Adding Value by Dennis O'Hagan

December Existing-Home Sales Rise, 2013 Strongest in Seven Years...

RISMEDIA, Friday, January 24, 2014— Existing-home sales edged up in December, sales for all of 2013 were the highest since 2006, and median prices maintained strong growth, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.0 percent to a seasonally adjusted annual rate of 4.87 million in December from a downwardly revised 4.82 million in November, but are 0.6 percent below the 4.90 million-unit level in December 2012.

For all of 2013, there were 5.09 million sales, which is 9.1 percent higher than 2012. It was the strongest performance since 2006 when sales reached an unsustainably high 6.48 million at the close of the housing boom.

Lawrence Yun, NAR chief economist, said housing has experienced a healthy recovery over the past two years. “Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market,” he said. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”

The national median existing-home price for all of 2013 was $197,100, which is 11.5 percent above the 2012 median of $176,800, and was the strongest gain since 2005 when it rose 12.4 percent.

The median existing-home price for all housing types in December was $198,000, up 9.9 percent from December 2012. Distressed homes—foreclosures and short sales—accounted for 14 percent of December sales, unchanged from November; they were 24 percent in December 2012. The shrinking share of distressed sales accounts for some of the price growth.

Ten percent of December sales were foreclosures, and 4 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in December, while short sales were discounted 13 percent.

Total housing inventory at the end of December fell 9.3 percent to 1.86 million existing homes available for sale, which represents a 4.6-month supply at the current sales pace, down from 5.1 months in November. Unsold inventory is 1.6 percent above a year ago, when there was a 4.5-month supply.

The median time on market for all homes was 72 days in December, up sharply from 56 days in November, but slightly below the 73 days on market in December 2012. Adverse weather reportedly delayed closings in many areas. Twenty-eight percent of homes sold in December were on the market for less than a month, down from 35 percent in November, which appears to be a weather impact.

Short sales were on the market for a median of 122 days in December, while foreclosures typically sold in 67 days and non-distressed homes took 70 days.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.46 percent in December from 4.26 percent in November; the rate was 3.35 percent in December 2012.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said that with jobs expected to improve this year, sales should hold even despite rising home prices and higher mortgage interest rates. “The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory,” he said. “With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home.”

First-time buyers accounted for 27 percent of purchases in December, down from 28 percent in November and 30 percent in December 2012.

All-cash sales comprised 32 percent of transactions in December, unchanged from November; they were 29 percent in December 2012. Individual investors, who account for many cash sales, purchased 21 percent of homes in December, up from 19 percent in November, but are unchanged from December 2012.

Single-family home sales rose 1.9 percent to a seasonally adjusted annual rate of 4.30 million in December from 4.22 million in November, but are 0.7 percent below the 4.33 million-unit pace in December 2012. The median existing single-family home price was $197,900 in December, up 9.8 percent from a year ago.

Existing condominium and co-op sales fell 5.0 percent to an annual rate of 570,000 units in December from 600,000 units in November, and are unchanged a year ago. The median existing condo price was $198,600 in December, which is 10.9 percent above December 2012.

Regionally, existing-home sales in the Northeast slipped 1.5 percent to an annual rate of 640,000 in December, but are 3.2 percent higher than December 2012. The median price in the Northeast was $239,300, up 3.6 percent from a year ago.

Existing-home sales in the Midwest fell 4.3 percent in December to a pace of 1.11 million, and are 0.9 percent below a year ago. The median price in the Midwest was $150,700, which is 7.0 percent higher than December 2012.

In the South, existing-home sales increased 3.0 percent to an annual level of 2.03 million in December, and are 4.6 percent above December 2012. The median price in the South was $173,200, up 8.9 percent from a year ago.

Existing-home sales in the West rose 4.8 percent to a pace of 1.09 million in December, but are 10.7 percent below a year ago. Inventory is tightest in the West, which is holding down sales in many markets, and multiple bidding is causing it to experience the strongest price gains in the U.S. The median price in the West was $285,000, up 16.0 percent from December 2012.

