Owners Upbeat About Their Home Values

Owners Upbeat About Their Home Values. Image courtesy of cooldesign / FreeDigitalPhotos.net

Home sales may be off to a sluggish start this year, but home owners are still upbeat when it comes to the value of their homes. They’re willing to spend to preserve that value too.

Home-improving giants Lowe’s Co. and Home Depot Inc. reported “blowout fourth quarter profits,” which beat expectations with sales advancing more than 7 percent at both retailers, Bloomberg News reports. Purchases greater than $500 surged 13 percent at Lowe’s. What’s more, January is showing strong gains too, which could prove a boon heading into the spring selling season.

“Consumers are feeling better about their jobs, their wages, and certainly feeling better about the value of their home,” Lowe’s Chief Executive Officer Robert Niblock told Bloomberg. “They are re-engaging in projects that they have put off.”

With these big box home-improvement stores, home values are key to growth, company officials say. That’s because when home owners feel good about the value of their home, they tend to be more willing to spend on repairs and remodels.

And home prices have been on the rise: The median price of an existing single-family home in the past year rose in 86 percent of the 175 metro areas tracked, according to the National Association of REALTORS®.

Lowe’s, which surveys consumers every quarter, says that its most recent poll showed that 50 percent of the home owners surveyed reported that the value of their home is rising – marking a survey high (ever since Lowe’s began polling home owners in 2007).

“That’s certainly good for their willingness to spend on the home,” Niblock says, adding that rising values of existing houses will be the single-biggest driver of Lowe’s business.

The remodeling industry also confirms the gains. The number of remodeling companies seeing increases in major projects and committed work for the next three months are at all-time highs, according to a fourth quarter survey conducted by the National Association of Home Builders.

Source: “Americans Are Still Housing Bulls, Just Ask Home Depot or Lowe’s,” Bloomberg News (Feb. 25, 2015)

Spring Housing Market

Spring Housing Market. Image courtesy of Simon Howden / FreeDigitalPhotos.net

Low inventories of homes for-sale threatens to dampen the spring selling season this year. Nearly 9 percent fewer homes were for sale in January of this year than a year ago, according to realtor.com® housing data. The tight inventories may mean buyers will face sticker shock with home prices.

“January’s inventory data suggest a continuation of the tightening trend we identified last month in the December data, and with a shortage of inventory typically comes increased home prices,” says Jonathan Smoke, chief economist at Realtor.com. “Half of the 200 markets realtor.com tracks experienced year-over-year price increases of at least 6 percent in January.”

The National Association of REALTORS® reported this week that January existing-home sales plummeted nearly 5 percent year-over-year, a nine-month low.

“This is a notable speed bump,” says Lawrence Yun, NAR’s chief economist, Lawrence Yun. He says home sales should be higher given the recent pick ups in the economy and job market and rising rental costs.

But despite the higher buyer demand, he says the weak supply has become a big issue.

Housing inventories are down by some of the largest amounts year-over-year in Las Vegas; Key West, Fla.; Colorado Springs, Colo.; Palm Bay, Fla.; and Columbus, Ohio, according to realtor.com’s January National Housing Trend Report. (Read: Inventories Tighten Up Again)

“Typically for a home seller in the past, they live in their home for seven years and then make a move,” Yun says. “Now we’re seeing home sellers are living in their home for 10 years.”

Source: “Low Inventory May Take Bloom Off Spring Home Sales,” CNBC (Feb. 24, 2015)

Loan Delinquencies Back to Pre-Crisis Levels

Loan Delinquencies Back to Pre-Crisis Levels. Image courtesy of suphakit73 / FreeDigitalPhotos.net

More home owners are keeping up with their mortgage payments. The delinquency rate for mortgage loans on residential properties fell to a rate of 5.68 percent of all loans outstanding at the end of the fourth quarter of 2014, according to the newly released Mortgage Bankers Association’s National Delinquency Survey. This marked the lowest level since the third quarter of 2007, MBA reports.

The mortgage delinquency rate has fallen 71 basis points from just one year ago. The delinquency rate includes loans that are at least one payment past due; it does not include loans in the foreclosure process.

In the fourth quarter, the percentage of loans in the foreclosure process fell 12 basis points compared to the previous quarter, standing at 2.27 percent, MBA reports.

“Delinquency rates and the percentage of loans in foreclosure decreased for another quarter and were at their lowest levels since 2007,” says Marina Walsh, MBA’s vice president of industry analysis. “We are now back to pre-crisis levels for most measures.”

