Archive for the ‘Home Values’ Category

Case-Shiller: February Home Prices Grow at Fastest Pace in 3 Years

April 27, 2017

According to the Case-Shiller National Home Price Index, February home prices grew at their fastest pace in three years. While home prices have steadily grown in recent months, growth rates slowed in many areas month-to-month; the escalation of home prices from January to February indicates stronger housing markets. National home prices increased by 0.20 percent in February to a seasonally-adjusted annual rate of 5.80 percent appreciation.

Case-Shiller’s 20-City Home Price Index posted a month-to-month gain of 0.20 percent for a year-over-year gain of 5.90 percent. Seattle, Washington again topped the 20-City index with year-over-year home price growth of 12.20 percent. Portland Oregon followed with an annual price gain of 9.70 percent. Denver, Colorado was replaced by Dallas, Texas with a year-over-year home price growth rate of 8.80 percent. Fifteen cities posted higher year-over-year gains in home prices in February as compared to January readings.

Monthto Month Home Prices

Case-Shiller National, 20-City and 10-City Home Price Indices reported moth-to-month 0.20 percent home price growth before seasonal adjustment. After prices were seasonally adjusted, national home prices increased by 0.40 percent month-to-month; the 20-city index showed an increase of 0.70 percent and home prices in the 10-City Index rose by 0.60 percent after seasonal adjustment.  

Home Prices Rising on High Demand, Low Inventory of Homes Available

David M. Blitzer, Managing Director and Chair of the S&P Dow Jones Indices Committee, said that ongoing shortages of homes for sale continue to boost home prices as demand exceeds supply. First-time and moderate income home buyers continue to face affordability concerns as rising home prices can negatively impact buyers’ ability to qualify for mortgage loans.

Analysts said that while rising home prices are a sign of economic strength, housing market indicators such as housing starts have not had corresponding growth rates. New construction is viewed as the only way to ease demand for homes as rising home prices have so far not cooled demand.

Home Builder Index Dips in January

January 19, 2017

January’s National Association of Home Builders Housing Market Index dipped two points from December’s revised reading of 69 to 67;  the index reading forecast for January was also 69.Analysts said that January’s reading was the second highest (after December 2016) since the peak of the housing bubble in 2005. January’s dip in builder sentiment was attributed to easing of builder enthusiasm, which spiked right after the U.S. presidential election. To put January’s home builder confidence reading in context, NAHB says that any index reading over 50 indicates that more builders than fewer have confidence in housing market conditions.

NAHB SubIndex Readings for January

Three sub-index readings are used in compiling the NAHB Housing Market Index reading. Builder confidence in current housing market conditions fell three points to 72; builder confidence in housing market conditions over the next six months fell two points to 76. Builder confidence in buyer traffic in new housing developments dropped one point to 51.

Builders surveyed continued to cite the cost of new lots for development and the lack of skilled labor as obstacles to higher builder confidence.

After releasing January’s index readings, the NAHB said that while January’s readings were lower than those for December, a majority of builders have expressed confidence that the new administration will reduce regulatory pressure on home builders. NAHB also cited home builder concerns over mortgage rates, which rose nearly a percentage point in November and December before falling. Despite ongoing concerns, builder sentiment has steadily improved over time. On average, builder confidence averaged a reading of 61 in 2016 against 2015’s average reading of 59 and the 2014 average reading of 52.

Builder Outlook Seen as Key to Easing Home Shortage

Real estate and mortgage pros have consistently said that building more homes is necessary to ease the ongoing shortage of available homes. NAHB’s Housing Market Index is closely followed as a benchmark of home builder confidence. Higher builder confidence in current and future housing market conditions is viewed as a potential indicator of home building activity, but housing starts have not been uniformly allied with builder confidence.

Shortages available homes creates high demand creates concerns for potential buyers seeking affordable homes. Rapidly rising home price, particularly in high demand metro areas, have sidelined buyers who cannot compete against buyers making cash offers on homes with rapidly escalating prices. 

