Home sales have been notably sluggish during the past couple of months. This puzzles many sellers, considering the historically low interest rates of mortgages in the current market.
The National Association of Realtors recently addressed the subject and issued a report on their findings. Lawrence Yun, NAR's chief economist, pointed to several factors that are contributing to the cooling off of home sales.
"There continues to be a dearth of available listings in the lower end of the market for first-time buyers, and Realtors in many areas are reporting stronger competition than what's normal this time of year because of stubbornly low inventory conditions," he said.
"Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing U.S. economy may be causing some prospective buyers to take a wait-and-see approach."
The NAR report also noted that while pending home sales were down in September, they still remain 3 percent above last year's levels. Yun said he's confident the housing market will prove itself as one of the brighter spots of a more sluggish economy in the coming months.
"With interest rates hovering around 4 percent, rents rising at a near eight-year high, and job growth holding strong — albeit at a more modest pace than earlier this year — the overall demand for buying should stay at a healthy level, despite some weakness in the overall economy," Yun said.
Q: Are home values tied to the homeowner's employer?
A: That's true in a few dramatic cases. The average Apple worker's home is worth more than five times as much as the average American home, and the gap has been widening, according to a report from Zillow.
"Workers at Google, Facebook and Apple live in pricier homes than other Bay Area workers and have faster home value growth than other workers," was reported.
"The average Apple worker now lives in a home that is more than five times more valuable than the average U.S. home. The gap has widened in the last five years — in 2010, the average Apple worker's home was worth three times as much as a typical U.S. home."
Q: Is it true that a broker's commission is often negotiable?
A: Definitely. And with property prices continuing to rise, more sellers are objecting to the old 6 percent commission. As prices rise, so, too, do commissions.
On a personal note, I recently sold our townhouse residence in Ventura, California. I contacted a major brokerage firm and offered to list my property. However, I told them I wanted a contract with a commission rate substantially lower than the old 6 percent.
They immediately accepted my offer and sent a representative out that same day to finalize the listing. The brokerage business is very competitive, and most firms recognize that they must be flexible if they are to maintain their share of local business.
Q: Is it more difficult to finance the purchase of a condo than a single-family home?
A: Condo buyers do indeed face a special challenge in obtaining a mortgage. A report by the NAR focused on this dilemma.
"As with single-family buyers, how much credit the household can qualify for and at what terms depends on their personal financial situation and their credit profiles," the report pointed out.
"On the other side, you have the condominium project, and it's on this side that constraints can come into play beyond the buyers' financial picture. How many units in the condo project are owned and how many are rented? Is there retail or other commercial space on the ground floor of the building?
"If so, what percentage of the project is taken up by this non-residential use? And what about the board that governs the condominium project?"
The report noted that the board has to sign certifications about the project. And there are other hurdles on the condo side of the equation.
To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. Jim Woodard's email: [email protected]