Tag Archives: North Salem Homes for Sale

North Salem Homes for Sale

Home Prices are on the Rise Again | North Salem Real Estate

A second housing price index is showing an uptick in the rate of appreciation, possibly because interest rates declines have begun to mitigate affordability issues.  CoreLogic says its Home Price Index for July was up 3.6 percent in July, the annual increase in June, was 3.4 percent.  On a month over month basis the gain was 0.5 percent compared to an increase of 0.4 percent the previous month.  Last week Black Knight noted that the rate of increase in its index had risen for the first time in 16 months.

CoreLogic Chief Economist Frank Nothaft said, “Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income. With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”

Annual price gains were experienced in all states but Connecticut and South Dakota. The highest increases were posted in Idaho (11.5 percent) Utah (8.4 percent) and Maine (7.7 percent).

The company’s forecast is for home prices to increase by 5.4 percent on a year over year basis from July to this year to the corresponding month in 2020.  On a month-over-month basis, home prices are expected to increase by 0.4 percent from July 2019 to August 2019.

The graph below shows a comparison of the national year-over-year percent change for the CoreLogic HPI and CoreLogic Case-Shiller Index from 2000 to present month with forecasts one year into the future. Both the CoreLogic HPI Single Family Combined tier and the CoreLogic Case-Shiller Index are posting positive, but moderating year-over-year percent changes, and forecasting gains for the next year.

“Although the rise in home prices has slowed over the past several months, we see a reacceleration over the next year to just over 5 percent on an annualized basis,” CEO President and CEO Frank Martell commented.  “Lower rates are certainly making it more affordable to buy homes and millennial buyers are entering the market with increasing force.  These positive demand drivers, which are occurring against a backdrop of persistent shortages in housing stock, are the major drivers for higher home prices, which will likely continue to rise for the foreseeable future.”

During the second quarter of 2019, CoreLogic and RTi Research conducted a survey of Millennial generation consumer-housing sentiment.  They found that approximately 26 percent of that age group expressed an interest in buying a home in the next 12 months, but only 8 percent indicated a desire to sell their home within the same time frame. This means that new housing starts, or sellers from other age cohorts, will need to make up the necessary available supply to meet the demand. This desire to buy while housing stock is limited will continue to force prices up as buyers search for a home to purchase.

CoreLogic considers 37 percent of large metropolitan areas to have an overvalued housing stock as of July.  Their analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income. Twenty-three percent were undervalued, and 40 percent were at value. When the analysis is done on only the top 50 markets 40 percent were overvalued, 16 percent were undervalued, and 44 percent were at value.

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http://www.mortgagenewsdaily.com/09032019_corelogic_hpi.asp

Berlin is imposing a five-year rent freeze—Could it work in New York City? | North Salem Real Estate

VIEW PHOTO IN GALLERY

Photo via Pixabay

In June, New York State rolled out a slate of proposals to protect renters. Among other changes, the new legislation closes several loopholes that have permitted owners to legally spike rents following renovations—a tactic that has been successfully used to deregulate more than 150,000 units over the past two decades. In essence, under the new legislation, owners will no longer be able to deregulate rent-regulated apartments at all. While the new legislation is certainly good news for many renters, for the tens of thousands of New Yorkers who now already live in unregulated apartments, the current legislation doesn’t fix their current woes. But could a five-year rent freeze help? It may sound impossible, but this is precisely what Berlin—once an oasis of inexpensive rents—has just approved as a way to put the brakes on rising rental prices.

Berlin’s changing rental landscape and five-year price freeze

Just a decade ago, Berlin was still known around the world as a phenomenally cool city where one could rent a large apartment at a very reasonable rate. As Berlin’s economy has improved and its tourism industry has expanded, finding an affordable apartment in some of Berlin’s most desirable neighborhoods has become increasingly difficult.

