New-home construction and building permits — a future gauge of construction — surged last month, slowly helping to pull the new-home market out of one of its worst years for home building.
Builders broke ground on more homes in November, a 9.3 percent increase over October, reaching the highest level since April 2010, the Commerce Department reported Tuesday. Year-over-year, new-home starts were up 24.3 percent in November.
Home construction increased to a seasonally adjusted annual rate of 685,000 homes in November. However, while it’s an improvement, the rate is still below the 1.2 million home pace that economists consider healthy for the new-home sector.
November’s increase was mostly driven by construction of multi-family homes with at least two units, which soared 25.3 percent in November. Construction of single-family homes increased 2.3 percent for the month.
Building permits jumped 5.7 percent in November, the highest increase since March 2010, with the increase mostly driven by apartment construction permits.
Builders Feeling More Confident
Meanwhile, for the third consecutive month, builder confidence in the new-home market continued to edge up, according to the National Association of Home Builders/Wells Fargo Housing Market Index for December. The index is at its highest point since May 2010.
While the index reached 21 in December, it is still far below 50, a reading which indicates more builders view conditions as good rather than poor. The index hasn’t reached that point since the housing boom in April 2006.
“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. "However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving."
Source: “Apartment Construction Spurs 9.3% Jump in Housing Starts, But Level Remains Low,” Associated Press (Dec. 20, 2011); “U.S. Nov. Housing Starts +9.3% to 685K; Consensus +0.3%,” Dow Jones International News (Dec. 20, 2011); and National Association of Home Builders
Read More:
New-Home Building Soars 15% in September
Tuesday, December 20, 2011
Tuesday, November 15, 2011
NAR: Gradual recovery for housing and economy in 2012
ANAHEIM, Calif. – Nov. 15, 2011 – Although the housing market struggled to maintain an even footing in 2011, gradual improvement is expected in 2012 and beyond, according to projections at the 2011 Realtors® Conference & Expo.
Lawrence Yun, chief economist of the National Association of Realtors (NAR), said home sales should be stronger. “Tight mortgage credit conditions have been holding back homebuyers all year, and consumer confidence has been shaky recently,” he said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”
Yun projects growth in Gross Domestic Product to be 1.8 percent this year, then rising moderately at a rate of 2.2 percent in 2012. With job growth of 1.7 to 2.2 million next year, the unemployment rate is expected to decline to 8.7 percent by the second half of 2012. Mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.
“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year,” Yun said. “Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more homebuyers to take advantage of current opportunities.”
Existing-home sales are forecast to edge up about 1 percent this year, and then rise another 4 to 5 percent in 2012. Based on NAR’s current projection model, existing-home sales would total 4.96 million in 2011.
Housing data
NAR says it is benchmarking its existing-home sales statistics, and it expects total sales to be lowered for recent years. However, it doesn’t expect many changes to previously reported percentage comparisons, median prices or the month’s supply of inventory. NAR expects to publish its improved measurement methodology soon.
“NAR began its normal process for benchmarking sales at the beginning of this year in consultation with government agencies, outside housing economists and academic experts,” NAR said in a release. “There will be no notable change to previous characterizations of the market in terms of sales trends, monthly percentage changes, etc.”
In the 2010 U.S. Census, the government stopped reporting home sales data, which NAR used as a benchmark. As a result, the association had to develop a new independent score to use as a baseline for its calculations. Preliminary data using the new benchmark will “undergo broad review shortly by professional economists and government agencies. After any issues that may surface in the review process are addressed, we will update monthly seasonal adjustment factors and publish revisions.”
Housing forecast
New-home sales are expected to be a record low 302,000 this year, rising to 372,000 in 2012. Housing starts are forecast to rise to 630,000 next year from 583,000 in 2011.
“Although a double-digit growth in new-home sales and housing starts sounds encouraging, the projections remain historically soft relative to long-term underlying demand,” Yun explained.
With falling inventory, the median home price should rise in 2012. “Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012,” Yun said. “Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve,” Yun added.
Richard Peach, senior vice president at the Federal Reserve Board of New York, said the economy is under-performing. “Nearly two-and-a-half years since the end of ‘the great recession,’ the economy continues to operate well below its potential,” he said. “Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level.”
Peach said the current business cycle remains 7 percent below its peak and is longer than other recession cycles since 1953. He added the employment to population ratio is historically low, and there’s been a shift in the distribution of income, with corporate profits up strongly while employment compensation is down.
