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NAR: Healthier Home Prices in Q4

Feb 12, 2019 by

Across the largest markets, home prices are rising, but at a healthier rate than in recent years, according to new research.

From the fourth quarter of 2017 to the fourth quarter of 2018, home prices rose 4 percent, according to a National Association of REALTORS® (NAR) report. On an annual basis, there were higher home prices in 92 percent, or 163, of the 178 metropolitan areas in the report. Comparing the largest markets, the median price was $ 257,600. Among condos/co-ops, the median price was $ 237,900.

Despite the easing gains in home prices, affordability is still tight, the report shows. To buy at the median price, and assuming a 5 percent down payment, a homebuyer would have to have an income of $ 62,954; assuming 10 percent, a buyer would have to have $ 59,640; and assuming 20 percent, $ 53,013. Although average earnings have increased nationally to $ 77,392, high home prices, and now, higher mortgage rates, are contributing to the cost crunch.

According to the report, with affordability diminished, existing-home sales slid, down 1.8 percent from the last quarter and 7.4 percent from the prior year. At the close of the fourth quarter of 2018, existing for-sale inventory totaled 1.55 million—6.2 percent higher than the prior year. During the fourth quarter, the average supply was 4.0 months.

By region: 

Midwest
Q4 Existing-Home Sales: -5.9% YoY
Q4 Median Price: $ 196,900 (+1.6% YoY)

Northeast
Q4 Existing-Home Sales: -5.4% YoY
Q4 Median Price: $ 286,000 (+6.5% YoY)

South
Q4 Existing-Home Sales: -5.4% YoY
Q4 Median Price: $ 228,200 (+3.3% YoY)

West
Q4 Existing-Home Sales: -6.5% YoY
Q4 Median Price: $ 383,100 (+1.8% YoY)

According to the report, the most expensive markets were:

  • San Jose-Sunnyvale-Santa Clara, Calif. – $ 1.25 million
  • San Francisco-Oakland-Hayward, Calif. – $ 952,400
  • Urban Honolulu, Hawaii – $ 812,900
  • Anaheim-Santa Ana-Irvine, Calif. – $ 799,000
  • San Diego-Carlsbad, Calif. – $ 626,000

The least expensive were:

  • Decatur, Ill. – $ 89,300
  • Youngstown-Warren-Boardman, Ohio – $ 97,200
  • Cumberland, Md. – $ 109,100
  • Elmira, N.Y. – $ 111,400
  • Erie, Pa. – $ 113,300

“Home prices continued to rise in the vast majority of markets but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” says Lawrence Yun, chief economist at NAR. “Housing affordability will be the key to sustained healthy growth in the housing market in the upcoming years. That requires more home-building of moderately-priced homes. Local zoning law changes, expanding construction worker training programs at trade schools and promoting the use of tax breaks for developers in the designated Opportunity Zones will all play an important role in assuring an adequate future supply of housing.” 

For more information, please visit www.nar.realtor.  

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

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Gains in Home Prices Soften

Jan 29, 2019 by

Appreciation is continuing to moderate, abated by flattening home-building and home sales.

According to the latest S&P CoreLogic/Case-Shiller Indices, home prices in November rose 5.2 percent year-over-year—a dip from October, when prices were up 5.3 percent. In June, annual appreciation stood at 6.2 percent.

“A combination of cyclical and short-term factors put a damper on home-price growth in November,” says Ralph McLaughlin, deputy chief economist and executive of Research and Insights at CoreLogic. “On the cyclical side, a maturing economic expansion set a low ceiling for continued price growth, especially given recent challenges in affordability and inventory. Short-term factors included contentious midterm elections and decade-high mortgage rates in October and November.”

“Home prices are still rising, but more slowly than in recent months,” says David M. Blitzer, chairman and managing director of the Index Committee at S&P Dow Jones Indices. “The pace of price increases are being dampened by declining sales of existing homes and weaker affordability. Sales peaked in November 2017 and drifted down through 2018.”

Constrained inventory, according to Blitzer, is keeping prices from slowing substantially. For the better part of a year, existing-home sales have stumbled, creating downward pressure on prices. In November, sales slid 7 percent year-over-year, the National Association of REALTORS® (NAR) reported; in December, they fell further, slipping 10.3 percent.

Housing market conditions are mixed while analysts’ comments express concerns that housing is weakening and could affect the broader economy,” Blitzer says. “Current low inventories of homes for sale—about a four-month supply—are supporting home prices. New-home construction trends, like sales of existing homes, peaked in late 2017 and are flat to down since then.”

