SoCal Home Market “Normalizing”
Southern Calfornia’s housing market continued a normalizing trend in August, prompting cheers from analysts who said the market in on the path for long term sustainability. The figures, release on Wednesday by real estate Corelogic, saw slowing price appreciation even as sales continued to rise – a course that has been evident most of the year.
“The housing market is normalizing,” said Esmael Adibi, drector of the A. Gary Anderson Center for Economic Research at Chapman University. “It’s very good news”. Adibi said demand is now being driven by fundamentals such as job creation – not investors flush with cash – and predicted the market is on the path for sustainable growth. In July, California added 80,700 new jobs, the largest monthly employment gain in the last year. Southern California home prices are likely to climb 3% to 4% in 2016, buoyed by continued job growth, he said.
Stuart Garbriel, director of UCLA’s Ziman Center for Real Estate, said that even if the Federal Reserves decides Thursday to raise its short-term interest rate, there will be minimal effect on housing demand, because any increases are likely to be small and made slowly.
For now, the improving economy has helped boost sales nationally too, as more families have confidence to make what is often the biggest purchase of their lifetimes, economists said. In July, sales of U.S. previously owned homes reached an eight year high. And Wednesday, the National Assn. of Home Builders reported single-family-home haven’t been this confident since before the housing crash last decade.
Business Section, Los Angeles Times
September 17, 2015
California median home price reaches highest level since December 2007; home sales register largest monthly gain since January 2011
LOS ANGELES (May 15) –Showing true signs of improvement, California’s housing market continued to perform better than expected in April with both the median home price and home sales increasing month to month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. However, decreased home affordability remains a challenge for buyers in many areas of the state.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 394,070 units in April, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. April marked the sixth consecutive month that sales were below the 400,000 level and the ninth straight decline on a year-over-year basis. Sales in April increased 7.4 percent from a revised 367,020 in March but were down 7 percent from a revised 423,690 in April 2013. The statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
“With home prices increasing by double-digits in 2013, many investors have decided to leave the market which is adversely affecting home sales as a whole,” said C.A.R. President Kevin Brown. “While the number of homes sold continued to decline from a year ago, the better-than normal surge in sales activities in April is encouraging and could be an indication that we will see further improvement in the housing market in the next few months.”
Diminished Investor Activity Expected to Have Significant Impact on Home Shoppers in 2014
Buyers Could Benefit From Smoother Market as Investors Withdraw; Home Values Expected to Normalize Through 2018, According to Zillow Home Price Expectations Survey
SEATTLE, Feb. 12, 2014 /PRNewswire/ -- A majority of more than 100 forecasters said they expect large-scale investors to sell off the bulk of homes in their portfolios in the next three to five years, boosting inventory and potentially contributing to a smoother market ahead, according to the latest Zillow® Home Price Expectations Survey. On average, panelists also said they expected nationwide home value appreciation of 4.5 percent this year, with a steady slowdown in appreciation rates each year through 2018.
The survey of 110 economists, real estate experts and investment and market strategists asked panelists to predict the path of the U.S. Zillow Home Value Indexi through 2018 and solicited opinions on investor activity and federal monetary policy. The survey was sponsored by leading real estate information marketplace Zillow, Inc. and is conducted quarterly by Pulsenomics LLC.
Throughout the recovery, large-scale investors have purchased thousands of homes nationwide, particularly lower-priced vacant and foreclosed homes, fixing them up and keeping them in their portfolios as rental properties. This investor activity helped put a floor under sales volumes during the depth of the housing recession, but also created competition for many would-be buyers and contributed to rapid price spikes in some areas.
Panelists were asked to assess the impact to the market if these institutional investors were to significantly curtail their activity this year. Among those panelists expressing an opinion, 79 percent said the impact would be significant or somewhat significant. Panelists were also asked when they thought these investors will have sold the majority of homes in their portfolios. Among those with an opinion, 57 percent said they expected this to occur in the next three to five years.
"Real estate investors, both large and small, played a crucial role in helping to stabilize markets during the darkest days of the housing recession, but a decline in investor activity now isn't necessarily a bad thing, and could have real benefits for buyers," said Zillow Chief Economist Dr. Stan Humphries. "Buyers entering the market in the next few months will not be competing with cash-rich investors like they were last year which should be some small solace given the higher prices and mortgage rates that they will encounter. The gradual decline of investor activity should be viewed as another sign of the market slowly returning to normal, and I agree with the panel's expectations that there will not be a rush for the exit by institutional investors."
