Housing Market is on an Uptrend

Washington, DC, February 27, 2012

Pending home sales are on an upward trend, which has been uneven but meaningful since reaching a cyclical low last April, and are well above a year ago, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 2.0 percent to 97.0 in January from a downwardly revised 95.1 in December and is 8.0 percent higher than January 2011 when it was 89.8. The data reflects contracts but not closings.

The January index is the highest since April 2010 when it reached 111.3 as buyers were rushing to take advantage of the home buyer tax credit.

Lawrence Yun, NAR chief economist, said this is a hopeful indicator going into the spring home-buying season. “Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year. With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”

The PHSI in the Northeast rose 7.6 percent to 78.2 in January and is 9.8 percent above a year ago. In the Midwest the index declined 3.8 percent to 88.1 but is 10.8 percent higher than January 2011. Pending home sales in the South increased 7.7 percent to an index of 109.1 in January and are 10.5 percent above a year ago. In the West the index fell 4.4 percent in January to 101.9 but is 0.7 percent above January 2011.

“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun said. “If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater.”

The National Association of Realtors®,

Housing Predictions

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

dsnews.com

New Home Sales

Sales of new U.S. homes dipped in January but only after the government said the final quarter of 2011 was stronger than first estimated.

An upward revision to December’s data and a drop in supply of homes on the market added to growing signs of a nascent recovery in housing, however.

The Commerce Department said on Friday sales slipped 0.9 percent to a seasonally adjusted 321,000-unit annual rate. December’s sales pace was revised up to 324,000 units, the highest in a year, from the previously reported 307,000 units.

Economists polled by Reuters had forecast sales at a 315,000-unit rate. Compared to January last year, new home sales were up 3.5 percent.

Despite the weak sales last month, details of the report offered further fresh signs of green shoots in the housing market, with the months’ supply of homes on the market falling to 5.6 months – the lowest since January 2006. That compared to 5.7 months in December. A 6-month supply is generally considered ideal, with higher readings indicating steep price declines.

The median price for a new home rose 0.3 percent to $217,100 – the highest level since October. Compared to January last year, the median price was down 9.6 percent. The inventory of new homes on the market was the lowest on record.

Pierre Ellis, an economist at Decision Economics, said the improvement lends “additional support to the housing market,” and mirrors other positive signs in the industry.

Data this week showed home resales rose to a 1-1/2 year-high in January. Confidence among homebuilders this month approached a five-year high and builders are undertaking more residential projects, mirroring the economy’s generally upbeat tone.

Still, both sales and home construction remain far below their 2005 levels. New homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.

The Federal Reserve has suggested a number of ways other policymakers could step in to help the beaten-up market and is considering purchasing more mortgage-backed securities to drive mortgages rates even lower.

New home sales last month rose in two of the four regions.

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

 

Owning a Home Still Matters to most Americans

  Despite the beating that home prices have taken over the last five years, Americans are still optimistic about their own housing situation, a new poll shows.

Seventy-eight percent of Americans identified as likely to vote in the 2012 presidential election said that owning their own home was one of the most important things in their lives, according to the survey by Lake Research Partners done for the National Association of Home Builders and presented here Wednesday at the International Builders Show.

And 74% agreed, with 43% strongly agreeing, that owning a home was worth it even with all the ups and downs of the housing market.

“People told us that homeownership is more than just bricks and mortar, more than just having a big mortgage. It’s about family. It’s still part of the American dream,” said Alex Batty, a partner with Public Opinion Strategies who analyzed the results.

One-third of those polled even said housing was one of the best investments you could make, ignoring the 30%-plus drop in home prices nationally since the peak of the housing boom in 2006. The only better investment Americans can think of is a retirement account such as an IRA or 401(k).

Current homeowners were not discouraged in the least by the pitfalls of paying for and maintaining a house: 96% said they were happy with their decision to own a home and 85% said they were very happy with that decision.

“The desire for homeownership long-term is still there,” said Frank Nothaft, chief economist for mortgage agency Freddie Mac, even if economic and job uncertainty is keeping people from jumping into the market today.

The NAHB commissioned the election-year survey in the hopes of backing up its lobbying effort on Capitol Hill with data that could show Congress and the Obama administration that housing is still a valued commodity in the country and that Americans want the government to provide supportive housing policies, said Jim Tobin, the trade group’s chief lobbyist.

“It’s been frustrating for us, to see what we think is a lack of focus on housing,” Tobin said. “We’re just starting to see some of our efforts on this pay off with the Republican candidates and the president.”

Obama late in January unveiled a new mortgage-refinancing plan designed to help distressed homeowners. Read more about the mortgage-refinancing plan.

That kind of assistance is what respondents to the survey said is appropriate for the government to do in support of housing. Two-thirds said it was OK for the government to ensure the availability of 30-year mortgages and 75% said it was all right to use the tax code to support homeownership.

