May 16, 2013 | Housing Analysis
Home builders are gaining confidence in current and future market conditions for new homes, but continue to see below-average foot traffic in new homes.
The reading for May’s National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI) increased by three points to a reading of 44 as compared to April’s revised reading of 41. The HMI measures builder confidence in current sales conditions for newly built homes, buyer foot traffic in new homes and builder expectations for future sales conditions.
Builder Confidence In Future New Home Sales Highest Since February 2007
The HMI reading for current sales conditions for newly built homes rose from 44 to 48. The reading for buyer foot traffic in new homes rose from 30 to 33, and builder confidence in future sales of new homes rose from 52 to 53, which is the highest reading posted for builder expectations since February 2007.
A reading of more than 50 indicates that more builders consider housing markets good than bad.
NAHB Chairman Rick Judson noted that home builders are facing challenges including rising costs for building materials, lots and labor as supply chains recover from the recession. He also said that builders took note of “urgency” among home buyers wanting to take advantage of low mortgage rates, but who are facing a dwindling supply of available homes.
Regional Housing Market Index Unchanged Except In West
HMI readings for three of the four geographical regions used in the HMI survey of builders remained unchanged with the Northeast at 37, Midwest at 45 and South at 42.
The reading for the West declined by five points to 49, and likely reflects the shortage of building space and available new homes for sale. The regional HMI figures are calculated as a three-month rolling average. (more…)
May 10, 2013 | Housing Analysis
RealtyTrac recently reported that national foreclosure filings are down while foreclosure filings are seeing marked increases in some states.
There are two systems for foreclosing residential real estate in the United States; judicial and non-judicial foreclosure. The states individually decide which foreclosure process will be followed in their state.
Click Here To Download An Overview Of The Foreclosure Process
Judicial foreclosure requires action by the courts because the mortgage is not written including a “power of sale clause”. Judicial foreclosure proceedings generally take longer than non-judicial processes due to this court involvement.
A log-jam of delayed judicial foreclosures are beginning to move through backlogged courts with the result of higher numbers of foreclosures started, foreclosure auctions scheduled, and properties either sold to third parties at foreclosure auctions or repossessed by mortgage lenders.
In states allowing non-judicial foreclosure, the matter may be handled outside of the judicial system as the mortgage is written with the power of sale clause which allows the lender to take control of the mortgaged property to satisfy the outstanding lien.
Here are highlights of April’s foreclosure report:
Nationally, 144,790 foreclosure filings were made in April, a decrease of 5 percent compared to March and representing an annual decrease of 23 percent year-over-year.
Overall, April’s residential foreclosure activity was at its lowest since February 2007. About one of every 905 U.S. housing units had a foreclosure filing during April.
Due to the aforementioned backlog of judicial foreclosures, scheduled foreclosure auctions hit a 30-month high in April rising by 22 percent between March and April. (more…)
May 8, 2013 | Housing Analysis
The Bureau of Labor Statistics released its monthly Non-farm Payrolls and National Unemployment Rate for April last Friday. These two reports are collectively called the Jobs Report.
165,000 jobs were added in April, while the unemployment rate dropped from 7.60 percent in March to 7.50 percent in April. 673,000 jobs have been added since January. Jobs were added in employment sectors including business and professional, health care and eating and drinking establishments.
The main impact of the jobs report on home sales and mortgage lending is the ability of would-be home buyers to qualify for mortgage loans.
Long term unemployment and under-employment has worked against consumers wanting to buy homes when interest rates and home prices hit significant lows.
Falling Long Term Unemployment Numbers Help New Home Buyers Buy Homes
Long-term unemployment (workers unemployed for 27 weeks or more) fell by 258,000 workers to 4.4 million in April. The share of long term workers among all unemployed fell by 2.2 percent to 37.4 percent of unemployed workers.
Since January, the number of long-term unemployed has decreased by 687,000 workers and 3.1 percent. Gaining employment is a plus for the economy and for households facing financial stress due to unemployment.
Another significant data set in terms of U.S. jobs measures workers who are working part-time, but who want to work full time. This sector increased by 278,000 in April to 7.9 million.
February and March 2013 Non-farm Payrolls numbers were revised upward. In February, jobs added were changed from 268,000 to 332,000. In March, jobs added were revised from 88,000 to 138,000. This adjusts the number of jobs added for February to March by an additional 114,000 new jobs.
Federal Reserve Bond Purchase Point To Continued Low Mortgage Rates
The Federal Reserve is continuing its program of quantitative easing (QE) by buying $85 billion in bonds and mortgage backed securities (MBS) monthly.
Reducing or eliminating QE would lessen the demand for bonds and MBS; when bond and MBS prices fall, mortgage rates usually rise. Lower mortgage rates can help offset rising home prices and allow more consumers to buy homes.
While home prices are gradually increasing, mortgage rates are still low. This helps moderate-income home buyers with affordability, but these conditions won’t last indefinitely.
In some regions, such as the West, available homes and land are in short supply, which is driving up home prices. This trend is helping home owners, and potentially home sellers, gain higher sales prices for their real estate. Overall, increasing the number of jobs is positive for the economy.
Contact your trusted mortgage lender for a personalized mortgage interest rate quote and to learn more about affordable home loan options.
May 1, 2013 | Housing Analysis
Housing markets continue to improve according to the S&P Case Shiller Home Price Indices released April 30 for February’s data.
The Indices consist of a 10-City Composite Index and a 20-City Composite Index with housing markets for each city reported based on a three-month rolling average of home prices.
Case Shiller Posts Highest Growth Rates Since 2006
The data released yesterday comprised the Indices’ highest growth rates since May 2006.
