Month: May 2014

Mortgages are cheap, but shoppers aren’t splurging

MarketWatch is reporting something that we’ve been covering here at HousingWire — despite mortgage rates being at the lowest point in 2014, home shoppers aren’t buying.

Low mortgage rates have cut the cost of borrowing, driving down the interest that Americans pay on home loans to the slowest pace in almost 14 years. But that doesn’t mean that families are splurging. And despite a run-up in home prices over the past year, few are pulling cash out of their homes and credit-card debt is continuing to tumble.

Memories of the financial meltdown may be haunting some consumers, including those who have managed to refinance into cheaper loans. And then there’s the labor market, which is adding jobs too slowly to inspire much confidence in workers or to make a substantial dent in the share of long-term jobless workers .

Mortgage-interest payments dropped to a seasonally adjusted annual rate of $381 billion in the first quarter — the lowest tally since the third quarter of 2000, according to U.S. Commerce Department data. The first quarter’s rate was down 36% from a peak pace of $594 billion at the end of 2007.

California April Home Sales

May 14, 2014 
http://dqnewspressreleases.blogspot.com/2014/05/april-california-home-sales-press.html
An estimated 37,988 new and resale houses and condos sold statewide in April. That was up 15.4 percent from 32,923 in March, and down 2.7 percent from 39,051 sales in April 2013, according to San Diego-based DataQuick. 

The month-to-month sales gain was higher than usual. On average, sales have increased 2.9 percent between March and April since 1988, when DataQuick’s statistics begin. Sales have fallen on a year-over-year basis for seven consecutive months, but last month’s 2.7 percent dip from a year earlier was the smallest decline in that series. 

April sales have varied from a low of 27,625 in 1995 to a high of 71,638 in 2004. Last month’s sales were 13.1 percent below the average of 43,700 sales for all the months of April since 1988. 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 $383,000, up 1.9 percent from $376,000 in March and up 18.2 percent from $324,000 in April 2013. It was the highest since January 2008, when the median was also $383,000. Last month was the 26th consecutive month in which the state’s median sale price rose year-over-year. It was the first time in nearly a year-and-a-half that the median’s year-over-year gain was below 20 percent. 

In March/April/May 2007 the median peaked at $484,000. The post-peak trough was $221,000 in April 2009. 

Of the existing homes sold last month, 6.7 percent were properties that had been foreclosed on during the past year. That was down from a revised 7.2 percent in March and down from 13.5 percent a year earlier. 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 5.5 percent of the homes that resold last month. That was down from an estimated 7.0 percent the month before and down from 16.1 percent a year earlier. 

The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,523, up from $1,496 the month before and up from $1,157 a year earlier. Adjusted for inflation, last month’s payment was 34.8 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 47.1 percent below the current cycle’s peak in June 2006. It was 63.6 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 in March 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

Faster Pace for Southland Home Sales; Median Sale Price Edges Higher

May 13, 2014

http://dqnewspressreleases.blogspot.com/2014/05/april-southland-home-sale-press-release.html

La Jolla, CA—Southern California’s housing market perked up a bit in April, with sales rising more than usual from March and dipping below a year earlier by the smallest degree in six months. Home prices edged higher again but at a slower pace, the result of more inventory, affordability constraints and less pressure from investors, a real estate information service reported. 

A total of 20,008 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 13.4 percent from 17,638 sales in March, and down 6.6 percent from 21,415 sales in April last year, according to San Diego-based DataQuick. 

On average, sales have increased 1.4 percent between March and April since 1988, when DataQuick’s statistics begin. Southland sales have fallen on a year-over-year basis for seven consecutive months, but last month’s decline was the smallest since sales fell 4.4 percent last October. 

This April’s sales were higher than in April 2012 and 2011. That’s a significant change from February and March this year, which had the lowest home sales for those particular months in six years. Sales during the month of April have ranged from a low of 15,303 in 1995 to a high of 37,905 in 2004. Last month’s sales were 17.1 percent below the average – 24,133 – for all Aprils since 1988. March sales were 27 percent below average. 

