michaelsondergard
No, the bottom is not here yet.
(Credit: Getty Images North America via @daylife)
Well, 2012 may or may not be the end of the world as we know it, but one thing is perhaps certain: it’s the end of the ghastly price hemorrhages home owners have suffered since the real estate market crashed in 2007. Nationally, home prices have dropped about 35% since the housing bubble burst – in the hardest hits areas, 55% or more. Yet new reports from several real estate research firms signify that home prices are finally stabilizing. The data reinforces a notion already asserted by many an economist, real estate agent and Wall Street investor: that 2012 is the year of the bottom.
The National Association of Realtors reports that in the first quarter of 2012, the median existing single-family home price, or final sales price, rose in 74 of the 146 metro areas that the association tracks. In the fourth quarter of 2011, only 29 metro areas had showed price gains. In other words 51% of the major cities across the U.S. have welcomed price gains, most notably in areas where the energy industry helps fuel the economy (Bismarck, N.D. and Oklahoma City, Okla.) and in snow bird retirement haven Florida (Tampa, Cape Coral, Palm Bay, Sarasota). Areas still plagued by falling prices are Atlanta, Ga., Mobile, Ala., Reno, Nev., Seattle, Wash., and Kingston, N.Y.
“Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future.” Lawrence Yun, chief economist of NAR, noted in a statement.
Housing inventory levels have been shrinking across the U.S., leading to bidding wars and modest upward pressure on prices in some areas. At the end of the first quarter, 2.4 million existing homes were up for grabs, nearly 22% less than last year. Completed home sales jumped 4.7% in the first quarter of 2012 and pending homes sales are currently up 12.8% since March 2011. As inventory levels continue to tighten, a recovery, however nascent, can begin to materialize, especially if lenders can offload distressed properties to investors.
The latest Fiserv Case-Shiller Indexes also report signs of price stabilization. David Stiff, chief economist at Fiserv, notes that non-price metrics like home sales volume, increased spending on home improvement and more multi-family construction indicate that the housing sector has bottomed. “We expect that home prices, which generally lag changes in sales activity by nine to12 months, will stabilize by the end of this summer and then rise at an annualized rate of 3.9 % over the next five years,” asserts Stiff in a statement.
Fiserv says the spring and summer selling season will be fueled predominantly by investors this year. NAR estimates that roughly one-third of all purchases are already investor-related. As rents continue to rise, first-time buyers and trade-up buyers will eventually follow, lured by the record affordability levels of home ownership, Fiserv predicts.
A third real estate research firm, CoreLogic, released its own data this week. Including distressed sales, U.S. home prices ticked down 0.6% from March 20122 to March 2012. However, from February to March they rose 0.6% in the first month-over-month increase since July.
“This spring the housing market is responding to an improving balance between real estate supply and demand which is causing stabilization in house prices,” notes Mark Fleming, chief economist for CoreLogic, in the report. “Although this has been the case in each of the last two years, the difference this year is that stabilization is occurring without the support of tax credits and in spite of a declining share of REO sales.”
Fleming points to Washington, D.C., New York City and Phoenix, Ariz. as examples of markets where recovery is already taking hold.
Despite the hopeful prognoses from these reports, it’s also crucial to note that housing is and should be viewed on a local level rather than nationally. As I have noted before, different markets will bottom and recover at different paces depending on a variety of factors this year, including the availability of local jobs and how fast foreclosures can be processed and reabsorbed into local markets.
Though the economy is showing signs of life, the job market for new college graduates is still extremely tough. A daunting figure – three million new grads competing for one million jobs – has been widely reported, as has the fact that more than half of recent grads are unemployed or under-employed. It's also been widely and incorrectly reported that 85 percent of grads are moving back in with mom and dad. The correct figure is actually 40 percent, according to the Pew Research Center. That's nothing new, really. The period immediately after college has always been one of flux.
Before all you grads get too down, remember that the economic prospects look considerably better over the long run. Americans with a college degree face a substantially smaller risk of being and staying unemployed than those without diplomas. A college degree returns 15.2 percent a year, more than double the return to stock market investments since the 1950s, and five times more than the return to bonds, gold, or government bonds, according to a Brookings Institution study. Straight out of college, the average 22-year-old college grad can expect about 70 percent more in wages and salary than a peer with just a high-school degree. And the job market for graduates seems to be improving, albeit slowly, according to recent accounts.
A good way to improve your economic prospects is to pick the right place to live. Choosing the right location is one of the most important, if not the single most important, decisions you will ever make. It will influence your job and career opportunities, not to mention your ability to make friends, develop personal and professional networks, and find a potential life partner.
