Showing posts with label arizona homes for sale. Show all posts
Showing posts with label arizona homes for sale. Show all posts

Thursday, June 18, 2015

Developing Affordable Housing for Millennials

Cities across the country are having to adapt to the needs of the millennial generation, who make up the largest share of home buyers, according to a generational trends report by NAR. Due to the recent economic climate, millennials don't mind making sacrifices, often choosing compact housing and not owning a car, as long as they can live in a vibrant city with a lot of perks.
"They [millennials] seem more willing than other cohorts to trade space for access to transit and a walkable, mixed-use lifestyle," says Stockton Williams, executive director of the Urban Land Institute's Terwilliger Center for Housing in Washington, D.C. "It doesn't necessarily mean they're all saying they want to live in downtown central cities. It can be smaller towns or suburban towns that have these features."
To meet the need for affordable housing options, many cities are being proactive. In Austin, Texas, which is a hotspot for young professionals, builders are catering to millennials by offering homes that are much smaller than the national average and close to public transportation and local attractions.
"The demand for the smaller homes was enormous, and millennials bought them," says REALTOR® Scott Turner, owner of Riverside Homes in Austin, Texas and broker-owner of Turner Residential. "Millennials are much more willing to make the location-over-space trade-off than prior generations. They're happy with less space and less stuff. We found that 850 square feet with two bedrooms and one bath is fine if it’s in a good location."
Housing affordability remains a huge issue in Manhattan, and builders are going a step further by offering up micro housing as a solution. Micro housing is loosely defined as an apartment less than 350 square feet with a functioning and accessibility compliant kitchen and bathroom. Micro housing projects are also cropping up near Washington D.C. and Seattle.
"In places like Seattle, more micro housing units are popping up, and that does seem to be a viable option," says says Matt Kelly, a policy analyst and researcher at Florida State University in Tallahassee. "Smaller and smaller square footage seems to be viable for short-term year apartment leases because there needs to be a low-income housing alternative."
In the past, many cities had zoning regulations that banned small housing. New York City, for example, only recently waived a requirement that housing must be larger than 400 square feet. San Francisco recently allowed housing as small as 220 square feet, and two cities on the forefront of the micro housing trend, Seattle and Portland, have no minimum size requirement.
As housing affordability is outpacing income growth for many across the country, it continue to be important for cities to think out of the box and develop accessible and affordable options, not just for millennials, but for everyone.
Source: "Reducing Everyday Costs for Affordable Neighborhoods," On Common Ground (June, 2015)


Thursday, June 11, 2015

Why Renters May Be Losing Out

Americans are better off buying than renting in the majority of places across the U.S., but the number of renters continues to be at record highs.
Realtor.com® finds that it's cheaper to buy rather than rent in 80 percent of the counties in the U.S. That's because renters continue to face sharp price increases. A record number of renting households are leading to fewer apartment vacancies, which in turn is continuing to push rents upward, notes Jonathan Smoke, realtor.com®'s chief economist, in recent commentary at realtor.com®.
But many renters – with home ownership aspirations – are struggling to break into the housing market. Indeed, 81 percent of renters indicate they would prefer to own a home if they could afford to do so, according to the Federal Reserve's Survey of Household Economics and Decisionmaking. Fifty percent of renters reported that they lack the funds for a down payment and 31 percent of renters say they could not qualify for a mortgage. Other reasons given for renting included 27 percent of renters saying it was cheaper for their household; 25 percent who thought renting was more convenient; and only 12 percent said they rented because they preferred it over owning.
The amount of income renters may have influenced their responses for why they choose to rent. For example, for renters earning less than $40,000 year, their top responses on why they rent were because they were unable to save for a down payment (52%) or qualify for a mortgage (35%). On the other hand, for renters who earn more than $100,000 a year, their top responses for renting were because they believed renting was more convenient (39%) or they preferred renting to owning (17%). Twenty-nine percent in the $100,000 and up earner group said they plan on moving in the near term.
Source: "Federal Reserve Report on Household Economic Well-Being," National Association of Home Builders Eye on Housing Blog (June 10, 2015) and "Midyear Report: The Housing Market Is on Track for Its Best Year Since 2006 (and it Ain’t a Bubble," realtor.com® (June 10, 2015)


Monday, April 20, 2015

Drought Drying Up Homebuilding out West?