For the 12 months between February 2012 and February 2013, the 10-City Composite Index reports that average home prices posted a gain of 8.6 percent and average home prices for the 20-City Composite Index grew by 9.3 percent on a non-seasonally adjusted basis.
All 20 cities posted a year-over-year gain for at least two consecutive months.
The 10-City Composite Index grew by 0.4 percent between January and February, while the 20-City Composite Index grew by 0.3 percent for the same time period.
16 of the 20 cities reported rising annual growth rates for home sales between January and February 2013, while four cities including Detroit, Miami, Minneapolis and Phoenix saw decreases between -0.1 and -0.4 percent in annual home prices between January and February 2013 readings.
Longer-term readings provide a more positive light, as with the example for Phoenix, Arizona.
The month-to-month reading of annual home prices indicated a decrease, but the reading for Phoenix year over year indicates a + 23.0 percent increase in average home prices.
Ten Metro Areas Gain Double Digits Over Past Year
10 cities posted double-digit year-over-year growth rates; they include Atlanta, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, Phoenix, San Diego, San Francisco and Tampa.
San Diego and Tampa have joined the double-digit cities in February with average home prices increasing for each city of just over 10 percent.
Phoenix, San Francisco, Las Vegas and Atlanta posted the highest year-over-year gains in average home prices.
Three older cities, New York, Boston and Chicago posted the lowest year-over-year rates in average home price readings.
Atlanta and Dallas achieved the highest annual growth rates since the inception of the 10-City Composite (1991) and the 20-City Composite (2001).
Improving Housing Markets Seen As Beacon Of Economic Recovery
Improving housing markets are considered a leading indicator of overall economic recovery as home ownership typically increases wealth and leads to more spending.
Economists note that while current news for housing markets is good, average home prices remain at 2003 levels, which can be very good for new home buyers.
Shortages of available homes in some areas and news that apartment construction is increasing can impact availability and ultimately, the sale of single-family homes.
Apr 30, 2013 | Housing Analysis
According to the the latest Foreclosure Inventory Analysis showed nearly 1.5 million properties were currently in the foreclosure process or being held by banks as Real Estate Owned.
This was up 9 percent from the first quarter of 2012, but down significantly from the apex of foreclosure activity — 2.2 million units — in December 2010.
What Is Distressed Property?
“Distressed property” is a blanket term for homes in foreclosure, short sale or that are REO (Real Estate Owned).
Below are definitions of different types of distressed real estate, so that you can be familiar with the terms.
- Foreclosure: When a homeowner has defaulted on their mortgage for a specified period of time, the bank takes possession of the real estate.
- Short Sale: A homeowner facing foreclosure may request a short sale from their lender to sell the property for less than what is owed.
- REO: Real Estate Owned properties have gone through foreclosure and are held by the bank. This increases the possibility of purchasing these homes at a discount because maintaining an REO is costly for a lender.
All three scenarios offer opportunities for substantial savings, yet all include stipulations with regard to the contract and terms of purchase.
Special Requirements With Distressed Property Purchases
When you buy this type of property, you are dealing with a financial institution instead of a private seller, so it may take more time to get to the closing table.
Be prepared for a longer than normal communication cycle as there are often delays when working with the bank or mortgage lender to come to a decision on an acceptable offer and closing date.
Unfortunately, many distressed properties have more deferred maintenance and repair issues
If you are willing to take the chance and be patient, a distressed property could pay off in terms of a lower purchase price.
Additionally, most buyers of distressed properties see an increase in the value of their Massachusetts real estate within a short time of purchase.
In the end, it is strongly advised that buyers work with an experienced property expert when interested in distressed properties because of the additional paperwork and requirements to complete the transaction.
Apr 17, 2013 | Housing Analysis
The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index (HMI) report for April shows that builder confidence slipped by two points to a rating of 42 from the March reading of 44.
The Housing Market Index (HMI) measures home builder confidence in market conditions for newly built single family homes.
A reading of more than 50 indicates better than average confidence, while readings below 50 indicate that home builders have concerns about current market conditions.
NAHB Housing Market Index Results For April
Home builders expressed concern over a gap between a growing demand for homes and builders’ ability to meet the demand for new homes as housing market conditions improve.
Top concerns cited by home builders surveyed include:
- Availability of construction credit
- Construction costs rising faster than home values
- Restrictive mortgage lending rules impacting would-be home buyers
Supply chains for building materials and available developed lots are also impacting home builder confidence, as they have been lagging behind increasing demand for homes since the recession and will need more time to catch up.
Six Month Confidence Forecast Strongest Since February 2007
While builder confidence fell on a month-to-month basis, home builders have a more positive outlook for the next six months.
The builder confidence reading for the next six months came in at 53 for April, which is the highest reading since February 2007.
In terms of demand for newly built homes, the home builders surveyed said that a shortage of existing homes, low mortgage rates and increasing consumer confidence are expected to improve the market for existing homes.
Consumer confidence is important to all facets of the home building and mortgage lending industries.
Buying a home is typically the largest investment that consumers make, and their confidence in the economy plays a role in their decisions about when or if they buy a home.
Regional readings for housing markets are based on a three month rolling average.
Results for April were unchanged or lower in all four regions as compared to the rolling average reported in March:
- Northeast: The reading of 38 is unchanged from March.
- Midwest: The reading declined by two points to 45.
- South: April’s reading declined by four points to 42
- West: April’s reading declined by three points to 55, but remains in positive territory.
Regional readings reflect conditions impacting only a specific area of the U.S.
Recent examples include the impact of Hurricane Sandy in the Northeast, and an ongoing lack of land available for home construction in the West.
