Housing Market: California Home Sales And Prices Expected To Rise In 2013 At Slower Rate Due To Effects Of “Underwater Borrowers”

5 10 2012

When will the housing market be “corrected?”The housing recovery in California is expected to continue through to 2013, but the market won’t be “corrected” until as far off as 2017, according to the California Housing Market Forecast released by the CALIFORNIA ASSOCIATION OF REALTORS.

  • Homes sales and prices are expected to keep rising, but lower-than-normal inventory levels and underwater mortgages are key hindrances to a faster recovery, according to Leslie Appleton-Young, chief economist with the CALIFORNIA ASSOCIATION OF REALTORS®.
  • Home sales are forecasted to rise 1.3 percent to 530,000 units next year, based on the projected tally of 523,300 units this year. That’s a slower growth than that of 2011 to 2012, which is roughly 5 percent.
  • The momentum in prices also is expected to carry through to 2013, a result of pent-up demand for a limited housing supply. The median price could rise 5.7 percent to $335,000 in 2013. That’s lower than the projected price growth from 2011 to 2012, an estimated 11 percent. The state has a 3.2 months’ worth of housing inventory, significantly lower than the 16 months’-plus supply of saw roughly four years ago.
  • “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes,” said Appleton-Young in the report.
  • Appleton-Young says what underwater borrowers throughout the state will do — be it selling or holding — will have a big effect on next year’s housing recovery.
  • Other things to watch next year that will have a bearing on the housing market include: policies related to the state,local and federal governments; and housing and monetary policies, Appleton-Young said.

Housing Market: Fannie Mae Reports That Consumers Expect “Modestly Positive” Increases In Home Prices; Confidence In Economy Dips

11 09 2012

Consumer sentiment regarding the housing market continues its modestly positive trend, according to results from Fannie Mae’s August 2012 National Housing Survey. Supported by the expectation that home prices will rise in the next year and more saying it is a good time to sell, Americans have maintained a cautious but improving view of the housing market and homeownership. However, their stalling household financial expectations and declining economic optimism will likely mean the rate at which the housing market recovers will remain tempered.

Homeownership and Renting

  • Average home price change expectation is 1.6 percent, largely consistent with last month and down from a June high of 2.0 percent.
  • Eleven percent of those surveyed say home prices will go down in the next year, holding steady at the lowest level since the survey’s inception in June 2010.
  • At 40 percent, the percentage of respondents who say mortgage rates will go up in the next 12 months has increased by 4 percentage points since July.
  • Eighteen percent of respondents say it is a good time to sell, the highest level since the survey’s inception.
  • The percentage of respondents who say it is a good time to buy has remained steady at 73 percent.
  • Forty-four percent of those surveyed say home rental prices will go up in the next year, a decrease of 3 percentage points, while 5 percent expect them to go down.
  • The average rental price change expectation decreased 0.7 percent from last month to 3.2 percent, the lowest level since January 2012.
  • The percentage of respondents who say they would buy if they were going to move increased slightly to 67 percent, while 28 percent would rent.

The Economy and Household Finances

  • Consumer optimism continues to wane, with 33 percent saying the economy is on the right track, a slight decrease from last month and 5 percentage points lower than the May 2012 peak.
  • The percentage of respondents who expect their personal financial situation to get worse fell slightly to 13 percent, while those expecting their personal financial situation to stay the same increased slightly to 41 percent.
  • The share of respondents who say their household income is significantly higher than it was 12 months ago remained steady at 20 percent, while those who say it is significantly lower increased slightly to 16 percent.
  • Fifty-six percent of those surveyed say their household expenses are about the same as they were a year ago, a slight decrease over July.