For additional information, visit www.houselogic.com and http://retradio.com.

Taking the Temperature of the Housing Market...

RISMEDIA, Wednesday, January 22, 2014— Recently, Freddie Mac released its U.S. Economic and Housing Market Outlook for January showing that four of the key housing indicators are all moving in the right direction, which bodes well for an ongoing recovery.

"As we start 2014, the housing recovery continues its steady pace,” says Frank Nothaft, Freddie Mac vice president and chief economist. “House-price gains will likely moderate from last year's pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets we are seeing the sales recovery strengthen while many others remain weak."

Outlook Highlights and First Quarter Projections
• December's unemployment rate of 6.7 percent remains stubbornly high. It may take another two years until labor market gets back to full employment.
• Mortgage delinquency rates at 5.88 percent have been nearly cut in half from their peak, but they are still very high from their long term normal average of approximately 2 percent.
• From 1999-2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth. Currently, payment-to-income ratios are only 60 percent of the level we had in 1999 suggesting room for continued house price growth.
• When measured against the single-family housing stock, historically home sales have averaged about 6 percent of the stock at an annual rate. During the housing boom, home sales increased up to about 9 and then plummeted down to around 4 percent. With home sales at a 5.8 million pace in 2014 this rate should rise up to 5.7 percent for 2014.

For more information, visit www.FreddieMac.com.

Growth??? I think so...

40 Years Ago

In 1974, Flower Mound had a population of 1,628 people.  Coppell boasted 1,700 people.  They were sleepy farming communities with a huge change on the way.   The Dallas-Ft Worth International Airport opened in 1974, celebrating its 40^th anniversary this month.    The DFW Metroplex had 2.5 million people in 1974.  The airport was to bring significant grow.  Today, the Metroplex has 6.8 million people.   What a change!

Shadow Inventory Lowest Since August 2008...

The industry’s shadow inventory of homes with mortgages 90 or more days delinquent, in foreclosure, or held as REO by mortgage servicers but not currently listed on multiple listing services (MLSs)—also known as pending supply—stood at 1.7 million as of October 2013, according to CoreLogic.

The supply of homes hidden in the shadows carries a value of $256 billion and is at its lowest level since August 2008, the company reports.

Turn back the calendar 12 months, and those numbers were significantly higher. In October 2012, there were 2.1 million homes in shadow inventory with a value of $348 billion. The asset count of shadow inventory homes declined 24 percent, while the dollar amount attached to the industry’s hidden inventory dropped 26.4 percent in one year’s time.

“The shadow inventory continues to decline,” said Dr. Mark Fleming, chief economist for CoreLogic, “decreasing at an average monthly rate of 46,000 units over the last year.”

According to Fleming, a healthy market hides around 650,000 housing units in its shadows. “[T]here is more to be done, but the trend is in the right direction,” he said.

30-Year Fixed Mortgage Rates Rise Slightly...

RISMEDIA, Thursday, January 09, 2014— The 30-year fixed mortgage rate on Zillow(R) Mortgage Marketplace is currently 4.39 percent, up one basis point from 4.38 percent at this time last week. The 30-year fixed mortgage rate remained relatively flat this week, hovering between 4.38 and 4.42 percent for the majority of the week.

"Rates were flat during last week's holiday-shortened trading week," says Erin Lantz, director of mortgages at Zillow. "This week rates should remain steady unless the December jobs report released on Friday reveals unexpected insights into the health of the U.S. labor market."

Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgage Marketplace site, and reflect the most recent changes in the market. These are not marketing rates, or a weekly survey.

The rate for a 15-year fixed home loan is currently 3.35 percent, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 2.89 percent.

For more information, visit http://www.zillow.com/mortgage-rates.

Fixed Mortgage Rates Little Changed at Year-End...

RISMEDIA, Saturday, December 28, 2013— Freddie Mac recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates little changed as we head into the final days of the year.