And in a warning to those would propose to cut the mortgage-interest tax deduction as part of the deficit-reduction debate, 65% said they would be less likely to vote for a candidate who supported that position.

Home Buyer’s Demands are Strengthening

January 2012

Georgia Association Of Realtors:

For once, the headlines are getting it right: “Supply-side correction continues,”
“Home buyer demand strengthening,” “Market heads toward balance.” There is
a very real sense that the landscape is shifting. We don’t want to overstate the
case this month, as this coming spring will be the bellwether. It’s been plus or
minus five long years since the peak of the housing bubble and the ensuing
aftermath. As we delve into a new year, let’s see if the first month of the sixth
year brought any encouraging signs.

New Listings in the state of Georgia decreased 16.6 percent to 11,859. Pending
Sales were up 46.8 percent to 7,947. Inventory levels shrank 28.5 percent to
50,381 units.

Days on Market was down 2.7 percent to 94 days. Absorption rates
improved as Months Supply of Inventory was down 36.7 percent to 7.3 months.
U.S. economic data has been encouraging. The unemployment rate flirted with
a 3-year low and an initial reading on the fourth quarter of 2011 GDP was in-line
with expectations. Mortgage rates posted yet another fresh new record low. At
the risk of sounding redundant (at the risk of sounding redundant), the missing
puzzle piece is still jobs. Improvements in the labor market will spur housing
demand through new household formations, improve family financials and
galvanize consumer confidence.

Positive News for Real Estate

A recent survey of more than 1,800 real estate professionals has indicated that 2012 might represent the end of the down real estate market and the start of a rebound, with 10 specific local markets expected to lead the way. The biggest challenges facing the recovering market, agents said, will be short sales, loan qualification rules and foreclosures.

Collected from among the more than 220,000 ActiveRain real estate professional community members, the survey highlighted which specific markets across the United States held the most optimism for growth among real estate agents as well as which markets were expected to continue struggling into 2013.

 

“Real estate is a deeply local business, so it’s no surprise to see such differences in optimism and pessimism between agents in vastly different market conditions,” said Nikesh Parekh, chief executive officer for ActiveRain. “But the fact that, as a group, they expect improvement during 2012 is a good sign for the real estate industry and for the economy overall.”

New Construction and Interest Rates

The Commerce Department says builders broke ground on a seasonally adjusted annual rate of 699,000 homes in January.

Construction began on 508,000 single-family homes last month, a 1 percent drop from December and the first decline in four months. Still, December single-family homes were revised up strongly to show builders started 513,000 homes. That’s up from the initial estimate of 470,000, a difference of 9 percent.

NEW YORK (CNNMoney) — Rates on 30-year fixed mortgages remained at an all-time record low for the second week in a row.

The 30-year fixed rate held steady at an average of 3.87% for the week ending February 9, the lowest rate ever recorded in the 40-year history of the Freddie Mac Primary Mortgage Market Survey. That compares with the 5.05% rate recorded at the same time a year ago.

Meanwhile the 15-year fixed rate inched slightly higher to an average of 3.16%, up from the record 3.14% it set in the previous week. The 5-year Treasury-indexed adjustable rate mortgage and the 1-year Treasury-indexed adjustable rate mortgage also saw modest gains.

Frank Nothaft, vice president and chief economist at Freddie Mac, attributed the increases to last Friday’s much better-than-expected jobs report. The report showed that the economy gained 243,000 jobs last month and the unemployment rate eased to 8.3% — the lowest rate since February 2009.

Houston County Board of Education

New Homes

Builders really have their work cut out for them today, considering that more people prefer existing homes over new homes, and that those existing homes are perceived to be much less expensive.  Even so, 29 percent of current homeowners would prefer to buy a new home, if they bought another.  What do people like best about new homes? “Everything is new” was the top response, cited by 82 percent of current homeowners.

When an industry goes through the kind of major upheaval that we have seen in home building in  recent years, it emerges transformed. Old rules and expectations may no longer be relevant, and success goes to those who are the best prepared to work within a new business model.

Bob Neilsen

Realtors

Realtors have never been more important to builders than they are today, especially now that more and more home buyers are using the interenet to find their home.  According to recent research, in 72% of new home closings involving a co-op Realtor payment, the home buyer initially found the home through the internet, and then used the Realtor as an expert third-party source to validate the price, location, builder, quality, and more. Builders need to build or adjust their Realtor strategy to accommodate the real estate agent’s new role of validating homes and builders.  They must base their new strategy on several assumptions: -Realtors have buyers. -Realtors validate purchase decisions. -The role of on-site salesperson has changed. I read this information in the latest Builder Magazine in the February 2012 addition/publication. As a local builder here in Middle Georgia I have always tried to work with Realtors in every way that I can and have always tried to really appreciate their services.  What they bring to the table  to say the  least is”Price-Less”!