Intero Insider: Home Sales Slip During Winter Lull

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

The first monthly home sales numbers of 2014 came out late last week, giving us a peek into the year ahead. The prognosis? It’s been a harsh winter in much of the country, impacting America’s appetite for moving.

Perhaps to no one’s surprise, existing-home sales slowed down in January, falling to their lowest level in a year and a half in the National Association of Realtors’ latest report. Total sales, which include townhomes, condos and co-ops, fell 5.1% to an adjusted rate of 4.62 million in January from December, and were 5.1% below the pace seen in January 2013.

It was the slowest month since July 2012.

What’s causing the slowdown and do we need to worry?

Intero Insider - Are Homes Still Affordable in the U. S.?

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

Who would've thought in 2012 that just two short years later we'd be hearing talk and worry over housing affordability in the U.S.? Well it's here. And with affordability comes the inevitable talk of housing bubbles.

A rapid growth in home prices will conjure up these worries and debates every time. And that's exactly what's happening in some parts of the country – mostly the west.

The median existing single-family home price climbed in 73% of metropolitan markets in the fourth quarter of 2013 from the previous year, according to a recent National Association of Realtors report. Forty-two of the metropolitan areas tracked in the report, or 26%, had double-digit increases, while two were unchanged and 43 recorded lower median prices.

The five most expensive housing markets in the fourth quarter were all in the west: San Jose, Calif., where the median existing single-family prices was $775,000; San Francisco at $682,400; Honolulu at $670,800; Anaheim-Santa Ana, Calif., at $666,300; and San Diego, where the median prices $476,800.

The five least expensive housing markets in the fourth quarter were Toledo, Ohio, where the median single-family home price was $80,500; Rockgord, Ill., at $81,400; Cumberland, Md., at $89,500; Elmira, N.Y., at $99,500; and South Bend, Ind., with a median price of $101,100.

Rising values in the west has been a good thing for homeowners who've seen significant gains in equity – in some cases enabling them the freedom to sell for the first time in several years. This housing activity is also helping to drive local economies through increased consumer spending.

But in some cases, home prices have risen faster than incomes, which impedes some buyers from getting in. That's where affordability concerns start to come into play.

This is also the segment of the market that will be impacted the most by any spikes in mortgage rates, which could stand to price out some buyers.

What we're looking for now in these rapidly rising markets is an increase in housing supply. A lack of available homes is the culprit behind much of the fast pace.

The average supply of homes during the fourth quarter was 4.9 months, up slightly from 4.8 months during the fourth quarter of 2012. However, NAR points out that a supply of 6-6.5 months represents a balance between buyers and sellers. So you can see why there's such frenzy in certain markets right now.

Housing supply will continue to play a large role in affordability this year. Things to watch out for include housing starts for new construction and hopefully a big spring home buying season that spurs more owners to put their homes on the market.

Intero Insider: Move-up Buyers Hungry for Bigger, More Expensive Homes

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

Here’s a term we haven’t heard much of in the last few years: move-up buyer. But many markets are now seeing many more of these folks. Some are even showing signs of strength in luxury or the high-end of the market thanks to this type of buyer.

After the recession started to take hold in 2008, the market for large and expensive homes fell as more buyers looked for more affordable places to live that weren’t as much of a drain to heat, cool and keep lit up.

Fierce Competition Makes Home Buyers More Flexible

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

As we kick off 2014, it’s already abundantly clear that in many places it’s a seller’s market out there.
Even more evidence to prop up this argument has cropped up in the last week as a survey conducted by Redfin found that more buyers are realizing they have to compromise more in order to get the home they want.

By compromise, they mean pay more and accept less.

The Redfin survey revealed that 35% of real estate agents said that buyers are now “willing to pay more” to find a home compared to last summer. An additional 30% of agents said that buyers are more flexible about must-have features and lowering their expectations of what their money can buy.

Good news for sellers, right?

Home Values, Sales and Housing Starts on Track for Big Growth Year

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

The housing market kicked off 2013 with an energetic bang, with January marking the 15th consecutive month of home value gains and a positive report from Fannie Mae last week that noted housing is “on a sustained growth path,” despite a potential damper on overall economic growth at the federal level.

Home values were up 0.7% in January from the previous month, and up 6.2% year-over-year, according to the latest report from Zillow. It was the largest annual gain since July 2006, when home values rose 7.5% year-over-year.

