Real Estate Report for 5/30/13
Bryan & Allison's Real Estate Report - 5/30/13
Welcome to this week's Real Estate Report, featuring information about home prices, sales stats, and much more.
US Home Prices Rise 10.9%, Most Since 2006
U.S. home prices jumped 10.9% in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.
The Standard & Poor's/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month. And prices rose in 15 cities in March from February. That's up from only 11 in the previous month. The monthly figures aren't seasonally adjusted and may reflect the beginning of the spring buying season.
Prices rose in Phoenix by 22.5% over the past 12 months, the biggest gain among cities. It was followed by San Francisco (22.2%) and Las Vegas (20.6%).
U.S. Home Sales Tick Up to Highest in 3.5 Years
Sales of previously occupied U.S. homes ticked up last month to the highest level in three and a half years, helped by a jump in the number of houses for sale. The National Association of Realtors said that sales rose to a seasonally adjusted annual rate of 4.97 million, up from 4.94 million in March.
Home sales have risen 9.7% in the past 12 months, evidence that the housing market is still improving. But sales have been roughly flat since November. The supply of available homes remains tight and many potential buyers aren't able to get loans. The number of homes for sale rose 12% in April from March to 2.16 million. But inventory is still almost 14% lower than a year earlier.
Pending Sales of U.S. Existing Homes Increase Less Than Forecast
Fewer Americans than forecast signed contracts in April to buy previously owned homes, indicating limited inventory is holding back further progress in the housing market.
The index of pending home sales rose 0.3% after a 1.5% gain in March, figures from the National Association of Realtors showed today in Washington. Economists forecast April contract signings would match the prior month’s increase, according to the median estimate in a Bloomberg survey.
Growth in the labor market and cheaper borrowing costs are sustaining housing demand, showing residential real estate will remain a source of strength for the economy. Rising property values may encourage more Americans to put their homes on the market and help increase the number of available dwellings.
Distressed Resales Up Slightly in San Diego, Down in California
San Diego’s share of distressed resales increased slightly in April, while the state continued a downward trend as previously underwater homes rose in value, according to the California Association of Realtors (CAR). The state’s share of REO (real estate owned) resales, homes foreclosed by lenders, registered in the single-digits for the first time in more than five years.
In San Diego, the combined share of all distressed property sales was 10%, up from 9% in March and down from 23% in April 2012. Statewide, the combined share of all distressed property sales registered its lowest level since February 2008, dropping to 24.4% in April, down from 27.9% in March and down from 45.8% in April 2012.
SD Housing Market Ranked 8th Fastest in the US
San Diego has the eighth-fastest moving market in the country, according to the Redfin Fastest Real Estate Markets Report for April. The report tracks the speed of the overall housing market, and highlights the fastest- and slowest-moving markets across the country.
Redfin analyzed several statistics: months of supply, which are used to determine whether it is a buyer's or seller's market; the percentage of homes under contract within two weeks and one week of their debut; and the number of 'flash sales,' which are homes under contract within 24 hours. San Diego had 49% of its homes under contract within two weeks, 30% sold within one week and a total of 63 homes sold in 24 hours. There was 1.4 months of supply in San Diego in April.
In April, the number of homes that went under contract within two weeks increased by 39% since the same time last year and by 3% from March. Homes going under contract in one week increased 54% from last year and by 2% since March. The percentages of homes under contract in two weeks and in one week both set new records since at least January 2011, when Redfin began tracking this data.
Trulia Releases 'Bubble Watch'
Trulia, a leading online marketplace for home buyers, sellers, renters, and real estate professionals, launched the Trulia Bubble Watch. A bubble in home prices happens when prices soar above their fundamental value, which is based on supply, demand, and realistic expectations about the future. This new housing market indicator tracks whether home prices are in or nearing bubble territory based on how over versus undervalued home prices are relative to their fundamentals, nationally and in the 100 largest metro areas.
The Trulia Bubble Watch estimates that national home prices are currently 7% undervalued. During the most recent housing bubble, prices were as high as 39% overvalued in 2006 Q1. After the bubble burst, prices fell to being 15% undervalued in 2011 Q4. So despite recent price increases, home prices nationally remain undervalued relative to fundamentals and are much lower than seven years ago – making today’s price gains a rebound, not a new bubble. At the metro level, prices are above their fundamental value in only 8 of the 100 largest metros. Even Texas metros, which largely avoided last decade’s housing bubble, are less overvalued today than at their peaks during the last bubble.
Foreclosure Rates Fall in SD
Foreclosure rates in San Diego-Carlsbad-San Marcos decreased for the month of March over the same period last year, according to CoreLogic. The rate of San Diego-Carlsbad-San Marcos area foreclosures among outstanding mortgage loans was 1.09% for the month of March 2013, a decrease of 1.04% points compared to March of 2012, when the rate was 2.13%. Foreclosure activity in San Diego-Carlsbad-San Marcos was lower than the national foreclosure rate, which was 2.84% for March 2013.
According to CoreLogic data for March 2013, 3.69% of mortgage loans were 90 days or more delinquent compared to 5.57% for the same period last year, representing a decrease of 1.88% points.
Buying Beats Renting in 64% of Metro Markets After 3 Years
Buying a home is more affordable than renting in nearly two-thirds of metros after three years of paying for a mortgage, according Zillow.
For its calculation, Zillow considered costs associated with buying and renting, such as upfront payments, closing costs, insurance, utilities, and maintenance. Then, the online marketplace looked at historic and anticipated home value appreciation rates, rental prices, and rental appreciation rates to determine how many years would need to pass before buying becomes less expensive than renting.
According to Zillow, in 64% of U.S. metros, buying is more affordable than renting if homebuyers plan to stay in their home for at least three years.
What is the breakeven point in your area? Check out the Zillow Breakeven Tool to find out.
Investors Prefer Holding Over Flipping
Investors are favoring a buy-and-hold strategy over flipping their home purchases, according to a survey by the California Association of Realtors (CAR). Two-thirds of real estate investors are following a long-term investment strategy while 26% of investors flipped the property, according to a CAR investor survey.
The CAR surveyed its members about their interactions with investors. Low mortgage rates, attractive home prices and low yields on alternative assets have fueled demand for investment properties, particularly where distressed homes have dominated in many markets.
Three-fourths of investors are of the small 'mom-and-pop' type, owning one to 10 other investment properties, with 15%owning just one property, 46%owning two to five properties, and 14%owning six to 10 properties, CAR’s “2013 Investor Survey” found.
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