Wednesday, May 28, 2014
Friday, May 16, 2014
Home prices rose 9 percent year-over-year for the first quarter of this year, according to FNC, Inc.'s Residential Price Index, which measures sales activity for non-distressed homes in the 100 largest metros in the country. On a monthly basis, prices rose 0.6 percent in March.
On an annual basis, Western states continue to lead the nation with drastic price gains. FNC reported a 40 percent rise in prices in the sand states over the past two years.
On the other hand, the Midwest has experienced very little price relief since the start of the recovery, according to FNC.
In the FNC 30-MSA Composite, Sacramento, California (26.8 percent); Riverside, California (21.8 percent); and Las Vegas (21.3 percent) posted the greatest price increases over the year in March.
Only two of the 30 cities posted price declines year-over-year in March: St. Louis (-0.5 percent) and Cleveland (-2.9 percent).
In addition to rising prices among non-distressed homes, FNC reported declining foreclosure sales and smaller discounts in asking prices. Foreclosure sales made up 12.6 percent of sales in April, down from 13.4 percent in March, according to FNC.
Additionally, asking price discounts in April averaged 2.0 percent, down from 2.6 percent in March.
Non-distressed sales are rising "moderately," according to FNC.
For more information contact
Jerry Gusman, The Gusman Group
(888) 213-4208
Where Can the Middle Class Buy a Home?
For the majority of homes, buying is cheaper than renting. But as home prices rise faster than incomes and mortgage rates slowly head upwards, the question of national affordability becomes ever more germane. Compared to the longer-term past, homeownership still looks relatively affordable as home prices remain undervalued and mortgage rates remain near historic lows. However, affordability for the middle class in some areas of the nation is becoming problematic.
In a blog post, Trulia's Jed Kolko notes that certain discrepancies do arise, specifically along the coasts, for middle class homeownership. Kolko explains his methodology of defining what counts as middle-class, and what counts as affordable before breaking down nationwide trends.
Affordability is based on whether a home's monthly payment, which includes mortgage, insurance, and property taxes, was less than 31 percent of the surrounding metro's median household income. The designation "middle class" is fluid, dependent upon each metro's local median household income.
Kolko found that the middle class is getting priced out of California, but finds more success in the Midwest. In 80 of the 100 largest U.S. metros, most of the homes for sale are within reach of the middle class.
In the most affordable housing markets, more than 80 percent of homes are within reach. Akron, Ohio tops the list at 86 percent of homes affordable for the middle class. "The 10 most affordable markets include eight in (or near) the Midwest, plus the southern markets of Columbia, South Carolina, and Little Rock, Arkansas. Five of the top 10 are in Ohio," Kolko writes.
Indeed, the top three metros for affordability include Akron, Toledo, and Dayton, Ohio, each sporting percentages above 80 percent of homes as affordable for the middle class in May 2014.
Seven of the 10 least affordable markets reside in California. Not surprisingly, the rest of the top ten is rounded out by New York City, Fairfield County, Connecticut; and Honolulu, Hawaii. San Francisco remains on top as the least affordable city in the nation, with only 14 percent of homes for sale in San Francisco affordable to the middle class, despite higher median incomes.
Education also plays a factor, affecting income which in turn directly reflects one's ability to afford a home.
"Household income is strongly correlated with education. Median household income is $33,500 for households headed by someone with a high school degree or less, $49,300 with some college or an associate's degree, $77,500 with a bachelor's degree, and $100,000 with a graduate degree," Kolko commented.
He notes that the higher the education of a metro's population, the more homes will be available for purchase with a median income: "Take the Washington, D.C., metro area as an example: for a high-school-or-less household, just 23% of homes for sale are affordable, compared with 75% for a bachelor’s-degree household and 83% for a graduate-degree household."
Furthermore, the supply of available homes matters, with lower affordability markets experiencing a low supply from a lack of new construction, driving prices upward and out of the range of middle class families. For America's most expensive markets to come down in price, there would have to be a subsequent drop in demand or an increase in construction. Cities like San Francisco, south Florida, and parts of the Northeast are geographically limited by their availability to construct new homes, and thus, are inherently limited in their ability to construct new homes, according to Kolko.
Unfortunately, his conclusions aren't exactly great news for the middle class family looking to purchase a home in more expensive markets. "In all, today's unaffordable markets are likely to stay unaffordable. A collapse in demand is nothing to wish for; geographic constraints are nearly impossible to change; and strong political forces make building regulations difficult to relax," he writes.
For more information contact
Jerry Gusman, The Gusman Group
(888) 213-4208
Thursday, May 15, 2014
Tuesday, May 13, 2014
Friday, May 9, 2014
While The Share Of Flipped Homes Is Shrinking, Profits Are Growing!
"Investors appear to have recalibrated their flipping strategy, accounting for the slower home price appreciation even if that means fewer flips. This is another good sign that this housing recovery is behaving much more rationally than the last housing boom." - Daren Blomquist VP at RealtyTrac
Tuesday, May 6, 2014
Monday, May 5, 2014
Zillow: Buying a Home Beats Renting After 2 Years
Zillow's break-even horizon analysis came to an interesting conclusion: in half of U.S. metros, buying a home is a better financial decision than renting for buyers intending to stay in their home at least two years. The company’s analysis includes all costs associated with buying versus renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, taxes, utilities, maintenance, and renovation costs.
