Spring Market Off To Strong Start

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Surging Home Sales Herald Strong Spring Market

Surging Home Sales Herald Strong Spring Market

BY: JANN SWANSON

April 22 2015, 11:29AM

The spring housing market blasted in across the county last month and existing home sales jumped 6.1 percent from the February level to the highest annual rate in 18 months.  The National Association of Realtors® (NAR) said March sales were at a seasonally adjusted annual rate of 5.19 million units compared to 4.89 million in February.  The rate of sales tied those in September 2013, which had been the most recent high in sales.  The March increase was the largest month-over-month gain since a +6.2 percent change in December 2010.
The pace of sales of existing single-family homes, townhomes, condominiums, and co-ops in March was 10.4 percent higher than in March 2014 and represented the sixth consecutive month of annual increases.  It was also the largest year-over-year increase since August 2013's 10.7 percent rise.
Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.59 million from 4.35 million in February, and were 10.9 percent above the 4.14 million pace a year previous. Existing condominium and co-op sales increased 11.1 percent to a seasonally adjusted annual rate of 600,000 units in March from 540,000 units in February, and are now 7.1 percent higher than March 2014 (560,000 units).
Lawrence Yun, NAR chief economist, says the housing market appears to be off to an encouraging start this spring. "After a quiet start to the year, sales activity picked up greatly throughout the country in March," he said. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."
The inventory of existing homes increased to 2.0 million homes for sale, a gain of 5.3 percent for the month and 2.0 percent higher than a year earlier.  The unsold inventory is estimated at a 4.6-month supply at the current sales pace, down from 4.7 months in February.
"The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign," adds Yun. "For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market."
The median existing-home price for all homes in March was 7.8 percent higher than in March 2014 at $212,100.  The month was the 37th consecutive one in which annual prices increased and the change was the largest since an 8.8 percent year-over-year gain in February 2014.  The median existing single-family home price was $213,500, up 8.7 percent from March 2014 and the median condo price was 1.6 percent higher at $201,400.
Foreclosures made up 7 percent of sales during the month and 3 percent were short sales.  Total distressed sales accounted for 11 percent of all sales in February and 14 percent in March 2014.  Foreclosures sold for an average discount of 16 percent below market value in March while short sales were also discounted 16 percent.
For the third time in 12 months the share of first-time buyers broke through 30 percent, rising to that exact number in March from 29 percent in February. Investors purchased 14 percent of homes sold in both February and March but this was down from 17 percent in March 2014.  Seventy percent of investors paid cash for the homes they purchased during the month and total cash sales accounted for 24 percent of all transactions, down from 26 percent in February and 33 percent the previous March.
Properties typically stayed on the market for a shorter time period in March (52 days) compared to February (62 days), and are also selling slightly faster than a year ago (55 days). Short sales were on the market the longest at a median of 165 days in March, while foreclosures sold in 56 days and non-distressed homes took 51 days. Forty percent of homes sold in March were on the market for less than a month.
Regional sales also boomed in March.  Sales in the Northeast increased 6.9 percent to an annual rate of 620,000, and were 1.6 percent above a year ago.  Prices however eased with the median down 1.6 percent from a year earlier to $240,500.
In the Midwest, existing-home sales jumped 10.1 percent to an annual rate of 1.20 million in March, and were 12.1 percent above March 2014. The median price in the Midwest was $163,600, up 9.7 percent from a year ago.
Existing-home sales in the South climbed 3.8 percent to an annual rate of 2.19 million in March, and were 11.7 percent above March 2014. The median price in the South was $187,900 an annual increase of 9.3 percent.
Existing-home sales in the West rose 6.3 percent to an annual rate of 1.18 million in March, and 11.3 percent compared to the prior year. The median price in the West gained 8.3 percent to $305,000.

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Click link to view Wall Street Journal Article:

Fed’s Williams Sees Door Open for Interest-Rate Increases Starting in June

 

Fed’s Williams Sees Door Open for Interest-Rate Increases Starting in June

By Michael S. Derby

 

Federal Reserve Bank of San Francisco President John Williams said the door is open to central bank interest rate increases any time from mid-June onward.In an interview with The Wall Street Journal, Mr. Williams expressed a good deal of confidence in the U.S. outlook, especially on hiring. He said the jobless rate could fall to 5% by the end of the year, which means the central bank is getting closer to boosting its benchmark short-term interest rate from near zero, where it has been since the end of 2008.

