Month: June 2014

Housing inventory jumps 11.8% but first-time buyers still locked out

Affordable home inventory shrinking further

After plunging throughout 2012 and for much of 2013, and rising only modestly through the beginning of this year, the inventory of all for-sale homes nationwide spiked in May, jumping 11.8% year-over-year according to Zillow(Z).

But most of those gains in inventory were made among homes priced in the middle and top one-third of home values, according to Zillow Real Estate Market Reports.

The number of homes available for sale in the most affordable price bracket, those homes most sought by first-time homebuyers, fell year-over-year in 28 of the nation’s largest metro areas analyzed by Zillow.

“It’s good to see overall inventory rising. It’s likely that many would-be sellers have decided to capitalize on recent home value gains, particularly as the pace slows, and list their home for sale now in order to move into a new home while mortgage interest rates remain low,” said Zillow chief economist Stan Humphries. “But persistent inventory constraints at the low end of the market continue to make it a tough environment for first-time and lower-income homebuyers. Low inventory and high demand can lead to rapid price spikes, which make homes even more difficult to afford for many buyers. Hopefully the inventory gains we’re seeing in the middle and upper tiers of the market will begin trickling down to the most affordable homes soon.”

The total number of homes listed for sale on Zillow in May was up 4.3% over April, and has risen month-over-month in each of the past three months on a seasonally adjusted basis.

Here’s a look at the breakdown by city. Click the image below to see the chart.

Overall inventory of for-sale homes was up year-over-year in 506 (78%) of the more than 600 metro areas analyzed by Zillow. Large metros where inventory has increased the most include Las Vegas (up 51.5% year-over-year), Washington, DC (up 45.7% year-over-year) and Riverside, Calif. (up 42.7% year-over-year).

In addition to low numbers of affordable homes for sale, first-time and lower-income homebuyers armed with traditional financing are also competing with all-cash buyers at the lower end of the market. Zillow reported last week that in 27 of the top 30 metros analyzed by Zillow, more than one third of all sales of the lowest-priced homes were made with cash. In three of the top 30 metros – Tampa, Detroit and Miami – more than 80% of all sales in the lowest price bracket were cash deals.

National home values in May were up 0.1% from April to a Zillow Home Value Index of $172,300, and have now risen for 28 consecutive months.

Year-over-year, U.S. home values rose 5.4% in May, the slowest annual pace of appreciation in more than a year. For the 12-month period from May 2014 to May 2015, national home values are expected to rise another 2.9% to approximately $177,321, according to the Zillow Home Value Forecast.

 

Existing home sales surge 4.9% in May

Is this the light at the end of the tunnel?

In April, existing home sales rose for the first time in 2014.  The rise was a modest 1.3% increase over March’s figures but it still led to headlines like, “Has spring buying season finally arrived?

As it turns out, that headline may just have been prophetic. That’s because May’s existing home sales were even better than April’s. According to newly released data from theNational Association of Realtors, May’s existing home sales rose by nearly 5% over April’s numbers. May’s month-over-month gain of 4.9% was the highest monthly rise since August 2011.

The total existing homes sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, rose to a seasonally adjusted rate of 4.89 million in May. That’s up from the upwardly revised figure of 4.66 million for April. But it’s still 5.5% below May 2013’s total of 5.15 million.

“Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,” said Lawrence Yun, NAR’s chief economist. “Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.”

NAR’s report also showed that total housing inventory rose 2.2% in May to 2.28 million existing homes available for sale. That represents a 5.6-month supply at the current pace of sales, which is down slightly from 5.7 months in April.

Unsold inventory is 6% higher than it was a year ago, when there were 2.15 million existing homes available for sale.

And the homes that are on the market are priced higher than they were last year. May’s median existing home price for all types of housing was 5.1% above May 2013.

“Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market,” Yun said. “Therefore, new home construction is still needed to keep prices and housing supply healthy in the long run.”

NAR also reported that the share of first-time buyers continued to “underperform.” First-time buyers made up less than one-third (27%) of all buyers in May. That’s down from 29% in April.

Perhaps that’s because the number of homes available in the most affordable price bracketfell year-over-year, according to a report from Zillow (Z).

“Many potential buyers were left on the sidelines beginning last summer as affordability declined amidst rising home prices and interest rates,” NAR’s president Steve Brown said. “The temporary pause in rising interest rates and more homes for sale is good news – especially for first-time home buyers – who likely have a better chance in upcoming months to make a competitive offer that’s in return accepted by the seller.”

Brown’s positive view is not shared by Lindsey Piegza, chief economist at Sterne Agee. Piegza suggests that the rise in home prices is going to continue to prevent 2014’s home sales figures from reaching 2013’s levels.
Going forward, rising home prices will continue to exclude many potential homebuyers from entering the market against the backdrop of lackluster income growth and still tepid full-time, high-wage job creation,” Piegza said. “Warmer weather alone is not enough to restore housing market activity — consumers must have an organic ability to finance and afford such a large purchase.”

