Slight Increase in April Existing-Home Sales

on Thursday, 22 May 2014. Posted in Real Estate

Existing-home sales and total home inventory bumped up in April, for the first time this year, while home price growth remained steady. According to the National Association of Realtors (NAR), total existing-home sales for April 2014 were a seasonally adjusted annual rate of 4.65 million, up 1.3 percent from March. While April’s existing home sales topped March’s 4.59 million in total sales, the number was still 6.8 percent shy of the 4.99 million sold in April 2013.

“Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” said Lawrence Yun, NAR chief economist. “Annual homes sales, however, due to a sluggish first quarter, will likely be lower than last year.”

April finished with a total housing inventory of 2.29 million, a sharp increase of 16.8 percent from March. April’s inventory represented a 5.9-month supply, whereas March’s numbers were indicative of a 5.1 month supply. Unsold inventory is 6.5 percent higher than last year.

“We’ll continue to see a balancing act between housing inventory and price growth, which remains stronger than normal simply because there have not been enough sellers in many areas. More inventory and increased new-home construction will help to foster healthy market conditions,” Yun added.

Home prices also waned in April, ending with a $201,700 median home price. “Current price data suggest a trend of slower growth, which bodes well for preserving favorable affordability conditions in much of the country,” Yun noted.

Foreclosure Starts in California Close to 8-year Low

on Monday, 28 April 2014.

foreclosure-1-1The number of California foreclosure starts have remained steady for three consecutive quarters, at levels that haven’t previously been seen since early 2006. A market study recently released by DataQuick has suggested that economic growth, coupled with increased home values, could be contributing to the constant pace of new foreclosures.

Approximately 19,000 notices of default were recorded during the first quarter of 2014, rising 6 percent from the quarter previous. In comparison, Q1 of 2009 saw a height of 135,000 foreclosure starts. DataQuick notes, however, that the numbers may be ambiguous.

“It may well be that the foreclosure starts in recent quarters don’t reflect the ebb and flow of financial distress as much as they reflect a steady state of workload capacity on the part of the servicers. They may well be just working their way through a backlog, stacks of paper piled high on desks,” said John Karevoll, DataQuick analyst.

The first quarter of this year saw a rise in year-over-year default filings, something that hasn’t occurred since 2009. This gain, however, can possibly be traced to the newly passed California “Homeowner Bill of Rights,” which was enacted January and February of last year. Because the law temporarily halted lenders and services, homeowners received less foreclosure notices and may have created the illusion of lower foreclosure start numbers.

Suburbs Lead in Growth; Urban Areas Lead in Home Prices

on Tuesday, 15 April 2014. Posted in Real Estate

park-slope-brownstoneThe housing market has been making small strides towards recovery, and with it an interesting split has occurred between suburban and urban growth. According to Jed Kolko, chief economist at Trulia, cities are outpacing the suburbs in price gains, but the suburbs are leading the way in population growth.

According to Kolko, citing Trulia’s Price and Rent Monitor report, asking prices for homes in urban settings with high-density populations are continuing to increase. After seasonally adjusting calculations, Trulia found that national month-to-month asking prices in urban markets ticked up 1.2 percent in March. On a quarterly basis, prices jumped 2.0 percent in March, marking the third straight month of month-over-month gains.

Asking prices are up 10 percent from last year, rising in 97 of the 100 largest metros. Only three metro areas demonstrated a fall in asking prices year-over-year—Albany, New York; and Hartford and New Haven, Connecticut.

Curiously, it’s the suburbs where population is getting the largest boost. Kolko says, “locations with stronger demand, should have both higher price growth and more population growth.” Since the new home construction bubble burst in 2009, there has been a higher demand for urban residency, which has in turn hurt suburban construction growth.

“Suburbs can have faster household growth but smaller price gains because it’s easier to build new housing in suburbs than in dense urban neighborhoods,” Kolko said. “New construction accommodates population growth while taking pressure off rising prices.”

It merely appears that cities are taking the lead in the housing recovery, he said, because home prices in densely populated high-rise areas in cities, such as New York and Chicago, have gone up at a faster pace than those in other urban areas.

California's Home Financing Trends in 2013 (Infographic)

on Tuesday, 08 April 2014. Posted in Real Estate

California's Home Financing Trends, as Published by CAR

Home Financing Trends1

Has The Nation Reached Another Housing Bubble?

on Monday, 31 March 2014. Posted in Real Estate

With home prices continuing to rise year-over-year, despite recent slowdowns, market commentators and analysts are asking yet again if the nation has hit another housing bubble.

Trulia chief economist Jed Kolko says the answer is complicated, and that signs point to yes and no.

In the company’s latest quarterly Bubble Watch report, Kolko estimates national home prices are approximately 5 percent undervalued when considering elements such as historical prices, incomes, and rents. Continued price improvements have brought the market close to a tipping point, but he notes it’s nowhere near the 39 percent overvaluation in the first quarter of 2006.

“Even though recent double-digit price gains look unsustainable, current national price levels are not cause for alarm,” Kolko stated in a blog post. “Sharp price gains, like we’ve had in 2012 and 2013, are not the sign of a bubble unless price levels look high relative to fundamentals.”

