Home prices showed yet another surge in April as year over year values increased for all 50 states, according to the latest Home Price Index report from CoreLogic, a global property information, analytics and data-enabled solutions provider.
Home prices increased 6.9% nationally from April 2017 to April 2018, and increased 1.2% from the prior month, according to the report.
The chart below shows home prices have been steadily increasing at the same rate for the past several years.
“The best antidote for rising home prices is additional supply,” CoreLogic Chief Economist Frank Nothaft said. “New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures.”
An analysis of home values in the country’s 100 largest metropolitan areas based on housing stock, indicates 40% of metropolitan areas had an overvalued housing market as of April 2018, CoreLogic reported.
Another 28% of the top 100 metropolitan areas were undervalued while 32% were at value. When looking at only the top 50 markets, 52% were overvalued, 14% were undervalued and 34% were at-value.
The national home-price index is projected to increase by 5.3% from April 2018 to April 2019, according to the CoreLogic HPI Forecast.
The forecast is an econometric model that projects calculations from analyzing state level forecast, which are measured by the number of owner-occupied households for each state.
As of April, Florida’s recovery is promising, but experts say another natural disaster could hinder its growth.
“Florida continues to show price resiliency after Hurricane Irma in 2017. Despite the impact of the hurricane, prices were up 5.8% across the state compared to a year ago,” CoreLogic President and CEO Frank Martell said. “CoreLogic data projects continued gains to home prices in Florida for the remainder of 2018. However, gains could be erased if a significant storm makes landfall again.”
Hartford-based insurer Aetna will receive roughly $34 million in city and state subsidies to move its headquarters to a luxury boutique office building being erected in the trendy Meatpacking District, the de Blasio and Cuomo administrations announced in separate press releases Thursday.
Aetna will take 145,000 square feet at 61 Ninth Ave., the entirety of the building’s office space. The high-end commercial property is being developed by a partnership between Aurora Capital Associates and Vornado Realty Trust, a $17.6 billion public real estate company that is one of the city’s biggest and richest landlords.
Aetna will recieve $24 million of “performance-based tax credits” over 10 years, according to a statement from Gov. Andrew Cuomo’s office. The administration said Aetna will add 250 “senior” positions to the new headquarters and invest $84 million in the space.
Mayor Bill de Blasio’s office announced that Aetna will receive $9.6 million in financial assistance from the city’s Economic Development Corp. The subsidy will come in the form of a $4.25 million break on sales taxes for materials purchased for the site, $3.8 million in property-tax relief and $1.5 million of other sales-tax benefits and other breaks, according to the city.
Aurora and Vornado have been developing the Rafael Vinoly-designed 61 Ninth Ave. with the aim of fetching soaring rents in a neighborhood that has become a pricey and exclusive enclave for high-end tech firms, hedge funds and other deep-pocketed tenants.
Some fiscal watchdogs took a dim view of a multibillion-dollar insurance company being showered with millions of subsidy dollars so it can pay robust rents in a hot neighborhood to a landlord also worth billions.
“The city’s economy is the strongest that it’s been for generations,” said James Parrott, an economist and longtime critic of subsidy policy. “Tax breaks only serve to make New York City real estate more costly. Why would you want to do that?”
The city, in its press release announcing the deal, stated that Aetna’s move would generate $146 million in economic benefits to the city. A spokesman for the Economic Development Corp. couldn’t immediately describe in detail how it calculated that.
30-year fixed-rate mortgage (FRM) averaged 3.91 percent with an average 0.5 point for the week ending June 15, 2017, up from last week when it averaged 3.89 percent. A year ago at this time, the 30-year FRM averaged 3.54 percent.
15-year FRM this week averaged 3.18 percent with an average 0.5 point, up from last week when it averaged 3.16 percent. A year ago at this time, the 15-year FRM averaged 2.81 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.
Quote Attributed to Sean Becketti, chief economist, Freddie Mac.
“The 30-year mortgage rate rose 2 basis points over the week to 3.91 percent. However, our survey was conducted before investors drove Treasury yields sharply lower in a reaction to the surprisingly weak CPI release. If that drop in yields sticks, mortgage rates are likely to follow in next week’s survey.”
The first quarter of 2017 saw the strongest quarterly home sales pace in a decade, according to the latest quarterly report from the National Association of Realtors.
