About one in four home sales during the first quarter of this year was in some form of foreclosure, according to RealtyTrac. A growing number of those distressed sales were also from short sales, the newly released report shows.
Distressed properties—either bank-owned, in default, or scheduled for auction—accounted for 26 percent of all residential sales during the first three months of this year, which is up 8 percent from the previous quarter, according to RealtyTrac.
Short sales made up a bigger bulk of that number—12 percent of all home sales—and reached a three-year high during the first quarter of this year. The percentage of short sales rose 25 percent compared to a year earlier.
Short sales in the first quarter sold for an average price of $175,461 (which is the lowest average ever recorded by RealtyTrac since 2005). Meanwhile, foreclosures in the first quarter sold for an average of $161,214, which is 27 percent below the average price of a non-foreclosure, according to RealtyTrac.
"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," says Brandon Moore, chief executive of RealtyTrac.
Source: “Foreclosures Made up 26% of U.S. Home Sales in First Quarter,” CNNMoney (May 31, 2012)
Thursday, May 31, 2012
$30M investment to boost Fla. housing market
Wells Fargo brings its NeighborhoodLIFT program to Miami this week, calling it “a major effort to help stabilize neighborhoods deeply affected by the foreclosure crisis.” It has a five-year goal of $300 million in mortgage purchase loans by Wells Fargo, and a $9 million investment in downpayment assistance grants and homebuyer support programs. Homebuyers could qualify for up to $15,000 in downpayment assistance.
Wells Fargo will collaborate with the City of Miami, the non-profit organization NeighborWorks America and its local Miami affiliate Neighborhood Housing Services of South Florida to execute the program.
The program launches tomorrow and Saturday through a free large-scale homebuyer workshop at the Miami Airport Convention Center (MACC) from 10 a.m.-7 p.m. Prospective homebuyers can register and learn more about the NeighborhoodLIFT program at www.neighborhoodlift.org or by calling 866-858-2151. Wells Fargo says pre-registration is encouraged but walk-ins are welcome.
The company says it plans to bring Florida NeighborhoodLIFT to three more Florida cities in the future with $7 million spent at each location:
• Tampa, June 22-23
• Orlando, July 13-14
• Jacksonville, July 27-28
All four Florida cities were chosen based on their high concentration of homeowners, foreclosures, delinquencies and overall housing inventory, Wells Fargo says.
Miami is the sixth city to launch the NeighborhoodLIFT program, following Atlanta, Houston, Las Vegas, Los Angeles, and Phoenix.
The June 1-2 NeighborhoodLIFT event in Miami is for anyone interested in buying and living in a home in the City of Miami. Downpayment assistance of up to $15,000 is available to those who qualify, buy and reside in a home in Miami. To qualify for downpayment assistance that may be applied to mortgage purchase loans with any lender, applicants must meet certain criteria including annual income not exceeding 120 percent of the area median income; completion of an eight-hour homebuyer education session with the approved NeighborWorks America affiliate; a commitment to stay in the home for five years; and qualification for a first mortgage on the property.
At the event, potential homebuyers can find out if they qualify for the downpayment assistance program for a mortgage purchase loan with any lender and reserve funds for 60 days – even if they have not yet found a property. They can also get pre-approved for a mortgage and, if they face credit challenges, they can sign up for free counseling.
In addition, prospective homebuyers may stop by the Wells Fargo Affordable Home Tour viewing center to preview the features and prices of about 100 homes available for sale in each city. And they can board a tour bus for a free ride to see and go inside the homes. Buses will depart from noon to 5 p.m. each day to the neighborhoods. Self-directed tours are also encouraged.
“This is a tremendous commitment by Wells Fargo to support homeowners and communities,” said Eileen Fitzgerald, chief executive officer of NeighborWorks America, the national non-profit collaborating with Wells Fargo on NeighborhoodLIFT. “This is the kind of public-private collaboration that can help communities tackle difficult challenges and families realize their goal of sustainable homeownership.”
Source: Florida Realtors®
Wells Fargo will collaborate with the City of Miami, the non-profit organization NeighborWorks America and its local Miami affiliate Neighborhood Housing Services of South Florida to execute the program.
The program launches tomorrow and Saturday through a free large-scale homebuyer workshop at the Miami Airport Convention Center (MACC) from 10 a.m.-7 p.m. Prospective homebuyers can register and learn more about the NeighborhoodLIFT program at www.neighborhoodlift.org or by calling 866-858-2151. Wells Fargo says pre-registration is encouraged but walk-ins are welcome.
The company says it plans to bring Florida NeighborhoodLIFT to three more Florida cities in the future with $7 million spent at each location:
• Tampa, June 22-23
• Orlando, July 13-14
• Jacksonville, July 27-28
All four Florida cities were chosen based on their high concentration of homeowners, foreclosures, delinquencies and overall housing inventory, Wells Fargo says.
Miami is the sixth city to launch the NeighborhoodLIFT program, following Atlanta, Houston, Las Vegas, Los Angeles, and Phoenix.
The June 1-2 NeighborhoodLIFT event in Miami is for anyone interested in buying and living in a home in the City of Miami. Downpayment assistance of up to $15,000 is available to those who qualify, buy and reside in a home in Miami. To qualify for downpayment assistance that may be applied to mortgage purchase loans with any lender, applicants must meet certain criteria including annual income not exceeding 120 percent of the area median income; completion of an eight-hour homebuyer education session with the approved NeighborWorks America affiliate; a commitment to stay in the home for five years; and qualification for a first mortgage on the property.
At the event, potential homebuyers can find out if they qualify for the downpayment assistance program for a mortgage purchase loan with any lender and reserve funds for 60 days – even if they have not yet found a property. They can also get pre-approved for a mortgage and, if they face credit challenges, they can sign up for free counseling.
In addition, prospective homebuyers may stop by the Wells Fargo Affordable Home Tour viewing center to preview the features and prices of about 100 homes available for sale in each city. And they can board a tour bus for a free ride to see and go inside the homes. Buses will depart from noon to 5 p.m. each day to the neighborhoods. Self-directed tours are also encouraged.
“This is a tremendous commitment by Wells Fargo to support homeowners and communities,” said Eileen Fitzgerald, chief executive officer of NeighborWorks America, the national non-profit collaborating with Wells Fargo on NeighborhoodLIFT. “This is the kind of public-private collaboration that can help communities tackle difficult challenges and families realize their goal of sustainable homeownership.”
Source: Florida Realtors®
Fed flood insurance program gets 60-day extension
Congress has given itself two more months to come up with long-term solutions for the debt-burdened federal program that provides insurance for homes and businesses in areas subject to flooding.
A voice vote in the House Wednesday extended the life of the National Flood Insurance Program for 60 days, assuring that people in flood-risk areas will continue to have access to the flood insurance they need to close on mortgages or obtain refinancing. The program was slated to expire today.
The last full-scale reauthorization of the NFIP, a wing of the Federal Emergency Management Agency, occurred in 2004. Since 2008, the insurance provider has stayed alive through a series of 16 short-term extensions while lawmakers debate how to restore its fiscal soundness.
The NFIP was largely self-financing until it was overwhelmed by claims from hurricanes Katrina and Rita in 2005. It now owes nearly $18 billion to the Treasury.
Rep. Judy Biggert, R-Ill., chair of the House Financial Services subcommittee on insurance, said she hoped Wednesday’s 17th stopgap measure would be the last, “because this program is too important to let lapse, and too in-debt to continue without reform.”
She said Senate leaders had given public and private assurances that they would vote on a long-term extension in June.
The House last year passed a five-year extension that allowed for increased premiums and ended some subsidies, but the Senate has been unable to get a companion bill to the floor for a vote.
The Senate last week passed the 60-day extension after adding a provision by Sen. Tom Coburn, R-Okla., that would gradually eliminate premium rate subsidies for people buying second homes and vacation homes in flood-prone areas. Coburn said that could save the program $2.7 billion over 10 years.
The NFIP was created in 1969, partly to fill the gap left by the unwillingness of private insurers to provide flood insurance. It now covers some 5.6 million policyholders in 21,000 flood-prone communities.
Source: The Associated Press, Jim Abrams. All rights reserved.
A voice vote in the House Wednesday extended the life of the National Flood Insurance Program for 60 days, assuring that people in flood-risk areas will continue to have access to the flood insurance they need to close on mortgages or obtain refinancing. The program was slated to expire today.
The last full-scale reauthorization of the NFIP, a wing of the Federal Emergency Management Agency, occurred in 2004. Since 2008, the insurance provider has stayed alive through a series of 16 short-term extensions while lawmakers debate how to restore its fiscal soundness.
The NFIP was largely self-financing until it was overwhelmed by claims from hurricanes Katrina and Rita in 2005. It now owes nearly $18 billion to the Treasury.
Rep. Judy Biggert, R-Ill., chair of the House Financial Services subcommittee on insurance, said she hoped Wednesday’s 17th stopgap measure would be the last, “because this program is too important to let lapse, and too in-debt to continue without reform.”
She said Senate leaders had given public and private assurances that they would vote on a long-term extension in June.
The House last year passed a five-year extension that allowed for increased premiums and ended some subsidies, but the Senate has been unable to get a companion bill to the floor for a vote.
The Senate last week passed the 60-day extension after adding a provision by Sen. Tom Coburn, R-Okla., that would gradually eliminate premium rate subsidies for people buying second homes and vacation homes in flood-prone areas. Coburn said that could save the program $2.7 billion over 10 years.
The NFIP was created in 1969, partly to fill the gap left by the unwillingness of private insurers to provide flood insurance. It now covers some 5.6 million policyholders in 21,000 flood-prone communities.
Source: The Associated Press, Jim Abrams. All rights reserved.
Wednesday, May 30, 2012
Celebrities Lose Their Star Power With Housing
Celebrities are increasingly finding that having a famous name doesn’t always help them sell real estate, even though those famous names may help them move movie or music tickets, perfumes, or other products.
Several celebrities who have tried to sell their homes recently have had to reduce their asking prices or have found their big-priced homes linger on the market waiting for a buyer.
In the last year, for example, actors like Goldie Hawn and Kurt Russell have had to reduce the asking price for their $11.2 million Malibu beach home by $3.5 million. Ozzy and Sharon Osbourne sold their Malibu home for 21 percent less than their original asking price at $7.9 million. Actress Meg Ryan has relisted her Bel Air mansion at $11.4 million, a 42 percent price reduction since she first listed it in 2008.
"In the art world, there is this notion of provenance — that who owns something can detract or add to the value," says Elizabeth Currid-Halkett, author of Starstruck: The Business of Celebrity. "But it does not seem to translate to celebrity homes."
However, celebrities do tend to draw extra attention for their for-sale homes. But real estate pros say that celebrities just shouldn’t equate that with a “sold” sign or a boost in sales price.
“The value of a house has more to do with the individual stamp the person puts on the property, real estate experts say, than a famous autograph on the sales contract,” according to a recent Los Angeles Times article.
Source: “Celebrity Sellers Have Little Effect on Home Prices," Los Angeles Times (May 19, 2012)
Several celebrities who have tried to sell their homes recently have had to reduce their asking prices or have found their big-priced homes linger on the market waiting for a buyer.
In the last year, for example, actors like Goldie Hawn and Kurt Russell have had to reduce the asking price for their $11.2 million Malibu beach home by $3.5 million. Ozzy and Sharon Osbourne sold their Malibu home for 21 percent less than their original asking price at $7.9 million. Actress Meg Ryan has relisted her Bel Air mansion at $11.4 million, a 42 percent price reduction since she first listed it in 2008.
"In the art world, there is this notion of provenance — that who owns something can detract or add to the value," says Elizabeth Currid-Halkett, author of Starstruck: The Business of Celebrity. "But it does not seem to translate to celebrity homes."
However, celebrities do tend to draw extra attention for their for-sale homes. But real estate pros say that celebrities just shouldn’t equate that with a “sold” sign or a boost in sales price.
