Home Prices...Where are they Headed?

From KCM Blog

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number. The results of their latest survey Home values will appreciate by 4.6% in 2014. The cumulative appreciation will be 19.5% by 2018. That means the average annual appreciation will be 3.6% over the next 5 years. Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 11.2% by 2018. Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

 

Small Country Acreages

I have some buyer clients that are looking for a large house on a small acreage, likely 2 - 5 acres. We looked at a few today, north of Caldwell as well as on the other side of Homedale. Most needed a considerable amount of updating. Just for kicks, I thought I would add photos of them today.



$249,000   5 Acres   2759 Square Feet

$209,900   3.02 Acres   2440 Square Feet including a full basement.

$220,000    5.08 Acres   3077 Square Feet

$279,900   5.03 Acres   3312 Square Feet including full basement.

Buying a Home? You do not need to do it alone!

Look at this poor worn out fellow, let me help you!



Last week, Discover Home Loans released an interesting survey which revealed how prepared home buyers are for the actual mortgage process. The survey reported that 94 percent of prospective buyers believe they are making a good investment decision if they buy a home. The survey also explained that 66 percent of buyers reach out to real estate agents to help determine whether buying a certain home would be a good investment. However, there is less certainty regarding the mortgage process.

Most buyers overwhelmed

The majority of potential buyers are actually overwhelmed with the plethora of information available about the home financing process.  Here are some interesting highlights from the report:

• Nearly 66% feel overwhelmed with the amount of information available


• 76% of those under the age of 30 feel overwhelmed


• 76% of first time buyers feel the same way


• 54% of those buyers who have previously owned also were overwhelmed


• 59% of buyers turn to mortgage bankers to help evaluate mortgage terms and comparing offers


• 49% of buyers turn to real estate agents to help evaluate mortgage terms and comparing offers

There is help available…use it!

Cameron Findlay, chief economist at Discover Home Loans, gives great advice:

“The industry is becoming more transparent in an effort to help homebuyers become informed about changes that may affect their process. The sheer amount of information can lead to confusion and stress. Those looking to purchase should work closely with their lender and realtor to make sure they are comfortable with mortgage terms and understand the impact a loan will have on their finances.”

Bottom Line

The purchasing of a home can put great pressure on a family. Reach out to the best mortgage and real estate professionals in your market for assistance throughout the process.

Courtesy of KCM Blog

Pending Home Sales Slip in June

 

After three consecutive months of solid gains, pending home sales slowed modestly in June, according to theNational Association of Realtors^®.

The Pending Home Sales Index,^* a forward-looking indicator based on contract signings, declined 1.1 percent to 102.7 in June from 103.8 in May, and is 7.3 percent below June 2013 (110.8). Despite June’s decrease, the index is above 100 – considered an average level of contract activity – for the second consecutive month after failing to reach the mark since November 2013 (100.7).

Lawrence Yun, NAR chief economist, says the housing market is stabilizing, but ongoing challenges are impeding full sales potential. “Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved,” he said. “However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates.”

Despite these headwinds, Yun ultimately expects a slight uptick in sales during the second half of the year. “The good news is that price appreciation has decreased to its slowest pace since March 2012¹ behind much needed increases in inventory,” he said. “With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and can make smart decisions on whether or not it makes sense to buy or continue renting.”

 

The PTC Index for June

With the summer in full swing, the PTC Index inched just slightly to settle at 221 points for the month of June. Overall, most categories showed little change from the month prior and, in some cases, little from the year-ago time period. First, building permits and existing home sales fell from the month prior by 8.4 percent and 4.2 percent, respectively. Refinances also slipped slightly from the month prior, but show some stabilization month-over-month having fallen by only 4/5 of a point. Notices of default also stabilized with no change from the month prior but down by 45 percent from a year ago. Inventories of distressed property (short sales/REOs) dipped by 3.9 percent, while new home sales saw a boost in June with a 20.5 percent increase from the month prior and almost equal to numbers from this time last year. Finally, the average Treasure Valley sales price inched up just a bit to settle at $201,539 - a 5 percent increase from June 2013.

June 2014

Building Permits
261
New Home Sales
206
Existing Home Sales
902
Refinance
724
Average Sales Price
201539.5
Financial-Bond Market_{(10-yr Treasury)}
2.6
Days on Market
53
Distressed_{(Short Sales and REO)}
956
Notices of Default
112
PTC Index
221




From Pioneer Title Company

To create the PTC Index, we gather data for nine key real estate variables and process them through our weighted algorithm to generate a single number reflective of the Treasure Valley real estate market.

The base data for the PTC Index is culled from various private sources as well as the public domain on a monthly basis.

These nine variables include building permits, new home sales, existing home sales refinances, average home sales price, the 10-year Treasury yield, days on market, distressed (short sales and Real Estate Owned) and notices of default. In simplified terms, the negative data from these sources is subtracted from the positive data to create the PTC Index. But before this happens, the data is weighted using a proprietary computation, resulting in a more accurate reflection of the real estate market.

What is holding back the Real Estate Market?

Though the housing market is recovering nicely, it is not doing quite as well as some analysts had predicted. There has been no shortage of excuses offered as to why this is: the rise in interest rates, more stringent lending standards, the weather.

However, we feel that there is one factor that is most responsible for curtailing the number of houses sold – the number of houses available for sale!

Inventory Levels are BELOW Historic Norms

In a recent economic forecast, Freddie Mac addressed this exact issue:

“Including newly built homes in the inventory count, the total number of homes offered for sale relative to the number of households in the U.S. has been running at the lowest level in more than 30 years, as shown in the second exhibit. The relatively low for-sale inventory reflects several features of today’s market.”

“A supply-constrained market (holding other factors constant) will result in a decline in the volume of sales and an increase in real transaction prices.”

NAR Report Confirms Inventory Constriction

History shows us that a balanced real estate market requires a six month supply of available housing inventory. The National Association of Realtors released their Existing Homes Sales Report earlier this week. The report revealed that we are still only at a 5.5 month supply of homes for sale. We have not reached the 6 month mark in over two years.

The recent increase in buyers now looking will again put a strain on this number. That is why today at 2PM EST, we are hosting a special webinar for real estate professionals; The 4 Keys to Prospecting for Listings that Sell. Agents can reserve their seat here.

Bottom Line

While inventory levels remain below historic norms, it will remain a seller’s market. This being the case, if you are considering selling your home, now may be the time to list it for sale.

 

Foreclosure Inventory Down 37% over Last Year!

 

According to the latest CoreLogic National Foreclosure Report, “approximately 660,000 homes in the US were in some state of foreclosure as of May 2014”. This figure is down 37% from the 1 million homes in May of 2013. May marked the 31st consecutive month in which there were year-over-year declines. Mark Fleming chief economist for CoreLogic revealed: “Significant gains have been made in the last year to reduce the foreclosure stock. Yet, these improvements are occurring disproportionately in non-judicial states. The foreclosure inventory in judicial states is averaging 2.1% which is more than twice the 0.9% average that is occurring in non-judicial states.” The foreclosure process in the twenty-two judicial states can take, on average, anywhere from 180-400 days according to the Mortgage Bankers Association. The lack of initial court intervention in non-judicial states, often means that the process of foreclosure takes significantly less time. Therefore, judicial states as a whole, have taken longer to catch up to the rest of the country in liquidating foreclosure inventory. All five states with the highest foreclosure inventory as a percentage of mortgaged homes are judicial states. On the list of the five lowest inventory states, only North Dakota uses a judicial process. Bottom Line Even though some states have not recovered completely from the foreclosure crisis, the nation as a whole is on the right track as inventory decreases.