Additionally, “the slowdown in price gains make[s] it less likely that we’re heading for another bubble,” he added.

The national market remains undervalued, but conditions are widely varied at the local level. According to Trulia, of the 100 largest metro markets, home prices are overvalued in 19, including 8 of the 11 largest California metros. The greatest danger is in the southern half of the state, in markets like Orange County, Los Angeles, and Riverside-San Bernardino—which make up three of the five most overvalued markets in the country.
While the number of overvalued housing markets continues to increase, Kolko again says historical perspective is required. “In 2014 Q1, prices were overvalued in 19 of the 100 largest metros, which is in the highest number since 2009 Q4; furthermore, prices were overvalued by more than 10 percent in 4 large metros, which is the highest number since 2008 Q4.

However, at the height of the bubble, all 100 were overvalued, and 91 were overvalued by more than 10 percent.”

Housing Recovery Gaining Consumer Confidence

on Tuesday, 11 March 2014. Posted in Real Estate

Consumer attitudes toward housing improved overall for the month of February, according to Fannie Mae’s February National Housing Survey. Fifty percent of respondents said they expect improvements in home price trends, up 7 percent from January. A slightly larger number of consumers anticipate declining prices—7 percent, up from 6 percent—while those predicting little movement fell to 38 percent.

Having previously dropped 1.2 percentage points to start the year, the average price change expectation bounced up to 3.2 percent, matching December survey numbers.

That renewed confidence in home prices saw a spike in those saying now is a good time to buy a home; that number was up 3 percent from January to 68 percent. Surprisingly, respondents saying they think it would be easy for them to get a mortgage right now dropped from January’s all-time high of 52 percent to 45 percent.

Additional survey results:

  • 35% believe economy is on the right track, down 4% from January
  • 57% believe economy is on the wrong track
  • 24% say their household income is significantly higher than it was 12 months ago
  • 36% say their expenses have increased substantially
  • 43% expect their personal financial situation to improve in the next year
  • 15% expect their personal financial situation to decline in the next year

California Home Prices Continued to Rise in January

on Wednesday, 19 February 2014. Posted in Real Estate

Home sales in California dropped for the sixth month in row in January, according to the California Association of Realtors.

Closed sales of existing, single-family homes stood at a seasonally adjusted annualized rate of 363,640 last month, flat from December but down 13.8 percent from January 2013.

CAR attributed the decline to continued low inventory and sinking home affordability due to increasing home prices. The median home price in California last month was $410,990, up 22.1 percent from the previous year. January marked the 23rd month straight in which the median has increased year over year and the 19th month straight to have a double-digit jump.

With rising home prices and home sales continuing to dip, CAR's report wasn't entirely bad news. While inventory remained low, the supply of existing single-family homes rose to 4.3 months last month, up from 3 months in December and 3.5 months in January 2013. CAR considers a six-to-seven month supply typical in a "normal" market.

Freddie Mac Says Mortgage Rates Are Down Again

on Thursday, 06 February 2014. Posted in Real Estate

Mortgage rates are continuing to decline for the fifth straight week, with Freddie Mac reporting that lenders were offering 30-year fixed home loans to solid borrowers at a 4.23% average, down from 4.32% a week ago.

The rate is the lowest for Freddie Mac's weekly survey since November, and down from 4.53% at the beginning of the year.

The average for 15-year fixed mortgages also dropped, from 3.4% to 3.33%, Freddie Mac said Thursday. The start rates for variable home loans fell as well.

An index of pending home sales decreased 8.7% in December to its lowest level since October 2011, Freddie Mac's chief economist, Frank Nothaft, said in announcing the survey results.

"Fixed residential investment negatively contributed to GDP in the fourth quarter for the first time since the third quarter of 2010," Nothaft said.

"Also, the Institute for Supply Management reported a significant slowing in growth in the manufacturing industry in December than the market consensus forecast."

California Median Home Prices (Infographic)

on Wednesday, 29 January 2014. Posted in Real Estate

California Median Home Prices by County, as Published by CAR

california median home prices

Housing Market Expected to Improve in 2014

on Monday, 27 January 2014. Posted in Real Estate

The housing marketing may not be back to normal just yet, but it is heading in that direction, according to a report from Zillow. Last year's soaring home price appreciation, frantic demand from investors, and increased negative equity are all expected to slow somewhat this year, according to the real estate company.

On a national basis, home prices rose 6.4 percent year-over-year in the fourth quarter, but annual price gains are expected to decline to 4.8 percent by year's end.

"Below the surface of last year's market, a number of unsettling trends started to emerge as a result of rapid and ultimately unsustainable appreciation, setting up a bit of a mixed bag for 2014," said Stan Humphries, chief economist at Zillow.

Some of the markets that had the highest price gains last year are already slowing, which according to Zillow, is "a welcome sign in markets that risk crossing over into bubble territory as rising mortgage interest rates create affordability issues for homebuyers."

Markets like those in California and the Southwest that experienced accelerated appreciation last year may stall this year due to issues with affordability, leading to "volatility that could potentially cause whiplash for homebuyers and sellers," according to Zillow.

Nationally, price appreciation is already slowing down, according to Zillow. After reaching a high of a 7.1 percent annual price gain in August, price gains remained below 7 percent for the entire fourth quarter.

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