Zillow’s home value index averaged $158,100 in January. The last time home values were this high at the national level was June 2004.

The rise in values is spreading out as well. Major markets that saw the biggest annual increase in home values were Phoenix (21.9%), San Francisco (17.2%), San Jose (16.8%), Las Vegas (16.2%), and Sacramento (13.7%).

And thanks to rising home values, Zillow estimates that 2 million homeowners are no longer underwater.

In a separate report released last week, Fannie Mae made some predictions for housing this year and gave an overall conclusion that this growth will keep up.

Fannie Mae economists predict the median price of an existing home will rise 2.3% in 2013, to $181,000. They expect the median price of a new home to increase 1.6% to $248,000. And they predict a further increase of 2.8% for both types of housing in 2014.

Growth, not recovery.

Of course, not every market will be enjoying this growth – many are still in recovery mode. But Fannie Mae expects existing home sales, new home sales and single-family housing starts to see substantial increases from 2012. The mortgage financier predicts existing home sales will rise 11.5%, new home sales will climb 12.5%, and single-family housing starts will shoot up 23.7% this year from 2012.

The substantial increase in housing starts is telling of the activity expected in the market for new homes this year and in coming years. We’ve talked here before about how investors are betting bigger on home builders this year, with the first builder IPOs debuting this year in nearly 10 years. We know the demand is there in many markets that suffer from lack of supply – so this is great news to see housing starts increasing.

As anticipated, 2013 is showing signs of breaking out of a recovery pattern and growing faster and with more force. Hold on tight – the ride is getting intense!

A Land Rush Is On

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

Some big money is walking back into real estate this year in the form of land sales, new housing developments and home builder IPOs.

CNN Money reports that:

“Hedge funds and private equity firms have been rushing in to buy up companies and assets in every part of the housing supply chain, including undeveloped land, homebuilders, foreclosed homes, and building parts manufacturers.

Some interesting developments are laid out in the article. Hedge fund Paulson & Co is making a huge bet on land, buying up land in California, Arizona and Nevada – enough to build 25,000 homes. Blackstone Group last year bought 17,000 single-family homes that had been through foreclosure and has plans to continue these purchases in 2013.

Several home builder IPOs are expected this year, as we discussed here before. Tri Pointe Homes, which builds homes in California and Colorado, raised $232 million through its IPO last week, marking the first public offering by a home builder in nearly a decade.

And another sign of increasing investor appetite is in the price of home builder stock, which has been climbing lately. Pulte Group, KB Home and Lennar – three of the nation’s largest home builders – all have had shares trading at 52-week highs.

The window of opportunity in housing has clearly opened for investors. But it won’t be open for long. As more money rushes in, the chances of getting rock-bottom prices become scarcer.
All of this means two things: The housing market is picking up and investors know it. And we can expect a lot more housing inventory coming down the pike in years to come.

Even if you’re not in the market for land or a new home, these things will likely impact you in some way by impacting the entire sector. When investors see a market healthy enough to jump in, then it’s generally a good sign. For buyers, this means more supply to keep up with demand. For sellers, it means an overall stronger market that will pick up in value.

If you are looking to pick up some land this year, then you better get to it.

Home Prices to Continue Rise in 2013 as Inventory Remains Tight

All housing and real estate indicators point to the fact that there just aren’t enough houses on the market for sale. We’ve included below Intero’s CEO, Gino Blefari’s comments about this condition. Now is certainly the time to list your property if you’re considering the possibility. Prices are as high as they’ve been since the recession began, and every correctly priced property gets sold quickly. Don’t put it off! Contact us to discuss your property, your price, and the possibilities. We’d love to hear from you.

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

Now that many of us agree that 2012 was the bottom for most markets, things are already heating up. This week, we received news on home prices and a few predictions about where things are going this year.

CoreLogic released its latest Home Price Index this week, showing home prices increased 7.4% in November 2012 (on a year-over-year basis), the largest increase and highest level since 2006 when the market began to slide.

