5 California Markets End 2015 on a High Note

Residential real estate overall may have cooled as 2015 comes to a close, but the slowdown wasn’t evident everywhere.

Realtor.com®’s research team identified the top 20 medium-to-large markets where homes are selling the fastest and demand remains high (based on the site’s listing views). Topping the list for the second consecutive month in California is San Francisco, San Jose, Vallejo, Sacramento and San Diego.

“While California closed out our latest ranking still firmly in control of the hottest markets, the Midwest and Florida are both seeing substantial improvement,” says Jonathan Smoke, realtor.com®’s chief economist. “Pent-up demand and robust economic growth combined with limited supply will keep California tight in 2016, but more markets will challenge them as demand improves elsewhere.”

Source: “The Hottest U.S. Housing Markets in December 2015,” realtor.com(R) (Dec. 28, 2015)

Home Sellers Net equals Highest Profits in 8 Years

Rising home prices over the last few years are finally putting more money back into home sellers’ pockets. Home owners who sold during the third quarter saw an average price gain of $40,658 – or 17 percent – from the purchase price of their property – the highest average price increase for sellers since the third quarter of 2007, according to RealtyTrac’s Third Quarter 2015 U.S. Home Sales Report.

“An increasing number of home owners in 2015 have been cashing out the home equity they’ve gained during the housing recovery of the past three years,” says Daren Blomquist, vice president at RealtyTrac. “That may be a good decision because the data points to a plateauing market going forward. Home price appreciation is slowing, a trend that will continue if interest rates rise in the coming months as expected. Meanwhile the threat of rising interest rates combined with lowered premiums for buyers using FHA loans is spurring more demand.”

Its analysis of 171 counties nationwide is at: RealtyTrac

Home Sales Only Going Up From Here!

Existing-home sales will likely rise about 7 percent this year, as a strengthening economy and job growth leads to a healthier market, according to the National Association of REALTORS®’ 2015 housing forecast.

“Home prices have risen for the past three years cumulatively about 25 percent, which boosts confidence in the market and traditionally gives current home owners the ability to use their equity buildup as a down payment towards their next home purchase,” says Lawrence Yun, NAR’s chief economist. “Furthermore, first-time buyers are expected to slowly return as the economy improves and new mortgage products are made available in the marketplace with low down payments and private mortgage insurance.”

Yun is forecasting growth in home prices, but at a more moderate pace than recent years. The national median existing-home price for 2014 will likely near $208,000, up 5.6 % from 2013, but it’s expected to moderate between 4 % and 5 % growth in 2015.

Source: National Association of REALTORS®

Winter Is Best Time to Sell a Home, Study Shows

The housing market doesn’t hibernate in the winter. Sellers who list and buyers who buy often find the winter season the most advantageous time to make a move in real estate, according to a new study by the real estate brokerage Redfin. The winter season officially takes place between Dec. 21 and March 20, and real estate professionals should be ready for a season that often brings in more focused and active sellers and buyers.

In an update to a two-year analysis it completed last year, Redfin researchers studied nationwide home listings, sales prices, and time-on-market data from 2010 through October 2014.

The winter tends to net sellers’ more than their asking price during the months of December, January, February, and March than listings from June through November. Listing during those four winter months has resulted in higher percentages of above-asking-price sales than listing during any months, other than April and May.

Researchers say the winter market is less competitive for sellers since many people tend to wait until the spring to list. The smaller inventory of active listings help sellers get more attention from buyers on their properties. Also, many large corporations often transfer employees or hire new ones early in the year, creating opportunities for winter sellers from very motivated purchasers.

Source: “Best Time to List a Home for Sale? Winter, Redfin Says,” Los Angeles Times (Dec. 14, 2014)

Refis Tick Up Loan Demand in Latest Week

A drop in mortgage rates renew home owners’ interest in refinancing their mortgage.

The rise in refinancing applications helped to give overall loan demand a boost for the week ending Aug. 15, the Mortgage Bankers Association reports in its weekly mortgage market survey, which reflects 75 percent of the residential mortgage market.

Mortgage application activity, including both loans for refinancings and home purchases, increased 1.4 percent during the week.

Broken out, refinancing applications increased 2.7 percent, while loans for home purchases, viewed as a leading indicator of future home sales, fell 0.4 percent.

The 30-year fixed-rate mortgage averaged 4.29 percent during the week, down 6 basis points from the prior week, the MBA reports.

Source: “U.S. Mortgage Applications Rise in Latest Week: MBA,” Reuters (Aug. 20, 2014)

2014 Expected to Have ‘Strong Finish’

Despite hitting a soft spot in the first quarter, home sales are expected to make a strong showing in the second half of 2014, NAR’s Chief Economist Lawrence Yun told brokers at the Broker Summit in Atlanta Thursday.