Metro Areas See Solid Home-Price Growth, Some Markets Facing Affordability Issues
WASHINGTON (February 11, 2014) – The lion’s share of metropolitan areas continued to experience strong year-over-year price growth in the fourth quarter, according to the latest quarterly report by the National Association of Realtors®. A companion metro area annual affordability report shows less favorable conditions, particularly in the West.
The median existing single-family home price increased in 73 percent of measured markets, with 119 out of 164 metropolitan statistical areas (MSAs) showing gains based on closings in the fourth quarter compared with the fourth quarter of 2012. Forty-two areas, 26 percent, had double-digit increases, two were unchanged and 43 recorded lower median prices.
There were fewer rising markets than seen in the third quarter, when price increases were recorded in 88 percent of metro areas from a year earlier, with 33 percent rising at double-digit rates, reflecting a slowdown in price growth.
Lawrence Yun, NAR chief economist, said there are two ways of looking at the price gains. “The vast majority of homeowners have seen significant gains in equity over the past two years, which is helping the economy through increased consumer spending,” he said. “At the same time, home prices have been rising faster than incomes, while mortgage interest rates are above the record lows of a year ago. This is beginning to hamper housing affordability.”
The five most expensive housing markets in the fourth quarter were the San Jose, Calif., metro area, where the median existing single-family price was $775,000; San Francisco, $682,400; Honolulu, $670,800; Anaheim-Santa Ana, Calif., $666,300; and San Diego, where the median price was $476,800.
The five lowest-cost metro areas were Toledo, Ohio, with a median single-family price of $80,500; Rockford, Ill., $81,400; Cumberland, Md., at $89,500; Elmira, N.Y., $99,500; and South Bend, Ind., with a median price of $101,100.
Home Improvements That Pay You Back
1. Remodeling the kitchen – You can expect to recoup 60%-120% of your investment on the kitchen remodel, as long as you don’t go overboard. You should never make your kitchen fancier than the rest of the house, or the neighborhood.
2. Bathroom addition – If your home only has one bathroom, you can recoup a large chunk of your investment by adding another one. It is estimated that you can recoup 80%-130% of whatever you spend adding a bathroom.
3. Adding square footage – Adding more square footage to your home with a new room can be an incredibly expensive project. However, you can typically recoup between 50%-83% of your initial investment. Just make sure you keep the cost under control.
4. Deck addition – If you make your deck and your backyard more appealing, your house will be more appealing to prospective buyers when you decide to sell. Homeowners can recoup 65%-90% of their investment by adding a deck.
(California Association of Realtors Newsletter dated 1/13/2014)
Mortgage rates began 2014 with a round of increases, kicking off a trend many experts believe will continue through the rest of the year. "Freddie Mac's" weekly Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaging 4.53 percent (0.8 point) for the week ending January 2, up from the last week of 2013, when it averaged 4.48 percent. A year ago, the 30-year FRM was at 3.34 percent.
The 15-year FRM this week averaged 3.55 percent (0.7 point), climbing from 3.52 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also saw an increase, rising to 3.05 percent (0.4 point) from 3.00 percent. The 1-year ARM was flat at 2.56 percent (0.5 point).
Frank Nothaft, VP and chief economist for Freddie Mac, cited three major factors behind the week's increases: rising "Freddie Mac's" as reported by the Conference Board, a strong showing for home prices in the most recent "Freddie Mac's", and a slight gain in "Freddie Mac's" for November--all of which served as ""signs of a stronger economic recovery,"" he said.
Meanwhile, finance site "Freddie Mac's" reported on the findings in its weekly survey, putting the 30-year fixed at 4.69 percent--up 6 basis points--with the 15-year fixed at 3.73 percent--up 3 points. The 5/1 ARM was up to 3.52 percent, nearly 10 basis points up, Bankrate reported.
"Mortgage rates finished 2013 more than a full percentage point higher than where they began,"" Bankrate said in a release. ""While mortgage rates are still below September's high point of the year, they did finish 2013 near the upper end of this year's range.