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.

Home Prices Continue Rising, Sales Steady

BY: ASHLEY R. HARRIS

Home sales continue to seesaw—while levels increased from the previous year, they dipped from previous month. Following historic seasonal trends, October home sales edged 2.8 percent lower than September, but still pushed 2.2 percent higher than sales in October 2012. Median home prices were 11.9 percent above prices seen last October.

“What we’re seeing now are predictable seasonal cycles, which is just another sign that the housing recovery is bringing us back to a more normal market,” said Margaret Kelly, CEO of RE/MAX. “Home sales are expected to slow down during the holidays and winter months before returning to the next growth cycle in the spring.”

Home sales have experienced year-over-year increases in both sales and prices for 21 months now. The median price of all homes sold in October was $179,950. Inventories of homes for sale were 12.2 percent lower than the levels in October last year. For the last 29 months in a row, inventories have declined at a slower rate.

The October inventory drop is half of the annual loss seen as recently as June. At the current rate of sales, the number of months required to sell the entire inventory of homes on the market was 4.9. A 6-month supply is recognized as a balanced market with an equal number of buyers and sellers.

For the most part, normal seasonal trends are responsible for slowing month-to-month changes in home sales. Of the 52 metro areas surveyed in October, 35 reported higher sales than in October 2012, with 19 reporting double-digit gains. New York, New York experienced gains of 32.6 percent; Trenton, New Jersey experienced gains of 32.5 percent; Anchorage, Alaska experienced gains of 24.2 percent; Philadelphia, Pennsylvania experienced gains of 18.2 percent; Wilmington, Delaware experienced gains of 18.1 percent; and Manchester, New Hampshire experienced gains of 17.1 percent.

In the month of October, homes stayed on the market for an average of 66 days. This is one day higher than the average seen in September, but is 16 days lower than the average seen in October 2012. An average this low is the direct result of continued high demand and a reduced inventory of homes for sale, according to RE/MAX.

The housing market has been plagued by a low inventory environment, but for seven consecutive months, inventory has declined at a slower rate than during the same month of the previous year. While not yet adding inventory, the situation is improving. In October, there were 5.1 percent fewer homes for sale than in September, and 12.2 percent fewer than in October 2012. At the rate of home sales in October, the Months Supply of inventory was 4.9.

Housing Scorecard Suggests Improvement

09/13/2013BY: HUGH MOORE

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The housing recovery continues to gather momentum, indicating an ongoing economic upswing according to the Housing Scorecard released by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today. Improving market indicators include home prices, purchases of new homes, and sales of existing homes according to the report.

“As indicated in the August housing scorecard, the Administration continues to work to stabilize the housing market and help responsible homeowners get back on their feet,” said HUD Deputy Assistant Secretary for Economic Affairs Kurt Usowski. “With the number of underwater homeowners decreasing by more than 40%, it is clear that we are moving in the right direction. As we regain

stability in our housing markets, it is important to remember that we still have a long way to go in making sure that our housing finance system is strong for future generations.”

“The standards set by the Making Home Affordable program have changed the mortgage servicing industry, as have our quarterly assessments of servicer performance” said Treasury Assistant Secretary for Financial Stability Tim Massad. “While there has been significant progress, there is still more improvement needed in servicer behavior. And while the housing market has recovered substantially, there are still homeowners struggling to avoid foreclosure and it is vital that we continue to try to help them.”

Home prices continued to show strong annual gains, according to the report. The FHFA purchase-only index rose 7.7 percent from last year, and the seasonally adjusted purchase-only index has increased for the last 17 consecutive months.

The Housing Scorecard highlighted the government’s foreclosure mitigation programs, including the Home Affordable Modification Program (HAMP), which has provided more than 1.2 million permanent modifications as of July. Also, it noted that grantees of the Neighborhood Stabilization Program reported completion of more than 25,000 rehabilitated housing units.

Panelists Discuss Future of Mortgage Market

09/13/2013BY: HUGH MOORE

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When Ron D’Vari and Thomas Heinemann discussed the possible winding down of Government Supported Entities (GSEs) Fannie Mae and Freddie Mac, one thing both agreed on was that possible reform of government’s role in the mortgage market needs to be preceded by sweeping changes in how loans are provided and capitalized.

“GSE reform is badly needed,” said D’Vari , Co-Founder and CEO of NewOak Capital. “But other issues have to come ahead of this. Provided the right transition and the right preparation, there is capital in the market.”

Heinemann, a senior legislative advisor in the Department of Housing and Urban Development, said that coming regulations will tighten the market, but only time will tell how the market will adjust. “I think we’re about to enter what could be a very interesting time on the Hill,” Heinemann said. “What are the new rules of the road? I think what you’ll begin to see is a gradual scaling back of government support. A lot of things are happening that are meant to bring back private capital.”

D’Vari suggested that the government’s role in the housing market simply couldn’t be maintained. “We have created too much of an intersection between politics and the market,” D’Vari said. “We have created a big monster for ourselves. There is no precedent for the way the US housing market works. By every historical measure we are off the charts.”

List of Improving Markets Hits New Record

09/09/2013BY: KRISTA FRANKS BROCK

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The National Association of Home Builders/First American Improving Markets Index reached its highest level on record in September with a little more than 80 percent of markets qualifying as “improving.”

The index, released Monday, tracks 361 metropolitan areas for improvement in housing permits, employment, and house prices. Markets have to demonstrate improvement in all three areas for six consecutive months to make it on the list.