By one estimate, since 2008, Berlin rents have doubled from 5.60 euros to 11.40 euros. Downtown neighborhoods such as Friedrichshain-Kreuzberg have been especially hard hit. And prices aren’t just soaring on the rental side of the market. Buying a unit in Berlin is also increasingly out of reach. According to a recent report by the UK-based Frank-Knight, in 2017, Berlin bucked global trends, becoming the only major city in the world to report real estate price growth above 20 percent. However, in a city with more renters than any other European city, Berliners’ real concern remains the rising cost of rentals.

To be clear, Berliners are still not as hard up as people in New York, London, Paris, or Tokyo, but there are fears the city may be heading in this direction. On average, one-bedroom units in Berlin’s center are about 1,000 euros per month. Of course, this figure reflects area averages, and therefore, takes into account the high number of units still being rented out at pre-gentrification prices. As a result, if you’re new to Berlin’s housing market and looking for an apartment, you’ll likely pay much more than 1,000 euros monthly for a decent one-bedroom unit in a desirable neighborhood—as much as 1,500 to 2,000 euros or roughly $1,700 to $2,250 USD.

With rents rising, competition is also getting tough. A recent BBC report noted that over 100 prospective tenants often show up for apartment viewings. To stand out, some Berliners have reportedly even started to bribe prospective landlords who are willing to take them on as tenants. One couple, both professional photographers, reportedly offered prospective landlords a free photoshoot.  Another house hunter posted a sign offering regular baking to any landlord willing to rent her a flat. While a free photoshoot or weekly fresh-based bread may not be enough to close a deal in New York City, such bribes are apparently growing increasingly common in Berlin’s rental market.

To put the kibosh on the rising rents, tough competition, and bribes, on June 18, the Berlin Senate voted in favor of a five-year rental freeze. Although planned to take effect on January 2020, the freeze will be applied retroactively from June 18. While many Berliners are in support, not everyone in Germany is happy about the proposal. Some critics worry that the freeze will prevent landlords from making necessary repairs to their buildings. Business analysts also fear the freeze may negatively impact Berlin’s economy. Even Chancellor Angela Merkel is skeptical. She’s suggested that building more affordable housing in the city may be a better solution.

Could a five-year rental freeze work in New York City?

Theoretically, a five-year freeze on both rent-regulated and market-rate units could be imposed—albeit not without major backlash from the real estate industry—but would it help control the city’s already inflated rental market?

NYU Furman Center’s historical data reveals that a lot can happen in five years, depending on a wide range of factors. The graph above features real median gross rental prices for MN 03 (the Lower East Side-Chinatown) compared to Manhattan and citywide rents from 2006 to 2017. As illustrated, had a five-year freeze on rents come into play in 2012, average rental prices would have been about $200 less on average by 2017. However, in the inflated Lower East Side-Chinatown market, a rental freeze in 2012 would have had virtually no impact on real median gross rental prices at all since the freeze would have happened during the area’s 2012 peak in prices.

Another risk of imposing a five-year rental freeze in New York City is what would happen next. In Berlin, no new lease can be 10 percent higher than the previous lease, but in New York, owners of unregulated units are free to raise rents as high as they like when an apartment turns over and even when an existing tenant renews a lease. The risk, then, is that if the city did impose a five-year freeze, owners would rebel and spike rents after the freeze, creating an even more untenable rental landscape.

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Davis Love’s house on Georgia coast will not sell | North Salem Real Estate

davis-love-iii-house
realtor.com; Michael Reaves/Getty Images

All that glitters is gold when you’re talking about high-end real estate along the Atlantic Ocean. The Golden Isles are a chain of barrier islands sitting midway between Savannah, GA, and Jacksonville, FL.

If you’re unfamiliar with names like St. Simons Island, Little St. Simons Island, Sea Island, Jekyll Island, and Brunswick, that’s because they’re hidden gems along Georgia’s oft-overlooked coastline.

The island chain offers just the right blend of notoriety and privacy and was tabbed last year as “The Secluded Island Hideaways for America’s Rich and Famous” by the Wall Street Journal. In addition to seclusion, the allure of these isles is intimately tied to golf. In fact, the golf tradition of the Golden Isles dates back at least a century.

With a backdrop of golf history and award-winning courses, it’s no surprise that pro golfers have snapped up homes in the Golden Isles.

