Recovery Expected to Enter ‘Middle Innings’ in 2014

Author: Krista Franks-Brock January 24, 2014 0

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While the housing market is still far from “normal,” it is inching that way, according to a report released Thursday from Zillow. Last year’s skyrocketing home price appreciation, frenzied demand from investors, and high tide of negative equity are all expected to subside somewhat this year, according to the real estate company.

Nationally, home prices increased 6.4 percent year-over-year in the fourth quarter, but annual price gains are expected to fall to 4.8 percent by the end of this year.

On a quarterly basis, prices rose 1.4 percent in the fourth quarter, according to Zillow.

“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.

However, some of the markets that posted 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 such as those in California and the Southwest that experienced rapid appreciation this year may stall this year due to affordability issues, leading to “volatility that could potentially cause whiplash for homebuyers and sellers,” according to Zillow.

Nationally, price appreciation is already tapering off, 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.

However, local markets will vary widely this year with a 16.1 percent anticipated gain in Riverside, California, and a 0.4 percent gain anticipated in Kansas City, according to Zillow.

All but three of the nation’s 35 largest metros experienced price growth in 2013, and all but one are expected to experience price gains again this year, according to Zillow.

After posting a 3.8 percent decline last year, St. Louis, Missouri, is the only metro expected to experience falling prices this year with an anticipated 3.1 percent decline.

In two of the 35 markets Zillow tracks—Denver and Pittsburgh—home prices surpassed the peaks they reached before the housing downturn.

While home prices rose 1.4 percent in the fourth quarter to $169,000, rents rose 0.7 percent to $1,302.

Housing Recovery Unmoved by Rising Interest Rates

Author: Krista Franks-Brock January 23, 2014

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Mortgage rates may be rising, but the housing market doesn’t seem to mind. In fact, several indicators have improved alongside rising rates, according to the HousingPulse Tracking Survey released by Campbell Surveys and Inside Mortgage Finance this week.

The lending atmosphere is becoming friendlier, especially to first-time buyers. Simultaneously, the average time on market for non-distressed properties and the average sales-to-list price ratio both improved year-over-year in December, according to the survey.

“Six months after the May-June 2013 rise in interest rates, the housing market is showing remarkable resilience,” said HousingPulse research director Thomas Popik.

“[U]nderwriting standards are getting a little looser” at Fannie Mae and Freddie Mac, as well, according to Campbell and Inside Mortgage Finance.

The average credit score for GSE loans in the fourth quarter was 743, down from 758 a year earlier. Loan-to-value ratios at the GSEs rose from 75 percent to 76 percent year-over-year in the fourth quarter.

Fannie Mae and Freddie Mac increased their share of the purchase market as well as their share of the first-time homebuyer sector. In fact, the GSEs posted survey highs in both categories, according to the four-year HousingPulse survey. The GSEs accounted to 19.2 percent of purchase loans originated over the last three months of 2013, up from 16.5 percent a year earlier. The GSEs’ share of the first-time buyer market reached 19.5 percent, up from 14.1 percent a year earlier.

Looking at the broader market, time on market over the last three months of the year averaged 9.7 weeks, a decline from 12.4 weeks recorded at the end of 2012. The average sales-to-list price ratio increased from 95.5 percent at the end of 2012 to 97.1 percent at the end of 2013.

“A year-over-year comparison of key metrics points to a housing market that was stronger at the end of 2013 than it was at the end of 2012,” Popik said.

The HousingPulse Tracking Survey relies on input from 2,000 real estate agents each month and calculates its metrics on a three-month moving average.

Local Markets Return to ‘Normal’

BY: KRISTA FRANKS BROCK

More than 35 percent of the more than 350 metro markets tracked in the National Association of Home Builders’ and First American’s Leading Markets Index are performing at 90 percent or higher of their pre-housing crisis norms, according to the latest Leading Markets Index.

Previously, NAHB and First American tracked markets based on their rate of growth in the Improving Markets Index. Instead, the Leading Markets Index compares each market to its pre-crisis norms in terms of current permits, prices, and employment.

Currently, 56 markets have turned the corner and returned to normal, up from 54 last month.

“More markets are slowly returning to normal levels and we expect this upward trend to continue as an improving economy and pent-up demand brings more home buyers back into the marketplace,” said Rick Judson, chairman of the NAHB.

A majority of the markets that are back to normal levels are smaller markets with populations of less than 500,000. Forty-eight of the 56 markets that are back to normal fall into this category, with many benefitting from strong energy sectors, which lead to strong employment.

Overall, metro markets across the nation are performing at an average of 86 percent of normal levels in terms of permits, prices, and employment, according to NAHB. Forty-five percent of metros are exceeding this rate.

