Parade of Homes

Just a reminder, the Builders' Association of Greater Lafayette is hosting its annual Parade of Homes on Saturday and Sunday, July 18th and 19th and Saturday and Sunday, July 25th and 26th. Each Parade home will be open from 1:00 -- 5:00. For detailed information about the 20 homes in the Parade, including an impressive mapping feature, visit the BAGL website.

A softening in demand?

I reported to you earlier in the spring a delightful pop in buyer demand. We began to notice the increase in March and it continued through most of May. I define a "pop" as when measurements in demand compare favorably to the same time frame in the prior year.

We noticed the improvement first in showings, next in accepted offers and it manifested itself in closed sales. During the same period in time, we noticed a decrease in the number of homes for sale in Lafayette and homes for sale in West Lafayette. Once again, we found this encouraging....a reduction in what was clearly an oversupply of inventory.

Regretfully, shortly before Memorial Day, we saw a bit of a reversal, specifically a slip in our showing activity. Written offers dropped slightly in June (compared to last June) and we anticipate closings in July will be below July, 2009. On a year to date basis, closed units sales in the Lafayette area are down by 13% from the same period of time last year.

It is always hard to speculate what causes increases and decreases in sales activity, but in this case, it was in all likelihood driven by 60 basis point increase in fixed rate mortgages in May. According to Freddie Mac statistics, the average fixed rate mortgage rose from 4.86% in May to 5.42% in June. However, this is not all gloom and doom. The average fixed rate in June is still 90 basis points better than the 6.43 average in June, 2008.

I guess this is more evidence to show that we have reached the bottom of our local real estate recession and are bouncing up and down. I do not believe we have begun the final and steady road to real estate recovery. We look forward to the second round of buyers that will be generated by the $8,000 first time home buyers credit (the folks whose houses were sold to the first time buyers, who are now have become buyers without a house to sell) and the economic strength that is yet to come from the unspent Federal stimulus money.