Case-Shiller: Home Price Growth Continues

Home prices increased in October according to Case-Shiller’s 20 City Home Price Index. Home prices rose from September’s annualized reading of 5.40 percent to 5.60 percent. Factors contributing to rising home prices include stronger economic conditions and outlook along with short inventories of available homes coupled with high demand. On average, October home prices rose 5.10 percent on seasonally adjusted annual basis, which was unchanged from September’s reading.

West Continues to Lead Home Price Growth

Top home price growth rates were in Seattle, Washington at 10.70 percent, Portland, Oregon at 10.30 percent and Denver, Colorado with a seasonally-adjusted annual price increase of 8.30 percent. New York, New York had the lowest home price growth in October with a reading of 1.70 percent.

In a separate report, December consumer confidence exceeded expectations with an index reading of 113.70 as compared to an expected reading of 110.00 and November’s reading of 109.40. This was the highest reading for consumer confidence since 2001. Analysts said that the strong reading for consumer confidence was a sign that consumers will increase their spending in 2017, but what will happen with mortgage rates is a big question.

Rising Mortgage Rates May Slow Home Prices, High Demand for Homes

With the Federal Reserve’s decision to raise its target federal funds range in December comes a question of how rising mortgage rates will affect housing markets. Rising fed rates typically lead to increases in consumer lending rates including rates for home loans and refinancing. Combined effects of rising home prices and mortgage rates create challenges for first-time and moderate income home buyers. While higher mortgage rates have not impacted buyer demand so far, rising mortgage rates could sideline some buyers.

A recent compilation of the most expensive places to live in America illustrates the imbalance of home prices as compared to consumer incomes. Brooklyn, NY topped this list with a reading of 127.70 percent of average household income earned in Brooklyn to buy an average priced home in Brooklyn. Analysts reporting this data noted that many Brooklyn homeowners work in Manhattan and earn more than those who work in Brooklyn. Disparities in average home prices and home buyer incomes could “trickle down” to less expensive areas if mortgage rates and home prices continue to rise.

Meanwhile, builder confidence is strong and is expected to lead to higher levels of home construction in 2017.

Home Builder Sentiment Unchanged in November

According to the National Association of Home Builders Housing Market Index for November, builder sentiment was unchanged at a reading of 63. Readings above 50 indicate that a majority of builders are confident about housing market conditions. Readings for three sub-indexes used to calculate the Housing Market Index Readings for builder confidence in current market conditions and market conditions within the next six months were posted at 69. The reading for buyer foot traffic in housing developments was 47. Buyer traffic has not reached the benchmark reading of 50 since the peak of the housing bubble approximately 10 years ago.

NAHB Chair Ed Brady noted that survey information provided by most participating builders was gathered prior to the presidential election. Mr. Brady also noted that Housing Market Index readings have exceeded 60 for the past three months, which indicates slow but steady growth in housing markets.

 

Analysts: Builder Sentiment and Building Activity Inconsistent

While positive builder sentiment readings seem to contribute to stronger housing markets, analysts pointed out that housing starts are not consistent with high builder sentiment levels. Reasons for fewer home starts than the Housing Market Index suggests include approaching winter weather and ongoing shortages of labor and buildable lots.

Real estate pros count on building more homes (and building them faster) as the only solution to tight supplies of available homes and rising demand. These conditions create highly competitive markets that present obstacles to moderate income and first time home buyers. NAHB said that rising incomes, expanding labor markets and relatively low mortgage rates are fueling demand for homes. While mortgage rates have remained near historic lows, home prices have risen quickly in high-demand areas. This creates affordability challenges for home buyers, who also face strict home loan approval requirements.

 

3 Month Rolling Averages Show Regional Confidence Readings

NAHB reported its three-month rolling averages according to four regions included in Housing Market Index readings. The Northeast reading was 45; the Midwest region’s confidence reading was 58 and the Southern region reported a reading of 66. The West, which includes high-demand metro areas such as Portland, Oregon and San Francisco, California, had a November builder confidence reading of 77.

Want To Achieve Your Goals In 2016? There’s An App For That!

There is a big difference between having a goal and achieving it. As you plan out what you’d like to achieve next year, try enlisting the help of technology to stay on track. photo_807

GoalsOnTrack guides you through a goal-setting process and helps you create the action plan. The app then helps track your changing habits and completed tasks for a fully visual guide to success. Free for iPhone, iPads, Android, Blackberry and Windows Phone 7*.