“The housing market’s pulse quickened a bit in April. If the inventory grows more, which we consider likely, it’s going to make it a lot easier for sales to reach at least an average level, which we haven’t seen in more than seven years. There are certainly factors undermining housing demand, including affordability constraints, credit challenges and less investment activity. But there are considerable forces fueling demand, too: Employment is rising, families are growing, and more people can qualify to buy again after losing a home to foreclosure or a short sale over the past eight years,” said Andrew LePage, a DataQuick analyst. 

“There’s still pressure on home prices but it has moderated,” he said. “In April we logged the Southland’s lowest year-over-year gain in the median sale price – around 13 percent – since September 2012. In April last year the median rose 23 percent year-over-year. It’s tough to sustain that sort of price growth amid rising inventory, fewer investors, less-than-stellar income growth, higher mortgage rates and very limited availability of riskier ‘stretch’ financing.” 

The median price paid for all new and resale houses and condos sold in the six-county region last month was $404,000, up 1.0 percent from $400,000 in March and up 13.2 percent from $357,000 in April 2013. Last month’s median was the highest since it was $408,000 in February 2008. 

The median has risen on a year-over-year basis for 25 consecutive months. Those gains have been double-digit – between 10.8 percent and 28.3 percent – over the past 21 months. The 13.2 percent year-over-year gain in the median last month marked the lowest increase for any month since September 2012, when the $315,000 median rose 12.5 percent from a year earlier. Last month two counties – Orange and San Diego – saw single-digit, year-over-year gains in their medians. 

April’s Southland median sale price stood 20.0 percent below the peak $505,000 median in spring/summer 2007. 

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 in March by Irvine-based property information company CoreLogic. 

Home prices continue to rise at different rates depending on price segment. In April, the lowest-cost third of the region’s housing stock saw a 20.6 percent year-over-year increase in the median price paid per square foot for resale houses. The annual gain was 17.1 percent for the middle third of the market and 9.6 percent for the top, most-expensive third. 

Last month the number of homes that sold for $500,000 or more increased 9.3 percent from one year earlier, while $800,000-plus sales rose 5.8 percent. Sales below $500,000 fell 11.4 percent year-over year, while sales below $200,000 plunged 35.1 percent. 

In April, 35.1 percent of all Southland home sales were for $500,000 or more, down from a revised 35.6 percent the month before and up from 30.5 percent a year earlier. 

The market impact of distressed properties continued to wane. 

Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 5.9 percent of the Southland resale market in April. That was down from a revised 6.3 percent the prior month and down from 12.4 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009. 

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 5.4 percent of Southland resales last month. That was down from a revised 7.3 percent the prior month and down from 16.6 percent a year earlier. 

Absentee buyers – mostly investors and some second-home purchasers – bought 26.1 percent of the homes sold last month, which is the lowest share since November 2011, when 25.1 percent of homes sold to absentee buyers. Last month’s figure was down from 27.7 percent in March and down from 30.6 percent a year earlier. The peak was 32.4 percent in January 2013, while the monthly average since 2000, when the absentee data begin, is 18.7 percent. Last month’s absentee buyers paid a median $350,000, up 22.8 percent year-over-year. 

In April 4.8 percent of all Southland homes sold on the open market were flipped, meaning they had previously sold in the prior six months. That’s down from a flipping rate of 5.3 percent the prior month and it’s down from 6.0 percent a year earlier. The peak was 7.0 percent in February 2013. (The figures exclude homes resold after being purchased at public foreclosure auctions on the courthouse steps). 

Buyers paying cash last month accounted for 26.7 percent of Southland home sales, down from 29.8 percent the month before and down from 34.4 percent in April last year. The peak was 36.9 percent in February 2013. Since 1988 the monthly average for cash buyers is 16.5 percent of all sales. Cash buyers paid a median $380,000 last month, up 26.7 percent from a year earlier. 

In April, Southern California home buyers forked over a total of $4.48 billion of their own money in the form of down payments or cash purchases. That was up from a revised $4.35 billion in March and down from $4.91 billion a year earlier. The out-of-pocket total peaked last May at $5.41 billion. 

Credit conditions appear to have eased in recent months. 

In April 14.1 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs) – the highest share in six years and nearly double the ARM level of a year earlier. Last month’s figure was up from 13.2 percent in March and up from 7.9 percent in April 2013. The ARM rate dropped to as low as 1.9 percent in May 2009. Since 2000, a monthly average of about 31 percent of Southland purchase loans have been ARMs. 

