Tag Archives: Housing Data

Case-Shiller Reports Home Prices Rise At Slowest Pace In 8 Months, As San Francisco Sales Volume Slump

April was not a good month for home prices – despite hopeful signs from seasonally adjusted sales data. S&P Case-Shiller 20-City index rose just 0.45% MoM (well below expectations and March’s 0.85% gain) – the weakest rise since Aug 2015. The broader Home Price Index hovered near unchanged for the 2nd month – the weakest since January 2012. Most worrisome, perhaps, is the 18.16% YoY plunge in San Francisco home sales… as perhaps the bubble is finally bursting.

20-City (Seasonally Adjusted) Index…

Broad (Seasonally-Adjusted) Home Price Index…

Source: Zero Hedge

Should You Buy A House Today?

By Ramsey Su

Examining the reasons to buy a house today may give us some idea where the housing market is heading in the future.

There are three reasons to buy a house:

Reason 1 – Utility

A house (any dwelling) is a shelter.  It provides enjoyment, a home to raise one’s family, or just a place to watch that big screen TV.  Utility is not quantifiable and it differs from household to household.

Reason 2 – Savings

If financed, a mortgage is a way of saving something every month until the mortgage is paid in full.  If paid for, the savings come in the form of “owners’ equivalent rent”, which is what the census bureau uses to measure inflation in housing.

Reason 3 – Asset appreciation

At 5% appreciation per year, a $100k house today will be worth $412k in 30 years. Even a more modest 3% appreciation would result in better than a double.

 house, modern
Why Not to Buy a House Today

Based on the reasons above, it appears to be a slam dunk decision.  Why would anyone not want to buy a house?  There are three obstacles:

Obstacle 1 – Affordability

Housing, as a percentage of household income, is too expensive.  A decade of ill-conceived government intervention and Federal Reserve accommodations prevented natural economic forces from driving house prices to equilibrium.  As a result, not only is entry difficult, but many are struggling and are stuck in dire housing traps.  Corelogic estimated that as of the 1st quarter of 2015, 10.2% of mortgages are still under water while 9.7 million households have less than 20% equity.

Obstacle 2 – High Risk

Say you are young couple that purchased a home two years ago, using minimal down financing.  The wife is now pregnant and the husband has an excellent career opportunity in another city.  The couple has insufficient savings and the house has not appreciated enough to facilitate a sale, which results in negative equity after selling expenses.  The house can become a trap that diminishes a life time of income stream.

Obstacle 3 – “Dead zones”

Say you live in the middle of the country, in Kane County Illinois.  For the privilege of living there, you pay 3% in property taxes.  That is like adding 3% to a mortgage that never gets paid down.  Your property would have to appreciate 3% per year just to break even. By the way, “appreciation” is unheard of in Kane County, good times or bad.  There are many Kane Counties in the US.  Real estate in these counties should be named something else and should not be co-mingled with other housing statistics.  Employment is continuing to trend away from these areas.  What is going to happen to real estate in these markets?

 courthouseLGThe Kane County court house: where real estate goes to vegetate

The factors listed above are nothing new.  They provide some perspective as to where are are heading.  Looking at each of the reasons and obstacles, they are all trending negatively.

The country is spending too much on housing, a luxury that is made possible by irresponsible Fed policies.  50% debt to income ratios are just insane and Ms. Yellen has the gall to call mortgage lending restrictive.  Can we not see what is happening to Greece?

Fed MBS holdingsMortgage backed securities held by the Federal Reserve System, a non-market central economic planning institution that is the chief instigator of house price inflation. Still growing, in spite of QE having officially ended – via Saint Louis Federal Reserve Research, click to enlarge.

Real estate is an investment that matures over time.  The first few years are the toughest, until equity can be built up.  With appreciation slowing, not to mention the possibility of depreciation, it is taking much longer to reach financial safety.  The current base is weak, with too high a percentage of low equity and no equity ownership.  The stress of a recession, or just a few years of a flat market, can impact the economy beyond expectations.  The risks that might have been negligible once upon a time are much higher today.  Many who purchased ten years ago are still living with the consequences of that ill-timed decision today.

By stepping back and looking at the big picture, we can see that real estate should be correcting and trending down.  The reasons why our grandparents bought their homes have changed.  Government intervention cannot last forever.  It will change from accommodation to devastation, when they finally run out of ideas.