This increase in home sales put downward pressure on housing inventory levels and caused home prices growth to accelerate its rate of increase in the first quarter, the report states. In fact, metro home prices now accelerated for three consecutive quarters.
The national median home price increased to $232,100, up 6.9% from the first quarter of 2016. This represents the fastest rate of growth since the second quarter of 2015.
“Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” NAR Chief Economist Lawrence Yun said. “Those able to successfully buy most likely had to outbid others, especially for those in the starter-home market, which in turn quickened price growth to the fastest quarterly pace in almost two years.”
Single family home prices increased in 85% of markets as 152 of 178 metropolitan statistical areas showed sales prices gains in the first quarter, the report states. However, in 14 MSAs, home prices decreased year-over-year.
“Several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction,” Yun said. “This is why many of these areas, in particular several parts of the South and West, are seeing unhealthy price appreciation that far exceeds incomes.”
Total existing home sales, including single-family homes and condos, increased 1.4% in the first quarter to a seasonally adjusted rate of 5.62 million, the highest rate since the first quarter of 2007. This is up from 5.55 million in the fourth quarter of 2016 and from 5.36 million in the first quarter of 2016.
Housing inventory, however, decreased 6.6% from 1.96 million homes for sale in the first quarter last year to 1.83 million this year. This average supply rested at 3.7 months in the first quarter, down from 4.2 months last year.
And while median income is increasing,, hitting a national average of $71,201, higher mortgage rates and home prices weakened affordability.
“Last quarter’s robust pace of sales was especially impressive considering the affordability sting buyers experienced from higher prices and mortgage rates,” Yun said. “High demand is poised to continue heading into the summer as long as job gains continue. However, many metro areas need to see a significant rise in new and existing inventory to meet this demand and cool down price growth.”
The count of unfilled jobs in the overall construction sector remained elevated in November, as residential construction employment continues to grow.
According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the number of open construction sector jobs (on a seasonally adjusted basis) came in at 184,000 in November. The cycle high was 225,000 set in July.
The open position rate (job openings as a percent of total employment) for November was 2.7%. On a smoothed twelve-month moving average basis, the open position rate for the construction sector increased to 2.8%, setting a cycle high and exceeding the peak twelve-month moving average rate established prior to the recession.
The overall trend for open construction jobs has been increasing since the end of the Great Recession. This is consistent with survey data indicating that access to labor remains a top business challenge for builders.
The construction sector hiring rate, as measured on a twelve-month moving average basis, remained steady at 4.9% in November. The twelve-month moving average for layoffs was also steady (2.6%), remaining in a range set last Fall. Quits rose to 2.4% in November, consistent with a tight labor market.
Monthly employment data for December 2016 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that home builder and remodeler employment expanded, increasing by 9,800. The December gains continue the improvement in the Fall after a period of hiring weakness early in 2016. The 6-month moving average of jobs gains for residential construction has now increased to a healthier 11,450 per month.
Residential construction employment now stands at 2.653 million, broken down as 739,000 builders and 1.915 million residential specialty trade contractors.
Over the last 12 months home builders and remodelers have added 103,000 jobs on a net basis. Since the low point of industry employment following the Great Recession, residential construction has gained 667,000 positions.
In December, the unemployment rate for construction workers stood at 6.8% on a seasonally adjusted basis. The unemployment rate for the construction occupation had been on a general decline since reaching a peak rate of 22% in February 2010, although it has leveled off in the 6% to 7% range since the middle of 2016
With the end of 2016 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In July, Na Zhao examined typical construction durations for various types of single-family homes and regions.
The 2015 Survey of Construction (SOC) from the Census Bureau shows that the average completion time of a single-family house is around 7 months, which usually includes almost a month from authorization to start and another 6 months to finish the construction. The timeline from authorization to completion, however, is not consistent across the nation, depending on the housing category, the geographic location, and metropolitan status.
Among all the single-family houses completed in 2015, houses built for sale took the shortest time, 6 months to completion after obtaining building permits, while houses built by owners required the longest time, almost a year. Homes built for rent took 9 months from permit to completion, and those built by hired contractors normally needed around 8 months. A large proportion of single-family homes built for sale and on owners’ land built by contractors began construction within the same month after obtaining building authorizations. However, homes built for rent and built by owners had a one-month lag between permits and construction start in 2015.
