Archive for May, 2008

Some Quick Mortgage Facts

May 21, 2008 at 11:39 am · Filed under For Home Buyers, Mortgage, Philadelphia Market Conditions

philadelphia mortgage facts66% of all households have mortgages

18% had adjustable rates in 2003
25% had adjustable rates in 2005

16% were prime borrowers in 2003
25% were prime borrowers in 2005

45% were subprime borrowers in 2003
59% were subprime borrowers in 2005

*Figures according to Freddie Mac

With so many subprime borrowers in 2005 with adjustable rate loans and their loans resetting in
2007-8 it doesn’t take a rocket scientist to have a fundamental understanding of the current mortgage mess. The greed of the mortgage compaines, Wall Street, the buyers, the Realtors have hurt everyone.

When the inventories in the housing market return to normal levels and the mortgage-backed securities return to a more reasonable investment, the future will be brighter.

Not all bad news, current buyers are looking around and seeing the good news: plenty of inventory, low prices, sellers willing to negotiate and then negotiate some more.

A word of caution: It’s more important than ever to check your credit scores, to find a professionial mortgagebanker/broker and to get pre-approved. Only the best will qualify, there isn’t much money flowing into real estate finance right now.

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Absorption Rate Key to Successful Pricing

May 15, 2008 at 4:16 pm · Filed under For Home Buyers, For Home Sellers, Philadelphia Market Conditions

What's your absorbtion rate?

If I tell you the price you want to hear I will get your listing, but will I earn your business and will I be able to get your home sold?

Only pricing your home right will do that. And the right price depends in large part on the current absorption rate in your market and in your neighborhood.

Here’s how I find the absorption rate:

1st   I determine the number of homes closed in your market over a specific period – say, 6 months. I get this data from the MLS.

2nd  I divide the number of homes by the number of months in the period – in this case, 6. This calculation gives a per month absorption rate.

Last  I divide that rate into the number of current listings. This yields the months’ supply of homes.

Six months’ supply is considered a balanced market – when the number of listings roughly equals the number of buyers. if there is over a six month supply that represents a buyers’ market and below that a sellers’ market.

To assess sales trends (which way is the market going?), I calculate supply over longer periods (twelve-months) and over shorter (three-month) periods. Price in real estate is mostly a matter of supply and demand and what a buyer is willing to pay.

Every neighborhood is different and there can be huge variation in the same neighborhood but different price range. It’s important to have all the information you need to price your homes to sell. And its important to have an agent who understands the market and can give you the information that you need.

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