The severe drought plaguing the West may stall new-home construction in the region, according to the chief economist of the National Association of Home Builders.
Housing starts in the West dropped for the third consecutive month, falling 19 percent in March and reaching its weakest level since May. The drop came at a time when other regions of the U.S. rebounded from a harsh winter.
The drought in the West may discourage companies from building or taking out permits for new construction, says David Crowe, NAHB’s chief economist. Some builders may be hesitant due to uncertainty surrounding local water policy and the ability to obtain water connections for new homes or apartment buildings, he told Bloomberg.
"Until it's clear what restrictions mean for new building, it's wise for builders to be hesitant," Crowe says. "This is more serious than just a temporary dry period. This is a new regime that says it's going to be harder to obtain additional water usage."
About 21 percent of the U.S. fell in the "moderate" to "extreme" drought categories at the end of March, with cases most severe reported in California and parts of Nevada and Wyoming, according to the National Climatic Data Center.
In California, Gov. Jerry Brown recently ordered the state's first mandatory water restrictions. The state is seeking to drop its use of water by 25 percent. The restrictions include a requirement that new homes feature water-efficient irrigation if the builder plans to use portable water for landscaping.


Tuesday, February 24, 2015

Townhome Market Shows Signs of a Comeback

Townhouse construction was back on the rise in 2014, as home buyers show an increasing appetite for this type of housing once again. 
Single-family attached starts totaled 19,000 in the fourth quarter of 2014 – 12 percent higher than a year prior, according to Census data. For all of 2014, townhouse construction starts totaled 72,000, up from 68,000 starts in 2013.
The market share of townhouses comprises 12 percent of all single-family starts. The peak for townhouse construction was during the first quarter of 2008 when it reached 14.6 percent.
During the recent recession, the townhome market plunged, particularly as the number of first-time home buyers fled the market. But as the number of first-time home buyers rebounds, construction of town homes is expected to rise again too.
“The prospects for townhouse construction over the long run are positive given large numbers of home buyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities,” writes Robert Dietz, an economist for the National Association of Home Builders, on NAHB’s Eye on Housing blog.
REALTORS® are upbeat about townhome prospects in the District of Columbia, North Dakota, Colorado, Texas, California, Florida, Hawaii, and Alaska, according to the December 2014 REALTORS® Confidence Index Survey.
However, REALTORS® continue to be concerned about the condo market overall, reporting that obtaining Federal Housing Administration financing for condos remains a big hurdle for home buyers because many condos continue to not meet FHA eligibility criteria. Existing condo and co-op sales fell 3.5 percent on a seasonally adjusted annual rate in January; they remain 1.8 percent below year ago levels, the National Association of REALTORS® reported in its latest housing report.  
“Condominiums offer an affordable option and are the first step to home ownership for many home buyers,” NAR President Chris Polychron said in a recent statement. “NAR has urged FHA to develop policies that will give buyers access to more flexible and affordable financing opportunities and a wider choice of approved condo developments.”
Source: “Townhouse Market Expanded in 2014,” National Association of Home Builders’ Eye on Housing blog (Feb. 23, 2015) and “States with Strong Townhouses and Condos Market,” National Association of REALTORS® Economists’ Outlook blog (Feb. 10, 2015)


The Hottest Winter Home Markets

While most of the United States is currently under a deep freeze, real estate markets in many cities across the country are heating up, according to the recent Hotness Index compiled by realtor.com®.
Not surprisingly, warm locations continue to be hot spots for winter buyers. Miami, Las Vegas, Phoenix, Raleigh, and San Diego rank highest on the Hotness Index, and see busy Spring level home-buying activity earlier than other cities across the country.
To compile the Hotness Index rankings, economists fromrealtor.com® looked at 2014 monthly search volume on realtor.com®, adjusted for population, and combined climate data from the National Oceanic and Atmospheric Administration.
“The correlation between warmer metropolitan areas and more January searches makes sense, as it’s easier to get out and go house hunting in these cities,” said Jonathan Smoke, Chief Economist forrealtor.com®. “In these markets, looking for a home in November or January makes as much sense as August.
Winter home-buying activity isn't just booming in cities with balmy climates. Chicago is a surprisingly hot real estate market in the winter months, according to the Hottest Index. Despite Chicago's frigid temperatures, their prime buying season actually begins in January and home showings during snowstorms are the norm.
Some suggest that what's driving this push towards an earlier Spring buying season is the lack of inventory in many metropolitan areas.
“Prices are appreciating and homes are selling more quickly,” Smoke said. “These are the criteria that we use to define a healthy market. When inventory is growing as well, the hot market can keep its momentum, which benefits both sellers and buyers.”