“The value of a house has more to do with the individual stamp the person puts on the property, real estate experts say, than a famous autograph on the sales contract,” according to a recent Los Angeles Times article.
Source: “Celebrity Sellers Have Little Effect on Home Prices," Los Angeles Times (May 19, 2012)
Demand for foreclosures triples among homebuyers
Interest in buying foreclosures has almost tripled among potential homebuyers in the past two and half years, according to a new national survey released by Realtor.com. Of those buyers, 92.1 percent plan to live in them rather than use them as investments.
This suggests the stigma once associated with buying a foreclosure as a home has faded, and significant demand among potential owner occupants has developed for the more than 1.5 million foreclosures in the pipeline nationwide.
According to the Realtor.com survey, homebuyer interest in foreclosures jumped 159 percent since October 2009 when foreclosures accounted for 29 percent of all home sales. In fact, more than two-thirds (64.9%) of today’s homebuyers said they’re likely to buy a foreclosure compared to 25.3 percent two and a half years ago. Only 6.9 percent of today’s potential homebuyers are interested in buying a foreclosure as an investment, down from 13.2 percent in October 2009.
“We see a combination of factors coming into play explaining the unexpected interest in foreclosures,” said Steve Berkowitz, chief executive officer of Realtor.com, which is operated by Move Inc. Realtor.com is the official consumer website of the National Association of Realtors® (NAR). “Reductions in supply, expectations that home prices will rise, and changing attitudes towards foreclosures are contributing to the increased demand, especially among owner-occupants. As lenders begin processing their distressed inventories and releasing them for sale at the local level, we look to them to move carefully and monitor conditions so recently gained home values aren’t diminished.”
Concern about home values
The Realtor.com survey found that more than half of all Americans (55.7%) are concerned the more than 1.5 million backlogged foreclosures expected to be released by major lenders will lower home values in their markets. Midwesterners (62.2%) are more concerned than those in other regions, while people in the Northeast are least concerned (42.8%). The majority of backlogged foreclosures are expected to be released in the 26 judicial states that require court orders before distressed properties can be processed and released for sale. Many judicial states are located in the Midwest and Northeast. Homeowners (56.1%) and non-homeowners (54.5%) are equally concerned.
Fear of facing foreclosure declines
As the stigma associated with buying a foreclosure has declined in the past few years, so has the fear of losing a home to foreclosure. Today, about one third of Americans (34.9%) fear they or someone they know will face foreclosure in the next year, down 33.5 percent from March 2009 levels when 52.5 percent expressed this concern. Fear of facing foreclosure today is greatest among those earning less than $30,000 a year and slightly higher among non-homeowners (38.6%) than homeowners (33.6%).
While foreclosure activities have declined 34 percent in the past year, most Americans say they haven’t seen improvement in the foreclosure situation where they live. The Realtor.com survey found most Americans (49%) think the foreclosure situation is about the same as it was last year, while close to one in six (17.6%) say the foreclosure situation is worse. Only 21.3 percent think the foreclosure situation in their market is better. Foreclosures have in fact declined by 34 percent in the past 12 months.
Who’s to blame?
Americans blame the economy and job losses (22.2%), lenders (24.8%) and the government (22.1%) equally responsible for the foreclosure problems facing the nation today. Defaulting homeowners (10.3%) and Wall Street (9.4%) were least blamed by survey respondents. Homeowners with annual incomes of $40,000 or more (30%) and those age 25 to 64 (29%) blame lenders more than other groups, while older Americans 65+ (32.8%) and those earning over $50,000 (26%) blame government most. Younger consumers (18-24) are more likely to blame the economy (28.7%) and defaulting homeowners (26.9%) for today’s foreclosure problems.
What can lenders do now?
To keep the ‘shadow inventory’ of foreclosures from lowering home values, more Americans want lenders to offer lease-purchase programs to help reduce their foreclosure inventories compared to other options. In fact, one in four (28.3%) Americans prefer the lease-purchase option instead of: selling them slowly to preserve home values (12.8%); selling them to investors to fix up and rent out (11%); continuing business as usual (10.8%); selling them quickly to eliminate the backlog even if home values suffer (10.6%); and renting them out until prices improve (8.7%).
Foreclosure buyers are savvy
The Realtor.com survey found prospective foreclosure buyers have a fairly accurate picture of the discounts and appreciation that comes with foreclosures, suggesting they’re savvy consumers that are informed, serious and likely successful buyers. Most foreclosure buyers expect to receive a discount of anywhere from 10 percent to up to 30 percent on their property purchase, which is in line with today’s average discount of approximately 29 percent. Also interesting, the lower the income level of a prospective foreclosure buyer, the more realistic their expectations are about the discount.
More than half of all prospective foreclosure buyers (56.4%) expect their purchases to appreciate 10 percent or less over five years, or 2 percent a year. Younger buyers (age 18-34) are most realistic. More than half those in the first-time buyer age group, 25-34 (57.1%), expect their purchases to appreciate less than 5 percent, or 1 percent a year. Most (54.8%) middle-income buyers ($30-40K) are more conservative and anticipate an appreciation of less than 5 percent in five years.
“Foreclosures can present a new opportunity for buyers to become homeowners, especially considering the discounted purchase prices and lower downpayment requirements,” said Realtor.com President Errol Samuelson. “This is especially true for owner-occupants interested in improving the property, and holding on to it long enough to realize appreciation that can be carried over to future home purchases. Working with a Realtor who specializes in distressed properties can help foreclosure buyers be more successful as they navigate the process unique to this type of purchase.”
The survey for Realtor.com was conducted May 4-6, 2012, by GfK Custom Research North America, via OmniTel, their weekly national telephone omnibus service. The study consisted of 1,004 completed interviews, among adults 18 years of age and over.
Source: Move Inc. & Florida Realtors®
This suggests the stigma once associated with buying a foreclosure as a home has faded, and significant demand among potential owner occupants has developed for the more than 1.5 million foreclosures in the pipeline nationwide.
According to the Realtor.com survey, homebuyer interest in foreclosures jumped 159 percent since October 2009 when foreclosures accounted for 29 percent of all home sales. In fact, more than two-thirds (64.9%) of today’s homebuyers said they’re likely to buy a foreclosure compared to 25.3 percent two and a half years ago. Only 6.9 percent of today’s potential homebuyers are interested in buying a foreclosure as an investment, down from 13.2 percent in October 2009.
“We see a combination of factors coming into play explaining the unexpected interest in foreclosures,” said Steve Berkowitz, chief executive officer of Realtor.com, which is operated by Move Inc. Realtor.com is the official consumer website of the National Association of Realtors® (NAR). “Reductions in supply, expectations that home prices will rise, and changing attitudes towards foreclosures are contributing to the increased demand, especially among owner-occupants. As lenders begin processing their distressed inventories and releasing them for sale at the local level, we look to them to move carefully and monitor conditions so recently gained home values aren’t diminished.”
Concern about home values
The Realtor.com survey found that more than half of all Americans (55.7%) are concerned the more than 1.5 million backlogged foreclosures expected to be released by major lenders will lower home values in their markets. Midwesterners (62.2%) are more concerned than those in other regions, while people in the Northeast are least concerned (42.8%). The majority of backlogged foreclosures are expected to be released in the 26 judicial states that require court orders before distressed properties can be processed and released for sale. Many judicial states are located in the Midwest and Northeast. Homeowners (56.1%) and non-homeowners (54.5%) are equally concerned.
Fear of facing foreclosure declines
As the stigma associated with buying a foreclosure has declined in the past few years, so has the fear of losing a home to foreclosure. Today, about one third of Americans (34.9%) fear they or someone they know will face foreclosure in the next year, down 33.5 percent from March 2009 levels when 52.5 percent expressed this concern. Fear of facing foreclosure today is greatest among those earning less than $30,000 a year and slightly higher among non-homeowners (38.6%) than homeowners (33.6%).
While foreclosure activities have declined 34 percent in the past year, most Americans say they haven’t seen improvement in the foreclosure situation where they live. The Realtor.com survey found most Americans (49%) think the foreclosure situation is about the same as it was last year, while close to one in six (17.6%) say the foreclosure situation is worse. Only 21.3 percent think the foreclosure situation in their market is better. Foreclosures have in fact declined by 34 percent in the past 12 months.
Who’s to blame?
Americans blame the economy and job losses (22.2%), lenders (24.8%) and the government (22.1%) equally responsible for the foreclosure problems facing the nation today. Defaulting homeowners (10.3%) and Wall Street (9.4%) were least blamed by survey respondents. Homeowners with annual incomes of $40,000 or more (30%) and those age 25 to 64 (29%) blame lenders more than other groups, while older Americans 65+ (32.8%) and those earning over $50,000 (26%) blame government most. Younger consumers (18-24) are more likely to blame the economy (28.7%) and defaulting homeowners (26.9%) for today’s foreclosure problems.
What can lenders do now?
To keep the ‘shadow inventory’ of foreclosures from lowering home values, more Americans want lenders to offer lease-purchase programs to help reduce their foreclosure inventories compared to other options. In fact, one in four (28.3%) Americans prefer the lease-purchase option instead of: selling them slowly to preserve home values (12.8%); selling them to investors to fix up and rent out (11%); continuing business as usual (10.8%); selling them quickly to eliminate the backlog even if home values suffer (10.6%); and renting them out until prices improve (8.7%).
Foreclosure buyers are savvy
The Realtor.com survey found prospective foreclosure buyers have a fairly accurate picture of the discounts and appreciation that comes with foreclosures, suggesting they’re savvy consumers that are informed, serious and likely successful buyers. Most foreclosure buyers expect to receive a discount of anywhere from 10 percent to up to 30 percent on their property purchase, which is in line with today’s average discount of approximately 29 percent. Also interesting, the lower the income level of a prospective foreclosure buyer, the more realistic their expectations are about the discount.
More than half of all prospective foreclosure buyers (56.4%) expect their purchases to appreciate 10 percent or less over five years, or 2 percent a year. Younger buyers (age 18-34) are most realistic. More than half those in the first-time buyer age group, 25-34 (57.1%), expect their purchases to appreciate less than 5 percent, or 1 percent a year. Most (54.8%) middle-income buyers ($30-40K) are more conservative and anticipate an appreciation of less than 5 percent in five years.
“Foreclosures can present a new opportunity for buyers to become homeowners, especially considering the discounted purchase prices and lower downpayment requirements,” said Realtor.com President Errol Samuelson. “This is especially true for owner-occupants interested in improving the property, and holding on to it long enough to realize appreciation that can be carried over to future home purchases. Working with a Realtor who specializes in distressed properties can help foreclosure buyers be more successful as they navigate the process unique to this type of purchase.”
The survey for Realtor.com was conducted May 4-6, 2012, by GfK Custom Research North America, via OmniTel, their weekly national telephone omnibus service. The study consisted of 1,004 completed interviews, among adults 18 years of age and over.
Source: Move Inc. & Florida Realtors®
UF: Consumer confidence in Florida jumps three points in May
Consumer confidence among Floridians rose three points to 77 in May, reversing a three-month decline, according to a monthly University of Florida survey. The latest figure is nine points higher than it was a year ago.
“This is a welcome turnaround in consumer confidence,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “The rise in confidence in May was particularly strong among those under age 60 and those with household incomes above $30,000.”
Three of the five components in the study showed rising confidence. For example, the overall expectations among respondents that their personal finances will improve in the coming year jumped eight points to 87 from last month. Confidence in the U.S. economy in the coming year went up one point to 74, while trust in economic conditions over the next five years rose five points to 81.
Perceptions of whether now is a good time to purchase big-ticket items such as houses, automobiles and refrigerators remained unchanged at 80. Only one component showed a decline: Respondents’ assessment of their current financial situations compared with a year ago, which fell one point to 62.