LifeTick offers coordinated goal setting and tracking functions to help families, educators, small businesses or any group that wants to accomplish something together. Available for iPhone, Android and iPad. Free for individuals with limited functions, or pricing from $14 per month for groups*.

Habit List helps you build great lifetime habits (eating right, drinking more water, exercising regularly) by tracking your “streaks,” or how many times you complete a task in a row. Schedule the habits you want; then get reminders that keep you on track. $3.99 for iPhone*.

Coach.me begins with the premise that goals are easier to achieve with accountability. Choose goals and the type of coaching you require—advice, motivation or prompting—and be held accountable through crowdsourcing. You can hire a coach, get help and encouragement from other users, and set up reminders to push you toward success. Free for iPhone, Android and web*.

irunurun is the perfect app for those with a competitive streak. After you input the action or habit you want to track, assign it a point value. Try to achieve 100 points each week. Build an accountability team by inviting friends, family or colleagues to any action you choose. Free for individuals on iPhone and iPad. Prices from $49 per month for groups*.

Whatever you aspire to do in the year ahead, don’t go it alone. Pick one of the applications above and let technology carry some of the burden. Here’s wishing you the very best of everything in the upcoming year!

*Prices and availability offered at time of writing.

Source: Entrepreneur

Do’s And Don’ts Of Buying Distressed Real Estate

How to Build the Ultimate Tree House for Your Children in Just Seven StepsDistressed real estate is real estate in need of serious repairs. These properties are often called “handyman specials.” If you have the skill or the money to complete the repairs, you can often find great deals. Here are some dos and don’ts of buying distressed real estate.

DO Get A Home Inspection

Distressed homes need repairs. Some of these repairs, like broken floor tile, are easy to see. Others, like water damage in the attic, can be easily hidden. The only way to know for sure what you’re buying is to have the property inspected by a professional home inspector.

DO Pay Attention To The Home’s Market Value

You don’t want to buy a home and spend your hard-earned money for repairs only to find out the home is worth less than what you paid for it. Have your agent complete a comparative market analysis so you know what the home is worth.

DO Have An Estimate For Repairs

There’s no point buying a distressed home if you can’t afford the cost of the home and the repairs. Get an estimate from at least three contractors before you buy. Knowing the cost of repairs beforehand will help you make the best decision.

DON’T Think About Potential Profit

You’ve probably heard countless stories about people who bought distressed properties and sold them for outrageous profits. However, the reality is that most distressed homes are sold for a small profit or no profit.

DON’T Buy A Home Just Because The Price Is Low

When you buy distressed homes, you have to consider more than just the asking price. Add together the cost of repairs, insurance, and what you can realistically expect to make from the sale. This will tell you if the home really is a good investment for you.

DON’T Buy If You Don’t Have The Money

No matter how good a deal you find on distressed homes, they aren’t worth it if they will stretch your budget too far. The last thing you want to deal with is damage to your credit score and the risk of foreclosure in the event you can’t pay for the home.

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Highest Year-Over-Year Increase In Home Prices Since 2005

Highest Year-Over-Year Increase In Home Prices Since 2005Two major indicators of home price trends showed a slowing momentum for home prices in December. The S&P Case Shiller 10 and 20 city indices reported that of 20 cities tracked, home prices were lower in December than for November.

Case-Shiller’s seasonally adjusted month-to month reading showed that home prices rose by 0.8 percent as compared to 0.90 percent in November.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said that “Gains are slowing from month-to-month and the strongest part of home price recovery may be over.” He also noted that seasonally adjusted data was showing a loss of momentum for home prices.

December home prices posted a year-over-year gain of 13.40 percent, down from November’s year-over-year reading of 13.70 percent. December’s reading reflected the highest year-over-year increase in home prices since 2005.

Analysts note that a slower pace of increasing home prices may allow more buyers to enter the market, and may also encourage more buyers to list their properties for sale.

This would increase inventories of available homes and relieve pent-up demand for homes. Although home price growth is cooling off, average home prices remain 20 percent below their pre-recession peak in 2006.