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 29.3 percent of last month’s Southland purchase lending. That was down a hair from 29.7 percent in March, which had the highest jumbo level for any month since the credit crunch struck in August 2007. Last month’s figure was up from 26.1 percent a year earlier. Prior to August 2007 jumbos accounted for around 40 percent of the home loan market. The Southland jumbo level dropped to as low as 9.3 percent in January 2009. 

All lenders combined provided a total of $6.15 billion in mortgage money to Southern California home buyers in April, up from a revised $5.08 billion in March and up from $5.56 billion in April last year. 

The most active lenders to Southern California home buyers last month were Wells Fargo with 7.3 percent of the total home purchase loan market, JP Morgan Chase with 3.9 percent and Bank of America with 2.8 percent. 

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 18.8 percent of all purchase mortgages last month. That was up from 18.4 percent the month before and down from 21.7 percent a year earlier. In recent months the FHA share has been the lowest since early 2008, mainly because of tighter FHA qualifying standards and the difficulties first-time buyers have competing with investors and cash buyers. 

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,607, up from $1,591 the month before and up from $1,275 a year earlier. Adjusted for inflation, last month’s typical payment was 34.1 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 46.0 percent below the current cycle’s peak in July 2007. 

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported. 

To view the county-by-county chart, visit DQNews.com.

Freddie Mac: Rates fall to lowest level in 2014

http://www.housingwire.com/articles/29950-freddie-mac-rates-fall-to-lowest-level-in-2014

Weak economic growth keeps rates down

Mortgage rates fell once again and this time to the lowest level since Nov. 7, 2013, as the economic growth for the first quarter came in well below market expectations.

The latest Freddie Mac Primary Mortgage Market Survey recorded an average 30-year, fixed-rate mortgage of 4.21% for the week ending May 8, continuing to fall from 4.29% a week ago, but up from 3.42% a year earlier.

The 15-year FRM fell to 3.32%, compared to 3.38% a week ago and 2.61% in 2013.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage remained frozen at 3.05%, but up from 2.58% last year.

The 1-year Treasury-indexed ARM declined to 2.43% this week, compared to 2.45% last week and 2.44% for the same period in 2013.

“Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter,” Frank Nothaft, vice president and chief economist with Freddie Mac, said.

“Meanwhile, the economy added 288,000 jobs in April, the largest since January 2012, and followed an upward revision of 36,000 jobs for the prior two months. Also, the unemployment rate fell to 6.3%.”

Meanwhile, Bankrate posted a drop in mortgage rates too, with the 30-year, FRM decreasing to 4.37% from 4.44%.

The 15-year, FRM fell to 3.45%, rising from 3.51% last week, while the 5/1 ARM dipped to 3.34% from 3.35% a week prior.

3 reasons right now is the best time to buy a home

http://www.housingwire.com/articles/29958-reasons-right-now-is-the-best-time-to-buy-a-home?page=4

The advantage is on the buyer side

There has never been a better time to buy a home this year.

And yet despite three major advantages for homebuyers, sales so far have been slow.

Buying is cheaper than renting in most markets. And withmortgage activity down, originators, one would think, would be bending over backwards for applicants.

More people want to be homeowners, even younger buyers. A recent Fannie Mae survey of younger renters and buyers finds that though most younger renters prefer owning, many of them may stay renters longer due to insufficient financial capability and/or preparation. They don’t want to be renters – 90% would prefer to be homeowners.

Additionally, according to the latest quarterly report from the Federal Housing Finance Agency, both Fannie Mae and Freddie Mac are reducing the money set aside to cushion any blow to their business, making it fair to say this is the result of the government-sponsored enterprises betting on a continued housing recovery.

There are three reasons this may be the best time to buy a home.

1) Mortgage rates are at six-month lows

Mortgage rates in the first week of May fell once again and this time to the lowest level since Nov. 7, 2013.

The latest Freddie Mac Primary Mortgage Market Survey recorded an average 30-year, fixed-rate mortgage of 4.21% for the week ending May 8, continuing to fall from 4.29% a week ago, but up from 3.42% a year earlier.

“Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter,” Frank Nothaft, vice president and chief economist with Freddie Mac, said.