Monday, February 23, 2015

Why Buyers May Find Mortgages Easier to Get

Good news for potential home shoppers: A Mortgage Bankers Association index shows lender requirements regarding credit scores, down payments, and other key terms are finally loosening up. Some lenders are even expanding the types of mortgages they offer. These moves come after years of lenders tightening loan requirements in the aftermath of the housing crisis.
The Opening of the Credit Box
The newly-released MBA index shows that recent improvements in lending are mostly tied to the government’s efforts to ease regulations and improve affordability in the housing market. For example, mortgage financing giant Fannie Mae is now allowing purchases of conventional mortgages that have down payments as low as 3 percent; Freddie Mac is planning to do the same for mortgages closed on or after March 23.
Also, the Federal Housing Administration, which insures loans with down payments as low as 3.5 percent, reduced its upfront mortgage insurance premiums last month, which is expanding eligibility for home purchases to thousands of potential home shoppers.
“Things are looking better for home buyers and refinancers,” not just in the loosening of underwriting requirements but also in the cost of credit, says Brad Blackwell, executive vice president of Wells Fargo Home Mortgage, the nation’s largest mortgage originator based on volume.
Blackwell says that Wells Fargo has been gradually opening its credit box as the government has taken steps to clarify its lending policies and penalties against lenders for defaulting loans. That has helped lenders gain confidence to expand lending to a broader range of borrowers, including those who may not have high credit scores or a sizable down payment for their home purchase.
Wells Fargo says it also has relaxed its policy on down payment gifts to borrowers from relatives and friends. Wells Fargo previously required borrowers to contribute at least 5 percent of the total costs on a home purchase from their own finances in order to qualify for a conventional loan with a 5 percent or lower down payment. The bank giant recently reduced that requirement to 3 percent, allowing for greater gift assistance.
Source: “Lenders Begin Easing Requirements to get a Mortgage,” The Los Angeles Times (Feb. 22, 2015)



Friday, February 20, 2015

Bet on These Home Improvements in 2015

If you're considering giving your home an upgrade this year, it can be overwhelming to choose what home features need an overhaul. Trends seem to change all the time, and the last thing you want is to spend money on costly improvements that will soon be out of date.
What's Hot In Design?
Real estate brokerage Redfin recently analyzed home features that are most desirable to potential home buyers. First, they asked local real estate agents to take note to what features were cropping up the most on home tours. Then they searched for those design keywords and took note of what trends experienced the most growth in popularity in the last five years.
So what seven home improvements made their list of the safest bets?  
  1. Quartz Countertops: For years it was all about the granite counters, but it appears that quartz is all the rage these days for buyers. According to Redfin, quartz has experienced a huge increase since 2012, due to its durability and overall buyer granite fatigue.
  2. Smart Homes: While Smart Home design is overall still a niche with buyers, it's a phrase that has experienced an explosion in listing mentions since 2012. Redfin agents caution that buyers really need to choose a smart home system with the most up-to-date software since smart home technology is rapidly evolving.
  3. Stainless Steel Appliances: This trend is here to stay, and it has only increased in popularity since 2011. According to a Redfin agent, stainless steel is "the gold standard for kitchens these days" and it appears to be a very safe home improvement bet.
  4. Fire Pits: Buyers are still interested in turning their backyards into relaxing areas with multiple focal points that encourages interaction and socializing, and adding a fire pit remains a popular upgrade.
  5. Tasting Rooms: In the high-end and luxury market, the term "tasting" has slowly increased in listings over the last five years. In the past, buyers hid their wine cellars away from the main focal point of the house, but these days they're requesting tasting rooms that are adjacent to the main socializing rooms of the house, such as the kitchen and living rooms.
  6. Outdoor Kitchens: Along with fire pits, outdoor kitchens and multi-use backyard areas have only gained in popularity, especially for high-end buyers who mention socializing in the home as a priority. According to Redfin, "Backyards are becoming places to lounge during the summer, with full kitchens, fireplaces and televisions."
  7. Freestanding Tubs: The days of the space-saving combined shower and tub are over, at least for luxury buyers. Redfin reports that the term "freestanding tub" has increased dramatically since 2011, as buyers want a bathroom that's more reminiscent of a spa.
And lastly, one trend that is seemingly on its way out? Exposed brick. According to Redfin, mentions of exposed brick in listings peaked back in 2013, and they caution that other than loft homes, buyers' interest in exposed brick is waning.