S&P Case-Shiller: Home Prices Gain in August

October 27, 2016

Home prices gained in August per the 20-City S&P Case-Shiller Home Price Index. Analysts said that home values continue to expand in spite of challenges including low inventories of available homes and strict mortgage qualification requirements.

National Home Price Index Near 2006 Peak

According to the national Case-Shiller Home Price Index, August home prices are 0.10 percent below their 2006 peak and all metro areas in the 20-City Home Price Index posted gains. Top gains in the 20-City Home Price Index were posted by Portland, Oregon with a year-over-year gain of 11.70 percent, Seattle, Washington home prices gained 11.40 percent and Denver, Colorado home prices gained 8.80 percent year-over-year.

All metro areas included in the 20-City Index posted year-over-year gains in excess of one percent. New York City had the lowest year-over-year price gain with a year-over-year reading of 1.70 percent in August. Washington, D.C. home prices rose 2.30 percent year-over-year. Home prices in the Cleveland, Ohio metro area increased by 2.90 percent year-over-year.

New Housing Bubble Unlikely

With home price gains close to peak prices seen before the housing bubble burst, concerns may arise over the potential for a new housing bubble to occur in coming months. Analysts say this is unlikely as home buyers are not taking out extreme levels of mortgage debt seen at the onset of the Great Recession. David M. Blitzer, chairman of the S&P Index Committee, said “There is no reason to fear another massive collapse is around the corner. The run-up to the financial crisis was marked with both rising home prices and rapid growth in mortgage debt.”

Possible Fed Rate Hike Won’t Cause Mortgage Rates to Explode

The Federal Open Market Committee of the Federal Reserve is expected to raise the Fed’s target federal funds rate in December. This action will lead to interest rate increases for consumer credit and mortgages, but not at levels that would make mortgage loans suddenly unaffordable. While gradual increases in federal interest rates would cause mortgage rates to rise over time, market conditions and related factors could potentially cause home prices to slow or even dip in some areas. Regional influences including employment and demand for homes are examples of factors contributing to home price growth or decline in specific areas.

Home Affordability Peaked Last Quarter; Purchasing Power Sinks 10%

March 8, 2011

Home Opportunity Index 2004-2010

Home affordability reached an all-time high in 2010’s last quarter. Unfortunately for home buyers in Utah , it’s been a different story since, however.

As mortgage rates cratered, and with home values soft, the Home Opportunity Index reached its highest level in 20 years. The index is published by the National Association of Home Builders. 

Close to 74 percent of the new and existing homes sold between October-December 2010 were affordable to families earning the national median income of $64,400. It’s the 8th straight quarter in which the Home Affordability Index surpassed 70 percent.

Prior to 2009, the HOI rarely topped 65 percent.

That said, though, as with everything in real estate, home affordability is a local event. For example, take the Elkhart/Goshen area of northern Indiana. 97 percent of homes sold there last quarter were affordable to families making the area’s median income. 

This level of affordability is likely related to state capital Indianapolis, a perennial top-scorer itself.

For the second straight quarter — and the 22nd time dating back to 2006 — Indianapolis led all major metropolitan areas with a 93.5 affordability rating.

Meanwhile, on the opposite end of the home affordability spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 11th consecutive quarter. Just 25.5 percent of homes were affordable to households earning the area median income.

It’s a a 6-point improvement from Q2 2010, however.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, it’s important to remember that rising mortgage rates this year have made homes less affordable in all markets across the United States. We won’t see a repeat record in this quarter’s HOI once it’s calculated and published.

Home buyers have lost 10% of their purchasing power since November, and mortgage rates look poised to rise even more.

If your plans call for buying a home later this year, consider moving up your time frame. The long-term costs of homeownership are rising, and affordability, therefore, is falling.

Home Affordability Reaches Record-Levels… Last Quarter.

December 9, 2010

Home Affordability - Top and Bottom 5 markets 2010 Q3

Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, the cost of home ownership was extraordinarily low in Utah and most U.S. markets.