Golf Hall of Famer Davis Love III is one such linksman. The 21-time PGA Tour winner owns a pristine plantation-style home on St. Simons Island.

Exterior
Exteriorrealtor.com

Love’s 5-acre spread is located in a private, serene neighborhood and includes a fully functioning farm. Known as Sinclair Farm, Love’s summery sanctuary is way, way above par.

It’s currently on the market for $4.48 million and eagerly awaits a buyer in search of a place with a golden reputation.

Aerial view
Aerial viewrealtor.com

There’s only one divot—the golfer’s home has been up for sale for sixlong years. We’ll spare you the albatross jokes.

In 2013, Love’s property landed on the market at a price of $5.5 million. So what’s the holdup? Why aren’t buyers swooning over Love’s beautiful island compound?

St. Simons Island offers the best of island life. The plantation-style house is gorgeous. The property is enormous and lush. We’re talking endless summer, twinkling stars on clear nights with fireflies flitting around. The beach right around the corner.

To dig in to the reasons, we spoke with a couple of local agents.

An abundance of options

On Sea Island and St. Simons Island, there are over 50 listings priced between $1 million and $14 million, according to Rhonda NeSmith, an agent with Coldwell Banker Platinum Partners.

Entryway
Entrywayrealtor.com

“People who can afford to buy in this price range have options,” she said. “This property is really nice and private, but a lot of people come to the area to be either in a golf community or on the water.”

Love’s secluded property is located in an area with only six other homes, and the street to reach the home is quite dark and winding, NeSmith said.

With an abundance of waterfront and golf course properties available, this lovely island spread might be … too remote?

Living space
Living spacerealtor.com

The listing mentions views of a marsh in the distance. NeSmith said “distance” is a bit of an understatement: “There’s a 50-acre property in between this one and the marsh, so there’s not much to see in that regard.”

However, the views of the sky are unparalleled. NeSmith told us, “I can guarantee the view of the night sky from this property is an amazing sight.”

Dining room
Dining roomrealtor.com

The home is also competing with luxury homes on the other Golden Isles, and many of those options are gated, private islands for residents only.

New construction in the area also plays a role. Even though Love’s home is only two decades old, many high-end buyers want a place with no previous owners.

“This home was built in 1999,” said Maria Jennings, real estate agent with DeLoach Sotheby’s International Realty. “There’s a fair amount of new construction in the area. This presents some competition for this kind of home.”

The vacation vibe

Jennings told us the Golden Isles are a popular destination for vacationers, retirees, and owners of second homes.

Kitchen
Kitchenrealtor.com

“The island tends to attract retirees that want to downsize,” Jennings said. “They’re looking for something that’s easy to maintain, and this property requires a lot of upkeep.”

Five acres aren’t going to tend to themselves. And with a fully functioning farm, upkeep is a daily commitment, which runs counter to the idea of having a low-key retreat.

Vacationers, she said, are looking for something similar: a place to stay that requires little maintenance and has enough space to spread out and relax, but not so much that keeping things clean, tidy, and in working order takes the fun out of the experience.

Bedroom
Bedroomrealtor.com

“The farm makes this property really unique, which is good, but it also narrows down the kind of buyer looking for this kind of home.”

You can’t hurry Love

For someone like Love, a native of the Golden Isles area and a professional athlete with presumably a sizable nest egg, selling the property quickly isn’t a top priority. He ranks among the top 20 money earners all-time in the world of professional golf, having pulled down nearly $45 million in career earnings.

“I tend to think he built this as his forever home, but obviously something changed,” says NeSmith. “Still, he probably doesn’t need to sell it for the money.”

The lack of urgency is reflected in the years the home has spent on the market and the relative lack of price cuts. The asking price was cut in 2015, 2017, and then again earlier this year to its present price.

Pool
Poolrealtor.com

“The house is worth its current asking price,” said NeSmith. “So that’s not the issue here. The property is just really unique for the area.”

So what kind of buyer will fall in love with an island farm?

“It’s probably going to be someone middle-aged that’s relocating that wants to be close to the water but still have the farm feel,” said Jennings. “That’s a pretty unique buyer.” If you fit the very specific bill, Love is still waiting for you to take a swing.