Thursday, February 19, 2015

After Baby Boomers, What’s Next for Housing?

As baby boomers age, the decline of this mammoth generation will have a “dampening effect on household growth,” according to a new report by Harvard’s Joint Center for Housing Studies. However, this decline in growth will occur over several decades and may be offset by the millennial generation starting households of their own.
But the big question is whether the housing left by baby boomers will be desirable to younger generations?
“Many homes vacated by aging seniors will not be in demand by tomorrow’s young adults, being in the wrong part of the country or otherwise unsuitable,” according to JCHS researchers. “Some will be simply too expensive. Some ‘affordable’ vacated homes in desirable locations will be torn down and replaced by larger and more energy efficient/amenity rich houses targeted to older buyers. Many houses will sit on the market for long periods of time before sellers are willing to recognize that they are overpriced. Some homes in declining communities will become abandoned.”
As such between now and 2030, new construction will be needed to meet the housing demand from the large number of those under the age of 30 that are currently in the pipeline – which will be even further escalated due to future immigration trends, researchers note.
Later this decade, the adult population growth is expect to turn sharply, according to recent Census Bureau population projections. Growth in the population age 20 and older is expected to see a 40 percent decline, gradually falling to about 1.5 million per year by 2050.
“Despite their improving life expectancies, the oldest baby boomers will soon turn 70, and begin to die off in ever-greater numbers,” notes JCHS’ report. “Today, there are about 2.6 million deaths every year, but this number will rise to over 4 million a year by 2050.”
Baby boomers have long had a thirst for real estate. As they aged, the share heading an independent household rose from 53.4 percent in 1990; 56.1 percent in 2000; and 58.5 percent in 2010.
On the other hand, younger age groups have been slower to enter the housing market. “Higher minority shares and delayed marriage have had a negative effect on headship rates, as has the Great Recession’s impact on employment and income,” JCHS researchers note.
So what does this mean for the future of housing?
“Projected declining adult population growth because of increasing deaths will have several effects on housing markets,” JCHS researchers predict. “But it will not have an immediate and proportional impact on household growth for a variety of reasons. First, many initial baby boomer deaths will occur to married couples, leaving the surviving spouse to continue to head a household. Many deaths will also occur to people who do not head a household, but rather live in a household headed by children or other relatives, or in institutional settings (assisted living or nursing facilities).”
The decline in household growth due to the aging baby boomers will occur over many decades. By then, aging millennials could cause “the changing age structure effect to be more positive, similar to what baby boomers exerted as they passed into middle age, offsetting the effects of declining adult population growth.”
Source: “What Will Happen to Housing When Baby Boomers Are Gone?” Harvard Joint Center for Housing Studies’ Housing Perspectives Blog (Feb. 17, 2015)


Wednesday, February 18, 2015

Home Owners, Appraisers Align on Price

Appraisers’ opinions of home values are mostly falling in line with home owners’ estimates, according to the latest reading of Quicken Loans' Home Price Perception Index. Indeed, appraisers’ opinions of home values were only 0.18 percent higher than home owners – the closest the two opinions have been since September 2013. The previous month, the difference between appraiser and home owners’ price opinions was 1.43 percent.
While the value perception is closing, home values have also been on the rise. The national median single-family home price at $208,700 in the fourth quarter, up 6 percent year-over-year, according to the National Association of REALTORS®. 
Quicken Loans, the nation’s second largest retail mortgage lender, uses its index to evaluate perceptions of the housing market. Appraisers in more than 74 percent of the metro areas the company examined continued to have higher opinions of home values than the home owners – which means that many may have more equity in their home than they realize.
“Interest rates have dropped and we have seen more and more Americans refinance their mortgage,” says Bob Walters, chief economist for Quicken Loans. “These consumers have been watching their local housing market and realizing their home’s true value more accurately than any time in the last year and a half. This is encouraging, but I urge home owners to continue to watch the ebbs and flows of the market, especially in their neighborhood, so they understand the direction of home values in their community when it comes time to sell.”
Source: “Quicken Loans Study Shows Appraiser and Homeowner  Opinions in January Nearly Equal,” Quicken Loans Press Room (Feb. 10, 2015)


