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January, 2005 Newsletter

+++++++++++ January 1, 2005 +++++++++++++++++++

Introduction: Re-Sales at Record, New Home Sales Slip
Mortgage Rate Update: Rates Decrease, then Increase in December
This Month's Tip: The Right Home for You

Introduction: Re-Sales at Record, New Home Sales Slip

Happy New Year to all and welcome to the
January edition of the Home Buyer's Newsletter, brought to you
by the Home Buyer's Information Center.
The Home Buyer's Information Center

Low interest rates helped the market for existing single-family
home sales to set the highest monthly pace on record in November,
according to the National Association of Realtors®.

Existing-home sales increased 2.7 percent to a seasonally adjusted
annual rate of 6.94 million units in November from an upwardly
revised pace of 6.76 million units in October. Last month's sales
activity was 13.2 percent above the 6.13-million unit level in November
2003. The previous record was 6.92 million in June 2004.

David Lereah, NAR's chief economist, said low interest rates get much
of the credit. "Mortgage interest rates dropped a quarter of a percentage
point in late summer and then stabilized," he said. "Coupled with a
growing labor market and a rising economy, this created optimal
conditions for the housing sector."

Lereah expects economic conditions in 2005 will be comparable with
this year. "Our forecast for the housing market is for a continuation of
strong home sales, although down a little from the record-setting pace
of 2004," he said. "We think slower sales will help to create a better
balance between home buyers and sellers, but with tight inventories
of homes available for sale, price appreciation hasn't slowed yet."

The national median existing-home price was $188,200 in November,
up 10.4 percent from November 2003 when the median price was
$170,500. The median is a typical market price where half of the
homes sold for more and half sold for less.

On the new home side, sales of new one-family houses in November 2004
were at a seasonally adjusted annual rate of 1,125,000, according to
estimates released jointly on December 23rd by the U.S. Census Bureau
and the U.S. Department of Housing and Urban Development.
This is 12.0 percent (±9.9%) below the revised October rate
of 1,278,000 but is 3.6 percent (±12.1%) above the November
2003 estimate of 1,086,000.

The median sales price of new houses sold in November 2004
was $206,300; the average sales price was $268,100. The
seasonally adjusted estimate of new houses for sale at the end
of November was 418,000. This represents a supply of 4.5
months at the current sales rate.


Mortgage Rate Update: Rates Decrease, then Increase in December

Mortgage rates began the month of December with a couple of
weeks of declines then finished the month with two weeks of
increases. For 30-year fixed-rate mortgages, that meant that
average rates ended exactly where they began the month, at
5.81%. For 15-year fixed-rate mortgages, the average rate
at the beginning of the month was likewise exactly the same
at 5.23%. These average rates are courtesy of mortgage
company Freddie Mac and do not include fees paid for

There is some disagreement among analyists for the trend
in rates for 2005. Some see rates rising slowly throughout
next year but still below average historical levels. Others see
rates rising slightly early in the year and then gradually
declining again. Much depends on how quickly the U.S.
economy comes out of the gates at the beginning of 2005:
A strong 1st quarter should equate to rising rates, a less
than spectacular quarter should indicate little or no change
in the current levels.

For current average mortgage rates, see:
Mortgage Rates
For more information on mortgages, visit the Mortgage
Section at:


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This Month's Tip: The Right Home for You

It is one of the first decisions that is made when considering
a home purchase, but often does not get the attention it needs:
the relatively simple but important decision as to what type of home
to purchase--a single family house, a townhome, a condominium
or, in the realtively few areas where they are available, a co-op.

Although some changes in the housing market in the last few years
have blurred the distinctions a little , the general descriptions and
attributes of these different types of housing are as follows:

Single Family Home

A single family home is generally a detached house that sits on its
own parcel of land. For more information, see the discussion on
the Home Buyer's Information Center site:
Single Family Homes


Although there can be some variance, townhomes are generally houses
that are directly attacted to one or more other houses, but sits
directly on land that is owned. For more information, see the discussion on
the Home Buyer's Information Center site:


Usually, a condominium is a single unit in a larger building consisting
of a number of similar units, but, again, there can be variables here.
In the most common form of condominium, you would own from the interior
walls, ceilings and floors inward. There are, however, other types of
condominiums that share some of the attributes of townhomes or even
single family homes. For more information, see the discussion on
the Home Buyer's Information Center site:


Buying a co-operative (a "co-op") is very different than purchasing any
of the other types of homes mentioned here, since you do not actually
buy your own unit (as in a condiminium) but rather own "stock" in the
co-operative which then assigns you a specific unit. Co-operatives
are popular only in a few areas of the U.S., so it is possible that
this may not even be an option.

Which Type?

In determining which type of home is best for you, it is imperative
that you consider both your present as well as your future needs and
wants. For example, if you are planning to start a family some time
in the next five years, a one-bedroom condiminium probably would not
be the right fit. Likewise, if you hate the idea of home maintenance
and repairs, a single family home probably does not make a whole lot
of sense unless you have an unlimited budget for repair and maintenance

Another important consideration is budget. Traditionally in most areas
of North America, the least expensive type of housing was a condo,
followed in expense by a townhome and then a single family home. This
was due largely to the fact that there is almost always more land
involved, per unit, in a single family home than in any other type of
housing. This expense ratio, though, has been skewed in the past
few years as condominiums have suddenly jumped in popularity--and in
price. We've seen condos that are priced in excess of single family
homes that have front, side and rear yards in the same general
geographic area. In this scenario, not only do you pay more for
the condominium initially, you continue to pay more due to homeowner's
association fees (often $150 or more--sometimes much more per month).
Although single family homes will occasionally have homeowner's
associations, the monthly fees will always be considerably more in
a condominium community.

Next Month's Topic: Offers and Contracts


The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist
Home Buyer's Checklist

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line here:
Home Buyer's Information Center Feedback

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.
Have a great month and good luck in your home buying process!

The Team at the Home Buyer's Information Center

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