The Wall Street Journal recently cited five significant factors behind the rise in home prices, as numerous markets see significant year-over-year gains. The big price drives are:
1. The rise in housing affordability – which is drawing more buyers out into the market who are looking to cash in on low mortgage rates and fallen home prices compared to a few years ago.
2. The rise in household formation – which is expected to hit 1 million new households this year. That is up from an average of 570,000 over the last five years, according to data by Bank of America Merrill Lynch.
3. The rise in rents – which has prompted more investors to purchase properties to rent out and more renters to second-guess why they are paying so much in rent when they could buy.
4. The decline in distressed sales and foreclosures – which has fallen significantly this past year. While distressed sales are still high by historical standards, they have fallen from their peaks in most markets, helping to alleviate the downward pressure on home prices in many areas.
5. Inventories of homes for-sale are at their lowest levels in nearly 50 years – and builders have cut back on construction and many home owners are waiting to sell until they can recover some equity on their properties.
Source: “Five Reasons Home Prices Have Been Rising,” The Wall Street Journal (Nov. 27, 2012)
California metros, as well as hard-hit housing markets such Phoenix and Seattle, are showing some of the largest year-over-year increases in asking prices.
Nationwide, the median list price was $191,500 in September, only about 0.78 percent higher than a year ago, according to the most recent housing data release from Realtor.com. But in several metros across the country, asking prices are more than 10 percent higher than what they were a year ago.
The following metros are showing the strongest rebounds in asking prices in the past year, according to September housing data from Realtor.com.
1. Santa Barbara-Santa Maria-Lompoc, Calif.
- Median list price: $725,000
- Year-over-year increase: 32.05%
2. Phoenix-Mesa, Ariz.
- Median list price: $190,000
- Year-over-year increase: 26.66%
3. San Francisco
- Median list price: $750,000
- Year-over-year increase: 18.11%
4. San Jose, Calif.
- Median list price: $579,000
- Year-over-year increase: 17.50%
5. Seattle-Bellevue-Everett, Wash.
- Median list price: $367,950
- Year-over-year increase: 14.98%
6. Sacramento, Calif.
- Median list price: $239,000
- Year-over-year increase: 14.23%
7. Oakland, Calif.
- Median list price: $387,503
- Year-over-year increase: 13.97%
8. Boise City, Idaho
- Median list price: $170,000
- Year-over-year increase: 13.33%
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Rents are forecasted to rise nationally 4.6 percent next year, and that’s following a 4.1 percent increase this year, according to the National Association of REALTORS®.
What’s more, rents are expected to continue to climb for the foreseeable future, rising more than 4 percent a year for 2014 and 2015, forecasts Reis, a market research firm.
“The pendulum has definitely swung back in favor of landlords, not renters,” Ryan Severino, senior economist for Reis, told USA Today.
Rents are rising even more rapidly in some areas. For example, rents in San Jose, Calif., and San Francisco have been climbing at a 13 percent to 15 percent annual rate as of late last year, according to MPF Research. Other metro area seeing rent increases of more than 5 percent by the end of September include Oakland, Calif.; New York; Denver; Houston; Nashville; and Columbus, Ohio, MPF reports.
The rise in rental costs are causing more renters to consider home ownerships, says Greg Willett, MPF vice president. Mortgage rates are at historical lows and home prices are up, but still way below their 2006 peak.
Source: “Rents Expected to Climb Steadily, According to Forecast,” USA Today (Nov. 27, 2012)
What do home shopper prefer about new homes versus older homes? A study commissioned by BHI Inc. examined consumer preferences in new homes versus existing homes among 984 prospective buyers who plan to purchase a home within the next 12 months.
The survey found that consumers generally prefer existing homes over new homes, but many will still consider a new home offered by a builder. Seventy-five percent of the buyers say they are considering buying an existing home compared to 20 percent who say they want a new home. Five percent say they have no preference whether the home is old or new, according to the survey.