Among large metros, Baton Rouge, Louisiana, in performing best, 42 percent better than its pre-crisis level. Oklahoma City, Oklahoma, Austin Texas, and Houston, Texas, are also at the top of the list of major metros.

Among smaller metros, two are performing at twice their pre-crisis level—Odessa, Texas, and Midland, Texas.

As markets continue to work their way back to normal and/or surpass their previous norms, Judson says, “Policymakers must be careful to avoid actions that would harm consumer confidence and impede the ongoing recovery.”

 

Recovering Housing Market to Spur Economic Recovery in New Year

BY: KRISTA FRANKS BROCK

Next year will likely be the first year since 2000 that home purchases outpace refinances, according to Freddie Mac’s expectations. Furthermore, the rallying housing market should set the broader economy on a brighter path, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for November.

“Led by a resurgent housing sector, 2014 should shape up to be better than 2013,” Freddie Mac stated in its outlook.

Housing starts, which have been slow, should rise to a pace of about 1.15 million in 2014, according to Freddie Mac.

This is more in line with the historical average of 1.1 million per year reported by the Census Bureau. In comparison, the Census Bureau recently reported household formation over the first three quarters of this year at just 380,000.

Freddie Mac expects home sales to increase 5 or 6 percent in the new year, but tight inventory will prevent further increases.

Home values will continue to increase, albeit at a slower pace. Freddie Mac expects home price growth to be about the same as home sales growth—5 or 6 percent.

Rental prices will also continue to rise, but like housing prices, their pace will moderate. Freddie Mac expects rents to rise at a pace of about 5.3 percent next year.

Mortgage rates will reach about 5 percent for 30-year, fixed-rate mortgages by the end of 2014, according to Freddie Mac. While this will not threaten affordability in most markets, it may dampen affordability in a few higher-priced markets, according to the outlook.

Also, Freddie Mac noted there may be “some volatility in the short-term” resulting from uncertainty surrounding fiscal policies, such as the debt ceiling and the Federal Reserve’s tapering of its MBS purchases.

The overall good news for the housing market translates to good news for the broader economy, according to Freddie Mac.

The rise in housing starts should translate to 700,000 new jobs, according to economists at Freddie Mac.

These new jobs will help bring the unemployment rate below 7 percent “perhaps by mid-2014,” Freddie Mac stated.

Economic growth is expected at 2.5 to 3 percent for the year, which is “more than 0.5 percentage points better than is projected for 2013,” according to Freddie Mac.

Report: Homes Selling Faster Than Previous Year

11/14/2013BY: ASHLEY R. HARRIS

Nationwide, homes listed for sale on Zillow were selling at a rapid clip, to the tune of a month faster in September than a year ago, according to a new analysis. Zillow measured homes sold on the real estate marketplace, and as a whole homes in September spent a median of 86 days on Zillow, down 30 days from 116 days in September 2012.

Among the 30 largest metro markets covered by Zillow in September, homes moved the fastest and spent the fewest days listed on the site in the Bay Area (48 days); Sacramento, California (59 days); and Dallas, Texas (60 days). Homes sold faster this September compared to last September in 30 of the largest metros. Those metros include Las Vegas (44 days faster), Sacramento (43 days faster), and San Antonio (37 days faster).

Zillow calculated the median number of days listings spent on Zillow, at the national, metro, and county levels, dating to January 2010. In order to correct for homes that are listed, then removed and re-posted with new prices, Zillow considered multiple listings within 40 days at the same address as one listing. Since the beginning of 2010, homes nationwide have spent a median of 119 days on Zillow before being sold or taken off the market.

“The declining inventory of for-sale homes over the past year naturally creates pressure for buyers to more quickly snap up the inventory that is on the market. This demand has been fueled by huge resets in home prices since market peak, historically low mortgage rates and a slowly improving broader economic climate,” said Dr. Stan Humphries, Zillow chief economist.

“Home shoppers in today’s environment need to be prepared to move quickly, with pre-approvals in place and an established sense of what they’re willing to pay for a home,” he continued. “But even though things are moving fast, buyers should resist the urge to enter into bidding wars or pay prices they’re uncomfortable with. We do expect that this need for speed will abate in the near-term as mortgage rates rise and more inventory becomes available because of new construction and declining negative equity.”

 

Housing Picks Up Steam with Little Regard for Changing

Housing Picks Up Steam with Little Regard for Changing of the Seasons

BY: TORY BARRINGER

Contrary to what some are reporting, Realtor.com’sNational Housing Trend Report for October indicates the homebuying season hasn’t come to a close just yet.

“Instead of the usual seasonal slowdown, October data show the 2013 fall market moving at a fast pace,” said Errol Samuelson, president of Realtor.com.

“Inventory has returned to last year’s levels, but prices continue to strengthen and homes are moving significantly faster compared to this time last year,” Samuelson continued.

