Posts Tagged “market conditions”
 The rate of homeownership in America is back down to levels not seen since 1998, according to Census data released Wednesday.
The homeownership rate in the first quarter of 2011 fell to 66.4 percent, down a tick from 66.5 percent in Q4 of 2010. It marks the lowest rate of homeownership since the last quarter of 1998.
After riding the crest of the housing boom through the mid-2000s, the rate of homeownership peaked in the first quarter of 2005, at 69.1 percent. With a few exceptions, prompted in part by federal stimulus programs such as the home buyer tax credit, the rate has since steadily declined.
Meanwhile, the U.S. home vacancy rate, which measures the proportion of empty homes for sale, dropped to 2.6 percent in Q1 of this year, down from 2.7 percent in Q4 2010. The rate remains statistically unchanged, however, from the year-ago period. Part of the reason for the holding pattern in home vacancy rates is the ongoing investigation of major lenders in connection with faulty foreclosure proceedings.
The rental vacancy rate increased to 9.7 percent, up from 9.4 percent from Q4 2010. This time last year, the rental vacancy rate was higher, at 10.6 percent.
As of the latest data, the total U.S. housing inventory was an estimated 131 million units with 112 million occupied properties.
Source: realestate.aol.com
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April 2011 Market Update
Gradual and uneven progress in the housing market continues without government support. The market has shown remarkable improvement from the initial drop after the expiration of the home buyer tax credit this past July. Although higher-than-normal distressed sales skew the overall picture of home prices downward, inventory remains at pretax credit expiration levels. The rock-bottom interest rates of 2010 are likely to trend upward. As economists anticipate rates at or above 6% by the end of 2012, buyers are moving off the sidelines and into the market.
Recent reports suggest the economy is picking up steam even though it is not yet fully reflected in the job market. In terms of economic growth, America outpaces all the other G7 nations except Canada. However, when it comes to adding back jobs, America is the weakest. During the recession, businesses looked for ways to increase efficiency and productivity. U.S. productivity, or output per worker, doubled in both of the past two years. A full housing recovery depends on growing employment. Without jobs, most Americans cannot buy new homes or afford their current ones. As the economy continues to pick up steam, employment will likely follow suit as there is a limited amount of productivity workers can provide.
While the economy improves, stimulus efforts by the government and the Federal Reserve Board will gradually wind down, which typically spurs rising interest rates. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers are encouraged by increased market stability.
Home Sales
in millions
Although home sales have fallen 9.6% compared to the previous month, they remain close to last year’s levels, showing only a 2.8% decline. The unseasonably cold weather across much of the country during late January and February could have kept buyers indoors more so than normal. Gradual improvement with bumps along the way has long been the anticipated road to full recovery. In fact, home sales remain 26.4% above the low last July. As Lawrence Yun, chief economist of the National Association of Realtors, explains “month-to-month movements can be instructive, but in this uneven recovery, it’s important to look at the long-term performance.”
Home Price
in thousands
Home prices continued to soften in January with median home prices decreasing to $156,100. This is 5.2% below the year-ago level and brings the median price close to February 2002 levels. Two out of every five homes sold during February, or 40% of sales, were distressed properties. Distressed sales often sell for 10%‒20% less than traditional home sales. The decline in home prices is less reflective of the value of individual homes and more reflective of the bargains that a record level of all cash buyers and investors are snapping up. Prices and mortgage rates remain favorable for buyers as the spring selling season starts.
Inventory- Month’s Supply
in months
The slowing of home sales and an increase in listings pushed the months’ supply up to 8.6 months, an increase of 15% from the previous month and 2% year over year. This is the third-lowest level since June. Months of inventory remains 31% below its peak of 12.5 months in July and is now back to pretax credit expiration levels. With the summer selling season approaching quickly, experts anticipate more homes to go on the market in the coming months.
Source: National Association of Realtors – housing data released Mar 21.
Interest Rates
Throughout the month, rates hovered in the 4.8%‒4.9% range. After rising above 5% for the first time in about ten months in early February, rates have come back below but are expected to follow an upward trend throughout the year. As overall economic recovery remains on track, rates will likely rise to keep inflation in check. Buyers wanting to capture the savings in monthly payments that a historically low interest rate affords are expected to take advantage of excellent buying conditions.
This Month’s Video
Topics For Home Owners, Buyers & Sellers
When first-time home buyers decide they are ready to buy, it is essential for them to begin the process by carefully assessing their values, wants, and needs—both for the short and for the long term. This is a critical step since consultation sessions normally start with the buyers’ values. Afterward, buyers can explore their wants and needs, and once defined, determine actual criteria.