Yun called the past few years of economic recovery “difficult but meaningful.” Unit sales are currently down 5 percent year-over-year, but he expects 2014 to end up close to last year’s totals at a little more than 5 million units sold.

Looking at the economy is a good way to see what will happen in housing, Yun says. Gross domestic product (GDP) was negative in the first quarter, but bounced back in the second. Although Yun would like to see consistent economic growth above 3 percent – it’s currently around 2 percent. “It’s moving in the right direction,” he says. “We’ve recovered all the jobs lost in downturn and new jobs are being created.”

Declining unemployment is a good sign for housing. However,more people are claiming disability, and rarely do they return to the workforce, Yun says. What’s more, the unemployment statistics are not considering Americans who aren’t collecting unemployment and who have essentially dropped out of the labor force.

Another piece of good news for real estate is that inventory is heading up nationwide, Yun says. Thetotal housing inventory at the end of June rose 2.2 percent to 2.30 million existing homes for sale. Research shows that consumers feel more confortable visiting 10 to 15 homes before making a purchase decision, Yun says, and as inventories come back, so will buyer confidence and sales.

Source: Erica Christoffer, REALTOR® Magazine

Fannie Mae Releases ‘2014 National Housing Survey Results’

Americans’ concerns about the direction of the economy and their household income appear to be weighing on housing growth, according to results from Fannie Mae’s May 2014 National Housing Survey. The share of respondents who believe the economy is headed in the wrong direction remained at 57 percent last month, and those who said their household income is significantly higher than it was at the same time last year decreased four percentage points to 21 percent.

Although respondents’ attitudes toward housing have been generally positive during the past few months, their reluctance to enter the home buying or selling market has restrained activity below typical seasonal trends.

Lending Stalling the Housing Recovery?

Tight mortgage lending standards are still plaguing the housing recovery, says Stuart Miller, CEO of homebuilder Lennar.

Housing starts are averaging about a million per year right now, still well off from the 1.5 million that is considered more normal for the economy. In 2009, housing starts fell below 500,000 but have been gradually increasing since.

Lennar, one of the nation’s largest builders, is predicting a gradual recovery that will likely stretch over the next three to five years.

“The mortgage market is not enabling demand to form at normalized levels,” Miller tells CNBC. He notes that there has been insufficient growth in the number of households as the Millennial generation doubles up and lives at home with their parents.

“We’ve been under-producing what’s needed for a growing population and for what should be normalized household formation,” Miller says.

Source: “Housing is still 30% below normal: Lennar CEO,” CNBC (June 4, 2014)

Home Owners Doing Record Number of Cash Deals

A record number of home owners are using the increased equity in their current homes to buy their next homes in cash and avoid the mortgage process altogether. About 29 percent of non-investment buyers used cash to fund their housing transactions in the first quarter of this year — the highest level on record, according to a new Bloomberg report.

Baby boomers make up a large bulk of these all-cash deals, says Lawrence Yun, chief economist for the National Association of REALTORS®.

“Cash purchases are on the rise because older home owners who have decades of home-equity accumulation don’t want the hassle of a mortgage,” Yun says. “With the economy improving and the stock market at record highs, boomers are the ones who are driving the market.”

“The whole investor class, the ones doing most of the cash purchasing until now, is stepping back,” Yun says. “Baby boomers are taking their place.”

Baby boomers have more equity than previous generations because they may have owned a home during a 30-year “housing bull market.” In April, the median price of an existing-home was $201,700 compared to $67,800 in 1982, when many boomers had purchased their first properties, Bloomberg reports.

Baby boomers are expected to remain a strong presence in the housing market much longer than previous generations, too.

Source: “Cash Property Deals Reach Record with U.S. Boomers Retiring,” Bloomberg Businessweek (June 2, 2014)

Housing Market Reaching Equilibrium

Home prices have already begun moderating over the past year and appreciation likely will continue to gradually slow over the next two years, according to a forecast of 31 analysts recently surveyed by Reuters. Analysts predict home prices to rise 7.5 percent this year and then curtail to 4 percent by 2016.

That marks a sharp slowdown from the double-digit increases reported last year. Analysts surveyed by Reuters say they expect prices to slow in the coming months due to tight lending standards, slow wage growth, and a lack of first-time buyers.

“Growth would be more robust if we saw more first-time homebuyers in the market,” says David Nice, economist at Mesirow Financial. “That would put the housing market on a sustainable growth trajectory.”

Analysts surveyed expect existing home sales to reach a 4.75 million annual rate in the second quarter of this year and rise to 5.10 million in the first quarter of 2015.

“We are seeing a state of equilibrium,” says Mark Goldman, a real estate expert at San Diego State University in California. “I don’t see any symptoms that would cause housing prices to go up or down significantly.”

Source: “U.S. House Price Gains Seen Moderating Over Next Few Years: Poll,” Reuters (May 30, 2014)