Has the Housing Market Finally Reached Bottom?

If home buyers or home owners are waiting for the housing market to hit bottom before acting, they may have already missed it.

“The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc., told Bloomberg about the real estate market. “Home sales—both new and existing—and housing starts are now off the bottom.”

Several economists are saying the bottom of the housing market has already been reached, and the market has been showing several signs of progress, including home prices stabilizing and demand increasing. The economists say they’re optimistic about a recovery in the housing market, despite threats of a foreclosure wave coming.

One of the biggest signs that a sustainable housing market recovery is taking shape: Consumer confidence is up.

“Today’s consumer confidence shows labor markets recovering and that confidence is going to allow consumers to go out and buy homes,” Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi in New York, told Bloomberg.

Indeed, real estate professionals have been reporting increased activity among home shoppers this spring, too.

“This year’s selling season is shaping up to be the strongest we’ve seen in years,” says Margaret Kelly, RE/MAX’s chief executive officer. “Although we don’t expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold.”

Source: “Housing Declared Bottoming in U.S.,” Bloomberg News (April 25, 2012)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Housing Market Reaches Turning Point, Economists Say

Economists say the housing market is starting to heal, but too many people aren’t aware of it because they’re judging a housing recovery on the wrong sign: What’s happening with home prices.

Paul Dales at Capital Economics says higher prices won’t be the sign that the housing market is on the mend — that can be a lagging indicator — but rather an increase in overall home sales. And that’s showing signs of improvement: Existing home sales in 2011 rose to 4.26 million compared to 4.19 million in 2010. In the last six months alone, home sales have increased 13 percent.

As a recent article at Fortune points out, “The evidence reminds us that perhaps we should change our expectations of what a housing recovery might look like, particularly following a crisis marked by record foreclosures and a financial crisis that sent the economy into one of the deepest recessions. The recovery we have been anticipating is defined more on the rate at which the glut of vacant properties comes off the market as opposed to any steady rise in prices, which some think won’t happen for another few years.”

Source: “The One Number to Watch for a Housing Recovery,” Fortune (March 20, 2012)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Houston’s Housing Market Posts Big Gains

The sale of single-family homes in Houston soared 16.9 percent last month and reached the highest median price on record for September, the Houston Association of REALTORS® reports.

September has marked the fourth-straight month for sale increases.

The median single-family home price in September was $157,500–the highest on record for a September in Houston, HAR reports. The median price is 1.6 percent higher than the $155,000 median sales price in September 2010.

“The combination of increased closed and pending sales, fewer active listings, and strong pricing suggests that we are entering the fall home-buying season on strong footing,” Carlos Bujosa, HAR chairman, said in a statement.

Source: “Houston Home Sales Rise, Break Price Record,” Houston Business Journal (Oct. 18, 2011)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Tight Credit Hurting the Market

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.23 percent in October from 4.35 percent in September; the rate was 4.95 percent in October 2009.

The national median existing-home price for all housing types was $170,500 in October, down 0.9 percent from October 2009. Distressed homes accounted for 34 percent of sales in October, compared with 35 percent in September and 30 percent of sales in October 2009.

NAR President Ron Phipps clarified that several factors are restraining a housing recovery, even with great affordability conditions. “We’ll likely see some impact from the foreclosure moratorium in the months ahead, but overly tight credit is making it difficult for some creditworthy borrowers to qualify for a mortgage, and we are continuing to deal with a notable share of appraisals coming in below a price negotiated between a buyer and seller,” he said.

“A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable home ownership. In addition, all home valuations should be made by competent professionals with local expertise and full access to market data – there remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed,” Phipps said.

A parallel NAR practitioner survey shows 10 percent of REALTORS® in October report they had a contract cancelled as a result of a low appraisal, and 13 percent report they had a contract delayed; 16 percent said a contract was negotiated to a lower sales price as a result of a low appraisal. According to FHFA, Fannie- and Freddie-backed mortgages that were recently originated show an outstanding performance, even better than during the pre-housing bubble years.

“A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget,” Yun added.

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Analysts Say Housing Is Better But Still Fragile

Analysts are saying that low interest rates and low prices could encourage more people to buy homes soon or refinance the ones they have.

