Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.85 percent with an average 0.4 point for the week ending March 27, 2008, down from last week when it averaged 5.87 percent. Last year at this time, the 30-year FRM averaged 6.16 percent.

The 15-year FRM this week averaged 5.34 percent with an average 0.4 point, up from last week when it averaged 5.27 percent. A year ago at this time, the 15-year FRM averaged 5.86 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.67 percent this week, with an average 0.6 point, up from last week when it averaged 5.56 percent. A year ago, the 5-year ARM averaged 5.88 percent.

One-year Treasury-indexed ARMs averaged 5.24 percent this week with an average 0.5 point, up from last week when it was 5.15 percent. At this time last year, the 1-year ARM averaged 5.43 percent

"Long-term mortgage rates were mixed, but relatively unchanged in the past week as the latest economic indicators came in much as expected," said Frank Nothaft, Freddie Mac vice president and chief economist. "For instance, the index of leading indicators continued to fall for the fifth straight month while consumer confidence reached a 5-year low.

"On the housing front, house prices keep declining across the nation. The S&P/Case-Shiller Home Price Index was the most recent to document the drop in prices, reporting a decline of 2.3 percent from December to January in its 10-City Composite Index and a cumulative decline of 11.4 percent from January a year ago. Lower prices improve affordability and the National Association of Realtors reported that its home affordability index was at the highest level in nearly five years, contributing to a pickup in existing home sales in February."
 

source: www.freddiemac.com, Primary Mortgage Market Survey® (PMMS®)

The residential real estate market continues to experience sharp decline in prices. Residential real estate has posted another record decline in the S&P Case/Shiller Home Price index released last Tuesday. It showed home prices plummeting 10.7% in the 12 months ending January. That marks their lowest level since the index was launched in 2000.

"Affordability is actually quite high," he said. "This is a pretty good market to consider taking the plunge. And it's going to get better as we go forward."

Subprime fallout. Across the nation, the market for lower-priced homes has been the most volatile over the last 12 months, a phenomenon Shiller thinks is a result of the ongoing subprime crisis.

"It's going to take those markets a long time to recover," Shiller said. 
 
 

There is a big difference between price and value. Price is the amount of money being asked by the seller in exchange for the property to be sold. Value is the perceived worth of the house. This can be the perception of the buyer or even the seller. Since this is based on perception, there are lots of factors that may influence the value. These are comparables, location, features and other conditions.

Attending to details and improving the house for sale can have a positive effect on the value of the house while spending less than the value added. Those add-ons can significantly increase the attractiveness and the chances of attracting qualified buyers willing to pay the asking price if the perceived value is high.

Some tips to achieve a positive impact on value are:

Size is important. Perceived size affects value. People usually value the house by square foot. This can be actual increase in size or just an impression to the prospect that the house is very spacious or larger than house’s actual square footage. Open spaces may make the visitor or viewer feel that the room is bigger. This can make a room feel bigger than larger spaces with smaller rooms. Some sellers remove furniture or reduce clutter to help make the space look or feel bigger.

The property is easier to sell if it is vacant. It can be considered ready for occupancy once sold. It is more saleable. Property is easier to show and easier to sell, and quicker to take possession of when it is vacant at the time it is offered for sale. Evidence of problems to take possession of the property -- such as encroachments, or uncooperative tenants who won’t allow buyer tours negatively affects value. Vacancy also helps the buyer walk through the property imagining ownership. Sellers should remove personal ornaments and family pictures as well as being conveniently absent during a buyer tour.

Cosmetics are important.

Fresh paint will always add more value than it costs. The place will look cleaner and fresher. Clean or new carpet/flooring adds more value than it costs.

Landscaping adds more value than it costs. The curb appeal can make an impact on the buyer. Remove clutters and make way for an open space to make the yard look bigger. Make the entrance area attractive. Colorful plants and flowers can do the trick.