The average time from authorization to completion also varies across the nation. New England division had the longest time of 10 months, followed by the Middle Atlantic of 9.6 months, East South Central, East North Central, and Pacific of 8 months in 2014. These four divisions all had above average time from permit to completion. The shortest period, 6 months, happened in the Mountain division, which also had the shortest waiting period from permit to construction start.
The metropolitan status indicates how long it takes to build a single-family home. Houses in metropolitan areas, on average, took nearly 7.5 months to completion, which was 2 months shorter than those in non-metropolitan areas. This pattern was quite consistent across the nation, except for the Middle Atlantic division where the average month to completion in metropolitan areas was longer than in non-metropolitan areas in 2015.
The SOC also collects sale information for houses built for sale, including the sale date when buyers sign the sale contracts or make a deposit. In 2015, the share of single-family sold while under construction was 66%, with 32% even sold before construction start and 12% sold during the same month of completion. The percent of single-family houses completed in 2015 stayed unsold at the first quarter of 2016 was only 6%.
The popular belief that the seven million Americans who lost their homes to foreclosure during the Housing Crash are healed, whole and forgiven of their debts after seven years have passed is only partly true.
For foreclosures, Fannie Mae and Freddie Mac set a seven-year waiting period before defaulters can apply for a mortgage, measured from the completion date of the foreclosure action. With time foreclosures, bankruptcy filings and tax liens disappear from credit records but the impact of their misfortune lingers for years in the form of substandard credit ratings and scores.
A new study from the Urban institute, The Lasting Impact of Foreclosures and Negative Public Records, corrects the conventional wisdom by chronicling the painful punishment suffered by victims of the foreclosure floods and the Great Recession that began in earnest a decade ago and the impact not just upon individual families but on the economy as a whole.
The researchers found that It takes a long time for a consumer’s credit score to recover from the impact of a foreclosure—far longer than the seven years the foreclosure remains on the credit report.
From 2004 through 2015, 7.1 million borrowers experienced a foreclosure filing, and 34.4 million consumers acquired an adverse public record other than foreclosure. Altogether, 41.5 million people, or 16 percent of the 264 million US consumers with credit records, experienced a financial crisis that impacted their credit.
“We believe this extended impact at least partially explains the slow recovery after 2010, the study found,” wrote the authors, Wei Li, Laurie Goodman and Denise Bonsu.
More than 60 percent of consumers with these negative financial events still had VantageScore credit scores below 620 in 2015. More than 60 percent of them had delinquent debt in 2015, and only 8 percent of them were able to obtain new mortgages as of 2015. And, more than 70 percent of them were the age that preferred homeowning (between 29 and 59 years old) in 2015; this large group of potential borrowers with negative financial events profoundly affects the homeownership rate.
At least at the peak of crisis, when the spike in foreclosure filings jammed up judicial foreclosures, the long judicial foreclosure process might have prevented foreclosed-upon borrowers from moving on.
A large number of consumers will retain adverse events on their records for a considerable time, making it hard for many of them to borrow again. At the end of 2018, 22.8 million consumers—almost 9 percent of the adult consumer population—will still have a foreclosure or adverse public record.
Middle-aged consumers were hit hardest by these credit blemishes. Seventy-three percent of consumers (30 million) who experienced foreclosure or other adverse public records were between 29 and 59 years old in 2015, yet this age group accounts for only 53 percent of adult consumers. The middle-aged consumers hit hardest by these adverse credit events have had a profound impact on the homeownership rate because their age group has the strongest preference for homeownership.
Inflation in prices received for building materials (prior to sales to consumers) was mixed in September according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. Although their monthly changes were relatively modest, the prices of OSB and ready-mix concrete have been trending upward for quite some time and remain at historically high levels.
OSB prices climbed 2.5% in September, continuing a 7-month trend that has the commodity at its highest price since June 2013. Since February, monthly increases have averaged 3.2%, pushing prices up by a cumulative, eye-popping 25%.
In addition, although the price of ready-mix concrete fell marginally in September, the long-term trend remains concerning. Monthly increases have averaged 0.3% over the last five years as the price of ready-mix concrete has steadily risen by roughly 20%. While gypsum prices picked up (+0.1%), the prices of softwood lumber and steel mill products fell by 1.4% and 0.5%, respectively.
After holding steady in August, the economy-wide PPI rose 0.3% in September. Over three-quarters of the increase was the result of a 0.7% increase in prices for goods, while the rise in prices for services was a more modest 0.1%. Final demand prices for core goods (i.e. goods excluding food and energy) inched up 0.3%, and prices for core goods less trade services rose 1.5% over the 12 months ended in September. This represented the largest 12-month increase in two years.