Conclusion

In summary, my working life had its origins in real estate and I am not trying to bite the hand that fed me.  However, the reality is that the circumstances that prevailed when I entered the market are non-existent today.  I seriously doubt that I would chose real estate as a career, or as an investment avenue, if I were starting over.  As for buying a house, I would consider it more of a luxury as opposed to an investment, and one has to be prepared for the possibility of it being a depreciating asset, especially if one decides to move.

U.S. Median Home Price in October Increases to Highest Level Since September 2008, Still 19 Percent Below Peak

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– Price Appreciation Slowing in More than Half of Major U.S. Markets –
  – 20 Major Metros Reach New Post-Recession Price Peaks in 2013 or 2014 –
  – REO and Short Sales Down from a Year Ago, Foreclosure Auction Sales Increase –

IRVINE, Calif. – Nov. 26, 2014 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its October 2014 Residential & Foreclosure Sales Report, which shows the median sales price of U.S. single family homes and condos in October was $193,000, up 2 percent from the previous month and up 16 percent from a year ago to the highest level since September 2008 — a 73-month high.

“This U.S. recovery is largely being driven by investors, and as the lower-priced, often distressed inventory most appealing to investors dries up in a given market, investor activity will slow down in that market and move to other markets with more ideal inventory available,” said Daren Blomquist, vice president at RealtyTrac. “This has created a ripple-effect recovery moving out from traditional investor hot spots such as Phoenix, Atlanta and many California markets and into markets such as Charlotte, Columbus, Ohio, Dallas and Oklahoma City.

“More than 32 percent of all single family homes and condos purchased so far in 2014 are non-owner occupied compared to 68 percent that are owner-occupied,” Blomquist added. “That is the highest share of investor purchases since we began tracking in 2001.”

The October median sales price — which included both distressed sales of homes in some stage of foreclosure and non-distressed sales — was up 37 percent from a trough of $141,000 in March 2012 but still 19 percent below the previous peak of $237,537 in August 2006. Among 97 metropolitan statistical areas with a population of 500,000 or more with sufficient home price data, 20 have reached new post-recession median sales price peaks in 2013 or 2014, including Denver, Pittsburgh, Columbus, Ohio, and Charlotte.

“Home prices have risen substantially in the lower price ranges — generally under $400,000.  That has led most underwater properties out of trouble,” said Phil Shell, Managing Broker of RE/MAX Alliance, covering the Denver market, where median home prices reached a new post-recession peak in July 2014.  “We are seeing a ‘compression’ in the market because we are experiencing record low inventories.  Prices on the low end are coming up, and while the high end is not necessarily coming down, it has flat-lined.  So we are seeing prices compress in the middle.  A homeowner wanting to move up into the market at $550,000 or above will find substantial value and a terrific opportunity.”
 
 The median sales price of distressed homes — those in the foreclosure process or bank-owned — was $128,701 nationwide in October, 36 percent below the median sales price of non-distressed properties, $200,000. But distressed home prices increased at a faster pace, up 18 percent from a year ago while non-distressed home prices were up 11 percent during the same time period.

“The demand is strong for a lessening distressed inventory and pushing prices to their highest level since 2008,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market. “Additionally, due to the long delay in our judicial foreclosure system we are now seeing a higher quality of distressed inventory being liquidated, although overall home prices have begun to gradually level off over the past few months as the market normalizes.”

Markets with highest home price appreciation
Among metro areas with a population of 500,000 or more and sufficient home price data, those with the biggest annual increase in median sales price were Toledo, Ohio (up 33 percent), Detroit (up 27 percent), Cleveland (up 21 percent), McAllen-Edinburg-Mission, Texas (up 21 percent), and Dayton, Ohio (up 20 percent).

Other major markets with double-digit appreciation compared to a year ago included Memphis, Tenn. (up 18 percent), Austin, Texas (up 17 percent), Miami (up 16 percent), Houston (up 16 percent), Cincinnati (up 15 percent), and Chicago (up 15 percent).

“While price appreciation has leveled off month to month, home prices have increased significantly from a year ago and we expect this trend to continue,” said Craig King, COO of Chase International, covering the Lake Tahoe and Reno, Nev., markets.  The median sales price in Reno was unchanged from September to October but up 15 percent from a year ago — the 29th consecutive month with a year-over-year increase in the market.