For home shoppers who prefer existing homes, their preferences tend to be driven by the mature landscaping, larger lot sizes, and sense of community that they say existing homes tend to offer. Some reported that more established neighborhoods of existing subdivisions tended to have a “warmer inviting feel,” “better constructed,” and “better privacy, homes are not on top of each other and cookie cutter.”
Meanwhile, home buyers who prefer newer homes tend to cite energy efficiency, the ability to customize the home to their needs, and lower maintenance costs as top drivers. Also, those surveyed say that new homes tend to offer more living space, but that tends to come at the expense of smaller yard and lot sizes.
Source: “Don’t Let Buyers Shop New Homes Without You,” Inman News (Nov. 14, 2012)
The median age of inventory of for-sale homes has dropped nearly 12 percent compared to year-ago levels, according to October housing data from Realtor.com.
With inventories shrinking nationwide and hovering at historic lows, homes are selling faster in many parts of the country.
“Lower inventories, combined with somewhat higher median list prices, suggest that the housing market ending the 2012 home-buying season is in better shape than it was a year ago,” according to a Realtor.com release.
California boasts the most number of housing markets seeing some of the lowest median age of inventory in October. In Oakland, Calif., the median age of inventory is the lowest in the country at 21 days, a 57 percent decrease over year ago levels.
The following are the top eight markets with the lowest median age of inventories in the country:
Oakland, Calif.: 21 days
Stockton-Lodi, Calif.: 26 days
Sacramento, Calif.: 32 days
Denver, Colo.: 40 days
San Francisco: 44 days
Fresno, Calif.: 44 days
Phoenix-Mesa, Ariz.: 47 days
San Jose, Calif.: 47 days
By Melissa Dittmann Tracey, REALTOR(R) Magazine Daily News
Not so surprisingly, yet another national housing report — this time from the Federal Housing Finance Agency — has determined that home price gains this year in both metro Phoenix and Arizona have once again far outpaced the rest of the country.
The FHFA data released Tuesday shows Arizona landed the No. 1 spot for the biggest year-over-year increase — about 20 percent — in median sales prices in the third quarter. The District of Columbia trailed behind in second place with a 15.5 percent jump during the same period, followed by Idaho’s 9.5 percent rise, according to the report.
Click here to read the full article…
Similar to the Consumer Confidence Index published by the Conference Board, the relevance of the SCI lies in being the only economic indicator derived from the firsthand, up close observations of REALTORS® who operate at the front line of real estate in the Valley.
All three indices headed downward in November, perhaps as a reaction to the outcome of the Presidential election and the looming Fiscal Cliff.
- The Subscriber Confidence Index dropped 10.3 points to 75.6%.
- The Present Confidence Index fell 3.3 points to 80.5%.
- The Expected Confidence Index declined 15.6 points to 71.9%.
All representing the steepest decline in any of the three indices since ARMLS began tracking Subscriber Confidence in December 2010.
Similar to the Consumer Confidence Index, the SCI mirrors Subscriber reaction to changing market conditions and their experience with current Buyers and Sellers. This sentiment influences Subscriber investment and strategy regarding their professional real estate activities.
Top spots for veterans
6. Warren, Mich.
7. Ann Arbor, Mich.
9. Columbus, Ohio
10. St. Louis
Phoenix ranks among the nation’s best cities for helping veterans make the transition back to civilian life, according to a study that evaluated job and education opportunities, living costs, quality of life aspects and more.
Pittsburgh ranked as the best place for military personnel returning to civilian life in the study commissioned by financial-services giant USAA and Military.com, a site geared to benefits, careers and other topics of interest to veterans.
The study looked at military-focused variables for 379 U.S. metro areas. The variables were weighted based on what veterans said is most important to them.
Midwestern cities dominated the most-favorable list for veterans. Phoenix was the only top city in the West.
Metro areas with significantly high jobless rates, living costs or crime rates were excluded.
USAA, which operates a large campus in north Phoenix, provides insurance, bank products, investments and more for military personnel and their families.
Click the link for the full article: http://www.azcentral.com/business/news/articles/20121108phoenix-among-best-cities-vets.html