The rise in prices is due to steady demand from buyers, fewer bank-owned (REO) sales and a restricted inventory of homes for sale. Lack of inventory is expected to be the major market driver in 2013. Many owners in 2012 struggled with loan balances greater than the value of their homes, which made it impossible for them to sell and move up as they traditionally would do. While inventory will still be an obstacle in 2013, the rise in values will help more owners out of the underwater situation.
The best part of this news is that the increases are not completely contained within a few states. In fact, the index shows that all but six states are experiencing year-over-year price gains. The five states with the highest home price appreciation (including distressed sales) were Arizona (20.9%), Nevada (14.2%), Idaho (13.8%), North Dakota (11.3%), and California (11.1%).

In terms of price depreciation, the five states with the lowest home price depreciation were Delaware (-4.9%), Illinois (-2.2%), Connecticut (-0.5%), New Jersey (-0.5%) and Rhode Island (-0.3%). And excluding distressed sales, only two states experienced home price depreciation in November: Delaware (-3.5%) and Alabama (-2.2%).

Also, of the top 100 statistical areas measured by population, only 13 show year-over-year declines in November, which is seven fewer than seen in October, CoreLogic reported. That’s a marked improvement for sure.

The research firm expects bank-owned sales to decline this year, which it says will also help with overall home values as these properties tend to sell at a discount compared to comparable homes.
All the pieces are in place for housing to break out of “recovery” mode this year and move into growth. The inventory hurdle may turn out to be a good thing if it can help to push up prices a bit more this year. Then maybe in 2014, we’ll see even more homeowners pull out of their underwater loans.

Home Prices Trending Up; Mortgage Rates Hit New Lows

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

What better end to the year could housing ask for? Home sales and prices are up on average across markets. Inventory is low, but housing starts are up. Mortgage rates remain at rock bottom – and the Fed said at its meeting this month that it doesn’t anticipate raising rates any time soon.

The stars have aligned. The door to recovery is now wide open.

The September Home Price Index tracked by Lender Processing Services showed a 3.6% year-over-year increase since last September. In addition, the index rose 4.9% since the beginning of the year.
California and New York led the states with a 0.4% month-over-month increase, and Washington, D.C. led metros with a 0.6% increase from August. The largest monthly increases in the home price index took place in Arizona, Washington, D.C., Georgia, Delaware and Maryland, with Arizona holding the largest year-to-date increase at 14.4% since January.

In mortgage rates, we continue to see fantastic borrowing rates for home buyers. Average rates on a 30-year fixed-rate mortgage hit a new low of 3.31% last week, and average rates on a 15-year fixed-rate mortgage also hit a new record low of 2.63%, Freddie Mac said in its latest weekly report.

In its quest to use monetary policy to help the recovery, the Federal Reserve board indicated at its
November meeting that it would not be raising rates in the foreseeable future. In fact, Fed Chairman Ben Bernanke suggested that the Fed will keep trying to push down long-term interest rates through
2013.

As we enter 2013, inventory will be of concern in many markets that have struggled to keep up with demand. But things will be looking up next year in most markets. In fact, Daren Bloomquist of RealtyTrac said at a housing symposium in San Francisco this month that underwater homeowners are more likely to sell as prices rise next year, which will help inventory levels.

At the same symposium, Ken Rosen, an economics professor at UC Berkeley, declared housing is in recovery mode now and through next year, though he’s not anticipating a boom in sales.

Things to watch next year will be jobs and income levels, both of which have the strongest impact on housing than any other indicator.

The forecast, overall, is looking optimistic for real estate. Some markets, like ours here in Silicon Valley are already enjoying near-peak activity and pricing. Others are just starting to pull themselves up. Either way, 2013 is going to be a solid year for housing.

Intero Insider Video Series - featuring Steve Becerra from Intero Saratoga

This Intero Insider-Video Series brings you Steve Becerra, one of the top real estate agents at Intero Real Estate Services from the Saratoga office. Steve has been in the business for over 20 years and is an expert on the commercial real estate market, owning his own brokerage business for 10 years. Steve speaks with Intero COO Tom Tognoli and shares his knowledge about the current condition of the commercial market both locally and globally as well as giving us his insight about what to expect in the future
 

Cleaning Up the Mortgage Industry

Several new laws were recently enacted to help clean up the mortgage industry. Gino explains them in this week's Intero Insider.

Homebuyer Tax Credit Extension Needed

Team Patereau has helped many first-time buyers purchase homes this year and the Homebuyer Tax Credit has played a major role. We're hoping that our government will find a way to extend that credit. Here's Gino's take on the topic.