Housing Starts Reach Six Year Highs

DAILY REAL ESTATE NEWS | THURSDAY, JANUARY 22, 2015

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.

Measuring Sentiment:Homebuilders Remain Cautiously Confident

"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)

http://realtormag.realtor.org/daily-news/2015/01/22/housing-starts-reach-six-year-highs

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Improving Economy Helps Buoy Housing

DAILY REAL ESTATE NEWS | WEDNESDAY, JANUARY 21, 2015

Recent drops in oil prices and mortgage rates, along with positive tailwinds in the economy, are helping to jump-start the housing market in the new year, according to Freddie Mac’s newly released2015 U.S. Economic and Housing Market Outlook for January. Consumers are gaining confidence, which is expected to translate to higher home sales in the coming months. Some economists are skeptical on whether this latest jolt will stick around for the entire year, however.

NAR Forecast: Home Sales Only Going Up From Here

Freddie Mac economists note that mortgage rates continue to remain well below expectations, and they predict that mortgage rates will remain low at the beginning of 2015, staying around 4 percent for the first two quarters of the year at least. Last week, mortgage rates dipped to a 20-month low with the 30-year fixed-rate mortgage rate plunging to a 3.66 percent national average and the 15-year fixed-rate mortgage dropping to 2.98 percent. 

“We … expect these low mortgage rates to help the growing purchase market continue to expand and reach the highest levels we’ve seen since 2007,” the economists note in the forecast.

But rates likely will move up by the end of the year. Lawrence Yun, chief economist for the National Association of REALTORS®, says that the 30-year fixed-rate mortgage could average around 5 percent – or higher – by the end of this year.

"I would not be surprised if it is above 5 percent because when mortgage rates move or interest rates move, it is generally not in a slow creep," Yun told Bankrate.com.

That said, many potential home buyers remain sidelined due to high monthly rents that have prevented many from being able to save for a down payment on a home. Freddie Mac believes its new announcement, along with Fannie Mae, of offering mortgages with down payments as little as 3 percent, along with the Federal Housing Administration’s recent announcement that it will cut its premiums for new and refinancing borrowers by a half percentage point to help increase mortgage availability to first-time home buyers.

Economists also note in Freddie Mac’s report that home prices will likely rise by 3.5 percent this year. In addition, in the labor market, wages are expected to rise, helping to give consumers greater confidence. The National Federation’s Independent Business Index for December showed that small businesses expect to raise employee compensation to the highest level since 2006.

Still, economists worry that some of the positives in the housing market may be for a “limited time only,” influeneced by unexpected weaknesses in the global economy as well as what the Federal Reserve ultimately does with mortgage rates. While mortgage rates are expected to largely remain low for the next two quarters, many economists are expecting rates to move higher in the second half of the year.

"On balance there are a lot of positive opportunities in the U.S. economy at the start of the year, and the real question is whether or not households and businesses will be able to seize these opportunities and make the most of them,” says Frank Nothaft, Freddie Mac’s chief economist. “The reprieve in interest rates and drop in gas prices should help to spur economic growth. Until rates start to rise later in the year, housing markets should respond positively, and we anticipate increases in home sales and continued improvement in construction activity.”

Source: “January U.S. Economic & Housing Market Outlook,” Freddie Mac (January 2015) and “Housing Market’s ‘Interesting Times,’” Bankrate.com (Jan. 19, 2015)

http://realtormag.realtor.org/daily-news/2015/01/21/improving-economy-helps-buoy-housing

www.RebeccaSellsAZ.com

4 Things You Don’t Know About Outdoor Kitchens

DAILY REAL ESTATE NEWS | WEDNESDAY, JANUARY 21, 2015

Now that the 2015 International Builders’ Show has partnered with the Kitchen & Bath Industry Show, there are plenty of examples of beautiful cooking spaces, indoors and out. But what about the numbers? The results of a new survey released at the show attempt to define what consumers want when it comes to outdoor kitchens.

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Dave Brown, a partner with Chicago-based ad firm HY Connect, surveyed consumers who have or would like to have outdoor kitchens in their homes. The study, which surveyed households making $150,000 or more in household income across the United States, was conducted in December 2014. He discussed the results of the survey at the first day of IBS/KBIS in Las Vegas on Tuesday.

A Growing Market
While only 4 percent of affluent households have outdoor kitchens today, 13.6 percent say they are planning on adding one in 2014. Brown says that the largest age group who don’t have these amenities but are hoping to incorporate them in their living space is between the ages of 45 and 54. He also adds that those who are interested in this particular amenity are more likely to have children in the home, noting, “These are active households. They’re doing stuff.”

