Prices and Home sales decrease in July

homepricesCalifornia home sales stumbled in July as low inventories and eroding affordability dragged down the housing market, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Closed sales of existing, single-family homes in California totaled a seasonally adjusted annualized rate of 415,840 units in July, according to info collected from more than 90 local REALTOR® associations & MLS’s.

Making sense of the story

  • The July figure was down 4.1 percent from the revised 433,600 level in June and down 5.1 percent compared with home sales in July 2015 of a revised 438,230. Home sales remained above the 400,000 pace for the fourth straight month, but sales have declined year over year for the fifth consecutive month.
  • “Despite the tight housing supply conditions that have persisted over the past few years, home sales have stayed relatively solid,” said C.A.R. President Pat “Ziggy” Zicarelli. “Even with a shortage of homes on the market, low rates and strong demand have been the norm. Some regions, such as the Bay Area, are seeing an uptick in inventory as high prices are motivating sellers to list their properties for sale. While this could ease the inventory somewhat, supply remains tight, and low affordability is expected to be an issue in the short term.”
  • The statewide median price remained above the $500,000 mark for the fourth straight month, but there are signs of an expected slowing in price growth. The median price of an existing, single-family detached California home slipped 1.8 percent in July to $509,830 from $519,410 in June. July’s median price increased 3.9 percent from the revised $490,780 recorded in July 2015. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values. More homes being sold at the high end of the market (over $1 million) and slightly fewer sales at the lower end (under $300,000) contributed to the year-over-year gain in the median price.

Home Ownership rate drops

ownership

The share of Americans who own their own homes dropped to the lowest rate since 1965 and well below its peak of 69.2 percent in June 2004, according to the U.S. Census Bureau. This rate was lower than the second quarter 2015 rate of 63.4 percent and lower than the 63.5 percent rate in the first quarter 2016,

By race, the homeownership rate for the second quarter 2016 for non-Hispanic white households was the highest at 71.5 percent. The homeownership rate for Asian or Native Hawaiian and Pacific Islander households was 53.7 percent and 41.7 percent for blacks.

Approximately 87.3 percent of the housing units in the United States in the second quarter 2016 were occupied and 12.7 percent were vacant. Owner-occupied housing units made up 54.9 percent of total housing units, while renter-occupied units made up 32.4 percent of the inventory in the second quarter 2016.

To read the entir report, visit this site more info.

Real Estate Boost from Brexit?

Britain’s vote to exit the European Union will likely have a long-term impact on the world economy, according to an article in REALTOR magazine.

“Demand for U.S. real estate could rise,” says NAR Chief Economist Lawrence Yun. While a rise in the dollar could hurt U.S. exports, it’s also expected to put downward pressure on long-term mortgage interest rates. “Mortgage rates will tumble,” says Greg McBride, chief financial analyst at Bankrate.com, “possibly hitting new record lows. If you’re a borrower, don’t wait to lock in your rate, as this opportunity may not last long.”

Steve Rick, chief economist at CUNA Mutual Group, was quoted in a Bankrate.com article saying a further drop in mortgage interest rates could give new life to home-mortgage refinancing, which started to cool early this year after several years of big growth.

Still signs of a housing hangover

helocThere are about 850,000 homes with equity lines that were taken out in 2005, and 1.25 million each for 2006 and 2007, totaling about $192 billion in all.

HELOCs taken out in 2005, 2006, and 2007 make up 52% of all active lines of credit, suggesting delinquencies could remain elevated for some time, as reported by data provider Black Knight.

 

HELOCs come with 10-year grace periods, so 2015 marked 10 years after the frothiest borrowings. In March, delinquencies were up 87% compared to a year ago among 2005 second lien HELOCs – those that stand behind a mortgage on the property – data provider Black Knight said Monday.

In some ways, the housing market has recovered: sales of new and previously-owned homes rebounded to 6 million in April, the first time above that benchmark since the downturn. In some metro areas, prices have topped earlier highs.

But there are still signs of a housing hangover. Nationally, prices remain below the 2006 high by double digits, housing starts haven’t picked up enough to satisfy demand, and nearly 7 million homeowners are still underwater.

This information was taken from an article written by Andrea Riquier of Market Watch. 

 

Before buying a vacation home

1. Where’s a good place to buy?

Buying a vacation home is a bit like getting married: After enjoying the destination as a casual visitor, it’s time to make a long-term commitment and settle down. Choosing where to buy depends largely on where you live, what you can afford, and whether or not you will rent out the property when you’re not using it.

