Category Archives: National Housing Market

Sales Stir Hope for the Housing Market

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December marked the third straight month of previously owned home sales, bringing the supply of homes listed for sale to the lowest level since 2006. We are now seeing a glimmer of hope that the housing market could be starting to climb out of a profound downturn, according to an article posted by The Wall Street Journal.

Existing-home sales increased 5% in December from a month earlier, to a seasonally adjusted annual rate of 4.61 million units, the National Association of Realtors said Friday. Lawrence Yun, the Realtors’ chief economist, called the December gain “a good finish to a very tough year.”

Many economists had predicted that 2011 would be the worst year on record for existing home sales, but the year ended with 4.26 million sales, about 1.6% higher than the 4.19 million existing homes sold in 2010. Market-watchers attributed this to a minor surge in sales at year-end, driven by historically low mortgage rates, falling prices, active investor-buyers and increasing consumer confidence.

Still, economists cautioned that it’s too early to assume that the market is recovering. “These were positive numbers, but that doesn’t mean the market is getting better. Lenders have been trying to get rid of distressed homes, and investors been snapping them up,” said Patrick Newport, chief economist at IHS Global Insight. According to the Realtors report, investors purchased 21% of all homes in December, up from 19% in November.

The inventory of homes for sale declined in December to 2.38 million, the equivalent of a 6.2-month supply, assuming the pace of sales remain at December’s level. A six-month supply of homes typically is considered healthy, although NAR’s numbers don’t take into account the “shadow inventory” of homes that are either in foreclosure or on bank balance sheets and not yet listed for sale.

Read full article here

Optimism Builds in the Housing Market

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“Several recent indicators for the real estate industry are pointing to a market that is on the mend and entering recovery mode.

Housing experts’ predictions for the new year tend to center around a market stabilizing before entering a gradual, albeit very slow, recovery. However, the tone is more upbeat than it has been in years for the housing market.”

Via REALTORMag.com..

Here are a few of the signs that are showing the market moving in a more positive direction:

Home sales: Existing home sales are expected to increase 12 percent this year, following a 2 percent jump last year, Moody’s Analytics predicts. The signs are already showing: In November, pending home sales — a gauge for future home buying — reached its highest level in 19 months, the National Association of REALTORS® reported. (Read more.)

New-home market: Coming off of what could be considered the worst year for new-home building ever recorded, the sector is expected to bounce back this year. New-home sales and starts were already showing a rebound in the last few months of 2011. Moody’s is predicting that single-family housing starts will increase 37 percent this year, and new-home sales will soar 74 percent.

Housing stocks: Investors are starting to get optimistic about the possibility of a rebound too, and are turning to home builder stocks. These equities have recently outperformed the broader stock market and the S&P 1500 homebuilding index has increased 38 percent since mid-October, USA Today reports.

Consumer confidence: With mortgage rates at record lows and housing affordability high, about 71 percent of Americans say now is a good time to purchase a home. Also, more Americans are optimistic that home prices will rise over the next year — about 26 percent say prices will rise in 2012, an increase of 4 percent over the last survey, according to Fannie Mae’s December National Housing Survey.

Some Good Signs for the Real Estate Market

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“Sales ticked up for existing homes and new homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode.”

Via RealtorMag…

In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010.

The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace.

“Inventories of new homes are very low: There’s nothing on the shelf, so any increase in new home sales will translate directly into new housing starts,” Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. “That means putting people back to work.”

Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, andmortgage rates reached new record lows last week, pushing housing affordability even higher.

Source: “New Home Sales Edge Up,” CNNMoney (Dec. 23, 2011)

Residential Housing Ready to Awaken?

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“After half a decade of withering sales and slumping prices, there are strong and diverse signs that the single-family housing market is poised for a rebound.”

Via Yahoo! Finance…

In some metropolitan areas, the market has bottomed, with both sales and prices on the rise and foreclosures on the decline.

