The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, down from last week when it averaged 4.47 percent. A year ago at this time, the 15-year FRM averaged 5.77 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, with an average 0.5 point, unchanged from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.02 percent.

The one-year Treasury-indexed ARM averaged 4.52 percent this week with an average 0.6 point, down from last week when it averaged 4.58 percent. At this time last year, the 1-year ARM averaged 5.03 percent.

“Mortgage rates held relatively steady at three-month lows this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. Correspondingly, the Mortgage Bankers Association reported that mortgage applications jumped 12.8 percent over the week of September 18th to the strongest pace since late May, boosted by refinancing activity.”

“In its September 23rd policy statement, the Federal Reserve (Fed) indicated that it plans to keep its benchmark interest rate exceptionally low for an extended period. This will likely benefit consumers who opt for ARMs, because they are typically tied to shorter-term interest rates. The Fed also noted that activity in the economy and housing market has picked up and financial markets have improved.”

Published: September 25, 2009

Try getting to a seat quickly at Tomasita’s Restaurant. It’s been popular for a long time, but the place is really packed since the Rail Runner Express began delivering visitors from Albuquerque a few paces from the restaurant’s door last December.

My first interview in this months’ examination of the real-estate market was LIZ CALE, principal broker at Santa Fe Properties. She said:

Tomasita’s is one of my favorite restaurants, and there actually many in town that are busy, and you really get a sense of the confidence returning, and we’re seeing that in real estate as well.

Maybe it’s all about banks and individuals loosening up on loans and spending.

I agree with that, because people kind of froze up. I have seen that change in the last 60 days, at least locally.

And how are your sales stats in this company?

Every month they’re better. This will probably be one of our better months. Look in our parking lot and see the number of out-of-state license plates. These are people who have planned to come to town around Indian Market, but they also scheduled to work with our brokers at the same time.

Who is looking to buy?

You know, we’ve been fortunate to have so many national recognitions like the 2009 Dozen Distinctive Destination list of the National Trust for Historic Preservation. There are so many draws to this beautiful place, so you get people that fell in love with Santa Fe years ago and they return and plan to buy a second residence or plan for retirement here. People are coming from all over the United States.

Some of the feeder markets — such as in California, Illinois, and Florida — have suffered a lot more than Santa Fe. How is that affecting the market comeback?

There are some problems, but I think the indicators are showing that there won’t be further decreases except in the hardest-hit areas, like Las Vegas and Phoenix. I think most of our feeder markets are strong, and the new American Eagle connection to Dallas and Los Angeles will help us.

The lending restrictions have gotten tighter and tighter. It’s so unfortunate that has to be the case, because there are some strong borrowers out there having problems. And the federal government can’t continue special programs for first-time homebuyers, because it would send us into inflation. It’s one of those things that if people wait too long… in certain areas we are starting to see signs of a bottom.

We haven’t seen the bottom yet?

You have to be careful, since there isn’t a set answer for everything. It has to do with inventory.

Are many agents experiencing a problem between offer and closing?

Well, there are new regulations that are coming on board, so there are more wait periods for disclosures, and some people do fall off. A large part of it has to do with the financial institutions. Even with prequalification, you’re more under a microscope than before. There might be multiple properties and there can be issues on how they’re being held. There are so many rules and I can’t even begin to keep up with them. That’s the beauty of having a Century Bank office here in our building. That’s our job, to connect people with the other professionals.

What’s the outlook, do you think?

I think there’s more good than bad. People need to be careful that they don’t miss the timing of what they can do right now. It’s all about confidence, and if you wait too long to see the bottom, you’ll miss the opportunity to buy on the bottom.

EVALYN BEMIS, an owner-broker at City Different Realty

What’s the reality of the market at this moment, as you see it?

My personal experience is that there has been a bit of uptick in activity. People are largely looking for good buys. We, for a long time, were able to say that Santa Fe was in its own class and we didn’t march to the beat of the national market, but that’s just not true; we’re not isolated from it.

What I’ve seen in my own listings is that you get to a sweet spot in the price and then the market responds. I had an appraiser say to me that the things that were A-1 were still achieving good price and maybe a better time on the market, but that’s everything tip-top and with all of the right ingredients, including location. And for everything that’s not A-1 right now, price has been a very strong motivator.

I got an Eldorado listing priced below where I thought it should be, finally, and we went under contract pretty quickly. Then I had three different Realtors call me and say they would write an offer if it fell apart.

