How is the move-up and higher end market? April 22, 2010

MOVE-UP/LUXURY MARKET

Showing Signs of Life

Over the past several years, first-time buyers made up about 42 percent of the market. As a result of home buyer tax credits, those first timers represent close to 50 percent of buyers. However, increasing activity in the upper price ranges shows that buyers in the move-up/luxury market are sparking the housing recovery as well.

In King County, pending sales* of entry/first-time/move-up homes (those priced $599,999 or less) were up more than 100 percent
over last March. In the move-up/luxury market ($600,000+), pending sales were up more than 150 percent over last year.This is clear evidence that the move-up/luxury market is making a good recovery, especially when you consider that this market has not directly benefited from home buyer tax credits like the lower price ranges have.

Why is the move-up/luxury market improving?

• Buyers who are hoping to “time” the bottom of the market

• Low interest rates

• The increased affordability of jumbo loans

At this time last year, interest rates on a jumbo loan were in excess of 8 percent due to a large number of lenders exiting the jumbo market.Today, many of those lenders are returning, which has helped bring interest rates on jumbo loans more in line with conforming loan rates: near 5.5 percent. In addition, King County FHA loan limits are up to $575,500, which means that a buyer can purchase a home with as little as 3.5 percent down payment as long as the loan does not exceed $575,500.
There is clear evidence that the move-up/luxury
market is making a good recovery, especially when you consider that this market has not directly benefited from home
buyer tax credits. ”

With increasing optimism in employment numbers and consumer confidence, as well as the increasing availability of financing products,the housing market recovery should continue at a steady pace.And as we are already seeing,the recovery appears to be taking place throughout the price points, not just in the markets that have been bolstered by tax credits.

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Home sales up higher then expected

Home sales rose more than expected in March, reversing three months of declines, as government incentives drew in buyers and kicked off what’s expected to be a strong spring selling season.

Sales of previously occupied homes rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million last month, the highest level since December, the National Association of Realtors said Thursday.

…The government is offering a $8,000 credit for first-time buyers and $6,500 for current homeowners willing to buy and move into another property.

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