Monthly Archives: April 2014

Sales of US existing homes slip to a 20-month low

This Friday, March 21, 2014 shows a home for sale in Shaker Heights, Ohio. The National Association of Realtors reports on existing-home sales in March on Tuesday, April 22, 2014. Photo: Tony Dejak, AP / AP

This Friday, March 21, 2014 shows a home for sale in Shaker Heights, Ohio. The National Association of Realtors reports on existing-home sales in March on Tuesday, April 22, 2014. Photo: Tony Dejak, AP

WASHINGTON (AP) — Sales of existing U.S. homes slipped in March to their lowest level since July 2012 as rising prices and a tight supply of available homes discouraged many would-be buyers.

The National Association of Realtors said Tuesday that sales edged down 0.2 percent to a seasonally adjusted annual rate of 4.59 million. It was the seventh drop in the past eight months.

Sales rose in the Northeast and Midwest, suggesting that cold winter weather did not weigh as heavily on sales as in previous months. Freezing temperatures and snowstorms had contributed to lower sales in January and February.

“Sales appear to be stabilizing following earlier weather-related disruptions,” Joseph LaVorgna, an economist at Deutsche Bank, said in a note to clients. “We expect sales to improve as we enter the crux of the spring selling season.”

LaVorgna noted that the Realtors’ group reported more buyer traffic at open houses last month, suggesting that demand is rising.

Still, big price increases in the past year, along with higher mortgage rates, have made it harder for many Americans to afford a home. Pay increases haven’t kept up with the higher buying costs.

Those trends and harsh weather have dragged down sales since last fall.

Sales fell last month in the West and South, where prices have risen the most in the past year. Price increases were smaller in the Northeast and Midwest.

Nationwide, the median sales price last month was $198,500, up 7.9 percent from 12 months ago.

The sharpest sales increase occurred among homes priced at $1 million or above. Purchases rose 8 percent in that category. Sales fell in nearly every other price group.

Other measures of home prices have shown stronger gains. Real estate data provider CoreLogic says prices rose 12.2 percent in the past year. That might be discouraging some potential investors, who accounted for just 17 percent of home sales in March, the lowest proportion since August. It was down from 21 percent in February.

But in a positive sign, first-time buyers made up 30 percent of home sales in March, the highest proportion in a year. That’s still below the roughly 40 percent that’s consistent with a healthy housing market. First-timers have struggled to save for down payments. They also face tight credit standards.

Sales of existing homes rose steadily in the first half of last year, reaching an annual pace of 5.38 million in July. But sales slowed in the fall as rising mortgage rates and higher prices began to squeeze some buyers out of the market.

About 5.1 million homes changed hands last year, the most in seven years. But that’s still below the 5.5 million that reflect a healthy market. Many economists expect sales to rise modestly this year but to remain below the 5.5 million level.

Home prices are rising even as sales slow. That’s a sign that the supply of available homes is tight, forcing potential buyers to make higher bids.

There were nearly 2 million homes for sale at the end of March. But at the current sales pace, that’s enough to last only 5.2 months, below the 6 months’ supply that’s considered normal.

More construction is needed to boost the supply, the Realtors’ group argues.

The average rate on a 30-year mortgage was 4.27 percent last week, according to mortgage buyer Freddie Mac. That was down from 4.34 percent the previous week. But the rate is still about a full percentage point above last spring’s record lows.

Source: Christopher S. Rugaber / SFGate.com / April 22, 2014
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Home Sales Increased by 10 Percent Year Over Year in March

New Construction Led Increase at 24 Percent Year Over Year

Home sales increased by 10 percent year over year in March 2014[1] to a non-seasonally adjusted annual sales pace of 5.17 million, 31.5 percent higher than the 3.93 million pace reported for February. Large month-to-month increases in home sales were expected as we entered the spring selling season. In fact, over the past 15 years, the monthly sales percent increase from the month of February to the month of March averaged 27 percent, even showing a 13-percent increase in March 2008 as the housing market was on a steep decline.

Improvement in March home sales were led by newly constructed homes which increased by 24 percent, followed by re-sales which increased by 19 percent.  Distressed sales accounted for 13.7 percent of total sales in March, a strong improvement from the same time a year ago when this category made up 20.4 percent of total sales. REO sales were down 15 percent year over year, accounting for 9.9 percent of total sales. Short sales were down 45 percent year over year, at just 3.8 percent of total sales in March.  At its peak, the distressed sales share totaled 32.7 percent of all sales in January 2009, with REO sales making up 28.2 percent of that share. The more recent shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount compared to healthy sales than do short sales. There will always be some amount of distress in the housing market, so one would never expect a 0-percent distressed sales share, but the pre-crisis share of distressed sales was traditionally about 2 percent.