According to the National Association of Home Builders’ quarterly Home Opportunity Index, 72.5 percent of all new and existing homes sold between June-September 2010 were affordable to families earning the national median income. This ties the all-time high for home affordability, set in the first quarter of 2009.

The data also underscores that, when compared to historical norms, it’s a fantastic time to be a home buyer.

Prior to 2009, the Home Opportunity Index rarely topped 65. The index has remained above 70 ever since.

All real estate is local, though, and on a city-by-city basis, home affordability varied last quarter.

For example, 96% of homes sold in Kokomo, IN are affordable for families earning the area’s median income. This handily beat the average figure and led the nation. Looking at major cities, Indianapolis led the pack.

93% of homes in Indianapolis are affordable to families earning the area’s median income. This ranks #9 nationwide.

On the opposite end of the affordability scale is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranks last in U.S. home affordability. Just 23% of homes are affordable to families earning the local median income, although this is 3 points higher versus Q1 2010.

The rankings for all 225 metro areas are available online.

Regardless of where your hometown ranks relative to its neighbors, home affordability remains high as compared to historical values. That said, with mortgage rates rising and home sales expected to climb this winter, it’s unlikely that the Home Opportunity Index will improve.

Buying a home may never be this inexpensive again. If you planned to buy in mid-2011, consider moving up your time frame.

Which Model Is More Accurate : The Case-Shiller Index Or The Home Price Index?

September 9, 2010

Home Price Index from April 2007 peak

The private-sector Case-Shiller Index reported home values up 5 percent nationwide in June. The government’s own Home Price Index, however, reached a different conclusion.

According to the Federal Home Finance Agency, month-to-month home values fell 0.3 percent in June, and values are down by 1.7 percent from June 2009.

So, as a home buyer and/or homeowner , by which valuation model should you make your bets?  Perhaps neither. 

This is because both the Case-Shiller Index and the Home Price have inherent methodology flaws, the most glaring of which is their respective sample sets. 

The Case-Shiller sample set, for example, comes from just 20 cities across the country — and they’re not even the 20 most populated cities. Together, the Case-Shiller cities represent just 9 percent of the overall U.S. population

That’s hardly representative of the housing stock overall.

By comparison, the Home Price Index tracks home sales everywhere — every city in every state — but it specifically excludes certain properties.  The Home Price Index does not track sales of homes for which the financing comes from agencies other than Fannie Mae or Freddie Mac. This means that as FHA loans grow in popularity, the pool of Home Price Index-eligible homes is reducing. 

The HPI ignores homes backed by “jumbo” loans, too.

Therefore, the “right” model for home values cannot come from national data at all — it can only come locally. Neither Case-Shiller nor the government has the tools to get as granular as a neighborhood. A real estate agent in the area does, however.

The best way to get a pulse for what’s happening in markets right now is to talk to somebody with good data.

Home Affordability Rankings For 225 Metropolitan Statistical Areas

August 27, 2010

Home Affordability - Top and Bottom 5 markets 2010 Q2

With home prices holding firm and mortgage rates still dropping, home affordability is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It’s a slightly higher reading as compared to last quarter, and the second highest reading in the survey’s history.

As with all aspects of real estate, however, home affordability varies by locale. 

For example, 97.2% of homes sold in Syracuse were affordable for families making the area’s median income, earning the New York city its first “Most Affordable Major City” designation.  Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter.  Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it’s ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

Home Opportunity Index Ranks 225 Metro Areas For Affordability

May 21, 2010

Home Affordability - Top and Bottom 5 markets 2010 Q1

With home prices still relatively low and mortgage rates trolling near their all-time best levels, it’s no surprise that home affordability is extraordinarily high in most U.S. markets.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between January-March 2010 were affordable to families earning the national median income.

It’s the second highest reading in the survey’s history.

Of course, on a city-by-city basis, home affordability varies. 

In the first quarter of 2010, for example, 98.7% of homes sold in Bay City, Michigan were affordable for families earning the area’s median income and in Indianapolis, the percentage was almost 95 percent.

Indianapolis has held the top quarterly ranking for close to 5 years now.