The group also takes into account different asset streams associated with different housing situations. For example, a buyer's home equity is factored into the final figure, while a renter's ability to invest some of the money they would have spent on a purchase is factored into the final figure for comparison.
"Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it. Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas," said Zillow Chief Economist Dr. Stan Humphries.
"However, some renters still have to overcome significant hurdles before they can pull the trigger on homeownership. For those renters who can't qualify for a mortgage or aren't able to save enough for a down payment on a house, renting can be a more flexible, and often far less frustrating option," Humphries added.
Metros with some of the shortest break-even times include Riverside, California (less than 1 year); Orlando, Florida (1 year); Tampa, Florida (1.1 years); and Miami-Fort Lauderdale, Florida (1.2 years).
Large metros with the longest break-even time include Washington, D.C. (4.2 years); Boston, Massachusetts (4 years); Phoenix, Arizona (3.3 years); San Diego, California (3.2 years); and both Minneapolis, Minnesota and Baltimore, Maryland (3.1 years).
Black Knight: 1 in 10 Home Borrowers Underwater
In Black Knight Financial Services’ latest Mortgage Monitor Report, the company found that only one in ten Americans are underwater, down from one in three in 2010. Overall, the company’s look at March data reflected a shifting landscape. As home prices have risen over the past two years, many distressed loans have worked their way through the system and the percentage of Americans with negative equity has declined considerably.
The company noted that 55 percent of loans in foreclosure have been delinquent for over two years.
"Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers," said Kostya Gradushy, Black Knight's manager of Loan Data and Customer Analytics.
"Looking at current combined loan-to-value (CLTV), we see that while four years ago 34 percent of borrowers were in negative equity positions, today that number has dropped to just about 10 percent of active mortgage loans," Gradushy said.
Gradushy references the 10.1 percent negative equity average, but what states homeowners reside in paint a clearer picture of negative equity across the spectrum. Judicial states have a higher negative equity rate at 13.4 percent, compared to the 7.9 percent rate experienced in non-judicial states.
Regardless, Gradushy notes that both judicial and non-judicial states have experienced declines. "Overall, nearly half of all borrowers today are both in positive equity positions and of strong credit quality—credit scores of 700 or above. Four years ago, that category of borrowers represented over a third of active mortgages," Gradushy said.
Loans, on average, are in foreclosure for 966 days.
The total delinquency rate is 5.37 percent, the lowest since October 2007 according to Black Knight. Month-over-month, delinquency rates have declined to 7.57 percent and are down yearly 16.29 percent in March.
The total U.S. foreclosure pre-sale inventory stands at 2.07 percent, the lowest figure since October 2008. Inventory rates are down 36.69 percent year-over-year.
Black Knight had more positive news in its Mortage Monitor Report: leading indicators, such as foreclosure starts, new problem loan percentage, 90-day defaults count, and 30 to 60 roll count are all down heading into the second quarter.
The company offered that the 2013 population of loans was "the best vintage on record," but the statement belies the fact that higher credit restrictions severely hampered new originations for lower credit borrowers.
The top five states with the highest total non-current loans were Mississippi (13.4 percent), New Jersey (12.9 percent), Florida (12.1 percent), New York (11.1 percent), and Maine (10.6 percent).
Excluding Mississippi, the remaining four states are judicial states, suggesting the longer timelines required to resolve foreclosures are impacting non-current loan rates, depressing the market's ability to quickly clear the remaining backlog in foreclosure pipeline.
For more information contact
Jerry Gusman, The Gusman Group
888-213-4208
Jerryggroup@aol.com
Clear Capital recently released its Home Data Index Market Report, which found the best deals in the housing market now reside in the middle-tier of available homes. The group found that following more than two years of recovery, low-tier homes are no longer the best value for homebuyers.
Mid-tier homes are homes selling between $95,000 and $310,000, nationally.
The company reported that low-tier homes experienced 32.3 percent growth from the trough in 2011. Mid-tier homes are still 30.6 percent off of peak values, while the low-tier price sectors remained just 21.5 percent below peak values. Top-tier homes, on average, are just 18.2 percent off of peak values.
"Very interesting dynamics are at play as we head into spring. Though our April data suggests the spring buying season is off to a slow start, we aren't concerned about the sustainability of the recovery," said Dr. Alex Villacorta, VP of research and analytics at Clear Capital.
Villacorta continued, "To be clear, there are lots of adjustments taking place in housing markets across the country. Everything from lender regulation, consumer confidence, investors tapering purchases, local economics, and rising home prices have forced participants to continually adjust to a market that has been anything but stable."
The company found that quarterly rates of growth for the nation and three of four regions remain virtually unchanged.
Nationally, housing markets experienced a 0.9 percent growth quarter-over-quarter. The largest gains were in the West, which experienced a 1.8 percent increase from the previous quarters. The South was next at 0.8 percent growth, followed closely by the Midwest (0.7 percent) and the Northeast (0.6 percent).
"Generally speaking, we see price growth stabilizing throughout 2014, which should help boost the confidence and purchase activity from buyers on the fence," Villacorta said.
Villacorta continued, "The days of double digit price gains are behind us, and the market will continue to calibrate to the new reality of annual growth rates between 3% and 5%. A strong spring buying season might be a casualty of the major adjustments underway, but it's no reason to ring the alarm bells quite yet."
For more information contact
Jerry Gusman, The Gusman Group
888-213-4208
Saturday, May 3, 2014
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