This contrarian – and largely overlooked – thesis flies in the face of the persistent gloom that has nagged the industry since 2007, when the subprime crisis flared.

Industry analysts and players cite a number of reasons – some traditional (employment), others unique to the post-credit bubble era (foreclosures)  - for the long-awaited sea change. An analysis of industry and government data also support the forecast.

“It has become increasingly apparent to us that the pieces for a housing rebound next year are beginning to fall into place,” declared Barclays Capital analyst Stephen Kim in a recent note to investors.

Proponents admit that the nascent rebound could easily be derailed, but stress that after years of government efforts to support sales and prices as well as the volatile impact of foreclosures, the market has regained a measure of normalcy.

“With the exception of really hard-hit markets, the vast majority is ready to turn around,” adds Jerry Howard, president and CEO of the National Association of Home Builders, NAHB. “The Washington, D.C., area is not only ripe for recovery, they need to start building units.”

Read full Article here.

 

 

 

 

Why Aren’t More Talking About This?

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Prices have mostly stabilized, so why aren’t more talking about it?

Via RealtorMag…

An improving job picture and prices stabilizing for non-distressed homes are all signs that point to a housing recovery taking shape, Barclays Capital analyst Stephen Kim told HousingWire.

“In the absence of a government home buyer incentives, prices for non-distressed home sales have stabilized for almost a year,” Kim said. “This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices.”

The key to when the housing recovery will largely take off “depends primarily on when these first-time buyers decide it is safe to buy a house,” Kim told HousingWire.

Real Estate as a Hedge against Inflation

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Via KCMBlog…

“We haven’t heard a lot about inflation recently. However, prices have started to creep upward over the last year.” Here are a few categories that increased from November 2010 to November 2011:

  • Food at home – up 6.2%
  • Housing fuels and utilities – up 3.5%
  • Transportation – up 9.2%

The National Association of Realtors (NAR) took an historic look at the impact of inflation. Here are some inflation numbers over the past 30 years:

NAR then looked at inflation moving forward over the next thirty years.

Bottom line, “We can lock in the housing costs of our primary residences and vacation homes at all time lows if we purchase today. Either would be a great hedge against future inflation.”

Finally, a Bottom for Home Prices

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“Housing prices will stop sinking next spring.”

According to an article on Kiplinger.com, the recovery process will be gradual, but home prices will stabilize by this spring. “Look for prices, which have fallen an average of 31% since 2006, to drop an additional 2% or so in the early months of 2012 and then recover that lost ground by the end of the year.”

A key signal that the bottom is near: A change in the ratio of average homes prices to personal income – houses are affordable again. After soaring to 4-to-1 during the housing boom, the ratio is now well below the long-term average of 3-to-1.

Another reason for optimism: Foreclosure numbers are set to level off after a recent surge to clear up the backlog that developed when banks were found to be rushing though the paperwork for seizing homes. Although the 3.5 million foreclosures still in the pipeline are weighing heavily on the housing market, that effect will diminish when it is clear that the worst has passed.

Look for home sales to tick up next year as well, hitting 5.5 million for new and existing homes. That’s up 4% from 2011, the low point since the housing bubble burst.

Farther down the road, there is plenty of pent-up demand. The lousy housing market has muffled the typical rate of household formation, deterring many young folks from getting their own homes. As a result, there are 2 million new households waiting for an improvement in economic conditions: recent graduates eager to leave their parents’ nests and 30-something couples who have delayed marriage or having children. As the economy picks up steam, they will emerge, helping to soak up the glut of foreclosed homes and putting construction on a faster track.

By 2014, the housing market will start to look more like its old self, with housing starts near the long-term average of 1.5 million a year, sales of about 6 million and price gains of over 4% a year.

Of course, the market shift won’t make much immediate difference for the millions of homeowners who owe more than their homes are worth. But for the majority with equity in their homes, even a modest gain in prices can change their spending behavior.