Peach believes there is a sizeable level of shadow inventory that will result in rising foreclosures. “My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a downpayment on a foreclosed home in the Fannie or Freddie portfolio,” he said.
© 2011 Florida Realtors®
Lawrence Yun, chief economist of the National Association of Realtors (NAR), said home sales should be stronger. “Tight mortgage credit conditions have been holding back homebuyers all year, and consumer confidence has been shaky recently,” he said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”
Yun projects growth in Gross Domestic Product to be 1.8 percent this year, then rising moderately at a rate of 2.2 percent in 2012. With job growth of 1.7 to 2.2 million next year, the unemployment rate is expected to decline to 8.7 percent by the second half of 2012. Mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.
“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year,” Yun said. “Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more homebuyers to take advantage of current opportunities.”
Existing-home sales are forecast to edge up about 1 percent this year, and then rise another 4 to 5 percent in 2012. Based on NAR’s current projection model, existing-home sales would total 4.96 million in 2011.
Housing data
NAR says it is benchmarking its existing-home sales statistics, and it expects total sales to be lowered for recent years. However, it doesn’t expect many changes to previously reported percentage comparisons, median prices or the month’s supply of inventory. NAR expects to publish its improved measurement methodology soon.
“NAR began its normal process for benchmarking sales at the beginning of this year in consultation with government agencies, outside housing economists and academic experts,” NAR said in a release. “There will be no notable change to previous characterizations of the market in terms of sales trends, monthly percentage changes, etc.”
In the 2010 U.S. Census, the government stopped reporting home sales data, which NAR used as a benchmark. As a result, the association had to develop a new independent score to use as a baseline for its calculations. Preliminary data using the new benchmark will “undergo broad review shortly by professional economists and government agencies. After any issues that may surface in the review process are addressed, we will update monthly seasonal adjustment factors and publish revisions.”
Housing forecast
New-home sales are expected to be a record low 302,000 this year, rising to 372,000 in 2012. Housing starts are forecast to rise to 630,000 next year from 583,000 in 2011.
“Although a double-digit growth in new-home sales and housing starts sounds encouraging, the projections remain historically soft relative to long-term underlying demand,” Yun explained.
With falling inventory, the median home price should rise in 2012. “Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012,” Yun said. “Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve,” Yun added.
Richard Peach, senior vice president at the Federal Reserve Board of New York, said the economy is under-performing. “Nearly two-and-a-half years since the end of ‘the great recession,’ the economy continues to operate well below its potential,” he said. “Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level.”
Peach said the current business cycle remains 7 percent below its peak and is longer than other recession cycles since 1953. He added the employment to population ratio is historically low, and there’s been a shift in the distribution of income, with corporate profits up strongly while employment compensation is down.
Peach believes there is a sizeable level of shadow inventory that will result in rising foreclosures. “My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a downpayment on a foreclosed home in the Fannie or Freddie portfolio,” he said.
© 2011 Florida Realtors®
Tuesday, November 1, 2011
7 Cities With Fewest Underwater Home Owners
DAILY REAL ESTATE NEWS | TUESDAY, NOVEMBER 01, 2011
Rochester, N.Y., has the fewest number of homes underwater in the country, according to an analysis by 24/7 Wall St., which culled CoreLogic data to recently identify the housing markets with the fewest number of underwater home owners.
Nationwide, 11 million households are considered underwater—meaning they owe more on their mortgage than their home is currently worth.
Here are the cities that are countering that trend and have the fewest number of underwater home owners, according to 24/7 Wall St.:
1. Rochester, N.Y.
Percentage of homes underwater: 3.41%
Home price change in last year: +0.25%
2. El Paso, Texas
Percentage of homes underwater: 3.89%
Home price change in last year: +5.73%
3. Albany-Schenectady-Troy, N.Y.
Percentage of homes underwater: 4.01%
Home price change in last year: -0.90%
4. Buffalo-Niagara Falls, N.Y.
Percentage of homes underwater: 4.22%
Home price change in last year: 3.92%
5. Fayetteville, N.C.
Percentage of homes underwater: 4.56%
Home price change in last year: +1.14%
6. Huntsville, Ala.
Percentage of homes underwater: 5.30%
Home price change in last year: -4.39%
7. Lancaster, Pa.
Percentage of homes underwater: 5.44%
Home price change in last year: -1.83%
See which other cities made the list.