Both Home Prices and Affordability on the Rise

The spring market will likely be a hotter one this year, as low interest rates and a healthier economy lure more home buyers to the marketplace. 
NAR's latest housing report:Tight Supplies Put Home Prices on the Move
“Interest rates below 4 percent, rising rents, and healthier local job markets are convincing more consumers to consider home ownership,” Chris Polychron, National Association of REALTORS® president, said in a recent news release showing fourth-quarter 2014 home prices moving up. 
An increase in the national family median income (to $65,782) mixed with low interest rates slightly improved affordability in the fourth quarter compared to the previous quarter, NAR reports. Affordability improved despite the national median single-family home price moving up to $208,700 in the fourth quarter, an increase of 6 percent year-over-year.
“Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying,” says Lawrence Yun, NAR’s chief economist.
To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $45,863. A 10 percent down payment would require an income of $43,449, and $38,621 would be needed for a 20 percent down payment.
The following were the five lowest-cost housing markets in the fourth quarter:
  1. Youngstown-Warren-Boardman, Ohio: $78,000
  2. Rockford, Ill.: $86,800
  3. Toledo, Ohio: $87,100
  4. Decatur, Ill.: $90,400
  5. Cumberland, Md.: $90,500


Friday, February 13, 2015

Mortgage Rates Remain Near 2013 Lows



Average fixed-rate mortgages are holding near historical lows, but did inch higher this week amid a stronger employment report, Freddie Mac reports in its weekly mortgage market survey.
The economy added 257,000 new jobs in January, following additional increases in December (329,000) and November (423,000).
Despite this week’s uptick in rates, fixed-rate mortgages remain near lows from May 23, 2013, Freddie Mac reports.
Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 12:
  • 30-year fixed-rate mortgages: averaged 3.69 percent, with an average 0.6 point up from last week’s 3.59 percent average. A year ago, 30-year rates averaged 4.28 percent.
  • 15-year fixed-rate mortgages: averaged 2.99 percent, with an average 0.6 point, rising from last week’s 2.92 percent average. Last year at this time, 15-year rates averaged 3.33 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, up from last week’s 2.82 percent average. A year ago, 5-year ARMs averaged 3.05 percent.
  • 1-year ARMs: averaged 2.42 percent, with an average 0.4 point, also up from last week’s 2.39 percent average. Last year at this time, 1-year ARMs averaged 2.55 percent.
Source: Freddie Mac


