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March, 2007 Newsletter

+++++++++++ March 1, 2007 +++++++++++++++++++

Introduction: Some Sales Up, Prices Down
Mortgage Rate Update: Rates Ease
This Month's Tip: Buy or Sell First?

Introduction: Some Sales Up, Prices Down

Sales of previously owned homes jumped 3% in the month of
January, the highest monthly increase in 2 years. The National
Association of Realtors reported that the healthy sales growth was
most likely result of a number of factors, including sellers lowering
their prices to stimulate sales as well as warm weather in the month
of December, spurring closings in January.

Meanwhile, though, median sales prices dropped to $210,600, a fall
of 3.1 percent from January, 2006. This was the third largest price
drop in history. Depending on your perspective, the falling prices
can be construed as either a good sign or an ominous one.

In new homes, sales of new one-family houses in January 2007
were at a seasonally adjusted annual rate of 937,000, according
to estimates released jointly on February 28th by the U.S. Census
Bureau and the Department of Housing and Urban
Development. This is 16.6 percent (±12.8%) below the revised
December rate of 1,123,000 and is 20.1 percent (±9.4%) below
the January 2006 estimate of 1,173,000.

Unlike the increase in resale home closings, this sales rate for
January shows the biggest decline since January of 1994. As
we have mentioned numerous times in the past, we continue to
get mixed signals on the market both currently and in the

The median sales price of new houses sold in January 2007 was
$239,800; the average sales price was $313,000.
The seasonally adjusted estimate of new houses for sale at
the end of January was 536,000. This represents a supply of 6.8
months at the current sales rate.


Mortgage Rate Update: Rates Ease

Mortgage rates eased during the month of January, to the relief
of many home buyers who have been closely watching interest
rate trends. 30-year fixed-rate mortgages ended the month with
an average of 6.22%, according to mortgage company Freddie
Mac. The average rate for these 30-year loans stood at 6.34% at
the beginning of the month. The trend in 15-year fixed-rate
mortgages was a similar one, starting the month at an average
of 6.04% and ending at an average of 5.96%.

Going forward, the outlook is a bit cloudier. Recent drops in the
value of equities in the stock market and some renewed interest
in bonds could affect mortgage rates going forward. Stay tuned!

For current average mortgage rates, see the
rates page.

For more information on mortgages, visit the
Mortgage Section

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This Month's Tip: Buy or Sell First?

As I drive around our neighborhood here in Virginia, I am amazed at the
number of vacant houses that are on the market, more than ever before
at one time. Recent data from the U.S. Census Bureau bears out this
impression--the level of unsold empty homes is at an exceptionally
high number. In the majority of cases, these are homes where the
owner has purchased another home and moved--before selling the first
home. In many instances, this means that these homeowners are
paying two--or more--mortgages while having the advantage of living in
only one home.

For those who are purchasing a home who already own one, a fairly
common question has been "what should we do first--get our home on
the market (and get a contract on it) or purchase a home first and
then put our current home up for sale?" For decades, the conventional
wisdom was pretty much to "get a contract on your home first, then
buy your next." Like so many tried and true adages, though, that
advice was, to some degree, shot down by the booming Real Estate
market in the first half of this decade. "Get locked in on the home you
want to buy" the new advice went. "Your current home will sell very
quickly so you won't need to worry."

For a few years, in many areas of North America, that tact was
successful. Many purchased a home without even the provision for
the sale of their current residence. The overall market was so
active that many sellers would not even consider a "contingency"
contract--meaning that the purchase was subject to the sale of
the buyer's current home. For many sellers, the home was listed,
sold in a few weeks (or days, or hours!), settlement was arranged for
both sales and moving was, as scheduled, on closing day. No muss,
no fuss.

As the pace of home sales slackened, however, the risks of buying
without getting commitment for a sale on the present home have
intensified. In many areas, homes that were selling in days or
weeks are now taking months to sell, slowing down the entire
process of buying and selling. By committing to purchase a home
without having a firm contract to sell yours, a home owner runs
the very real risk of owning two homes--and paying two mortgages--
at the same time. This is a situation that could be rectified quickly,
if the home sells, but could go on indefinitely if there are no offers.

To determine if you are a good candidate for buying BEFORE
selling, ask yourself a few questions:

1) What is the market like for your particular home? Are homes
in your area moving quickly (meaning house, neighborhood, general
geographic area)?
2) Is your house ready to be sold (meaning no work to be done and
will pass a home inspection easily)?
3) Is your pricing realistic (meaning in line with or below current
sales prices)? Are you flexible?
4) Does your Agent (or you) have a comprehensive plan for
marketing the home?

Unless you can answer an honest and unqualified YES to all of the
above questions, it may not be a wise move to buy your next home
until you have a firm contract on the present one.

Resources on the site:
Setting a Value on a Home
Home Seller's Information Center

Next Month's Tip: Ready, Set, Close


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

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

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 all your endeavors!

The Team at the Home Buyer's Information Center

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