Home Prices Face Challenges In 2014

Another factor in slower growth of home prices is regional differences in the rate of economic recovery. Cities including Dallas, Texas and Denver, Colorado recently set records for escalating home prices.

Five states including Florida and Michigan accounted for almost half of foreclosures completed during 2013. Slow job growth and poor winter weather were also blamed for slower gains in home prices.

New mortgage rules and relatively strict mortgage lending standards may continue to dampen housing markets, but there is some good news as some lenders are easing credit standards.

 FHFA: Home Prices Higher For 10th Consecutive Quarter

The Federal Housing Finance Administration reported similar trends in December home price data for properties either financed or owned by Fannie Mae or Freddie Mac. Home prices rose by a seasonally adjusted rate of 0.80 percent in December as compared to November’s reading.

Home prices were 7.70 percent higher for the fourth quarter of 2013 than for the same period in 2012. Adjusted for inflation, this reading indicates an approximate year-over-year increase of 7 percent.

FHFA reported higher readings for 38 states in its fourth quarter 2013 Home Price Index, as compared with 48 states in in the third quarter of 2013.  In order of home price appreciation, the top five states with highest growth in home prices were Nevada, California, Arizona, Oregon and Florida.

These calculations were seasonally adjusted and based on home purchases only.

Case Shiller Price Index Shows That It’s A Buyers Market

Case Shiller Price Index Shows That It's A Buyers MarketTwo major indicators of home price trends showed a slowing momentum for home prices in December. The S&P Case Shiller 10 and 20 city indices reported that of 20 cities tracked, home prices were lower in December than for November.

Case-Shiller’s seasonally adjusted month-to month reading showed that home prices rose by 0.8 percent as compared to 0.90 percent in November.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said that “Gains are slowing from month-to-month and the strongest part of home price recovery may be over.” He also noted that seasonally adjusted data was showing a loss of momentum for home prices.

December home prices posted a year-over-year gain of 13.40 percent, down from November’s year-over-year reading of 13.70 percent. December’s reading reflected the highest year-over-year increase in home prices since 2005.

Analysts note that a slower pace of increasing home prices may allow more buyers to enter the market, and may also encourage more buyers to list their properties for sale. This would increase inventories of available homes and relieve pent-up demand for homes.

Although home price growth is cooling off, average home prices remain 20 percent below their pre-recession peak in 2006.

Home Prices Face Challenges In 2014

Another factor in slower growth of home prices is regional differences in the rate of economic recovery. Cities including Dallas, Texas and Denver, Colorado recently set records for escalating home prices.

Five states including Florida and Michigan accounted for almost half of foreclosures completed during 2013. Slow job growth and poor winter weather were also blamed for slower gains in home prices.

New mortgage rules and relatively strict mortgage lending standards may continue to dampen housing markets, but there is some good news as some lenders are easing credit standards.

FHFA: Home Prices Higher For 10th Consecutive Quarter

The Federal Housing Finance Administration reported similar trends in December home price data for properties either financed or owned by Fannie Mae or Freddie Mac.

Home prices rose by a seasonally adjusted rate of 0.80 percent in December as compared to November’s reading. Home prices were 7.70 percent higher for the fourth quarter of 2013 than for the same period in 2012. Adjusted for inflation, this reading indicates an approximate year-over-year increase of 7 percent.

FHFA reported higher readings for 38 states in its fourth quarter 2013 Home Price Index, as compared with 48 states in in the third quarter of 2013.  

In order of home price appreciation, the top five states with highest growth in home prices were Nevada, California, Arizona, Oregon and Florida. These calculations were seasonally adjusted and based on home purchases only.

 

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Existing Home Sales Lowest Since 2012

Existing Home Sales Lowest Since 2012Sales of existing homes fell by 5.10 percent in January according to the National Association of REALTORS.

Pre-owned home sales slowed to a seasonally-adjusted annual rate of 4.62 million homes against an expected reading of 4.65 million and December’s reading of 4.87 million existing homes sold.

Rising home prices are reducing the number of affordable homes and a shrinking inventory of available homes were said to be underlying causes to January’s slump in existing home sales.

Severe winter weather also contributed to lower sales.

January’s reading was the lowest for existing home sales since July of 2012. The national inventory of available pre-owned homes was 1.90 million, which represents a 4.90 month supply at the current sales pace.