 

Bay Area Home Sales Constrained by Supply; Prices Continue to Rise

June 12, 2014

http://dqnewspressreleases.blogspot.com/2014/06/may-bay-area-home-sale-press-release.html

La Jolla, CA.—-Bay Area home sales remained below long-term norms in May as potential buyers continued to struggle with a limited inventory, prices near or beyond pre-recession highs, and a home loan environment that, while improved, remains fussy, a real estate information service reported.

A total of 7,898 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 4.5 percent from 7,555 in April and down 7.5 percent from 8,541 in May last year, according to San Diego-based DataQuick.

Bay Area sales almost always increase from April to May. On average they have risen about 7.2 percent between those two months since 1988, when DataQuick’s statistics begin. May sales have ranged from a low of 6,216 in 2008 to a high of 13,567 in 2004. Last month’s sales were 17.4 percent below the May average of 9,558 sales since 1988. Bay Area sales haven’t been above average for any particular month in more than eight years.

“Virtually all the technical indicators are pointing in the direction of more market normalization. We are surprised that the rates of change in that direction remain so pitifully incremental. Right now we’re keeping an eye on prices. While some of the Bay Area counties have already re-reached or passed their pre-recession price peaks, the region as a whole is on pace to reach that point later this summer,” said John Karevoll, DataQuick analyst.

The median price paid for a home in the nine-county Bay Area rose last month to $617,000, the highest since it was $629,000 in November 2007. Last month’s median increased 1.1 percent from $610,000 in April, and rose 18.9 percent from $519,000 in May last year. On a year-over-year basis, the median has increased the last 26 months, with gains as high as 33.5 percent (last July).

The Bay Area’s median peaked at $665,000 in June and July 2007, then dropped to a low of $290,000 in March 2009.

The number of homes sold for less than $500,000 dropped 26.1 percent year-over-year, while the number that sold for more was up 3.3 percent.

A variety of market indicators are trending incrementally toward long-term norms.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, are slowly regaining their foothold in the market. ARMs accounted for 28.8 percent of the Bay Area’s home purchase loans in May, up from a revised 28.5 percent in April, and well up from the 14.1 percent in May last year. Last month’s ARM use was the highest since it was 30.9 percent of all loans in April 2008. ARMs hit a low of 3.0 percent of loans in January 2009. Since 2000, ARMs have accounted for 47.0 percent of all Bay Area purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 56.6 percent of last month’s purchase lending, down slightly from a revised 56.9 percent in April, and up from 49.8 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 9.7 percent of all Bay Area home purchase mortgages in May, down from 9.8 percent in April and 9.9 percent a year earlier.

DataQuick was acquired in March by Irvine-based property information company CoreLogic. DataQuick provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda, San Francisco and San Mateo counties.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 3.1 percent of all resales, down from a revised 3.6 percent the month before, and down from 6.5 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is 9.8 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 4.7 percent of Bay Area resales last month. That was up from an estimated 4.2 percent in April and down from 10.4 percent a year earlier.

Bay Area home buyers put $2.49 billion of their own money on the table last month in the form of a down payment or as an outright cash purchase. That number hit an all-time high of $2.64 billion in May a year ago. Home buyers borrowed $3.51 billion in mortgage money from lenders last month.

The most active lenders to Bay Area home buyers in May were Wells Fargo with 14.1 percent of the purchase loan market, Bank of America with 4.4 percent and RPM Mortgage with 3.7 percent, DataQuick reported.

Last month absentee buyers – mostly investors – purchased 20.5 percent of all Bay Area homes. That was up a hair from April’s revised 20.4 percent and down from 22.4 percent for May a year ago.

Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for 22.9 percent of sales in May, down from a revised 24.6 percent in April and down from 27.6 percent a year earlier.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,411. Adjusted for inflation, last month’s payment was 16.7 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 38.5 percent below the current cycle’s peak in July 2007. It was 88.5 percent above the February 2012 bottom of the current cycle.

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, please visit DQNews.com.

California May Home Sales

June 12, 2014

http://dqnewspressreleases.blogspot.com/2014/06/may-california-home-sale-press-release.html

An estimated 37,734 new and resale houses and condos sold statewide in May. That was down 0.7 percent from 37,988 in April, and down 14.4 percent from 44,087 sales in May 2013, according to San Diego-based DataQuick.

May sales have varied from a low of 32,223 in 1995 to a high of 67,958 in 2004. Last month’s sales were 18.3 percent below the average of 46,214 sales for all the months of May 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 $386,000, up 0.8 percent from $383,000 in April and up 13.5 percent from $340,000 in May 2013. Last month’s median was the highest since December 2007, when it was $402,000. This May marked the 27th consecutive month in which the state’s median sale price has risen year-over-year.

