Right now, the most compelling reason to jump into the housing market is the mortgage interest rate, now at all time lows. Smart buyers think in terms of monthly payments and the long term cost of a loan in addition to the purchase price. Currently, interest rates are the lowest they’ve been in over 50 years, at fixed rates of 4.17%.  According to the National Association of Realtors’ Chief Economist, Lawrence Yun, “ Economists are predicting a rise to 5% or 5.5% in the course of the next year.”  That translates to almost $2,000 a year or $57,975 over the life of $200,000, 30-year fixed rate loan.  The risk of rates increasing seems to overshadow the risk of prices falling further.

In addition to interest rates being a major factor,  there are a few other determinants to consider.  Inventory is plentiful.  Nationally, there is a 10–12 month supply of homes on the market, which is considered high.  A six month supply is thought to be a balanced market and is historically the average. We are tracking the national figures.

Prices are the final factor.  “Median prices are lower than they were,” says Lawrence Yun, “and economists expect increases in values during the next twelve months.”   In the Rhode Island market, the median price hit a low in quarter two of 2009 and re-hit that value in Q1 of 2010, but has risen slightly over the last two quarters. While predicting the future is impossible, it does seem like we are at a bottom as the experts are saying.

Considering all factors — the large selection of homes available, a price to value ratio, and especially the cost of your monthly payment, you may find this is the perfect time to start buying your home.

Here are the highlights of the RIAR report.

The Single Family Home market is starting to stabilize:

• 787 Single Family homes sold, compared with 621 last year.
• The median sales price was $200,000, down from $215,000 during October 2008.
• 22% of sales were distressed properties, which is approximately the difference between this and last year sales.
• The median price of sales without short sales or foreclosures was $230,000.

The multifamily home market fell slightly in year-over-year comparisons:

• 187 sales in October 2009, down from 193 a year earlier, a 3.1% drop.
• The median price fell from $116,000 to $110,000.
• 18.6 % of those were distressed sales.

Condos had a 35% increase in sales in October compared with the last year:

• 111 sold compared with 82 a year earlier.
• The median price fell 29 % to $161,000 from $227,500.
• 21 % of the sales were distressed, again most of the difference from last year.

With Mortgage rates at historic lows, and lower prices, home affordability conditions are the best on record since 1970. The expanded tax credit should drive the spring market; helping the move-up buyer as well as the first-time buyer. Since potential buyers have until April 30 to have a contract in place, we should continue to see robust sales through  Spring.

This Week’s Real Estate Insight:

By the time the credit expires, we should have worked though enough inventory that prices stabilize or even increase slightly, then the market could stabilize because buyers won’t be paralyzed by worry about further decline in home values.

Not all real estate companies are alike, and without getting deeply into the inner workings of each particular group, I will try to give you an overview to highlight the general activities you can expect from the office behind the face. Obviously, this may be slightly biased to our organization.

For the seller of property, the foremost interest is how is my home going to be offered, that is, how professional, how many sales people, and how is it going to be “marketed.” Your agent is the salesman for the property, but in some companies (like ours) the other agents in the company will also be sales people for the property. In companies which have different models, the agent may be the only salesperson, unless they have a team of people working with them. That means, if your agent isn’t available, your property may not be shown.

But a bigger picture item is the marketing of the property. Marketing can be everything from placing a link on Craig’s List, to an ad in the local papers, company websites, virtual or video tours, floorplans, property websites, and possibly social network marketing. It can also include open houses, newspaper feature articles, features on radio shows or even television ads. Plus, the office may have a good internal network to promote the property to buyers working with other agents in the company.

Your goal is to clearly understand what the company is doing for you and not just your agent. The “behind the scenes” marketing and technology departments are important in today’s world. Having a vision as to what should be done for a particular property is important. And understand, not every property needs the same marketing approach. This is clearly the case of one size doesn’t fit all.

