Monthly Archives: May 2015

S&P Case Shiller: House prices beat expectations, gain 1% in March | South Salem Real Estate

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S&P Case Shiller’s adjusted 20-city house price index rose a very solid and slightly higher-than-expected 1.0% in March with gains across all cities and well balanced gains across all regions.

These gains, however, were not confirmed by the Federal Housing Finance Agencyhouse price index, which rose a lower-than-expected 0.3% in March. The most optimistic reading for March came from Black Knight Financial Services (BKFS), a Fidelity National Financial (FNF) company.

Black Knight’s index says that home prices were up 1.2% in the month of March and up 4.8% on a year-over-year basis. Those totals represent the largest monthly gain in national home prices since June 2013.

“As we move deeper into the traditional home buying season, the low level of homes for sale in many markets is continuing to push prices higher,” said Quicken Loans Vice President Bill Banfield. “Once more owners realize the opportunity to sell their home, price gains will slow and prices may even dip in response to the greater choice for buyers.”

Year-on-year readings in both the S&P and FHFA reports show an improving trend, at a moderate 5% for Case-Shiller and plus 5.2% for FHFA.

“Home prices have enjoyed year-over-year gains for 35 consecutive months,” says David Blitzer, Managing Director & Chairman of the Index Committee for S&P Dow Jones Indices. “The pattern of consistent gains is national and seen across all 20 cities covered by the S&P/Case-Shiller Home Price Indices. The longest run of gains is in Detroit at 45 months, the shortest is New York with 27 months. However, the pace has moderated in the last year; from August 2013 to February 2014, the national index gained more than 10% year-over-year, compared to 4.1% in this release.

 

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http://www.housingwire.com/articles/33987

New home sales jump in April even as prices gain | Katonah Real Estate

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Sales of new single-family houses in April 2015 were at a seasonally adjusted annual rate of 517,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This comes after a big drop in March which saw just 481,000 new home sales, the biggest drop in almost two years and primarily driven by a precipitous drop in sales in the Northeast in March.

This is 6.8% above the revised March rate of 484,000 and is 26.1% above the April 2014 estimate of 410,000.

The big driver of the gain was one of the smaller home regions, the Midwest, which saw a jump from 57,000 to 78,000 sales. In April the West and Northeast both saw declines.

The median sales price of new houses sold in April 2015 was $297,300; the average sales price was $341,500 – both up from March.

 

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http://www.housingwire.com/articles/33989

Increase for Typical New Multifamily Residence Size | Bedford Hills Real Estate

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An elevated market share for rental multifamily homes is holding typical new apartment size below levels seen during the housing boom. However, as multifamily developers build more for-sale housing units in the years ahead, the average size of multifamily homes is likely to rise. The recent pattern of change in the size of new multifamily units stands in contrast to the post-recession increase in the size of typical new single-familyhomes.

According to first quarter 2015 data from the Census Bureau and NAHB analysis, the average per unit square footage of multifamily housing construction starts was 1,238, setting a post-recession high. The median was 1,121 square feet, near the cycle high.

MF unit size_1q15

Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the first quarter of 2015, the one-year moving average for the multifamily size was 1,188 square feet, while the median was 1,103.

The current quarterly median is 4% higher than the post-recession low, and the average is 6% higher.

The typical size of newly built multifamily units remains below the averages/medians recorded during the boom years, when the share of for-sale multifamily was considerably higher. The share of multifamily housing starts built for-rent fell to a historical low of 47% during the third quarter of 2005. It is currently (96%) above the approximate 80% share recorded during the 1980-2002 period due to the ongoing surge in rental demand.

MF built for rent

The reason for some of the recent change in multifamily average size is due to market mix. Renters tend toward smaller units than owner-occupiers. In 2012, for example, the median size of all multifamily units completed was 1,098 square feet. However, for rental apartments the median was 1,081, while it was a larger 1,466 for for-sale multifamily residences.

 

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http://eyeonhousing.org/2015/05/increase-for-typical-new-multifamily-residence-size/

Existing Home Sales Pause | Bedford Real Estate

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Existing home sales declined 3.3% in April, despite the fact that almost half of April sales remained on the market less than one month. The National Association of Realtors (NAR) reported April 2015 total existing home sales at a seasonally adjusted rate of 5.04 million units combined for single-family homes, townhomes, condominiums and co-ops, up from an upwardly revised 5.21 million units in March. April existing sales were up 6.1% from the same period a year ago, and have increased year-over-year for seven consecutive months.

Existing Home Sales April 2015

Existing sales in the Midwest increased 1.7% from the previous month, but fell in the other regions, ranging from 1.7% in the West to 6.8% in the South. Year-over-year, all four regions increased, ranging from 13.0% in the Midwest to 1.6% in the Northeast.

The first-time buyer share remained unchanged at 30% in April, compared to 29% in February and 28% in January. The first-time buyer participation remains well below the historically typical 40% share.