To me that says that we did get to a price where people suddenly perceived a value, and also buyers don’t like to step out: they saw it and liked it, and then once they see someone else getting a good buy, they wish they had done it themselves.

When will the widespread shift in confidence come?

People are just afraid, you know. We’ve all just been set on our heels by how deep this correction went, and for how long.

I am grateful for the correction in some respects, because the lending that was going on was insane. The last thing I want is for my clients to stumble and lose their place. I tend to be very conservative. I want people to have a good down payment and a comfort level about possibly hitting a rocky place in the road.

It seems like what’s really hurt people is job security. Again, we thought we’d be immunized against this correction because we have so many coming here as a lifestlye choice, not because of their jobs, but even the people who are already here have seen the contraction, and then the lending criteria have gotten a lot tighter.

We were hoping we would see much more forward progress this year; I think it will be more next year. But I think the smart buyers still have great opportunities out there.

What I say to anyone I’m working with is that I hope they have at least a 3- to 5-year timeline regarding how long they’ll hold onto the property. I wouldn’t advise anybody to buy now for speculation but that’s just me. I’m conservative. It’s like what they say about art: Buy it because you love it and then if it goes up in value, yippee.

CHERI JOHANSEN, executive director of the Santa Fe Area Home Builders Association

Is it true that local builders haven’t seen the surge in remodel jobs that they expected from people who decide to keep their homes rather than “trade up”?

I don’t think it’s been as much as we thought. A lot of people can’t get home equity loans. Let’s say you have a $500,000 home you want to remodel. In times past, you probably had $50,000 or $60,000 of equity you could use, but now the values are down and maybe you can’t get enough to do it. It’s really all about the availability of money, unfortunately, and I don’t see that changing until the banks get more confident.

However, I don’t think we’re getting worse. In Santa Fe, our market crashed in the fourth quarter of last year and the first quarter this year. It was disastrous then. It has improved, but it has not nearly come back.

I just got the permit data in the Housing Journal that’s put out by the New Mexico Home Builders Association. There were 47 residential building permits issued in Santa Fe County, year-to-date through June. In 2008, there were 84, and in 2007 it was at 174, so it’s been about half down each year.

We’re losing people in the industry.

A lot of the subs. Most of my contractors that are still in business are down to a skeleton core, their good people they don’t want to lose. That includes Lockwood Construction, which is big in Santa Fe. People have moved away and gone into different trades. We’ve lost a lot of good people.

NEIL LYON, longtime broker with Sotheby’s International Realty in Santa Fe

What’s the reality of the market for you at this moment?

In terms of closed sales, the upper end of the market, $1 million and above, is off by about 55 percent from last year. But I do have a great stable of sellers with wonderful, reasonably priced houses, and we’re attracting more than our fair share of buyers.

What’s the profile of the average buyer?

Up until a month or two ago, we were seeing primarily people buying because of relocation, but we are again seeing vacation-home buyers. It’s a very good development.

Have things improved in some of our feeder markets?

Yes. Definitely. Sales are up in the states that have been hardest hit: California, Nevada, and Arizona, because prices are down so significantly. Markets are definitely starting to heal, but at different rates because they were hurt to various degrees.

I take a very conservative view regarding the time frame that will be required for markets to return to some semblance of the condition we’ve been used to. Back in January, February, and March, we were showing three to six listings a week and now we’re up to four to seven a day. We’re as busy as we can be right now. But, having said that, buyers are very cautious. Negotiated prices are very disappointing from the perspective of the seller, but the sellers who are selling their houses are more grateful for their sales than they are disappointed about prices.

In August, the BBC reported that the economies of France, Germany, Japan, Hong Kong, and Britain rose out of recession.

That’s great. Some are already saying we’re out of recession. But I am very mindful of the severe unemployment situation and I’m also very mindful of the commercial mortgage market.

What about the mortgage scene?

The residential scene is frightening. Santa Fe has fared better than most, but quite a few people are being hurt in terms of mortgage defaults and foreclosures. The residential foreclosure issue is serious and from what I hear from friends who are involved, the commercial mortgage market is going to go through a very difficult time, and that’s starting to become apparent in terms of foreclosures.

But in the residential market we are seeing a level of confidence and engagement that’s really different from anything we’ve seen for almost a year. Five or six months ago, buyers who came to town left without buying because they were all convinced that prices would continue to drop. We now have buyers coming in who are confident that the bottom is near or that we are at the bottom to the point they are now engaging and buying homes.