The sudden rise in consumer confidence is strange given “the potential ‘fiscal cliff’ due at the beginning of 2013 that is now being reported in the news,” McCarty says. Several pressing economic issues, unless acted upon by Congress and the president, could dampen the current optimism, notably expiring Bush tax cuts. In addition, mandated automatic cuts in domestic and military spending and yet another battle over raising the debt ceiling could shake consumer confidence.
However, several trends should give Floridians something to cheer about, McCarty says. For instance, the cost of gas has dropped almost 33 cents a gallon in Florida over the past month.
“This reversal is due in large part to decreasing demand internationally as Europe struggles with a recession and China’s economy slows,” McCarty says. “Lower gas prices not only help Floridians at the pump but should result in more Florida vacations this summer that will keep the tourist sector busy.”
In addition, unemployment continues to fall in Florida. The rate is now 8.7 percent, which is only six-tenths of a percent higher than the national unemployment rate. Recent Florida labor data also reveals an encouraging rise in jobs in the professional and business services sectors. “This is a welcomed change from last year when job gains were concentrated in tourist-related industries,” McCarty says.
Nonetheless, some employment problems linger in Florida. The construction sector, for example, remains in the doldrums, a casualty of the housing bubble. Governments, too, have seen substantial job losses, resulting from ongoing budget cuts.
Finally, many job seekers have become discouraged and quit seeking work. “As the recovery takes hold, some of those will come back into the labor force resulting in an increase in unemployment,” McCarty says. “This will actually be a sign of healing in the job market.”
“The increase in confidence this month reversed the trend we were repeating from last year,” says McCarty. “If we can continue this trend, it will bode well for Florida’s economy. Increased confidence typically means increased consumer spending that will result in more jobs.”
Conducted between May 12 and 24, the UF study reflects the responses of 411 individuals who represent a demographic cross section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
Source: Florida Realtors®
“This is a welcome turnaround in consumer confidence,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “The rise in confidence in May was particularly strong among those under age 60 and those with household incomes above $30,000.”
Three of the five components in the study showed rising confidence. For example, the overall expectations among respondents that their personal finances will improve in the coming year jumped eight points to 87 from last month. Confidence in the U.S. economy in the coming year went up one point to 74, while trust in economic conditions over the next five years rose five points to 81.
Perceptions of whether now is a good time to purchase big-ticket items such as houses, automobiles and refrigerators remained unchanged at 80. Only one component showed a decline: Respondents’ assessment of their current financial situations compared with a year ago, which fell one point to 62.
The sudden rise in consumer confidence is strange given “the potential ‘fiscal cliff’ due at the beginning of 2013 that is now being reported in the news,” McCarty says. Several pressing economic issues, unless acted upon by Congress and the president, could dampen the current optimism, notably expiring Bush tax cuts. In addition, mandated automatic cuts in domestic and military spending and yet another battle over raising the debt ceiling could shake consumer confidence.
However, several trends should give Floridians something to cheer about, McCarty says. For instance, the cost of gas has dropped almost 33 cents a gallon in Florida over the past month.
“This reversal is due in large part to decreasing demand internationally as Europe struggles with a recession and China’s economy slows,” McCarty says. “Lower gas prices not only help Floridians at the pump but should result in more Florida vacations this summer that will keep the tourist sector busy.”
In addition, unemployment continues to fall in Florida. The rate is now 8.7 percent, which is only six-tenths of a percent higher than the national unemployment rate. Recent Florida labor data also reveals an encouraging rise in jobs in the professional and business services sectors. “This is a welcomed change from last year when job gains were concentrated in tourist-related industries,” McCarty says.
Nonetheless, some employment problems linger in Florida. The construction sector, for example, remains in the doldrums, a casualty of the housing bubble. Governments, too, have seen substantial job losses, resulting from ongoing budget cuts.
Finally, many job seekers have become discouraged and quit seeking work. “As the recovery takes hold, some of those will come back into the labor force resulting in an increase in unemployment,” McCarty says. “This will actually be a sign of healing in the job market.”
“The increase in confidence this month reversed the trend we were repeating from last year,” says McCarty. “If we can continue this trend, it will bode well for Florida’s economy. Increased confidence typically means increased consumer spending that will result in more jobs.”
Conducted between May 12 and 24, the UF study reflects the responses of 411 individuals who represent a demographic cross section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
Source: Florida Realtors®
Pending home sales down in April but up strongly from a year ago
Following three consecutive monthly gains, pending home sales retrenched in April, but are notably higher than a year ago, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 5.5 percent to 95.5 from a downwardly revised 101.1 in March but is 14.4 percent above April 2011 when it was 83.5. The data reflects contracts but not closings.
NAR Chief Economist Lawrence Yun said a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions. “Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said.
Yun notes home sales are staying well above the levels seen from 2008 through 2011. “Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007,” he said. “All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.”
The PHSI in the Northeast rose 0.9 percent to 78.9 in April and is 19.9 percent higher than April 2011. In the Midwest the index slipped 0.3 percent to 93.0 but is 23.0 percent above a year ago. Pending home sales in the South fell 6.8 percent to an index of 105.7 in April but are 13.3 percent higher than April 2011. In the West the index dropped 12.0 percent in April to 94.9 but is 5.1 percent above a year ago.
The housing forecast has been upgraded, with existing-home sales expected to reach 4.66 million this year, compared with 4.26 million in 2011. The outlook for 2013 is now 4.92 million, but could vary significantly depending on two scenarios.
If lending returns to normal, the 2013 outlook for existing-home sales would measurably improve to 5.3 million. However, a fiscal cliff scenario of higher taxes and sharp spending cuts beginning in early 2013, which is an unlikely event but still worth noting, would lower the sales projection to 4.5 million.
Because of measurably lower inventory supplies, the forecast for home prices has been upwardly revised with the median existing-home price projected to rise 2 to 3 percent this year and 4 to 5 percent in 2013, with wide local market variations. Miami and Phoenix will easily achieve double-digit price growth by year-end.
Yun said the price gains will measurably reduce the number of underwater homeowners.
“For example, a 5 percent national price gain means the number of underwater homeowners would fall to about 9 million from current estimates of around 11 million. A 10 percent gain, say over the next two years, would reduce the underwater status to about 7 million households out of 75 million owner-occupied homes,” he said.
About 25 million homes are owned free and clear without a mortgage.
Though the proportion of distressed properties is still high, the numbers have been falling over the past two years. “The diminishing share of distressed properties is another reason for higher home prices in upcoming months,” Yun added.
Source: Florida Realtors®
The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 5.5 percent to 95.5 from a downwardly revised 101.1 in March but is 14.4 percent above April 2011 when it was 83.5. The data reflects contracts but not closings.
NAR Chief Economist Lawrence Yun said a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions. “Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said.
Yun notes home sales are staying well above the levels seen from 2008 through 2011. “Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007,” he said. “All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.”
The PHSI in the Northeast rose 0.9 percent to 78.9 in April and is 19.9 percent higher than April 2011. In the Midwest the index slipped 0.3 percent to 93.0 but is 23.0 percent above a year ago. Pending home sales in the South fell 6.8 percent to an index of 105.7 in April but are 13.3 percent higher than April 2011. In the West the index dropped 12.0 percent in April to 94.9 but is 5.1 percent above a year ago.
The housing forecast has been upgraded, with existing-home sales expected to reach 4.66 million this year, compared with 4.26 million in 2011. The outlook for 2013 is now 4.92 million, but could vary significantly depending on two scenarios.
If lending returns to normal, the 2013 outlook for existing-home sales would measurably improve to 5.3 million. However, a fiscal cliff scenario of higher taxes and sharp spending cuts beginning in early 2013, which is an unlikely event but still worth noting, would lower the sales projection to 4.5 million.
Because of measurably lower inventory supplies, the forecast for home prices has been upwardly revised with the median existing-home price projected to rise 2 to 3 percent this year and 4 to 5 percent in 2013, with wide local market variations. Miami and Phoenix will easily achieve double-digit price growth by year-end.
Yun said the price gains will measurably reduce the number of underwater homeowners.
“For example, a 5 percent national price gain means the number of underwater homeowners would fall to about 9 million from current estimates of around 11 million. A 10 percent gain, say over the next two years, would reduce the underwater status to about 7 million households out of 75 million owner-occupied homes,” he said.
About 25 million homes are owned free and clear without a mortgage.
Though the proportion of distressed properties is still high, the numbers have been falling over the past two years. “The diminishing share of distressed properties is another reason for higher home prices in upcoming months,” Yun added.
Source: Florida Realtors®
Tuesday, May 29, 2012
10 Metros Where List Prices Are Rising the Most
Prices of for-sale homes are on the rise in several metro areas. According to Realtor.com, which tracks 146 metro markets, the following areas have seen their median list prices increase the most from March to April:
1. Minneapolis-St. Paul, Minn.-Wis.
Monthly median list price increase: 7.90 percent
Median list price: $199,500
2. Santa Barbara-Santa Maria-Lompoc, Calif.
Monthly median list price increase: 7.07 percent
Median list price: $545,000
3. Detroit
Monthly median list price increase: 4.66 percent
Median list price: $89,900
4. San Francisco
Monthly median list price increase: 4.62 percent
Median list price: $679,000
5. Seattle-Bellevue-Everett, Wash.
Monthly median list price increase: 4.46 percent
Median list price: $328,950
6. Boise City, Idaho
Monthly median list price increase: 4.40 percent
Median list price: $162,374
7. Trenton, N.J.
Monthly median list price increase: 4.26 percent
Median list price: $259,450
8. Boulder-Longmont, Colo.
Monthly median list price increase: 4.20 percent
Median list price: $375,000
9. Orange County, Calif.
Monthly median list price increase: 4.19 percent
Median list price: $448,000
10. Colorado Springs, Colo.
Monthly median list price increase: 4.09 percent
Median list price: $229,000
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
1. Minneapolis-St. Paul, Minn.-Wis.
Monthly median list price increase: 7.90 percent
Median list price: $199,500
2. Santa Barbara-Santa Maria-Lompoc, Calif.
Monthly median list price increase: 7.07 percent
Median list price: $545,000
3. Detroit
Monthly median list price increase: 4.66 percent
Median list price: $89,900
4. San Francisco
Monthly median list price increase: 4.62 percent
Median list price: $679,000
5. Seattle-Bellevue-Everett, Wash.
Monthly median list price increase: 4.46 percent
Median list price: $328,950
6. Boise City, Idaho
Monthly median list price increase: 4.40 percent
Median list price: $162,374
7. Trenton, N.J.
Monthly median list price increase: 4.26 percent
Median list price: $259,450
8. Boulder-Longmont, Colo.
Monthly median list price increase: 4.20 percent
Median list price: $375,000
9. Orange County, Calif.
Monthly median list price increase: 4.19 percent
Median list price: $448,000
10. Colorado Springs, Colo.
Monthly median list price increase: 4.09 percent
Median list price: $229,000
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Consumer confidence declines in May
The Conference Board Consumer Confidence Index, which had declined slightly in April, fell further in May. The Index now stands at 64.9, down from 68.7 in April.
The Expectations Index – a portion of the total index that measures attitudes about the short-term future – declined to 77.6 from 80.4, while the Present Situation Index decreased to 45.9 from 51.2 last month.
“Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook,” says Lynn Franco, Director of Economic Indicators at The Conference Board. “However, consumers were more upbeat about their income prospects, which should help sustain spending. Taken together, the retreat in the Present Situation Index and softening in consumer expectations suggest that the pace of economic growth in the months ahead may moderate.”
Consumers’ appraisal of present-day conditions deteriorated in May. Those claiming business conditions are “bad” increased to 34.3 percent from 33.2 percent, while those saying business conditions are “good” decreased to 13.6 percent from 15.5 percent. Consumers’ appraisal of the job market was also less favorable. Those claiming jobs are “hard to get” increased to 41.0 percent from 38.1 percent, while those stating jobs are “plentiful” decreased to 7.9 percent from 8.4 percent.