 

“We are coming at this from a position of strength,” Mr. Williams said. “As we collect more data through this spring, as we get to June or later, I think in my own view we’ll be coming closer to saying there are a constellation of factors in place” to make a call on rate increases, he said.

“I don’t see any reason at all that we should raise rates before June. That’s out,” he said. “Maybe in June it would be the time to contemplate raising rates. Maybe we’ll want to wait longer, but at least it will be an option to decide on,” he said. The Fed has a scheduled policy meeting June 16-17.

Mr. Williams said he would like the Fed to drop its commitment to be “patient” in deciding when to raise rates because it limits the central bank’s options on when to move. “You would want to remove the patient language only to have the ability to make those data-dependent decisions later in the year,” he said.

 

Fed Chairwoman Janet Yellen has said “patient” means the Fed won’t raise short-term rates at its next two policy meetings. Mr. Williams didn’t say when he wants to drop the term, but the Fed’s next formal opportunity would be in the statement released after its meeting March 17-18.

Mr. Williams is a close ally of Ms. Yellen–he was her research director when she led the San Francisco Fed. He is a voting member of the policy-making Federal Open Market Committee this year.

 

Mr. Williams’s comments came in the wake of two days of congressional testimony by Ms. Yellen in which she laid the groundwork for interest-rate increases later this year.

She also cautioned that dropping “patient” from the statement won’t mean automatic rate increases after two meetings.  Mr. Williams’s confidence about the monetary policy outlook is rooted in what he sees as labor market strength. He believes weak inflation, which has undershot the central bank’s 2% target for more than two years, will rise to its desired level by the end of 2016.

He also said falling short on the inflation target won’t necessarily stay the Fed’s hand on rate increases. Because Fed rate actions have to take account of their effect over the long run, “it’s very likely we would start raising interest rates even with inflation below 2%,” he said.

 

Mr. Williams said it is likely that the Fed will see a hot labor market that should in turn produce the wage pressures that will drive inflation back up to desired levels. He said much of the weakness seen now in price pressures is due to the sharp drop in oil prices, which he said isn’t likely to last.

“The cosmological constant is that if you heat up the labor market, get the unemployment rate down to 5% or below, that’s going to create pressures in the labor market” causing wages to rise, he said.

Mr. Williams said there is a “disconnect” between Fed officials’ and markets’ expectations for the path of short-term rates. He said he hopes that can be bridged by effective communication explaining central bank policy choices.

 

“I have no desire to raise rates just to raise rates. I’m not worried about financial stability, personally. I’m not worried about risks of low interest rates on their own. I am focused on the very pedestrian issue” of achieving the Fed’s employment and inflation goals, and will make policy with those factors in mind, Mr. Williams said.

 

He said that when the Fed does raise rates, he would prefer a gradual path, but he doesn’t expect it to replay the series of steady, small rate increases seen a decade ago. He said he could see the Fed taking whatever action is needed at a given meeting, rather than putting rates on a steady upward path.       

Home Prices to Level Off and Reverse Course Within 2 Years - Analysts

By: Jann Swanson for Mortgage News Daily

Jul 21 2014, 12:51PM

Two Bank of America Merrill Lynch (BAML) analysts are defending what they call their big high conviction views for what should happen in the housing world over the next two years. Chris Flanagan and Gregory Fitter, ABS and MBS strategists say that their views are not mainstream but that recent data has corroborated their theories.

The two contend that home price increases will continue to moderate from the skyrocket trajectory they were on in late 2012 and early 2013 will peak in mid-2016. Second, as unemployment continues to ease, the yield curve will continue to flatten (longer term rates getting lower while shorter term rates get higher, relative to each other) and the spread between two year and 10 year treasury yields should be at zero by the time home prices peak. The long end of the curve will remain at surprising low yields, fostered by a soft housing market and low inflation.

