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September, 2005 Newsletter

+++++++++++ September 1, 2005 +++++++++++++++++++

Introduction: Existing Sales Decline, New Home Sales Jump
Mortgage Rate Update: Rates Fall a Bit
This Month's Tip: Check Your Emotions at the Door

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

Existing-home sales declined in July from a record in June, but home prices
continue to rise at double-digit rates, according to the National Association
of Realtors®.

Total existing-home sales – including single-family, townhomes,
condominiums and co-ops – slipped 2.6 percent in July to a seasonally
adjusted annual rate of 7.16 million from an upwardly revised record of 7.35
million in June. Sales were 4.7 percent higher than the 6.84 million-unit pace
in July 2004.

David Lereah, NAR’s chief economist, said home sales remain in historic
territory. “The level of existing-home sales in July was the third highest
on record,” he said. “This is a big number any way you slice it, and
housing is continuing to stimulate the overall economy.” The second
highest level of sales activity ever recorded was in April of this year,
with a pace of 7.18 million units.

The national median existing-home price for all housing types was $218,000
in July, up 14.1 percent from July 2004 when the median price was $191,000.
The median is a typical market price where half of the homes sold for more
and half sold for less.

New home sales took a significant jump in July, exceeding virtually all
forecasts. Sales of new one-family houses in July 2005 were at a
seasonally adjusted annual rate of 1,410,000, according
to estimates released jointly on August 24th by the U.S. Census Bureau
and the Department of Housing and Urban Development. This is 6.5 percent
above the revised June rate of 1,324,000 and is 27.7 percent above the July
2004 estimate of 1,104,000.

The median sales price of new houses sold in July 2005 was $203,800;
the average sales price was $275,000. The seasonally adjusted estimate
of new houses for sale at the end of July was 460,000. This represents a
supply of 4.0 months at the current sales rate.


Mortgage Rate Update: Rates Fall a Bit

Mortgage rates, after rising for nearly two months, began to decline in
August. 30-year fixed-rate mortgages, after beginning the month at
an average of 5.82% and rising to 5.89%, fell for the last 3 weeks of the
month, averaging 5.71% in the period ending today, September 1.
15-year fixed-rate mortgages trended in similar fashion, begining the
month averaging 5.38% and ending at an average of 5.32%. Many
mortgage analyists expect rates to remain at these levels or decline
a bit more, depending on economic reports as well as effects from
Hurricane Katrina.

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: Check Your Emotions at the Door

Some of the most costly mistakes relating to the purchase of a home
involve emotions--both those of the buyer and of the seller. Obviously,
buying a house is a very emotional experience--for the buyer, this house
will become their HOME and for the seller it WAS their home, which usually
means good memories will be involved. Letting emotions get out of hand,
though, can be both a frustrating as well as an expensive experience.

It is important to understand that the emotions of the buyer running high
is important to many of the parties concerned in a home sale--agents,
lenders, sellers. Knowing that it is more difficult to make rational decisions
when emotions are running red-hot, it is possible that some of these parties
might take advantage of the situation. It also makes the job of the agent,
and the lender, and even of the seller much easier when the buyer's emotions
are at their peak. For the buyer, though, letting those emotions run wild
can lead turn to a major disadvantage and can cause financial mistakes
(or, worse, purchase the wrong home).

Obviously, it is impossible (and undesirable) to want to make a purchase
of a home devoid of all emotion. The excitement about buying a home,
especially a first home, is something that will most likely be a very warm
memory for the rest of your life. This excitement, though, really needs to
be tempered with a good dose of common sense as well as equal
measures of preparation and knowledge of the home buying process.
It's fine to be excited about you purchase as long as you don't allow yourself
to dive off the deep end of your emotions.

Where Emotions Can Be Costly


The first place that your emotions may caue you to make a wrong turn
is in the selection of a home. Some properties just seem to jump out
at a buyer, yelling "Dream Home!" or "Creampuff!" or "Dollhouse!"
It may be something as inocous as the exterior color, or gingerbread
trim, but we've all seen this type of house--it leaps out at you and says
"Hey there...I'm yours!" Immediately, the emotions begin to flow, which
is fine if the house fits your wants and needs, but can be a real disaster
if the home is wrong for you. If the home is not right for you, you can fall
OUT of love with it just as quickly as you fell IN love with it. Unfortunately,
this falling out often does not occur until after you have moved in!


Want to really get the emotional juices flowing? Walk into a house loaded
with all of the latest amenties and watch the emotions soar. Bright new
stainless steel kitchens, luxurious spas, huge walk-in closets, master
bathrooms the size of bedrooms and more. You can hear the oohs and
aahs clearly.

Keep in mind, though, that although these amenties are part of the home
you may purchase, tey are not the most important aspects of the house
since many of these amenities can be added to any home. Much more
important qualities to consider are:

* Location
* Overall condition
* Age
* Size

Although they don't have the pizzazz of flashy amenities, these qualities
are much more inportant to the overall value of the home, both at present
and in future resale.

Remember, too, that tastes for amenities can turn on a dime. Remember
all white kitchens? Thousands of home buyers "had" to have all white
kitchens just a few years ago. They now, unfortunately, look very dated.


When it comes to the possibility of emotions ending up costing a buyer
money, it is at the point of negotiations that reall problems can arise.
Every dollar lost here, whether in paying too much for a property or
missing a strong negotiating point, is real, tangible money. How do
emotions get involved when negotiating? Some examples are letting
the fear of losing a particular property get the best of you, getting wound
up in a bidding war, listening to advice from involved parties such as agents
and lenders urging you to pay more for a home than you may be prepared
to pay.

Paying too much unneccesarily for a home is the mistake that keeps on
taking from you, since the extra that you spend will inflate your monthly
mortgage payment--with interest--for as long as you own the home. In
general, you will not want to be so emotionally involved that you pay more
than the listing price unless it can be demonstrably proven that the house
is UNDERvalued. Likewise, you will not want to get involved in a bidding
war if the price paid escalates far beyond the market value of the home.

Summing Up

You can never divorce yourself from your emotions when it comes to
purchasing a home, so it is senseless to try. You can, however, make
sure that your emotions do not overrule your common sense or your
budget. The rapidly rising market of the last several years has covered
a number of mistakes make in an emotional frenzy, but going forward
it is highly unlikely that mistakes made now will be so covered.


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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