Consumers have also grown less upbeat about the short-term outlook. Those expecting business conditions to improve over the next six months decreased to 16.6 percent from 18.5 percent. However, those anticipating business conditions will worsen decreased to 13.1 percent from 14.2 percent.
Consumers’ outlook for the labor market was also less positive. Those expecting more jobs in the months ahead decreased to 15.8 percent from 16.9 percent, while those anticipating fewer jobs increased to 21.0 percent from 18.4 percent. The proportion of consumers expecting an increase in their incomes improved to 15.2 percent from 13.9 percent.
Nielsen conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was May 16.
Source: Florida Realtors®
The Expectations Index – a portion of the total index that measures attitudes about the short-term future – declined to 77.6 from 80.4, while the Present Situation Index decreased to 45.9 from 51.2 last month.
“Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook,” says Lynn Franco, Director of Economic Indicators at The Conference Board. “However, consumers were more upbeat about their income prospects, which should help sustain spending. Taken together, the retreat in the Present Situation Index and softening in consumer expectations suggest that the pace of economic growth in the months ahead may moderate.”
Consumers’ appraisal of present-day conditions deteriorated in May. Those claiming business conditions are “bad” increased to 34.3 percent from 33.2 percent, while those saying business conditions are “good” decreased to 13.6 percent from 15.5 percent. Consumers’ appraisal of the job market was also less favorable. Those claiming jobs are “hard to get” increased to 41.0 percent from 38.1 percent, while those stating jobs are “plentiful” decreased to 7.9 percent from 8.4 percent.
Consumers have also grown less upbeat about the short-term outlook. Those expecting business conditions to improve over the next six months decreased to 16.6 percent from 18.5 percent. However, those anticipating business conditions will worsen decreased to 13.1 percent from 14.2 percent.
Consumers’ outlook for the labor market was also less positive. Those expecting more jobs in the months ahead decreased to 15.8 percent from 16.9 percent, while those anticipating fewer jobs increased to 21.0 percent from 18.4 percent. The proportion of consumers expecting an increase in their incomes improved to 15.2 percent from 13.9 percent.
Nielsen conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was May 16.
Source: Florida Realtors®
Commercial Real Estate Improves, Multifamily Strong
Shaking off a prolonged impact from the recession, fundamentals are gradually improving in all of the major commercial real estate sectors, according to the National Association of REALTORS® quarterly commercial real estate forecast. The apartment rental sector has fully recovered and is growing.
The findings also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey, which collects data from members about market activity.
Lawrence Yun, NAR chief economist, said new jobs are the key. “Ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending,” he said. “The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth.”
Yun expects the economy to add 2 to 2.5 million jobs both this year and in 2013, on the heels of 1.7 million new jobs in 2011, assuming a new federal budget is passed before the end of the year. “Although we need even stronger job growth, by far the greatest impact of job creation is in multifamily housing, where newly formed households striking out on their own have increased demand for apartment rentals – this is the sector with the lowest vacancy rates and strongest rent growth, which is attracting many investors.”
Rising apartment rents also are having a positive impact on home sales because many long-time renters now view homeownership as a better long-term option, Yun noted.
A large problem remains for purchases of commercial property priced under $2.5 million. “Our recent commercial lending survey shows that there is very little capital available for small business, which is significantly impacting commercial real estate transactions, although funding is less restrictive for bigger properties.”
NAR’s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.
The markets with the lowest office vacancy rates:
The areas with the lowest industrial vacancy rates:
Presently, markets with the lowest retail vacancy rates:
Areas with the lowest multifamily vacancy rates:
Multifamily net absorption is forecast at 215,900 units this year and 230,300 in 2013.
The Commercial Real Estate Outlookis published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR. The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, REALTORS® Land Institute, Society of Industrial and Office REALTORS®, and Counselors of Real Estate. Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.
Source: NAR
The findings also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey, which collects data from members about market activity.
Lawrence Yun, NAR chief economist, said new jobs are the key. “Ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending,” he said. “The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth.”
Yun expects the economy to add 2 to 2.5 million jobs both this year and in 2013, on the heels of 1.7 million new jobs in 2011, assuming a new federal budget is passed before the end of the year. “Although we need even stronger job growth, by far the greatest impact of job creation is in multifamily housing, where newly formed households striking out on their own have increased demand for apartment rentals – this is the sector with the lowest vacancy rates and strongest rent growth, which is attracting many investors.”
Rising apartment rents also are having a positive impact on home sales because many long-time renters now view homeownership as a better long-term option, Yun noted.
A large problem remains for purchases of commercial property priced under $2.5 million. “Our recent commercial lending survey shows that there is very little capital available for small business, which is significantly impacting commercial real estate transactions, although funding is less restrictive for bigger properties.”
NAR’s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are projected to fall from 16.3 percent in the second quarter of this year to 16.0 percent in the second quarter of 2013.The markets with the lowest office vacancy rates:
- Washington, D.C.: 9.3% vacancy rate
- New York City: 10%
- New Orleans: 12.6%
Industrial Markets
Industrial vacancy rates are likely to decline from 11.0 percent in the current quarter to 10.7 percent in the second quarter of 2013.The areas with the lowest industrial vacancy rates:
- Orange County, Calif.: 4.7% vacancy rate
- Los Angeles: 5%
- Miami: 7.2%
Retail Markets
Retail vacancy rates are forecast to decline from 11.3 percent in the second quarter to 10.7 percent in the second quarter of 2013.Presently, markets with the lowest retail vacancy rates:
- San Francisco: 3.7% vacancy rate
- Fairfield County, Conn.: 4%
- Long Island, N.Y.: 5%
Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.5 percent in the second quarter to 4.3 percent in the second quarter of 2013; apartment vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.Areas with the lowest multifamily vacancy rates:
- New York City: 2.1%
- Portland, Ore.: 2.3%
- Minneapolis: 2.4%
Multifamily net absorption is forecast at 215,900 units this year and 230,300 in 2013.
The Commercial Real Estate Outlookis published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR. The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, REALTORS® Land Institute, Society of Industrial and Office REALTORS®, and Counselors of Real Estate. Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.
Source: NAR
Fourth Week in Row, 30-Year Rates Reach Records
Home buying got even more affordable this week as mortgage rates continue to ride low, breaking records, and increase home buyer affordability.
For the fourth consecutive week, 30-year fixed-rate mortgages, the most popular choice of borrowers, reached a new all-time low while 15-year fixed-rate mortgages held steady at its all-time low set last week, according to Freddie Mac’s weekly mortgage market survey.
"Mortgage rates were virtually unchanged this week with fixed-rate loans remaining at record lows and helping to drive home buyer affordability,” Frank Nothaft, Freddie Mac’s chief economist.
Indeed, housing affordability reached an all-time record high in the first quarter, according to the National Association of REALTORS®’ Housing Affordability Index.
Here’s a closer look at how mortgage rates fared for the week ending May 24, according to Freddie Mac:
For the fourth consecutive week, 30-year fixed-rate mortgages, the most popular choice of borrowers, reached a new all-time low while 15-year fixed-rate mortgages held steady at its all-time low set last week, according to Freddie Mac’s weekly mortgage market survey.
"Mortgage rates were virtually unchanged this week with fixed-rate loans remaining at record lows and helping to drive home buyer affordability,” Frank Nothaft, Freddie Mac’s chief economist.
Indeed, housing affordability reached an all-time record high in the first quarter, according to the National Association of REALTORS®’ Housing Affordability Index.
Here’s a closer look at how mortgage rates fared for the week ending May 24, according to Freddie Mac:
- 30-year fixed-rate mortgages: averaged a new record of 3.78 percent, with an average 0.8 point, dropping from last week’s previous record low of 3.79 percent. A year ago at this time, 30-year rates averaged 4.60 percent.
- 15-year fixed-rate mortgages: averaged 3.04 percent, with an average 0.7 point, holding steady at the record low it set last week. Last year at this time, 15-year rates averaged 3.78 percent.
- 5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.6 point, also unchanged from last week’s average. Last year at this time, 5-year ARMs averaged 3.41 percent.
- 1-year ARMs: averaged 2.75 percent, with an average 0.4 point, dropping from last week’s 2.78 percent average. A year ago, 1-year ARMs averaged 3.11 percent.
Market Stabilizing? Home Inventories Fall by Nearly 20%
Home inventories of for-sale listings continue to fall, which may help raise overall housing prices as demand picks up.
Inventory of for-sale single-family homes, condos, townhouses, and co-ops dropped by 18.85 percent in April compared to a year ago, according to housing data of 146 metro markets tracked by REALTOR.com.
“These key indicators continue to suggest the housing market may be at a turning point and headed towards a broad-based recovery,” REALTOR.com notes in a release on its April housing data. “Lower inventories, combined with faster moving markets and relatively stable median listing prices are indicative of the kind of balanced housing market that has not been seen in many years.”
On a national basis, the median age of inventory dropped nearly 12 percent year-over-year. The median age of inventory dropped by the highest percentages in the following metro areas:
1. Oakland, Calif.
Median age of inventory: 20
Year-over-year drop: 54.54%
2. Miami
Median age of inventory: 76
Year-over-year drop: 41.08%
3. Fort Lauderdale, Fla.
Median age of inventory: 67
Year-over-year drop: 36.19%
4. Seattle-Bellevue-Everett, Wash.
Median age of inventory: 46
Year-over-year drop: 34.28%
5. Pensacola, Fla.
Median age of inventory: 106
Year-over-year drop: 33.33%
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Inventory of for-sale single-family homes, condos, townhouses, and co-ops dropped by 18.85 percent in April compared to a year ago, according to housing data of 146 metro markets tracked by REALTOR.com.
“These key indicators continue to suggest the housing market may be at a turning point and headed towards a broad-based recovery,” REALTOR.com notes in a release on its April housing data. “Lower inventories, combined with faster moving markets and relatively stable median listing prices are indicative of the kind of balanced housing market that has not been seen in many years.”
On a national basis, the median age of inventory dropped nearly 12 percent year-over-year. The median age of inventory dropped by the highest percentages in the following metro areas:
1. Oakland, Calif.
Median age of inventory: 20
Year-over-year drop: 54.54%
2. Miami
Median age of inventory: 76
Year-over-year drop: 41.08%
3. Fort Lauderdale, Fla.
Median age of inventory: 67
Year-over-year drop: 36.19%
4. Seattle-Bellevue-Everett, Wash.
Median age of inventory: 46
Year-over-year drop: 34.28%
5. Pensacola, Fla.
Median age of inventory: 106
Year-over-year drop: 33.33%
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Thursday, May 24, 2012
Home Prices Begin to Bounce Back
The Federal Housing Finance Agency reported that nationwide home prices posted their first gain in the first quarter since 2007. While the gain was modest at 0.6 percent, housing experts note it’s still another sign that the housing market is gaining momentum.
FHFA’s housing price index is calculated using home sales price information based off Freddie Mac and Fannie Mae-backed mortgages.
FHFA’s seasonally adjusted monthly index rose 1.8 percent in March over February, which is the largest monthly increase in at least 20 years. Year-over-year, home prices increased 2.7 percent, FHFA reports.
"Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices," says Andrew Leventis, FHFA’s principal economist.
Price increases were the highest in Hawaii with a 10.3 percent increase, and in Washington, D.C., which saw a 9.8 percent gain, according to FHFA.
Still, Number of Underwater Home Owners Remain High
Despite recent improvements in home prices, the percentage of underwater borrowers has shown little improvement in the last year. More than 30 percent of home owners in the first quarter remained underwater on their mortgage, owing more on their home than it’s currently worth, according to a new Zillow housing report.
A year ago, 32.4 percent of all borrowers had negative equity on their loan compared to 31.4 percent during the most recent quarter, Zillow reports.
