Home Inventories Are Selling Faster.

Home Inventories Are Selling Faster

Home Inventories of for-sale homes aren’t the only thing that is dropping. The amount of time homes are staying on the market is growing shorter as well—down 11 percent in the last year—according to the latest Realtor.com data.

Home Inventories were listed on average 95 days, according to September housing data. That is down from 107 days a year earlier.

Home Inventories are selling the fastest in Oakland, Calif., in which the median age of the inventory averages 21 days, which is 57 percent below what it was a year ago. Denver, Colo. boasts a median age of inventory of only 38 days, followed by fast-selling markets of Stockton-Lodi, Calif., with 43 days, and San Francisco with 44 days.

As the median age of the inventory is falling, Home Inventories of for-sale homes continue to hover at record lows too, dropping 18 percent last month compared to a year ago.

“There’s a recovery,” Curt Beardsley, vice president of Realtor.com, told BusinessWeek. “Our market times are low and there’s actually a compression of inventory.”

Home buyer demand is increasing, with housing affordability still high and ultra low mortgage rates that have pushed home buyers’ purchasing power higher. The rise in demand has caused asking prices to also rise. Last month, the median asking price was $191,500, which is up 0.8 percent compared to a year earlier, Realtor.com reports.

Source: “Listings of Homes for Sale Drop as U.S. Housing Recovers,” BusinessWeek (Oct. 15, 2012) and REALTOR® Magazine Daily News

Home builders may benefit from the drop in distressed properties.

“Fitch: Home builders to Get Boost From Falling Foreclosures”

Home builders may benefit from the drop in distressed properties.

Home builders may benefit from the drop in distressed properties in recent months, which might spur greater activity in new-home construction, according to a new report by Fitch Ratings.

Distressed home sales have hampered home prices the last few years. But with less competition from distressed home sales and rental prices, more home buyers may consider new homes, according to Fitch.

Robert Curran, Fitch’s managing director of home builders, forecasts single-family housing starts to rise 19 percent in 2012, and existing-home sales to grow 8.5 percent this year.

“However, we note that new home builders construction can be volatile as they fluctuate more frequently verses other [housing] indicators,” Curran says. “Although starts have been stronger for several months, we are hesitant to suggest that a V-shaped housing recovery is forming.”

Last week, the Commerce Department reported new home construction increased 15 percent in September.

Source: “Fewer Distressed Homes Could Spur Home Construction,” HousingWire (Oct. 19, 2012)

Home builders Grow More Confident About Housing Recovery.

Home builders Grow More Confident About Housing Recovery.

Home builders confidence inched slightly higher in October, bringing it to its strongest level since June of 2006, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The October gain also marks the sixth consecutive month for increases in the index, which measures builder confidence about the direction of the new-home market.

“Many Home builders are reporting increases in the number of serious buyers visiting their sales offices, and the overall confidence measure is much higher than it was at this time last year,” says Barry Rutenberg, NAHB Chairman.

The monthly Housing Recovery index measures Home builders perceptions of current single-family home sales, sales expectations, and buyer traffic.

While builders’ confidence about the housing recovery continues to improve, housing experts say there are still several challenges ahead for the new-home sector.

“The slight gain in the Home builders confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets,” says David Crowe, NAHB chief economist.

Source: National Association of Home Builders

Housing Appraisals Remain Big Hurdle.

Housing Appraisals Remain Big Hurdle.

Housing Appraisals have been blamed on derailing a lot of sales in recent years. In fact, more than one-third of REALTORS® recently reported that deals were canceled, delayed, or renegotiated to a lower price due to a low appraisal.

The National Association of REALTORS® has spoken out against faulty Housing Appraisals, blaming it on holding back the housing recovery.

More real estate professionals are starting to include Housing Appraisals contingencies in their contracts. These contingencies specify how much a buyer would be willing to pay in cash in case the appraisal comes in lower than the agreed upon sales price.

Appraisers have been criticized for using foreclosures as comparable homes in their valuations and for failing to take into account market conditions like the low inventory and bidding wars in many areas, according to NAR’s report. NAR also has criticized many banks for increasing their requirements to six comparable sales instead of three, particularly at a time with low inventories.

“It’s holding sellers off the market,” Jed Smith, NAR’s managing director of quantitative research, told The New York Times. “Sales volume could probably be an additional 10 to 15 percent higher if we had normal lending practices and if we had normal appraisal practices.”

Appraisers say they’re not making valuations lower but they’re reflecting the current value of homes.

“Appraisers don’t set the market, they reflect what’s happening in the market,” Ken Chitester, a spokesman for the Housing Appraisals Institute, told The New York Times. “So don’t shoot the messenger. Blaming the appraiser for a bad housing market is like blaming the weatherman because you don’t like the weather.”

Appraisers don’t always make adjustments if they use bank-owned homes in comparables because not all REOs sell at a discount and not all are in bad condition, says Dan McKinnon, who operates an appraisal company in Phoenix. When neighborhoods are dominated by REOs, those homes need to be factored in to help determine the value of homes, he adds.

“If that property is in similar condition to your subject, it is direct competition,” McKinnon says.

Source: “Scrutiny for Home Appraisers as the Market Struggles,” The New York Times (Oct. 12, 2012)

House Flipping is Back!!

House Flipping is Back!!

Buying up homes, rehabbing them, and reselling them for a profit was big during the housing boom. But when the housing market started to slump, these buyer interested in House Flipping and in search of quick profits nearly vanished.

As the housing market recovers, house flipping may be showing signs of re-emerging, according to The Washington Post.

In the first half of 2012, House Flipping increased 25 percent compared to a year earlier, according to RealtyTrac. The average profit on each property is $29,342, according to the real estate research firm.

“There are House Flipping in many markets, but a market where home prices are appreciating is much more forgiving for flippers than a market where prices are depreciating,” Daren Blomquist, vice president of RealtyTrac, told The Washington Post. “We have turned that corner in a lot of places in the last six months, so that’s going to attract flippers.”

Areas that were the hardest hit in the housing crash are seeing some of the largest increases in flipping as investors buy up foreclosures and short sales at large discounts. Phoenix has had the highest number of reported flips, followed by Las Vegas, Los Angeles, Miami, and Atlanta.

Source: “Flipping Houses Is Once Again a Booming Business,” The Washington Post (Oct. 14, 2012)

A New Housing Boom by 2015?

A New Housing Boom by 2015?

The housing market has been showing several signs of recovery, including home prices and home sales on the rise, new construction up, foreclosures falling, and mortgage rates near record lows. Some economists are getting very bullish about a Housing Boom recovery and even predicting that the market will return to its “boom” level days in just three years.

In a recent report, Barclays Capital predicts that the Housing Boom could be back to peak levels by 2015. Barclays is predicting home prices to rise 5 percent to 7.5 percent a year.

“In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a Housing Boom,” says Stephen Kim, an analyst with Barclays.

Home construction is also expected to soar, rising 20 percent or more a year for the next year, according to some economists’ forecasts. The new-home market could return to its pre-bubble average of about 1.5 million new homes a year by 2016, CNNMoney reports. That would double the construction level expected this year.

“That turn in the [housing] market is occurring now and it should become a Housing Boom by 2015,” Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary, told CNNMoney.

Source: “A New Housing Boom,” CNNMoney (Oct. 12, 2012)