Real Estate Report for 8/4/13
Bryan & Allison's Real Estate Report - 8/4/13
A slight lull in our vacation, so time to provide an update on what's happening in the world of real estate!
Home Prices & Sales
Case-Shiller: Annual US home price rise in May best in 6 years
U.S. home prices jumped 12.2% in May compared with a year ago, the biggest annual gain since March 2006. The increase shows the housing recovery is strengthening.
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday also surged 2.4% in May from April. The month-over-month gain nearly matched the 2.6% increase in April from March -- the highest on record.
The price increases were widespread. All 20 cities showed gains in May from April and compared with a year ago. In San Diego, May was 3.1% above April and 17.3% higher than May 2012. Prices in Dallas and Denver reached the highest level on records dating back to 2000. That marks the first time since the housing bust that any city has reached an all-time high.
Home values are rising, as more people are bidding on a scarce supply of houses for sale. Steady price increases, along with stable job gains and historically low mortgage rates, have in turn encouraged more Americans to buy homes. One concern is that higher mortgage rates could slow home sales. But many economists say rates remain low by historical standards and would need to rise much faster to halt the momentum.
CoreLogic: SD's foreclosure inventory down from 2012
There were 4,485 completed foreclosures in the San Diego-Carlsbad-San Marcos area in the 12 months ending June 2013, according to CoreLogic’s June National Foreclosure Report.
The foreclosure inventory as of June 2013 represented 0.9% of all San Diego homes with a mortgage, compared to 1.9% in June 2012. Statewide, there were 72,334 completed foreclosures in the 12 months ending June 2013.
The five states with the highest number of completed foreclosures for the 12 months ending in June 2013 were: Florida (107,000), California (72,000), Michigan (63,000), Texas (48,000) and Georgia (44,000). These five states account for almost half of all completed foreclosures nationally.
California’s foreclosure inventory as of June 2013 was 1.1% of all homes with a mortgage, compared to 2.3% in June 2012.
Other News & Information
Housing market has buyers willing to use 'Aggressive Tactics'
The frenzied market in real estate has prospective home buyers ready to gamble, according to a study.
Two-thirds of would-be homeowners would resort to “aggressive tactics” -- such as paying the seller’s closing costs, bidding above the asking price or borrowing money from loved ones for a down payment -- to get the home of their dreams, according to the survey by real estate website Trulia.
“Consumers are worried that mortgage rates and prices will keep rising before they buy, and many are willing to fight over the limited number of homes for sale,” Jed Kolko, Trulia's chief economist, said in a statement.
According to the survey, 25% of respondents would bid 1% to 5% over a home’s asking price, and the same percentage would offer to cover the seller’s closing costs.
Trulia said young adults -- ages 18 to 34 -- are more willing to resort to tactics the firm labels aggressive, with 30% of those respondents willing to pay the seller’s closing costs and 31% willing to bid 1% to 5% over asking price.
Rising home prices, mortgage rates leave many unable to buy
The chances of finding an affordable home in California are fading fast as prices and interest rates rise — slamming the door shut on many would-be buyers.
Just 44% of Golden State residents were able to afford the median-priced home at the end of the first quarter, according to an affordability index published by the California Association of Realtors. That compares with 56% during the same period last year, when affordability hit its highest level since the group began publishing its affordability statistics in 1988.
The percentage is expected to decline further when second-quarter data is published next month, reflecting sharp increases in home prices and interest rates. The state's median home price, as tracked by the real estate group, was $428,510 in June, an eye-popping jump from $378,960 in March. Average monthly interest rates rose to 4.37% in July from 3.41% in March, according to Freddie Mac.
Most housing rebounds involve first-time buyers pouring into the market, said Thomas A. Lawler, founder of research firm Lawler Economic & Housing Consulting. But many younger would-be buyers are saddled with student debt, still living at home, unemployed or don't have enough for a down payment.
'You saw housing affordability get incredibly better, and they weren't able to take advantage of it,' Lawler said. 'It's kind of a bummer.'
The rise of the 'Mooching Millennial'
Until recently, hedge funds and private equity firms drove the U.S. housing market's recovery, buying a shrinking pool of foreclosed and distressed homes to rent. It seemed like a lucrative investment, given that rents were rising while homeownership fell to record lows.
But as big investors turn into landlords, it's worth asking if any considered how long it could take before junior finally gets a place of his own.
Rents for single-family homes have now risen slower than property prices. This comes as investors flood the market with homes for lease, but it also comes as fewer young adults -- generally a key market for rentals -- create homes of their own.
Throughout the housing recovery, plenty of attention has been paid to the sharp drop in first-time homebuyers, typically couples in their 20s and 30s. Joblessness has kept many from buying houses, but that also suggests fewer are renting, too; many are couch surfing at a friend's or relative's, or living with their parents. Even as many aspects of the housing market improve, the recovery in household formation among millennials lags behind improvements we've witnessed in home prices and foreclosures.
The share of 18 to 34-year-olds living with their parents rose from about 27.6% before the Great Recession in 2007 to above 31%, where it remains today, according to an analysis by Trulia, a real-estate website. Millennials have contributed to the sharp decline in household formation, which likely will take a while to return to normal.
Bryan & Allison Devore
Prudential California Realty
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Blog Archive2017-04-21 06:42:10
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