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https://www.realtor.com/news/celebrity-real-estate/why-wont-anyone-buy-davis-love-iii-gorgeous-georgia-property/

Case Shiller home prices rise 4% annually | North Salem Real Estate

house down payment

In February, annual home price gains slowed across the country, according to the latest Case-Shiller Home Price Index from S&P Down Jones Indices and CoreLogic.

The report’s results showed that February 2019 saw an annual increase of 4% for home prices nationwide, falling from the previous month’s report.

The graph below highlights the average home prices within the 10-City and 20-City Composites.

(Click to enlarge)

S&P CoreLogic - Case Shiller - February

Before seasonal adjustment, the National Index decreased 0.2% month over month in February. The 10-City Composite and the 20-City Composite both posted a 0.2% month over month decrease.

After seasonal adjustment, the National Index recorded a month-over-month gain of 0.3% in February. Additionally, the 10-City Composite and the 20-City Composite posted also posted a 0.2% month-over-month increase.

The 10-City and 20-City composites reported a 2.6% and 3.1% year-over-year increase for the month, respectively. Before seasonal adjustment, 14 of 20 cities reported increases, while 17 of 20 cities reported increases after the seasonal adjustment.

S&P Dow Jones Indices Managing Director and Chairman of the Index Committee David Blitzer said the pace of increases for home prices continues to slow.

“Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits,” Blitzer said. “Subsequently, increases slowed until now when the National Index is up 4% in the last 12 months.”

And although sales of existing single-family homes have recovered since 2010 and reached their peak one year ago in February 2018, home sales have drifted down over the last year except for a one-month pop in February 2019, according to Blitzer.

“Sales of new homeshousing starts, and residential investment had similar weak trajectories over the last year,” Blitzer said. “Mortgage rates are down one-half to three-quarters of a percentage point since late 2018.”

Additionally, Blitzer notes that regional housing trends are changing, especially as previously thriving housing markets continue to lose appreciation.

According to the report, Las Vegas, Phoenix and Tampa reported the highest year-over-year gains among all of the 20 cities.

In February, Las Vegas led with a 9.7% year-over-year price increase, followed by Phoenix with a 6.7% increase and Tampa with a 5.4% increase. Notably, only one of the 20 cities reported larger price increases in the year ending February 2019 versus the year ending January 2019.

“The largest year-over-year price increase is 9.7% in Las Vegas; last year, the largest gain was 12.7% in Seattle. Regional patterns are shifting. The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year. Chicago, New York and Cleveland saw only slightly larger prices increases than California,” Blitzer said. “Prices generally rose faster in inland cities than on either the coasts or the Great Lakes. Aside from Las Vegas, Phoenix, and Tampa, which saw the fastest gains, Atlanta, Denver, and Minneapolis all saw prices rise more than 4% — twice the rate of inflation.”

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https://www.housingwire.com/articles/48910-case-shiller-home-price-gains-continue-to-slow-shifting-regional-housing-trends?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_source=hs_email&utm_medium=email&utm_content=72230236&_hsenc=p2ANqtz–ygXtWx8r1R8vGQo3erxp3Kh-lZtWoE39s-RRgGzxvOOKIGHJQQr3d63g1XHQWPZSnnayVM3_yx9hKNzy5G6oRVSV5sA&_hsmi=72230236

More buyers priced out of the market with higher rates | North Salem Real Estate

By Na Zhao, Ph.DNAHB Economics and Housing Policy GroupReport available to the public as a courtesy of HousingEconomics.com

This article announces NAHB’s “priced out estimates” for 2019, showing how higher home prices and interest rates affect housing affordability. The 2019 U.S. estimates indicate that a $1,000 increase in the median new home price would price 127,560 U.S. households out of the market. In other words, 127,560 households would qualify for the new home mortgage before the change, but not afterwards. Similarly, 25 basis points added to the current mortgage rate would price out around 1 million households. The article also includes priced out estimates for individual states and more than 300 metropolitan areas.

