Thursday, September 18, 2014

Another Dip in Home Affordability, But...

DAILY REAL ESTATE NEWS | TUESDAY, SEPTEMBER 16, 2014
Housing affordability nationwide creeped lower once again, as home prices continue to outpace incomes, according to the National Association of REALTORS®' Monthly Housing Affordability Index. Nevertheless, price gains are slowing and mortgage rates are hovering near yearly lows, which is helping to keep homes more affordable to the average family.
A Growing Problem
The median single-family home price in July was $223,900, rising 5.1 percent year-over-year.
Affordability in July fell from the previous month in all regions, excluding the Midwest. NAR researchers note that the Midwest was the only region to experience a slight gain in affordability because of lower home prices and qualifying incomes.
However, affordability has fallen from year-ago levels in all regions, with the West seeing the largest decline — 4.6 percent.
"The rise in mortgage rates was modest this month, so purchases at this time are still favorable when you compare the locked-in monthly payment of a mortgage to the rise in rents," according to NAR's affordability analysis. "New-home construction and an increase in inventory during a time of low rates could lead to more manageable price growth and more sales."
Source: “The Latest Housing Affordability Index Data,” National Association of REALTORS® Economists’ Outlook Blog (Sept. 15, 2014)


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Wednesday, September 17, 2014

Economist Calls for National Policy to Reinforce Home Ownership

DAILY REAL ESTATE NEWS | MONDAY, SEPTEMBER 15, 2014
In a recent column for HousingWire, Jonathan Smoke, chief economist at realtor.com®, breaks down the good and the bad of the housing recovery. He notes certain areas are close to a complete recovery, such as employment, home prices, distressed existing home sales, multifamily new construction, and rents. On the other hand, Smoke says the recovery is far from normal levels in terms of single-family new-home construction, mortgage applications and originations, household formation, and home ownership.
“The most negative sales signal comes from the new-home market, where new-home sales came in at an estimated annualized rate of 412,000 in July, the second lowest rate in the last 10 months,” Smoke notes. New-home permits and starts have failed to reach a pace that economists consider healthy for the sector, which is generally above one million.
Smoke points to another troubling area: Mortgage applications, which fell to the lowest level in 14 years at the beginning of September. Mortgage applications remain low despite the fact that rates are hovering near yearly lows.
“Mortgage applications are considered a leading indicator for future home sales, but I believe the decline is not so much a signal of another downturn in demand but rather an indication of a seriously hobbled housing credit market,” Smoke writes. He says many buyers are being sidelined due to a very “small credit box,” where only consumers with easily documented incomes, strong credit scores, and large down payments are able to qualify for financing on a home.
Another housing hurdle Smoke notes is the abnormal levels of supply and demand. “Affordable homes aimed at the first-time buyer segment are not being built,” he says. “Hedge funds bought up most of the affordable distress inventory over the last three years and have turned them into rentals. Home values have recovered the least in affordable price points, resulting in higher numbers of existing owners with negative equity and therefore unable to sell.”
Smoke says that the continuing declines in areas of home ownership will portend to bigger problems ahead for the overall economy.
“Without a strong housing policy, the mortgage market is incapable of adequately addressing risk-appropriate access to credit that supports home ownership,” Smoke writes. “Fundamentally, we need new directions for national housing policy to address the broken credit market, find solutions for affordability housing across all income levels, reinforce home ownership as the cornerstone of financial security, and fulfill the housing needs of older households.”
Source: “Economist: Here’s Why Mortgage Supply and Demand Isn’t Normal,” HousingWire (Sept. 12, 2014)


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Wells Fargo: Fear Is Holding Many Buyers Back

DAILY REAL ESTATE NEWS | MONDAY, SEPTEMBER 15, 2014
Nearly two-thirds of Americans recently surveyed say they believed a stellar credit score was necessary to purchase a home, and more than 40 percent said they needed a down payment equal to or at least 20 percent of the purchase price to buy a home today, according to a new survey released by Wells Fargo.
Back in April, 56% of all potential home buyers said they were waiting to purchasebecause they feared being rejected by lenders.
However, the nation’s largest mortgage lender says many customers believe it’s much more difficult to get a mortgage than it really is.
Franklin Codel, Wells Fargo’s head of mortgage production, notes that the bank has lowered minimum credit scores for loans backed by the government in an effort to expand its eligible borrower pool.
“When we expanded FICO ranges, we saw not only an increase in applications but we also saw an increase in approval rates,” Codel says.
The lender acknowledges that mortgage credit has tightened since the financial crisis. But buyers’ fear of being turned down by a bank are needlessly keeping some of them out of the housing market, analysts note.
For example, in 2013, 19 percent of families said they did not apply for a consumer loan due to fear of rejection – which is above the 16.4 percent rate of families who actually are turned down for credit, according to a recent Federal Reserve survey.
Source: “Wells Fargo Finds Mortgage Myths Hamper Home Purchases,” Reuters (Sept. 15, 2014)
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Tuesday, September 16, 2014

What Makes a City Smart?

