Tuesday, November 27, 2012
Five Reasons Home Prices Have Been Rising
Home prices rose by 0.1% in September from the prior month and by 3.6% from one year ago, the largest such gain in six years, according to a report released Monday by Lender Processing Services.
Compared with one year ago, prices are up by 17.7% in Phoenix, the largest gain among the nation’s 40 largest metro areas. Other cities with notable year-over-year increases include Detroit (11.7%), Las Vegas (11.5%), San Jose, Calif. (11.3%), San Francisco (10%), and Sacramento (8.3%).
Among the top 40 metros, only a handful have posted year-over-year declines, led by St. Louis, which was down by 4.1%. Bridgeport, Conn., was down by 2.3%, while Chicago (-0.5%) and Cincinnati (-0.1%) also posted declines.
The LPS figures serve as a good reminder that it’s still hard to generalize about housing. Some markets are up sharply amid big declines in both prices and the share of distressed sales, while others are still soft. Generally, though, there are at least five significant contributors to rising prices:
Housing affordability is attractive based on traditional metrics such as price-to-rentand price-to-income measures, largely because prices have fallen so far. Housing is even more affordable considering today’s low mortgage rates. Many buyers judge their decision based on the monthly payment of a mortgage. The average payment on a median priced home last month, assuming a 10% down payment and not including taxes or insurance, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005.
Household formation is revving up. The U.S. is on track to add 1 million new households this year, up from 630,000 last year and an average of 570,000 over the past five years, according to economists at Bank of America BAC +0.48% Merrill Lynch. Based on normal population growth, that rate should be closer to 1.2 million households. The upshot is that some pent-up demand is being unleashed, in part because job growth has picked up.
Rents are rising. Falling mortgage rates and improving job growth didn’t do much for housing last year, in part because buyers didn’t have much confidence or urgency. Rising rents have changed that. Initially, they spurred more investor purchases of properties that could be rented out. More recently, they’ve given buyers a reason to get off the fence.
The share of distressed sales, such as foreclosures, are down, and in many Western markets, they are down sharply over the past year.
Why are distressed sales falling? For one, mortgage delinquencies peaked 2½ years ago. Banks also slowed down foreclosures as a result of the robosigning scandal, and they’ve stepped up foreclosure alternatives, notably, by shifting short sales into a higher gear. The share of distressed sales is still high, historically speaking, but because they have fallen from their peak in many markets, prices have stabilized.
Judicial foreclosure states such as Illinois, New York, and Florida that require banks to process foreclosures in courts still face large backlogs of potential foreclosures. But states such as California and Arizona that haven’t required banks to process foreclosures by going to court have seen large drops in the volume of outstanding bad debt.
Inventories of homes for sale have plunged. Inventories of new homes for sale are at their lowest levels in nearly 50 years as builders sharply cut back construction over the past three years. Inventories of existing homes for sale are near a 10-year low, and down by one third over the past two years. Many homeowners have held back from selling because they owe more than their homes are worth, and even those with equity don’t want to accept big declines in prices.
Low inventories have led to more multiple offer situations, as rising demand leads more buyers to chase after fewer properties. In some markets, foreclosure discounts have disappeared.
This isn’t to say housing is out of the recovery ward. Credit standards are tight. Millions of homeowners are in some stage of foreclosure or default, and millions of others still owe more than their homes are worth. If the economy weakens again, the housing market could relapse.
But if 2012 has taught anything, it’s that those headwinds haven’t been enough to prevent the housing market from healing.
Sunday, November 25, 2012
The luxury home market segment looms as a bright spot which can drive the southwest Florida real estate market entering into the historical increase in activity of buying and selling during the winter months according to Sarasota Bay Real Estate.
Tuesday, November 20, 2012
ORLANDO, Fla., Nov. 19, 2012 /PRNewswire/ -- Pending sales, closed sales and median prices rose, while the inventory of homes and condos for sale dropped in Florida's housing market in October, according to the latest housing data released by Florida Realtors®.
"With Thanksgiving just around the corner, we have a lot to be thankful for here in Florida," said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. "The state's latest unemployment rate fell to 8.5 percent, the lowest in nearly four years – and combined with the momentum of the housing market, it clearly shows that Florida is on a positive path and has been for months.
Pending sales, closed sales and prices are trending up."
Statewide closed sales of existing single-family homes totaled 17,779 in October, up 25.3 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. Closed sales typically occur 30 to 90 days after sales contracts are written.
Meanwhile, pending sales – contracts that are signed by not yet completed or closed – of existing single-family homes last month rose 56.7 percent over the previous October. The statewide median sales price for single-family existing homes in October was $145,000, up 9 percent from a year ago.
According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in September 2012 was $184,300, up 11.4 percent from the previous year. In California, the statewide median sales price for single-family existing homes in September was $345,000; in Massachusetts, it was $294,900; in Maryland, it was $244,357; and in New York, it was $225,000.
The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Looking at Florida's year-to-year comparison for sales of townhomes-condos, a total of 8,252 units sold statewide last month, up 16.4 percent compared to October 2011. Meanwhile, pending sales for townhome-condos in October increased 47.1 percent compared to the year-ago figure. The statewide median for townhome-condo properties was $107,000, up 20.2 percent over the previous year. NAR reported that the national median existing condo price in September 2012 was $181,000.
The inventory for single-family homes stood at a 5.2-months' supply in October; inventory for townhome-condo properties was also at a 5.2-months' supply, according to Florida Realtors. Industry analysts note that a 5.5-months' supply symbolically represents a market balanced between buyers and sellers.
"Once again, everything that should be going up in the market is going up, and everything that should be going down is going down," said Florida Realtors Chief Economist Dr. John Tuccillo. "As impressive as the year-over-year gains for October are, far more impressive are year-to-date gains of 2012 over 2011. They indicate the depth and resilience of this recovery."
The interest rate for a 30-year fixed-rate mortgage averaged 3.38 percent in October 2012, down from the 4.07 percent averaged during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors Media Center at http://media.floridarealtors.org/ and look under Latest Releases, or download the October 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data
Editor's Note: Florida Realtors 2012 housing market data releases mark a new statewide data reporting partnership between Florida Realtors Industry Data and Analysis department and new vendor partner 10K Research and Marketing. Housing sales data from the state's local Realtor organizations is collected and organized with the goal of providing unique, localized market reports to the local Realtor boards and associations within Florida Realtors, enabling the groups and their Realtor members to serve as the definitive voice of real estate in their respective local markets. At the same time, Florida Realtors is providing comprehensive statewide housing market statistics – but this new data series only refers to statewide data and does not include metropolitan statistical areas (MSAs).
Florida Realtors®, formerly known as the Florida Association of Realtors®, serves as the voice for real estate in Florida. It provides programs, services, continuing education, research and legislative representation to its 115,000 members in 63 boards/associations. Florida Realtors® Media Center website is available at http://media.floridarealtors.org.
SOURCE Florida Realtors
PR Newswire (http://s.tt/1u49l)
Monday, November 19, 2012
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