Source: “10 Cities Where Mortgages Are Staying Afloat,” AOL Real Estate (Oct. 28, 2011)
Read More:
Survey Reveals Top 8 Best Places to Live
Rochester, N.Y., has the fewest number of homes underwater in the country, according to an analysis by 24/7 Wall St., which culled CoreLogic data to recently identify the housing markets with the fewest number of underwater home owners.
Nationwide, 11 million households are considered underwater—meaning they owe more on their mortgage than their home is currently worth.
Here are the cities that are countering that trend and have the fewest number of underwater home owners, according to 24/7 Wall St.:
1. Rochester, N.Y.
Percentage of homes underwater: 3.41%
Home price change in last year: +0.25%
2. El Paso, Texas
Percentage of homes underwater: 3.89%
Home price change in last year: +5.73%
3. Albany-Schenectady-Troy, N.Y.
Percentage of homes underwater: 4.01%
Home price change in last year: -0.90%
4. Buffalo-Niagara Falls, N.Y.
Percentage of homes underwater: 4.22%
Home price change in last year: 3.92%
5. Fayetteville, N.C.
Percentage of homes underwater: 4.56%
Home price change in last year: +1.14%
6. Huntsville, Ala.
Percentage of homes underwater: 5.30%
Home price change in last year: -4.39%
7. Lancaster, Pa.
Percentage of homes underwater: 5.44%
Home price change in last year: -1.83%
See which other cities made the list.
Source: “10 Cities Where Mortgages Are Staying Afloat,” AOL Real Estate (Oct. 28, 2011)
Read More:
Survey Reveals Top 8 Best Places to Live
Tuesday, October 25, 2011
Homeownership is Highest on Record
WASHINGTON – Oct. 25, 2011 – The homeownership rate is at its second-highest level on record, only behind the record high set in 2000, according to the U.S. Census Bureau, which began collecting homeownership data in 1890.
By region, the homeownership rate is:
• Midwest: 69.2 percent
• South: 66.7
• Northeast: 62.2
• West: 60.5
Nearly every metro area had more homeowners than renters in 2010. The metro areas with the highest homeownership rates were in Michigan and Florida. Monroe, Mich., had the highest percentage of owner-occupied units at 79.8 percent, followed by Punta Gorda, Fla., at 79.7 percent.
While the national homeownership rate remained high, the decrease in the rate from 2000 to 2010 by 1.1 percent – to 65.1 percent overall – is the largest decrease since the 1930 to 1940 period, the Census Bureau reported.
States with highest housing inventory
Meanwhile, housing inventory soared 13.6 percent to 15.8 million units from 2000 to 2010, growing the fastest in the South and West. The states with the largest percentage increase in housing units were:
Nevada: 41.9 percent
Arizona: 29.9
Utah: 27.5
Idaho: 26.5
Georgia: 24.6
Florida: 23.1
North Carolina: 22.8
Colorado: 22.4
Texas: 22.3
South Carolina: 21.9
Source: U.S. Census 2010 and “Homeownership Near Record,” Investors.com (Oct. 20, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
By region, the homeownership rate is:
• Midwest: 69.2 percent
• South: 66.7
• Northeast: 62.2
• West: 60.5
Nearly every metro area had more homeowners than renters in 2010. The metro areas with the highest homeownership rates were in Michigan and Florida. Monroe, Mich., had the highest percentage of owner-occupied units at 79.8 percent, followed by Punta Gorda, Fla., at 79.7 percent.
While the national homeownership rate remained high, the decrease in the rate from 2000 to 2010 by 1.1 percent – to 65.1 percent overall – is the largest decrease since the 1930 to 1940 period, the Census Bureau reported.
States with highest housing inventory
Meanwhile, housing inventory soared 13.6 percent to 15.8 million units from 2000 to 2010, growing the fastest in the South and West. The states with the largest percentage increase in housing units were:
Nevada: 41.9 percent
Arizona: 29.9
Utah: 27.5
Idaho: 26.5
Georgia: 24.6
Florida: 23.1
North Carolina: 22.8
Colorado: 22.4
Texas: 22.3
South Carolina: 21.9
Source: U.S. Census 2010 and “Homeownership Near Record,” Investors.com (Oct. 20, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
Monday, October 10, 2011
30% of buyers denied or give up on mortgage
WASHINGTON – Oct. 10, 2011 – Credit has gotten tighter, and more buyers are being left out – or becoming so frustrated they give up. Last year, more than 2 million people were turned down for mortgages, according to the Federal Financial Institutions Examination Council.
About 30 percent of buyers are either denied a mortgage, or they drop out of the application process, the Mortgage Bankers Association estimates.