Michigan had the largest share of distressed sales of any state at 29.7 percent[2] in March, followed by Illinois (25.9 percent), Nevada (25.2 percent), Florida (24.3 percent) and Georgia (22.7 percent). California saw a 17.4-percentage point drop in the distressed sales share, the largest of any state. Of the largest 25 Core Based Statistical Areas (CBSAs) based on population, Chicago-Naperville-Arlington Heights, Ill. had the largest share of distressed sales at 28.6 percent, followed by Miami-Miami Beach-Kendall, Fla. (27.6 percent), Las Vegas-Henderson-Paradise, Nev. (26.6 percent), Orlando-Kissimmee-Sanford, Fla. (26.4 percent) and Tampa-St. Petersburg-Clearwater, Fla. (25.2 percent). Sacramento-Roseville-Arden-Arcade, Calif. had the largest drop in its distressed share, falling by 21.1 percentage points from 39.8 percent in March 2013 to 18.7 percent in March 2014.

[1] Home sales are adjusted for data reporting lags. CoreLogic uses a time-series forecast model to estimate the complete number for the prior period and forecast the current period. In this report, the March 2014 sales numbers are forecasted.
[2] The distressed sales share for states and CBSAs listed in this report were calculated using sales from the past 12 months.
Source: Molly Boesel / CoreLogic / April 21, 2014
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Healthier Market Welcome Sight for Spring Home Buyers

Healthier Market Welcome Sight for Spring Home Buyers

The National Housing Trend Report for March was just released by Realtor.com, and it offers some great news for spring home buyers. The market is much healthier this year, with growth in inventory and days on the market. With modest price increases present, the overall outlook is good.

The stats from Realtor.com showed a 9.5 percent growth over March of last year, with 1,841,844 units at a median price of $199,900, which was also 5.3 percent higher. Last year showed an imbalance, with a shorter supply and a heavy increase in home prices.

“Bidding wars in many markets last year frequently elevated offer prices beyond the reach of first-time buyers who could scarcely save for the down payment,” offered Steve Berkowitz, CEO of Move. “While inventory is still low, the continuing annual lift in the number of homes on the market that we’ve seen over the first months of 2014 is an indicator that buying conditions this year may be notably improved from the frenzied pace of last spring.”

More homes on the market is always a good sign for first-time buyers and those looking to move up. There is less competition and makes it that much harder to get a home.

Despite this good news, home sales are still relatively slow overall due to the current health of the housing market.

The National Association of Realtors (NAR) Pending Home Sales Index for February 2014 showed a 10.5 percent decline, compared to the same period in 2013, the eighth-straight month of decline for pending sales. With contract signings stable over the last few months, though, buyer traffic looks to be making a comeback.

Source: Paul Salfen / DSnews.com / April 19, 2014
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California March Home Sales

An estimated 32,923 new and resale houses and condos sold statewide in March. That was up 28.2 percent from 25,680 in February, and down 12.8 percent from 37,764 sales in March 2013, according to San Diego-based DataQuick.

Last month’s sales were the lowest for a March since 2008, when 24,565 homes sold – a record low for the month of March. California’s high for March sales was 68,848 in 2005. Last month’s sales were 23.9 percent below the average of 43,251 sales for all months of March since 1988, when DataQuick’s statistics begin. California sales haven’t been above average for any particular month in more than eight years.

The median price paid for a home in California last month was $376,000, up 5.9 percent from $355,000 in February and up 20.1 percent from $313,000 in March 2013. Last month’s median sale price was the highest since it was $383,000 in January 2008. This March was the 25th consecutive month in which the state’s median rose on a year-over-year basis, and it was the 16th straight month with a gain exceeding 20 percent.

In March/April/May 2007 California’s median sale price peaked at $484,000. The post-peak trough was $221,000 in April 2009.

Of the existing homes sold last month, 7.4 percent were properties that had been foreclosed on during the past year. That was down from a revised 8.0 percent in February and down from 15.0 percent a year earlier. California’s foreclosure resales peaked at 58.8 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 7.4 percent of the homes that resold last month. That was down from an estimated 9.3 percent the month before and 18.7 percent a year earlier.

The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,496, up from $1,405 the month before and up from $1,134 a year earlier. Adjusted for inflation, last month’s payment was 35.9 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 48.1 percent below the current cycle’s peak in June 2006. It was 60.7 percent above the January 2012 bottom of the current cycle.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. DataQuick was acquired last month by Irvine-based property information company CoreLogic.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached in the last five years. Financing with multiple mortgages is low, while down payment sizes are stable, DataQuick reported.

Source: DataQuick; DQNews.com / April 16, 2014
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17% of homes with a mortgage seriously underwater

Share of underwaters continues slow decline

underwater homeowner

Fully 9.1 million U.S. residential properties were seriously underwater, representing 17% of all properties with a mortgage in the first quarter, according to RealtyTrac’s U.S. Home Equity & Underwater Report for the first quarter of 2014.

