May 2, 2012 | Housing Analysis
Home prices started the year on an upswing.
According to the Federal Home Finance Agency’s Home Price Index, home prices rose by a seasonally-adjusted 0.3 percent between January and February 2012. The index is up 0.4% over the past year, offering a counter-story to the Case-Shiller Index’s assertion that home values are sinking.
Last week, Standard & Poor’s Case-Shiller Index said home values had dropped more than 3 percent in the prior 12 months.
As a home buyer or seller in Worcester County area , data showing “rising home values” or “falling home values” may be of interest to you, but we can’t forget that most home valuation trackers — including both the government’s Home Price Index and the private sector Case-Shiller Index — have a severe, built-in flaw.
Both used “aged” data. Today, the calendar reads May. Yet, we’re still discussing February’s housing data.
Data that is two-plus months old is of little value to everyday buyers and sellers wanting to know the “right now” of housing. And, even then, characterizing the data as “two-plus months old” may be a stretch. This is because the home values used in the Home Price index and the Case-Shiller Index are collected from actual transactions, but at the time of closing.
Considering that most purchases require 45-60 days to close, we can know that when we look at the Home Price Index and Case-Shiller Index reports for February, what we’re really seeing is a snapshot of the housing market as it existed two-plus month plus 60 days ago.
Data that’s 5 months old is of little relevance to today’s buyers and sellers. Today’s market is driven by today’s economics.
The Home Price Index is a useful gauge for economists and law-makers. It highlights long-term trends in housing which can be helpful in allocating resources to a particular project or policy. For home buyers and seller throughout Massachusetts , though, it’s much less useful. Real-time data is what matters to you.
For that, contact me and I can put you in contact with one of the areas best real estate professionals to talk with.
May 1, 2012 | Mortgage Guidelines
Despite an improving U.S. economy, the nation’s banks remain cautious about what they will lend, and to whom.
Last quarter, by a margin of 3-to-2, more banks tightened residential mortgage lending standards for “prime borrowers” than did loosen them.
A “prime borrower” is defined as one with a well-documented cre (more…)
Apr 27, 2012 | Housing Analysis
After a series of worse-than-expected data last month, the housing market appears to be back on track.
The Pending Home Sales Index posted 101.4 in March, a four percent gain from the month prior and the index’s highest reading since April 2010 — the last month of that year’s federal home buyer tax credit.
A “pending home” is a home under contract to sell, but not yet closed. The Pending Home Sales Index is tracked and published by the National Association of REALTORS® monthly.
The March report marks the index’s first 100-plus reading in nearly two years.
To home buyers and sellers throughout Worcester County area, this is statistically significant because the Pending Home Sales Index is normalized to 100, a value corresponding to the average home contract activity in 2001, the index’s first year of existence. 2001 was an historically-strong year for the housing market.
The March 2012 Pending Home Sales Index, therefore, puts current market activity on par with market activity from 2001. (more…)
Apr 25, 2012 | Federal Reserve
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent Wednesday.
For the fifth consecutive month, the Fed Funds Rate vote was nearly unanimous. Just one FOMC member, Richmond Federal Reserve President Jeffrey Lacker, dissented in the 9-1 vote.
The Fed Funds Rate has been near zero percent since December 2008. It is expected to remain near-zero through 2014, at least.
In its press release, the Federal Reserve noted that the U.S. economy has been “expanding moderately” since the FOMC’s last meeting in March. Beyond the next few quarters, the Fed expects growth to “pick up gradually”.
This key phrase will likely be repeated by the press. It suggests that the economy is no longer contracting; instead moving along a path of slow, consistent expansion. (more…)
Apr 25, 2012 | Housing Analysis
Sales of new homes ticked lower in March, unexpectedly.
Based on Census Bureau data, the number of new, single-family homes sold in March slipped 7 percent from February — the largest one-month drop in more than a year.
On a seasonally-adjusted, annualized basis, buyers in Worcester County area and nationwide purchased 328,000 newly-built homes last month. The decrease in sales from February to March can be attributed, in part, though, to a massive upward revision in February’s figures.
Last month, the Census Bureau had reported 313,000 new home sales in February on a seasonally-adjusted, annualized basis. This month, those sales were re-measured to be 353,000 — an increase of 13 percent.
January’s sales were revised higher, too.
The long-term trend in the market for new homes remains “up”. This is no more apparent than when we look at the available new home inventory.
At the close of March, just 144,000 new homes were available for purchase, down 2,000 from the month prior and representing the most sparse new home housing supply since at least 1993, the year that the Census Bureau starting tracking such data. (more…)
