Barclays: ‘Turning Point’ for Home Owners in 2013

The hustle and bustle of the Holidays are over….but now comes the stress of the overspending  that welcomes us into the new year. There is some good news! 

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 18, 2012

Falling housing inventories and an increase in demand bode well for the market’s recovery next year, according to Barclays 2013 housing outlook report. 

Real estate wealth is expected to give a long-awaited boost to consumer spending in 2013. 

“This would mark an important turning point for household balance sheets, where net-wealth effects from falling financial prices and the collapse of the housing market have been significant impediments to the strength of consumer spending and, in turn, the pace of the broader recovery,” Barclays reports.

Meanwhile, housing starts are projected to reach 944,000 in the first quarter of the new year and then rise to 973,000 by the second quarter, according to the report. Also, housing inventories are expected to increase modestly through the year. 

“New-home inventories have fallen to their lowest levels ever, as home builders have held housing starts below even the depressed pace of new-home sales in recent years,” according to the report. “Now that new- and existing-home sales are on sustained upward trends, new-home inventories have fallen enough that builders need to raise housing starts to prevent inventories from falling further.” 

Source: “Barclays: Housing market to remain resilient,” HousingWire (Dec. 17, 2012)

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Existing-Home Sales, Prices Maintain Uptrend

DAILY REAL ESTATE NEWS | THURSDAY, DECEMBER 20, 2012

Existing-home sales continued to improve in November with low inventory pressuring home prices upward, according to the National Association of REALTORS®.

Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October, and are 14.5 percent higher than the 4.40 million-unit pace in November 2011. Sales are at the highest level since November 2009 when the annual pace spiked at 5.44 million.

Lawrence Yun, NAR chief economist, said there is healthy market demand. “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation,” he said. “With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes. Areas impacted by Hurricane Sandy show storm-related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas.”

The national median existing-home price for all housing types was $180,600 in November, up 10.1 percent from November 2011. This is the ninthconsecutive monthly year-over-year price gain, which last occurred from September 2005 to May 2006.

DISTRESSED SALES

Distressed homes — foreclosures and short sales sold at deep discounts — accounted for 22 percent of November sales (12 percent were foreclosures and 10 percent were short sales), down from 24 percent in October and 29 percent in November 2011. Foreclosures sold for an average discount of 20 percent below market value in November, while short sales were discounted 16 percent.

“The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages,” Yun said.

Total housing inventory at the end of November fell 3.8 percent to 2.03 million existing homes available for sale, which represents a 4.8-month supply at the current sales pace; it was 5.3 months in October, and is the lowest housing supply since September of 2005 when it was 4.6 months.

Listed inventory is 22.5 percent below a year ago when there was a 7.1-month supply. Raw unsold inventory is now at the lowest level since December 2001 when there were 1.89 million homes on the market.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.35 percent in November from 3.38 percent in October; the rate was 3.99 percent in November 2011.

NAR President Gary Thomas said there’s been speculation of a rise in short sales before the end of the year with pending expiration of the Mortgage Forgiveness Debt Relief Act. “However, there’s been no movement in short sales, their market share is staying in a narrow range, and they’re still taking much longer to sell — typically three months,” he said.

“The fact remains it is extremely difficult to expedite a short sale, and banks’ response to client urgency is only starting to improve. However, we’re hopeful that the act will be extended before it expires on December 31 so sellers don’t have to pay taxes on forgiven mortgage debt, which would be unfairly treated as income for owners who are selling under duress,” Thomas said.

TRANSACTION TYPES

The median time on market for all homes was 70 days in November, slightly below 71 days in October, but is 28.6 percent below 98 days in November 2011. Thirty-two percent of homes sold in November were on the market for less than a month, while 20 percent were on the market for six months or longer; these findings are unchanged from October.

First-time buyers accounted for 30 percent of purchases in November, down from 31 percent in October and 35 percent in November 2011.

All-cash sales were at 30 percent of transactions in November, up slightly from 29 percent in October and 28 percent in November 2011. Investors, who account for most cash sales, purchased 19 percent of homes in November, little changed from 20 percent in October; they were 19 percent in November 2011.

Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.44 million in November from 4.21 million in October, and are 12.4 percent higher than the 3.95 million-unit level in November 2011. The median existing single-family home price was $180,600 in November, up 10.1 percent from a year ago.

Existing condominium and co-op sales jumped 9.1 percent to an annualized level of 600,000 in November from 550,000 in October, and are 33.3 percent above the 450,000-unit pace a year ago. The median existing condo price was $181,000 inNovember, which is 10.6 percent higher than November 2011.

REGIONAL PERFORMANCE

Existing-home sales in the Northeast rose 6.9 percent to an annual rate of 620,000 in November and are 14.8 percent above November 2011. The median price in the Northeast was $232,900, down 2.0 percent from a year ago.

Existing-home sales in the Midwest increased 7.2 percent in November to a pace of 1.19 million and are 21.4 percent higher than a year ago. The median price in the Midwest was $141,600, which is 7.0 percent above November 2011.

In the South, existing-home sales rose 7.9 percent to an annual level of 2.04 million in November and are 17.2 percent above November 2011. The median price in the South was $157,400, up 10.5 percent from a year ago.