To be seriously underwater, the combined loan amount secured by the property is at least 25% higher than the property’s market value. The first quarter negative equity numbers were down to the lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012.

In the fourth quarter of 2013, 9.3 million residential properties representing 19% of all properties with a mortgage were seriously underwater, and in the first quarter of 2013 10.9 million residential properties representing 26% of all properties with a mortgage were seriously underwater.

“U.S. homeowners are continuing to recover equity lost during the Great Recession, but the pace of that recovering equity slowed in the first quarter, corresponding to slowing home price appreciation,” said Daren Blomquist, vice president at RealtyTrac. “Slower price appreciation means the 9 million homeowners seriously underwater could still have a long road back to positive equity.”

The recent peak in negative equity was the second quarter of 2012, when 12.8 million U.S. residential properties representing 29% of all properties with a mortgage were seriously underwater.

The universe of equity-rich properties — those with at least 50 percent equity — grew to 9.9 million representing 19% of all properties with a mortgage in the first quarter, up from 9.1 million representing 18% of all properties with a mortgage in the fourth quarter of 2013.

Another 8.5 million properties were on the verge of resurfacing in the first quarter, with between 10% negative equity and 10% positive equity. This segment represented 16% of all properties with a mortgage in the first quarter.

That was compared to 8.3 million properties representing 17% of all properties with a mortgage in the fourth quarter of 2013.

Fewer distressed properties had negative equity in the first quarter, with 45% of all properties in the foreclosure process seriously underwater — down from 48% in the fourth quarter of 2013 and down from 58 percent in the first quarter of 2013.

Conversely, the share of foreclosures with positive equity increased to 35% in the first quarter, up from 31% in the fourth quarter and up from 24% in the third quarter of 2013.

“The relatively high percentage of foreclosures with equity is surprising to many because it would seem homeowners with equity could easily avoid foreclosure by leveraging that equity by refinancing or with an equity sale of the home,” Blomquist noted. “But many distressed homeowners with equity may not realize they have equity and in some cases have vacated the property already, assuming that foreclosure is inevitable.”

“Underwater properties have become an insignificant part of the housing market in Orange County,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market.  “Out of the nearly 40,000 properties we currently have listed only about 3,000 of those are distressed or short sale properties, proving that the continual rise in home prices is relieving the housing market of underwater homeowners.”

Source: Trey Garrison / HousingWire.com / April 16, 2014
Link to article.

Peak homebuying season starts slowly

Homes in Carmel Valley, San Diego on a recent Friday.
Homes in Carmel Valley, San Diego on a recent Friday. — Hayne Palmour IV

San Diego County’s housing market is off to one of its slowest starts to peak buying season, which began in March.

Last month, 3,057 homes sold for a median $427,000, real estate tracker DataQuick reported Tuesday. That’s a boost in activity from February’s 2,541 sales at a median $410,000, but it was a nearly 20 percent drop from the sales in March 2013. Last month was also the slowest for a March since 2009, toward the end of the Great Recession. March is generally the month in which activity in the housing market picks up, as weather improves and some families plan to move during the summer.

DataQuick analyst Andrew LePage said there are a variety of reasons for this year’s slow start.

“The inventory of homes for sale remains thin in many markets. Investor purchases have fallen. The jump in home prices and mortgage rates over the past year has priced some people out of the market, while other would-be buyers struggle with credit hurdles,” LePage said in a statement, “Also, some potential move-up buyers are holding back while they weigh whether to abandon a phenomenally low interest rate on their current mortgage in order to buy a different home.”

Last month’s median $427,000 was still a 12.4 percent jump from March 2013’s $380,000 price tag, but the value gain continued an overall trend of slowing annual appreciation. In June, for instance, when the median was $416,500, home values were up 24.1 percent from a year earlier.

Norm Miller, a professor of real estate at the University of San Diego, said it’s expected that real estate appreciation would slow. He said, however, that the housing market is returning to normalcy due to a decline in bank-owned home sales. Foreclosure resales made up 5 percent of the homes sold in March, whereas in March 2011 they made up 33.2 percent of transactions.

“As you lower the distressed sales, it looks like sales volume is down, but the point is it’s not really down. It’s just that these distressed sales are down and regular sales are probably doing just fine,” said Miller, noting that the historical appreciation rate is two to three percent above the inflation rate.

Increasing mortgage rates may also be keeping prices from appreciating drastically. Rates for a 30-year-fixed mortgage rose to an average 4.34 percent in March, up from 3.57 percent a year earlier, according to Freddie Mac.

In March, there were 6,223 active listings in the county, up from 4,265 a year earlier, the San Diego Association of Realtors reports. By comparison, there were more than 12,000 listings in March 2011.

In Southern California, home sales hit their lowest levels for a March in six years. Los Angeles County home values are up 14.5 percent to a median $435,000, while Orange County prices are up 14.9 percent to a median $580,000.

Source: Jonathan Horn / UT San Diego / April 15, 2014
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