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


Monday, February 16, 2015

Successful Cities Invest in Technology, Energy

Smart investments in energy and innovation earn San Francisco, CA and Austin, TX the distiction of being named the Best-Performing Cities in America by the Milken Institute.
Dynamic Cities
The Milken Insitute ranked 379 metro areas to help businesses, investors, government officials, and public-policy groups track and evaluate the performance of metros where they do business relative to the rest of the country. In the 2014 index, the they weighed nine factors, including  job, wage, and technology trends, with a heavy emphasis on growth in jobs creation and retention and the overall quality of new jobs.
What made these cities better equipped to weather the recent economic downturn was their ability to "offset high costs, an unfavorable tax structure, and a burdensome regulatory environment thanks to the clustering of talent and technology in an entrepreneurial ecosystem. The two main factors driving the success of these metros is technology and shale energy production.
"Technological advances in horizontal drilling and hydraulic fracturing are altering the energy landscape of the United States," according to the study. "Few experts had anticipated the magnitude of the boom in shale oil and gas exploration and production occurring since 2007. Energy investment has claimed the largest share of GDP since the early 1980s."
Study Highlights
  • San Franciso, CA, earned the top spot among large metros, accounting for 45 percent of all jobs created over the five years ending in 2013.
  • Five Texas metro areas were ranked in the top 10 list of best-performing cites, due to a combination of tech, energy strength, and a favorable business climate.
  • California and Colorado each had four metro areas in the Top 25.
  • Technology centers, made up of creative and scientific-based industries represented 13 of the Top 25.
  • Seven metros made the Top 25 due to large gains in shale oil and gas exploration, associated infrastructure investment, and related activities.
  • Fargo, ND, was No. 1 among small metros, benefitting from the shale oil boom and a diverse makeup of industries.
  • West Palm Beach, FL, increased 93 spots and was the city with the overall biggest increase.
Sources: "America's Best Performing Cities Are Invested In Technology And Energy,"  Fast Company (Jan 15, 2015), and "Best Performing Cities," Milken Institute, (Janaury, 2015)


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


Thursday, February 12, 2015

Tight Supplies Put Home Prices on the Move

Home prices posted solid gains in the fourth quarter of 2014, with the majority of metro areas seeing a slightly stronger price growth, propelled by tight housing supplies, low interest rates, and a strengthening job market, according to the National Association of REALTORS®’ latest quarterly report.
Prices on the Rise
The national median existing single-family home price was $208,700 in the fourth quarter, up 6 percent year-over-year, NAR reports.
The median existing single-family home price rose in 150 out of the 175 metro markets tracked – or 86 percent. That marks a stronger price gain compared to the third quarter when 73 percent of the metro areas had posted increases. What’s more, 24 areas – or 14 percent – saw double-digit increases in the fourth quarter.
“Home prices in metro areas throughout the country continue to show solid price growth, up 25 percent over the past three years on average,” says Lawrence Yun, NAR’s chief economist. “This is good news for current home owners, but remains a challenge for buyers who are seeing home prices continue to outpace their wages. 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.”
Meanwhile, total existing-home sales – including single-family and condo – fell 1 percent in the fourth quarter to a seasonally adjusted annual rate of 5.07 million. But existing home-sales are still 2.6 percent higher year-over-year, according to NAR’s housing report.
By the end of the fourth quarter, 1.85 million existing homes were available for sale, which is slightly below the 2.01 million homes for-sale during the fourth quarter of 2013. The average supply was 4.9 months in the fourth quarter. Most economists consider a supply of 6 to 7 months a healthy balance of supply between buyers and sellers.
“Despite affordable housing conditions in most of the country, an upward pressure on home prices still persists in some metro areas – particularly in the West – where the current supply of new and existing-homes for sale is failing to keep pace with overall demand and growing populations,” Yun says. “Unless homebuilders significantly boost construction, housing supply shortages could develop and lead to further price acceleration this spring.”
5 Priciest Markets in the Fourth Quarter
The following were the most expensive housing markets in the fourth quarter:
  1. San Jose, Calif. metro: $855,000 (median existing single-family home price)
  2. San Francisco: $742,900
  3. Honolulu: $701,300
  4. Anaheim-Santa Ana, Calif.: $688,500
  5. San Diego: $493,100
By Region
The following is a closer look at how existing-home sales and prices fared across the country in the fourth quarter:
  • Northeast: total existing-home sales increased 2.5 percent in the fourth quarter and are 4.1 percent below the fourth quarter of 2013. Median existing single-family home price: $246,300, up 2.2 percent from a year ago.
  • Midwest: existing-home sales fell 4.7 percent in the fourth quarter and are 0.6 percent below a year ago. Median existing single-family home price: $162,000, a 6.2 percent jump from a year ago.
  • South: existing-home sales rose 2.7 percent in the fourth quarter and are 5.8 percent above the fourth quarter of 2013. Median existing single-family home price: $183,500, 6.2 percent above a year earlier.
  • West: existing-home sales fell 6 percent in the fourth quarter and are 0.9 percent below a year ago. Median existing single-family home price: $299,500, up 4.8 percent year-over-year.


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