New single family home sales again on the rise
Sales
of new single-family rebounded in August rising 7% month over month to a
seasonally adjusted rate of 628,000, and were up 16.9% from a year ago,
according to a monthly report from the U.S. Census Bureau released on September
18th.
DISTRESSED PROPERTIES (FORECLOSURES AND SHORT SALES)
Distressed homeowners to be “above water” in 12 to 15 months
Approximately 10.7 million homeowners owe at least 25% or more on their mortgages than their properties are worth.
These 10.7 million homeowners represent 23% of U.S. residential properties with a mortgage.
Another 8.3 million homeowners have a loan to value (LTV) ratio from 90 to 110%, putting them on track to have enough equity to sell sometime in the next 12 to 15 months—without resorting to a short sale.
These 8.3 million homeowners represent 18% of all U.S. homeowners with a mortgage.
“Steadily rising home prices
are lifting all boats in this housing market and should spill over into more
inventory of homes for sale in the coming months,” stated Daren Bloomquist,
vice president at RealtyTrac. “Homeowners who already have ample equity are
quickly building on that equity, while the 8.3 million homeowners on the fence
with little or no equity are on track to regain enough equity to sell before
2015 if home prices continue to increase at the rate of 1.33% per month that
they have since bottoming out in March 2012.”
WHERE THE MARKET IS—NATIONWIDE
Quick Fact: September 25, 2013—the net worth of U.S. households and nonprofits shot up $1.3 trillion (of which real estate values accounted for $626.7 billion) in the second quarter thanks to rising home prices and stock market gains says the Federal Reserve
ClearCapital reports national home price gains
According to ClearCapital’s September report, national home price gains in September picked up by 10.9% year-over-year.
The West leads all other regions with a 19% gain year-on-year, and leads with a healthy 2.9% gain in the last quarter.
This was well ahead of the number two region, the MidWest, which had a 10% year-on-year gain, and a 2.0% gain in the last quarter.
The West is best!
Moody’s predicts strong housing market to continue
Moody’s reported in its monthly ResiLandscape report that the fundamental drivers of housing remain solid. Employers are adding jobs, housing is still affordable and inventories of homes on the market are low.
Moody’s reports that home sales, homebuilding and house prices will all head up this year and strengthen further in 2014 and 2015 as housing helps to fuel the broader economy’s expansion. These positive factors will offset the dampening impact of rising mortgage interest rates on demand for housing.
Barclays U.S Housing Forecasts
Barclays has forecasted an optimistic rise in U.S. housing prices by 11.0%
Additionally, the base case projections for 2013 home price appreciation in Arizona is now 9.9%.
Barclay’s expressed concern that higher mortgage rates might could decrease demand and adversely affect home prices. However, according to Barclay’s “Supply in most parts of the U.S. is elastic enough over the medium run to counter changes in demand due to changes in rates.”
The CoreLogic S&P/Case Shiller Index
According to S&P/Case-Shiller’s 20-city composite index, home prices in 2013 have risen 11.2% through July. This is the greatest year-to-date increase in index since 2004.
However even though the Case-Shiller indices continued to improve, they did so more slowly.
Home prices rose in July by less than 2% for the first time since March but still reached their highest level since August 2008, according to the Case-Shiller.
The 20-city index was up 1.8% in July—12.4% in the last year.
The 10-city index was up by 1.9%—12.3% since July 2012.
The 20-city index and the 10-city index have now improved month-over-month and year-over-year for 14 consecutive months.
FEDERAL HOUSING PROGRAMS / RULES / REPORTS
Quick Fact: At the Federal Housing Administration, which represents about 15% of the mortgage market, the lights will still be on, but the staff will be reduced.
Government shutdown won’t shut down FHA but delays can occur
The Federal Housing Administration (FHA) will not stop processing loan applications during the government shutdown. The U.S. Department of Housing and Urban Development (HUD)’s Office of
Single Family Housing will continue to endorse new loans. This is because the single-family part of FHA is funded through multiyear appropriations.
Unfortunately, FHA’s multifamily operations are funded on a year-by-year basis. Therefore, while FHA will be able to endorse new multifamily mortgages, it will not be able to underwrite them. No condo projects would be approved during the shutdown.
Reduced FHA staffing may cause a backlog of delays after the shutdown.
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