Rising home prices across the country are giving a long-awaited boost to the housing market, but fiscal uncertainties could make the recovery a “bumpy ride,” according to economists who spoke this week at a webinar sponsored by the National Association of Home Builders.
Builders continue to experience challenges in obtaining credit for new projects, and potential buyers are also still struggling to qualify for mortgage loans due to tightened underwriting standards in place the last few years. The economists also cited the challenges of appraisals coming in lower than the agreed-upon sales price and a limited inventory of developed lots in certain housing markets. Another factor potentially jeopardizing the speed of the recovery, the economists added, are pending tax increases and spending cuts that are set to take effect in January.
Despite the challenges, the economists mostly remained optimistic about the outlook for the real estate market. Mark Zandi, chief economist for Moody’s analytics, forecasts that mortgage rates will stay low, the availability of housing credit will improve as private mortgage lending picks up, and the job market will gain traction as policymakers resolve fiscal issues and the uncertainties facing the market.
Robert Denk, NAHB’s assistant vice president for forecasting and analysis, said that nationwide housing starts are projected to return to 55 percent of normal production by the end of next year, and reach 70 percent of normal levels by the end of 2014. The hardest-hit housing markets — such as Arizona, Florida, Nevada, and California — still have a long way to go for making up appreciation losses during the housing crash. However, energy-producing states — such as North Dakota, Texas, Oklahoma, Montana, and Wyoming — are expected to return to normal levels in housing production by the end of 2014, Denk said.
Monday, October 29, 2012
Housing Recovery Picks Up, But Challenges Await
Friday, October 19, 2012
Foreclosures Drop to 5-Year Lows
Foreclosures continue to do the opposite of what most analysts had predicted: They keep falling rather than rising.
Foreclosure filings in September fell 7 percent from August and are down 16 percent from last September, RealtyTrac reported Thursday. Foreclosure filings include default notices, scheduled auctions, and bank repossessions.
The number of foreclosure filings in September reached their lowest level since July 2007. What’s more, foreclosure filings have decreased 13 percent in the third quarter compared to the third quarter of 2011, marking the ninth consecutive quarter with an annual decrease in foreclosure activity, RealtyTrac reports.
“We’ve been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market — at least at a national level,” says Daren Blomquist, vice president at RealtyTrac. “Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year.”
A backlog of delayed foreclosures in certain states may be problematic in some areas soon, Blomquist says, particularly in judicial states, where foreclosures must be approved by a court. Florida, Illinois, Ohio, New Jersey, and New York have posted the largest year-over-year increases in foreclosure activity.
Meanwhile, other states are seeing large drops in foreclosure activity, mostly centered in “non-judicial” states, where foreclosures do not have to be court-approved. For example, states like California, Georgia, Texas, Arizona, and Michigan have posted large drops in foreclosure activity.
Source: RealtyTrac
Wednesday, October 10, 2012
Five Year Forecast: Prices Will Rise 8.5 to 22 Percent
Nominal house prices will continue to rise for the UFA 100, a broad based composite index of 100 US cities. Under current economic conditions commonly used house price indices will rise between 8.5 and 22 percent cumulatively over the next five years, but recovery will be slow for the larger metro areas in the Case-Shiller 10 city composite.
Tuesday, October 9, 2012
Baby Boomers Change Retirement – and Housing
by CJ Yeoman, Writer/Editor
The passage of Baby Boomers through American society has effected huge changes in attitudes toward women’s equality in the workplace, sexuality and parenthood. And now as they have started reaching the age of 65, boomers are redefining retirement and how to handle it.
And this is creating a HUGE opportunity for real estate professionals. How will you take advantage of it?
Busting out
Our friends at the KCM Blog say “Baby Boomers [are] About to Bust Out of Homes,” detailing the positive aspects of the booming numbers of these seniors who will be deciding where to spend their retirement years.
Of course, there’s the reality they may be forced to continue working because they have either lost value in their retirement nest eggs or they have not saved like they should have. But we’re talking here about those who are now deciding how they will be housed when they retire.
According to a recent study from the Center for Housing Policy (quoted by KCM), the homeownership rate exceeds 80 percent for those aged 65 to 84, and the typical homeowner has an average of $150,000 in home equity. Even those with a mortgage have an average of $93,000 in equity – so the ability to sell their home is not impacted by negative equity.
The Bipartisan Policy Commission says people over 65 “release much more housing than they absorb,” such as when they move in with their children, move into independent living facilities or nursing homes, or pass away.
“Between 2000 and 2010, people who began the decade aged 55 and over released over 10.5 million housing units (net). Most of these releases involve owner-occupied dwellings ….”
So as seniors are getting ready to make these decisions, will they have qualified real estate professionals to assist them?
Retirement assumptions going by the wayside
Tom Kelly of Inman News writes frequently on second-home purchases and says seniors will play a key role in the housing recovery. He figures nearly 5 million seniors are expected to buy and/or sell property in the next three years. With many of them boasting a “ton of equity,” seniors plan on buying their next home with cash, negating the effects of today’s horribly strict mortgage underwriting.
How many? Try 94 percent, according to the Market Enhancement Group, a Southern California real-estate research team.
The other surprise finding is that in 2010, only 1.6 percent of retirees between the ages of 55 and 65 moved across state lines. Florida is no longer the retirement haven it once was … and maybe no one state will take its place. Kelly says, “More retirees are opting to stay near where they once worked, moving out of the pricey real estate metro areas to places an hour or two outside of the city, where real estate prices and taxes tend to be cheaper.”
Also, boomers are not as willing to give up the cultural amenities they find in larger cities – or the better health-care providers. And why move far away from children and grandchildren you will need as a support system in later years?