The Priced Out Methodology and Data

The NAHB Priced Out model uses the ability to qualify a mortgage to measure housing affordability, because most home buyers finance their new home purchase with conventional loans, [1] and because convenient underwriting standards for these loans exist. The standard NAHB adopts for its priced-out estimates is that the sum of the mortgage payment (including the principal amount, loan interest, property tax, homeowners’ property and private mortgage insurance premiums (PITI), is no more than 28 percent of monthly gross household income.

As a result the number of households that qualify for mortgages for a certain priced home depends on the household income distribution in an area and the mortgage interest rate at that time. The most recent detailed household income distributions for all states and metro areas are from the 2017 American Community Survey (ACS). NAHB adjusts the income distributions to reflect the income and population changes that may happen from 2017 to 2019. The income distribution is adjusted for inflation using the 2018 median family income published by the Department of Housing and Urban Development (HUD) for all states and metro areas, and then extrapolated it into 2019. The number of households in 2019 is projected by the growth rate of households from 2016 to 2017.

The assumptions of the priced out calculation include a 10% s down payment and a 30-year fixed rate mortgage, at an interest rate of 4.85%. For a loan with this down payment, private mortgage insurance is required by lenders and also included as part of PITI. The typical private mortgage insurance annual premium is 73 basis points[2], based on the standard assumption of national median credit score of 738[3] and 10% down payment and 30-year fixed mortgage rate. Effective local property tax rates are calculated using data from the 2017 American Community Survey (ACS) summary files. Homeowner’s insurance rates are constructed from the 2016 ACS Public Use Microdata Sample (PUMS).[4] According to Brisbane property valuers, for the U.S. as a whole, the property tax is $12 per $1,000 of property value and the homeowner insurance is $4 per $1,000 property value.

Under these assumptions, 32.7 million of the 122.5 million U.S. households could afford to buy a new median priced home at $355,183 in 2019. A $1,000 home price increase thus would price 127,560 households out of the market for this home. These are the households that can qualify for a mortgage before a $1,000 increase but not afterwards, as shown in Table 1 below.

Table 1. US Households Priced Out of the Market by Increases in House Prices, 2019

State and Local Estimates

The number of priced out households varies across both states and metropolitan areas, largely affected by the sizes of local population and the affordability of new homes. The 2019 priced-out estimates for all states and the District of Columbia are shown in Table 2 (available in the Additional Resources box), which presents the projected 2019 median new home price and the amount of income needed to qualify the mortgage, and the number of households could be priced out if price goes up by $1,000. Among all the states, Texas registered the largest number of households priced out of the market by a $1,000 increase in the median-priced home in the state (11,152), followed by California (9,897), and Ohio (7,341).

Table 3, which is available in the Additional Resources box, shows the 2019 priced-out estimates for 382 metropolitan statistical areas. The metropolitan area with the largest priced out effect, in terms of absolute numbers, is Chicago-Naperville-Elgin, IL-IN-WI, where 4,499 households are squeezed out of the market for a new median-priced home if price increases by $1,000. This is largely because Chicago is a populous metropolitan area with a large number of households; and, compared to the largest metropolitan areas on the East and West costs, the median priced home is more affordable to begin with. Around 27% of households there are capable of buying new median-priced homes. For similar reasons, Houston-The Woodlands-Sugar Land, TX metro area, where nearly 33% of households can afford median-priced new homes.to begin with, registered the second largest number of priced out households (3,546), where nearly 33% of households can afford median-priced new homes. In New York-Newark-Jersey City, NY-NJ-PA, 3,531 households are squeezed out of the housing market for a new median-priced home if price increases by $1,000. Compared to Chicago or Houston, the median-priced new home is affordable to a smaller share of the households in New York, but New York is the largest metro area by population size with over 7 million households.