The break in the clouds are mortgage rates, which, after flirting with 5 percent, have returned to roughly 4.5 percent. The Federal Reserve has indicated it is pulling the reins this year, adopting a more “patient” policy, which is expected to keep rates from rising significantly.

“With the government shutdown failing to put homebuyers at ease, we expect home-price growth to continue to moderate over the next several months; however, falling mortgage rates should help mitigate some of these effects,” McLaughlin says.

Other economic measures, including encouraging expectations for incomes, are promising, as well.

“The softening home price appreciation in the latest Case-Shiller index will continue in the upcoming months as housing inventory builds, but it is unlikely for the national median home price to actually decline given the housing shortage of moderately-priced homes and from job additions in the economy,” said Lawrence Yun, chief economist of NAR, in a statement.

“Stable 2 percent inflation, continued employment growth and rising wages are all favorable,” says Blitzer. “Measures of consumer debt and debt service do not suggest any immediate problems.”

“In 2019, home prices in many markets look to trail income growth for the first time since 2012,” Yun said. “That is a healthy development of keeping housing affordability in check.”

The complete data for the 20 markets measured by S&P:

Atlanta, Ga.
MoM: 0.3%
YoY: 6.2%

Boston, Mass.
MoM: 0.1%
YoY: 5.6%

Charlotte, N.C.
MoM: 0.2%
YoY: 5.5%

Chicago, Ill.
MoM: -0.7%
YoY: 3.1%

Cleveland, Ohio
MoM: -0.7%
YoY: 4.6%

Dallas, Texas
MoM: 0.2%
YoY: 4%

Denver, Colo.
MoM: -0.3%
YoY: 6.2%

Detroit, Mich.
MoM: -0.4%
YoY: 5.7%

Las Vegas, Nev.
MoM: 0%
YoY: 12%

Los Angeles, Calif.
MoM: -0.3%
YoY: 4.4%

Miami, Fla.
MoM: 0.3%
YoY: 5% 

Minneapolis, Minn.
MoM: -0.2%
YoY: 5.8%

New York, N.Y.
MoM: 0.4%
YoY: 3.5%

Phoenix, Ariz.
MoM: 0.3%
YoY: 8.1%

Portland, Ore.
MoM: -0.5%
YoY: 4.4%

San Diego, Calif.
MoM: -0.6%
YoY: 3.3% 

San Francisco, Calif.
MoM: -0.7%
YoY: 5.6%

Seattle, Wash.
MoM: -0.7%
YoY: 6.3%

Tampa, Fla.
MoM: 0.4%
YoY: 5.7%

Washington, D.C.
MoM: 0%
YoY: 2.7%

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

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Prices Starting to Top Out

Mar 11, 2018 by

Home prices are starting to top out, with appreciation decelerating as the market moves toward a peak, according to the Buy vs. Rent Index published by Florida Atlantic University (FAU) and Florida International University (FIU).

“Housing markets are slowing, suggesting that we are nearing a peak in housing markets around the U.S.—but this is good news, as we are pulling back from the brink, unlike we did in 2007,” says Ken Johnson, a creator of the Index from FAU’s College of Business and an economist.

“Our data indicates that prices are above their 40-year trend, but not significantly so as they were in 2007,” says Eli Beracha, a creator of the Index and associate professor at FIU’s Hollo School of Real Estate. “Rather than a crash, I anticipate slower growth in prices accompanied by longer marketing times for sellers and increasing inventories, which should bring prices back in conjunction with their 40-year trend.”

Formally the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the gauge is a measure of 23 metropolitan areas: Atlanta, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Honolulu, Houston, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis, New York, Philadelphia, Pittsburgh, Portland, San Diego, San Francisco, Seattle, and St. Louis. It is similar to the S&P CoreLogic Case-Shiller Indices—which encompass 20 metros (with some overlap)—but also includes factors like mortgage rates.

Thirteen of the BH&J Index’s markets are “moderately” to “slightly” in buy territory, indicating it is more advantageous financially to purchase, while 10 are in “moderately” to “slightly” rent territory.

The adjustment anticipated by FAU/FIU has been on many a radar. A forecast by HouseCanary projects that 41 of the largest 100 metros will experience a price slowdown this year. Analysts at CoreLogic are predicting an overall stabilization, as well, and economists at Zillow are expecting a “normal” tempering.

What is causing the cooling? Along with a basic cycling of the market, other drivers include the as-yet-determined implications of the Tax Cuts and Jobs Act, and increasing mortgage rates.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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A Let-Up for Prices? Housing Trends to Watch

Feb 25, 2018 by

The housing market is on the up-and-up, but at a lesser pace than in prior years. According to new research, buzzier markets are now stabilizing.