Biggest reasons for rejection:
• Insufficient income: Buyers cannot afford a $1 million home if they make $50,000 per year.
• Credit details. There are a lot of rules, and it’s not easy to understand what a bank wants. Overtime income, for example, only counts if documented for at least two years to some lenders. Rental income may only count if the borrower has a 30 percent equity stake in the building.
• Bad credit. If a credit score is somewhere around 620 to 660, depending on the bank, lenders say no almost automatically.
• Appraisals. If an appraisal is lower than an agreed-upon selling price, the lender balks.
• External problems. A lender could nix an application if the homeowners’ association has issues or the neighborhood has problems.
• Incomplete information. Paperwork problems – incomplete information, missing forms, etc. – bog down about 12 percent of applications.
And “it’s common to get turned down if you have a gap in employment history over the last two years,” says Erin Lantz, director of the Zillow Mortgage Marketplace.
Source: “Triggers for Rejection,” The New York Times (Oct. 6, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
About 30 percent of buyers are either denied a mortgage, or they drop out of the application process, the Mortgage Bankers Association estimates.
Biggest reasons for rejection:
• Insufficient income: Buyers cannot afford a $1 million home if they make $50,000 per year.
• Credit details. There are a lot of rules, and it’s not easy to understand what a bank wants. Overtime income, for example, only counts if documented for at least two years to some lenders. Rental income may only count if the borrower has a 30 percent equity stake in the building.
• Bad credit. If a credit score is somewhere around 620 to 660, depending on the bank, lenders say no almost automatically.
• Appraisals. If an appraisal is lower than an agreed-upon selling price, the lender balks.
• External problems. A lender could nix an application if the homeowners’ association has issues or the neighborhood has problems.
• Incomplete information. Paperwork problems – incomplete information, missing forms, etc. – bog down about 12 percent of applications.
And “it’s common to get turned down if you have a gap in employment history over the last two years,” says Erin Lantz, director of the Zillow Mortgage Marketplace.
Source: “Triggers for Rejection,” The New York Times (Oct. 6, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
Thursday, September 15, 2011
10 States With the Highest Foreclosure Rates
DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 15, 2011
For the 56th straight month, Nevada continued to have the highest foreclosure rate in the country, where one in every 118 homes received a foreclosure filing during August, according to the latest figures from RealtyTrac.
Nationally, 1 in every 570 households received a foreclosure filing in August.
Meanwhile, five states accounted for 53 percent of the foreclosure activity in August, led by California. In California, 59,383 properties received foreclosure filings last month. The state saw a 55 percent month-over-month increase in default notices.
The following are the states that posted the highest foreclosure rates in August, according to RealtyTrac’s latest report:
1. Nevada
One in every 118 households received a foreclosure filing during August.
Total foreclosure filings in August: 9,677
2. California
One in every 226 households
Total foreclosure filings in August: 59,383
3. Arizona
One in every 248 households
Total foreclosure filings in August: 23,569
4. Georgia
1 in every 346 households
Total foreclosure filings in August: 11,743
5. Idaho
1 in every 348 households
Total foreclosure filings in August: 1,860
6. Michigan
1 in every 349 households
Total foreclosure filings in August: 13,016
7. Florida
1 in every 376 households
Total foreclosure filings in August: 23,569
8. Illinois
1 in every 424 households
Total foreclosure filings in August: 12,493
9. Colorado
1 in every 439 households
Total foreclosure filings in August: 4,933
10. Utah
1 in every 450 households
Total foreclosure filings in August: 2,119
By REALTOR® Magazine Daily News
Read More
Mortgage Defaults Soar 33%, Biggest Monthly Gain in 4 Years
For the 56th straight month, Nevada continued to have the highest foreclosure rate in the country, where one in every 118 homes received a foreclosure filing during August, according to the latest figures from RealtyTrac.
Nationally, 1 in every 570 households received a foreclosure filing in August.
Meanwhile, five states accounted for 53 percent of the foreclosure activity in August, led by California. In California, 59,383 properties received foreclosure filings last month. The state saw a 55 percent month-over-month increase in default notices.
The following are the states that posted the highest foreclosure rates in August, according to RealtyTrac’s latest report:
1. Nevada
One in every 118 households received a foreclosure filing during August.