Interest Rates

The NAHB 2019 priced-out estimates also present how interest rates affect the number of households would be priced out of the new home market. If the mortgage interest rate goes up, the monthly mortgage payments will increase as well and therefore higher household income thresholds to qualify a mortgage loan. Table 4 shows the number of households priced out of the market for a new median priced home at $355,183 by each 25 basis-point increase in interest rate from 2.85% to 10.85%. When interest rates goes up from 2.85% to 3.10%, around 1.26 million households could no longer afford buying median-priced new homes. An increase from 4.85% to 5.10% could price approximately one million households out of the market. However, about 423,000 households would be squeezed out of the market if interest rate goes up to 10.85% from 10.6%. This diminishing effects happen because only a few households at the thinner end of household income distribution will be affected. On the contrary, when interest rates are relatively low, 25 basis-point increase would affect a larger number of households at the thicker part of income distribution.

Table 4. US Households Priced Out of the Market by an Increase in Interest Rates, 2019

Footnotes[1]According to the 2017 American Housing Survey (funded by HUD and conducted by the Census Bureau), 74 percent of the home buyers who moved into their homes in 2016 or 2017 had a regular primary mortgage on the home.[2]Private mortgage insurance premium (PMI) is obtained from the PMI Cost Calculator( https://www.hsh.com/calc-pmionly.html)[3]Median credit score information is shown in the article “Four ways today’s high home prices affect the larger economy” October 2018 Urban Institute https://www.urban.org/urban-wire/four-ways-todays-high-home-prices-affect-larger-economy[4]Producing metro level estimates from the ACS PUMS involves aggregating Public Use Microdata Area (PUMA) level data according to the latest definitions of metropolitan areas. Due to complexity of these procedures and since metro level insurance rates tend to remain stable over time, NAHB revises these estimates only periodically.

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http://www.nahbclassic.org/generic.aspx?genericContentID=265844&_ga=2.145431924.1759393123.1547037557-774800730.1539205172

Decline for April Sales Masks 2017 Gains | North Salem Real Estate

Contracts for new single-family home sales fell more than expected in April, declining 11.4% to a 569,000 seasonally adjusted annual rate according to estimates from the joint data release of HUD and the Census Bureau. The decline occurred after solid, positive revisions for new home sales for the first three months of the year.

All told, total new home sales for 2017 stand at 210,000, a 11.3% gain over the 2016 comparable total of 189,000.

NAHB expects new home sales to continue to progress along the established, modest growth trend due to ongonig job growth, improving household formations, continuing favorable housing affordability conditions, and tight existing home inventory.

Inventory growth continued in April. After hovering near 240,000 for most of 2016, inventory has now risen to 268,000. The current months’ supply number stands at a healthy 5.7. Given tight existing inventory, more new homes are required to meet housing demand.

The most recent data also indicate a growing share of homes not-started in builder inventory. For example, on a year-over-year basis, homes under construction in inventory have increased by a little more than 6% over the last year. Completed, ready-to-occupy homes (there are only 59,000) are up 2% since April of last year. In contrast, homes not-started listed in inventory have increased 42%, from 36,000 in April of 2016 to 52,000 last month.

Pricing data in the April report find that the median sales price of new homes sold in April was $309,200, while the average price was $368,300. These levels are below the 2016 annual totals but remain higher than the 2015 data.

Regionally, all areas saw monthly declines in sales in April. Sales were down 26% in the West, 13% in the Midwest, 8% in the Northeast and 4% in the South. As with the national headline number, the monthly numbers obscure growth for 2017. On a year-to-date basis, new home sales are up 26% in the Midwest, 15% in the Northeast, 10% in the South and 7% in the West compared to April of 2016.

 

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http://eyeonhousing.org/2017/05/decline-for-april-sales-masks-2017-gains/

New Single-Family Home Size Continues to Trend Down | North Salem Real Estate

After increasing and leveling off in recent years, new single-family home size continued along a general trend of decreasing size during the start of 2017. This change marks a reversal of the trend that had been in place as builders focused on the higher end of the market during the recovery. As the entry-level market expands, including growth for townhouses, typical new home size is expected to decline.

According to first quarter 2017 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area was slightly lower at 2,389 square feet. Average (mean) square footage for new single-family homes declined to 2,628 square feet.

