First Time Home Buyer’s Beware, Home sales double in last year

by Dan Havey on August 23, 2011

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Part 5
Welcome back to the Velocity of Money this is Michael J Barnes and you are listening to KFNX 1100AM Arizona’s news talk leader.

You know I failed to give out the phone number here to the studio if you are interested in calling in with any questions specific to today’s topic or not but mortgage related you can call (602)277-KFNX.

So we are back in studio today with Dan Havey we are talking about some different statistics and some different numbers.

Dan and I have known each other for many years and we have worked very closer over the years in real estate.

Dan and I are not necessarily 100% in agreement with where the market is today and whether we are at the bottom or not.

I tend to believe that we are, let me tell you my thinking on this, Dan uses his actual facts and figures to make his prognostications.

Here’s what I know, I know that Fannie Mae and Freddie Mac have put a moratorium on foreclosures what that means is that they are slowing the supply.

What that means is that they are putting fewer homes on the market which means the supply has been shortened to I believe a 9 month supply of resale homes on the market.

The builders are gearing up getting ready to start building again but they are not building again just yet, that’s a great indicator.

Interest rates couldn’t be better they haven’t been better than they are now so not only can you buy a house at the same price you would have paid for that house in 2002 today, but you are going to get a significantly lower interest rate then it would have been then.

Effectively a house today is going to cost you less than it would in 2002 using the interest rate and the home value being what they were.

Now if property values do continue to increase and the average rate of 4 or 4.3% your internal rate of return or your investment will increase exponentially one of the things that Dan Havey did say though and I kinda think you need to pound on this one a couple of more times is this, don’t buy a house for you and your family as an investment, you buy a house because you want to live there because you want to raise your family there because it’s right for you.

The investment part of it will come in time on its own.

For now owning a home owning that dirt raising your family making your new memories is the best thing in our opinion that you can do.

Some statistics Dan.

Why don’t you take a minute and talk about the year over year numbers that you have.

Well there is a number of things I agree on with you on what you just talked about, Michael and one of the things I was really surprised by when I started looking at the numbers the other day is since June of 2008 so 7 or 8 months ago since then year over year sales actually increased and in many cases have doubled.

So let’s just say for a specific example if there were 5,000 sales in Maricopa County in June of 2008 that would mean that there was 2,500 a year earlier and so anytime you see an increase in sales year over year and especially when you see that big of an increase that’s 100% increase year over year in many cases over the last 8 months that is a huge indicator that the market is starting to recover.

Now there are other factors as Michael said the builders are not quite building yet but I like the fact that there is the moratorium in many cases now on the foreclosures going through and with the Mortgage Bailout Bill that came out today part of it was $75 Billion that they were going to throw at Fannie Mae, Freddie Mac, and all of the other lenders as well to help to modify loans one of the requirements is if the lender Fannie Freddie or the services is working with the lender during that time they have to stop the foreclosure process so hopefully what this is going to do is over the next six months it’s going to help out millions of people, I am not quite sure how they are going to get all of these loans done, there are an awful lot of people that need to have their loans modified but even if they can just help some of these people to delay the foreclosure sale, help these people, get their loans modified.

First off it is going to help keep people in their homes but the biggest thing from the standpoint of property values and first time home buyers is that it’s going to start taking some of that supply off the market there are going to be less repos out there for people to buy and because of that property values are going to begin to stabilize and quit dropping.
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