What are the features and colors included in kitchens of newly constructed homes? Data from Houzz, combined with information from the 2016 Builder Practices Survey, provides insight.
The 2016 Builder Practices Survey (BPS) is a national survey of homebuilders, conducted by Home Innovation Research Labs, that captures valuable information on the product features included in new residential construction, both single-family and multifamily.
It is a robust survey of 1,381 respondents who built single-family detached units and 199 respondents who built multifamily or single-family attached units (i.e. townhomes). Results are available on national and regional levels.
Analyzing the BPS can uncover interesting trends in the construction of new kitchens, such as countertop material type, cabinet type, and appliances.
Although the BPS covers a broad range of topics, it does not touch upon the color themes of kitchens in new construction. Houzz, an online platform dedicated to home remodeling and design, conducted an online survey on this very topic. Its survey asked recent buyers of newly constructed homes about the colors themes in their kitchens. The survey is national in scope and had 203 respondents.
Combining data from the BPS with the Houzz survey can provide powerful information on what today’s new kitchens look like. The following provides a snapshot of the 2015 product features and color themes included in kitchens of newly constructed single-family homes:
Countertops & Backsplashes Figure 1 displays the type of countertop material installed in new kitchens. Granite countertops are overwhelmingly the most popular with 64 percent of new homes having this material type. It is no surprise that only 14 percent of new homes have laminate countertops. Based on NAHB’s Consumer Preference Surveyreport, laminate countertops are the least desired kitchen feature and are likely only installed when affordability is a major concern. Besides these material types, 9 percent each of new homes have engineered stone and solid-surface countertops.
Figure 1: Countertop Material Type (1)
The Houzz survey provides insight on countertop color. Figure 2 displays the countertop color of those who have granite countertops, the most popular countertop material. Three color choices stand out: 30 percent of respondents have multi-colored countertops, 26 percent have white, and 18 percent have black. Twenty-six percent reported some other color, or were not sure about their countertop color.
Figure 2: Countertop Material Color (2)
In addition to countertop material color, buyers also noted the color of their backsplashes (Figure 3). Twenty-six percent of respondents reported having white backsplashes, 13 percent reported beige, 12 percent reported multi-colored, and 6 percent reported gray. Forty-three percent reported some other color, or were not sure of their backsplash color.
Figure 3: Backsplash Color (3)
Cabinetry Figure 4 displays the types of cabinets installed in new homes. Wood-based cabinets are the most common, but there is variation in the panel type of wood cabinets. Sixty percent of new homes have raised panel wood cabinets, compared to 25 percent that have flat panel wood cabinets. Only 5 percent of new homes have laminate cabinets, and the remaining 10 percent consists of various other types, such as glass cabinets.
Figure 4: Cabinet Type (4)
Figure 5 displays the cabinet colors reported by respondents in the Houzz survey. The most popular color is white (34 percent), followed by wood – medium tone (20 percent), gray (9 percent), wood – dark tone (7 percent), and multi-colored (6 percent).
Figure 5: Cabinet Color (5)
Appliances Figure 6 displays the percentage of new homes that have each appliance listed. Cooktops and ranges are almost always provided in new kitchens with 97 percent of new homes having these features. Features that are also commonly installed include dishwashers (92 percent), microwave ovens and garbage disposals (both 84 percent); and refrigerators and freezer (65 percent).
Items less frequently installed in new homes include clothes dryers and washers (36 and 34 percent, respectively), wall ovens (18 percent), hot water recirculation piping (17 percent), water softeners and central vacuum systems (both 13 percent); hot water dispensers and standby generators (both 8 percent); trash compactors (4 percent), and elevators (2 percent).
Figure 6: Percentage of New Homes that Include Appliance (6)
Figure 7 displays the colors of appliances installed in new kitchens. Most respondents reported that “stainless steel” is the color theme of their appliances, 6 percent reported black, and 4 percent reported white.
Figure 7: Appliance Colors (7)
The combination of data from the BPS and the Houzz survey provides a sense of what new kitchens look like. New kitchens tend to have granite countertops, raised panel wood cabinets, and come with a standard set of appliances, such as cooktops & ranges, microwaves, dishwashers and garbage disposals. New kitchens also have white, multi-colored, or wood-based color themes, and are complemented by “stainless steel” appliances.