Nov 28, 2012 | Housing Analysis
The housing market continues to expand.
According to the S&P/Case-Shiller Index, which was released earlier this week, U.S. home prices rose in September for the sixth straight month, climbing 0.3% as compared to the month prior.
On an annual basis, values are higher by 3.0%.
The Case-Shiller Index findings are a composite reading of 20 U.S cities, 17 of which showed home price gains in September. Detroit and Washington D.C. showed slight declines, and New York City showed no change.
Leading the recovery, though, appears to be Phoenix, Arizona. The previously hard-hit city has seen home values gain 20.4% over the last 12 months. Also noteworthy is that Atlanta, Georgia reversed 26 consecutive months of home value declines in September, posting a +0.1% annual growth rate.
Average U.S. home prices have climbed back to mid-2003 levels.
On a month-over-month basis, value change by city varied. San Diego, California and Las Vegas, Nevada both posted gains of 1.4 percent from August, leading the Case-Shiller Index’s 20 tracked cities. Minneapolis, Minnesota and Phoenix showed gains of 1.1 percent.
Los Angeles, California rounded out the Top Five, posting a 1% gain month-over-month.
Despite the index’s strong findings, however, we should remember to temper our expectations. The Case-Shiller Index — like most home value trackers — is wildly flawed. Buyers in Massachusetts should follow its gospel with caution.
Here’s why.
First, the Case-Shiller Index tracks values for single-family homes only. As a result, it doesn’t account for multi-unit homes or for condos and co-ops. This is a big deal in cities such as Chicago and New York where high-rise units are common.
Another flaw in the Case-Shiller Index is that it’s 60 days delayed. It’s nearly December yet we’re still reviewing data from September. In housing market terms, September was a different market. Real-time data trumps data from last season.
That said, the long-term trends as shown by the Case-Shiller Index, are overwhelmingly positive. As a Case-Shiller Index spokesperson remarked, “It is safe to say we are now in the midst of a recovery in the housing market.”
Nov 23, 2012 | Housing Analysis
According to a joint release from the U.S. Census Bureau and the Department of Housing and Urban Development, Housing Starts rose 3.6% in October 2012, climbing to a seasonally-adjusted, annualized rate of 894,000 units.
A “housing start” is a new home on which construction has started and the report gives buyers and sellers across Worcester County area yet one more reason to be optimistic for the 2013 housing market.
Regionally, Housing Starts varied.
The West and Midwest Regions posted gains between September and October 2012; and, the South and Northeast Regions posted declines. The latter was affected by the effects of Hurricane Sandy.
- West Region : +17.2% from the month prior
- Midwest Region : +8.9% from the month prior
- South Region : -2.5% from the month prior
- Northeast Region : -6.5% from the month prior
Single-family housing starts — starts for homes not considered multi-unit properties or to be apartment buildings — was mostly unchanged, slipping 1,000 units on a seasonally-adjusted annualized basis.
The Housing Starts data is the third housing-related release this week that hints at a strong start for the 2013 housing market.
Early in the week, the National Association of Homebuilders released its Housing Market Index (HMI), a measure of home builder confidence in the new construction market. The HMI posted 46 — the highest reading since 2006. With mortgage rates low and buyer traffic high, builders are expecting a rash of sales between now and the New Year, and an elevated number of closing over the next six months, in general.
The HMI is scored on a scale of 1-100. One year ago, it read 19.
Then, the National Association of REALTORS® showed Existing Home Sales climbing 2.1% and home supply fell to a multi-year low. At the current sales pace, the entire U.S. home inventory would be sold in just 5.4 months. Analysts believe that a home supply of less than 6.0 months favors home sellers.
In unison, these three housing market reports suggest a sustained, national housing market recovery. Home prices are expected to rise into next year’s housing market.
Nov 21, 2012 | Housing Analysis
After a small decline in September, Existing Home Sales rebounded in October, increasing a modest 2.1%.
The housing market’s slow, steady recovery continues as sales volume in all four regions expanded last month with the exception of the Hurricane Sandy-affected Northeast.
The National Association of REALTORS® monthly Existing Home Sales Report comprises completed sales of single-family homes, townhomes, condominiums, and co-ops. The Existing Home Sales report is compiled on a seasonally-adjusted, annualized basis. It shows a 10.9 percent sales increase as compared last year.
Sales volume might otherwise be higher, however, if not for a lack of homes for sale.
Total housing inventory fell 1.4 percent to 2.14 million homes last month which, at the current sales pace, represents a 5.4-month national supply — the lowest in more than 6 years.
The lack of supply amid burgeoning demand has led home prices higher nationwide. October’s median existing home sale price was $178,600 — an 11.1% increase from October 2011 and the eighth consecutive month during which the median sales price rose.
The last time that occurred was during the eight months ending May 2006.
In addition, the Existing Home Sales report showed that the median time on market in October rose to 71 days, up 1 day from September 2012. As compared to October 2011, however, median time on market is down 26% from 96 days.
Other noteworthy statistics from the October Existing Home Sales report include :
- Foreclosures and short sales accounted for 24% of sales
- Foreclosures sold for an average discount of 20% to market
- Short sales sold for an average discount of 14% to market
Furthermore, thirty-two percent of homes sold in October were on the market for less than one month. 20% were on the market for six months or longer.
Record-low mortgage interest rates continue to spur housing, as do low prices. Neither will last indefinitely. If you plan to purchase a home in Worcester County area in 2013, therefore, consider moving up your time frame. Home ownership will likely increase in cost as the year moves on.