Yet, Zillow notes that nine out of 10 underwater borrowers are current on their mortgage payments.
"[It's] important to note that negative equity remains only a paper loss for the vast majority of underwater home owners," says Stan Humphries, Zillow's chief economist. "As home values slowly increase and these home owners continue to pay down their principal, they will surface again."
The highest share of underwater home owners continues to be in Las Vegas, where 71 percent of home owners are underwater, followed by Phoenix (at 55.5 percent) and Atlanta (at 55.2 percent), according to the Zillow housing report.
Source: “U.S. Housing Prices Rise,” UPI (May 23, 2012); “Home Prices Rose Most in Two Decades in March, FHFA Says,” Bloomberg News (May 23, 2012) and “More than 30% of Mortgage Borrowers Still Underwater,” CNNMoney (May 24, 2012)
FHFA’s housing price index is calculated using home sales price information based off Freddie Mac and Fannie Mae-backed mortgages.
FHFA’s seasonally adjusted monthly index rose 1.8 percent in March over February, which is the largest monthly increase in at least 20 years. Year-over-year, home prices increased 2.7 percent, FHFA reports.
"Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices," says Andrew Leventis, FHFA’s principal economist.
Price increases were the highest in Hawaii with a 10.3 percent increase, and in Washington, D.C., which saw a 9.8 percent gain, according to FHFA.
Still, Number of Underwater Home Owners Remain High
Despite recent improvements in home prices, the percentage of underwater borrowers has shown little improvement in the last year. More than 30 percent of home owners in the first quarter remained underwater on their mortgage, owing more on their home than it’s currently worth, according to a new Zillow housing report.
A year ago, 32.4 percent of all borrowers had negative equity on their loan compared to 31.4 percent during the most recent quarter, Zillow reports.
Yet, Zillow notes that nine out of 10 underwater borrowers are current on their mortgage payments.
"[It's] important to note that negative equity remains only a paper loss for the vast majority of underwater home owners," says Stan Humphries, Zillow's chief economist. "As home values slowly increase and these home owners continue to pay down their principal, they will surface again."
The highest share of underwater home owners continues to be in Las Vegas, where 71 percent of home owners are underwater, followed by Phoenix (at 55.5 percent) and Atlanta (at 55.2 percent), according to the Zillow housing report.
Source: “U.S. Housing Prices Rise,” UPI (May 23, 2012); “Home Prices Rose Most in Two Decades in March, FHFA Says,” Bloomberg News (May 23, 2012) and “More than 30% of Mortgage Borrowers Still Underwater,” CNNMoney (May 24, 2012)
Mortgage Applications Rise Again on Low Rates
Record low interest rates continue to pump up mortgage volume, as more borrowers try to take advantage.
Mortgage applications increased 3.8 percent for the week ending May 18, the Mortgage Bankers Association reports. A boost in more home owners refinancing their mortgages was attributed to the rise last week.
Refinance application activity increased 5.6 percent, reaching a nearly four-month high. Meanwhile, applications for home purchases dropped 3 percent in the week, the Mortgage Bankers Association reports.
"Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” says Michael Fratantoni, MBA's vice president of research and economics. “As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year."
Source: “Record low rates spur mortgage application filings,” HousingWire (May 23, 2012)
Mortgage applications increased 3.8 percent for the week ending May 18, the Mortgage Bankers Association reports. A boost in more home owners refinancing their mortgages was attributed to the rise last week.
Refinance application activity increased 5.6 percent, reaching a nearly four-month high. Meanwhile, applications for home purchases dropped 3 percent in the week, the Mortgage Bankers Association reports.
"Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” says Michael Fratantoni, MBA's vice president of research and economics. “As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year."
Source: “Record low rates spur mortgage application filings,” HousingWire (May 23, 2012)
April, 2012 Market Update for the "BIG 5" Hialeah,
Miami Lakes, Miami Gardens, Miramar and Pembroke Pines in Florida
Market update for the cities of Hialeah, Miami Lakes, Miami Gardens:
Market update for the cities of Miramar and Pembroke Pines:
Total Sold for Dade and Broward Counties
Market update for the cities of Hialeah, Miami Lakes, Miami Gardens:
| Area 20 | |||
| Total Active Listings: | 54 | ||
| Total Value Dollar Volume: | $13,638,719.00 | ||
| Average List Price: | $252,569.00 | ||
| Median List Price: | $188,010.00 | ||
| Change from Previous Month (N. of Units) | -7% | ||
| Change from Previous Month (Dollar Vol.) | 17% | ||
| Total Sold Properties: | 120 | ||
| Total Dollar Volume Sold: | $17,658,727.00 | ||
| Average Sold Price: | $147,156.00 | ||
| Median Sold Price: | $117,000.00 | ||
| Change from Previous Month (N. of Units) | -10% | ||
| Change from Previous Month (Dollar Vol.) | -8% | ||
| Total Pending Sale: | 174 | ||
| Total Dollar Pending Volume: | $22,598,870.00 | ||
| Average Pending Price: | $129,879.00 | ||
| Median Pending Price: | $98,450.00 | ||
| Change from Previous Month (N. of Units) | -5% | ||
| Change from Previous Month (Dollar Vol.) | 4% | ||
Market update for the cities of Miramar and Pembroke Pines:
| Area 3990 | |||
| Total Active Listings: | 19 | ||
| Total Value Dollar Volume: | $7,248,900.00 | ||
| Average List Price: | $381,521.00 | ||
| Median List Price: | $360,000.00 | ||
| Change from Previous Month (N. of Units) | -5% | ||
| Change from Previous Month (Dollar Vol.) | 0% | ||
| Total Sold Properties: | 42 | ||
| Total Dollar Volume Sold: | $13,319,262.00 | ||
| Average Sold Price: | $317,125.00 | ||
| Median Sold Price: | $299,900.00 | ||
| Change from Previous Month (N. of Units) | -2% | ||
| Change from Previous Month (Dollar Vol.) | -5% | ||
| Total Pending Sale: | 42 | ||
| Total Dollar Pending Volume: | $12,197,300.00 | ||
| Average Pending Price: | $290,412.00 | ||
| Median Pending Price: | $299,950.00 | ||
| Change from Previous Month (N. of Units) | 40% | ||
| Change from Previous Month (Dollar Vol.) | 25% | ||
Total Sold for Dade and Broward Counties
| Dade County | |||
| Total Sales Count: | 2495 | ||
| Total Sales Dollar Volume: | $908,588,379.00 | ||
| Change from Previous Month (N. of Units) | -5% | ||
| Change from Previous Month (Dollar Vol.) | 9% | ||
| Broward County | |||
| Total Sales Count: | 2920 | ||
| Total Sales Dollar Volume: | $627,468,689.00 | ||
| Change from Previous Month (N. of Units) | 1% | ||
| Change from Previous Month (Dollar Vol.) | 6% | ||
The above data is for Residential Real Estate Only, Market
Data from SEF MLS
For an update on your market area please contact us
Flood insurance moves in Congress
The good news: Senate Majority Leader Harry Reid (D., Nev.) said his chamber would consider a five-year extension of the National Flood Insurance Program (NFIP) similar to one already approved by the U.S. House.
The bad news: It won’t happen by the program’s current deadline, May 31, 2012. Reid has suggested Congress approve another short-term extension of 60 days to give lawmakers time to fully consider the longer-term solution.
The long-term package seems to have bipartisan support and would include terms to make it more financially stable, such as gradually increasing flood insurance premiums.
It is “critical that we do something on flood insurance,” Reid said. “We need to get something done on a more permanent basis.”
Source: The Wall Street Journal, Alan Zibel & Florida Realtors®
The bad news: It won’t happen by the program’s current deadline, May 31, 2012. Reid has suggested Congress approve another short-term extension of 60 days to give lawmakers time to fully consider the longer-term solution.
The long-term package seems to have bipartisan support and would include terms to make it more financially stable, such as gradually increasing flood insurance premiums.
It is “critical that we do something on flood insurance,” Reid said. “We need to get something done on a more permanent basis.”
Source: The Wall Street Journal, Alan Zibel & Florida Realtors®
S. Fla.’s real estate market looks hot again
Bidding wars are erupting from Homestead to Weston, as home sales and prices take off, further reinforcing the end of a prolonged market slump.
A two-bedroom, two-bathroom, bank-owned condominium in Coral Springs sparked 64 offers within 10 days – selling for $71,000 on Tuesday, or 34 percent over its $53,000 listing price.
“It was a feeding frenzy. I’ve never seen anything like it,” said Marta DuPree, broker associate and vice president of the Keyes Company in Coral Springs. “It was a rentable building, so all the investors were out.”
In Broward County, the median sales price of single-family homes rose 17 percent in April to $205,000, and condominiums jumped 17.4 percent to $84,300, compared to prices in April 2011. And in Miami-Dade, home prices continued a five-month ascent – up 30 percent for condos, to $150,000, and 8.2 percent for single-family homes, to $183,000, compared to a year ago, according to figures released Tuesday by the Miami Association of Realtors.
Across South Florida, higher demand is leading to multiple bids and, in turn, elevating prices – as the real estate market keeps turning around.
“We have a very limited amount of inventory at this point and there are a lot less foreclosures on the market,” said Tony Garcia, district sales manager for the Keyes Company in Homestead. “What we are seeing is that people are going again to bidding wars ... We’re in a situation where for 80 percent of contracts there are at least three or four offers for the same property.”
Realtors say the inventory of residential listings is way down. It has decreased 34 percent in the past year in Miami-Dade, from 17,897 to 11,878, and down 4 percent since March, the Realtors’ Association said.
Similarly, in Broward, the inventory of residential listings has dropped 30 percent in the past year, from 15,781 to 11,086, also down 4 percent from March.
With a housing stock of 16,000 homes and condos in Weston, only 254 single-family homes and 91 condos are currently for sale, said Chip Rowand, assistant district sales manager for the Keyes Company’s Weston office.
Neighboring areas of Southwest Ranches, Pembroke Pines, Davie and Cooper City are all experiencing a similar dearth of inventory, said Fritz Hawkins, general manager for the Keyes Company.
“We can put a property on the market and we can have multiple offers in one day,” he said.
Investors with cash – predominantly foreign buyers – continue to fuel the market.
In both Miami-Dade and Broward, 64 percent of closed sales in March were all-cash sales, with the vast majority to international buyers, the Miami Association of Realtors said.
“We’re at a point where builder inventories are low, and in fact, for some builders, sales are proceeding faster than they can build,” said Brad Hunter, South Florida director for Metrostudy, a housing market advisory firm headquartered in Houston.
“For those who are waiting four or five or more years for home prices to stabilize and start edging back upwards, we are essentially there,” he said.
Meanwhile, distressed properties still make up a large number of sales.
In April, 47 percent of all closed residential sales in Miami-Dade were distressed, including REOs (bank-owned properties) and short sales, compared to 59 percent in April 2011 and 49 percent the previous month.
In April, 38 percent of all closed residential sales in Broward were distressed, compared to 50 percent in April 2011 and 41 percent the previous month.
Even more distressed properties are sure to hit the market, which could still dampen prices, analysts say.
“We still have 52,000 foreclosures that haven’t been sold, and it is still taking 809 days to process a foreclosure in Florida,” said Jack McCabe, chief executive of McCabe Research & Consulting, based in Deerfield Beach.
When those distressed properties become available, they may be sold online, rather than through Realtors, he said.
“Things are better, but they are still not great, and there is still a flood of distressed property yet to be sold,” McCabe said. “And that will have an impact on the marketplace.”
Statewide median sales prices in April increased 10.2 percent to $144,350 for single-family homes and 16.1 percent to $108,000 for condos, according to the Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The national median existing-home price for all housing types was $177,400 in April, a 10.1 percent increase from April 2011.
Source: The Miami Herald, Ina Paiva Cordle. Distributed by MCT Information Services.
