compared to a year earlier. The local closed sales in February were up almost 10% from January and an improvement from the 131 sales of February 2009 but we could not match the 2010 results which benefited from the federal tax credit. After a surprisingly strong January this leaves us with an 8.3% decrease for the year to date and we expect that this will probably get worse when comparing 2011 to 2010. In the first six months of 2010, fueled by the tax credit, we had a 23.6% increase in sales over the previous year so these next few months are going to be difficult to match.

There is some good news in the number of homes under contract which increased 34.5% from 246 at the end of January to 331 at the end of February. These are sales that should closing in the next couple of months.

The average selling price continues to hold up with a 1.4% increase in February and 4.7% for the year to date. The median price is up 1.4% to $220,000 for the year. Selling prices are obviously being helped by the low number of active listings on the market. There were just 1,392 at the end of February compared to 1,752 at the same time last year. When we deduct the under contract listings there are a net of 1,061 and with a demand of perhaps 1,600 homes over the next six months we have just a four month supply. Potential home sellers should be very aware of this supply figure and with the normal pick up in activity over the next few months, now is the time to have your home on the market. The average days on market for the homes that closed in February was 126, an improvement over the 146 for January closings but still higher than the 119 last year.

On another note, potential home buyers who have been planning to use FHA financing to obtain up to a 96.5% mortgage had better get moving. There are several changes being proposed that will severely impact borrowers. Among them:

·         Credit score requirements are going up. A minimum score of 580 will be required for a 96.5% loan. With a score of 500 to 580 buyers will be required to put down 10%.

·         The amount of a seller concession will be lowered from 6% to 3%.

·         The cost of annual mortgage insurance will increase and borrowers with less than 5% down payment will pay more than those with higher down payments.

These FHA changes are just the tip of the iceberg. Along with the Obama administration proposal to phase out Fannie Mae and Freddie Mac it could make for some very significant changes in how home purchases are financed. Fannie Mae and Freddie Mac are tax payer owned having been effectively nationalized in 2008. Currently they guarantee nine of every ten new mortgages and have cost taxpayers more than $150 billion in bailouts. And, according to their regulator, the Federal Housing Finance Agency, they may need up to $350 billion more in the next three years. The elimination of government backed home mortgages will make it more expensive for borrowers and at the very least we can expect: 

·         Higher down payments

·         Lower debt ratios

·         Shorter amortization periods

These changes are only proposed at this point but if you are considering the purchase of a home, whether it is your first home or a new home; a bigger home or a smaller home, sooner would seem to be better than later!

This is the time of year when many home owners start thinking about getting their home ready to sell but if you want to take full advantage of market activity you need to get started today!  While we do not have specific information for showing activity nor for when homes go under contract, we do have monthly figures for closed sales. Using prior years closed sales data and making the assumption that the average closed sale is under contract for four to six weeks and buyers begin looking at least a month or so prior to writing a contract, we have come up with the following ‘Showing Activity’ graph:

Note how the activity picks up in February and runs through June before slowing down. Almost 50% of the year’s activity occurs during the four months from March to June and nearly two-thirds of the entire years activity occurs in the six-month period starting in February.

A good place to get started is to select a real estate professional to market your property. This person can provide you with a detailed market analysis and help you determine the right asking price for your home. This is a very important step because the wrong asking price can mean the home does not get sold, takes too long to sell or, on the other end of the scale, can cost you money by not getting the full fair market value for your property.

An experienced real estate agent can also help you in determining what repairs and improvements should be made to the property and give you tips on presenting and showing your home in the best possible condition.

The agent will also give you a marketing plan, which will include all of the ways they will promote the property to reach the broadest range of qualified buyers.

If you don’t have a favorite, qualified agent check with family, friends and business associates for references. Look for signs in your neighborhood, attend open houses, check the internet or call several of the real estate agencies in the phone book and ask for a ‘top producer’ or someone who is experienced in your neighborhood or price range. You should normally ask two or three agents to prepare a market analysis and marketing plan and during the presentation you will have an opportunity to interview them to determine their knowledge and qualifications. Ask for references and call them. You want to make sure that you end up with an agent who you have confidence in and also one with whom you are comfortable since you will be probably be spending several months together in the business of selling your home.

If you are arranging to sell your home, this is also the time to begin planning your move. If you are going to purchase another home in the same area, the agent listing your home may be the best person to work with on another purchase. With the possibility of two transactions, you may be able to secure a better deal from one agent. If you are moving to another town or state, your listing agent may be able to assist you in locating an agent in the new area to assist you. The Internet can also be a valuable tool to find real estate agents and agencies in the new market plus a wealth of other information on the community, schools, recreation, weather and nearly everything else you want to know.

The next step is to implement the repairs and improvements that may be required prior to showing your home. At the very least this will probably involve a de-cluttering which could mean a garage sale, a few trips to the dump and renting a storage locker. Don’t forget the garage, basement, yard, shed and other storage areas. It may also mean some cosmetic improvements like painting, new carpet, perhaps a new light fixture, window coverings, tile, mirror or other decorating tips. There may also be some repairs to be done like checking the HVAC system, fixing that plumbing leak or electrical outlet, perhaps a roof inspection or fence repair.

These initial two steps of selecting a real estate professional to market your property and getting your property ready for the market can obviously take a few weeks. With increased showing activity starting in February and peaking in just 90 to 120 days NOW is the time to get started.