For the buyers out there, the company will offer other added benefits. Not only will your agent have a better understanding of the properties in the inventory of the company (most offices have their agents tour each property), but she will have the materials developed by the company to help understand the neighborhoods. In our case, since we have five strategically located offices, others in the company will help that agent understand the areas outside their community.

One other area to investigate. Does the company have a relocation department? If you are moving out of the state, you may need help in the new area finding a good agent to help you find the property in that new town. It is always better to have someone who knows something about you through a referral instead of walking into a new market with no help.

Finally, the local Realtor board, in RI it is the Rhode Island Association of Realtors (RIAR), is the oversight body to help self regulate the industry. Each state has their own group and these groups also have local boards to focus down on a subsection of the state. Rhode Island has five local boards. The state organization is a wealth of information and has a useful site at riliving.com. One other thing, the boards provide to the Realtor valuable educational resources on communication, legal information, technology, market statistics and ethical business practices. This keeps them informed on how to do business and what is going on in the market place. In the end, that will help you understand the real estate market better.

There were two golf tournaments in the blistering heat on Monday for the Realtors of Rhode Island. The 17th KWAOR Annual Charity Golf Tournament was held at Quidnessett Country Club in North Kingstown, RI. Our IT Director, Tom Flanagan, joined the East Greenwich team led by manager Cheryl Eley. They were joined by Sheila Harrington of Harrington & Rhodes, Ltd. and another friend of Cheryl. They didn’t enter into the leader board, but had a great time anyway. Proceeds from the event benefited the South County Habitat for Humanity and Habitat for Humanity West Bay and Northern RI.

The Northern RI Board of Realtors held their 3rd Annual Golf Tournament at the Crystal Lake Golf Club in Burrillville, RI. Cumberland sales agent, Debby Smith, was the co-chair of this event. Residential Properties fielded two full teams and a husband of an agent joined the third.

The Residential Properties Men’s team won the tournament. The team included agent Katie Baker’s husband, Gary, sons – Trent and Grant, and agent Doug McKinnon of the McKinnon team. The Women’s team, which was comprised of three agents, Anne Carey, Anne’s sister Marcia Clayton, Doreen LeBlanc and Anastasia Kaufman, also made a fine showing. Anastasia’s husband, Brian, played in another team of three people.

In other athleticism, our own COO, Libby Isaacson, put on a great personal performance in the Narragansett 5 mile run placing 4th in her bracket. This non-profit road race supported the Bobby Doyle Scholarships and the Bobby Doyle youth running fund.

So, when the conversation lags about homes or neighborhoods, you might want to ask about their hobbies. The answer may surprise you.

Bucking the national trend in home sales, The Rhode Island Association of Realtors (RIAR) showed a 12.4 % increase in sales from March 2008 to March 2009, and existing home sales increased 21.5% from February 09 to March 09. National Association of Realtors data showed a nationwide 7.1% decrease in sales during the same twelve months.  RIAR statistics include Rhode Island sales only, while NAR data includes the Fall River and New Bedford metropolitan areas. NAR reported that distressed sales accounted for just over half the sales in March virtually the same as in Rhode Island.

Lawrence Yun, NAR’s Chief Economist was in Rhode Island last Wednesday speaking at a RIAR conference.  He feels the national housing market “has returned to its normal balance after a buying frenzy in the first part of this decade led to a collapse last year, that can set the stage for buyers to return to the market and house prices to stabilize.  A median-priced house is as affordable as it was in 1998, before the run-up in housing prices.”

This Week’s Real Estate Insight:

You can take it from me, or you can listen to these two economists, Yun believes conditions are right for recovery to begin in Providence. “The buyer should be coming back, Providence will be the first housing market in the Northeast to emerge from the housing slump, and  University of Rhode Island  economist Len Lardaro agreed with Yun, saying “Now would not be a bad time to buy real estate – at the right price.”I’d be thinking about buying a house.”