Real estate pros look for a 6 to 6.50 month supply of existing homes to balance demand and availability between buyers and homes for sale.

High demand against a low supply of available homes suggests that some home sales weren’t completed due to a bottleneck between willing buyers and a low supply of available homes. Rising home prices also limit affordability for first-time and moderate income home buyers.

Regional Sales Of Existing Homes Lower

Existing home sales fell across all four regions:

  • Northeast: -3.10 percent
  • Midwest: -7.1 percent
  • South: -3.5 percent
  • West: 7.3 percent

Slow job growth, new mortgage rules and high loan approval standards were also reported as causes for slower sales. Short supplies of existing homes in high demand locations are causing multiple offers on homes, and in some areas, cash offers are in play. High competition for homes can eliminate home buyers with a limited range of purchasing power.

Reports on new construction and home builder confidence in housing market conditions supported the slower rate of existing home sales in January

Home prices, while still increasing, are not growing at the rapid rates seen in 2013. The national median home price in January rose to $188,900, which represents a 10.70 percent increase year-over-year. Analysts said that existing home sales that weren’t completed due to the winter weather can be expected to recover as warmer weather arrives.

Distressed Home Sales Impact Average Home Price 

Distressed sales of existing homes including foreclosed properties and short sales represented 15 percent of January sales of existing homes, down from 24 percent in January 2013, and higher than December’s reading of 14 percent.

Sales of foreclosed homes averaged 16 percent below market value and short sales were completed at an average of 13 percent below market value. Discounted home prices impact home prices in areas that have larger numbers of distressed homes for sale.

As warmer weather approaches, new home construction will pick up and more homeowners will be likely to put their homes on the market.

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Case Shiller Price Index Shows Homeowners A Rise In Home Equity

Case Shiller Price Index Shows Homeowners A Rise In Home Equity According to the S&P/Case-Shiller 10 and 20-City Home Price Indices released Tuesday, the U.S. Housing Market is on a roll based on year-over-year increases in average home values, but month-to-month results were mixed.

The 10 and 20-City Home Price Indices showed year-over-year growth of 13.80 and 13.70 percent respectively.

Highlights Include:

  • Dallas, Texas posted its highest rate of annual growth since 2000.
  • Chicago’s average home price rose by 11.00 percent, its highest annual gain since December 1988.
  • The 10 and 20-City Indices posted their best November home prices since 2005.

Top year-over-year gains in home prices included Las Vegas, Nevada at 27.30 percent, San Francisco, California at 23.20 percent, Los Angeles, California at 21.60 percent and San Diego, California at 18.70 percent. Atlanta, Georgia rounds out the top five cities with a year-over-year increase in home prices of 18.50 percent.

The annual readings for the S&P/Case-Shiller 10 and 20-City Housing Market Indices in November suggests that U.S. markets are strong enough to sustain momentum in spite of rising mortgage rates. The month-to-month results show that both indices decreased by an incremental 0.10 percent in November, 2013.

Keeping in mind the traditional slump in home sales during the winter and holiday season, lower month-to-month readings were neither unexpected nor disappointing.

Eight of the nine top cities posting the highest month-to-month growth in home prices were located in the Sun Belt. San Diego, California and Minneapolis, Minnesota home prices remained nearly flat after decreasing in October.

Nine of the 20 cities surveyed posted positive month-to-month growth in home prices. Of the nine cities, only Boston, Massachusetts and Cleveland, Ohio were not located in the Sun Belt.

S&P/ Dow Jones Index Committee Chairman Expects Slower Growth In 2014

David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, noted that November’s month-to-month readings for the 10 and 20-city home price indices indicated that Phoenix, Arizona, Los Angeles California and Las Vegas, Nevada had each posted 20 or more consecutive months of rising home prices.

While positive in his remarks about increasing home prices, Mr. Blitzer also noted that indicators suggested a slower rate of growth during 2014.

This aligns with previously released economic news citing uncertainty about mortgage rates that may continue to rise as the Federal Reserve continues tapering its monthly asset purchases under its quantitative easing program.

The Fed’s FOMC meeting is scheduled to end Wednesday, January 29, at which time the committee’s customary statement will indicate whether or not the Fed’s monthly asset purchases will be reduced from their current level of $75 billion.