A recent study shows how important the following home-buying factors were to buyers:
- List Price: 72%
- Location: 69%
- Neighborhood: 55%
- Floor Plan: 37%
- Square Footage: 28%
- Schools: 22%
By having the home-buying criteria in mind before walking into a consultation, buyers are off to a better start when meeting with their real estate agent. The consultation allows buyers to fill in any missing gaps within their values, wants, and needs.
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The U.S. economy is growing and employment should soon pick up steam, but housing will continue to lag behind other sectors, economists at the UCLA Anderson Forecast said in their latest report.
“Housing continues to wallow in its modern-day depression as low interest rates are being more than canceled by the glut of new product created during the bubble years of 2004-2007, the tidal wave of foreclosures, and increased credit standards being imposed by lenders,” said UCLA Anderson Forecast Senior Economist David Shulman in his forecast.
Although housing prices are down 30 percent, that would-be incentive to buyers has been offset by increased down-payment requirements, Shulman said.
Fears of “a further ratcheting down in prices, along with the shock of witnessing an unprecedented collapse in price structure, has kept buyers out of the market. Put simply, the investment value of homeownership has declined. Furthermore, the usual factors associated with housing weakness … tepid job growth and high unemployment, are suppressing demand.”
The Anderson Forecast calls for only a “modest” recovery in housing starts, which are expected to grow 12 percent this year, to 658,000. Housing starts peaked at 2.1 million in 2005, and bottomed at 554,000 in 2009.
Once the employment situation improves, housing starts should break the 1 million mark in 2012 and approach 1.5 million in 2013, with pent-up demand offsetting an expected rise in mortgage rates, the forecast said.
Read Full article at inman.com
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Statistics published by the National Association of Realtors appear to overstate sales of existing homes by 15 to 20 percent, mortgage and property data aggregator CoreLogic says in a new report that concludes home sales fell more sharply last year than previously thought.
A NAR spokesman said the CoreLogic claim “is premature at best,” and NAR will be making some benchmark revisions to its historic sales data later this year.
NAR’s figures — based on data collected from multiple listing services and large brokerages — show sales of existing homes fell 5 percent in 2010, to 4.9 million. But CoreLogic, which collects public sales records from county recorders and courts, estimates that home sales actually fell 12 percent, to 3.6 million.
The implications are not trivial: A slower rate of sales means that it will take longer to burn through unsold inventory, and a glut of homes for sale in a given market can undermine prices. CoreLogic says the unsold inventory on the market in November represented 16 months of supply, compared with NAR’s estimate of 9.5 months.
Weak sales following the expiration of the federal homebuyer tax credits, an excess supply of unsold homes, and the impact of sales of distressed homes is driving home prices down, CoreLogic said. A national, repeat-sales home-price index compiled by the company was down 5.1 percent in November from a year ago.
If that trend continues, national home prices will probably be down 10 percent year-over-year by spring, CoreLogic said.
Read the full article at www.inman.com by: Matt Carter
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SAN FRANCISCO, January 24, 2011 – Trulia.com (www.trulia.com), a top site for homebuyers, sellers and renters, today released its latest Rent vs. Buy Index which found that it is more affordable to buy than to rent a two-bedroom home[1] in 72 percent of America’s 50 largest cities[2]. Meanwhile, a nation of renters has emerged as more Americans rent by choice or due to unforeseen financial difficulties. In contrast to this nationwide trend, renting is only less expensive than buying in four of the cities included in this study – namely New York, Seattle, Kansas City and San Francisco. The remaining 10 cities are locations where buying may still be a financially sound long-term decision despite the relative affordability of renting.
“Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets,” said Pete Flint, CEO and co-founder of Trulia. “Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term. Even highly-qualified homebuyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan.”
Cities overwhelmed by foreclosure filings and unemployment, including many cities in Florida, Arizona, Nevada and central California, typically correspond to more affordable markets for prospective buyers; however, there are exceptions. Oakland and Los Angeles, which are experiencing similar rates of unemployment or foreclosure filings as Phoenix, Miami and Sacramento, are still more affordable to renters. Moreover, close proximity to economic centers with promising job growth projections has propped up both the demand for homes and costs of home homeownership in Oakland and Los Angeles.
“Although owning a home is relatively more affordable in most cities, market conditions have caused an interesting demographic swap between traditional renters and buyers,” said Tara-Nicholle Nelson, Consumer Educator for Trulia. “For example, lifelong renters are seizing the opportunity to become homeowners while affordability is high. At the same time, a growing number of long-time homeowners are finding themselves tenants – some by choice and others by necessity.”
- For an infographic illustrating the above findings, click here.
- For a full list of Rent vs. Buy Index rankings for the 50 largest U.S. cities, click here.
- For an interactive map of the Rent vs. Buy Index, click here.
- For a list of consumer-oriented tips on the top 5 hidden costs of renting and buying a home, click here.
Source Trulia.com
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