Housing Market Remains Depressed As Poor U.S. Economic Health Reduces Homeowner Expectations Of New Home Purchases Retaining Value

18 08 2011

“…The employed remain worried about their own job security, which they see tied to overall U.S. economic health…”

  • 41% of respondents in the Housing Market Index indicated that they had lost sales contracts due to buyers’ inability to sell their current homes
  • This is an example of the unemployed impact on the broader marketplace, where it impedes the fluid economic progression of the employed, or the healthy market participants
  • The traditional argument holds that although the old home must be sold cheaper than preferable, a new home is also acquired at better value
  • These buyers worry about the future of the real estate market, specifically the risk of losing value post closing

For more:  http://seekingalpha.com/article/288177-housing-insight-from-home-builders

Freddie Mac Releases August 2011 “Economic Outlook” Reporting Low Mortgage Rate Environment Providing Assistance For Housing Market As Employment Outlook Remains Weak

17 08 2011


  • Employment was up 117,000, the best showing since April, and the unemployment rate edged down a tenth to 9.1 percent.
  • Over the first half of 2011, growth was figured to be about 0.8 percent at an annual rate, far too weak to generate enough jobs to keep pace with labor force growth.
  • Compared with the first quarter of 2008, borrowers are paying about $130 billion less in mortgage interest today, at an annual rate.
  • The likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market’s recovery.
  • Interest rates on 15-year fixed-rate loans – always popular for borrowers considering to refinance – reached about 3.5 percent in early August, assuring the refinance boom continues.
  • Freddie Mac House Price Index(SM) for the U.S. shows that prices are down 25 percent, on average, as of June 2011 compared with their peak obtained five years ago.


Attributed to Frank Nothaft, Freddie Mac, vice president and chief economist.

  • “While the capital markets have experienced sizeable movements up and down in recent weeks, these swings are unlikely to lead to whiplash or hospitalization for individual investors. Heightened uncertainty, unfortunately, can be harmful to the overall economy.”

For more:  http://freddiemac.mediaroom.com/index.php?s=12329&item=49360

Fannie Mae Survey Shows More Americans Expect Home Prices To Decline In Next Year As Optimism Fades

9 08 2011

Homeownership and Renting

  • On average and consistent with June, Americans believe home prices will decline slightly over the next year.
  • Only 11 percent of respondents say it is a good time to sell one’s home (similar to May and June 2011 survey results).
  • Despite Americans’ expectations that rental prices will go up in the next 12 months, fewer Americans say they would buy their next home (down 5 percentage points) and more of those surveyed say they would rent (up by 3 percentage points).

Household Finances

  • For the third month in a row, optimism about personal finances has declined, with 35 percent of respondents expecting their finances to get better over the next year (down from 40 percent in April).
  • Consistent with June, 20 percent of respondents report significantly higher household incomes over the past 12 months, while 17 percent report significantly lower incomes.
  • As compared to past months, four times as many Americans report significantly higher household expenses (up from 37 percent in June to 40 percent in July) as significantly lower expenses (10 percent).

For more:  http://www.fanniemae.com/media/pdf/2011/nhs-monthly-data-082011.pdf

A New Study By Pew Research Center Finds “Housing Bust” Has Reduced “Household Wealth” Of Black And Hispanic Americans More Than White Americans (Video)

27 07 2011

As the economy struggles to rebound, a new analysis of Census data shows a widening wealth gap among white, black and Hispanic Americans. Gwen Ifill discusses the results of a new study with the Pew Research Center’s Paul Taylor and Howard University’s Roderick Harrison.

S&P/Case-Shiller Home Price Index Shows Slight Increase In May 2011 With 4.51% Lower Values In Past 12 Months

26 07 2011
The current Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as May 23 and averaged for the month. The data indicates that with increasing transactions in the spring has come increasing prices (the typical trend). The national index increased 1.14% since April but still remains 5.89% below the level seen in May 2010.
  • S&P/CaseShiller home price index for the month of May comes in at 139.87, vs. the economist estimate of 139.80 and compared to a revised reading of 138.46 for the month of April.
  • The index fell 0.05% on a month-over-month basis and 4.51% from the same month last year.

For more:  http://www.streetinsider.com/Economic+Data/May+S%26PCaseShiller+Home+Price+Index%3A+139.87%2C+Down+4.51%25+YoY/6659312.html