On the positive side, Chairman Blitzer said that the low inflation rate (1.50 percent in 2013) and rising home prices are helping homeowners accumulate home equity at a faster pace.

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Existing Home Sales Reach Highest Level In 7 Years

Existing Home Sales Reach Highest Level In 7 YearsThe NAR provided great year-end news as existing home sales in December pushed 2013 sales of existing homes to a 7 year high. December’s reading of 4.86 sales of pre-owned homes came in at 4.87 million on a seasonally adjusted annual basis.

Although projections had been for 4.89 million sales, the December reading topped November’s revised sales of 4.82 million pre-owned homes.

December’s reading showed the first gain in existing home sales in three months. NAR reported that existing home sales for 2013 reached 5.09 million, which represented a 9.10 percent increase over 2012.

More Good News: Median Price Of Existing Homes Rises

NAR reported that the national median price for pre-owned homes increased to $198,000, a year-over-year increase of 9.90 percent. The average price of an existing home for all of 2013 was $197,100. This was the strongest growth in existing home prices since 2005 and represented an increase of 11.50 percent.

There were 1.86 million pre-owned homes for sale in December. At current sales rates, this represents a 4.60 month inventory. Real estate pros like to see a minimum of a six-month supply of available homes, so existing homes remain in short supply.

Analysts attributed rising home prices to improving economic conditions and a persistent shortage of homes for sale.

FHFA: Slower Gain for Home Prices In November

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that November prices of homes financed with mortgages owned or guaranteed by the two agencies rose by a seasonally adjusted 0.10 percent as compared to October’s increase of 0.50 percent and an expected growth rate of 0.40 percent.

November’s reading brought year-over-year home sales to an increase of 7.60 percent, but is still 8.90 percent below their April 2007 peak.

Analysts noted that recent reports of increasing new home construction and rising new home sales as reasons why prices of existing homes are seeing slower growth.

Case Shiller Price Index Shows Highest Year-Over-Year Gains Since 2006

Case Shiller Price Index Shows Highest Year-Over-Year Gains Since 2006The Case-Shiller 10 and 20-City Home Price Indices for October were released on December 31. Although home prices in most cities continued to show year-over-year gains, the pace of home price appreciation is expected to slow in 2014.

Year-over-year increases have been in double digit territory since March 2013, but month-to-month readings suggest that the rate of increasing home prices is slowing.

According to David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, “…the monthly numbers show that we are living on borrowed time and the boom is fading.”

The 10 and 20 city indices are showing that home prices some cities that were showing little or no growth in 2013 are posting higher rates of appreciation, while growth in cities that have shown very high increases in home prices are beginning to lose momentum.

Year-over-Year Growth In Double Digits

The 10-and 20-city indices each posted year-over year gains of 13.60 percent between October 2012and October 2013. These were the highest year-over-year gains since February of 2006.

Home prices recovered to mid-2004 levels in October, but remained 20 percent lower than peak home prices seen in June and July of 2006.

Here are figures for 10 cities showing the highest increases in home prices year-over-year in October 2013:

City                                                                        Y-O-Y Growth Rate

Las Vegas, NV                                              27.10 %

San Francisco, CA                                         24.60%

Los Angeles, CA                                           22.10%

San Diego, CA                                             19.70%

Atlanta, GA                                                  19.00%

Phoenix, AZ                                                 18.10%

Detroit, MI                                                   17.30%

Miami, FL                                                    15.80%

Tampa, FL                                                   15.20%

Seattle, WA                                                 13.10 %

Home prices in the 10 and 20-city indices have gained 23.10 percent and 23.70 percent since home prices reached their lowest points in March 2012.

Month-To-Month Readings Indicate Slower Growth

Month-to-month readings show a slowing trend in home price growth. 18 of 20 cities included in the S&P Case-Shiller Home Price Indices showed slower growth in October as compared to September’s readings.

The Federal Reserve will begin tapering its asset purchases this month and will continue doing so unless economic conditions slow to a point where the Fed considers tapering counter-productive to economic growth.

Concerns over the tapering of “quantitative easing” and higher mortgage rates are seen as contributing to slower gains in home prices.

Although some analysts have identified indicators of economic growth, most seem to agree that home prices are likely to increase by single-digit percentages in 2014.

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