“A number of things have lined up regionally to provide game changing growth as we look forward,” continued King. “The world is aware that Tesla is making a move in to Northern Nevada with their Giga factory, but there are other huge projects on tap as well.  Collectively, these projects could account for population gains of 20 to 25 percent in the region over the next four to five years. With limited inventory the demand for housing will be unprecedented.”

Markets with accelerating home price appreciation
Home price appreciation accelerated in 45 of the 97 (46 percent) metro areas nationwide with a population of half a million or more and with sufficient home price data.

Markets with the fastest-accelerating appreciation included Cincinnati (15 percent annual appreciation this year compared to 4 percent annual depreciation last year), Cleveland (21 percent annual appreciation this year compared to 2 percent annual appreciation last year), Nashville (13 percent annual appreciation this year compared to 1 percent annual appreciation last year), Charlotte (10 percent annual appreciation this year compared to 1 percent annual depreciation last year), and Columbus, Ohio (14 percent annual appreciation this year compared to 3 percent annual appreciation last year.

Other major markets with accelerating home price appreciation were Chicago (15 percent annual appreciation this year compared to 11 percent a year ago), Dallas (11 percent annual appreciation this year compared to 7 percent a year ago), Pittsburgh (8 percent annual appreciation compared to 5 percent a year ago), Seattle (10 percent annual appreciation this year compared to 7 percent a year ago), Tampa (15 percent annual appreciation this year compared to 12 percent a year ago) and  Baltimore (2 percent annual appreciation this year compared to 0 percent a year ago).

“The continued rise in Seattle median home prices is largely a result of a strong local economy, low housing supply, and high buyer demand,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market. The percentage of distressed home sales in Seattle has returned to pre-mortgage crisis levels, with activity being driven by the hardships that have always instigated short sales, such as job loss, divorce, illness, and job relocation. Most of the distressed properties have shifted into the outlying areas around Seattle and are selling for well under the median home price.” 

Markets with slowing home price appreciation
Home price appreciation slowed compared to a year ago in 52 of the 97 (54 percent) metro areas nationwide with a population of half a million or more and with sufficient home price data.

Some of the fastest-appreciating markets in 2013 have seen substantial slowdowns in price appreciation this year, including Phoenix (6 percent annual appreciation in October 2014 compared to 25 percent a year ago), Los Angeles (9 percent annual appreciation this year compared to 24 percent a year ago), Oxnard-Thousand Oaks-Ventura in Southern California (7 percent annual appreciation this year compared to 24 percent a year ago), Jacksonville, Fla. (4 percent annual appreciation this year compared to 23 percent a year ago), Boston (3 percent annual appreciation this year compared to 21 percent a year ago), and San Diego (8 percent this year compared to 19 percent a year ago).

Other major markets with decelerating home price appreciation in October were New York (1 percent annual appreciation this year compared to 4 percent a year ago), Philadelphia (4 percent annual depreciation this  year compared to 5 percent annual appreciation a year ago), Houston (16 percent annual appreciation this year compared to 27 percent a year ago), Miami (16 percent annual appreciation this year compared to 20 percent a year ago), Atlanta (13 percent annual appreciation this year compared to 25 percent a year ago), and San Francisco (12 percent annual appreciation this year compared to 34 percent a year ago).

Las Vegas, Central California and Central Florida post highest distressed sale share
Short sales and distressed sales — in foreclosure or bank-owned — combined accounted for 13.8 percent of all residential property sales in October, up slightly from 13.7 percent the previous month, but down from 14.7 percent in October 2013.

Markets with the highest percentage of distressed and short sales combined were Las Vegas (33.6 percent), Stockton, Calif., (33.6 percent), Modesto, Calif., (31.7 percent), Lakeland, Fla., (28.9 percent), and Orlando (28.4 percent).

Short sales share close to pre-recession levels nationwide, up from a year ago in 12 states
Short sales accounted for 5.0 percent of all residential property sales in October, unchanged from the previous month and a year ago and not far above the pre-recession average of 4.5 percent a month in 2006.

Markets with the highest percentage of short sales were in Orlando (14.2 percent), Lakeland, Fla., (13.0 percent), Palm bay-Melbourne-Titusville, Fla., (11.8 percent), Cape Coral-Fort Myers, Fla., (11.8 percent), and Las Vegas (11.5 percent).