There isn’t the expectation that property values are going to drop another 10 or 20 percent, like there was six months ago. There are still plenty of buyers who are very cautious — I don’t want to overstate the level of confidence — but buyers are making decisions.

Paul Weideman | The New Mexican

9/6/2009

Mary S. Schroeder said the money from the Realtors Association of New Mexico will be spent to develop a “housing dialogue” among those involved in the issues and to hire an independent research firm to collect all the research that’s been done on ways to make Santa Fe housing more affordable for average working citizens.

She said the grant “would allow us to have a dialogue with all the key players at the table.” Schroeder conceded that many studies have already been done on the matter but often those involved “aren’t talking to each other” about their findings, or present conflicting information.

Others involved in housing issues, however, questioned the usefulness of yet another study if it’s centered just on housing.

“I don’t think the solution is to keep studying it,” said Mike Loftin of the nonprofit housing agency Homewise, which works with buyers, builders and others on financing and other housing matters. “The danger is that studies become the excuse” for inaction.

Loftin said if the Realtors’ most recent efforts “help get focus on concrete action, it’s a good thing; if it’s a diversion, it’s a loss.”

The Realtors association earlier this year spent thousands of dollars in a successful effort to defeat a city property transfer tax that would have levied a 1 percent fee on sales of homes of $750,000 or more. The tax would have been on the amount over $750,000, and used to support efforts to make homes more affordable for more people.

Schroeder said that had the tax passed, “it would have been a disaster” because it targeted only a certain group of people and would not have raised the funds proponents claimed.

“We want to find solutions,” Schroeder said. “The transfer tax was not the way to do it.”

Kathy McCormick, the city’s director of housing and community development, said some of the Realtors’ past suggestions for discussion on housing issues, especially in the middle of the transfer tax controversy, “seemed disingenuous.”

However, she said the new study, in whatever form it takes, could be helpful if its focus is expanded to include, not just housing, but other community issues as well. “To solely focus on housing would be a missed opportunity,” McCormick said.

She also said several housing-needs assessment and related studies have and continue to be conducted, and are available for anybody who wants to examine them. The various reports have been shared extensively among those involved, McCormick said.

Steve Anaya, executive director of the state Realtors group, said one of the goals of his industry concerning affordable housing is to bring “public awareness to consumers and the community as a whole.”

He said he hopes the new initiative will “facilitate the conversation and keep the dialogue going.”

Dennis J. Carroll | For The New Mexican

8/22/2009

Last week’s 3.6 percent increase in pending sales marked the fifth consecutive month of positive news from this key leading indicator, the first time there’s been a string that long since 2003.

Every region of the country saw increases in pending sales in June, according to the National Association of Realtors, which compiles the data based on signed contracts for home sales that haven’t yet closed.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the string of increases in part to first time buyers getting off the sidelines and looking to qualify for federal tax credits.

Another contributing factor is the dramatic improvements in affordability of houses in many markets, sharply lower prices combined with mortgage rates in the mid to lower five percent range.

The national housing affordability index is now 37 percent better than it was just a year ago. The typical family, with a monthly household income at the national median, can now devote just 16 percent of gross income to paying principal and interest on a median priced home financed with a 20 percent downpayment.

That sort of affordability hasn’t been seen for decades!

Meanwhile, there are growing reports of multiple offers on low-priced houses for sale in some major markets, along with the first signs of possible price turnarounds.

For example, in the Portland-Vancouver market, resales in June were up 25 percent from May. But more significantly: the median price of homes sold there gained 2.1 percent, according to MDA DataQuick, a research firm.

On the mortgage front, new purchase applications to buy houses rose again last week, according to the Mortgage Bankers Association. Thirty-year average fixed rates fell to 5.2 percent from 5.4 percent. Fifteen year rates averaged 4.6 percent.

Not all the economic indicators are reading positive for real estate, of course. Unemployment rates in many parts of the country remain in the double digits, consumer confidence is brittle, and gross domestic product, GDP, was down last quarter by one percent, the fourth straight quarterly drop.

But economic forecasters like the Mortgage Bankers’ Orawin Velz, see a bright side on the near horizon: The latest GDP negative number is much smaller than the 6 percent plus loss in the previous quarter.

That suggests “the end is near” for the recession, she says, and that’s got to be good for housing.

Published: August 11, 2009; by Kenneth R. Harney

The prediction came in a recent story on usnews.com, the Web version of US News and World Report. Researchers said they expect the Santa Fe real-estate market will grow at a rate of 3.6 percent annually through most of 2018.