Of the 291 markets that made it onto the latest Improving Markets Index, 242 were repeats from the previous month, and 49 were new to the list.

Five markets dropped off the list over the past month. Those markets include Kankakee, Illinois; Burlington, North Carolina; Jacksonville, North Carolina; Winston, North Carolina; and Danville, Virginia.

“While there is still plenty of room for growth, this is an excellent indication of how the housing recovery has begun to take hold across more geographical areas,” “said Rick Judson, chairman of the NAHB and a home builder from Charlotte, North Carolina.

The NAHB pointed out that markets new to the index this month spanned several regions of the country, including such metros as Macon, Georgia; St. Cloud Minnesota; Brownsville, Texas; Spokane, Washington; and Milwaukee, Wisconsin.

However, NAHB’s chief economist, David Crowe, pointed out that “[t]he dramatic increase in markets qualifying for the IMI in September was partly due to a recent improvement in the way that Freddie Mac measures home prices.” NAHB relies on Freddie Mac’s housing data for its index.

“Even so, the broadened list of metros on the IMI continues to demonstrate the slow but steady gains that individual housing markets are making to bolster the national outlook,” he added.

In fact, all 50 states have at least one county represented on the index, and 23 states have at least one new market on the index this month.

Salinas, California, outranks all other metros on the index in terms of permit growth from its trough with a 44.2 percent rise.

Phoenix, Arizona, ranked highest for price growth with a 41.5 percent increase from its trough.

Midland, Texas, has experienced the greatest employment growth of any market on the index—a 33.5 percent rise from the market trough.

Report: Housing Stable Despite ‘Bubble-Like’ Gains in August

09/10/2013BY: TORY BARRINGER

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August price gains were reminiscent of those last seen during the peak of the bubble—but analysts at Clear Capital insist there’s nothing to fear at this point.

The company reported in its latest Home Data Index that prices were up 10.2 percent year-over-year in August. By Clear Capital’s metrics, the last time the nation saw double-digit yearly price growth was mid-2006, the height of the bubble. (Other sources, including the monthly Case-Shiller Indices, have been reporting regular double-digit growth for some time.)

However, with prices still off 32.5 percent from their previous highs (putting them in line with prices circa 2002), the firm isn’t concerned about the possibility of a new bubble.

“With the continued strengthening of home price trends in August, the need for perspective on market activity is even more important,” said Dr. Alex Villacorta, VP of research and analytics at Clear Capital.

Looking under the surface trends, Villacorta notes the low-tier price segment of the housing market saw quarterly gains of 2.0 percent—the lowest since April 2012—indicating that sector is already on a more moderate growth path. Growth for the low-tier segment peaked in April 2013 at 4.1 percent.

“Considering the low tier price segment of the housing market led the recovery, the cooling in this segment will likely transfer through to the broader housing market,” Villacorta said, also observing that the industry is heading out of its busy season and into the slower fall and winter months. “That’s not to say the recovery is slated to stall, rather growth patterns are likely to return to more historical rates of growth, between 4.0 percent to 5.0 percent, rather than align with bubble-like growth.

“At the end of the day, this is still great news for housing,” he continued. “Today’s housing market is not irrational or out of balance within the broader context of housing trends, but as we learned, sustaining this pace of growth is simply not healthy. Our call for moderation is the next phase of a more mature recovery.”

 

Distressed Inventory Fading Fast as Housing Market Strengthens

08/29/2013BY: ESTHER CHO

As the housing market heals, foreclosure inventory is depleting quickly, CoreLogic reported Thursday.

In July, about 949,000 homes were in some stage of foreclosure, down 32 percent from 1.4 million a year ago. Foreclosure inventory also showed a 4.4 percent decline from June. Year-to-date, foreclosure inventory is down by 20 percent.

Currently, about 2.4 percent of homes with a mortgage are in foreclosure inventory, the lowest level since March 2009.

In addition to shrinking foreclosure inventory, CoreLogic also reported steep declines in completed foreclosures and serious delinquencies.

According to the data provider’s estimate, about 49,000 properties were lost to foreclosure in July, down 25 percent from 65,000 in July 2012.

From June to July, completed foreclosures fell by 8.6 percent from 53,000 in the prior month.

At 5.4 percent, the serious delinquency rate decreased to the lowest level since December 2008, according to CoreLogic. The rate represents fewer than 2.2 million mortgages.

“Continued strength in the housing market will contribute to our outlook for ongoing improvement in the stock of distressed assets through the end of this year,” said Mark Fleming, chief economist for CoreLogic.

According to CoreLogic, the decreases were apparent across the country, with every state reporting an annual decline in foreclosures.

“Not surprisingly, non-judicial states have come the farthest the fastest in reducing shadow inventory and lowering delinquency rates,” noted Anand Nallathambi, president and CEO of CoreLogic.

Florida took the lead again as the state with the highest number of completed foreclosures. Over the last 12 months, about 110,000 homes were lost to foreclosure in Florida. California followed with 65,000 completed foreclosures. Other states in the top five were Michigan (61,000), Texas (45,000), and Georgia (41,000).

Florida also held the highest percentage of homes in foreclosure inventory, at 8.1 percent. New Jersey’s foreclosure inventory rate of 5.9 percent put it at second, with New York (4.7 percent), Connecticut (4.0 percent), and Maine (4.0 percent) filling out the top five.

However, in 36 states, foreclosure inventory sits below the national rate of 2.4 percent.