Take care of the obvious! Water marks and spots on the ceiling from the roof leak may take thousands of dollars from the offer price. The perceived condition of the house will be affected. Buyers will ask for a bigger discount to cover the repairs. Discounts may be bigger than the repair expense.

Strategic renovations greatly affect the value and the bottom line. Just evaluate the trade-offs. Don't spend too much money on the renovation of the place if the increase in price can not cover the renovation expenses.

The rule is that we should create greater value at a lower price…
 

New home sales hit a 13-year low despite falling prices, according to a Census Bureau report.

New home sales plunged to their lowest level in 13 years in February. This was according to the Census Bureau report on the housing market released Wednesday.

February sales dipped 1.8 percent to seasonally-adjusted annual rate of 590,000, the bureau report showed. January figures showed of 601,000 in January and down 29.8% from February last year.

Prices are still falling. New home sales fell despite continued price declines. The median price of a new home sold in February was $244,100, down 2.7% from $250,800 a year earlier.

This decline in median price probably doesn't accurately capture the weakness in prices for new homes, since about three out of four builders have reported having to pay buyers' closing costs or offer other incentives, such as expensive features for free, in order to maintain sales.

"Falling prices are a double-edged sword," said National Association of Home Builders chief economist David Seiders. "Affordability of homes needs to be restored, but some prospective buyers stay away because they believe home prices will continue to go down further."

Prices have been driven down by the glut of new homes on the market.

Builders found it typically took 7.2 months to sell a completed home in the current market, according to the report.

The report showed 188,000 completed new homes available at the end of the month, bringing total inventory - including new homes under construction and not yet started - to 471,000. That equals a 9.8-month supply, which ties January for the highest supply since 1981.

Total inventory fell by 10,000 homes in the month, according to the Census Bureau, but the report does not include purchases that were cancelled and sent back to the builder.

"Inventories are still very high," said Seiders, who believes that inventories need to be whittled down to a five or six month supply to restore the balance to supply and demand.

Still, prices will continue to fall as there are more signs of housing weakness. Sales slip amidst sharp price declines. Price cuts are still inevitable till early 2009. People who will buy today must consider staying in the home they recently bought for long if he/she wants to see an appreciation in value.

Single-family housing starts posted a 6.7 percent decline to a seasonally adjusted annual rate of 707,000 units in February. The figure was released last March 18 by the U.S. Commerce Department. Meanwhile, production in the more volatile multifamily sector registered a 14.4 percent gain to 358,000 units, limiting the decline in total housing starts to a rate of 1.065 million units -- 0.6 percent below the revised January pace.

“Builders continue to scale back production of single-family homes in an effort to contain inventories amidst ongoing problems in the mortgage finance arena and other challenges that are keeping many potential buyers on the fence,” said NAHB President Sandy Dunn, who is a home builder from West Virginia. “We’re doing what we can to restore balance to the supply-demand equation, but we need the Federal Reserve, Congress and the Administration to take immediate action on several fronts if there’s any hope of rebuilding consumer confidence and jump-starting the economy.”

NAHB Chief Economist said: “Our latest surveys of single-family builders reveal that many prospective buyers are looking into a home purchase at this time, but that they are unwilling or unable to make their move with conditions in the overall economy and financing arena what they are.”

“The Federal Reserve’s latest moves to shore up financial markets have certainly been welcome developments, and a significant interest rate cut following today’s FOMC meeting will be more positive news,” Seiders said. “Beyond this, Congress and the Administration should follow up on the recently enacted economic stimulus package with additional measures aimed directly at boosting the housing market. If prompt action is taken in the direction of a home buyer tax credit, FHA modernization and GSE oversight reform, a housing recovery could take shape by this year’s second half and the benefits of that to the overall economy would be substantial.”

The issuance of permits also decline 7.8 percent overall in February to a seasonally adjusted annual rate of 978,000 units. This is a significant indicator of future building activity. The breakdown are as follows: 6.2 percent decline registered in the single-family sector to 639,000 units and a 10.8 percent decline on the multifamily side to 339,000 units.