Realtor.com’s data shows the median list price in October was relatively untouched by the yearly seasonal drag

falling just 0.25 percent month-over-month to $199,000—7.57 percent above its year-ago level.

Eighty-five percent of the 146 markets covered in the report showed yearly improvements in median list price, and only 19 reported annual declines.

Compared to September, national inventory was down to 1.9 million, a decline of 0.71 percent from September and 1.51 percent from October 2012.

While the country continues to struggle with inventory problems, local trends indicate growth in supply.

According to Realtor.com, the number of markets where inventories were down by 5 percent or more annually dropped to 65 in October, continuing a trend that started in the summer. Meanwhile, inventory grew in 49 markets, and the number of areas with inventories up by at least 5 percent compared to last year rose to 30.

Perhaps the most promising statistic at this point, however, is median age of inventory: 94 days in October, a slight pickup from 93 in September but an 11.32 percent decrease from the prior year.

“This suggests that properties continue to turn over quickly in contrast to the usual seasonal patterns, and despite increasing prices and stabilizing inventory,” Realtor.com said in its report.

August Existing Home Sales At Pre-Recession High

09/19/2013BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Existing home sales rose an unexpected 6.5 percent in August to an annual sales rate of 5.48 million, the highest level since February 2007 – ten months before the onset of the Great Recession — the National Association of Realtorsreported Thursday. Economists surveyed by Bloomberg expected existing home sales to drop to 5.255 million from July’s originally reported July’s 5.39 million sales pace which was unchanged in today’s report.

The increase in sales came as the median price of an existing single family home in August dipped slightly from July, down $300 to $212,100. It was the second straight month-month price drop.

The inventory of homes for sale edged up to 2.25 million from 2.24 million in July, computing to a 4.9 month supply down from 5.0 in July and the lowest since February’s 4.7 month supply.

The sales increase came as mortgage rates continue to rise with buyers seeking to complete transactions before rates went up further. According to Freddie Mac, the rate for 30-year fixed rate loan in August was 4.46 percent (the average of the weekly rates), up from 4.37 percent in July.

The sales data came shortly after a the Federal Open Market Committee said tighter rates could be hindering the economic recovery and announced it would continue its monetary stimulus policy designed to “maintain downward pressure on longer-term interest rates [and] support mortgage markets.”

The NAR warned the strong sales pace might be a “temporary peak”, the association’s chief economist said “rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead.”

He warned “tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.”

The stronger sales pace came despite a drop in the NAR’s forward-looking pending home sales index for June which dropped to 110.9 from 111.3 in May. The index fell again in July to 109.5.

The sales gain was driven by stronger activity in the South and Midwest where the sales pace increased by 80,000 and 40,000 respectively. The sales pace slipped 30,000 in the West and was unchanged in the Northeast. The median price rose month-month in the South and Midwest but fell month-month in the West and Northeast. The NAR usually cautions against month-month price comparisons which it said, “do not compensate for seasonal changes, especially for the timing of family buying patterns

With the August report, sales pace topped 5 million for the fourth month in a row for the first time since August-November 2007. The August sales rate was 640,000 or 13.2 percent ahead of August 2012, the 19th straight of year-year gains.

Existing home sales continue to be plagued though by a tight inventory. The number of homes on the in August was down 150,000 from a year earlier, the 30th straight month of annual inventory decline. The months’ supply of homes for sale in August – computed using the homes for sale and the sales pace — was down 1.1 months from a year earlier. The months’ supply has been down year-year for 26 straight months.

While down month-month in August, the median price was up $27,200 or 14.7 percent from a year earlier, the strongest dollar and percentage year-year gain since October 2005. Nonetheless, the median price of an existing single family home is down – 7.9 percent – from its July 2006 peak of $230,300

The median price in August though topped $200,000 for fourth month in a row for the first time since May-August 2008.

According to the NAR, distressed homes – foreclosures and short sales – accounted for 12 percent of August sales, down from 15 percent in July, the lowest share since monthly tracking began in October 2008; they were 23 percent in August 2012. The decline in the share of distressed sales accounts for some of the year-year increase in the median price, since distressed homes sell at discounted prices. Eight percent of August sales were foreclosures, NAR said, and 4 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in August, while short sales were discounted 12 percent.

According to the Realtor group, the median time on market for all homes was 43 days in August, up from 42 days in July and 37 days in June, but less than the 70 days in August 2012. Non-distressed homes were on the market for 41 days, NAR said, while short sales were on the market for a median of 96 days and foreclosures for 52 days. Under half – 43 percent — of homes sold in August were on the market for less than a month.

With the recent increase in rates, all-cash sales made up 32 percent of transactions in August, up from 31 percent in July and June but down from 33 percent in May. NARreported. All-cash sales were 27 percent in August 2012.

