Debbi Rivero & Your Key Consultants
Debbi Rivero, Realtor & Expert Seller Consultant
According to the National Association of Home Builders/First American Improving Markets Index (IMI), the number of improving housing markets across the country increased to 259 in February, up from 242 in January. The index measures three indicators―employment growth, house price appreciation, and single-family housing permit growth. This is the sixth consecutive month the index has risen. What’s more, the rise was seen in markets from all 50 states… Read More
National home sales are at a three year high. After climbing steadily for the past three months, November’s Pending Home Sales Index rose 1.7 percent to 106.4. This is the highest the Index has reached since April 2010, when the deadline for the home buyer tax credit was approaching. But November’s increase isn’t due to stimulus; rather, an increase in demand and highly favorable housing affordability conditions are spurring the gains. Existing-home sales, meanwhile, rose… Read More
Homes are spending less time on the market. A year ago, the median time it took a house to sell was 96 days. Now the median time has been shortened to just 71 days. A shortage of inventory, an increase in demand, and those ever-favorable mortgage rates are turning the market around.
Homebuilder optimism is up. The National Association of Home Builders/Wells Fargo Housing Market Index measures the optimism of builders in regards to the newly-built, single-family home market. In November, the index rose five points to 46. This is the highest the index has reached since May 2006, and it is far above the November 2011… Read More
The “fiscal cliff” has quickly become a commonly used term, but exactly what it means isn’t all that clear, especially for real estate. At it’s most basic level, it refers to sweeping tax cuts enacted a decade ago that will expire at year’s end, so tax rates will automatically rise to where they were before, while at the same time automatic spending cuts—the sequestration enacted when the government’s borrowing limit was raised a year ago–will take effect. Thus, the economy faces a two-pronged hit: taxes going up while federal fiscal spending goes down.
If Congress does nothing, that double hit would mean a negative economic impact of about $650 billion, enough to shrink the economy by 4 percent and push the country back into recession, says NAR Chief Economist Lawrence Yun.
For real estate, that has the potential to derail the recovery that’s been slowly taking hold. Foreclosures would rise, home values would drop, hurting households but also hurting FHA, which could get hit with another wave of bad loans. That could put FHA into financial trouble.
Against this background, the federal government will be looking at a lot of options for averting the cliff while also lowering the federal budget deficit for the long-term. That puts the mortgage interest deduction in the spotlight. But is it a good idea to make changes to that tax provision?
Without a doubt, changing the rules of the game on MID now would mean a tremendous hit on real estate markets and household finances, and it could deal a blow to the broader economy, says Yun.
He and NAR economist Danielle Hale look at the different pieces in play under the fiscal cliff debate and also the economic impact of changing MID in the 9-minute video above. The information is intended to be helpful as you try to put the fiscal cliff conversation into perspective.
Read more on the pro and con of modifying MID in a Dec. 10 segment of The Diane Rehm Show.
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Housing influences every other economic sector, not just because jobs are created to get houses built, but also because consumers spend lots of money–lots of other places–when they buy a new home. Add to this the tremendous transfer of wealth and additional taxation that occurs when homes are selling, and you’ve got the makings of a robust economy.
Here’s a glance at how the housing sector is doing now…and how it’s affecting the outlook for our economic recovery today.
New Construction and Housing Starts Improve
Recent housing data are reflecting improvement. Housing Starts jumped 15% from August to September and were at their highest level since July 2008. Building Permits also showed similar strength. States like Washington, Iowa, Nebraska, Texas and South Carolina are all experiencing new construction growth. In addition, the National Association of Home Builder’s Home Builder Sentiment index–which is important since it reflects how builders feel–rose for the sixth consecutive month in October, its highest level since June 2006.
New and Existing Home Sales on the Rise
September’s Existing Home Sales were 11% higher than the same period last year, translating to 15 straight months of increases on an annual basis. In addition, September’s New Home Sales were up 8% from June of this year. The increase in new home sales is a good sign for the housing market and our economy overall, as it indicates potential consumer purchases of furniture and appliances.
“Shadow Inventory” Declining
Shadow Inventory is the term for the mass of properties in some phase of foreclosure, but not yet on the market. Banks withhold properties because the dramatic volume of foreclosures in recent years has been hard to keep up with. Shadow Inventory is a problem because it can keep homebuilding from taking place, depress existing home prices, and continue to keep prices stubbornly weak.
Good news came in September when RealtyTrac, a leading real estate website specializing in foreclosure analysis, revealed a 7% decrease in foreclosure filings (which include default notices, scheduled auctions, and bank repossessions), down from August. They also reported filings were 16% lower than September 2011 and the lowest level since 2007. And that’s not all. CoreLogic, a leading provider of financial, consumer and property information, reported about 1.3 million homes (3.2% of all homes with a mortgage) were in the national foreclosure inventory as of August 2012, compared to 1.4 million in August 2011. They also found 32 of the 50 states have seen their percentage of foreclosure inventory decrease compared to last year.
Some states are headed in the opposite direction. At the top of list with the highest foreclosure inventory are Florida (11%), New Jersey (6.5%), New York (5.2%) and Illinois (4.8%).
The Bottom… and the Bottom Line
In its policy statement released on October 24 after the Federal Open Market Committee Meeting, the Fed noted that “economic activity has continued to expand at a moderate pace in recent months” and that “the housing sector has shown some further signs of improvement, albeit from a depressed level.” While this is good news, it’s important to note that our recovery in both the housing market and our economy overall is likely to be slow-going.
courtesy of this month’s issue of YOU Magazine.
When it was revealed that Facebook founder Mark Zuckerberg had refinanced his home with an adjustable-rate mortgage, many people could not figure out what was more shocking: a multibillionaire taking out a loan on a $7 million house or the 1.05 percent interest rate that Zuckerberg received on the loan.
With interest rates at historic lows, adjustable-rate mortgages do not seem to offer much of an advantage for potential home buyers. Of course, for someone as rich as Zuckerberg, the risks are essentially nonexistent. If interest rates suddenly spiked, he could easily pay off the mortgage; alternatively, he would benefit from significantly… Read More
New home sales hit a two-year high in September.
NEW YORK (CNNMoney) — In another sign of a housing market recovery, new-home sales rose in September to the highest level in more than two years, according to a government report released Wednesday.
Sales sold at an annual rate of 389,000 homes in the month, according to the Census Bureau report, up 5.7% from the 368,000 sales pace in August. The last time sales were at this pace, in April 2010, they were being helped by a short-term home buyer’s tax credit.
| Metro Area | Percentage With Drop In List Price | Days Listed On Zillow | Sale-to-List Price Ratio |
| San Jose | 16.5% | 51 | 1.01 |
| Cheyenne, Wyo. | 21.7% | 88 | 1.08 |
| Clarksville, Tenn. | 30.6% | 103 | 0.98 |
| National Average | 30.7% | 113 | 0.97 |
This time, the new home market has been showing steady signs of improvement. The pace of home building hit a four-year high in September, according to a separate government report. The year-over-year sales improvement in September reached 27.1%. Read story…
Mortgage rates have reached record lows, making home ownership more affordable than ever before. Americans considering buying a home should feel secure about investing in real estate; the housing market is continuing to improve.
July saw an increase in both the number of homes sold and the number of contracts signed. The number of total existing home sales rose to a seasonally adjusted annual rate of 4.47… Read More