A two-bedroom, two-bathroom, bank-owned condominium in Coral Springs sparked 64 offers within 10 days – selling for $71,000 on Tuesday, or 34 percent over its $53,000 listing price.
“It was a feeding frenzy. I’ve never seen anything like it,” said Marta DuPree, broker associate and vice president of the Keyes Company in Coral Springs. “It was a rentable building, so all the investors were out.”
In Broward County, the median sales price of single-family homes rose 17 percent in April to $205,000, and condominiums jumped 17.4 percent to $84,300, compared to prices in April 2011. And in Miami-Dade, home prices continued a five-month ascent – up 30 percent for condos, to $150,000, and 8.2 percent for single-family homes, to $183,000, compared to a year ago, according to figures released Tuesday by the Miami Association of Realtors.
Across South Florida, higher demand is leading to multiple bids and, in turn, elevating prices – as the real estate market keeps turning around.
“We have a very limited amount of inventory at this point and there are a lot less foreclosures on the market,” said Tony Garcia, district sales manager for the Keyes Company in Homestead. “What we are seeing is that people are going again to bidding wars ... We’re in a situation where for 80 percent of contracts there are at least three or four offers for the same property.”
Realtors say the inventory of residential listings is way down. It has decreased 34 percent in the past year in Miami-Dade, from 17,897 to 11,878, and down 4 percent since March, the Realtors’ Association said.
Similarly, in Broward, the inventory of residential listings has dropped 30 percent in the past year, from 15,781 to 11,086, also down 4 percent from March.
With a housing stock of 16,000 homes and condos in Weston, only 254 single-family homes and 91 condos are currently for sale, said Chip Rowand, assistant district sales manager for the Keyes Company’s Weston office.
Neighboring areas of Southwest Ranches, Pembroke Pines, Davie and Cooper City are all experiencing a similar dearth of inventory, said Fritz Hawkins, general manager for the Keyes Company.
“We can put a property on the market and we can have multiple offers in one day,” he said.
Investors with cash – predominantly foreign buyers – continue to fuel the market.
In both Miami-Dade and Broward, 64 percent of closed sales in March were all-cash sales, with the vast majority to international buyers, the Miami Association of Realtors said.
“We’re at a point where builder inventories are low, and in fact, for some builders, sales are proceeding faster than they can build,” said Brad Hunter, South Florida director for Metrostudy, a housing market advisory firm headquartered in Houston.
“For those who are waiting four or five or more years for home prices to stabilize and start edging back upwards, we are essentially there,” he said.
Meanwhile, distressed properties still make up a large number of sales.
In April, 47 percent of all closed residential sales in Miami-Dade were distressed, including REOs (bank-owned properties) and short sales, compared to 59 percent in April 2011 and 49 percent the previous month.
In April, 38 percent of all closed residential sales in Broward were distressed, compared to 50 percent in April 2011 and 41 percent the previous month.
Even more distressed properties are sure to hit the market, which could still dampen prices, analysts say.
“We still have 52,000 foreclosures that haven’t been sold, and it is still taking 809 days to process a foreclosure in Florida,” said Jack McCabe, chief executive of McCabe Research & Consulting, based in Deerfield Beach.
When those distressed properties become available, they may be sold online, rather than through Realtors, he said.
“Things are better, but they are still not great, and there is still a flood of distressed property yet to be sold,” McCabe said. “And that will have an impact on the marketplace.”
Statewide median sales prices in April increased 10.2 percent to $144,350 for single-family homes and 16.1 percent to $108,000 for condos, according to the Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The national median existing-home price for all housing types was $177,400 in April, a 10.1 percent increase from April 2011.
Source: The Miami Herald, Ina Paiva Cordle. Distributed by MCT Information Services.
Wednesday, May 23, 2012
What May Delay Some Housing Markets' Recovery
The difference in how states handle foreclosures may determine how quickly their housing markets make a full recovery, according to a new report by Capital Economics.
States with nonjudicial foreclosure markets — where foreclosures can be approved outside the court system — are seeing housing prices stabilize faster than states that require foreclosures to go through the court system, according to Capital Economics. The report notes that judicial foreclosure states tend to see houses linger on the market longer, which ultimately can cause prices to drop.
"We think that differences in foreclosure procedures will continue to affect state-level house price trends, with nonjudicial states outperforming," Paul Diggle, property economist with Capital Economics. "After all, as foreclosure pipelines are brought down to healthier levels in nonjudicial, high burn-through states, supply conditions can more rapidly tighten to the point that they support price growth."
The Federal Housing Finance Agency index recently showed that housing prices were down 2.3 percent year-over-year in the fourth quarter of 2011 and dropped 0.3 percent in the fourth quarter compared to the previous quarter in states with judicial procedures for foreclosures. In states with nonjudicial foreclosure procedures, however, home prices increased 0.3 percent quarter-over-quarter and dropped only 1.6 percent year-over-year.
Economists have predicted a surge in foreclosures is coming in the next few months from the $25 billion robo-signing mortgage settlement. The foreclosure wave will pose a “much greater threat to the house price outlook in judicial states, where the foreclosure backlog is that much larger,” Diggle told HousingWire.
Source: “Housing Markets Recover Faster in Nonjudicial Foreclosure States, Report Says,” HousingWire (May 18, 2012)
States with nonjudicial foreclosure markets — where foreclosures can be approved outside the court system — are seeing housing prices stabilize faster than states that require foreclosures to go through the court system, according to Capital Economics. The report notes that judicial foreclosure states tend to see houses linger on the market longer, which ultimately can cause prices to drop.
"We think that differences in foreclosure procedures will continue to affect state-level house price trends, with nonjudicial states outperforming," Paul Diggle, property economist with Capital Economics. "After all, as foreclosure pipelines are brought down to healthier levels in nonjudicial, high burn-through states, supply conditions can more rapidly tighten to the point that they support price growth."
The Federal Housing Finance Agency index recently showed that housing prices were down 2.3 percent year-over-year in the fourth quarter of 2011 and dropped 0.3 percent in the fourth quarter compared to the previous quarter in states with judicial procedures for foreclosures. In states with nonjudicial foreclosure procedures, however, home prices increased 0.3 percent quarter-over-quarter and dropped only 1.6 percent year-over-year.
Economists have predicted a surge in foreclosures is coming in the next few months from the $25 billion robo-signing mortgage settlement. The foreclosure wave will pose a “much greater threat to the house price outlook in judicial states, where the foreclosure backlog is that much larger,” Diggle told HousingWire.
Source: “Housing Markets Recover Faster in Nonjudicial Foreclosure States, Report Says,” HousingWire (May 18, 2012)
5 Places Where Prices Are Expected to Rise Most
Housing markets that have seen some of the biggest drop in home prices since the housing peak are now poised for recovery in the next two years, according to a new report by Fiserv. The bargains in these cities are attracting buyer attention and expected to drive up home prices in the coming year.
Fiserv forecasts that the following five cities will see some of the biggest growths in home prices by the end of 2013:
1. Madera, Calif.
Median home price: $125,000
2013 forecast for home prices: 21.5% increase
2. Medford, Ore.
Median home price: $144,000
2013 forecast for home prices: 20.1% increase
3. Yuma, Ariz.
Median home price: $105,000
2013 forecast for home prices: 16.7% increase
4. Corvallis, Ore.
Median home price: $224,000
2013 forecast for home prices: 13.2% increase
5. Eugene, Ore.
Median home price: $166,000
2013 forecast for home prices: 12.4% increase
Find out what other cities made Fiserv’s rebounding home price list.
Source: “Where Home Prices Are Rising Fastest,” CNNMoney (May 2012)
Fiserv forecasts that the following five cities will see some of the biggest growths in home prices by the end of 2013:
1. Madera, Calif.
Median home price: $125,000
2013 forecast for home prices: 21.5% increase
2. Medford, Ore.
Median home price: $144,000
2013 forecast for home prices: 20.1% increase
3. Yuma, Ariz.
Median home price: $105,000
2013 forecast for home prices: 16.7% increase
4. Corvallis, Ore.
Median home price: $224,000
2013 forecast for home prices: 13.2% increase
5. Eugene, Ore.
Median home price: $166,000
2013 forecast for home prices: 12.4% increase
Find out what other cities made Fiserv’s rebounding home price list.
Source: “Where Home Prices Are Rising Fastest,” CNNMoney (May 2012)
U.S. sales of new homes rose 3.3% in April
Sales of new homes in the U.S. rose solidly last month, adding to evidence of gradual improvement in the housing market.
The Commerce Department says sales increased 3.3 percent in April from March to a seasonally adjusted annual rate of 343,000. That followed a 7.3 percent decline in March.
A pickup in hiring and cheaper mortgages, combined with lower home prices in most markets, has made home buying more attractive. Builder confidence has increased steadily in the past several months, a sign that some expect the market to improve later this year.
Still, sales of new homes are well below the 700,000 annual sales that economists equate with healthy markets.
In April, sales rose in all regions except the South. The median price rose to $235,700, up slightly from March.
The Associated Press, Martin Crutsinger, AP economics writer.
The Commerce Department says sales increased 3.3 percent in April from March to a seasonally adjusted annual rate of 343,000. That followed a 7.3 percent decline in March.
A pickup in hiring and cheaper mortgages, combined with lower home prices in most markets, has made home buying more attractive. Builder confidence has increased steadily in the past several months, a sign that some expect the market to improve later this year.
Still, sales of new homes are well below the 700,000 annual sales that economists equate with healthy markets.
In April, sales rose in all regions except the South. The median price rose to $235,700, up slightly from March.
The Associated Press, Martin Crutsinger, AP economics writer.
Government: First house price increase since 2007
U.S. house prices rose 0.6 percent in the first quarter of 2012 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI).
HPI price changes are generally smaller than other indicators because they’re based on same-home selling prices for homes under government-owned Fannie Mae and Freddie Mac. The purchase-only index is based on more than 6 million repeat sales transactions.
Comparing year-to-year, the seasonally adjusted house prices rose 0.5 percent compared to first quarter 2011.
Comparing month-to-month, FHFA’s seasonally adjusted monthly index for March was up 1.8 percent from February.
“Consistent with other housing market indicators, the FHFA HPI showed stronger house prices in the first quarter, most notably in March,” says FHFA Principal Economist Andrew Leventis. “Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices.”
Findings:
• The seasonally adjusted purchase-only HPI rose in the first quarter in 30 states and the District of Columbia.
• The top five annual increases were Hawaii (10.3 percent), Washington, DC (9.8 percent), Iowa (5.7 percent), Florida (4.7 percent) and North Dakota (4.4 percent).
• Of the nine census divisions, the Mountain division experienced the strongest prices in the latest quarter, posting a 1.4 percent increase. Prices were weakest in the New England division, where prices fell -0.7 percent.
Source: Florida Realtors®
HPI price changes are generally smaller than other indicators because they’re based on same-home selling prices for homes under government-owned Fannie Mae and Freddie Mac. The purchase-only index is based on more than 6 million repeat sales transactions.
Comparing year-to-year, the seasonally adjusted house prices rose 0.5 percent compared to first quarter 2011.
Comparing month-to-month, FHFA’s seasonally adjusted monthly index for March was up 1.8 percent from February.
“Consistent with other housing market indicators, the FHFA HPI showed stronger house prices in the first quarter, most notably in March,” says FHFA Principal Economist Andrew Leventis. “Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices.”
Findings:
• The seasonally adjusted purchase-only HPI rose in the first quarter in 30 states and the District of Columbia.
• The top five annual increases were Hawaii (10.3 percent), Washington, DC (9.8 percent), Iowa (5.7 percent), Florida (4.7 percent) and North Dakota (4.4 percent).
• Of the nine census divisions, the Mountain division experienced the strongest prices in the latest quarter, posting a 1.4 percent increase. Prices were weakest in the New England division, where prices fell -0.7 percent.