The 30-year fixed-rate mortgage (FRM) averaged 4.48 percent with an average 0.7 point for the week ending December 26, 2013, up from last week when it averaged 4.47 percent. A year ago at this time, the 30-year FRM averaged 3.35 percent.

Additionally, the 15-year FRM this week averaged 3.52 percent with an average 0.7 point, up from last week when it averaged 3.51 percent. A year ago at this time, the 15-year FRM averaged 2.65 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.00 percent this week with an average 0.4 point, up from last week when it averaged 2.96 percent. A year ago, the 5-year ARM averaged 2.70 percent.

Results show that the 1-year Treasury-indexed ARM averaged 2.56 percent this week with an average 0.5 point, down from last week when it averaged 2.57 percent. At this time last year, the 1-year ARM averaged 2.56 percent.

"Mortgage rates were little changed this week following mixed economic reports,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “Real GDP was revised upwards to 4.1 percent growth in the third quarter of this year. However, existing-home sales dropped 4.3 percent to a seasonally adjusted annual rate of 4,900,000 in November. Also, new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000."

For more information please visit www.FreddieMac.com.

The Good, the Bad, and a Sense of Normalcy in the New Year...

While maintaining that “local markets vary widely,” Realtor.com released its predictions for the national housing market in the new year. The forecast includes a few bright spots, a couple of looming clouds, and some normalcy expected to precipitate the market in the coming year.

Among the bright spots are the rising tide of positive equity and abating foreclosures.

While 2.5 million homeowners rose from underwater during the second half of this year, 7.1 million homeowners remain below water. Furthermore, 10 million homeowners have less than 20 percent equity in their homes, according to Realtor.com.

However, “[t]he good news is that prices are expected to continue rising in 2014, which will lift more homeowners into positive territory,” according to Realtor.com.

A second positive trend that will continue into the new year is declining foreclosures.

In the third quarter of this year, foreclosure starts reached their lowest level since the second quarter of 2006.

September also marked the 36th straight month of declining foreclosure activity on an annual basis, according to Realtor.com; and this movement is expected to continue in 2014.

The new year will bring a couple clouds to the market, including rising mortgage rates and declining affordability.

Mortgage rates have already risen 100 basis points this year, and when the Federal Reserve begins tapering its stimulus spending, rates are likely to spike a little higher.

Rising prices may help bring some homeowners out of a negative equity position, but they also pose a threat to affordability. The rate of price appreciation this year outpaced income growth.

Rising mortgage rates also lead to lower affordability.

Another change to the market in the new year will likely be a rise in inventory, bringing it more in line with normal levels.

“The beginning of 2013 could be characterized as the ‘year of low inventory,’” according to Realtor.com. As the year ends, inventory matches levels seen a year ago, but median age of inventory is 11 percent lower.

MORE GREAT NEWS on the Distressed Housing Market...

Foreclosures, Foreclosure Inventory, Serious Delinquencies All Falling...

 

Foreclosures are declining but continue to remain well above pre-crisis norms, according to CoreLogic’s October National Foreclosure Report released Monday.

 

 

During the month of October, the company reports 48,000 foreclosures were completed. That’s down 30 percent from the 68,000 reported in October of last year and down 25.6 percent from 64,000 in September.

While these declines are significant, CoreLogic pointed out in its report that prior to the crisis—between 2000 and 2006—foreclosures averaged about 21,000 per month, well below the current rate.

Regardless, foreclosures declined year-over-year in all 50 states and the District of Columbia in October.

States with the fewest foreclosures completed during the 12 months ending in October were the District of Columbia with just 57 foreclosures in a year’s time, followed by North Dakota (411 foreclosures), Hawaii (491), West Virginia (514), and Wyoming (694).

Five states accounted for half the nation’s foreclosures during the 12-month period. Those states include Florida (115,000), Michigan (50,000), California (46,000), Texas (43,000), and Georgia (39,000).

