Existing-Home Sales Set Record for 2003

[rodbarnett]

By Jeannine Aversa Associated Press Writer
Published: Jan 26, 2004

WASHINGTON (AP) - Sales of previously owned homes set a record high in 2003 as decades-low mortgage rates proved too good for many buyers to pass up.

The National Association of Realtors reported Monday that existing-home sales totaled 6.1 million last year, shattering the previous record of 5.57 million set in 2002. Last year's sales represented a 9.6 percent increase from 2002's level.

<snip>

"Housing continues to boom," said David Lereah, chief economist at the National Association of Realtors.

Low mortgage rates have powered the housing market.

The average rate on a 30-year, fixed-rate mortgage for all of 2003 was 5.83 percent, the lowest annual average since Freddie Mac began tracking interest rates in 1971.


http://ap.tbo.com/ap/breaking/MGAREUWQWPD.html

comment: Who's buying???

[Frodo]

1. Anyone and everyone (who still has a job)

Rates only get this low once or twice in a lifetime, so everyone who can cobble together ANY kind of downpayment is trying to get in before it's too late. A $300,000 house at 6% doesn't cost much more per month than a $200,000 house would have cost when mortgages were at 8%. Instead of saving money each month, they're looking at more expensive houses... and EVERYTHING is getting more expensive. The average home costs almost 10% more today than it did last year at this time.

[Gin]

2. these stats are for re-sales not refis?

still waiting frodo...need you now more than ever.

[Frodo]

5. Correct. And ???

What are you "still waiting" on?

Yes, these are re-sales. Meaning sales of existing homes (instead of new construction). New construction sales have also been strong and will be reported in a couple days (forcast to rise slightly to 1.1M after a tiny dip last month)

[LeftHander]

4. Cashed in the 401k

For a downpayment on 15 year 5.125 fixed. Best money decision I ever made. The key is we didn't buy an expensive suburban monster. Inner city 90 year old home for 135k.

Live small.
Play large.

[Frodo]

6. Could be a smart move.

Can't say I agree with cashing in the 401(k) (could you have taken a loan??) with taxes an penalties, but buying a smart property on a 15yr loan at THAT rate is my kind of "conservative".

[LeftHander]

13. The 401k

was under 10k. I had moved it out of stocks before Bush killed the economy early in 2001. When interest rates fell we started adding up the numbers. With wife and I in our 40's we really didn't have much to gain keeping the money in the 401k. There are exceptions to being penalized if you are doing hardship withdrawls or withdrawing for a down payment of a primary residence.

Basically the investment in our modest house with 15 year 5.124 will be much better for us than seeing it sitting in a 401k. Most lenders won't give you the loan if you take a loan for a down payment.

This is in Waukesha, WI....

(now I've given it up....More of those pesky black helicopters hovering over the house and white vans across the street....)

[Frodo]

14. Don't worry... it's a ruse.

They never use the helicopters at the same time as the vans. They clash.

Best of luck with the house. Some here think real estate is about to tank... I happen to disagree. But as such a highly leveraged investment, there is certainly some risk.

But, either way, remember that the advantage you have is that this is your home... not just an investment - so short-term fluctuations are not as worrisome.

[ZenLefty]

9. Wow.

What city is that, if you don't mind me asking. In Denver, Inner city 90 year old home starts at about 275k. And they're still selling very quickly compared to the suburbs.

Good job on that 15 year loan. Losing the 401k sucks, but having your house free and clear in 15 years will be nice.

[DuctapeFatwa]

3. It's also people doing the 0-down loans trying to postpone homelessness

This was discussed extensively in another thread, the cliffnotes version is, as people are priced out of rental housing, a 0-down, if the payment is no more than a couple of increases more than their rent, can sign onto a mortgage that they can't afford, and is a ripoff, but will give them a chance to stay housed a year or so more than they will otherwise. When they foreclose, the lender can increase the price to cover loss and sell it, same 0-down deal, to the next tier of people being priced out of housing and let THEM buy another year or 2.

[hatrack]

7. Personal bankruptcies also set a new record in 2003

The number of people who apparently can't pay their bills even in a historically low-interest rate environment isn't encouraging.

[KansDem]

8. Didn't I read recently that foreclosures are up?

I wonder if there is a correlation between this and the increase in "existing home sales." After all, I've never heard of "new-home foreclosures:" doesn't a home need to have been owned before it can be sold as an "existing home?"

It seems banks and mortgage companies need to sell those homes acquired during "record foreclosures." Hence: "record existing-home sales."

[DuctapeFatwa]

10. yes. see post 3

[tlcandie]

11. Yes, a lot of homes are being purchased AND built here in

Hernando County, Florida. It is the fastest growing county in Florida because it is the cheapest and least inhabited on the Suncoast.

MANY are buying homes from other higher priced areas... Tampa, northeast, etc. You can buy a 4/2 NEW around $100k...might be a tad higher now.

Cost of living here is EXTREMELY low...groceries, taxes, utilites and it's sun and sand living.

So, I believe you have this factor...those down-sizing while the market is hot to pay off or buy more for their money in a less expensive area.

IMHO

[Frodo]

12. There is certainly SOME of that, BUT...

... "Trading down" (empty nest, retirement, budget, whatever) certainly DOES happen, but you don't see rising prices and increased sales from it.

Somebody has to actually BUY that older (bigger) house.

[banana republican]

15. And the Cooking Channel

is have a class on book cooking....