Tight Housing Inventories Still Plague Markets

Tight Housing Inventories Still Plague Markets. Image courtesy of nirots / FreeDigitalPhotos.net

Home buyers continue to face limited choices of homes for sale in many markets, according to realtor.com^®’s National Housing Trend Report.

“As we open the new year, the first-quarter inventory figures are especially crucial as our first barometer [of] seller confidence for the 2014 homebuying season,” said Errol Samuelson, president of realtor.com^®. “The market is still showing significant demand, but in order to have a strong homebuying season, sellers need to put their homes on the market.”

Some of the markets that saw the highest upticks to inventory levels were housing markets that had seen multiple bids and some of the fastest price gains due to inventory shortages in spring 2013. Many of those markets ended the year with the highest inventory gains as sellers put their homes on the market in response to the rising prices, realtor.com^®‘s report notes.

The markets with some of the largest year-over-year inventory increases were:

• Sacramento, Calif.: +57.9%
• Bakersfield, Calif.: +41.7%
• Minneapolis-St. Paul, Minn.-Wis.: +34.5%
• Orlando: +30.8%
• Atlanta: +27.3%

On the other hand, some of the housing markets with the largest year-over-year decreases in housing inventories were:

• Santa Barbara-Santa Maria-Lompoc, Calif.: -21.52%
• Orange County, Calif.: -16.08%
• Boulder-Longmont, Colo.: -15.62%
• Naples, Fla.: -15.37%
• Chicago: -14.65%
• Fort Worth-Arlington, Texas: -14.65%

Inventory shortages helped push asking prices higher in many markets. Forty-two markets nationwide saw double-digit price growth in 2013 compared with 2012. For example, Santa Barbara-Santa Maria-Lompoc, Calif., saw its housing inventory shrink by the largest amount in the past year, but asking prices there rose 29.6 percent in that time.

The markets with the largest year-over-year median list price increases were:

• Stockton-Lodi, Calif.: +47.3%
• Detroit: +41.1%
• Santa Barbara-Santa Maria-Lompoc, Calif.: +29.6%
• Las Vegas: +29.3%

Source: “Report: 2013 Ended With Higher Housing Demand, Prices,” realtor.com^® (Jan. 21, 2014)

Builders Hike Their Prices

Builders Hike Their Prices. Image courtesy of Supertrooper / FreeDigitalPhotos.net

More builders are reporting they’re raising their prices on new homes. Twenty-four percent of 231 builders recently surveyed say they raised their prices in December, which is an increase over a 19 percent low reported in November, according to John Burns Real Estate Consulting Inc. data. The percentage of builders who say they lowered their prices fell to 8 percent in December, after a 12 percent high in October.

“The pricing environment notably improved,” Jody Kahn, a senior vice president at Burns, told The Wall Street Journal. “It’s still not back to where we were earlier in [2013] with builders raising prices aggressively.”

In early 2013, more than half of the builders surveyed had reported raising their prices, with some markets, such as California and Arizona, even posting double-digit increases from 2012 levels. But prices curtailed during a slowdown in the summer months as interest rates rose.

Lately, however, interest rates have mostly remained flat — around 4.4 percent to 4.5 percent averages — and improving employment numbers have builders feeling more confident again.

Average new-home prices reached an all-time high of $340,300 in November, according to the U.S. Census Bureau.

Michael Gapen, senior U.S. economist at Barclays, predicts that home prices will rise 7 to 8 percent this year adding to last year’s gains of 11 to 12 percent.

Buyers “know that builders tend to make price increases at the first of the year,” says Gene Swang, a division president for David Weekley Homes. “I think customers are concerned that if they didn’t get a home under contract [in December], they’d see higher prices in another month.”

Source: “Santa’s Gift to Builders: Higher Home Prices,” The Wall Street Journal (Jan. 21, 2014)

4 Keys Identified for a Full Housing Recovery

4 Keys Identified for a Full Housing Recovery. Image courtesy of Nutdanai Apikhomboonwaroot / FreeDigitalPhotos.net

In order to have a fully recovered housing market and economic recovery, economists point to the need for four positive indicators:

1. A healthy job market with low stable unemployment;

2. Mortgage delinquencies that have returned to historical averages;

3. Home prices consistent with an affordable mortgage payment–to–income ratio; and

4. Home sales that are in the range of historical norms.

So, is the housing market inching closer?

Freddie Mac’s U.S. Economic and Housing Market Outlook for January takes a look at how the housing market is performing among these four indicators. Economists note that the unemployment rate — while inching down — still remains high at 6.7 percent. Meanwhile, mortgage delinquencies have fallen to 5.88 percent — nearly half of their peak rate but still higher than the national average of about 2 percent, Freddie notes.

Home prices still have some room to grow without outpacing income growth, economists say.

“From 1999–2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth,” Freddie Mac notes in the report. “Currently, payment-to-income ratios are only 60 percent of the level we had in 1999, suggesting room for continued housing growth.”

Finally, home sales have risen over the past two years but remain below levels from a nearly a decade ago. Home sales, historically, average a rate of about 6 percent of the housing stock every year. They dropped to 4 percent during the housing crisis. Economists are predicting a 5.7 percent pace in 2014.

“As we start 2014, the housing recovery continues its steady pace,” Frank Nothaft, Freddie Mac’s chief economist. “House-price gains will likely moderate from last year’s pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets we are seeing the sales recovery strengthen while many others remain weak.”

