Mortgage Rates in U.S. Drop to Record Low

Mortgage rates for fixed 30-year loans in the U.S. dropped to a record low of 4.71 percent for the week ended today, the lowest since Freddie Mac began compiling the data in 1971. Rates on 15-year fixed-rate mortgages were 4.27%, down from last week's prior low of 4.29% and 5.77% a year earlier. This comes amid signs that the housing market is beginning to emerge from the worst slump since the 1930s.

Five-year adjustable-rate mortgages averaged 4.19%, up from last week's record low of 4.18% but were down from 5.77% a year earlier. One-year ARMs were 4.25%, its lowest level since June 2005, down from 4.35% last week and 5.02% a year earlier.

Economists at Huntington National Bank in Columbus, Ohio speculate that rates probably won’t go any lower, and that they’re at the lowest point they are going to achieve in a long time.

The index of signed purchase agreements, or pending home sales, climbed 3.7 percent to 114.1 after rising 6 percent in September, the National Association of Realtors said on December 1st.

The low mortgage costs, in addition to the recent extension of the new homebuyer tax credit, have increased the demand for property. In October the demand for contracts to buy previously owned homes increased and the demand for applications for mortgages continue to increase.

With prices and rates this low, there has never been a better time to invest in Manhattan real estate. Contact Alfred Real Estate today!

The Debate on the State of the Market Rages On as Third Quarter Stats are Released

Today’s Headlines

Taken from:
The New York Times Manhattan Apartment Sales Bounced Back Over the Summer, but Not All the Way by Josh Barbanel
Published October 2, 2009

It’s the question that has been on the minds of many New Yorkers: Has the real estate market reached a bottom yet? After a year of declines in Manhattan co-op and condominium sales, the residential market has recovered enough to finally have real estate appraisers and brokers approach this debate. Here, some statistics from the third quarter market reports released today (Friday, October 02, 2009):

• From July through September sales rose sharply from the second quarter, up 45.6 percent, but are down 16 percent from the levels they were at a year ago.
• For the most part, sale prices moved sideways this quarter although prices of apartments and new condominiums continued to fall. The average co-op and condo apartment sale price is now at $1.32 million, off 10.6 percent from the same quarter in 2008, but up 0.8 percent from the second quarter.
• Co-op prices are down 5.9 percent from the previous quarter, while condominium prices are up 3 percent.
• Average sale price on Upper East Side townhouses is still 50 percent below the price in the first quarter of last year.
  

With all of this exciting new data, the debate on the market has sparked speculation from multiple New York real estate firms:

• A spokesman from Miller Samuel Inc. said that while the Manhattan housing market may be getting better in some ways, it has “not yet found a bottom.” The company attributed the current situation of the market to high local unemployment and tight credit.
• Many firms are more optimistic and are reporting that they had experience their busiest summer in years because buyers who had been scared of pulling the trigger in the spring had more confidence in the market. Dorothy Herman, the president of Prudential Douglas Elliman says, “We see the market as stabilizing. It has hit bottom.”
• Hall F. Willkie, president of Brown Harris Stevens, believes that with the rebound in the stock market and slowing job losses buyers are becoming more comfortable and that “confidence is returning to the marketplace.”
• Pamela Liebman of the Corcoran Group believes that “if we are not at a bottom, we are close to it.” However, she also says that despite the increase in sales, there is little evidence that prices will rise significantly in the near future.
  

Those who believe the market has yet to hit bottom attribute the sharp rise in sales to a shift in the busy season due to economic conditions. Usually, the spring is the busiest season for apartment sales in Manhattan. This year sales were halted due to the struggling economy and therefore the surge happened later. The spring market, in effect, occurred this summer.

Despite all of the hearsay, the new market has yet to take shape. But one thing is for certain—people are buying, and New Yorkers can’t ignore that sneaking suspicion that it is time, once again, to feel comfortable in the marketplace.


News Flash

Update from Alfred Real Estate

For those of you who think the real estate market is still dead, it is time to think again! The market is alive and property is selling. Don’t let anyone tell you otherwise. Sellers—the time has come to once again feel comfortable putting your property up for sale. Buyers—now is as good a time as ever to invest in a new home.

One of Alfred Real Estate’s principal brokers recently decided to invest in property and submitted a bid that was 10% less than the asking price. A few months ago she may have had it in the bag, but as it turns out she was one of three bids, and not even the highest at that! In fact, encouraged by the demand on his property the seller decided to have another open house to solicit more potential buyers. At the open house he plans to have a highest-and-best-bid closed auction. People are back in the market, and if the price is right, they are buying!

Mythbusters: Buyer’s Remorse in Today’s Manhattan Real Estate Market

Buyer’s remorse: a dark, threatening cloud that hangs over your head when the forecast calls for sunny weather. But in the current Manhattan real estate market it is important to ask yourself, “Is it really going to rain?” A recent Alfred Real Estate client spent weeks deliberating whether to sign a contract to purchase a six-room condominium in the desirable Upper East Side neighborhood. As time went on, she and her husband watched prices dip, prompting them to hold off as to not feel the sting of buyer’s remorse. In the meantime, the fear of overpaying combined with gossip floating around urging them to “wait for the right time” has them still paying a five figure rent. $200,000 in rent later, she is still house-hunting and living in a building and an apartment that she doesn’t really like. The news is that there is only so much downward play left in this market.

Most buyers in Manhattan think they are overpaying. With figures constantly being thrown around like “prices are down 20%” or “the market has yet to hit bottom” it is very easy to get caught up. However, just because prices are low doesn’t mean you shouldn’t be cautious. Read the offering plan, and then read it again. Make sure you are getting exactly what you want. The truth of the matter is you and your agent need to understand the reality of the market and how that applies to the property (condo, brownstone, or apartment) you are interested in. You must consider only appropriate comps, meaning properties that have recently been sold in buildings from the same era (prewar or new developments) and with the same amenities (doorman, gym) and the same neighborhood (Upper East Side, Upper West Side). When you are looking to buy, only assess properties that are either in contract or have sold in the past two to three months. Keep in mind that at the moment prices in Manhattan are lower than they have been in years, and how much further they are going to go down or when they are going to spike back up is anyone’s guess.

This is no time to be scared off from buying a Manhattan home if your finances allow it—the market has reached a realistic point and, when factoring in the connection between interest rates and prices it may be at its best point in years. If prices come down another 10% but interest rates increase by 1 percentage point, that would mean the same monthly payment today versus waiting. So, if you buy today might you end up paying more than if you had waited a couple months? Perhaps— but show me the buyer who has ever successfully picked the exact bottom or top of a market. Third quarter 2009 reports show that the number of sales is on the rise—a reasonable sign that the market has bottomed and is stabilizing. Does this mean that soon we are going to see prices shoot back up to where they were? No. But prices will probably rise enough to find a new, higher-than-current stabilized level. Continuing to pay an expensive lease in an apartment you want to leave behind could be a senseless waste of money. You might also end up waiting too long and missing out on an opportunity that hasn’t been available to buyers in Manhattan in 20 years. Now that would be a real case of buyer’s remorse.