Emmanuel Fonte | Music | Art | Leadership
If music be the food of love, play on. Emmanuel Fonte website is about music, art, real estate, architecture, design and decor. Occasionally, I talk about my other passion, hockey.
The REAL Trends Housing Market Report Video depicts national and regional trends for the residential real estate market. January report is based on Dec. 2012 Data.
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Mortgage giant Fannie Mae recently offered some predictions of what the housing market’s “normal” will look like in the next two years.
In its report, “Transition to ‘Normal’?”, Fannie says while the housing market has shown improvement, uncertainty remains over both the economy and the real estate market.
“Our forecast is that 2013 and 2014 will exhibit below-potential economic growth,” according to the white paper. “This is despite the fact that we expect the housing rebound will continue and that the economy will benefit from the gradual increased growth of U.S.-based manufacturing, as well as the expansion of domestic energy production.”
The following are some of the projections Fannie made in its report:
Source: “‘Normal’ Housing Market May Not be What it Used to Be,” Realty Times
Today’s existing home sales number was a little weaker than expected.
But have no fear, the housing comeback train continues.
Calculated Risk shows the number of months worth of existing home supply (red line). And that number continues to drop.
Which means: The price of your home is going to go up, as inventory gets tighter.
Many analysts differ on what impact shadow inventory will have on house values in 2013. Some warn that these distressed properties will still play a major role in limiting appreciation. Others believe that the increases in buyer demand will more than offset the increase in supply. The only thing on which everyone agrees is that there will be millions of distressed properties that will need to be liquidated over the next few years. How these properties are handled will have an effect on the impact they will have on values.
According to the National Association of Realtors, foreclosures sell at a 20% discount while a short sale sells at a 16% discount. Therefore, a short sale has less of a negative impact on prices compared to a foreclosure. Obviously, if the mortgage is modified, no sale takes place and there is no impact on surrounding home prices.
The U.S. Treasury Department just issued their latest OCC Mortgage Metrics Report which reports on how these distressed properties are currently being handled. Here is a graph showing how these properties are being processed now as compared to a year ago.
source: KCM
The U.S. Census Bureau and HUD recently released the 2011 American Housing Survey, a biennial comprehensive national housing survey that provides data on housing inventories, demographics, home improvements, mortgages, and more.The 2011 survey indicates that almost 20 percent of new home owners chose their neighborhood based on convenience to the workplace.
The poll of the nation’s 115 million occupied homes also reveals the median size of single-family detached and mobile residences to be 1,800 square feet — versus 2,200 square feet for newly built homes — and the median year of construction for owner-occupied units to be 1976.
Sixty-four percent of homes have three or more bedrooms and 52 percent have two or more bathrooms. In terms of accessibility, 64 percent have floors with no steps between rooms, 48 percent have entry-level bathrooms, and 36 percent have entry-level bedrooms.
The survey also found that 20 percent of recent movers located their current homes through a real estate agent, 17 percent through Realtor.com, and 16 percent by word-of-mouth. Additionally, households spend about 24 percent of their household income on housing.
This data and more is now available for the first time through the U.S. Census Bureau’s American FactFinder data access tool.
Source: “HUD and Census Bureau Expand Access to Include Housing Info” National Mortgage Professional
It’s been a little over four years since downtown Bellevue has seen an office tower go up. The 15-story Summit III project was left unfinished in 2009 when the recession hit. But some developers believe that this Eastside hub will soon become the site of large-scale construction, reports the Seattle Times.
Five residential projects with more than 1,100 units and three office towers featuring 1.5 million square feet are in the works for 2013. Kemper Development plans to expand Lincoln Square by building two office towers to create additional office and retail space as well as a 120-room hotel and 200 condos or apartments. CEO Kemper Freeman says that construction should start in the early summer.
Demand for living and office space in the region is on the rise, and developers are focusing on downtown Bellevue, with its relatively low office-vacancy rate, as a site for construction. There’s growing concern that Seattle neighborhoods are getting overbuilt. Traffic, tolls on Highway 520, and talk of additional tolls on other roadways are causing commuters to consider living in the city where they work.
Lisa Picard, executive vice president of developer Skanska USA, says that the Bellevue “has really developed into an urban center.” The second largest city center in Washington made CNN Money’s 100 Best Places to Live list for 2011. What used to be a suburban business district has transformed itself into an urban destination with retail shops, restaurants, and cultural amenities.
Pending home sales increased in November for the third-straight month and reached the highest level in two-and-a-half years, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 1.7 percent to 106.4 in November from a downwardly revised 104.6 in October and is 9.8 percent above November 2011 when it was 96.9. The data reflect contracts but not closings.
The index is at the highest level since April 2010, when it hit 111.3 as buyers were rushing to beat the deadline for the home buyer tax credit. With the exception of several months affected by tax stimulus, the last time there was a higher reading was in February 2007 when the index reached 107.9.