DAILY REAL ESTATE NEWS | MONDAY, SEPTEMBER 15, 2014
Everyone wants to live in a smart place. But the magic mix that draws people in is composed of a lot of different dynamics coming together all at once, according to the National Geographic Channel’s Smart Cities program.
“A city needs a heart and soul—typically the center, where people congregate for work and leisure. Smart cities are well-connected locally and internationally, have a sustainable lifestyle, and are places where people come first,” says Ian MacFarlane, consultant for the program.
National Geographic’s Traveler magazine recently compiled a list of the 50 top attributes that make for a smart city, naming cities that exemplify each factor along the way. Of course, the authors were thinking of travel destinations when they put the list together, but many items on their list matched attributes that make for a top place to live, too. Here are a few that resonated with the U.S. real estate industry:
  • Support for local artisans. Example: Paducah, Ky. was recently named a UNESCO City of Crafts and Folk Art for its promotion of its fiber arts assets and its attempts to attract creative types to its LowerTown Arts District.
  • Dreamers who foster innovation. Example: San Francisco is a city that has more than its fair share of tech start-ups and their eager investors.
  • Urban farming. Example: Manhattan was ahead of the curve when Bell Book & Candle started growing greens in aeroponic rooftop gardens many years ago.
  • High-tech data streams. Example: Chattanooga, Tenn. got the nickname of “Gig City” for its lightning-fast Internet.
The magazine included 47 other examples from around the world of how cities are demonstrating the types of intelligence that delight travelers and residents alike in the upcoming issue.
Source: “The 2014 Traveler 50: World's Smartest Cities,” National Geographic’s Traveler magazine (October 2014 issue).


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Monday, September 15, 2014

Low Mortgage Rates Are Lingering

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 12, 2014
The average percentage rates for fixed-rate mortgages inched up slightly this week, but continue to hover near yearly lows.
Mortgage Rates' Impact:
Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 11:
  • 30-year fixed-rate mortgages: averaged 4.12 percent, with an average 0.5 point, up slightly from last week’s 4.10 percent average. Last year at this time, 30-year fixed-rate mortgages averaged 4.57 percent.
  • 15-year fixed-rate mortgages: averaged 3.26 percent, with an average 0.5, rising from last week’s 3.24 percent average. A year ago, 15-year fixed-rate mortgages averaged 3.59 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.99 percent, with an average 0.5 point, rising from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.22 percent.
  • 1-year ARMs: averaged 2.45 percent, with an average 0.4 point, rising from last week’s 2.40 percent average. A year ago, 1-year ARMs averaged 2.67 percent.
Source: Freddie Mac


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Priced to Sell at $30M? Apparently, Yes!

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 12, 2014
Luxury homes are selling faster than last year, and the homes fetching some of the heftiest price tags are spending less time lingering on the market, according to new data from realtor.com®. An uptick in the stock market and improving economy may be helping to boost the luxury market in recent months.
The High-End Market isBooming:
For homes listed less than $1 million, the median age of listings ranged from 80 days to a median of 180 days for homes just under $30 million, according to realtor.com®. But for homes above $30 million, the median time to market dropped to 139 days.
Jonathan Smoke, realtor.com®’s chief economist, says the faster times are often because these high-ticketed homes are marketed quietly before hitting the open market. This market segment is attracting a more engaged group of buyers lately, he says.
For example, in Vail, Colo., homes above $15 million used to sit on the market for more than two years, but now are selling in “months, not years, and sometimes in weeks,” Tye Stockton, a real estate professional with Ascent Sotheby’s International Realty, told The Wall Street Journal. In Greenwich, Conn., Tamar Lurie with Coldwell Banker told The Wall Street Journal that she is expecting about 20 sales above $10 million this year – double the number sold last year.
A $2 million listing in the Hancock Park area of Los Angeles sat on the market last year before it was removed after never hooking a buyer. But this month, the owners put the home back on the market and sold above the asking price in just one day, says Billy Rose, co-founder of the Agency, a real estate brokerage in Beverly Hills, Calif.
Source: “Luxury Homes: Priced to Sell at $30 Million,” The Wall Street Journal (Sept. 10, 2014)


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Thursday, September 11, 2014

More Singles Than Ever: How It Affects Real Estate

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 11, 2014
In the age of "selfies," the majority of adults are sticking to themselves. Single Americans now make up more than half of the adult population, the first time the number of singles has passed the 50 percent mark since the government began tracking such data in 1976.
A Force to Be Reckoned With
About 124.6 million Americans indicated they were single in August; 50.2 percent were age 16 or older, according to new data from the Bureau of Labor Statistics. The percentage has been gradually trending upward since the beginning of 2013.
The rise of single households has "implications for our economy, society, and politics," writes Edward Yardeni, president of Yardeni Research Inc., in a report called "Selfies." He called the proportion of singles today "remarkable."
What are the implications for real estate? Singles, particularly younger professionals, are more likely to rent than own a home. They are less likely to have children, and the growth in single households likely will exaggerate income inequality, Yardeni notes.
"While they have less household earnings than married people, they also have fewer expenses, especially if there are no children in their households," Yardeni writes in his report.
The number of never-married adult Americans has been on the rise, too, increasing to 30.4 percent from 22.1 percent in 1976. The number of divorced, separated, or widowed adults also has risen up to 19.8 percent from 15.3 percent.
Some real estate analysts are expecting an increase in singles heading into home ownership in the coming years. For example, single women make up the second largest segment of home purchases, with one out of every five homes purchased by a single woman, according to National Association of REALTORS® data. More than 25 million single women over the age of 45 — who may be either divorced, widowed, or never married — are also making up a growing number of home owners, real estate professionals report.
Some builders are even catering to this growing segment, reportedly adding two master bedrooms to appeal to the 40 percent of single women who choose to have non-romantic roommates, according to AARP surveys. 

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