Single Family Home Sales Down - Condo Sales Up
Yesterday, the National Association of Realtors (NAR) reported that home sales declined about 2% in March, but condo sales were actually up slightly. This is in line with our analysis of the Daytona Beach Homes market for March. We see sales up and down slightly month to month, but at a plateau without significant movement.
Lending practices are likely contributing to pushing sales down. Basically, lenders who would loan money to just about anyone a couple of years ago have swung 180 degrees to the other side and are now overly conservative. We believe the balance will be restored not too far into the future. Lawrence Yun, NAR Chief Economist, seems to agree when he said, “Though mortgage rates are at historically low levels, some borrowers are facing restrictive lending practices in declining markets.” Florida is certainly in that category.
We also mentioned in an article that got a lot of views last month, that we need to be careful about inflation rates pushing mortgage rates up. Yun backs this up with the comment, “With elevated inflation, the Federal Reserved should be extra careful about further rate cuts. Mortgage interest rates, which do not move directly with Fed funds rates, may rise measurably and hurt the housing recovery if inflation gets out of hand.” Check out our post Daytona Beach Home Buyers - Remember 1980s Interest Rates. We are worried about inflation and the affect it will have on people who are on the fence. A 1% increase in mortgage rates will cost about $134 more in monthly payments on a $200,000 mortgage. More than that and you will getting a lot less home for the money.
Our quick analysis for the Daytona Beach Homes market is that we are still at a plateau. Despite a continuing flow of bad news and tales of economic woe, we appear to be in a holding pattern. Sales decline slightly and the median price for homes sold is falling, but we believe that’s because most of the sales activity is at the lower end right now. It’s a matter of timing. If you are considering purchasing a home or condo you need to watch mortgage rates and keep an eye on prices. Please check back here often for more information, or call me at 386-566-7503 to discuss your options.
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1 response so far ↓
1 Los Angeles Real Estate // Apr 26, 2008 at 10:49 pm
I think part of the problem is that even though Mortgage rates are at a all time low. the banks are not lending unless you can by the house with out a loan at all at least in Los Angeles. One of my really good friends can’t even get a loan. he does loans at a mortgage company here in LA. but I guess the banks are just not lending. So it make it really hard for people to get a loan even though the rates are low.
Dave Eshleman
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