Read more: http://www.kiplinger.com/columns/practical-economics/archives/finally-a-bottom-for-home-prices.html?si=1#ixzz1fhPiqfit

 

The PRICE is the Same, but the COST is Less (infographic)

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The KCM Blog...That means you save $285.30 a month, $3,423.60 a year and $102,708 over the life of a 30 year mortgage! You buy the home for the same PRICE but the COST is over $100,000 less.

 

 

Via the KCM Blog…

There is more and more research coming out showing that it makes great financial sense to purchase a home today . Whether it be rent vs. buy ratios, income-to-price ratios or income-to-mortgage payment ratios, purchasing a home right now is a bargain compared to historic norms. Now we want to look at the COST of a home today compared to pre-peak prices.

According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 1Q PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling.

Bottom Line

This is why so many financial advisors are saying that this may be one of the greatest times in history to purchase a home.

Contact a Coldwell Banker Seaside Realty agent today for more information about homeownership and what works for you.

Modest Volume, Price Gains Seen Next Year

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According to REALTORMag, the housing recovery will continue on its slow but steady pace over the next couple of years. However, one thing that may stand in the way is a loss of confidence in a housing recovery.

NAR Chief Economist Lawrence Yun

NAR Chief Economist Lawrence Yun predicted home sales would increase by 4 percent next year and home prices would inch up 2 percent during the Economic Issues & Residential Real Estate Business Trends forum Friday morning. In 2013, he projected sales to pick up another 6 percent and prices to rise another 3 percent.

Home-sales growth has been flat this year, even though it couldn’t be a better time for consumers to buy, because prices are still down—essentially under replacement value—and interest rate are at historical lows. Even employment and wages have been heading up, although both at a modest pace.

Yun characterized today’s market as “strange” because of this disconnect between the good buying conditions and the low sales growth.

Rock-bottom consumer confidence is a big part of the weak market but the hurdles to borrowers imposed by lenders through stringent underwriting requirements are a major issue, too. Lenders are requiring applicants to have credit scores of about 760 for Fannie Mae and Freddie Mac loans, and just under 700 for FHA loans, shrinking potential home sales by about 20 percent.

The stiff requirements come at a time when banks are seeing strong profits and run counter to the Federal Reserve’s efforts to use rock-bottom interest rates to attract borrowers and get the economy moving.

Behind the tough underwriting is a concern among banks about borrowers’ ability to repay loans, but Yun says that risk is low. Rather than continuing to head down, home prices have been stable for the last two years and are poised to head up, which will reduce lending risks, lower foreclosures, boost sales, and further strengthen the market.  

To show that home prices have been stable, he cited both NAR and Case-Shiller data, which show prices have been hovering around a $140,000 national median since 2009.

Yun said it was crucial that the federal government not stymie what little momentum the housing market is seeing by moving forward with a proposal to require 20 percent down payments from home buyers or making other destabilizing housing policy shifts. It’s also crucial for interest rates to stay low, although if lenders return their underwriting to the sound standards they used before the housing boom, he said, the market could handle higher interest rates.  

Richard Peach, senior vice president at the Federal Reserve Board of New York and the other speaker at the session, offered a unique suggestion to improve the housing sector, one that was particularly suitable for Veteran’s Day: help military personnel who served overseas purchase foreclosed homes.

“My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a downpayment on a foreclosed home in the Fannie or Freddie portfolio,” Peach said.

Baby Boomers and the Real Estate Market (infographic)

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Via Coldwell Banker Blue Matter…

There are 79 million baby boomers, and this year, the oldest boomers turn 65. Their impact on the economy is enormous, so looking at the home buying trends of this group highlights interesting differences between older and younger boomers. A new survey from Coldwell Banker reveals that younger baby boomers are interested in purchasing a second home (34 percent) as compared to their older boomer counterparts (22 percent).

The infographic below represents data collected from a survey of Coldwell Banker real estate brokers and agents regarding Baby Boomer real estate trends. The findings are pretty interesting. Take a look.