Nov 20, 2012 | Housing Analysis
The National Association of Home Builders (NAHB) released its Housing Market Index (HMI) Tuesday, which showed sharp, 5-point increase to 46 for November 2012, marking the seventh consecutive monthly gain for the HMI, and lifting the index to its highest point since May 2006.
Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions.
The Housing Market Index is a measure of builder confidence, published monthly, based on a survey sent to NAHB members which asks them to rate housing market conditions.
In November, home builders reported gains in two of the three areas surveyed:
- Current Single-Family Sales: 49 (+8 from October 2012)
- Projected Single-Family Sales: 53 (+2 from October 2012)
- Buyer Foot Traffic: 35 (unchanged from October 2012)
Builders report growing demand for new homes as inventories for alternative properties — distressed and foreclosed homes, for example — shrink nationwide.
Even Hurricane Sandy did little to suppress builder confidence.
The NAHB survey was conducted in the two weeks immediately following Hurricane Sandy so the Housing Market Index does reflect builder sentiment during that period. All regions of the country posted confidence gains in November.
The South Region showed a 4-point gain to 43; the West Region showed a 3-point gain to 47; the Midwest Region showed a 3-point gain to 45; and the Northeast Region showed a 2-point gain to 31.
Despite the gains, builders in Massachusetts and nationwide still report challenges with home appraisals and tight credit conditions. In addition, a shortage of buildable lots in some areas is limiting the ability for home builders to put more single-family homes on the market.
As builder confidence grows, today’s buyers throughout Massachusetts should prepare for the possibility of higher home prices. Confident sellers are less likely to make price concessions or to offer free upgrades.
If you are in the market for a new home, therefore, the time between now and the New Year may be the best opportunity to make a bid on a home. Starting next year, low prices may be gone.
Nov 16, 2012 | Housing Analysis
According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings increased 3 percent in October as compared to September 2012, climbing to 186,455 U.S. properties.
RealtyTrac defines a “foreclosure filing” as any foreclosure-related action including a Notice of Default, a Scheduled Auction, or a Bank Repossession. On average, 1 in every 706 U.S. homes had a foreclosure filing during the month of October.
For the 24th consecutive month, the number of bank repossessions fell, down less than 1% from the previous month and down 21% from October 2011. Bank repossessions dropped in 37 states, plus the District of Columbia, indicating that banks are seeking alternatives to foreclosure.
Distressed home sales, which include foreclosures and short sales, represented 23% of sales in the second quarter of 2012, down from 30% a year ago, according to the National Association of REALTORS®.
Florida again posted the top foreclosure rate nationwide.
One in every 312 Florida housing units had some sort of foreclosure filing in October as foreclosure starts moved to a 12-month high. Monthly filings increased 2% from last month.
In Nevada, the monthly increase was larger, rising 41% month-over-month, lifting it from the fifth-highest rate in September 2012, to the second-highest in October 2012.
Third-ranked Illinois saw a 6% increase in foreclosure filings over September 2012. California and Arizona rounded out the top five.
Hurricane Sandy made an impact on the foreclosure market, too, with a foreclosure moratorium being put into effect in the states most affected such as New Jersey, New York, and Connecticut.
For Worcester County area home buyers planning to venture into the home foreclosure market, there are well-priced homes for sale. However, understand that a foreclosure property is often sold “as is,” and that you may not be allowed into the property prior to the sale to inspect for damage. Home may have termites, been gutted by previous tenants or owners, or be filled with lead paint or asbestos.
For this reason, it’s a good idea to engage an experienced real estate professional when buying foreclosure properties. Real estate agents can guide you through the foreclosure process and give advice regarding contracts and home inspections.
Nov 7, 2012 | Housing Analysis
The U.S. economy continues to improve.
The National Association of Homebuilders released its Improving Markets Index Tuesday. The report attempts to identify U.S. metropolitan areas in which the economy is improving, demonstrating “measurable and sustained growth”.
125 U.S. markets are qualified as “improving” this month, a 22-market jump from the month prior and and all-time high for the index which launched late last year.
Compared to November 2011, this month’s IMI has climbed more than four-fold, rising from last year’s reading of 30. This jump suggests that housing recovery is firmly taking root, helping to generate needed jobs and economic growth across much of the country.
So what qualifies a market as “improving”? The NAHB uses strict criteria.
First, the group gathers data from the three separate, independent sources :
- Employment growth from the Bureau of Labor Statistics
- Housing price appreciation from Freddie Mac
- Single-family housing permits growth from the U.S. Census Bureau.
Next, for each of the above data sets, the National Association of Homebuilders separates for local data in each U.S. major metropolitan area.
And, lastly, armed with data, the NAHB looks for areas in which growth has occurred for all three data points for six consecutive months; and for the most recent “bottom” is at least six months in the past.
In this way, the Improving Market Index doesn’t just measure housing market strength — it measures general economic strength.
Of the 22 markets added to the Improving Market Index in November, the following cities were included : San Diego, California; Gainesville, Florida; Omaha, Nebraska; Louisville, Kentucky; and Charlotte, North Carolina.
Several markets dropped off the list, too, including Hanford, California; Orlando, Florida; Terre Haute, Indiana; and Greenville, North Carolina.
The complete list of 125 metropolitan areas on November’s IMI, plus breakouts of the metropolitan areas newly added and dropped is available online at http://www.nahb.org/imi.