On a less volatile one-year moving average, the recent trend of declines in new home size can be see on the graph above, although current readings remain elevated. Since cycle lows (and on a one-year moving average basis), the average size of new single-family homes is 10% higher at 2,624 square feet, while the median size is 14% higher at 2,402 square feet.

The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions. This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers. But the recent declines in size indicate that this part of the cycle has ended and size will trend lower as builders add more entry-level homes into inventory.

In contrast to single-family patterns, new multifamily apartment size is down compared to the pre-recession period. This is due to the weak for-sale multifamily market and strength for rental demand

 

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http://eyeonhousing.org/2017/05/new-single-family-size-continues-to-trend-down/

Mortgage rates average 4.15% | North Salem Real Estate

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average mortgage rates slightly falling for the second consecutive week.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.5 point for the week ending Feb. 16, 2017, down from last week when it averaged 4.17 percent. A year ago at this time, the 30-year FRM averaged 3.65 percent.
  • 15-year FRM this week averaged 3.35 percent with an average 0.5 point, down from last week when it averaged 3.39 percent. A year ago at this time, the 15-year FRM averaged 2.95 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.18 percent this week with an average 0.4 point, down from last week when it averaged 3.21 percent. A year ago, the 5-year ARM averaged 2.85 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.

“For the last 46 years, the 30-year mortgage rate has been almost perfectly correlated with the yield on the 10-year Treasury, but not this year. From Dec. 29, 2016, through today, the 30-year mortgage rate fell 17 basis points to this week’s reading of 4.15 percent. In contrast, the 10-year Treasury yield began and ended the same period at 2.49 percent. While we expect mortgage rates to fall into line with Treasury yields shortly, this just may be a year full of surprises.”

Single-Family Construction Up | North Salem Real Estate

NAHB analysis of Census Construction Spending data shows that total private residential construction spending fell 0.7% in November to a seasonally adjusted annual rate of $462.9 billion.

Multifamily construction spending slowed for the first time since July to a seasonally-adjusted annual rate of $61.9 billion, down 2.9% from the revised October estimate. Despite the slowdown, multifamily spending was still 10.7% higher than the rate one year prior.  In contrast, single-family construction spending increased by 1.7% over the month, posting its second consecutive gain. However, single-family construction spending still slipped down by 0.9% over November 2015. Though not as pronounced as the drop-off in multifamily construction spending, home improvements still fell by a substantial 3.5%. On a year-over-year basis, spending on home improvements increased by 6.8%.

The NAHB construction spending index shown in the graph below illustrates the recent convergence, though small, of single-family spending with that of multifamily and home improvements.

The pace of private nonresidential construction spending increased by 2.5% over the month, more than offsetting the 2.1% October decline, reaching a pace 6.4% higher than one year ago. The primary drivers of this month-over-month increase were spending on structures to be used for lodging (+6.9%) and religious (+9.8%) purposes.

 

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http://eyeonhousing.org/2017/01/single-family-construction-up-in-november/

Housing bubble is probably more myth than reality | North Salem Real Estate

 

If you own a home and you’ve visited real estate information websites Zillow, Trulia, Redfin, or any of the like recently, you’ve probably noticed an interesting trend: Your home is increasing in value at a rate that’s far and away higher than the national rate of inflation.

Is housing bubble 2.0 around the corner?

According to the S&P Case-Shiller Home Price Index, which tracks residential real estate prices nationally, as well as within 20 large metropolitan regions, residential real estate prices rose 5.3% between Aug. 2015 and Aug. 2016. By comparison, the national measure of inflation, the Consumer Price Index, has moved higher by a little more than 1% over the trailing 12-month period.

If we back the data out a bit further, the outperformance of housing prices becomes even more apparent. Real housing prices — essentially home price increases with inflation backed out — have risen by 25% just since 2012, and are now sitting at their highest point since the Great Recession. This is noteworthy considering that in the 107 years between 1890 and 1997, housing prices generally tracked the national inflation rate very closely, at least based on data from Robert Shiller in the book Irrational Exuberance. Only over the past two decades have we witnessed a diversion from the mean, with the first diversion leading to a massive housing bubble that’s still fresh in the minds of many homeowners.