The Difference Between Indoor and Outdoor
The needs and wants associated with an indoor kitchen don’t necessarily translate to that of an outdoor cooking space. “Outdoors is all about socializing… it is all about having fun and a great experience,” Brown says, noting that adequate seating space is one place where home owners tend to underestimate. Also, he adds that “storage in the indoor kitchen is huge [but] in terms of the outdoors, food prep becomes more important.”

Unexpected Features Top Favorites Lists
It may not seem that surprising that survey respondents consistently rated the outdoor kitchen their favorite room in the whole house. However, their favorite features weren’t the traditional items seen in most outdoor entertainment areas. The No. 1 item that current owners of outdoor kitchen regretted leaving out was a pizza oven. “What’s loved the most is what’s unique. Fountains, fireplaces, pools,” Brown says. He adds that his backyard pizza oven serves as a gathering place for guests to participate in the food prep process. “It’s what I call ‘kitchen karaoke.’”

Integration Is Key
Brown says that many home owners start small with the intention of adding on features later. But he notes that the most successful, best-loved outdoor kitchens tend to occur when the design process is holistic: “It feels like an entire outdoor room where I can have an event and not just a bunch of stuff stuck outside.”

—Meg White, REALTOR® Magazine

www.rebeccasellsAZ.com

http://realtormag.realtor.org/daily-news/2015/01/21/4-things-you-don-t-know-about-outdoor-kitchens

More Home Owners Are Remodeling Again

DAILY REAL ESTATE NEWS | FRIDAY, JANUARY 16, 2015

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.

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• 2015 Remodeling Cost vs. Value Report
• Smaller Remodeling Jobs Get Better ROI

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."

Source: National Association of Home Builders

http://realtormag.realtor.org/daily-news/2015/01/16/more-home-owners-are-remodeling-again

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Mortgage Lending Plunges to 13-Year Low

DAILY REAL ESTATE NEWS | MONDAY, DECEMBER 01, 2014

Mortgage lending is running at its lowest level in more than a decade, and 2014 is on pace to be the weakest for new mortgages since 2000, according to newly released figures by the Federal Reserve Bank of New York.

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Most of the drops in mortgage lending this year have been attributed to a sharp decrease in refinancing. The New York Fed’s data does not separate mortgage lending for home purchases from those for refinancing.

Mortgage lending has averaged $357 billion per quarter for the past year ending in September, which marks the lowest amount since the middle of 2001, the Fed reports. If the fourth quarter doesn’t show a spike in lending activity–which historically it does not—2014 will go down as the worst year for mortgage volume since 2000.

The drop in lending comes at a time when mortgage rates are hovering near historic lows. Freddie Mac reported that the 30-year fixed-rate mortgage averaged 3.97 percent last week. The rate drop in recent months has been welcome news for buyers and home owners who have been able to take advantage, particularly after the increase last year. The 30-year fixed-rate mortgages jumped in the middle of last year from around 3.6 percent to 4.6 percent in June, before falling back down in recent months.

Source: “New Mortgage Lending Drops to 13-Year Low,” The Wall Street Journal (Nov. 25, 2014)

http://realtormag.realtor.org/daily-news/2014/12/01/mortgage-lending-plunges-13-year-low

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Survey: More Americans Ready to Sell

DAILY REAL ESTATE NEWS | TUESDAY, NOVEMBER 11, 2014

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

http://realtormag.realtor.org/daily-news/2014/11/11/survey-more-americans-ready-sell

www.RebeccaSellsAz.com

Purchase Applications Post First Rise in Weeks

DAILY REAL ESTATE NEWS | WEDNESDAY, NOVEMBER 05, 2014

Applications for home purchases, a leading indicator of home sales, increased 2.6 percent last week, even with a rise in interest rates, according to the Mortgage Bankers Association’s seasonally adjust index of mortgage activity, reflecting the week ending Oct. 31. The rise follows a 5 percent decrease the previous week. 

Refinance activity is diminishing. Refinancing posted a big surge last month due to interest rates hitting the lowest point of the year. But for the last two weeks, refinance activity has fallen, dropping 5.5 percent the prior week.

Due to the big drop in refinancing applications last week, overall mortgage application activity, which reflects both refinancing and home purchases, posted a 2.6 percent decrease in the week.

Meanwhile, the 30-year fixed-rate mortgage was on the rise last week, up four basis points, averaging 4.17 percent.

Source: “U.S. Mortgage Applications Fall in Latest Week: MBA,” Reuters (Nov. 5, 2014)

http://realtormag.realtor.org/daily-news/2014/11/05/purchase-applications-post-first-rise-in-weeks

www.RebeccaSellsAZ.com