Housing Looking Good Despite Economic Headwinds

Housing Looking Good Despite Economic Headwinds. Image courtesy of phanlop88 / FreeDigitalPhotos.net

The number of consumers who believe home prices will increase over the next year rose to record highs, according to Fannie Mae’s February 2013 National Housing Survey, which polled more than 1,000 Americans to assess their attitudes toward housing. Forty-eight percent of consumers surveyed say they believe home prices will rise in the next 12 months, and 10 percent of consumers say they believe home prices will inch down, a survey low.

Overall, the survey showed that consumers are optimistic about the housing recovery, but that optimism isn’t carrying over to the direction of the overall economy or household finances.

“Despite fiscal headwinds and political uncertainty, consumer sentiment toward housing is robust and continues to gather strength,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “We expect home prices to firm further amid a durable housing recovery, gradually reducing the population of underwater borrowers and helping to boost the share of consumers who say that now is a good time to sell.”

Among some of the survey’s other findings:

• 25 percent of those surveyed say they believe it’s a good time to sell a house, also the highest level ever recorded in the survey’s history.
• 41 percent say they expect their personal financial situation to improve over the next two months — a drop of 2 percentage points from January.
• 31 percent say they have significantly higher household expenses than a year ago.
• 38 percent of respondents say the economy is on the right track.

Source: Fannie Mae

Jumbo Mortgage Comeback Helps Lift Luxury Sales.

Jumbo Mortgage Comeback Helps Lift Luxury Sales. Image courtesy of Salvatore Vuono / FreeDigitalPhotos.net

The revival in the luxury real estate market is being fueled by growth in jumbo mortgages, Reuters reports. Jumbo loans typically are more than $417,000.

“Jumbo loans are returning to the mortgage market after almost disappearing entirely in the wake of the credit crisis of 2008 and the real estate meltdown,” Reuters reports. “Most lenders stopped making new jumbo loans when the private secondary market dried up in the credit crunch.”

But now jumbo loans are coming back. Lenders are reserving jumbo loan approvals to qualified borrowers, and some reportedly are even offering these “once-pricey jumbo loans at interest rates that are barely higher than conventional mortgages,” Reuters reports.

“The jumbo market may fare better than the overall mortgage market in 2013,” says Guy Cecala, publisher of Inside Mortgage Finance.

But while jumbo loan volume was about $200 billion last year, it’s still far below the $348 billion in jumbo loans issued in 2007. Cecala predicts that 2013 volume of jumbo loans will reach about $220 billion.

Source: “Jumbo Home Loans Are Back, But Far Below 2007 Levels,” Reuters (Feb. 26, 2013)

Economist Makes Bold Statement on Home Prices.

Economist Makes Bold Statement on Home Prices. Image courtesy of ddpavumba / FreeDigitalPhotos.net

Home values could surge 35 percent without stretching housing affordability, Raj Dosaj, vice president of the home price index at LPS Applied Analytics, said during a recent webinar hosted by HousingWire.

Dosaj says that the increase in home prices could be less than that if mortgage rates rise, which he says they are predicted to do.

“During the peak of the housing run-up, affordability was stretched as the market sold off,” Dosaj said. “As home prices dropped, affordability dropped.”

Industry reports are showing home prices rebounding and rising across the country.

“There are definite signs that there’s room for growth,” said Dosaj. “Things are generally looking good for the housing market.”

Source: “LPS: Home prices could skyrocket 35% without affecting affordability,” HousingWire (Feb. 28, 2013)

January Pending Home Sales Up in All Regions.

January Pending Home Sales Up in All Regions. Image courtesy of ddpavumba / FreeDigitalPhotos.net

Pending home sales rose in January, and have been above year-ago levels for the past 21 months, according to the National Association of REALTORS®. There were healthy monthly gains in all regions but the West, which, despite being constrained by limited inventory, still improved slightly.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.5 percent to 105.9 in January from a downwardly revised 101.3 in December and is 9.5 percent above January 2012, when it was 96.7. The data reflect contracts but not closings.

The January index of Pending Home Sales is the highest reading since April 2010, when it hit 110.9, just before the deadline for the home buyer tax credit. Aside from spikes induced by the tax credits, the last time there was a higher reading was in February 2007 when it reached 107.9.

Lawrence Yun, NAR chief economist, said inventory is the key to this year’s housing market. “Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply-demand balance to sellers in much of the country. It’s also why we’re experiencing the strongest price growth in more than seven years,” he said.

“Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages,” Yun said.