Source: Florida Realtors®
April Existing-Home Sales, Prices Up
Existing-home sales rose in April and remain above a year ago, while home prices continued to rise, according to the National Association of REALTORS®. The improvements in sales and prices were broad based across all regions.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.
Lawrence Yun, NAR chief economist, said the housing recovery is underway. “It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said. “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”
“A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions,” Yun said.He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. “We expect stronger price increases in most of these areas.”
The national median existing-home price for all housing types jumped 10.1 percent to $177,400 in April from a year ago; the March price showed an upwardly revised 3.1 percent annual improvement. “This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent,” Yun said. “For the year we’re looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger improvement in 2013.”
Distressed homes — foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011. Foreclosures sold for an average discount of 21 percent below market value in April, while short sales were discounted 14 percent.
NAR President Moe Veissisaid home buyers should look into financing in the early stages of their search process. “With the tight lending environment it’s a good idea to consult with a REALTOR® about mortgages and program options in your area, and tips for boosting your credit score well in advance of making an offer on a home,” he said. “It helps to go into the process knowing what it takes to succeed.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 3.91 percent in April from 3.95 percent in March; the rate was 4.84 percent in April 2011. Last week the 30-year fixed rate dropped to a record weekly low of 3.79 percent; recordkeeping began in 1971.
First-time buyers rose to 35 percent of purchasers in April from 33 percent in March; they were 36 percent in April 2011.
All-cash sales fell to 29 percent of transactions in April from 32 percent in March; they were 31 percent in April 2011. Investors, who account for the bulk of cash sales, purchased 20 percent of homes in April, compared with 21 percent in March and 20 percent in April 2011.
Single-family home sales rose 3.0 percent to a seasonally adjusted annual rate of 4.09 million in April from 3.97 million in March, and are 9.9 percent higher than the 3.72 million-unit pace a year ago. The median existing single-family home price was $178,000 in April, up 10.4 percent from April 2011.
Existing condominium and co-op sales increased 6.0 percent to a seasonally adjusted annual rate of 530,000 in April from 500,000 in March, and are 10.4 percent above the 480,000-unit level in April 2011. The median existing condo price was $172,900 inApril, which is 8.1 percent above a year ago.
Existing-home sales in the Midwest increased 1.0 percent in April to a pace of 1.03 million and are 14.4 percent above April 2011. The median price in the Midwest was $141,400, up 7.4 percent from a year ago.
In the South, existing-home sales rose 3.5 percent to an annual level of 1.79 million in April andare 6.5 percent higher than a year ago. The median price in the South was $153,400, up 8.0 percent from April 2011.
Existing-home sales in the West increased 4.4 percent to an annual pace of 1.18 million in April and are 7.3 percent above April 2011. The median price in the West was $221,700, a surge of 15.9 percent from a year ago.
Source: NAR
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.
Lawrence Yun, NAR chief economist, said the housing recovery is underway. “It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said. “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”
Supply and Demand
Total housing inventory at the end of April rose 9.5 percent to 2.54 million existing homes available for sale, a seasonal increase which represents a 6.6-month supply at the current sales pace, up from a 6.2-month supply in March. Listed inventory is 20.6 percent below a year ago when there was a 9.1-month supply; the record for unsold inventory was 4.04 million in July 2007.“A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions,” Yun said.He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. “We expect stronger price increases in most of these areas.”
The national median existing-home price for all housing types jumped 10.1 percent to $177,400 in April from a year ago; the March price showed an upwardly revised 3.1 percent annual improvement. “This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent,” Yun said. “For the year we’re looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger improvement in 2013.”
Distressed homes — foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011. Foreclosures sold for an average discount of 21 percent below market value in April, while short sales were discounted 14 percent.
NAR President Moe Veissisaid home buyers should look into financing in the early stages of their search process. “With the tight lending environment it’s a good idea to consult with a REALTOR® about mortgages and program options in your area, and tips for boosting your credit score well in advance of making an offer on a home,” he said. “It helps to go into the process knowing what it takes to succeed.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 3.91 percent in April from 3.95 percent in March; the rate was 4.84 percent in April 2011. Last week the 30-year fixed rate dropped to a record weekly low of 3.79 percent; recordkeeping began in 1971.
First-time buyers rose to 35 percent of purchasers in April from 33 percent in March; they were 36 percent in April 2011.
All-cash sales fell to 29 percent of transactions in April from 32 percent in March; they were 31 percent in April 2011. Investors, who account for the bulk of cash sales, purchased 20 percent of homes in April, compared with 21 percent in March and 20 percent in April 2011.
Single-family home sales rose 3.0 percent to a seasonally adjusted annual rate of 4.09 million in April from 3.97 million in March, and are 9.9 percent higher than the 3.72 million-unit pace a year ago. The median existing single-family home price was $178,000 in April, up 10.4 percent from April 2011.
Existing condominium and co-op sales increased 6.0 percent to a seasonally adjusted annual rate of 530,000 in April from 500,000 in March, and are 10.4 percent above the 480,000-unit level in April 2011. The median existing condo price was $172,900 inApril, which is 8.1 percent above a year ago.
Performance by Region
Existing-home sales in the Northeast rose 5.1 percent to an annual level of 620,000 in April and are 19.2 percent higher than a year ago. The median price in the Northeast was $256,600, up 8.8 percent from April 2011.Existing-home sales in the Midwest increased 1.0 percent in April to a pace of 1.03 million and are 14.4 percent above April 2011. The median price in the Midwest was $141,400, up 7.4 percent from a year ago.
In the South, existing-home sales rose 3.5 percent to an annual level of 1.79 million in April andare 6.5 percent higher than a year ago. The median price in the South was $153,400, up 8.0 percent from April 2011.
Existing-home sales in the West increased 4.4 percent to an annual pace of 1.18 million in April and are 7.3 percent above April 2011. The median price in the West was $221,700, a surge of 15.9 percent from a year ago.
Source: NAR
Fla.’s housing market continues positive signs in April 2012
Florida’s housing market had increased pending sales and higher median prices in April, along with a greatly reduced inventory of homes and condos for sale, according to Florida Realtors® latest housing data.
“Here in Florida, we’re seeing some strong numbers that show positive momentum for the state’s housing recovery and our economy,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “Home prices continue to rise in many markets. Inventory is down to extremely low levels while pending sales are on the rise – almost 38 percent for single-family homes and 25 percent for townhomes and condos. It is not unusual to see multiple offers.
“Now the challenge will be for appraisals to catch up. Overall, we are very happy to see the market move in this direction and expect this trend to continue.”
Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.
The statewide median sales price for single-family existing homes in April was $144,350, up 10.2 percent from the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department, and vendor partner 10K Research and Marketing. The statewide median for townhome-condo properties was $108,000, up 16.1 percent over April 2011.
The national median sales price for existing single-family homes in March 2012 was $163,600, up 1.9 percent from the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in March was $291,080; in Massachusetts, it was $267,500; in Maryland, it was $225,601; and in New York, it was $215,000.
The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Statewide sales of existing single-family homes totaled 17,544 in April, down slightly, 0.7 percent, compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 9,765 units sold statewide last month, down 4.9 percent from those sold in April 2011. NAR reported the national median existing condo price in March 2012 was $165,200.
In April, there was a 5.8-month supply of single-family homes in inventory and a 5.7-month supply for townhomes/condos, according to Florida Realtors.
“The housing numbers for the state of Florida continue to signal recovery,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Sales in 2012 are above where they were in 2011, a harbinger of a third straight year of improvement. More importantly, pending sales are up dramatically, and inventory is still falling. Financing constraints still mean that a significant percentage of these will not lead to closed sales, but with the numbers up, we are confident that closed sales will continue to rise.
“The increase in both median and average prices suggests that investors are having a strong impact on the market, soaking up lower priced inventory and causing buyers to move up the price ladder.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.91 percent in April 2012, down from the 4.84 percent average during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors website at www.floridarealtors.org, and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the April report. Or go to Florida Realtors Media Center at http://media.floridarealtors.org/ and download the April 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data.
Source Florida Realtors®
“Here in Florida, we’re seeing some strong numbers that show positive momentum for the state’s housing recovery and our economy,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “Home prices continue to rise in many markets. Inventory is down to extremely low levels while pending sales are on the rise – almost 38 percent for single-family homes and 25 percent for townhomes and condos. It is not unusual to see multiple offers.
“Now the challenge will be for appraisals to catch up. Overall, we are very happy to see the market move in this direction and expect this trend to continue.”
Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.
The statewide median sales price for single-family existing homes in April was $144,350, up 10.2 percent from the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department, and vendor partner 10K Research and Marketing. The statewide median for townhome-condo properties was $108,000, up 16.1 percent over April 2011.
The national median sales price for existing single-family homes in March 2012 was $163,600, up 1.9 percent from the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in March was $291,080; in Massachusetts, it was $267,500; in Maryland, it was $225,601; and in New York, it was $215,000.
The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Statewide sales of existing single-family homes totaled 17,544 in April, down slightly, 0.7 percent, compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 9,765 units sold statewide last month, down 4.9 percent from those sold in April 2011. NAR reported the national median existing condo price in March 2012 was $165,200.
In April, there was a 5.8-month supply of single-family homes in inventory and a 5.7-month supply for townhomes/condos, according to Florida Realtors.
“The housing numbers for the state of Florida continue to signal recovery,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Sales in 2012 are above where they were in 2011, a harbinger of a third straight year of improvement. More importantly, pending sales are up dramatically, and inventory is still falling. Financing constraints still mean that a significant percentage of these will not lead to closed sales, but with the numbers up, we are confident that closed sales will continue to rise.
“The increase in both median and average prices suggests that investors are having a strong impact on the market, soaking up lower priced inventory and causing buyers to move up the price ladder.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.91 percent in April 2012, down from the 4.84 percent average during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors website at www.floridarealtors.org, and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the April report. Or go to Florida Realtors Media Center at http://media.floridarealtors.org/ and download the April 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data.
Source Florida Realtors®
Citizens’ hurricane mitigation inspections pick up
Florida’s state-backed property insurer, Citizens Property Insurance Corp., is taking a second look at wind mitigation incentives put in place a decade ago, part of its effort to raise premiums to match its risk.
For many of its customers, that means higher rates.
Citizens plans to take a look at 209,000 residential policies by the end of the year to see if the homeowners’ current wind mitigation credits are deserved. As of April 30, Citizens inspectors had completed 180,503 residential inspections, and almost 71 percent of homes saw a premium increase because they didn’t have the necessary hurricane mitigation measures in place.
By nixing the discounts associated with mitigation efforts, Citizens has increased its premium income so far by $107 million. Individual homeowners’ without the claimed mitigation elements saw their premiums jump an average $600 per year, or 23 percent.
In a few cases – 7.5 percent – inspectors discovered that a homeowner had unclaimed hurricane mitigation components. Those homeowners received a credit, reducing Citizens income by about $4.4 million.
The hurricane mitigation incentives that net a discount include things such as tie downs, shutters and other upgrades. They were offered starting in 2002 in an attempt to lower risk for the state-backed pool, which now handles nearly 1.5 million policies.
The wind mitigation program has come under fire from industry groups and the Florida Office of Insurance Regulation, who have said the program eroded the company’s premium base while not significantly reducing its exposure, especially after credits were dramatically increased in 2007.
Private insurers have also given mitigation credits to homeowners, but a 2010 study by the Department of Financial Services found that, despite good intentions, the programs cost companies money in lost premiums while only modestly decreasing potential losses.
Last year, lawmakers passed and Gov. Rick Scott signed SB 408, which struck some language relating to mitigation credits and gave insurers more flexibility in establishing rates and applying discounts. As a result, Citizens officials ordered re-inspections of homes that claim more than $650 in credits.
Robin Westcott, Florida Insurance Consumer Advocate, said she understands Citizens’ objective to get accurate information on proper wind mitigation credits, but she’s worried homeowners may not always be ready with proper documentation on their mitigation efforts and may unnecessarily lose out on benefits. She said Citizens could do a better job of letting homeowners know what inspectors are looking for.
