Is “Traditional” Avoided Like the Plague?

I was out for a stroll this morning and noticed an interesting catch phrase on a real estate sign, “anything but traditional.” Sure it could refer to operations and attitude, but my guess is they wouldn’t have chosen the phrase if traditional was a hot feature in homes.

If you’ve been out looking for homes you may have noticed finding a traditional-looking home with lots of walls doors and square symmetrical spaces can be difficult. More often there are big, open spaces, multi-purpose rooms, built ins and large windows.

This all makes it difficult to find places to put stuff. A traditional home can accomodate lots of things because there are lots of walls and spaces in corners, between windows, in hallways and atop stairways. There just isn’t a lot of room for stuff in many of the homes being built now.

I don’t think its necessarily that home buyers want to be minimalists, the open spaces don’t offer places for too many things even though there may be more space over-all. It would be nice to see a traditional form come back to home building.

Luxury Home Sales Outperform Others

Gloomy news that July sales of existing homes dropped 25.5 percent year-over-year has overshadowed new statistics showing summer sales of million dollar plus homes significantly outperformed other price ranges.

“Luxury homebuyers have been buying this summer,” said Laurie Moore-Moore, CEO of The Institute for Luxury Home Marketing (ILHM). “After waiting in the wings, many affluent buyers spent the summer shopping for value and snapping up trophy properties.”

Statistics would indicate that she’s right. According to The National Association of Realtors (NAR), for 2009 million-dollar and above home sales were just 1.2 percent of total sales or about 61,500 sales nationally. In July 2010, million dollar plus market share was up to 1.9 percent. While sales of homes in the $500,000 and above range rose dramatically in June, the million-dollar-plus market segment was the only price range in July showing positive growth compared to last year. “The mix of what is selling has shifted in favor of homes priced at $750 and above,” added Moore-Moore.

NAR’s report that July’s median sales price increased 0.7 percent  year-over-year may be more a function of increasing sales of expensive properties relative to other price ranges than an indicator of across-the-board home price appreciation.

According to the ILHM National Luxury Market Report -- which does a weekly analysis of luxury homes for sale in more than 30 major markets -- after a dramatic rise in upper-tier inventory, which started in January of this year, the numbers of luxury homes for sale has declined about 5 percent  since the beginning of July. Along with a decrease in inventory, there has been a decline in asking prices. Forty three percent of luxury homes currently on the market have had at least one reduction in asking price over the last 90 days. An additional 19 percent  have been pulled off the market and subsequently re-listed.

“While I wouldn’t say the luxury market is in recovery,” said Moore-Moore, “ the growing market share of luxury sales relative to total sales, a slight downward trend in inventory, and sellers who are more realistic about price are factors shifting the affluent into a buying mode.”

Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending July 22, 2011.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4.9 percent compared with the previous week. The Refinance Index decreased 5.5 percent from the previous week. The seasonally adjusted Purchase Index decreased 3.8 percent from one week earlier. The unadjusted Purchase Index decreased 3.4 percent compared with the previous week and was 2.2 percent higher than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is down 0.3 percent. The four week moving average is down 0.5 percent for the seasonally adjusted Purchase Index, while this average is down 0.3 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 69.6 percent of total applications from 70.1 percent the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent from 5.8 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.54 percent, with points increasing to 1.14 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.67 percent from 3.66 percent, with points increasing to 1.08 from 0.97 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.