May 9

Source: Freddie Mac

2) Home price growth is slowing

According to CoreLogic’s (CLGX) March HPI index, home prices rose year-over-year for 25 months straight in March.

Also, existing home inventory is increasing. Home prices nationwide, including distressed sales, grew 11.1% in March from one year prior.

This is not too far off the February 12.2%January 12% and December 11% rise over the past three months, respectively.

Looking ahead, the CoreLogic HPI forecast indicates that home prices, including distressed sales, are projected to increase 0.8% month over month from March 2014 to April 2014 and by 6.7% from March 2014 to March 2015.

2

Source: CoreLogic

 

3) Most housing markets have recovered

Fifty-nine metros have fully recovered from the last housing market crash, and 300 saw year-over-year gains, according to an index of markets put together by the National Association of Home Builders/First American.

The nationwide economic score rose slightly to 0.88 from a revised April reading of 0.87.

This means that based on current permit, price and employment data, the nationwide average is running at 88% of normal economic and housing activity. The index showed an overall reading of 0.82 a year ago.
“Our builder members tell us they are starting to see more optimism in the field,” said NAHB chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “Mortgage rates are low, home prices are affordable and with the harsh winter behind us our latest surveys show builders are feeling more bullish about future sales conditions.”

Credit and affordability issues remain, but this may be the best time for the buyer who is on the fence.

pie chart

3 keys to understanding the housing market right now

Where the best deals in challenging market can be found and why

Prices should stabilize this year, the best deals are in the mid-tier and it’s a weak start for homebuying, according to the Clear Capital Home Data Index market report for May.

Clear Capital’s report is among the most granular home data, and its analysis comes out earlier than nearly any other index provider in housing.

“Very interesting dynamics are at play as we head into spring. Though our April data suggests the spring buying season is off to a slow start, we aren’t concerned about the sustainability of the recovery,” said Alex Villacorta, vice president of research and analytics at Clear Capital. “To be clear, there are lots of adjustments taking place in housing markets across the country.”

He said that everything from lender regulation, consumer confidence, investors tapering purchases, local economics, and rising home prices have forced participants to continually adjust to a market that has been anything but stable.

“Generally speaking, we see price growth stabilizing throughout 2014, which should help boost the confidence and purchase activity from buyers on the fence. Looking at home price trends by tier, it’s apparent the impact of investor activity has been concentrated in the low price tier segment. Conversely, the segment of the market that represents the middle 50% of all transactions is still more than 30% off peak values.

He said that this suggests that there is good price growth potential and could motivate enough buyers to sustain an overall rate of home price growth consistent with historical norms.

“The days of double digit price gains are behind us, and the market will continue to calibrate to the new reality of annual growth rates between 3% and 5%. A strong spring buying season might be a casualty of the major adjustments underway, but it’s no reason to ring the alarm bells quite yet,” Villacorta said.

The three takeaways?

1) Best deals move from low-tier to mid-tier

Following more than two years of recovery, the mid-tier price sector now offers home buyers the best deals, relative to peak values. After 32.3% growth from the trough in 2011, low-tier deals appear to be played out compared to mid-tier deals (homes selling between $95,000 and $310,000 nationally), with prices still 30.6% off peak values. The strong rebound in the low-tier price sector left homes, on average, just 21.5% below peak values. Top tier homes are just 18.2% off peak values.

2) Weak start can mean stability

Early signs show the spring buying season is off to a tepid start in April. We observe quarterly rates of growth for the nation and three of the four regions virtually unchanged over last month. Stability in this new moderating pattern, back toward historical norms of 3%-5% annually, will help restore first time and owner occupant buyers’ confidence in the market.

3) Real estate is local again.

Yes, moderating price trends are converging toward one another (with just a one percentage point spread in quarterly rates of growth for the top performing 15 MSAs). But underlying drivers, like distressed sale saturation and local job markets, remain drastically different. Between Chicago’s 39.7% and San Jose’s 7.9%, the spread in distressed saturation within the top 15 performing MSAs is nearly 32 percentage points.

Chicago will likely see more demand from investors looking for great deals on distressed sales (with median prices around $160,000), while higher priced markets like San Jose (with median prices around $650,000), supported by a relatively healthy local economy, may see stronger appetites from owner occupied buyers.