Twelve states saw an increase in short sales share compared to a year ago, including New Jersey (7.1 percent compared to 4.6 percent a year ago), Illinois (9.9 percent compared to 6.6 percent a year ago), Maryland (9.3 percent compared to 7.2 percent a year ago), Ohio (5.4 percent compared to 4.7 percent a year ago), Nevada (10.8 percent compared to 9.8 percent a year ago), California (4.6 percent compared to 4.3 percent a year ago), Michigan (6.5 percent compared to 6.2 percent a year ago) and Arizona (5.8 percent compared to 5.6 percent a year ago).

Bank-owned sales share matches lowest level since January 2011
Sales of bank-owned properties nationwide accounted for 7.5 percent of all U.S. residential sales in October, the same as previous month but down from 9.1 percent a year ago. The share of bank-owned sales in September and October was the lowest share since January 2011.

Markets with the highest percentage of bank-owned sales were in Stockton, Calif. (23.5 percent), Modesto, Calif., (19.3 percent), Bakersfield, Calif., (18.8 percent), Las Vegas (18.6 percent), Riverside-San Bernardino, Calif., (18.3 percent), and Phoenix (16.4 percent).

“Distressed sales remain a small percentage of the overall marketplace in Southern California as prices stabilize and market health continues to improve,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market.

Foreclosure auction sales share increases most in Midwest, Rust Belt cities
Sales at the public foreclosure auction accounted for 1.3 percent of all U.S. residential property sales in October, up from 1.2 percent in September and up from 0.7 percent in October 2013.

Markets with the highest percentage of sales at foreclosure auction were Lakeland, Fla. (5.4 percent), Orlando (4.2 percent), Palm Bay-Melbourne-Titusville (4.1 percent), Miami (4.1 percent), Tampa (4.0 percent) and Las Vegas (3.5 percent).

Markets with the biggest annual increases in share of foreclosure auctions were Des Moines (1.9 percent compared to 0.1 percent a year ago), Akron, Ohio (2.1 percent compared to 0.1 percent a year ago), Philadelphia (1.9 percent compared to 0.1 percent a year ago), Chattanooga, Tenn., (1.3 percent compared to 0.1 percent a year ago), and Fresno, Calif., (0.9 percent compared to 0.1 percent a year ago).

Major metros with an annual increase in share of foreclosure auction sales included Dallas (1.8 percent compared to 0.4 percent a year ago), Cincinnati (1.2 percent compared to 0.3 percent a year ago), Columbus (3.0 percent compared to 0.7 percent a year ago), San Antonio (1.5 percent compared to 0.4 percent a year ago), Cleveland (2.2 percent compared to 0.6 percent a year ago), Houston (1.6 percent compared to 0.6 percent a year ago), Jacksonville, Fla., (3.5 percent compared to 1.4 percent a year ago), Oklahoma City (1.3 percent compared to 0.8 percent a year ago), Virginia Beach (1.4 percent compared to 0.8 percent a year ago), and Atlanta (2.3 percent compared to 3.3 percent a year ago).

Report methodology
The RealtyTrac U.S. Residential Sales Report provides counts and median prices for sales of residential properties nationwide, by state and metropolitan statistical areas with a population of 500,000 or more. Data is also available at the county level upon request. The report also provides a breakdown of short sales, bank-owned sales and foreclosure auction sales to third parties. The data is derived from recorded sales deeds and loan data, which is used to determine cash sales and short sales. Sales counts for recent months are projected based on seasonality and expected number of sales records for those months that are not yet available from public record sources but will be in the future given historical patterns. Statistics for previous months are revised when each new monthly report is issued as more deed data becomes available for those previous months.

Definitions
Residential property sales: sales of single family homes, condominiums/town homes, and co-ops, not including multi-family properties.

Annualized sales: an annualized estimate of the number of residential property sales based on the actual number of sales deeds received for the month, accounting for expected sales records for that month that will be received in future months as well as seasonality.

Distressed sales: sale of a residential property that is actively in the foreclosure process or bank-owned when the sale is recorded.

Distressed discount: percentage difference between the median distressed sales price and the median non-distressed sales price in a given geographic area.

Bank-Owned sales: sales of residential properties that have been foreclosed on and are owned by the foreclosing lender (bank).

Short sales: sales of residential properties where the sale price is below the combined total of outstanding mortgages secured by the property.

Foreclosure Auction sales: sale of a property at the public foreclosure auction to a third party buyer that is not the foreclosing lender.

Report License
The RealtyTrac U.S. Residential & Foreclosure Sales report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193800.462.5193 or datasales@realtytrac.com.

About RealtyTrac
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 129 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac’s housing data and foreclosure reports are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

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