Category Archives: North Salem

Should Home Prices Rise Over Time? | Pound Ridge NY Real Estate

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Nationwide home prices are up 8% over the last year, according to the Case-Shiller housing index.

This isn’t surprising. The supply of existing homes for sale is at a seven-year low. Construction of new homes is still well below the rate of household formation. Prices will almost always rise in that situation. It’s simple supply and demand. And it’s pulled millions of homeowners out from being underwater on their mortgage and brought new hope to the housing industry, boosting shares of D.R. Horton (NYSE: DHI  ) and NVR (NYSE: NVR  ) as the outlook for construction rises. 

That’s the good news. But what should homeowners expect the price of their house to do over time?

In this video, Fool analysts Morgan Housel and Matt Koppenheffer tackle that question.

via fool.com

Lending remains low at Wells Fargo and JPMorgan | North Salem Real Estate

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Both JPMorgan Chase ($49.01 -0.3%) and Wells Fargo [stock] [/stock] predict reduced mortgage-related profit margins for the rest of the year, in addition to already lower profits off home loans, according to an article in the Huffington Post. 

Banks willingness to lend is based off their ratio of loans to deposits. Following that guideline, JPMorgan’s enthusiasm for lending fell last quarter to 60.6%, the lowest level in at least five years. 

Yet while Wells Fargo increased its total loans 4% to $800 billion and JPMorgan grew its lending 1.1% to $728.9 billion, both lenders are failing to take advantage of the flood of cheap deposits that historically has led to increased loan activity.

via housingwire.com

Realtor.com: Broad-based Recovery Underway | Pound Ridge NY Real Estate

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While the median national list price rose by only a modest amount in March, all indicators suggest that a broad-based housing recovery is beginning to take hold across the nation as a whole. List prices are appreciating at a year-over-year basis in more than 100 of the 146 markets tracked by Realtor.com and nearly all are within reach of achieving positive year-over-year price growth by the end of the year. A successful spring market could move the entire nation into the black.

The recovery is broadening and reaching smaller markets and markets that still have significant foreclosure inventories and local employment problems. Of the 146 markets tracked by Realtor.com, only 42 still report negative year-over-year prices compared to 63 in December. Prices rose in all by three of these markets in March.

List prices are down more than 5 percnt in only six of Realtor.com’s 146 markets: Roanoke VA, Akron OH, Dayton-Springfield OH, Springfield IL, Columbia MO and Peoria-Pekin IL.

While the number of markets experiencing year-over-year list price declines increased in the second half of 2012, this pattern appears to have turned around in the past three months. Since the beginning of the year, a growing number of markets have experienced a YOY increase in their list price, while a declining number have experienced a YOY list price decline. These patterns suggest that 2013 could well see a broad-based recovery of the housing market.

Inventories on Realtor.com continue to be down significantly on a year-over-year basis (-15.22%). The size of the for-sale inventory is now roughly half of its 2007 peak. These historically low inventories set the stage for continued broad-based recovery and the change over from buyers’ to sellers’ market.

Realtor.com reported the total U.S. for-sale inventory of single family homes, condos, townhomes and co-ops remained at near-record lows in March, with 1,529,432 units for sale. While the inventory was down by 15.22 percent compared to a year ago, the national inventory increased for the second month in a row, growing by 2.35 percent in March.

The national median age of the inventory fell to just 78 days in March, down by 20.41 percent over the month and by 12.35 percent on a year-over-year basis. The sudden decline in the age of listings indicates that volumes of new listings are flooding into markets across the nation in preparation for the spring season.

The net increase in listings coupled with the 20 percent decline in the median age of listings suggests that seller confidence is responding to higher prices and positive price forecasts.

via realestateeconomywatch.com

Will rising mortgage rates undermine home prices? | Pound Ridge NY Real Estate

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Thanks to freakishly low interest rates, many homeowners with mortgages are able to make their monthly house payments using a much smaller percentage of their income than has been the historical norm, an analysis by Zillow shows.

But home prices are actually more expensive relative to median annual incomes than they were during the pre-boom years, which raises a troubling question: What happens when the economy improves and interest rates go up?

Because housing affordability is more highly dependent on interest rates than it has been in the past, when rates go up, home values will either have to remain stagnant while incomes catch up, or home values may even have to fall in some markets, said Stan Humphries, Zillow’s chief economist.

Some homebuyers could find themselves newly underwater if rising mortgage interest rates depress home values in their markets.

“Those buyers purchasing with little money down and high initial mortgage balances will be more at risk for slipping underwater if home prices fall marginally,” Humphries said. “Many homebuyers financing their purchase with a mortgage backed by the Federal Housing Administration can put down as little as 3.5 percent of the home price in down payment, and these buyers could be more susceptible to falling into negative equity even with modest home value declines.”

U.S. homeowners in the fourth quarter of 2012 devoted 12.6 percent of their median monthly incomes to mortgage payments, according to Zillow. That’s close to 37 percent more than homeowners paid from 1985 to 1999, Zillow says, when mortgages took up 19.9 percent of a typical homeowners’ median monthly income.

via inman.com