Friday, January 23, 2015

Existing-Home Sales Rebound: 5 Stats to Know

Home sales picked up at the end of 2014, closing off a year that had a sluggish start but then showed encouraging signs in the second half, according to the National Association of REALTORS®’ latest housing report, released Friday.
Existing-home sales rose 2.4 percent in December month-over-month, bouncing back after a dismal November. Total home sales –reflecting completed transactions of single-family homes, townhomes, condos, and co-ops – reached a seasonally adjusted annual rate of 5.04 million in December.
“Home sales improved over the summer once inventory increased, prices moderated, and economic growth accelerated,” says Lawrence Yun, NAR’s chief economist. “Sales were measurably better in the second half – up 8 percent compared to the first six months of the year.”
Overall for 2014, the median national existing-home price was $208,500, reaching the highest level since 2007, and a 5.8 percent increase from 2013 when it was $197,100. However, total existing-home sales were 3.1 percent lower in 2014 compared to 2013, NAR reports.
Here’s a closer look at five housing stats from NAR’s latest report -- reflecting December 2014 data -- to gauge the market:
1. Home sales: Single-family home sales rose 3.5 percent in December to a seasonally adjusted annual rate of 4.47 million compared to 4.32 million in November. Single-family home sales are 4 percent above the pace a year ago. Existing condo and co-op sales, on the other hand, dropped 5 percent in December.
2. Home prices: The median existing-home price for all housing types in December was $209,500 – 6 percent higher than year ago levels. This marks the 34th consecutive month of year-over-year price gains.
3. Days on the market: Properties typically stayed on the market in December for 66 days, a slightly shorter time frame than a year ago when the average was 72 days. Short sales were on the market the longest amount of time at a median of 98 days in December, while foreclosures sold in 61 days. Non-distressed homes averaged 66 days on the market. About 31 percent of homes that were sold in December were on the market for less than a month, according to NAR.
4. Distressed sales: Foreclosures and short sales edged up slightly in December, reaching 11 percent of sales compared to 9 percent in November. However, distressed sales are down from 14 percent a year ago. Of December existing-home sales, 8 percent were foreclosures and 3 percent were short sales. On average, foreclosures sold for a discount of 15 percent below market value while short sales were discounted 12 percent.
5. Inventory: Total housing inventory at the end of December fell 11.1 percent to 1.85 million existing homes available for sale. That represents a 4.4-month supply at the current sales pace, which is down from 5.1 months in November. Unsold inventory is now 0.5 percent lower than a year ago.
“A drop in housing supply in December raises some affordability concerns in the months ahead as minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates,” says Yun. “Housing costs – both rents and home prices – continue to outpace wages and are burdensome for potential buyers trying to save for a downpayment while looking for available homes in their price range.”
By Region
The following is a look at how existing-home sales performed across the country in December:
  • Northeast: existing-home sales fell 2.9 percent to an annual rate of 660,000. Sales are 3.1 percent above year ago levels. Median price: $246,600, up 3.2 percent above a year ago.
  • Midwest: existing-home sales dropped 3.5 percent to an annual level of 1.09 million in December. Sales are 2.7 percent below December 2013. Median price: $159,100, up 5.3 percent from a year ago.
  • South: existing-home sales in the South climbed 3.8 percent to an annual rate of 2.17 million in December. Sales are 7.4 percent above December 2013. Median price: $184,100, up 6.6 percent from a year ago.
  • West: existing-home sales surged 9.8 percent to an annual rate of 1.12 million in December. Sales are 2.8 percent above a year ago. Median price: $299,600, up 5.6 percent year-over-year.


Mortgage Rates Fall Even Lower This Week

Fixed-rate mortgages continue their free fall, with the 30-year fixed rate mortgage averaging 3.63 percent this week and the 15-year fixed-rate mortgage staying below 3 percent, Freddie Mac reports. The 30-year fixed-rate mortgage is at its lowest level since the week ending May 23, 2013, when it averaged 3.59 percent.
"Mortgage rates continued to fall, albeit at a slower pace,” says Frank Nothaft, Freddie Mac’s chief economist. Mortgage rates are falling amid declining bond yields and oil prices, Freddie Mac notes.
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 22:
  • 30-year fixed-rate mortgages: averaged 3.63 percent, with an average 0.7 point, dropping from last week’s 3.66 percent average. Last year at this time, 30-year rates averaged 4.39 percent.
  • 15-year fixed-rate mortgages: averaged 2.93 percent, with an average 0.6 point, dropping from last week’s 2.98 percent average. A year ago, 15-year rates averaged 3.44 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.83 percent, with an average 0.4 point, dropping from last week’s 2.90 percent average. Last year at this time, 5-year ARMs averaged 3.15 percent.
  • 1-year ARMs: averaged 2.37 percent, with an average 0.4 point, holding the same from last week. A year ago, the 1-year ARM averaged 2.54 percent.
Source: Freddie Mac


