Realtors lock in their Commissions

Here is an interesting article about how NAR (National Association of Realtors) is lobbying to keep commissions high by locking out discount real estate brokers. They have some very big political weight in congress and they plan to use it to keep MLS locked down.

U.S. housing market the 'new Nasdaq'?

Housing has become the "new Nasdaq" in the United States, according to David Rosenberg, chief North American economist at Merrill Lynch & Co. Inc.

Buoyed by investors' love of technology stocks, the Nasdaq Stock Market composite index soared above 5,000 in early 2000 before tumbling. The index has never recovered to any significant degree and currently stands at 1,928.65.

Mr. Rosenberg was reacting to an article in Investor's Business Daily. According to the article, the National Association of Realtors said that 23 per cent of the houses purchased in the past year in the United States were for investment and another 13 per cent of the total were vacation homes.

Real estate has become so popular as an investment that the number of clubs in the National Association of Real Estate Investors tripled between the end of 2001 and the end of last year.

And a National Association of Investors poll found that individual investors rank real estate as the top investment class.

Mr. Rosenberg also noted that the rise in U.S. house prices has pushed many would-be home buyers out of the market.

"Prices have moved so far out of whack with incomes out on the West Coast that we have a situation where only 19 per cent of Californians can now afford to buy a house, and this compares to 37 per cent who could in 1999, when interest rates were a lot higher than they are today," he said in his morning market comment yesterday.

Real Estate and 'Irrational Exuberance'

Here is a great article and another on the looming real estate bubble and what it might mean the the housing market. Prices for real estate have been climbing very fast and investor money is fueling the fire even more. When will it stabilize and are we in for a downturn? For a really good discussion on what influences house prices and how they trend check out this article.

Real Estate Forums

Here is a few interesting forums related to real estate and real estate investing.
[link=http://www.dealmakerscafe.com/forum] [/link]
[link=http://www.agentsonline.net/] [/link]
[link=http://www.realestatetalks.com/] [/link]

House Prices are Stretching the Affordability Index

It hasn't been this difficult to afford a used home in metropolitan Phoenix since 1990.

Rising Valley home prices continue to outpace income gains, making it tougher for buyers to find houses that don't stretch their budgets.

The area's housing affordability crunch will likely worsen this year when interest rates finally start to climb. If home prices continue to increase, the affordability crunch could become more serious.

The reading on a key affordability index for existing homes published by Arizona State University's Arizona Real Estate Center fell to 114 at the end of 2004, its lowest level in 15 years.

"Interest rates were stable, but monthly payments went up with prices," said Jay Butler, director of the Real Estate Center.

The median price of a used Valley home climbed 22 percent during 2004 to hit a record $190,000 in December, according to the Real Estate Center. Easing the crunch a little was a drop in the average mortgage rate for Phoenix-area home sales. It went from 5.7 percent in 2003 to 5.5 percent last year.

ASU's affordability index measures whether a typical buyer can afford a median-priced house at the prevailing interest rates. An index value of 100 or higher means the average buyer can afford a house. Anything below 100 means a city's typical household can't afford one of its average homes.

The index is based on Greater Phoenix's median household income, the area's median home price and the average interest rate. Overall, Valley household incomes inched up less than 2 percent to reach $49,500 last year.

Rising values are good news for sellers but not for buyers, especially first-timers who can't afford $50 to $100 more a month that higher prices and interest rates can tack onto a mortgage payment.

But despite the Valley's sagging affordability, new- and used-home sales broke records in 2004.

Out of state buyers are pushing sales and prices, say real estate agents and analysts. Investors from pricier housing markets such as California, the East Coast, Chicago and Las Vegas bought a record number of Valley houses in 2004, according to property records.

In Phoenix, new home prices are typically higher than used home prices so that index is always lower.

The median price of a new Valley home hit $211,640 in December, a 19 percent jump from January of last year. ASU's new home affordability index fell to 102 last year, after hitting a 17-year high of 113 in both 2003 and 2002.

Despite the run up in metropolitan Phoenix home prices, the Valley is still considered relatively affordable by national standards. The median U.S. existing home price reached $189,000 in December, according to the National Association of Realtors.

To keep metropolitan Phoenix's existing home affordability index below 100 during the first part of this year, interest rates can't climb above 6.12 percent and prices must flatten out.

Housing affordability varies by Valley city because of different median home prices and incomes. Gilbert has high home prices but the town's median household income is also higher. For example, the resale index in Gilbert is 146 because the area's $205,000 median used home price is offset by an almost $75,000 household income.

Avondale has a resale index of 132 due to a median used home price of $163,000 and a household income of $53,640.

Scottsdale is the least affordable market for both new and used homes. Its resale index is 65 because of a $385,000 median used home price and a household income of only $62,700. Its median new home costs $569,095, which gives it a rating of 44.

New House Builds Slow Down

U.S. housing starts posted their steepest drop in more than 14 years in March, suggesting some cooling in the long-hot housing market. We should see lower rates of appreciation in real estate as well as slower economic growth in the coming months. There should also be an increased availability of inventory. There will be new buying opportunities for the real estate investors in the coming months.

Gas Prices Rise with no End in Sight

It doesn't look like there will be any relief from the soaring gas prices as the cost for fuel hits new highs. Gas is now going for over $3.00 a gallon in some areas. This will definately have an effect on the economy as consumers will have less disposable income to spend because they will have to use it for added cost of fuel. With interest rates also on the rise, we should see an overall slow down to the economic growth including appreciation of real estate.