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September, 2004 Newsletter

+++++++++++ September 1, 2004 +++++++++++++++++++

Introduction: Resales Slip, New Home Sales Pace Lowest Of Year
Mortgage Rate Update: Rates Decline
This Month's Tip: Buy Low, Sell High

Introduction: Resales Slip, New Home Sales Pace Lowest Of Year

Welcome to the September edition of the
Home Buyer's Newsletter, brought to you by the
Home Buyer's Information Center.
The Home Buyer's Information Center

Although sales of both new homes and resales declined in the month
of July, the overall performance of the real estate market is still
showing reasonably strong activity.

Existing single-family home sales slipped in July but still managed the
third-best pace on record, according to the National Association of

Existing-home sales declined 2.9 percent to a seasonally adjusted
annual rate* of 6.72 million units in July from a record pace of 6.92
million units in June; last month's sales activity was 8.6 percent above
the 6.19-million unit pace in July 2003. The second-highest sales
rate was in May of this year.

David Lereah, NAR's chief economist, said changes at this volume
of sales are relative. "Prior to this year, the July sales pace would
have been a real eye-popper," he said. "The fact is it remains so.
The present level of home sales activity is considerably above last
year's record, and the new benchmark we'll set in 2004 is a
significant contributor to overall U.S. economic growth."

Sales of new one-family houses in July 2004 were at a seasonally
adjusted annual rate of 1,134,000, according to estimates
released jointly on August 25th by the U.S. Census Bureau and the U.S.
Department of Housing and Urban Development. This is
6.4 percent (±10.7%) below the revised June rate of 1,211,000
and is 1.9 percent (±9.7%) below the July 2003 estimate of
The median sales price of new houses sold in July 2004 was
$207,400; the average sales price was $274,200. The seasonally
adjusted estimate of new houses for sale at the end of July was
393,000. This represents a supply of 4.2 months at the current sales rate.


Mortgage Rate Update: Rates Decline

Although there was a small rise in mortgage rates at the end of the
month, the overall trend in the month of August was down slightly.
As of the period ending August 26th, 30-year fixed-rate mortgages
averaged 5.82%, according to mortgage company Freddie Mac.
These rates began the month averaging 5.99%. Likewise, 15-year
fixed-rate loans averaged 5.21% after starting the month averaging

The future trend may be a bit difficult to discern, since the U.S. economy
has been sending mixed signals over the last few months. Some of
the economic reports point to a slowing in the recovery while others
paint a very different picture. As a result, rates have been moving up
and down all through this summer. Chances are good that this trend
may continue at least through the fall, especially since we are in an
election year.

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: Buy Low, Sell High

Ask many successful investors--whether in real estate, equities, bonds
or commodities--what some of their secrets to success are and you
will find a large number who say "buy low, sell high" is way up on their
list. When you purchase a personal home you may not need to be quite
as concerned as a professional investor, but if you see your home as
an investement, then this little "secret" (which is fairly obvious, actually)
should be an integral part of your home buying plans. Simply put,
you will want to buy your home for the very least possible and sell it for
the maximum possible.

Sounds so elementary, yet unfortunately in the last couple of years we
have seen far too many buyers pursue the exact opposite tactic--
seemingly doing everything in their power to pay the absolute most for
their home. This may be fine as long as real estate prices keep
accelerating as they have done recently. However, due to a number of
factors--notably little or no wage and income gains plus interest rate increases--
in many areas of the country fewer and fewer buyers are able to afford
even a median priced home now (let alone as interest rates continue
to rise). As a result, in many areas of North America, we see more
limited price increases for at least the forseeable future. If you are buying
now, then, you need to be extremely vigilant on the price you are going
to pay.

So, then, what are some of the ways to make sure that you, first of all,
"Buy Low"

+ Do your research
+ Have a good Agent as an ally
+ Don't get caught in a bidding war
+ Look beyond cosmetics
+ Buy value, not fluff

Do your research

One of your first activities--and one that will probably be the most effective,
will be to do some up-front research. You should have a fairly good idea
of which areas and neighborhoods are the most popular (meaning a better
chance of good appreciation) as well as those less popular. You should be
familiar with the general price ranges in the areas in which you are interested
so you can spot either a bargain or a turkey quickly.

Have a good Agent as an ally

An Agent who knows your wants and needs and knows how to ferret out
bargains can be worth their weight in gold. Let the Agent know exactly
what you are looking for, the areas in which you have the most interest
and the price range in which you want to remain. Keep in close communication
with the Agent--bargains, when found, usually sell very quickly.

Don't get caught in a bidding war

Unless the bidding starts--and ENDS--thousands of dollars below market
value, getting caught in a bidding war will almost certainly harm your
chances for strong price appreciation. It is like some of the auctions we
watch on the online auction sites that have become so popular recently. We
watch people pay more--sometimes MUCH more--for someone's used item
than they could have purchased it brand new! Paying a few bucks more
for a CD or a book may be a mild annoyance, but paying thousands and
thousands of dollars too much for a house can be a financial nightmare.
Remember hint one: Do your research.

Look beyond cosmetics

One of the easiest ways to help you in your quest to "buy low" is to search
for homes that are structurally sound, in good neighborhoods but in need
of cosmetic attention. Painting, carpeting and minor repairs can usually
be accomplished in a minimum amount of time and with not a great deal of
expenditure. Take advantage of the fact that the majority of buyers have no
vision--they cannot see past the ugly paint color or the stained carpet--
and put almost immediate equity growth through price appreciation in YOUR

Buy value, not fluff

We would define value as an amenity or condition that adds to the long-term
value of a home. We would define fluff as what is trendy today and passe
tomorrow. Not only will you pay more for a house with fluff (or "all the bells
and whistles!"), you'll pay a second time when the out-of-style elements
need to be replaced to bring the home up-to-date.

Sell high

Just as important, obviously, as buying low is the opposite end of the
equation: Sell high. When it comes time to market your home, use all
of the tools available and at your disposal to maximize your marketing
and sales price. You can find hundreds of tips and hints at our sister
site, the Home Seller's Information Center.
The Home Seller's Information Center

Summing up

In the majority of cases, the profit on a home is made when you BUY it,
not when you sell it. Purchase a home at a low price relative to current
market value and you will have that equity in your pocket. Pay too much
for a home, and it will take much longer to reach that point of solid
equity. No matter what happens to the market--up, down or indifferent--
the lower price will always have the advantage.

Next Month's Topic: Understanding CMAs

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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