This latest outperformance in housing prices, as well as the fresh memory of the recent housing collapse less than one decade prior, has some pundits predicting that housing bubble 2.0 could be right around the corner. A Dec. 2015 interview with 66 industry experts conducted by Zillow found that more than 10 believed the Boston, Los Angeles, and Miami markets were at risk of entering a bubble, while even more pundits believed New York and San Francisco were already there.

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Home prices can continue to soar

However, it’s possible these industry experts could be completely wrong. Based on the evidence available at the moment, I’d contend that we’re not even close to a bubble in housing prices, and that home prices could very well outpace the national rate of inflation for many years to come.

Let’s have a closer look at why home prices could keep soaring.

1. Supply constraints

The biggest factor that could push home prices continuously higher is the trade-off between homebuilder supply and homeowner demand. According to Jesse Edgerton, an economist at J.P. Morgan, most national markets simply don’t have the homebuilder supply to meet demand, and that’s unlikely to change anytime soon.

In an interview with Yahoo! Finance, Edgerton had this to say:

One might wonder if these high prices reflect growing demand that could soon elicit a wave of construction that would prove our forecasts wrong. We find, however, that high prices are concentrated in markets where supply is constrained by geography or regulation, suggesting there may be little room for additional construction.

Data from J.P. Morgan indicates that while housing prices are rebounding rapidly from their recessionary lows, homebuilders appear content in increasing their supply at only a modest pace. Furthermore, the areas where an expansion of construction would appear to be beneficial — San Jose, Los Angeles, San Francisco, and so on — are also the areas that are the most limited in their ability to respond to an increase in demand.

It’s tough to predict how homebuilders will respond if prices continue to climb. For some builders, the allure of profits may be too great to ignore. However, if homebuilders can prudently manage their supply growth, they’ll likely encourage home prices to head higher at a rate that handily outpaces inflation.

 

2. A continuation of the low-lending-rate environment

Secondly, the ongoing low-lending-rate environment should continue to spur demand for new homes.

A home is arguably the largest purchase Americans will make during their lifetimes, and historically low mortgage rates could be the catalyst that coerces prospective homeowners to pull the trigger. Even more appealing is the fact that many Americans have far better FICO credit scores than they had a decade prior, meaning they’d probably qualify for sweeter deals from lenders.

Based on data released by FICO last year, the national average FICO score of 695 was an all-time high. Comparatively, the national average FICO score in Oct. 2005 was 688. FICO’s data showed a 3% increase in the number of consumers with a FICO score above 800 compared to the prior decade (FICO scores max out at 850), with a 2.1% decline in consumers with a FICO score under 550. Long story short, Americans appear to be in better shape than ever when it comes to getting a mortgage.

Though the Federal Reserve is the “X factor” here, and it can be completely unpredictable, the case for raising the federal funds target rate isn’t that strong. Inflation remains below the Fed’s target level, job creation has been up and down in 2016, and external factors, such as Brexit and China’s slowing GDP growth, could weigh on the growth outlook in the United States. After aiming for four interest-rate hikes in 2016, it’s quite possible the Fed ends the year without making a single move, which favors the continuation of a low-lending-rate environment.

 

3. The “rent” vs. “buy” trade-off

Over the longer term, the trade-off between renting and buying a home would also seem to favor rising housing prices.

If interest rates do normalize over the long term and head back to around 3%, it would presumably work in favor of the rental market. Higher interest rates mean higher mortgage rates, which in turn should push on-the-fence homebuyers back into renting. When this happens, landlords become privy to significant rental pricing power and are able to increase rental rates well above the national rate of inflation. Just the expectation of rising interest rates at some point soon has been pushing rental prices around the country higher, at a pace that’s well above the national inflation rate.

However, there comes a tipping point in the renting vs. buying trade-off where rental prices increase enough that buying a home actually becomes the cheaper option on a monthly basis. It happened to me in 2007, and it could very well happen to millions of Americans as rental inflation increases.

 

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http://www.fool.com/mortgages/2016/11/07/no-were-not-in-a-housing-bubble-and-yes-home-price.aspx