Housing and Economic Forecast Brightens

http://rismedia.com/rrein/8617/91376/4582391/37053

Housing and Economic Forecast Brightens

RISMEDIA, Thursday, May 24, 2012— Positive underlying economic factors are helping relieve a pent-up housing demand, according to a presentation at a residential real estate forum at last week’s REALTORS® Midyear Legislative Meetings & Trade Expo. National Association of Realtors® Chief Economist Lawrence Yun says there are many improving factors that are helping home sales. "Historically high housing affordability conditions, ongoing job creation, a solid stock market recovery, rising rents, a larger pool of qualified renters, a pent-up demand and improving confidence are drawing buyers to the market," he says. "Smart money, largely from investors responding to low home prices and rising rents, is chasing real estate, and we could see a potential surge once the broad perception of homeownership changes to that of an appreciating asset," Yun says. "We just finished the strongest first quarter for home sales in five years, pending contracts are pointing to a strong second quarter, and the favorable conditions are helping the economy recover from an unusual slowdown in household formation in recent years with more young people now leaving their parents' homes." Despite a minor gain in total home sales last year, owner-occupied sales fell. "A recovery in investment- and vacation-home sales and a high proportion of all-cash deals are hiding the current dysfunctional mortgage market," Yun says. "Tight mortgage credit is holding back a stronger recovery. Banks are hoarding cash, possibly from regulatory uncertainties and lawsuits." Home sales had been basically flat from 2008 through 2011. Yun forecasts 4.6 to 4.7 million existing-home sales in 2012, up strongly from 4.26 million last year, and additional improvement in 2013 with sales rising to the range of 4.7 to 4.8 million. Mortgage interest rates are projected to rise gradually and then average 4.9 percent in 2013 -- still historically favorable. "The pressure of rising rents on consumer inflation could force the Federal Reserve to raise interest rates in 2014, which might be good for home sales. Refinancing would fall and bank staff would be able to focus more on mortgage origination for home purchases," Yun says. Inflation currently remains under control with the Consumer Price Index rising about 2.4 percent this year and 2.8 percent in 2013. Yun expects the Gross Domestic Product to grow 2.4 percent this year and 3.1 percent in 2013, adding 2.2 million jobs this year and 2.5 million in 2013. Housing starts, which have been well below the long-term average of about 1.5 million, are expected to rise to 770,000 this year from 610,000 in 2011, and to continue growing to 970,000 in 2013. New-home sales are seen at 400,000 this year, up from a record low 306,000 in 2011, and rising to 530,000 in 2013. "With a growing population, we could see housing shortages in 2014 or 2015 if builders don't increase production," Yun said. A sustained decline in housing inventory -- both for listed homes and "shadow inventory" of those with seriously delinquent mortgages -- is the biggest factor affecting home prices, with broadly balanced conditions developing in much of the country. Yun says the median existing-home price is likely to improve modestly this year, rising just over 1 percent, with a gain of about 3 percent forecast for 2013. Yun's forecast assumes no adverse Washington policy or tax changes affecting homeownership. He adds there would be significant economic fallout if there is no new budget compromise by the end of the year. Raven Molloy, Senior Economist at the Federal Reserve Board of Governors in Washington, D.C., offers her personal assessment on one residential trend. "Internal migration in the United States is at a 30-year low, and has been declining since the 1980s," she says. "The widespread nature of the decrease suggests that the drop in mobility is not related to demographics, income, employment, labor-force participation, or homeownership." Most short-distance moves are housing related, such as needing a larger home, while most long-distance moves are job related. Younger households move more frequently. Her research shows the downtrend in mobility has been a fairly steady trend over time, with no sharp drops coinciding with the housing market downturn or economic recession. Although renters move much more frequently than homeowners, the aging of the population may be a factor in the general slowdown. Molloy notes that migration out of states with many underwater homeowners has not fallen more than in other states. However, other research shows that local moves are lower for underwater homeowners. Migration within the U.S. remains higher than it is within most other developed countries. Molloy says the link between migration and macroeconomic performance has received relatively little attention. "High levels of migration may reduce commitment to the provision of local public goods or corrode social ties in other ways, in which case lower mobility might raise aggregate well-being and possibly economic output. This is an important topic for future research." Earlier NAR research found homeownership helps to foster stable communities and economic well-being. For more information, visit www.realtor.org.

Builder Confidence Rises Five Points in May

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Builder Confidence Rises Five Points in May

RISMEDIA, Friday, May 18, 2012— Builder confidence in the market for newly built, single-family homes gained five points in May from a downwardly revised reading in the previous month to reach a level of 29 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This is the index’s strongest reading since May of 2007. “Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” says Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.” “While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” says NAHB Chief Economist David Crowe. “The pace of this emerging recovery could be stronger were it not for the significant impediments that the market continues to face with regard to builder and consumer access to credit, inaccurate appraisals, and more recently, rising materials prices.” Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. Each of the index’s components rebounded from declines in the previous month. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007. The component gauging sales expectations in the next six months rose three points to 34. Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.

Waiting to sell for prices to raise? Could be a long wait...

Why U.S. House Prices Won't Recover 

By JACK HOUGH

When will U.S. house prices recover? Likely never. But that's no reason not to buy.

Read full article below from Wall Street Journal "Smart Money"

http://www.smartmoney.com/spend/real-estate/why-us-house-prices-wont-recover-1335877657114/?mg=com-sm

GOOD NEWS! HOUSING IS HEALING!!!

Housing Is Healing: Asking Prices to Show Gain in 2012

RISMEDIA, Thursday, March 15, 2012— For the first time in six years, sellers’ asking prices tracked by the Department of Numbers Website have gone positive on a year-to-year basis, another sign that the housing economy is slowly healing itself. Sellers’ asking prices nationally first showed a positive year over year gain in December, and increased to 3.9 percent as of March 5. “I wanted to see January’s data follow suit lest I prematurely announce a sign change only to have it reverse direction the following month. Of course there’s nothing that precludes that even with two months of positive Y/Y numbers, but it does tell me that the housing market is slowly healing itself,” wrote Ben Engebreth, an independent programmer and data analyst who operates the site. As of March 5, 2012 there were about 858,688 single family and condo homes listed for sale in the 54 metro areas Engebreth tracks. The median asking price of these homes was estimated to be $224,322.2. Since this time last year, the inventory of homes for sale has decreased by 20.5 percent and the median price has increased by 3.9 percent. “The Y/Y inventory decline of roughly 15 percent (which puts it at an all-time low for the series) offers additional supporting evidence. That’s not to say that we’ll be returning to rapid price appreciation any time soon; I certainly don’t foresee that,” Engebreth wrote. The median asking price for homes in the US peaked in June 2006 at $319,459 and is now $95,137 (29.8 percent) lower. From a low of $211,844 in January 2011, the median asking price in the US has increased by $12,477 (5.9 percent). In its January data, REALTOR.com, the massive listings site which also tracks asking prices, reported list prices were up 3.69 percent on the year in the 146 metros it covers. The site reported the top four markets in terms of year over year increases were all in Florida: Miami (up 32.75 percent), Fort Myers-Cape Coral (up 21 percent), Punta Gorda (up 19.33 percent), and West Palm Beach (up 18.60 percent). Inventory was down 23.20 percent on the year. For more information, visit www.realestateeconomywatch.com.