Lawrence Yun, NAR chief economist, said home sales are on a sustained uptrend. “Even with market frictions related to the mortgage process, home-contract activity continues to improve. Home sales are recovering now based solely on fundamental demand and favorable affordability conditions.”
On a year-over-year basis, pending home sales have risen for 19 consecutive months.
The upward momentum means existing-home sales should rise 8 to 9 percent in 2013 to approximately 5.1 million, following a 10 percent gain expected for all of 2012. The median existing-home price is projected to rise just over 4 percent in 2013, after rising more than 7 percent in 2012.
The PHSI in the Northeast rose 5.2 percent to 83.3 in November and is 15.2 percent above a year ago. In the Midwest the index edged up 0.1 percent to 103.8 in November and is 15.2 percent above November 2011. Pending home sales in the South were unchanged at an index of 117.2 in November and are 13.9 percent higher than a year ago. In the West (see Greater Seattle stats) the index rose 4.2 percent in November to 110.1, but is 3.2 percent below November 2011 with inventory constraints limiting sales.
Source: NAR
Existing home sales are up, prices are improving, inventory is tight, and housing is showing signs of improvement, but the sector has found its bottom and is not recovered, rather starting that long road toward a recovery. 
According to the National Association of Realtors Dr. Lawrence Yun, NAR chief economist, said there is Median prices, and the impact of distressed properties healthy market demand. “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation. “With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes. Areas impacted by Hurricane Sandy show storm-related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas.”(NAR), existing home sales continued to improve in November with low inventory supply pressuring home prices, rising 5.9 percent for the month, spiking 14.5 percent compared to November 2011. NAR reports that sales are at the highest level since November 2009.
The national median existing-home price for all housing types was $180,600 in November, up 10.1 percent compared to November 2011, marking the ninth consecutive monthly year-over-year price gain, which has not happened since September 2005 to May 2006.
Distressed home sales accounted for 22 percent of November sales (12 percent were foreclosures and 10 percent were short sales), down from 24.0 percent in October and 29.0 percent in November 2011. Foreclosures sold for an average discount of 20.0 percent below market value in November, while short sales were discounted 16 percent.
Dr. Yun said, “The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages.”
Total housing inventory at the end of November fell 3.8 percent to 2.03 million existing homes available for sale, which represents a 4.8-month supply at the current sales pace; it was 5.3 months in October, and is the lowest housing supply since September of 2005 when it was 4.6 months.
Listed inventory is 22.5 percent below a year ago when there was a 7.1-month supply. Raw unsold inventory is now at the lowest level since December 2001 when there were 1.89 million homes on the market.
The median time on market was 70 days in November, slightly below 71 days in October, but is 28.6 percent below 98 days in November 2011. Fully 32.0 percent of homes sold in November were on the market for less than a month, while 20.0 percent were on the market for six months or longer; these findings are unchanged from October.
First time buyers accounted for 30 percent of purchases in November, down from 31 percent in October and 35 percent in November 2011.
All-cash sales were at 30 percent of transactions in November, up slightly from 29 percent in October and 28 percent in November 2011. Investors, who account for most cash sales, purchased 19 percent of homes in November, little changed from 20 percent in October; they were 19 percent in November 2011.
Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.44 million in November from 4.21 million in October, and are 12.4 percent higher than the 3.95 million-unit level in November 2011. The median existing single-family home price was $180,600 in November, up 10.1 percent from a year ago.
Regionally, existing-home sales in the Northeast rose 6.9 percent to an annual rate of 620,000 in November and are 14.8 percent above November 2011. The median price in the Northeast was $232,900, down 2.0 percent from a year ago.
Existing-home sales in the Midwest increased 7.2 percent in November to a pace of 1.19 million and are 21.4 percent higher than a year ago. The median price in the Midwest was $141,600, which is 7.0 percent above November 2011.
In the South, existing-home sales rose 7.9 percent to an annual level of 2.04 million in November and are 17.2 percent above November 2011. The median price in the South was $157,400, up 10.5 percent from a year ago.
Existing-home sales in the West rose 0.8 percent a pace of 1.19 million in November and are 4.4 percent higher than a year ago. With ongoing inventory constraints, the median price in the West was $248,300, which is 23.9 percent above November 2011.
As opposed to former eras, the NAR is approaching their future forecasting with cautious optimism. Dr. Yun said that the housing market recovery should “continue through coming years” unless the nation falls off of the “fiscal cliff,” and assuming that there are no further limitations on the availability of mortgage credit.
Dr. Yun pointed to improving existing and new home sales and housing starts as all seeing “notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases.”
Many economists agree that there are gains being made in housing, but we urge all to note that these signs of improvement are only signs of improvement, and not an actual recovery, as housing is just now moving past bottoming out and we’re finding signs of life which is hopeful, but not yet a recovery.
by Tara Steele