“In most markets, the crash is over and stability is beginning,” said Joel Naroff at Naroff Economic Advisors. “[Real Estate practitioners] are saying it isn’t great, but it’s better than last year. If refinancings get going, that will help consumer confidence.”

Mark Zandi, chief economist of Moody’s Analytics, sees it slightly differently. He thinks lower mortgage rates aren’t going to stop home prices from falling further. “The housing market is still really fragile,” Zandi said.

Source: USA Today, Stephanie Armour (11/11/2010)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Housing Starts Up Slightly

Housing starts rose to a 610,000 annual rate in September, the most since April, and a 0.3 percent increase from a revised 608,000 rate in August, according to figures released Tuesday by the Commerce Department.

At the same time, building permits, a predictor of future activity, fell 5.6 percent to a 539,000 annual rate, the lowest level in more than a year. The decline was mostly driven by multi-family construction, an often volatile space.

“At least we’re making some progress here,” says John Herrmann, senior fixed-income strategist at State Street Global Markets in Boston. “It’s a slow, steady-as-she-goes improvement in builder activity.”

Single-family starts were up 4.8 percent in the South, but they were down 2.9 percent in the Northeast, 8.2 percent in the Midwest, and 3.6 percent in the West.

Source: Bloomberg, Bob Willis (10/19/2010

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Home Glut Blamed on Fewer New Households

There were 357,000 new households created between March 2009 and March 2010, down from about 1.3 million per year between 2002 and 2007, according to U.S. Census Bureau data.

With household formation at a 63-year low, the supply of homes on the market is nearing a record high. “When people are afraid of losing their jobs or not being able to get into the job market, they are not thinking about buying a home,” explains NATIONAL ASSOCIATION OF REALTORS ® spokesman Lucien Salvant. “Many opt to stay at home with parents, or to share rentals with friends.”

The Census Bureau reports a 14.5 percent gross vacancy rate in the nation’s housing at the close of the second quarter. Normally, demand for replacement homes and second homes, a jump in new households, and nonresidential to residential conversions mean approximately 1.7 million new units are needed each year to satisfy demand. Foreclosures alone are not responsible for the housing glut, with experts pointing out that household formation has fallen along with immigration and marriage rates.

Source: Philadelphia Inquirer, Alan Heavens (10/12/10)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC

Housing Less Likely to Be Wealth Builder

The housing market may stabilize, but some economists believe that real estate will never again be the investment it once was.

Stan Humphries, chief economist for Zillow.com, predicts that in the future housing values will only keep up with inflation. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”

Dean Baker, co-director of the Center for Economic and Policy Research, says it will take 20 years for the market to recover the $6 trillion lost since 2005 and values will never catch up.

Bob Walters, chief economist of the online mortgage firm Quicken, is more optimistic. “You have to live somewhere,” he says. “In three or four years, people will resume a normal course, and home values will continue to increase.”

Source: The New York Times, David Streitfeld (08/22/2010)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.

Job Market Still Holding Back Housing

The one factor that would certainly push up demand for homes is increased employment, but many analysts are now predicting that employment won’t revive significantly until 2011.

This doesn’t bode well for the immediate recovery of the housing market. “If you’re looking for a silver lining in housing, you aren’t going to find it here,” Mike Larson of Weiss Research said in a report.

“The overall economy is rolling over, consumer confidence is slumping, and, most importantly, we just aren’t creating jobs,” Larson added. “With so many Americans unemployed or underemployed, the housing market is going to keep hurting.”

Source: U.S. News & World Report, Luke Mullins (07/01/2010)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.

Forecasters Split on 2010 Housing Market

Economic forecasters appear to be split on the outlook for residential real estate values.

The news this week regarding new- and-used home sales in May seems to support the views of bears like Dean Baker, co-director of the Center for Economic and Policy Research. Baker projects that home prices will decline 12 percent in 2010.

Meanwhile, Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, predicts a gain of 2.5 percent.

Terry Loebs, managing director of MacroMarkets, which creates securities that allow investors to hedge their housing bets, says, “The width of that spread is a byproduct of uncertainty in the market.”

Source: Bloomberg, Kathleen M. Howley (06/24/2010)

Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.