Home sales rise while foreclosures moderate pricing

by The City Wire staff ([email protected]) 94 views 

Home sales across Northwest Arkansas were strong in October with 206 unit sales in Washington County and 361 in Benton County. Unit sales rallied 21.17% and 8.4%, respectively, when compared to the month last year, according to MountData.com.

The two counties recorded more than $99.781 million in total sales volume last month rising 32% in Washington County ($36.62 million) and 9.36% higher in Benton County ($63.15 million).

While the number of sales continue to improve year-over-year, the price-per-square-foot has tapered a bit as the foreclosure market has been more brisk in the last quarter, according to George Faucette, CEO of the local Coldwell Banker franchise.

Median home prices in Benton County dipped to $143,649 during October. On a per-foot basis prices receded from $82.6 to $79.6 in the year-over-year period, according to MountData.com. In Washington County, the median price totaled $146,550 in October. On a per-square-foot basis the price rose to $84.10, up from $81.2 in the same month last year.

“Every month this year has been better than every month last year, but our sales volume for October was flat compared to the same month last year,” Faucette said.

Through the first 10 months of this year he said his firm has posted a 22% increase in sales volume and closed 19% more units than in the same period of 2012.

“The average price is up 3% over 2012. As our closed foreclosure business has picked up in September and October, prices have moderated some,” he said. “But, an increase of 3% is still good and healthy for this market."
Agents agreed that it takes much more than one month to make or break a year and they remain bullish on a strong finish to 2013.

There are many good, visible signs in the local real estate market through 10 months of this year. Agents have sold 6,172 homes through October for a total value of $1.13 billion, up 25% from the same period in 2012.

Paul Bynum, analyst with MountData.com, said the average market time from listing to contract this year has been roughly 50 days, an indication that demand is strong relative to the supply of homes on the market.

The median price-per-square-foot is $84 through October, up from $78 a year ago. The median sales price of $149,900 in the combined two-counties is up 7% from a year ago, Bynum reports.

There was a 6-month supply of homes listed for sell at the end of October, which Bynum deems a balanced market for buyers and sellers.

Multiple reports in recent days outline lower down payment programs for qualified homebuyers looking for cheaper loans. Since 2009, buyers have needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low 3% to 5% down-payment loan.

But recently, Bank of America, Wells Fargo and TD Bank have loosened the strings, offering loans with down payments that are as low as 5%.

TD Bank's "Right Step" mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows buyers to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.

Mortgage bankers said this is huge marketing opportunity that could take some of the wind out of the sales of what has been largely been an FHA dominated market place. The FHA loans are typically more expensive than conventional products because of the required private mortgage insurance feature that can add thousands to the borrowing cost over the life of a loan.

While the private lenders that are offering the 5%-down loans are also requiring borrowers to buy private mortgage insurance, they are only requiring them to do so until they build up 20% equity in the home. FHA recently made the requirement mandatory for the life of the loan.

The difference is worth noting. For instance, an FHA loan for $100,000 at a 30-year fixed rate of 4.4%, would incur nearly $30,000 in added costs with the 1.35% mandatory private insurance premium.

Agents said access to low down payment loans are crucial to a healthy real estate market because many first time buyers turn to these lower down payment loans to help them get into that starter home.