New Construction Led Increase at 24 Percent Year Over Year
Home sales increased by 10 percent year over year in March 2014 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 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.
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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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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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Share of underwaters continues slow decline
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
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