Existing-home sales in the West rose 0.8 percent a pace of 1.19 million in November and are 4.4 percent higher than a year ago. With ongoing inventory constraints, the median price in the West was $248,300, which is 23.9 percent above November 2011.

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Buyer Urgency Expected to Drive 2013

Home shoppers will likely have more urgency in the new year, wanting to buy before home prices rise even more. 

Home prices are edging up in most markets, and buyers are taking notice. Buyer surveys recently have shown that home shoppers expect home prices to continue to inch up, and they want to cash in before they rise too much higher. 

“Every single thing about housing is flashing green” with household formation rising, inventory falling, and affordability hovering at record highs, James Dimon, chief executive of J.P. Morgan Chase told CNBC last month. 

In 2013, rising rents are expected to push more renters to buy, The Wall Street Journal reports. Also, investors who’ve had a big appetite for housing in recent years may start to decrease their share in some markets that have seen prices rise, such as Phoenix, and focus on other markets still in recovery mode, like Chicago and Atlanta. 

“Rising prices could eventually encourage more sellers to put their homes on the market, which would help boost demand even further,” The Wall Street Journal reports. 

To meet the expected increase in demand in 2013, some real estate companies are going on a hiring spree. For example, Redfin says it plans to increase its 400 agents nationally by 50 percent by the end of January after having to send about half of its referrals to other companies earlier this year because demand outstripped its supply of agents.

Source: “2013: How Rising Prices Could Boost Housing Demand,” The Wall Street Journal (Dec. 18, 2012)

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Who's Calling the Shots: Buyers or Sellers?

DAILY REAL ESTATE NEWS | WEDNESDAY, DECEMBER 12, 2012

The housing market is changing, creating a “new playing field for home owners, who are finally able to sell, as well as would-be buyers who’ve been delaying a purchase in anticipation that prices would keep falling,” Money Magazine reports.

http://realtormag.realtor.org/daily-news/2012/12/12/who-s-calling-shots-buyers-or-sellers?om_rid=AACssQ&om_mid=_BQyLgVB8vsWcNg&om_ntype=RMODaily

Mortgages for home purchases are expected to soar 55 percent in 2013, according to forecasts by the Mortgage Bankers Association.

“The days of buyers sticking it to sellers are over,” says Tracie Peay, a Salt Lake City real estate practitioner.

Still, home sellers should keep their expectations in line: Price increases are to be modest and gradual. Fiserv forecasts home prices will rise 3.3 percent a year in value between now and 2017.

As for buyers, they may need to have a better understanding of the increased competition they may face.

“If you want to buy, you have to be ready to make an offer,” says David Howell, chief information officer at McEnearney Associates, a real estate agency in the Washington, D.C., metro area. He says the first offer should be close to the home buyer’s best offer.

Lowball bids will get ignored, adds Fran Bailey, a Chicago real estate professional.

According to Money Magazine, home sellers may have the most bargaining power in the West, while home buyers may be more in control in the Midwest and Northeast.

Some of the top markets for selling, according to Money Magazine, are:

• Los Angeles
• Phoenix
• San Jose, Calif.
• Seattle

Some of the top markets for buying:

• Albany, N.Y.
• Chicago
• New Haven/Stamford, Conn.
• Philadelphia
• 
  
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RealtyTrac: Worst May Be Over for Foreclosure Epidemic

DAILY REAL ESTATE NEWS | FRIDAY, OCTOBER 26, 2012

Foreclosures have fallen in about 62 percent of the country’s 212 largest metro markets in the third quarter, leading to more stability in the housing market recovery, RealtyTrac reports in its latest foreclosure report.
What’s more, RealtyTrac reports that foreclosure activity in 58 percent of the major markets have fallen to below September 2007 levels. In some markets, foreclosures have decreased by 26 percent or more, such as in Detroit, Los Angeles, Phoenix, San Francisco, and San Diego.
"Most of the nation's housing markets are past the worst of the foreclosure problem," says Daren Blomquist, RealtyTrac's vice president.
A few markets are still seeing foreclosures rising, however. For example, several Florida areas are seeing a jump. Foreclosures were up 64 percent in Palm Bay, Fla., up 43 percent in Tampa; and up 32 percent in Jacksonville, Fla. Florida is a “judicial state,” where foreclosures must get the court’s OK before they’re final.
The majority of the nation’s highest foreclosure rates fall in California, Florida, Arizona, and Nevada. The only cities outside those states in the top 20 highest foreclosure rate list are Chicago, which has the ninth-highest foreclosure rate and has seen a 34 percent increase over year-ago levels in its foreclosures; and Atlanta, which is number 15 on the list.
Stockton, Calif., continued to have the nation’s highest foreclosure rate, yet still had a 21 percent decline in foreclosures, RealtyTrac reports.
Source: “Foreclosures Fall in 62% of U.S. Cities,” CNNMoney (Oct. 25, 2012)
http://realtormag.realtor.org/daily-news/2012/10/26/realtytrac-worst-may-be-over-for-foreclosure-epidemic?om_rid=AACssQ&om_mid=_BQirqLB8u1XFPs&om_ntype=RMODaily

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