Source: Freddie Mac and “Are We There Yet? Freddie Mac Says Recovery Has a Ways to Go,” Mortgage News Daily (Jan. 16, 2014)

Is Your Listing Offensive?

Is Your Listing Offensive? Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Real estate ads are getting a big dose of political correctness, as real estate professionals are carefully watching their words in listings so as not to offend anyone.

Major home builders in Washington, D.C., reportedly are no longer using the term “master bedroom” in their marketing because, they say, it has racist undertones. Instead, the term is being replaced with “owner’s suite.” Others in the real estate community are also carefully choosing their words to avoid potential conflicts with the Fair Housing Act.

“You can say ‘family room’ but not ‘family home,’” explains Beth Brody, a licensed real estate agent in Marin County, Calif. “We avoid anything gender-specific like ‘his-and-hers’ closets or baths.” Brody says her real estate agency carefully monitors the language used in its agents’ listing ads, adding that the list of potentially offensive words has grown over the years.

Doing so could save a lot of trouble. For example, in August, the 6th U.S. Circuit Court of Appeals reversed a ruling and granted a new trial to the Miami Valley Fair Housing Center in a federal discrimination lawsuit over an Ohio apartment listing that used the phrase “bachelor pad.”

The U.S. Department of Housing and Urban Development has never issued an official list of terms to avoid, but some MLSs have. The Northwest Multiple Listings Service issued a list of “potentially offensive words,” such as “newlyweds,” “country club nearby,” “handyman’s dream,” “safe neighborhood,” “secure,” and “walking distance to.” (After all, one person’s idea of what is nearby may not be someone else’s, and “walking distance” may be prejudicial against someone in a wheel chair, agents note.)

Lesley Walker, associate counsel at the National Association of REALTORS®, says, “Our culture and society are now more in tune with the sensitivities of more groups of people. I think we’re more aware and educated, and so [we are] taking more precautions not to inadvertently or expressly discriminate against a specific class of people.”

Source: “You Can’t Say That … in a Real Estate Ad!” The Examiner (Jan. 15, 2014)

Google-Controlled Homes?

Google-Controlled Homes?

Search-engine giant Google wants to help make homes smarter and more connected, and took another step at that by by announcing its acquisition of connected device maker Nest Labs.

Google announced it will pay $3.2 billion in cash to acquire Nest Labs, a company that develops “smart” home appliances such as thermostats and smoke detectors that can program themselves and be controlled and monitored over smartphones.

“This allows us to accelerate and stay in front of the coming wave of products for what we like to call the ‘conscious home,’” says Nest leader Tony Fadell.

Google’s acquisition follows several previous efforts by Google to get into the connected home business. For example, the company’s Android @Home platform was created to allow users control home appliances from their Android smartphones and tablets. However, the device failed to catch on, CNN reports.

At the International Consumer Electronics Show last week in Las Vegas, the “connected home” garnered a lot of attention as several companies touted new technologies to allow home owners to better monitor and control their homes from anywhere. The market for connected homes is expected to reach $10 billion this year and bloom to $44 billion by 2017, according to GSMA, a wireless industry group.

Source: “Google Buys Nest Labs for $3.2 Billion,” CNNMoney (Jan. 14, 2014)

4 Short-Sale Myths Dispelled

4 Short-Sale Myths Dispelled. Image courtesy of Victor Habbick / FreeDigitalPhotos.net

Several myths persist about short sales. Tracy Mooney, senior vice president at Freddie Mac, dispels some of the following common myths on the mortgage giant’s blog, including:

Myth 1: “A short sale is not an option for me because I’m current on my mortgage payments.”

Freddie Mac Fact: Even if home owners are current on their mortgage payments, they may still qualify for a short sale. They must meet general eligibility requirements, the home must be their primary residence, and their debt-to-income ratio must be more than 55 percent.

Myth 2: “I will be responsible for the entire amount owed on the mortgage.”

Freddie Mac Fact:  Home owners won’t necessarily be responsible for the entire amount owed on the mortgage under the Freddie Mac Standard Short Sale program, Mooney notes. Borrowers who complete a short sale in good faith and are in compliance with all laws and Freddie Mac policies will not be pursued by Freddie Mac for the entire amount owed under the mortgage. However, home owners who have the financial means may be asked to make a one-time payment or sign a new promissory note for a portion of the unpaid balance after the short sale closes, Mooney says.

Myth 3: “I can’t get a short sale on an investment property or second home.”

Freddie Mac Fact: Mooney says that investment properties and second homes are eligible for a Freddie Mac short sale. However, borrowers must meet eligibility requirements.

Myth 4: “A short sale will affect my eligibility for a new mortgage.”

Freddie Mac Fact: Home owners who go through a short sale may be eligible for a new mortgage sooner if the short sale was caused from financial difficulties due to income loss, medical emergencies, or other extenuating circumstances beyond their control. Former home owners in those circumstances may be eligible for a new Freddie Mac mortgage once they’ve established acceptable credit for at least 24 months after completing the short sale. Former home owners who underwent a short sale due to “personal financial mismanagement,” however, will need to re-establish acceptable credit for at least 48 months to become eligible for a mortgage backed by Freddie Mac. “You should start speaking to a lender about a new mortgage two years after your short sale closed,” Mooney notes.

Source: “Short Sales: Dispelling the Myths,” Freddie Mac (Jan. 13, 2014)