2. Can you afford to buy a second home?

Crunching the numbers is a crucial first step for anyone who’s thinking about buying a second home. Otherwise, that dream vacation getaway could become your worst financial nightmare. David Hehman, CEO of EscapeHomes.com, advises buyers to look beyond the sale price to calculate the true cost of ownership.

3. Is it a smart investment?

Recent figures from the National Association of Realtors show an upward trend in the number of second homes purchased for investment purposes, with rental properties outnumbering vacation homes by a wide margin. Property values do fluctuate, of course, but according to Tom Kelly, co-author of How a Second Home Can Be Your Best Investment (McGraw-Hill), sinking a portion of your net worth into residential real estate can be a great way to diversify your portfolio.

4. How will a second home affect your taxes?

Just like your primary home, a vacation home is likely to have a major impact when April 15 rolls around. According to the National Association of Tax Professionals (NATP), mortgage interest and property taxes on first and second homes alike may be claimed as Schedule A deductions, but to avoid unfriendly encounters with the IRS, buyers should be aware of some important differences in the way second homes are taxed.

5. Are time shares or joint ownership good options?

A history of pushy sales tactics and shady deals has given time shares a bad reputation in the past, but lately the industry has made a concerted effort to turn over a new leaf.

This information was taken from an article by HGTV, read the entire article at this link

Economists forecast 2016 housing market future

New_homes_salesThe two most important housing market trends to watch in 2016, according to Alex Villacorta, chief economist at Clear Capital,  will be the continued growth of rental rates and the moderating trend in home prices.

Demand for resale housing will grow and will continue to be dominated by older millennials, aged 25 to 34, according to Jonathan Smoke, chief economist at realtor.com.

Lots of discussion of the need for subsidy but the real problem is lack of income growth for low and moderate income households, as stated by Douglas Duncan, chief economist, Fannie Mae:

Matthew Gardner, chief economist at Windermere believes we will see more homes for sale. Homeowner equity started to recover in 2013 and has been steadily improving since that time.

Mark Zandi, chief economist of Analytics says the most important housing market trend in 2016 will be the developing housing shortage. New housing construction has picked up in recent years, but it remains well below that needed to meet demand from newly formed households, second home buyers, and obsolescence of the existing stock of homes.

Wage growth will be the key new ingredient for the housing recovery states Peter Muoio, chief economist, Ten-X.

Reprinted from a report by Inman News. For the entire article and the contributors complete remarks click here.

Home Buying Activity of International Clients for 2015

internationalProximity to the home country, the presence of relatives, friends and associates, job and educational opportunities, and climate and location appear to be important considerations to prospective buyers purchasing property in the US from foreign countries.

Canadians tend to buy in Arizona, Nevada and Florida—apparently seeking winter vacation opportunities. The 2015 Profile of International Buying Activity is based on a survey of REALTORS® about Existing Home Sales to resident and non-resident foreigners over the time period April 2014 through March 2015.

  • Approximately 209,000 houses are estimated to have been sold to foreign buyers over the time period, approximately 4 percent of total Existing Home Sales.
  • The total foreign sales dollar volume is estimated at $104 billion, approximately 8 percent of total Existing Home Sales dollar volume.
  • Foreign clients are an upscale group of buyers, paying on average nearly $500,000 for a house, compared to the overall U.S. average house price of about $256,000.
  • Sales to foreigners are split between resident and non-resident purchasers. Resident foreigners may be in the U.S. for business, educational, or other purposes. Non-resident foreigners are typically looking for a vacation or investment property.
  • Unit sales of homes to foreigners declined by 10 percent in the 2014/15 time frame, possibly due to the strengthening of the U.S. dollar in relation to foreign currencies and weakening foreign economics.
  • Measured in numbers of houses purchased, Asiana/Oceana accounted for 35 percent of international purchases, followed by Latin America (including Mexico) at 23 percent and Europe at 20 percent. Canada accounted for 14 percent. The Middle East and Africa each accounted for less than 5 percent.
  • Five countries accounted for 51 percent of purchases by foreigners: Canada, China, Mexico, India, and the United Kingdom.
  • Although foreigners purchased property nationwide, four states accounted for 50 percent of international sales: Florida, California, Texas, and Arizona.
  • The bulk of purchases by international clients were all-cash, accounting for approximately 55 percent of reported foreign transactions. Mortgage financing tends to be a major problem for non-resident international clients due to financial profiles that are different in some cases from those normally received by the financial institution from domestic residents.
  • The percentage of REALTOR® respondents who reported working with international clients in the 12 months ending March 2015 increased by 7 percent over the previous year.
  • Previous client contacts and referrals were the most important source of leads for REALTORS®, mentioned by 56 percent of REALTORS®. An additional 20 percent mentioned website/online listings.