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, 6.0 percent were properties that had been foreclosed on during the past year. That was down from a revised 6.6 percent in April and down from 11.3 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 6.9 percent of the homes that resold last month. That was up from an estimated 6.3 percent the month before and down from 15.0 percent a year earlier.

The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,508, down from $1,523 the month before and up from $1,227 a year earlier. Adjusted for inflation, last month’s payment was 35.8 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 47.9 percent below the current cycle’s peak in June 2006. It was 61.1 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 six years. Financing with multiple mortgages is low, while down payment sizes are stable, DataQuick reported.

Source: DataQuick; DQNews.com

Southland Home Sales Slow; Median Price Rises Again but at Slower Pace

June 11, 2014
http://dqnewspressreleases.blogspot.com/2014/06/may-southland-home-sale-press-release.html
La Jolla, CA—Southern California home sales lost momentum in May, falling from both April and a year earlier as investor demand fell and buyers continued to face inventory, affordability and credit constraints. Prices climbed again but at roughly half the year-ago pace, a real estate information service reported.

A total of 19,556 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 2.3 percent from 20,008 sales in April, and down 15.1 percent from 23,034 sales in May last year, according to San Diego-based DataQuick.

On average, sales have increased 5.8 percent between April and May since 1988, when DataQuick’s statistics begin. Sales have fallen on a year-over-year basis for eight consecutive months. May sales have ranged from a low of 16,917 in May 2008 to a high of 35,557 in May 2005. Last month’s sales were 23.0 percent below the May average of 25,393 sales.

“We expected rising prices to unlock more inventory this spring and that’s happened. But the supply of homes for sale still falls short of demand in many markets, contributing to a rise in prices and a below-average sales pace. The drop in affordability has also hampered activity, helping to explain how sales could be lower now even though today’s inventory is higher than a year ago. The recent dip in mortgage rates will help fuel demand, adding pressure to home prices. But the sort of price spikes we saw this time last year – annual gains of 20 percent or more – are less likely today given affordability constraints, higher inventory and the drop-off in investor purchases,” said Andrew LePage, a DataQuick analyst.

The median price paid for all new and resale houses and condos sold in the six-county region last month was $410,000, up 1.5 percent from $404,000 in April and up 11.4 percent from $368,000 in May 2013. Last month’s median was the highest since it was $415,000 in January 2008.

Prices are rising at a substantially slower pace than a year ago. In May 2013 the $368,000 median sale price was up 3.1 percent from the prior month and up 24.7 percent from May 2012.

The Southland median has risen on a year-over-year basis for 26 consecutive months. Those gains have been double-digit – between 10.8 percent and 28.3 percent – over the past 22 months. The 11.4 percent year-over-year increase in the median last month marked the lowest gain for any month since August 2012, when the $309,000 median rose 10.8 percent year-over-year. Last month three Southland counties – Los Angeles, San Diego and Ventura – saw single-digit, year-over-year gains in their medians.

May’s median sale price stood 18.8 percent below Southern California’s 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 May, the lowest-cost third of the region’s housing stock saw a 16.7 percent year-over-year increase in the median price paid per square foot for resale houses. The annual gain was 11.9 percent for the middle third of the market and 9.3 percent for the top, most-expensive third.

Last month the number of homes that sold for $500,000 or more fell 10.5 percent from one year earlier, while $800,000-plus sales fell 13.1 percent. Sales below $500,000 fell 27.6 percent year-over year, while sales below $200,000 tumbled 46.4 percent.

In May, 36.7 percent of all Southland home sales were for $500,000 or more, which was the highest level since it was 38.3 percent in December 2007. Last month’s 36.7 percent was up from a revised 35.9 percent the month before and up from 31.9 percent a year earlier.

The impact of distressed properties on the market continues to fade.

Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 5.0 percent of the Southland resale market in May. That was down from a revised 5.8 percent the prior month and down from 10.9 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 6.6 percent of Southland resales last month. That was up slightly from a revised 6.2 percent the prior month and down from 15.7 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 25.0 percent of the Southland homes sold last month, which is the lowest share since September 2011, when 24.6 percent of homes sold to absentee buyers. Last month’s figure was down from 26.7 percent in April and down from 29.5 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 about 19 percent.

Buyers paying cash last month accounted for 25.8 percent of Southland home sales, down from 27.6 percent the month before and down from 32.6 percent in May last year. The peak was 36.9 percent in February 2013. Since 1988 the monthly average for cash buyers is 16.6 percent of all sales.

In May, Southern California home buyers forked over a total of $4.49 billion of their own money in the form of down payments or cash purchases. That was down from a revised $4.77 billion in April. The out-of-pocket total peaked last May at $5.41 billion.