Total housing inventory increased 10.0% in April to 2.21 million existing homes, which was still 0.9% below the 2.23 million level during the same month a year ago. At the current sales rate, the April unsold inventory represents a 5.3-month supply, up from a 4.6-month supply last month. NAR also reported that April homes sold in an average of 39 days compared to 52 days in March, and was the shortest time on the market since July 2013.

The distressed sales share remained unchanged at 10% in April, and was down from 15% during the same month a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts. April all cash sales remained unchanged at 24% of transactions, down from 26% of transactions in February and 27% in January, and were down from 32% in April 2014. Individual investors purchased a 14% share of homes in April, unchanged from March, and down from 18% during the same month a year ago. Some 71% of investors paid in cash in April, compared to 70% in March, and 67% in February and January. The awaited withdrawal of cash investors will create more opportunity for first-time buyers.

 

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http://eyeonhousing.org/2015/05/existing-home-sales-pause/

Too Many Listings, Too Much Time | Pound Ridge Real Estate

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A new study scheduled to be published by the Journal of Housing Economics found that agents who take on too many listings sell them for about 3 percent less and it takes 129 percent longer to sell than agents with modest listing inventories.

The study looked at whether agents have an incentive to take on too many listings—at least from the point of view of their clients. Additional listings may represent additional broker commissions, but they also place greater claims on the broker’s time and energy, which in turn can have adverse sales performance consequences for their clients.

The dilution of agent effort and agency costs by very large numbers of listings adversely affects home prices and liquidity, concluded the study by economists Xun Bian, Bennie D. Waller, Geoffrey K. Turnbull, Scott A. Wentland.

‘It is clear from the results that there is a relationship between agent inventory and sales outcomes that sellers care most about: selling price and time on market. Greater agent inventory is associated with a slightly lower price and a significantly higher time on market,” wrote the authors.

While the adverse impact on price is modest, the effect of agent inventory on liquidity is substantial, the study found. The study found that adding 9 additional listings increases time on market by14%. A richer inventory measure taking into account distance-weighted overlapping listings yields a 26% effect on liquidity.

The study also compared sales of agent-owned homes versus homes owned by clients and found that agents generally sell their homes for approximately 1.6% more than client properties. Inventory competition increases the time on market by 26% for clients, but only 12% for agents. In sum, agent-owned homes still take longer to sell with additional inventory but not as long as client properties. This supports the theory that the inventory effect is driven primarily by agent incentives.

 

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http://www.realestateeconomywatch.com/2015/05/

Rising Rents are Backfiring | Armonk Real Estate

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A new survey by Freddie Mac finds that soaring rents are not turning renters into homeowners, but actually delaying homeownership for many.

Of those who experienced a rent increase in the past two years, 70 percent would like to buy a home but cannot afford to at this point. Half (51 percent) said that they now have to put off their plans to purchase a home. Some 44 percent indicated they’d like to buy a home and have started looking.

“We’ve found that rising rents do not appear to be playing a significant role in motivating renters to buy a home,” said David Brickman, EVP of Freddie Mac Multifamily. “This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. We believe rising rents are primarily a sign dsof increased demand rather than a signal that home purchases will be increasing.”

Brickman added, “Growth in the number of renter households is occurring amid an improving job market and economy. The demand for rental housing is increasing and an estimated 440,000 new apartment units are needed each year to keep up with demand.”

Rents rose 3.6 percent in 2014 and are expected to rise 3.4 percent above inflation this year. More than one-third of U.S. households now rent their homes, and renters account for all net new household growth over the last several years, according to the U.S. Census Bureau.

More than a third (38 percent) of renters who have lived in their home two years or more experienced a rent increase in the last two years, while 6 percent experienced a decrease.

A third of renters in the survey are very satisfied with their rental experience and another 30 percent indicate they are moderately satisfied.  The top favorable factors about renting are freedom from home maintenance, more flexibility over where you live and protection against declines in home prices.

Moreover, the results show some shared positive views across generations with no significant differences between Millennial, Generation X or Baby Boomer renters in their views that renting provides flexibility over where you live and protection against home price decline.

 

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http://www.realestateeconomywatch.com/2015/05/

New Single-Family Home Size Increases at the Start of 2015 | North Salem Real Estate

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The typical size of newly built single-family homes increased at the start of the year. The trend of increasing new home size leveled off in 2014, but new home size increased during the first quarter of 2015 with a decline in the volume of construction. As first-time buyers return to the market, typical home size is expected to trend lower.

According to first quarter 2015 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area increased from 2,445 in the fourth quarter of last year to 2,521 square feet. Average (mean) square footage for new single-family homes increased from 2,677 to 2,736 for the first three months of the year.

SF size_1Q15

On a less volatile one-year moving average, the recent trend of leveling home size can be see on the graph above, although current sizes remain elevated. Since cycle lows and on a one-year moving average basis, the average size of new single-family homes has increased 13% to 2,678 square feet, while the median size has increased 18% to 2,477 square feet.

The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical home size falls prior to and during a recession as some homebuyers cut back, and thensizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions. This pattern has been exacerbated in the last two years due to market weakness among first-time homebuyers.

