Five-Year High for Pending Home Sales

With more than 1,000,000 members, the National Association of Realtors^® is the nation’s largest trade association. It’s no wonder that what it says carries a lot of weight. When a gargantuan outfit like NAR makes a prediction, its words may not always make headlines, but they do influence everyone whose job it is to forecast the future of the nation’s economic activity.

That’s why their most recent report dealing with pending home sales put smiles on many of those one million members’ faces.

“The spring home buying season looks bright,” according to Chief Economist Lawrence Yun. “If activity is sustained near present levels, existing-home sales will see their best performance in five years.”

Like all statistics, those he was describing can be looked at in more than one way. We know that some numbers are more reliable than others. This particular index is based on an unusually large sample: about 20% of all transactions for existing home sales. It’s a forward-looking indicator: in the past, it has signaled coming trends before they materialize. This index seldom produces a straight line of activity because of seasonal and monthly ups and downs, but this time a trend is evident that is “notably above the pattern from a year ago.”

Our Savannah home sales patterns are not invariably tied to national trends -- but they aren’t impervious to them, either.  So we are pleased when our own impression that the spring market is looking up is borne out by the experts who deal in the broader picture. “Based on all of the factors in the current market,” Yun went on, he expects to see “sales rising 7 to 10 percent in 2012.” 

Real estate is a famously local phenomenon, and although we keep an eye on the national and state markets, our real attention is always centered right here in Savannah. If you have questions about your own real estate outlook, call us anytime for a consultation focused on your neighborhood. 

Savannah Investors: New Rental Homes Index

Zillow.com is a website that is often cited for its index of home values across the nation – but its surveys and data are interesting to Savannah real estate observers, too.  Recently it launched a new rental homes index that seeks to measure rental rates throughout the country. The index weighs rental listing prices as well as tax data and homes' sale histories.

The index has some value to prospective Savannah area tenants and landlords as well. Ultimately it might help identify local market trends (but their data only extends back to November 2010, so more time will be needed for its usefulness to be proven). It might, though, serve as a tool for comparing markets. For example, the index showed year-over-year median rent increases in nearly 70 percent of metro markets from January 2010 to January 2011, and it reports that rents have appreciated 3% during the same period.

Of course we all know that decisions based on data are only as good as the data itself. Unfortunately, Zillow's track record for accuracy in its market value numbers (it calls them "Zestimates"!) is less than stellar. Although these estimates of value are thought to come within 15% of true market values more than three-quarters of the time in some metropolitan markets, if you are interested in rental homes in that other quarter, you might be misled. And in many small markets, it misses the mark entirely. In some markets, the estimates are so far off base that Zillow doesn't even attempt to quantify their accuracy.

The other disadvantage to relying on an algorithmic index like Zillow's is that algorithms can't replace the local market knowledge that is any real estate professional’s stock in trade. The data we collect and analyze on Savannah investment homes comes from our own knowledge…and what is more important, is put it into a context that allows local tenants and landlords alike to use the information to make sound decisions.

If you are considering buying an income property, you need to know the most recent and accurate information for the local rental homes market – so I hope you won’t hesitate to call us for a consultation.

Banks with a Heart? - Homeowners Become Tenants

A few weeks ago, Bank of America initiated a pilot program allowing homeowners facing foreclosure to remain in their homes as renters.   There are important reasons why Savannah homeowners should be interested in the success or failure of BoA’s approach.

First, a note about the term “bank owned homes”. It’s not technically correct to say that there has been some huge rise in the number of them, because “bank owned homes” actually describes every home with a mortgage. The mortgage holder always technically "owns" the property, even when the homeowner retains title. However, what is true is that over the last four years, many homeowners learned the hard way just what it means to face the reality of your home being owned by someone else.  

Enter Bank of America. Their press release quotes Ron Sturzenegger, a Legacy Asset Servicing executive with the Bank: "Our priority is designing a solution that helps our customer." Although we might be justifiably skeptical of this as BoA’s sole motive, allowing homeowners to remain as renters in bank owned homes is hardly just a PR move.

The program certainly makes bottom-line financial sense for a whole host of parties, including Savannah area homeowners who have no difficulty meeting their own mortgage payments.



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Under the program, a former homeowner who qualified would be able to continue working and contributing to the economy without the costs, loss of time, and anxiety involved in moving. For all property owners, the ultimate effect is to keep the market from being flooded with distress sales. Every neighborhood would benefit if home values stabilize.

Under the pilot model, bank owned homes convert to investor ownership in a much smoother transition than the foreclosure/short sale model. Instead of the lender being left with an empty property generating zero revenue in the interim, former homeowners simply become renters, making it easier for them to get back on their feet financially.

In our opinion, any move or policy that helps more people stay in homes is a policy worth discussing.  BoA’s program is only in a limited test stage, but here in Savannah we can hope that it will prove to have multiple beneficiaries: banks, investors, agents, homeowners and neighbors. Everyone benefits when his or her neighborhood’s real estate market is healthy!

Have a question about real estate in the Savannah area?  Feel free to contact us anytime with questions. We represent Low Country buyers and sellers, and are always available to chat about your own plans.