During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable." In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.
The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.
Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.
Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.
Source: “Home Prices Rising at Fastest Pace in 36 Years,” Mortgage News Daily (Aug. 6, 2013) and “Home prices rise again, but at a slower pace,” USA Today (Aug. 6, 2013)
Sales of homes priced at more than $1 million jumped an average 37 percent in 2013’s first half from a year earlier to the highest level since 2007, according to real estate research firm DataQuick Inc. Transactions priced at less than $1 million rose 11 percent in the same period to the highest since 2009, data from the National Association of Realtors show. That means that homes priced at more than $1 million are gaining at triple the pace of the broader market, according to DataQuick.
"When the real estate market was booming, people sat in Starbucks and talked about how much they paid for a house,” said Craig Moe, who in June bought a $1.2 million property discounted 25 percent from its sale six years ago. “Now, they talk about how little they paid and what a bargain they got.”
“The real estate recovery has been built on purchases by middle-class families, even though they haven’t been the ones to flourish during the recovery,” said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School in Pennsylvania. “Now, the economy is getting a vote of confidence from wealthy homebuyers.”
Source: Bloomberg
The national mortgage delinquency rate fell nearly 26 percent in the second quarter compared to the same period last year, according to TransUnion. Every state and the District of Columbia saw an improvement in the mortgage delinquency rate year-over-year.
“This marks the third quarter in a row where we have posted all-time highs in terms of delinquency improvement, and that is very welcome news for both borrowers and their lenders,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.
Several markets have posted double-digit drops: Phoenix saw a 47.7 percent decrease in the delinquency rate, and San Francisco posted a 43.7 percent drop. The states that have had some of the highest mortgage delinquency rates — Florida and Nevada — also posted big drops. Florida saw a 26.8 percent decrease, and Nevada dropped 28.7 percent, according to TransUnion.
“Improving house prices and low interest rates have helped some home owners across the country refinance or sell their way out of mortgage payments they were having difficulty affording,” Martin says.
Source: “Mortgage delinquency rates improve across key markets,” HousingWire (Aug. 6, 2013)
A real estate brokerage has launched a new service called the “price whisperer” that allows home owners to get feedback on a price for their home before actually listing it for sale. Redfin’s new “price whisperer” tool allows potential sellers to gauge the pricing of their home from potential buyers while giving buyers a “sneak peek” at homes not yet on the market.
"The most important decision when selling a home is what price to charge," says Redfin CEO Glenn Kelman. "The traditional process often amounts to a high-stakes guessing game with tens of thousands of dollars at stake for the owner.”
Home owners provide the price they want for their home, while also getting advice from an agent. An agent then takes photos of the property and e-mails up to 250 active buyers with a question whether they would pay that price for this home. The address is not disclosed. Buyers are also asked if they’d like to tour the home.
Redfin says the service is not intended to generate pocket listings. If there is interest in the property, the agent will recommend that the home owner list the property on the Multiple Listing Service before selling.
“Selling directly to a buyer without listing the home on the MLS is called a ‘pocket listing,’ and generally does not benefit the seller,” according to a release from Redfin.
The service is being launched in Boston; Chicago; the Los Angeles area; New York; Portland, Ore.; San Diego; San Francisco Bay area; Seattle; and Washington, D.C.
Source: Redfin
According to a report by Morgan Stanley, the buy-to-rent market is only a fraction of where it could be, and the market is ready for major growth in the coming years.
Morgan Stanley analysts predict that the buy-to-rent market will grow from $17 billion today to more than $100 billion in the next several years. They called it a “sustainable business with a long runway for growth.”
According to analysts, institutional investors may be able to anticipate a more than 10 percent return on investments, as rents nationwide continue to rise.
"Over the past three years, investor activity has removed significant amounts of distressed supply from Southern California, Phoenix and Las Vegas," according to the report. "Consequently, select MSAs in Florida, the Midwest and the Northeast now constitute a greater proportion of the nation’s distressed properties, making them potentially more attractive to institutional buy-to-rent investors."
Source: “Morgan Stanley predicts buy-to-rent boom,” HousingWire (July 31, 2013)
Houston-based real estate consulting firm Metrostudy uses "drive-bys" to help it gauge the health of the residential market in different U.S. metro areas. Employees drive through newly built—or still under construction—housing developments from Texas to Florida and begin observing.
If there are toys on a house's front lawn, for example, that is a good sign that a family has moved in. Another positive sign is if a garden hose is attached to the side of the house. Not only is the home occupied, it also has an owner who cares about his or her property.
Among the bad signs are the absence of curtains in the windows, a high number of empty lots, and newly completed but clearly vacant houses. Metrostudy researchers say these are indicators that a developer may have badly overestimated demand and could soon be saddled with inventory.
Brad Hunter, chief economist of Metrostudy, is projecting double-digit increases in new-home prices for the remainder of 2013. He sees the speculative excess mostly gone from the market. In 2014, though, Hunter forecasts that new-home prices will increase only 6 percent as interest rates continue their upward climb. He concludes, "Mortgage rates could pose a challenge to affordability."
Source: "To Figure Out Where Real Estate Is Headed, Start Driving," Business Week (Aug. 5, 2013)
More happy customers get the keys to their new home in Sarasota. Congratulations Jerry and Carol -- enjoy your new life in Florida!