Thursday, January 22, 2015

Housing Starts Reach Six Year Highs

Housing starts for single-family homes surged to the highest level in more than six-and-a-half years, a promising sign at the end of 2014, the Commerce Department reported Wednesday.
"The last piece of the economic puzzle is starting to come together now as housing construction is coming back. The housing market is continuing to heal," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters.
Homebuilding has been significantly low despite recent economic growth. Household formation has been running at about 500,000 a year – way below the 1-million mark that most economists consider healthy for the sector.
But the Commerce Department’s report on Wednesday hints at a turnaround: Single-family housing starts, the largest portion of the homebuilding market, rose 7.2 percent to a seasonally adjusted annual pace of 728,000 units in December. It’s the highest level since March 2008.
Meanwhile, groundbreaking on the volatile multi-family market fell slightly at 0.8 percent in December.
Overall, housing starts – reflecting the single-family and multi-family markets – increased 4.4 percent in December to a 1.09 million-unit rate.
Economists point to several factors as helping to lift the new-home market, notably the 30-year mortgage rate is down more than 80 basis points from early 2014, the government’s move to ease credit conditions, and overall wage and employment growth.
"This should allow for many more individuals to enter the market. We expect much of the improvement to occur in sales at the lower end of the market, which has been lagging the overall housing recovery," says David Nice, an economist at Mesirow Financial in Chicago.
Overall for 2014, groundbreaking on single-family and multifamily homes rose 8.8 percent to 1.01 million units – the highest since 2007.
However, the new-home market still has a ways to go. Building permits – a sign of future homebuilding activity – dropped 1.9 percent in December – mostly attributed to an 11.8 percent drop in the multi-family segment. Yet, single-family permits increased 4.5 percent, marking the highest level since January 2008. Building permits in the South in December reached their highest level since February 2008.
Source: “U.S. Single-Family Housing Starts Highest Since Early 2008,” Reuters (Jan. 21, 2015) and “Housing Starts End Year Solidly, Up 4.4%,” Dow Jones Business News (Jan. 21, 2015)


Tuesday, January 20, 2015

More Home Owners Are Remodeling Again

A housing index that measures activity in the remodeling market reached a record-high in the final quarter of 2014, showing that home owners are once again sprucing up their homes following a large slowdown in remodeling activity in the years following the Great Recession.
Biggest Remodeling Payoffs:
The National Association of Home Builders’ Remodeling Market Index rose to 60 in the fourth quarter of 2014. Any reading above 50 indicates more remodelers are reporting higher market activity than those who say they are experiencing less activity.
“The recent pace and volume of business has been a boon to our remodeler members' confidence in the recovery of the housing market," says NAHB Remodelers Chair Paul Sullivan. "The upward trajectory of the RMI results over the past year has shown that home owners are ready, willing, and deciding to remodel."
All of the subcomponents measured within the index posted increases, including large additions, small remodels, and maintenance and repair.
"Even with some weakness in existing homes sales and house prices earlier in the year, remodelers are upbeat as 2014 closes," says NAHB Chief Economist David Crowe. "The consistent improvement in RMI results throughout 2014 are a sign of the gradual recovery of the remodeling market."


Wednesday, November 12, 2014

Survey: More Americans Ready to Sell



More Americans are growing optimistic about home-price appreciation and selling, according to Fannie Mae's October 2014 National Housing Survey of 1,000 American adults.
Home-price expectations rose significantly in the latest survey, largely reversing a dip over the past four months, says Doug Duncan, Fannie Mae's chief economist. Also, the share of consumers who say now is a good time to sell a home reached another survey high this month.
"The narrowing gap between home buying and home selling sentiment may foreshadow increased housing inventory levels and a better balance of housing supply and demand," Duncan says. "These results may help drive a healthier housing market in 2015."
Duncan says that the latest survey showed that consumers are growing more optimistic about the housing market "in the face of broader improvement in economic sentiment. The share of consumers who expect their personal finances to get better is near its highest level since the survey's inception, while those expecting their finances to get worse reached a survey low."
The following are some additional highlights from the Fannie Mae survey:
  • Home buying and selling: The percentage of Americans who say now is a good time to buy a house dropped to 65 percent in October, but sellers were more optimistic. Those who say it's a good time to sell rose to 44 percent, marking a new all-time survey high.
  • Home prices: The average home-price expectation for the next 12 months increased to 2.8 percent. Forty-four percent of respondents now say they expect home prices to rise within the next 12 months.
  • Personal finances: Forty-five percent of respondents say they expect their personal financial situation to improve during the next 12 months, seven points higher than a year ago. The share expecting their financial situation to worsen, meanwhile, decreased to 10 percent last month.
  • Rent expectations: The percentage of respondents who expect home rental prices to rise fell by six percentage points to 49 percent in October.
Source: Fannie Mae