Appreciation is projected to slow in 41 of the top 100 metropolitan statistical areas (MSAs) this year, according to HouseCanary, which recently released its “5 Housing Trends That Are Changing the Market Today.” HouseCanary assessed the country’s 381 MSAs for affordability and appreciation. The areas with marked softening:

  1. Palm Bay-Melbourne-Titusville, Fla.
  2. North Port-Sarasota-Bradenton, Fla.
  3. Lakeland-Winter Haven, Fla.
  4. Cape Coral-Ft. Myers, Fla.
  5. Deltona-Daytona Beach-Ormond Beach, Fla.
  6. Phoenix-Mesa-Scottsdale, Ariz.
  7. Orlando-Kissimmee-Sanford, Fla.
  8. Miami-Ft. Lauderdale-West Palm Beach, Fla.
  9. Urban Honolulu, Hawaii
  10. Tampa-St. Petersburg-Clearwater, Fla.

HC_100_MSAs

“Although the housing market is still strong, with home prices still increasing in many markets, there is clear evidence of a considerable deceleration in the pace of those price increases,” says Alex Villacorta, executive vice president of Analytics for HouseCanary. “The rapid price growth in high-end and luxury markets seems to have stagnated as affordability continues to put downward pressure on home price appreciation.”

What factors are fueling the trend? The demand/supply dynamic, for one, Villacorta says. Buyers are out in droves, but inventory is lacking. The imbalance is pressuring prices—and affordability is suffering, in turn. Households in 30 of the top 100 MSAs are allocating more than 30 percent of their income to their mortgage, HouseCanary’s research shows. (Thirty percent is considered, generally, the ideal share.) Five of the top 100 MSAs are allocating more than 50 percent of their income.

Affordability is also impacted by mortgage rates, which Villacorta anticipates will land in the neighborhood of 4.75 percent by this time next year—a change that could deter homeowners with lower rates from selling, exacerbating inventory issues. The average 30-year, fixed mortgage rate has been on an uptick since the start of 2018.

The Tax Cuts and Jobs Act could have an effect on housing, as well, though how it could help or hurt the market is unclear. With change comes indecision, and Villacorta believes homebuyers and sellers could hold off on their plans until they know how the bill will impact them personally.

MORE: Housing and Tax Reform: Where Could the Impact Land?

“Clearly there are many challenges to stabilizing the housing market,” Villacorta says. “There is still a supply-and-demand problem, mortgage rates are still on the rise, affordability remains an issue in many major markets, and the wider-ranging effects of the new tax plan are still unknown—so it’s unclear whether this slowed growth will lead to housing market price plateaus or declines, but the conditions are certainly in place for that potential outcome.”

For more information, please visit www.housecanary.com.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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High Prices Keep Activity Sizzling Through Summer

Jul 28, 2017 by

High prices are keeping home sales activity sizzling through summer, with listings moving 6 percent faster year-over-year in July, according to the latest data preview from realtor.com®. Prices in July are 10 percent higher than those one year ago, with the national median at $ 275,000 and the national median age of inventory at 64 days. There are 11 percent less homes on the market year-over-year.

“In the middle of the summer we normally see the housing market begin to slow down and prices drop a bit, but this year has been a different story,” says Javier Vivas, manager of Economic Research at realtor.com. “After a strong start to the buying season, homes are not only selling faster than last July, but faster than last year’s peak months. However, quick sales don’t necessarily mean more sales, particularly when there isn’t enough inventory as is currently the case. Home prices also remain stubbornly high, failing to show hints of the usual seasonal cooldown. Low- and moderately-priced homes are being snatched up especially quickly, keeping many would-be buyers from being able to get into the market.”

The housing markets ranking in realtor.com’s Hotness Index for July:

  1. Vallejo-Fairfield, Calif.
    Median Age of Inventory: 31 days
  1. Kennewick-Richland, Wash.
    Median Age of Inventory: 31 days
  1. San Francisco-Oakland-Hayward, Calf.
    Median Age of Inventory: 32 days
  1. San Jose-Sunnyvale-Santa Clara, Calif.
    Median Age of Inventory: 30 days
  1. San Diego-Carlsbad, Calif.
    Median Age of Inventory: 36 days
  1. Stockton-Lodi, Calif.
    Median Age of Inventory: 35 days
  1. Columbus, Ohio
    Median Age of Inventory: 38 days
  1. Fort Wayne, Ind.
    Median Age of Inventory: 38 days
  1. Sacramento-Roseville-Arden-Arcade, Calif.
    Median Age of Inventory: 37 days
  1. Detroit-Warren-Dearborn, Mich.
    Median Age of Inventory: 38 days

For more information, please visit www.realtor.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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