On the opposite end of the spectrum, the New York-White Plains, NY-Wayne, NJ region earned the “least affordable” metropolitan area for the 8th consecutive quarter.  Just 20.9% of homes are affordable to families earning the local median income.

The rankings for all 225 metro areas are available on the NAHB website but regardless of where your town ranks, home affordability remains high as compared to historical values but it likely won’t last long.  Home values are recovering in many markets and mortgage rates won’t stay this low forever.

All things equal, buying a home may never come this cheap again. If you were planning to buy later this year, consider moving up your timeframe.

CNNMoney.com Predicts The Best And Worst Real Estate Markets For 2010

March 23, 2010

Real estate is localCNNMoney.com recently published its 2010 forecast and projections for home prices in the country’s largest metro markets. 

Listed as “Top 25” and also comprehensively by state, CNNMoney.com’s home price forecasts puts Santa Rosa, California at the top of 2010’s home appreciation list and Hanford, California at its bottom.

The 10 cities projected for highest home appreciation in 2010 are:

  1. Santa Rosa, CA : +6.0%
  2. Cheyenne, WY : +4.7%
  3. Kennewick, WA : +4.6%
  4. Merced, CA : +4.4%
  5. Bremerton, WA : +4.2%
  6. Fairbanks, AK : +4.2%
  7. Corvallis, OR : +4.1%
  8. Tacoma, WA : +3.9%
  9. Anchorage, AK : +3.8%
  10. Bend, OR : +3.3%

The Pacific Northwest is the region most heavily-represented among price gainers. The Southeast and Middle Atlantic are most represented on the under-perform list.

However, just because a city’s homes are expected to appreciate (or depreciate) in 2010, that doesn’t mean that every home within its limits will follow suit.  Real estate cannot be grouped on a city level like CNNMoney.com tries to. There will always be areas in demand within city limits in which prices rise, just as there will be out-of-demand areas in which prices fall.

Real estate data can’t be grouped by city or even by ZIP code, really.

Real estate is more local than that.

When we say “real estate is local”,  it means that every street in every town has a distinct set of traits that drives its home values. Homes that are one block closer to the train; or, homes that are facing north; or, homes that are made of brick. Each of these characteristics can affect a home’s desirability which, in turn, can affects its sales price.

National surveys can’t capture “essence” like this. They only report on the aggregate.

For local real estate data, look to established, publicly available websites and to active, local real estate agents.  Both will have data and insight that can help you.  National surveys often make for good headlines, but do little to help homebuyers find good value.

Home Prices On The Rise, Says The October Home Price Index Report

December 30, 2009

Home Price Index April 2007 to October 2009

More positive signals from housing — home values are still on the rise.

According to the Federal Housing Finance Agency, after posting its first quarterly increase since 2007 this past September, the Home Price Index rose by another 0.6 percent in October.

Prices are up in 4 of the last six months.

But before we take the stats to the proverbial bank, it’s important that we recognize the Home Price Index for its shortcomings.

  1. HPI only accounts for homes with mortgages backed by Fannie Mae or Freddie Mac
  2. HPI only accounts for re-sold homes — newly-built homes are excluded
  3. HPI aggregates national data whereas real estate markets are local phenomena

On a broad scale, the Home Price Index can be useful, but it doesn’t specifically apply to any specific U.S. market.  For that, analysts tend to turn to the Case-Shiller Index, a privately-produced report that assesses home values in 20 cities nationwide.

 

The good news for home sellers is that Case-Shiller’s most recent report corroborates the government’s conclusion — home values are creeping back.

Home buyers should pay attention. When public and private sector data is in accord, markets tend to go along and, looking back, housing likely bottomed in February 2009.  Since then, home sales are up, home supplies are down, and values have increased in most U.S. markets.  Furthermore, so long as mortgage rates remain low and government stimulus is in place, the trend should continue through at least the first quarter of 2010.

If you’re on the fence about buying a home right now, or wondering about timing, consider your options vis-a-vis today’s market.  Into the new year, homes won’t likely be as cheap to buy, nor to finance.