Friday, June 5, 2015

Market Matters


New-Home Prices Are on Fire

Source: Wall St. Journal

The uptrend in resale values is nothing compared to the speedy rise in new-home prices, according to research by economists at TD Securities. New homes generally command a 10 to 20 percent premium over existing houses because new construction tends to be of higher quality and have more up-to-date amenities, the TD economists said. But by 2014, the price gap between new and existing houses had widened to 40 percent. Bargain-seeking plus the flood of existing homes into the market caused the median resale price to plummet by about one third during the bust; meanwhile, the median price for a new home fell only about 25 percent during the bust and surpassed its boom peak way back in early 2013.
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'Stale' homes are tightening up the housing market
Source: CNBC
 
A lack of listings is the biggest barrier to a more robust spring housing market. Unfortunately, nearly three-quarters of the homes on the market are "stale," which is to say that they have sat on the market for more than a month with little to no interest from buyers, according to a Redfin report. With demand and sales increasing, there is just a 4.6-month supply of listings; a six-month supply is considered to be a healthy market balance between buyers and sellers. 
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Home sales vault to 18-month high as supply improves
Source: Reuters
 
As a sign of strength in the housing market ahead of the spring selling season, U.S. home re-sales surged to their highest level in 18 months in March as more homes came on the market.  Existing home sales increased 6.1 percent to an annual rate of 5.19 million units in March, the highest level since September 2013. The percent rise was the largest since December 2010. Last month's sales outpaced economists' expectations for a 5.03 million-unit rate.
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These Charts Will Tell You Where the Housing Market Is Headed This Year
Source: Bloomberg
 
The Federal Reserve is preparing to raise its benchmark interest rate for the first time since 2006, but there has not been any evidence of panic in the healing housing industry. After all, housing has been one of the biggest beneficiaries of rock-bottom borrowing costs in this economic recovery. According to analysts, there are several key things to watch this year to determine the performance of the housing market: Inventory, prices, affordability for first-time buyers, credit availability, and wages.
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How to win a bidding war in today’s outrageous housing market
Source: HousingWireWith supply tight and demand high, the spring home buying season can be frustrating for Americans looking to purchase a home. One REALTOR® has put together nine tips to succeed in any ensuing bidding wars that stem from a lack of inventory. The tips include financing issues, cash, closing costs, and more.
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If You Want to Buy a Home, Here’s What You Need to Do Now
Source: CNN Money
 If you’ve been sitting on the sidelines, this may be the time to act—or at least to do some serious number crunching as the housing market continues to improve. While inventory is low in many markets, it is expected to loosen up, with 1.9 million units on the market this year—far below the flooded supply of 4 million we saw in 2008. The number of homes that were “flipped” (bought for a quick-sale investment) has dropped for the second year in a row, while the foreclosure rate is less than half what it was two years ago. Those are healthy signs for everyone.
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Friday, May 29, 2015

Mortgage Challenge

Mortgage Challenge OCT

Market Matters

State bill proposes fee to deal with affordable housing issue
Source: KPCC

A bill addressing affordable housing is going before the State Assembly this week. If passed by legislators, it would add a $75 fee to some real estate transfers and put that money into a fund for development of below-market-rate properties. Assembly Speaker Toni Atkins (D-San Diego), who introduced the bill along with a package of affordable housing proposals, said the bills would produce a combined $300-$500 million annually for low-income developments. After negotiations, the CALIFORNIA ASSOCIATION OF REALTORS® is supporting the bill. C.A.R. lobbied to cap the fees at $225 per transaction, add an oversight board to the fund that includes REALTORS®, and setting aside 20 percent of the fund for owner-occupied developments.
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2015 SCE Housing Survey Shows Optimism about Housing Market
Source: Federal Reserve
 
Households expect home price growth to continue at a similar pace as they did a year ago, according to the results of the Federal Reserve Bank of New York’s 2015 SCE Housing Survey. Attitudes toward housing as a financial investment remain overwhelmingly positive, and most renters express a preference for owning over renting if they had the necessary financial resources. In addition, the survey finds households expect mortgage rates to increase in coming years, but at a moderate pace.
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Housing Bubble? Despite Rising Prices, Most Economists Still Say No
Source: Wall St. Journal
 
The relentless rise in housing prices has led many economists to question whether another housing bubble is forming. Housing prices have been climbing for 35 consecutive months, according to the latest S&P/Case-Shiller Home Price Index. However, while prices keep rising, the rate of growth has slowed, thereby giving economists reason to believe a bubble is not a concern. Also, far fewer new homes are being built than a decade ago, so oversupply will not be an issue related to a price bubble.
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Fewer Homes for Sale Makes U.S. Housing Recovery Painstaking
Source: Bloomberg
 
High prices and low inventory have made the recovery of the U.S. housing market painstaking for many potential buyers looking to enter the market. Contract closings on previously owned properties unexpectedly dropped 3.3 percent to a 5.04 million annualized rate in April after a 5.21 million pace that was the strongest in almost two years, according to figures from the National Association of REALTORS®. Bloomberg notes that “The rebound in residential real estate has been stop-and-go as small wage gains and lingering concerns about taking on more debt offset the benefits of historically low mortgage rates.”
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The Deep Roots of America's Housing Affordability Crisis
Source: The AtlanticWharton real estate economist Todd Sinai argues in a new policy brief that the current manifestation of the country’s housing affordability crisis is a long-running trend. His research shows that the roots of the current affordability crisis date back to at least the 1990s. During that era, six cities saw rents dramatically outpace inflation, growing around 3.5 to 4.5 percent per year. Since then, rents have actually grown much more modestly, especially in recent years. Sinai states, “It is true that, in many cities, rental costs are higher now than they were 10 years ago. But 10 years ago, rental costs were higher than they were 10 years before that. Likewise, ownership costs have followed the same pattern.” He adds that buying a home may offer a way to sidestep this cycle of ever-rising housing prices and rents.
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Realtor.com: Waiting to buy a home could cost tens of thousands
Source: HousingWire
 The financial penalties of delaying or forgoing a home purchase in today’s market have become very steep. After all, interest rates and home prices are expected to climb in the next year, and according to realtor.com, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. National data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of markets, buying a home produces a financial benefit of at least $100,000 over 30 years.
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