Total foreclosure filings in August: 9,677
2. California
One in every 226 households
Total foreclosure filings in August: 59,383
3. Arizona
One in every 248 households
Total foreclosure filings in August: 23,569
4. Georgia
1 in every 346 households
Total foreclosure filings in August: 11,743
5. Idaho
1 in every 348 households
Total foreclosure filings in August: 1,860
6. Michigan
1 in every 349 households
Total foreclosure filings in August: 13,016
7. Florida
1 in every 376 households
Total foreclosure filings in August: 23,569
8. Illinois
1 in every 424 households
Total foreclosure filings in August: 12,493
9. Colorado
1 in every 439 households
Total foreclosure filings in August: 4,933
10. Utah
1 in every 450 households
Total foreclosure filings in August: 2,119
By REALTOR® Magazine Daily News
Read More
Mortgage Defaults Soar 33%, Biggest Monthly Gain in 4 Years
Friday, September 9, 2011
Where Home Prices Have Dropped the Most
California cities have seen their home values drop by the largest percentage in the last five years, with some metro areas posting losses of up to 67 percent in that time period. California cities occupied six of the top 10 metro areas with the largest drops, according to a recent Zillow study based on its home-value estimates and Zillow Home Value Index.
Overall, "there will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest,” says Stan Humphries, Zillow’s chief economist. “There are still hazards in the form of a full foreclosure pipeline, high negative equity, and fluctuations in demand."
The following are seven cities that have seen home values drop the most since the housing boom, according to Zillow:
1. Merced, Calif.
July 2011 Zillow Home Value Index: $106,514
Zillow Home Value Index 5 Years ago: $328,813
Value difference (by percent): -67.6%
2. Modesto, Calif.
July 2011 ZHVI: $128,777
ZHVI 5 Years Ago: $352,599
Value difference: -63.5%
3. Stockton, Calif.
July 2011 ZHVI: $150,061
ZHVI 5 Years Ago: $404,036
Value difference: -62.9%
4. Las Vegas
July 2011 ZHVI: $117,084
ZHVI 5 Years Ago: $303,656
Value difference: -61.4%
5. Vallejo, Calif.
July 2011 ZHVI: $190,521
ZHVI 5 Years Ago: $468,071
Value difference: -59.3%
6. Salinas, Calif.
July 2011 ZHVI: $282,289
ZHVI 5 Years Ago: $664,404
Value difference: -57.5%
7. Daytona Beach, Fla.
July 2011 ZHVI: $95,193
ZHVI 5 Years Ago: $220,436
Value difference: -56.8%
See what other cities made it in the top 10 list.
Source: “Five Years After Housing Market Peak, Bumpy Road Toward Stabilization Underway As Home Values Show Recent Rise in Many Markets,” Zillow (Aug. 9, 2011) and “10 Real Estate Markets With the Largest 5-Year Drop in Home Values,” Inman News (Sept. 8, 2011)
Read More
Zillow: Market to Reach Bottom Possibly by 2012
Overall, "there will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest,” says Stan Humphries, Zillow’s chief economist. “There are still hazards in the form of a full foreclosure pipeline, high negative equity, and fluctuations in demand."
The following are seven cities that have seen home values drop the most since the housing boom, according to Zillow:
1. Merced, Calif.
July 2011 Zillow Home Value Index: $106,514
Zillow Home Value Index 5 Years ago: $328,813
Value difference (by percent): -67.6%
2. Modesto, Calif.
July 2011 ZHVI: $128,777
ZHVI 5 Years Ago: $352,599
Value difference: -63.5%
3. Stockton, Calif.
July 2011 ZHVI: $150,061
ZHVI 5 Years Ago: $404,036
Value difference: -62.9%
4. Las Vegas
July 2011 ZHVI: $117,084
ZHVI 5 Years Ago: $303,656
Value difference: -61.4%
5. Vallejo, Calif.
July 2011 ZHVI: $190,521
ZHVI 5 Years Ago: $468,071
Value difference: -59.3%
6. Salinas, Calif.
July 2011 ZHVI: $282,289
ZHVI 5 Years Ago: $664,404
Value difference: -57.5%
7. Daytona Beach, Fla.
July 2011 ZHVI: $95,193
ZHVI 5 Years Ago: $220,436
Value difference: -56.8%
See what other cities made it in the top 10 list.
Source: “Five Years After Housing Market Peak, Bumpy Road Toward Stabilization Underway As Home Values Show Recent Rise in Many Markets,” Zillow (Aug. 9, 2011) and “10 Real Estate Markets With the Largest 5-Year Drop in Home Values,” Inman News (Sept. 8, 2011)
Read More
Zillow: Market to Reach Bottom Possibly by 2012
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