Thursday, February 25, 2010
Friday, February 19, 2010
Builder confidence in the market for newly built, single-family homes rose two points to 17 in February as favorable home buying conditions and signs of healing in the job market helped boost the National Association of Home Builders/Wells Fargo Housing Market Index.
Factors that have helped boost confidence include:
- Continued low interest rates
- Attractive home prices that appear to have stabilized in many markets
- The availability of the home buyer tax credit
- the improving employment market
Several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months, as well as asking builders to rate traffic of prospective buyers. Regionally, February’s HMI results were mixed. While the Midwest and South each registered two-point gains, to 13 and 19, respectively, the Northeast and West each registered one-point declines, to 19 and 14, respectively.
Tuesday, February 9, 2010
National vacancy rates in the fourth quarter 2009 were 2.7 percent for homeowner housing, not significantly different statistically from the fourth quarter 2008 rate (2.9 percent) or from the rate last quarter (2.6 percent), according to the Census Bureau.
The homeownership rate at 67.2 (+ 0.5) percent for the current quarter was not significantly different statistically from the fourth quarter 2008 rate (67.5 percent), but it was lower than last quarter’s rate (67.6 percent).
Targeting more specific areas:
- Principal cities vacancy rate of 3.1% exceeded the 2.5% vacancy rate of the surrounding suburbs.
- Q4 regional homeowner vacancy rate was lowest in the Northeast (1.9 percent).
- The South, Midwest and West vacancy rates were not statistically different from each other.
- The homeowner vacancy rates in the four regions were not statistically different from their respective rates last year.
Stabilized vacancies are a strong signal that housing may be balancing itself out. A stable inventory points is a sign of recovery in the U.S. housing market.
Monday, February 8, 2010
Results of the 18th annual survey conducted among the members of the Association of Foreign Investors in Real Estate, show a dramatic increase in the number of respondents identifying the U.S. as the country providing the best opportunity for real estate capital appreciation. The survey was conducted by the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business.
The survey was conducted in the fourth quarter of 2009 among the association’s nearly 200 members. Survey respondents own more than $842 billion of real estate globally, including $304 billion in the U.S., and invest primarily in mulit-family residential and office real estate. In this year’s survey:
- 51% of respondents identify the U.S. as providing the best opportunity for capital appreciation. This compares to 37% in 2008, 26% in 2007, and 23% in 2006. The last time respondents’ perceptions for U.S. real estate were this strong was in 2003, when the percentage once again reached 51%.
- The U.K. emerges as the second-best country for capital appreciation, receiving 30% of respondents’ votes.
- In third place, China receives 10% of respondents’ votes.
- Two thirds of respondents plan to increase their investment in the U.S. in 2010 compared to 2009.
Among U.S. cities representing the best investment opportunities, survey respondents firmly select Washington, D.C. and New York, receiving much stronger scores than third-place San Francisco. This year, Boston makes a significant climb into fourth place, and Los Angeles falls one spot into fifth place.
Friday, February 5, 2010
First American CoreLogic projects its LoanPerformance Home Price Index (HPI) to decline 0.23% in the winter, but increase 2.94% excluding distressed sales, by November 2010.
National home prices declined 5.7% year-over-year in November, according to First American. That’s an improvement from October’s year-over-year decline of 7.6%, but prices also declined 0.2% in November compared to October. Excluding distressed sales, prices declined 5.1% year-over-year in November, compared to a 5.7% decline in non-distressed sales prices in October. Including distressed transactions, the HPI has fallen 30.0% nationally through November from its peak in April 2006. Excluding distressed properties, the national HPI has fallen 21.8% from the same peak.
- Nevada experienced the worst year-over-year price decline at 22.5%, followed by Arizona (14.9%), Florida (13.7%), Michigan (12.6%) and Idaho (11%).
- Excluding distressed sales, the worst five states for year-over-year price declines were only slightly different. Nevada (19.7%) still holds the top spot, followed by Arizona (14.1%), Florida (12.3%), Michigan (10.6%) and West Virginia (9.6%).
- The markets with the largest year-over-year declines are all located in the Midwest and Great Lakes areas, led by Detroit (13.1%), Sault Ste. Marie (11.0%), Saginaw (9.7%) and Kalamazoo (7.8%).
- In the Sun Belt, prices are down the worst in Las Vegas (6.5%), followed by Phoenix (-3.3%), Reno (-3.3%) and Orlando (-2.5%).
For the 45 largest core based statistical areas (CBSAs), the HPI is projected to rise an average of 1% per market through November 2010.
Thursday, February 4, 2010
From Housing Zone:
According to a newly released 2010 report compiled by IHS Global Insight and PNC Financial Services, only 87 of 255 markets are in the overvalued category.