Most of America’s real estate markets overall will appreciate during the next 10 years, some more than others, Mark Zandi, chief economist at Moody’s Economy.com., said in the report.

Moody’s Economy based its forecast on employment and population data, as well as geographic and industry trends.

Unlike most other cities in the top 10, Santa Fe lacks an industrial base to boost the city’s economy. But other factors could be at work.

Among the reasons for optimism about Santa Fe?

The community’s 300 art galleries and dealers and the estimated 1 million visitors who come to Santa Fe every year, “making tourism a key component of the local economy,” the article stated.

Real-estate brokers were delighted with the prediction, including Mary Schroeder, president of the Santa Fe Association of Realtors, though she was a little cautious.

“That’s actually good news,” she said. “I haven’t seen that about Santa Fe before. The news is usually about Albuquerque. I get tired of hearing about Albuquerque.”

Santa Fe isn’t seeing that 3.6 percent growth rate just yet.

In the first quarter of 2009, according to the Santa Fe Association of Realtors, the rate of growth was about 2 percent in the city of Santa Fe, with the median sales price rising from $301,500 during the first quarter of 2008 to $308,000 in the same period in 2009.

In Santa Fe County, the result was not as good. The median sales price dropped from $480,000 to $440,000, a decline of 8 percent.

“The biggest thing we need to do over the next 10 years,” Schroeder said, “is to reduce the supply of homes for sale. In some neighborhoods, we’ve got several years’ supply. There are thousands of homes on the market. We’ve got to get rid of that inventory. That will make a big difference in our pricing.”

Once that happens, “I think people will wake up,” Schroeder said. “They’ll be wondering, ‘Oh my God? Did I miss the bottom?’ And then go out and buy a house.”

The market also will be affected by the slowdown in new construction, Schroeder said. “If they’re not building anything new, resales are going to go at a higher price. I think that will have a positive impact on the market.”

People also will buy homes in Santa Fe because of the air quality and because they want to live in a town where green building is a priority, Schroeder said. “We could be a model city for those kind of changes.”

Santa Fe also has the advantage of being considered free of such natural disasters as earthquakes and hurricanes. “It’s pretty safe here,” Schroeder said. “The more people realize what a safe haven Santa Fe is will help with people retiring here,” she said.

The only problem is that Santa Fe is not as cheap as other places to live, she added.

One government program helping sales is the federal income-tax credit of $8,000 for first-time home buyers.

“It helps a lot,” Schroeder said. “My son used it to buy a house in Las Cruces. He was thrilled with that.”

Alan Ball, publisher of a quarterly real-estate newsletter and general manager of Southwestern Title & Escrow, also was glad to the forecast for Santa Fe’s real estate. But he was hesitant about predicting the course of real-estate prices over such a long period.

“I might take a stab at one year,” he said. “Much less two or 10 years.”

Ball added: “I can’t imagine us leading anything nationally since we’re such a small MSA (metropolitan statistical area). But I think it’s possible. The good news for us is that we didn’t have the runaway appreciation some cities had and therefore we don’t have the crazy drops in housing values that other places did.

“We also didn’t have the large number of foreclosures. In some markets, 3 to 5 percent of the homes are bank-owned. The stability here is really nice.”

Ball cautioned, however, that trends toward government forcing builders to provide affordable housing are “prohibitive for normal development” and “will put a wall around the city.”

Rising incomes will be necessary if residents are going to buy homes in Santa Fe, and New Mexico personal income growth is expected to be 2.2 percent in 2009, 2.7 percent in 2010 and 4.5 percent in 2011, according to Mark Boyd, an economist with the state Department of Workforce Solutions.

“It’s hard to know how things will turn out,” Boyd said. “But all the forecasts see us getting back on the track we were on” before the recession hit. “Perhaps with a few lessons learned.”

PICKED TO UPTICK

A list of cities and projected annual percent change in home prices from the fourth quarter of 2008 to the fourth quarter of 2018:

1. Bremerton-Silverdale, Wash.: 5.22 percent

2. Glens Falls, N.Y.: 4.71 percent

3. Fort Collins/Loveland, Co.: 4.06 percent

4. Corvallis, Ore.: 3.95 percent

5, Anchorage, Alaska: 3.8 percent

6. Duluth, Minn.: 3.74 percent

7. Sandusky, Ohio: 3.66 percent

8. Santa Fe: 3.57 percent

9. Pittsfield, Mass.: 3.51 percent

10. Decatur, Ill.: 3.44 percent.

Bob Quick | The New Mexican | Source: usnews.com