For the complete report visit Realtor.org.

Over One-Third of Households are 55 or Older in the US

seniorsIn the U.S. as a whole, there are a little over 48 million households headed by someone age 55 or older, accounting for roughly 42 percent of all U.S. households. Of the 51 states (including the District of Columbia), 35 are clustered in in a very narrow band with a 55+ share of all households between 40 and 45 percent. In no state do 55+ households account for less than 34 percent, or more than 49 percent, of all households.

At the high end, 55+ accounts for 48.3 percent of all households in West Virginia. California is in the range of 35 to 40 percent. In every county, 55+ category accounts for over 20 percent of all households.

Read the full story (http://eyeonhousing.org/2016/02/in-every-state-over-13-of-households-are-55/)

In other News:

  • Mortgage rates sank even further, marking the fifth consecutive week of declines amid ongoing market volatility, according to the latest Freddie Mac Primary Mortgage Market Survey.
  • The 30-year fixed-rate mortgage declined to 3.72 percent for the week ending Feb. 4, 2016, down from last week when it averaged 3.79 percent. In 2015, the 30-year FRM averaged 3.59 percent.
  • This is its lowest point since the week of April 30, 2015 when it averaged 3.68 percent. Additionally, the 15-year fixed-rate mortgage this week came in at 3.01 percent, down from 3.07 percent last week. A year ago at this time, the 15-year fixed-rate mortgage was at 2.92 percent.

Give up these money wasters for an easier down payment

By cutting a few things from your budget this year, you can speed up your progress toward having a down payment by the time you are ready to buy.

1. Skip the latte
2. Cut the gym membership
3. Cancel the cable
4. While you’re at it, drop a streaming service
5. Lower your mega smartphone plan
6. Pack a lunch instead of buying it
7. Quit drinking
8. Go to the cleaners less often

Best of all, you won’t miss the things you cut (OK, maybe some), but you’ll rack up a truckload of money in 12 short months. In fact, drop everything from this list and you could bank nearly $9,400 by the end of the year. Take that, down payment!

Taken from an article on Realtor.com written by Angela Colley.

Existing home sales on track for best year since 2006

housinggrowthExisting home sales at the end of October 2015 are on track to rise by 7%, and to have the best year since 2006 with 5.3 million unit sales.

For 2016, the growth will continue, but not as strong. In addition, home prices have risen by 11.5 percent, 5.7 percent, and 5.9 percent respectively in each of the past three years. With wages rising only by around 2 percent, the affordability squeeze will continue. As a result, the number of first-time buyers may once again be near historic lows in 2016. The existing homeowners who are also facing higher prices when buying, will be compensated by the fact that they will have increased housing equity when they sell. This housing equity will facilitate down payments for their next home purchase.

Affordability will be an issue throughout 2016 but one big bolster for housing will be job additions. Currently 46 states are adding jobs. The states in the Mountain and Pacific Time Zones are doing particularly well. As illustrated in the below table, Idaho and Utah will easily outperform the rest of the country in home sales because of a better performing local job market. California, Oregon, and Washington will also do fine, though affordability conditions are one of the worst in the country.

One area to watch out for is inflation. Rents are rising at a seven-year high and could rise more based on continued falling apartment vacancy rates. It is this rent increase that will put upward pressure on the overall Consumer Price Index. The Federal Reserve, consequently, will have no choice but to raise interest rates multiple times over the next three years to assure that inflation does not get out of control. As said, the Fed policy will, in the end, boost mortgage rates to around 4.5 percent in 2016, which is higher but certainly not alarming, for the housing market.

Taken from an article written by Lawrence Yun, Chief Economist, NATIONAL ASSOCIATION OF REALTORS®.

RANK STATE NET NEW JOBS OVER 12 MONTHS JOB GROWTH RATE
1 Idaho 25,300 3.8
2 Utah 47,700 3.5
3 Nevada 42,400 3.4
4 Florida 239,900 3.0
5 Washington 9,300 3.0
6 California 463,800 2.9
7 South Carolina 57,400 2.9
8 Oregon 46,600 2.7
9 Arizona 60,300 2.3
10 Georgia 96,900 2.3
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