 

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http://eyeonhousing.org/2015/05/

 

Builders increased building activity in April | Mt Kisco Real Estate

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Builders increased building activity in April to a level not seen since November 2007. Total starts increased 20.2% from March to April to a seasonally-adjusted annual rate of 1.135 million. The increase was broad based with a 16.7% increase in single-family starts to a level of 733,000, the highest since January 2008, and multifamily (2 or more units in the structure) increase of 27.2% to an annual rate of 402,000.

Some of the increase in the total and both sectors was due to poor readings in February and March due to particularly cold and snow-laden weather. But the increases, particularly in the single-family market, are also indicative of the continued healing taking place. Home buyers have been reluctant to buy until there is a clear sign that the economy, and more particularly their own future, is more positive. As employment grows and some wages increase and as home equity improves, some of those households break out of their concerns and are beginning to shop for a new home.

Permits were also up suggesting the positive trend will continue. Total permits rose 10.1% to 1.143 million units, the highest since December 2007. Single-family permits were up 3.7% from March to 666,000 and multifamily permits totaled 477,000 the highest since April 2006. Apartment construction continues to grow as most newly formed households are turning to renting.

Single-family starts increased in all regions and multifamily starts increased in the West and Northeast and were virtually unchanged in the Midwest. Multifamily starts were down 20% in the South. Single-family permits were up in every region and multifamily permits were up in the Northeast and South and virtually unchanged in the West. Multifamily permits were down 6% in the Midwest.

 

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http://eyeonhousing.org/2015/05/winter-slump-over/

Housing Affordability Posts Solid Gain in First Quarter | South Salem Real Estate

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Lower interest rates and home prices contributed to a solid boost in nationwide affordability in the first quarter of 2015, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

“Consumers benefitted from continued low mortgage rates and some fall in the price of homes sold in the first quarter, as these conditions offer a great time to buy,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.

“The past two quarters have seen an improvement in affordability as mortgage rates remain low,” said NAHB Chief Economist David Crowe. “Eighty-five percent of the metropolitan areas measured experienced an increase in affordability. Along with favorable home prices and pent-up demand, this broad improvement should help encourage more buyers to enter the marketplace.”

In all, 66.5 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,800. This is up from the 62.8 percent of homes sold that were affordable to median-income earners in the fourth quarter.

The national median home price declined from $215,000 in the fourth quarter to $210,000 in the first quarter. Meanwhile, average mortgage interest fell from 4.29 percent to 4.03 percent in the same period.

For the second straight quarter, Syracuse, N.Y. remained the nation’s most affordable major housing market, as 95.6 percent of all new and existing homes sold in the first quarter of 2015 were affordable to families earning the area’s median income of $68,500.

Also ranking among the most affordable major housing markets in respective order were Toledo, Ohio; St. Louis; Akron, Ohio; and Harrisburg-Carlisle, Pa.

Meanwhile, Sandusky, Ohio topped the affordability chart among smaller markets in the first quarter of 2015. There, 96.3 percent of homes sold during the first quarter were affordable to families earning the area’s median income of $69,600. Other smaller housing markets at the top of the index included Cumberland, Md.-W.Va.; Elmira, N.Y.; Davenport-Moline-Rock Island, Iowa-Ill.; and Kokomo, Ind.

 

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http://www.nahb.org/en/news-and-publications/Press-Releases/2015/may/housing-affordability-posts-solid-gain-in-first-quarter.aspx

Mortgage rates move higher for third week in a row | Cross River Real Estate

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Average fixed mortgage rates followed 10-year Treasury yields higher and rose for the third consecutive week, according to Freddie Mac.

At 3.85%, the average 30-year fixed-rate mortgage is just below the high for 2015.

“Mortgage rates rose for the third consecutive week as 10-year Treasury yields continued to climb,” said Len Kiefer, deputy chief economist for Freddie Mac.

“The labor market continues to improve with U.S. economy adding 223,000 jobs in April, a solid rebound from merely 85,000 job gains in March. Also, the unemployment rate dipped to 5.4% in April as the participation rate ticked up to 62.8% and jobless claims were far less than expected.”

The 30-year fixed-rate mortgage averaged 3.85% with an average 0.6 point for the week ending May 14, 2015, up from last week when it averaged 3.80%. A year ago at this time, the 30-year FRM averaged 4.20%.

The 15-year FRM this week averaged 3.07% with an average 0.6 point, up from last week when it averaged 3.02%. A year ago at this time, the 15-year FRM averaged 3.29%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.89% this week with an average 0.5 point, down from last week when it averaged 2.90%. A year ago, the 5-year ARM averaged 3.01%.

The 1-year Treasury-indexed ARM averaged 2.48% this week with an average 0.4 point, up from last week when it averaged 2.46%. At this time last year, the 1-year ARM averaged 2.43%.

 

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http://www.housingwire.com/articles/33891-mortgage-rates-move-higher-for-third-week-in-a-row