“In some cases, you are looking at pretty hefty increases,” Westcott said. “That is really a big part of our concern.”
Source: News Service of Florida, Michael Peltier
For many of its customers, that means higher rates.
Citizens plans to take a look at 209,000 residential policies by the end of the year to see if the homeowners’ current wind mitigation credits are deserved. As of April 30, Citizens inspectors had completed 180,503 residential inspections, and almost 71 percent of homes saw a premium increase because they didn’t have the necessary hurricane mitigation measures in place.
By nixing the discounts associated with mitigation efforts, Citizens has increased its premium income so far by $107 million. Individual homeowners’ without the claimed mitigation elements saw their premiums jump an average $600 per year, or 23 percent.
In a few cases – 7.5 percent – inspectors discovered that a homeowner had unclaimed hurricane mitigation components. Those homeowners received a credit, reducing Citizens income by about $4.4 million.
The hurricane mitigation incentives that net a discount include things such as tie downs, shutters and other upgrades. They were offered starting in 2002 in an attempt to lower risk for the state-backed pool, which now handles nearly 1.5 million policies.
The wind mitigation program has come under fire from industry groups and the Florida Office of Insurance Regulation, who have said the program eroded the company’s premium base while not significantly reducing its exposure, especially after credits were dramatically increased in 2007.
Private insurers have also given mitigation credits to homeowners, but a 2010 study by the Department of Financial Services found that, despite good intentions, the programs cost companies money in lost premiums while only modestly decreasing potential losses.
Last year, lawmakers passed and Gov. Rick Scott signed SB 408, which struck some language relating to mitigation credits and gave insurers more flexibility in establishing rates and applying discounts. As a result, Citizens officials ordered re-inspections of homes that claim more than $650 in credits.
Robin Westcott, Florida Insurance Consumer Advocate, said she understands Citizens’ objective to get accurate information on proper wind mitigation credits, but she’s worried homeowners may not always be ready with proper documentation on their mitigation efforts and may unnecessarily lose out on benefits. She said Citizens could do a better job of letting homeowners know what inspectors are looking for.
“In some cases, you are looking at pretty hefty increases,” Westcott said. “That is really a big part of our concern.”
Source: News Service of Florida, Michael Peltier
Monday, May 21, 2012
Lack of capital hinders commercial market
National Association of Realtors® (NAR) Chief Economist Lawrence Yun presented a modest and hopeful outlook for the commercial real estate market during the Economic Issues and Commercial Business Trends Forum at the recent Realtors Midyear Legislative Meetings & Trade Expo in Washington, D.C.
“The commercial market has displayed modest growth lately,” said Yun. “Commercial real estate is the basis for much of the growth in the American economy, however challenges continue to exist. Despite this, there are hopeful signs that the market might be slowly recovering due to recent job creation and an increase in consumer spending, among other indicators.”
Yun provided an economic overview and identified areas that showed signs of improvement. Consumer spending has increased slightly, while personal incomes have risen. People also are able to save money now, proving that the savings rate had rebounded. Jobs are accelerating and the stock market has shown a strong recovery.
“Consumer confidence has yet to return to normal, and America still needs to create more jobs,” said Yun. “However, there are signs that show a positive overall financial improvement within the country.”
One major challenge that continues to plague the commercial market is lack of available credit. While there are notable improvements in capital for large commercial transactions valued at $2.5 million or higher, significant challenges remain for small businesses.
According to NAR’s annual Commercial Real Estate 2012 Lending Survey, most Realtors are typically involved in transactions of less than $2 million and usually all cash – both of which make it difficult to obtain commercial lending.
“Since the economic crisis, smaller lenders have been shut out while larger lenders do a majority of the business,” said Yun. “Realtors have reported that they typically obtain commercial mortgages from smaller banks. They find it frustrating that the larger banks are gaining market share at the expense of smaller sized lenders, which is hampering lending to small businesses.”
All major commercial real estate sectors are seeing improvement, but multifamily housing continues to be the healthiest, with falling vacancy rates and rising rents. Families who went through foreclosure and young people who cannot obtain a mortgage are choosing to rent, and Yun predicts this trend will continue. Based on the demand and lack of new construction on apartment buildings, Yun estimates rents will increase by about four percent next year.
In the office and industrial sectors, vacancy rates are improving and prices are beginning to level off. Transaction volume in the industrial sector is also beginning to pick up. Retail is showing signs of a slight recovery, which Yun predicts will be a consistent trend. Yun said overall, the commercial market is experiencing a slow healing process.
Source: Florida Realtors®
“The commercial market has displayed modest growth lately,” said Yun. “Commercial real estate is the basis for much of the growth in the American economy, however challenges continue to exist. Despite this, there are hopeful signs that the market might be slowly recovering due to recent job creation and an increase in consumer spending, among other indicators.”
Yun provided an economic overview and identified areas that showed signs of improvement. Consumer spending has increased slightly, while personal incomes have risen. People also are able to save money now, proving that the savings rate had rebounded. Jobs are accelerating and the stock market has shown a strong recovery.
“Consumer confidence has yet to return to normal, and America still needs to create more jobs,” said Yun. “However, there are signs that show a positive overall financial improvement within the country.”
One major challenge that continues to plague the commercial market is lack of available credit. While there are notable improvements in capital for large commercial transactions valued at $2.5 million or higher, significant challenges remain for small businesses.
According to NAR’s annual Commercial Real Estate 2012 Lending Survey, most Realtors are typically involved in transactions of less than $2 million and usually all cash – both of which make it difficult to obtain commercial lending.
“Since the economic crisis, smaller lenders have been shut out while larger lenders do a majority of the business,” said Yun. “Realtors have reported that they typically obtain commercial mortgages from smaller banks. They find it frustrating that the larger banks are gaining market share at the expense of smaller sized lenders, which is hampering lending to small businesses.”
All major commercial real estate sectors are seeing improvement, but multifamily housing continues to be the healthiest, with falling vacancy rates and rising rents. Families who went through foreclosure and young people who cannot obtain a mortgage are choosing to rent, and Yun predicts this trend will continue. Based on the demand and lack of new construction on apartment buildings, Yun estimates rents will increase by about four percent next year.
In the office and industrial sectors, vacancy rates are improving and prices are beginning to level off. Transaction volume in the industrial sector is also beginning to pick up. Retail is showing signs of a slight recovery, which Yun predicts will be a consistent trend. Yun said overall, the commercial market is experiencing a slow healing process.
Source: Florida Realtors®
Future of U.S. housing market? Echo boomers
The next two decades in housing markets depends largely on the Echo Boomers. That’s according to panelists at the “Shifting Demographics and Housing Choice: A Whole New World?” session during the recent National Association of Realtors® (NAR) 2012 Midyear Legislative Meetings & Trade Expo.
There are approximately 62 million echo boomers in the U.S. Also called “millennials,” echo boomers are currently ages 17-31. According to the 2011 National Association of Realtors Profile of Home Buyers and Sellers, younger homebuyers – those ages 18-34 – represent 31 percent of all recent home purchases.
“We know that although many young people may be delaying home purchases in today’s economic climate, most of them still aspire to homeownership,” says NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami and 2002 president of Florida Realtors.
During the session, economists with NAR, the University of Washington and Florida State University presented various research and data that illustrates the future of homeownership from a generational standpoint.
“Demography is destiny,” says NAR Chief Economist Lawrence Yun. “In that vein, demographics can provide very useful insights into the future of housing and homeownership, and the results of these reports indicate that certain generational shifts will have a significant impact on the real estate industry over the next two decades.”
NAR Economist Selma Hepp identified several key demographic trends on both ends of the housing age spectrum. The demand for affordable, accessible housing will increase as the 65-and-over population grows; at the same time, as seniors leave their homes and move into assisted living and other arrangements, they will add to the current supply of housing. Because of their sheer size, however, echo boomers will significantly impact the next two decades in housing.
“Echo boomers represent a long-term opportunity for a housing market recovery, but they are struggling in the current economic crisis,” says NAR’s Selma Hepp. “Consequently, demand for rental housing is likely to climb in the near term.”
As a group, the echo boomers are more racially and ethnically diverse than their baby boomer parents. While 65 percent of baby boomers are Caucasian, only 55 percent of echo boomers are Caucasian. Echo boomers are also more likely to be college educated than previous generations, and they’re remaining single longer.
Glenn E. Crenlin from the Runstad Center for Real Estate Studies at the University of Washington shared his insights into recent declines in homeownership and whether those declines indicate possible generational trends.
“It is worrying that the homeownership rate for those under 35 has fallen more sharply than the rate for older Americans,” says Crenlin. “But I think we need to examine homeownership rates by generation in a more balanced way. Although the Millennial generation does not own homes at the same percentages of those in other generations, many of them are still in the early stages of household formation – in fact, some of them are still in high school.”
Crenlin presented data from the American Community Survey that shows a significant increase in homeownership among millennials when compared to baby boomers at the same age. While 900,000 households in the millennial generation own their own home, only 500,000 baby boomer households owned their own homes at the same point in their lives.
“Given these data, what we’re looking at in terms of the millennial generation is likely only a delay in homeownership of three to five years, not a long-term trend away from homeownership itself,” said Crenlin.
Source: Florida Realtors®
There are approximately 62 million echo boomers in the U.S. Also called “millennials,” echo boomers are currently ages 17-31. According to the 2011 National Association of Realtors Profile of Home Buyers and Sellers, younger homebuyers – those ages 18-34 – represent 31 percent of all recent home purchases.
“We know that although many young people may be delaying home purchases in today’s economic climate, most of them still aspire to homeownership,” says NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami and 2002 president of Florida Realtors.
During the session, economists with NAR, the University of Washington and Florida State University presented various research and data that illustrates the future of homeownership from a generational standpoint.
“Demography is destiny,” says NAR Chief Economist Lawrence Yun. “In that vein, demographics can provide very useful insights into the future of housing and homeownership, and the results of these reports indicate that certain generational shifts will have a significant impact on the real estate industry over the next two decades.”
NAR Economist Selma Hepp identified several key demographic trends on both ends of the housing age spectrum. The demand for affordable, accessible housing will increase as the 65-and-over population grows; at the same time, as seniors leave their homes and move into assisted living and other arrangements, they will add to the current supply of housing. Because of their sheer size, however, echo boomers will significantly impact the next two decades in housing.
“Echo boomers represent a long-term opportunity for a housing market recovery, but they are struggling in the current economic crisis,” says NAR’s Selma Hepp. “Consequently, demand for rental housing is likely to climb in the near term.”
As a group, the echo boomers are more racially and ethnically diverse than their baby boomer parents. While 65 percent of baby boomers are Caucasian, only 55 percent of echo boomers are Caucasian. Echo boomers are also more likely to be college educated than previous generations, and they’re remaining single longer.
Glenn E. Crenlin from the Runstad Center for Real Estate Studies at the University of Washington shared his insights into recent declines in homeownership and whether those declines indicate possible generational trends.
“It is worrying that the homeownership rate for those under 35 has fallen more sharply than the rate for older Americans,” says Crenlin. “But I think we need to examine homeownership rates by generation in a more balanced way. Although the Millennial generation does not own homes at the same percentages of those in other generations, many of them are still in the early stages of household formation – in fact, some of them are still in high school.”
Crenlin presented data from the American Community Survey that shows a significant increase in homeownership among millennials when compared to baby boomers at the same age. While 900,000 households in the millennial generation own their own home, only 500,000 baby boomer households owned their own homes at the same point in their lives.
“Given these data, what we’re looking at in terms of the millennial generation is likely only a delay in homeownership of three to five years, not a long-term trend away from homeownership itself,” said Crenlin.
Source: Florida Realtors®
Subscribe to:
Posts (Atom)