First-time homebuyers accounted for 28 percent of August sales, down from 29 percent in July and from 31 percent a year ago.

Survey Shows Strong Support for Financial Regulation

09/12/2013BY: TORY BARRINGER

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As the calendar approaches September 15, marking the anniversary of the collapse of Lehman Brothers, the nation is reminded of that historical event which severed the very fabric of our financial system.

It’s been five years since that fateful day, and the Center for Responsible Lending (CRL) says Americans-regardless of political party, age, race, or locale-overwhelmingly support financial regulation, and in particular, increased consumer protections.

CRL and Americans for Financial Reform contracted a research group to poll 1,004 likely voters on their feelings toward Wall Street, reform measures that have been implemented, and reforms that have been proposed. They found consumer support for tough financial reform and the Consumer Financial Protection Bureau (CFPB) remains strong.

While the issue of financial regulation has been an area of contention in Washington, the survey actually found that the electorate overwhelmingly favors it, with 96 percent of Democrats, 95 percent of Independents, and 89 percent of Republicans saying they believe financial regulation is “important” or “very important.”

Overall, 83 percent of voters (including 89 percent of Democrats, 82 percent of Independents, and 75 percent of Republicans) said they favor tougher regulation of “Wall Street financial companies” when that statement is presented alongside the alternative of “their practices have changed enough that they don’t need further regulation.”

Meanwhile, 64 percent of voters said they see a need for an agency charged to protect consumers from dangerous financial products. By contrast, 26 percent agreed with a counter-argument depicting the CFPB as an example of expensive and unnecessary federal bureaucracy. Notably, though, 40 percent of respondents said they have no opinion or have not heard of the new consumer protection agency.

Nevertheless, after hearing arguments both for and against financial reform, 63 percent of voters agreed that Wall Street should be held accountable and prevented from repeating past actions, and 67 percent held a favorable view of the stepped-up oversight of mortgage brokers and other financial industry players.

Support for financial regulation, however, coexists with a widespread view of debt problems as a reflection of “personal irresponsibility.” When asked to choose, 30 percent of voters point to personal irresponsibility, while 44 percent prefer an alternative statement that “lenders need rules” and should have to provide clear information “so people can make wise choices.” At the same time, 22 percent of voters say they support both propositions equally.

 

Administration: As Market Shows Stability, It’s Time to Reform Housing

08/09/2013BY: KRISTA FRANKS BROCK

Newly initiated foreclosures are on the decline, reaching their lowest numbers since December 2005 in June, according to the latest Housing Scorecard from the Obama administration. Meanwhile, the administration continues to add to the tally of homeowners helped through itsMaking Home Affordable Program, bringing the total to more than 1.7 million as of June.

Foreclosure starts and completions declined in June. Foreclosure starts fell from 72,700 in May to 57,300 in June, while foreclosure completions fell from 38,900 to 35,500.

Despite the decline in foreclosures, the delinquency rate among both prime and subprime mortgages increased in June, according to the Housing Scorecard.

The delinquency rate for prime mortgages is 3.5 percent, and the subprime delinquency rate is 30.9 percent. The previous month’s prime and subprime delinquency rates were 3.1 and 28.7 percent, respectively.

More than 1.2 million homeowners have benefited from the Home Affordable Modification Program since the program was initiated, and another 1.9 million homeowners have gone through loss mitigation or early delinquency interventions with the Federal Housing Administration (FHA).

Homeowners receiving HAMP modifications save about $547 per month on their mortgages as of June.

Despite the administration’s original goal of aiding 4 million homeowners directly through HAMP, the administration congratulates itself for “creating standards that have helped millions more” homeowners beyond those 1.2 million who have received HAMP modifications, Tim Massad, assistant secretary of the Treasury said in the latest Housing Scorecard.

“Clearly without HAMP, national foreclosure rates would have been much higher and many borrowers would not have received the assistance they needed,” Massad said.

As of the end of May, HOPE Now, an alliance of mortgage professionals, reported the completion of 3.7 million mortgage modifications, which were influenced by Making Home Affordable, according to the administration.

The pace of new trial HAMP modifications slowed somewhat in June. About 15,700 homeowners received trial modifications in June, down from 18,300 in May.

On the other hand, permanent modifications increased in June to 17,300, up from 15,600 in May.

The administration’s other headline-making program —the Home Affordable Refinance Program slowed somewhat in June. About 84,600 homeowners received HARPrefinances in June, down from 106,900 in May.

Looking forward, the administration says it will focus on forming a new housing finance system.

“As we regain stability in our housing markets, it is time to begin the process of reforming the housing finance system to reduce the federal government footprint and ensure that private capital takes a sustainable central role,” said Kurt Usowski, deputy assistant secretary for economic affairs at the Department of Housing and Urban Development.

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