Just as completed foreclosures declined, so too did the industry’s foreclosure inventory, meaning the number of properties still in some stage of foreclosure.

The national foreclosure inventory stood at 879,000 homes, according to CoreLogic’s October data, down 31 percent from last October’s 1.3 million.

October’s foreclosure inventory accounted for 2.2 percent of all homes with outstanding mortgages, according to CoreLogic, which is down from a foreclosure inventory rate of 3.1 percent in October 2012.

“This is good news for the housing and mortgage finance markets, but the rate remains elevated relative to the pre-crisis level of about 0.6 percent,” said Mark Fleming, chief economist for CoreLogic.

A “normal level” of foreclosure inventory “would be only a quarter of the current stock,” according to Fleming.

States with the highest percentages of foreclosure inventory are mostly located in the Northeast, which continues to lag the national recovery.

Florida, the No. 1 state for foreclosure inventory, is the only state in the top five that is not located in the Northeast. By CoreLogic’s assessment, Florida’s foreclosure inventory comprised 7.1 percent of its homes with outstanding mortgages in October.

New Jersey was not far behind with a rate of 6.7 percent, followed by New York (4.9 percent), Maine (3.8 percent), and Connecticut (3.7 percent).

The national serious delinquency rate stood at 5.1 percent, after falling more than 25 percent since last October, according to CoreLogic. This is its lowest level for serious delinquencies in almost five years, the company says.

As with completed foreclosures and foreclosure inventory, Florida also ranks highest when it comes to serious delinquencies with a rate of 11.6 percent. New Jersey falls in with the second highest rate, registering 10.6 percent.

These two judicial states are the only states in the nation where the serious delinquency rate is in the double-digits, according to CoreLogic’s data.

More GREAT News on Home Pricing Trends...

October Home Prices Maintain Trend of Slow but Steady Gains

Home prices just barely bumped up in October compared to September, keeping the trend going for slow month-to-month improvements.

CoreLogic’s Home Price Index (HPI) report for October shows the national home price (including distressed sales) rising 0.2 percent from September, edging just above the company’s predictions from last month. Year-over-year, the national price increased 12.5 percent, marking the 20th straight month of annual price increases nationally.

Removing distressed sales, home prices increased 0.4 percent month-over-month and 11 percent year-over-year in October.

“In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013,” said CoreLogic president and CEO Anand

Nallathambi. “The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates.”

Including distressed sales, the states with the highest price appreciation in October were Nevada (+25.9 percent), California (+22.4 percent), Georgia (+14.2 percent), Michigan (+14.1 percent), and Arizona (+14 percent). Only one state reported depreciation: New Mexico (-0.5 percent).

Taking distressed sales out of the equation, the list of the top states mostly comprised those struggling from low inventory and what’s left of the post-crash fallout: Nevada (+22.5 percent), California (+18.5 percent), Utah (+13.3 percent), Florida (+13 percent), and New York (+12.4 percent). No states posted price depreciation with distressed sales excluded.

For November, CoreLogic’s Pending HPI projects home prices (including distressed sales) will sit at roughly the same level as October, with an anticipated year-over-year increase of 12.2 percent.

“Based on our pending HPI, the monthly growth rate is expected to moderate even further in November and December,” said Dr. Mark Fleming, chief economist for the company. “The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks.”

More great news on the Housing Industry...

The number of U.S. residential building permits issued in October surpassed 1 million, the highest level in five years, the Commerce Department reported Tuesday.

Building permits in October were up 6.2 percent from the month before, reaching 1,034,000, government figures show. That’s up 13.9 percent from October of last year.

Data for the number of housing starts were not included with the report due to the partial government shutdown last month. The release of those figures has now been pushed to Dec. 18.

Nonetheless, the building permits data are a good barometer of the overall state of residential construction, which has been strong over the past year.

The housing recovery in recent months has boosted home prices, spurred new construction and generated consumer spending at hardware stores such as Home Depot and Lowe’s.