The PHSI in the Northeast rose 8.2 percent to 84.8 in January and is 10.5 percent higher than January 2012. In the Midwest, the index increased 4.5 percent to 105.0 in January and is 17.7 percent above a year ago. Pending home sales in the South rose 5.9 percent to an index of 119.3 in January and are 11.3 percent higher January 2012. In the West, the index edged up 0.1 percent in January to 102.1 but is 1.5 percent below a year ago.

Yun expects approximately 5.0 million existing-home sales this year. However, price growth could exceed a 7 percent gain projected for 2013 if inventory supplies remain low. Previously, NAR had expected 5.1 million existing-home sales in 2013, while prices were forecast to rise 5.5 to 6.0 percent.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

Also released today are annual data revisions. Each February, NAR Research incorporates a review of seasonal activity factors and fine-tunes historic data for the past three years based on the most recent findings. There are no changes to unadjusted or annual data.

Asking/Selling Price Gap Closing

Asking/Selling Price Gap Closing. Image courtesy of renjith krishnan/ FreeDigitalPhotos.net

A growing number of home owners are selling for an amount closer to their asking price, reports the Atlanta Journal-Constitution. Nationally, the average home sold for 98.3 percent of the sellers’ list price in December 2012, up from 97.1 percent in January 2011.

Be sure your clients achieve the same goal by posting to your Web site a free article from the REALTOR^® Content Resource: “How to Use Comparable Sales to Price Your Home”. That’s just one of five free articles to help you answer sellers’ common questions now available in the February “Land Lots More Listings” article package.

You can also add to your e-newsletter (or post to your Web site, blog, Facebook page, or Twitter feed; e-mail; or brand, print, and hand deliver) any of the nearly 1,000 other free home listing, selling, and ownership articles always available. Just search the REALTOR^®  Content Resource by keyword or topic for other content ranging from home improvement and maintenance to taxes and finance.

While you’re adding REALTOR^® Content Resource materials to your marketing communications, be careful not to download photos or videos on the site. The REALTOR^® Content Resource doesn’t have permission to allow others to use them, and owners of the images actively search online — and charge violators for — unauthorized uses. Learn more in the Reprint Rights Policy.

The REALTOR^® Content Resource is brought to you by the NATIONAL ASSOCIATION OF REALTORS^®. With it, you can download free home ownership content from HouseLogic to your marketing materials.

HouseLogic is a comprehensive consumer website — from NAR— geared to helping home owners make smart decisions to enhance, maintain, and protect the value of their home.

Seller Shortage Plagues Many Housing Markets.

Seller Shortage Plagues Many Housing Markets. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

The low inventory of for-sale homes is creating a seller’s market throughout the country.

“Buyers and agents are literally waiting for the next house,” says Rick Turley, president of Coldwell Banker Residential Brokerage for the San Francisco Bay Area.

The supply of existing homes for sale reached nearly an eight-year low in January, according to the National Association of REALTORS®. Nationwide, there is a 4.2-month supply of existing homes for sale.

More balanced Housing Markets with a six-month supply will occur when home prices rise another 20 percent, says John Burns, CEO of John Burns Real Estate Consulting. Such an increase would then lure sellers to match demand coming in from renters and investors, and the rise in prices will also lead to more home building, Burns says.

Still, a return to healthy inventory levels could be years off, some say. “Many home owners can’t afford to sell because they don’t have enough equity to put into buying another house — or would have to write a check to sell,” USA Today reports. “The supply of distressed houses for sale is thinning as the foreclosure crisis recedes, especially in some states. Home building, while improving, is still at low levels. And, after years of holding on, few home owners want to sell when prices are just coming off the bottom, REALTORS® say.”

Source: “Home sellers are scarce as spring buyers stir,” USA Today (Feb. 26, 2013)

Ivy League School Offers Free Homes

Ivy League School Offers Free Homes .Image courtesy of jscreationzs / FreeDigitalPhotos.net

Princeton University is offering free houses to the public, but they have to be able to haul the domiciles away.

The homes—which have in the past been used as university offices or for other purposes—are all located south of campus on Alexander Street and have been made available to the public for free in as-is condition.

The homes are slated to be demolished to make room for future Princeton University Art and Transit project, which will include a train station and retail ventures. As such, the homes will need to be moved for any one who wants to claim them. The homes will need to be relocated by the end of April.

The homes are currently empty.

Anyone interested in the free homes are encouraged to contact the Princeton University Office of Community and Regional Affairs via phone (609-258-3204) or email (pucra@princeton.edu).

Source: “Princeton University Giving Away Homes for Free — With Just One Big Catch,” AOL Real Estate