For the first time, no metros are extremely overvalued, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued. For the country as a whole, the housing market is now slightly undervalued. When all of the 330 metro areas are weighted by market value, the nation is 8.6% undervalued. When weighted by housing units, the nation is 10.1% undervalued.
The judgment is based on a comparison of median home prices, local interest rates, population densities and income, plus historic premiums or discounts. Here are the 10 most undervalued areas, according to the study:
- Las Vegas, -41.4 percent
- Vero Beach, Fla., -39.8 percent
- Merced, Calif., -37.7 percent
- Cape Coral, Fla., -36.8 percent
- Houma, La., -34.6 percent
- Port St. Lucie, Fla., -33.3 percent
- Warren, Mich., -32.3 percent
- Vallejo, Calif., -31.9 percent
- Modesto, Calif. -31.8 percent
- Stockton, Calif., -31.8 percent
Wednesday, February 3, 2010
Reduction levels of home prices reached a new low, real estate search site Trulia announced Tuesday. This month's survey marks the second month of declines in price-reduction levels. Of the site's single-family and condominium listings, just 21% that went on the market on or after Jan. 1 have experienced at least one price cut, the lowest share since the site started the survey in April 2009. The previous low was in December, at 22%. The data do not include foreclosures.
Accounting for the reduced reduction levels are historically low interest rates and tax credit incentives. The total amount slashed from homes fell 14%, to $21.2 billion, compared with $24.7 billion in December. Price-reduction hot spots and cool spots are emerging.
- The number of major U.S. cities with price-reduction levels at 30% or more dropped 50%, to seven, compared with 14 last month.
- Those with largest price reductions include Los Angeles: 46%; New York City and Jacksonville, Fla.: 36%; Memphis :34%; and Minneapolis and Honolulu: 33%.
- The South saw the lowest overall level of price reductions, at 20%.
- At 22%, the West, Midwest and Northeast experienced a slightly higher level of reductions.
Luxury houses priced at $2 million and up were hit with an average discount of 14%, compared with 10% in the nonluxury market. Luxury homes are less than 2% of all current listings on Trulia, but make up 26% of that total discount.
Monday, February 1, 2010
WHEN prices fall far enough, buyers will appear.
That seems to have been the story of the American housing market in 2009. The number of existing homes that changed hands in 2009 — 4.6 million — was up 5 percent from the previous year. It was the first annual increase since 2005.
But to accomplish that, prices had to be cut sharply. The median sales price was $173,200, compared with $196,600 in 2008.
Adjusted for inflation, that price was the lowest since 1997. As the accompanying chart shows, not since 2005 has the price of the median existing home risen in real dollars.
For those four years, the inflation-adjusted price has fallen 28 percent, something few homeowners thought possible before it happened. They were more used to the previous four years, when the median price outstripped inflation by a total of 27 percent.
The increase in sales was not only because of rising demand. Foreclosures forced many people out of homes, despite government efforts to get banks to restructure mortgages.
Sales of new homes continued to sink, even with help from a tax credit for new homebuyers. For the year, just 373,000 new single-family homes were sold, the lowest total since the government began keeping count in 1963.
That appears to have been caused, as much as anything, by the excess supply of such homes. It is taking a long time to work that off, and in some communities it may never be worked off, as foreclosures and partly built homes make some neighborhoods unattractive for all but the most desperate.
New-home sales have always been volatile, rising when the economy is strong and interest rates are low, and declining when one or both of those factors are absent. But those ups and downs tended to balance out.
Over every 10-year period from the 1960s to the late 1990s, annual sales of new homes averaged from about 540,000 homes to 650,000 homes. But after that, the figure began to climb steadily. The recession of 2001 hardly made a dent in sales, as the Federal Reserve slashed interest rates.
The 10-year average peaked in 2006 at 995,000 homes. Even after the disastrous performance in 2009, the 10-year figure is still over 900,000.
Prices of new homes have come down as well as those of existing homes, but not as rapidly. That, too, may have held sales back. Adjusted for inflation, the median price of a new home in 2009 was 18 percent below the 2005 figure, compared with the 28 percent drop for existing home prices.
The supply of completed but unsold new homes ended 2009 at 99,000. That is half the peak level reached in early 2008, but many of those homes no longer look new. On average, it has been more than 13 months since they were completed.
In the accompanying charts, there may be hope to be found from the early 1980s, when the plunge in sales was comparable to this one. When the economy finally picked up, home sales skyrocketed from pent-up demand.
Perhaps that will happen again. The big difference, however, is in prices. While inflation-adjusted prices declined during that downturn, high inflation meant that nominal prices did not. Unlike now, few homeowners owed more than their houses were worth. That is why some economists think a way must be found to reduce the amounts owed by some homeowners.