The foreclosure inventory has fallen every quarter since the second quarter of 2012. Forty-five states saw a decline in their foreclosure inventory rates during the fourth quarter, but judicial states continue to account for a disproportionately high share, Walsh notes. States that use a judicial foreclosure process have a foreclosure inventory rate that is about three times that of non-judicial states, she adds.

Overall, “we expect the improvement in mortgage performance to continue due to the improving economy and a strengthening job market, and the improved credit quality of recent vintages,” Walsh says.

Source: “Mortgage Delinquencies Continue to Decrease in Fourth Quarter,” Mortgage Bankers Association (Feb. 25, 2015)

Home buying to Rebound Soon

Home buying to Rebound Soon. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

After several recent drops, mortgage applications reversed course last week, with those for home purchases jumping 5 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association’s latest report. The rise, which reflects data from the week ending Feb. 20, also came despite higher mortgage interest rates, MBA notes. (The survey includes adjustments for the President’s Day holiday.) Nevertheless, purchase applications still remain 2 percent lower than the same week a year ago.

Meanwhile, applications for refinancing continued to fall last week, dropping 8 percent to its lowest level this year. The drop prompted MBA’s overall mortgage application index, which reflects both applications for home purchases and refinancing, to fall 3.5 percent for the week.

“The one exception to this trend was VA refinance volume, which increased 27 percent last week as certain lenders refocused on VA production,” says Mike Fratantoni, MBA’s chief economist. “The VA share of total applications increased to 9.6 percent from 8 percent the week prior as a result.”

The 30-year fixed-rate mortgage averaged 3.99 percent last week, up from 3.93 percent the previous week, MBA reported.

Source: “Mortgage Applications Point to More Buyers,” CNBC (Feb. 25, 2015)

10 Metros Attracting Gen Xers

10 Metros Attracting Gen Xers. Image courtesy of stockimages / FreeDigitalPhotos.net

Generation X, those born between 1965 and 1976, has had the sharpest drop in home ownership since the recession, according to U.S. Census data. Home ownership among the age group has plunged 9 percent since 1994, with researchers pointing to unemployment mostly to blame.

But while there’s much talk about millennials and baby boomers in real estate, Gen X is still an important generation. As the economy continues to recover, they’re re-entrance into home ownership is expected to recover as well.

A recent report by RealtyTrac uses Census data to find which metros Gen-Xers are gravitating to. The following metro areas have the largest bulk of Gen Xers.

1. Raleigh-Cary, N.C.: 18.54% (the percentage of the population that is Gen-X)
2. Atlanta-Sandy Springs-Marietta, Ga.: 18.01%
3. Charlotte-Gastonia-Concord, North and South Carolina: 18.01%
4. San Jose-Sunnyvale-Santa Clara, Calif.: 17.94%
5. San Francisco-Oakland-Fremont, Calif.: 17.58%
6. Washington, D.C.-Arlington-Alexandria, Va.: 17.57%
7. Austin-Round Rock, Texas: 17.50%
8. Dallas-Fort Worth-Arlington, Texas: 17.26%
9. Bridgeport-Stamford-Norwalk, Conn.: 17.12%
10. Seattle-Tacoma-Bellevue, Wash.: 17.11%

Source: “X Marks the Spot for Gen-X Density,” RealtyTrac (Feb. 13, 2015) and “Don’t Blame Millennials for Ownership Drop,” REALTOR® Magazine Daily News (Oct. 28, 2014)

Builders Target Single, Female Baby Boomers

Builders Target Single, Female Baby Boomers. Image courtesy of stockimages / FreeDigitalPhotos.net

Single, female Baby Boomers are emerging as a powerful demographic and homebuilders are taking notice.

“They have diverse needs, and it is incumbent on us to develop communities that offer an overall experience that reflects all that they want out of life,” says Ryan Marshall, executive vice president of home building operations for the PulteGroup.

A new survey of more than 1,000 single, female adults ages 50 to 68 by DelWebb, a national brand of home builder PulteGroup Inc., finds that single, female Baby Boomers are incredibly confident – and happy. In fact, 74 percent of the Baby Boomer women surveyed say they are as happy – or happier – than they were at age 35.

Some of that confidence stems from the fact that 54 percent of single, female Boomers say they are active – or more active – than they were at age 35. Eighty-one percent of those surveyed rank being physically healthy as “very important” and 68 percent rank a healthy lifestyle as one of their top priorities, after time with family and friends.

Builders are taking note of the activities that Boomers say they like and trying to weave them into future developments. For example, the most popular exercising activities cited in the survey by single, female boomers were weight training, hiking, yoga, biking, and swimming.

Source: PulteGroup Inc.