Margaret Canfield

New Home Sales were up 12.3% in February compared to a year ago. After a super big hike in January, new home sales fell slightly in February, but they’re still at a 411,000 annual rate. Plus, the median price of new homes sold was up 2.9% versus a year ago, with the average price up an impressive 14.5%! 

Speaking of prices, check out the closely watched Case-Shiller index of home prices in the 20 largest metros. Up 1% in January, prices are now up 8.1% over a year ago. That’s the largest annual gain in over 6 years! The chief economist at an online real estate site observed, “We’re seeing prices increase both in markets that had a really big decline during the bust, as well as markets that have really strong fundamentals.” Finally, Pending Home Sales in February were at their second-highest level in nearly three years, up 8.4% over a year ago, although slipping a tad for the month.

Interest rates are up to 3.65% for a 30 year fixed, conventional mortgage with 20% down.  Still excellent rates for purchasing within the Geneva Lake Resort communities.  

As Buyers for lake homes in the resort communities around Geneva Lake you have to consider your purchasing thought process.   The difference between you and the Seller may be $10,000 to $20,000 but in reality it is a $40-62.00 difference in your monthly payment because of  LOW  interest rates and your offer to purchase   While this may be a simplistic example that is how you should consider your offer and negotiation process.   There are only so many homes with lake frontage, piers and slips within 1.5 hours of your home.  Talk about a hedge against inflation??  Do you want to be on your own pier in 30 days or not?    

We’re only one year into this recovery… ” Doug Yearley said on Bloomberg TV yesterday morning. “Remember, we had seven of the worst years in housing that this country has ever seen. This recovery, we believe, should be a lot longer than just one or two years.”  Yearley is the CEO of Toll Brothers, a nationwide homebuilder. When asked if he thought the strength in housing could continue, he didn’t mince words…   “We feel really good this spring,” he said. “Our orders are up 49%.”  He explained that there’s simply “no inventory.” And “no inventory” is one of the key ingredients in seeing higher home prices ahead. You always have to take a CEO’s comments with a grain of salt. It’s his job to be optimistic. But I fully agree with his assessment. As you probably know, I have been extremely optimistic on U.S. housing for years now—expecting big gains. Our True Wealth Systems numbers back me up…   In short, U.S. housing is the greatest value it’s ever been in our lifetimes—and probably the greatest value it will ever be. I objectively define value as “affordability.” Affordability is a function of 1) house prices, 2) mortgage rates, and 3) income. The first two crashed to an epic degree, making U.S. housing more affordable than ever.

Last week, more good news came regarding home prices. A leading data aggregator reported national home prices were UP 9.7% in January versus a year ago, the biggest annual increase since April 2006. And the 0.7% monthly advance they posted was their 11th in a row. Many observers feel these price gains will likely boost home sales during the first half of the year.  Lake Geneva and area is part of the Milwaukee Metro system and our stats show that days on the market has fallen to 5.7 months and inventory continues to go down.

In addition, asking prices of homes listed for sale on a major online real estate portal were up compared to a year ago in 90 of the top 100 U.S. metros. The asking price gains for February were the largest since the recession began, UP 1.4% for the month and UP 7% versus a year ago. Their chief economist commented, “…buyers face a dilemma between buying now before prices rise even more, or later this year, when they’ll have more inventory to chose from.”  If you have been waiting to jump back into the market you may be watching it go by!  Many buyers have been use to ‘having time’ but that is not the case right now as properties go under contract.  Second home buyers for the Geneva Lakes Resort communities are purchasing now to be in for summer.  

SETTING RECORDS… Starting Tuesday, the Dow set new record highs four days in a row, blasting past the peak it reached in 2007, well before the recession. Even the broadly based S&P 500 index ended the week just 14 points away from its all-time record high. What made investors feel so optimistic were some decent corporate earnings, better economic data, and the growing recognition that the government spending cuts known as the sequester probably wouldn’t have that much of an economic impact once they started to kick in.

ISM Services bested expectations, at 56.0, showing solid expansion in the sector where over 80% of our jobs are found. Those jobs are now being created at a healthier pace, with 236,000 nonfarm payrolls added during February, enough to push the unemployment rate down to 7.7%, its lowest level in four years. The release of the Fed’s Beige Book of economic observations from around the country concluded that the U.S. economy is now expanding at a “modest to moderate pace.” 

The week ended with the Dow up 2.2%, to 14397; the S&P 500 up 2.2%, to 1551; and the Nasdaq up 2.4%, to 3244. 

The upbeat economic data that sent stocks skyward slammed bonds pretty hard. The FNMA 3.5% bond we watch ended the week down .94, at $104.31. Freddie Mac’s Primary Mortgage Market Survey had average fixed mortgage rates mostly holding steady from the week prior. Their chief economist feels, “…these low mortgage rates are helping to revive the housing market.” Underlining that point, mortgage applications were up 14.8% over the week before, according to the Mortgage Bankers Association.