Credit conditions have eased over the past year.

In May, 14.8 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs) – the highest share in more than six years and nearly double the ARM level of a year earlier. Last month’s figure was up from 14.1 percent in April and up from 8.0 percent in May 2013. ARM use dropped to as low as 1.9 percent of all purchase loans 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 31.4 percent of last month’s Southland purchase lending – the highest jumbo level for any month since the credit crunch struck in August 2007. Last month’s figure was up from 29.3 percent in April and 27.7 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 $6.04 billion in mortgage money to Southern California home buyers in May, down from a revised $6.43 billion in April and down from $6.37 billion in May last year.

The most active lenders to Southern California home buyers last month were Wells Fargo with 6.9 percent of the total home purchase loan market, Bank of America with 3.1 percent and Stearns Lending with 2.3 percent.

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 18.7 percent of all purchase mortgages last month. That was down a tad from 18.8 percent the month before and down from 20.7 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 $1,602, down a hair from $1,612 the month before and up from $1,353 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 statistics, please visit DQNews.com.

This chart shows how to build a down payment fast

A down payment is one of the first hurdles borrowers have to tackle when they are trying to buy a home, but there is just one giant problem: they have no savings.

A survey by NeighborWorks America in April found that almost 70 million working age Americans – about one-third – have no emergency savings, and 25% only have enough saved to cover 30 days of living expenses.

About one in five have enough savings to cover three months – about the average time of unemployment for many Americans – while 28 % expect their emergency funds to cover a year.

But saving might not be as hard as people think.

Trulia (TRLA) outlined simple, but feasible, ways people can save over $10,000 in as little as three years if they just cut back in various areas.

For example, on average Starbucks can cost $730 a year. But if you swap Starbucks for brewing coffee at home, people would only be spending $138 a year. This alone would save $1,776 over three years.

And this same situation can be applied to so many other areas.

saving

(source Trulia: click for larger image)

Largest mortgage financier: The great home recovery reversal

Fannie Mae survey shows housing recovery petering out

Housing has peaked and 2014 will show a slowdown from the amount of housing activity in 2013, Fannie Mae’s May 2014 National Housing Survey shows.

Respondents to the annual survey say that economic concerns and stagnant household income are dragging down housing. The results show that in the space of just one month, attitudes toward housing can shift dramatically.

The share of 1,000 respondents who still believe the economy is headed in the wrong direction remained at 57% last month, and those who said their household income is significantly higher than it was at the same time last year decreased four percentage points to 21%.

Housing activity in 2014 has been well below typical seasonal trends.

“Consumers’ lukewarm income expectations and reticence about the economy seem to be holding back housing demand,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “This year’s spring and summer home buying season has gotten off to a slow start, even as mortgage rates have trended lower over the past two months.”

He added that while recent housing activity suggests that the worst of the housing slump may be behind America, this caution among consumers means sales this year will likely be too weak to pull sales for all of 2014 ahead of last year.

The survey findings track with real world indicators that support the conclusions by Fannie Mae: The housing market has serious cracks in the foundation – existing home sales have stalled out, pending home sales have plunged, price increases have slowed, and construction is slowing.

It’s a 180 degree turn from the last National Housing Survey, which was considerably more positive.

For the April survey, Duncan said, “consumer attitudes about the current home selling environment have improved and now are at the most favorable level we’ve seen in the survey’s four-year history.”

Here are some of the key survey findings from the May report.

Homeownership and Renting

  • The average 12-month home price change expectation remained unchanged from last month, at 2.9%
  • The share of respondents who say home prices will go up in the next 12 months fell to 48% and the share who say home prices will go down increased to 7%
  • The share of respondents who say mortgage rates will go up in the next 12 months continued on a downward trend, dropping to 49%
  • Those who say it is a good time to buy a house fell slightly to 68% and those who say it is a good time to sell a house increased to 43% a new all-time survey high.
  • The average 12-month rental price change expectation decreased slightly to 3.9%
  • 51% of those surveyed said home rental prices will go up in the next 12 months, while 3%of respondents said home prices will go down.
  • 49% of respondents thought it would be easy for them to get a home mortgage today, rising 4 percentage points from last month.
  • The share who say they would buy if they were going to move increased slightly to 66%.

 

The Economy and Household Finances

  • The share of respondents who say the economy is on the right track increased 3 percentage points from last month to 38%
  • The percentage of respondents who expect their personal financial situation to get better over the next 12 months fell slightly to 42%
  • The share of respondents who say their household income is significantly higher than it was 12 months ago decreased 4 percentage points to 21%
  • The share of respondents who say their household expenses are significantly higher than they were 12 months ago decreased 5 percentage points to 34%