The first "big view", that home prices will peak in two years is validated they say by the most recent income based home price model from Case Shiller. Charts 1 and 2 includes the Case Shiller historical and forecasted home price index (HPI) along with the BoA strategists' estimate of fair value. This model shows that the HPI will increase from the first quarter 2014 level of 155.5 to a peak of 167.3 in the third quarter of 2016. This is an annualized growth of 3 percent over 30 months compared to 11 percent in 2013 and the 9.5 percent annualized rate since prices bottomed in the fourth quarter of 2011. Then prices are expected to decline and not recover to the 2016 level until Q2 2022, an annualized rate of price growth over six years of 0. With this factored in, the annualized home price growth rate between Q1 2014 and Q2 2022 is expected to be 1.0 percent.

To read the full article click the link below:
Home Prices to level off

Surprise! Bank-Owned Properties Actually Sell For More!

Just when you thought you had the market all figured out....

In an article posted by Jann Swanson for Mortgage News Daily, it seemingly dispels the myth of bank owned REO properties being the default standard for the biggest bargains in the market place.

Surprise! Bank-Owned Properties Actually Sell For More!

Posted to: MND NewsWire
Thursday, June 26, 2014 10:03 AM

RealtyTrac recently analyzed residential sales over the year that ended in March to determine what drives discounts in the market value or premiums in the sales price for distressed properties.  They looked at four factors, foreclosure status, occupancy, equity, and property age, using them to construct 24 different distressed property profiles. Each profile was compared to a control group of properties not in foreclosure that sold in the same time frame. 
As might be expected, the properties that sold at the largest discounts, an average of 28 percent, were vacant, had negative equity, and were older (but not the oldest), built between 1950 and 1990.   What is surprising is that some property profiles sold at a premium.
Bank-owned properties overall went for an average of 3 percent above market value while bank-owned properties that were built prior to 1950 brought 6 percent more than the control group.  The largest premium was paid for properties that had negative equity but were neither in foreclosure or foreclosed.  Those properties sold at a 19 percent premium. (Note: in the chart below, negative numbers indicate above-market-value sales prices).





Two profiles tied for the second largest discount, 26 percent.  One profile was properties that were in default with positive equity; the other was properties in default with negative equity, vacant, and built before 1950.  Discounts of 25 percent were the average for two other profiles; vacant properties with negative equity that were scheduled for foreclosure auction and vacant properties scheduled for foreclosure auction.

Read More:
Bank Owned Bargains?

Mortgage Rates Push Further Into 6-Month Lows

May 7 2014, 3:15PM

by: Matthew Graham

Mortgage rates continued pushing into the lowest levels in more than 6 months after a docile congressional testimony from Fed Chair Yellen this morning. Financial markets and mortgage lenders were cautious ahead of the 10am speech, but improved afterward. A majority of lenders issued mid-day reprices, bringing rate sheets to levels not seen since November 1st. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is already straddling 4.25% and 4.125%. Today's improvement equates to an effective drop of 0.04%.

Read More:
Mortgage Rates Push Further Into 6-Month Lows

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Giving New Meaning to "Shadow Inventory"

 

May 5 2014, 2:33PM

by Jann Swanson

                

Since the beginning of the housing crisis in 2008 housing experts have cited concern over the "Shadow Inventory" and the pitfalls it could present to any recovery of the housing market.  Back then, as every month brought news of mounting delinquencies, rising unemployment, and pending adjustments to adjustable and teaser rate mortgages the shadow inventory had a particular definition; the number of homes with mortgages that are 90 or more days delinquent and that have a reasonable likelihood of ultimately being foreclosed and becoming bank-owned real estate even though they are not yet publicly listed for sale.
While lenders and servicers are still trying to rid themselves of backlogs of REO and there are still concerns over homes which may be held off the market for various reasons, the cry for months has been that there are not enough homes for sale.  Sales, appeared to have been hampered by a lack of inventory as new home builders cut back on construction and current homeowners have deferred moving, each awaiting a better market. 
The number of homes thought to be in the shadow inventory has dropped from 3 million at the peak in January 2010 to about 1.7 million in January of this year.  Mark Fleming, CoreLogic's chief economist, said recently that the traditional view of the shadow inventory doesn't tell the whole story anymore and he puts forth two new ways of looking at how a different version of shadow inventory may still be holding back recovery.

Read more:
Giving New Meaning to Shadow Inventory