To help you with your choice, my Martin Prosperity Institute colleague Charlotta Mellander and I ranked U.S. metropolitan areas on a variety of key criteria that are important to new grads. First and foremost are economic factors like the unemployment rate, salary levels, the fraction of high-paying/high-quality job markets, and the amount of money people have left over after paying for housing. Many recent grads can’t afford to buy a house or car, so we included the percentage of rental housing in a metro and the fraction of commuters who use public transit. To capture places that are open to smart 20-somethings, where you can not only build friendships and look for mates but create the personal and professional networks that are so crucial to both career and happiness, we added the share of adults who are college graduates along with the percentage of the population that has never been married. The eight variables we based our rankings on are:
The slideshow below, from Cities fellow Tyler Falk, shows the top 25 metro regions for college grads in 2012.
The San Francisco Bay Area tops the list of this year’s best places for college graduates. Greater San Francisco takes the top spot, followed closely by Silicon Valley (the San Jose-Sunnyvale-Santa Clara metro).
Greater New York, which consistently attracts the largest number of new grads, is third. The metros that make up the Bos-Wash corridor do well overall, with Trenton-Ewing in ninth place, Boston tenth, New Haven 13th, Greater Washington, D.C. at 18th, Philadelphia 20th, the Hartford area 21st, and Baltimore 22nd.
California has five metros in the top 25 with Sacramento 15th, Los Angeles 17th, and San Diego 19th. The Northwest is also well represented, with Seattle 11th and Corvallis, Oregon, at 12th.
The best places for college grads have a bi-coastal flair. Fifteen of the top 25 metros are located either along the Bos-Wash corridor or on the West Coast.
Big metros in other parts of the country have long attracted regional grads. They remain good choices this year. Chicago ranks 16th, Atlanta 23rd, and Denver 24th.
And for those who want to avoid big cities, smaller college towns remain a great alternative. Champaign-Urbana, Illinois, is fourth; Durham, North Carolina, fifth; Gainesville, Florida, sixth; Ithaca, New York, seventh; Ann Arbor, Michigan eighth; Boulder, Colorado, 14th; and Ames, Iowa, 25th. College towns like these have highly-skilled, resilient economies. And they are great hold-over places for new grads thinking about their next move, whether it's the job market or on to grad school.
That said, there is no one perfect place – or even a small set of places – that are right for all college grads. The key thing is to pick the place that is right for you.
Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized.
The median sales price increased from a year earlier in 74 of 146 metropolitan areas measured, the National Association of Realtors said in a report today. In the fourth quarter, only 29 areas had gains.
Daniel Acker/Bloomberg
A development in Oswego, Illinois.
A development in Oswego, Illinois. Photographer: Daniel Acker/Bloomberg
May 7 (Bloomberg) -- Michelle Meyer, a senior economist at Bank of America Merrill Lynch, talks about the U.S. economy and real estate market. She speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
The U.S. housing market is showing signs of bottoming as improving employment and record-low mortgage rates boost demand while inventories of available properties tighten. At the end of March, 2.37 million previously owned homes were available for sale, 22 percent fewer than a year earlier, the Realtors said.
“The housing market is still depressed but it had a good quarter,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said in a telephone interview today. “We’re on the mend but it’s still something that will take two or three years before we’re back to normal.”
The national median existing single-family home price was $158,100 in the first quarter, down 0.4 percent from the first three months of 2011, according to the Realtors group.
The best-performing metro area was Cape Coral, Florida, where prices increased 28.1 percent from a year earlier. Prices rose 19 percent in Grand Rapids, Michigan; 16.9 percent in Palm Bay, Florida; and 16.6 percent in Erie, Pennsylvania.
Kingston, New York, had the biggest decline, with the median selling price tumbling 22 percent in the quarter. It was followed by Stamford, Connecticut, with an 18 percent decline; Mobile, Alabama, at 14.7 percent; and Atlanta at 12 percent.
The median selling price is influenced by the mix of homes on the market and probably was boosted by a smaller share of transactions involving distressed properties. Those homes, which sell at discounts, accounted for 32 percent of first-quarter sales, down from 38 percent a year earlier.
Prices are more volatile than normal because they are affected by the prevalence of distressed sales and “sudden upswings” in buyer interest in some areas, said Lawrence Yun, the group’s chief economist.
“We have broad shortages of lower-priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges,” Yun said in the report.“This is good news for many sellers who wish to list now, or for those waiting for prices to improve.”
Sales of previously owned homes rose 5.3 percent in the first quarter from a year earlier, according to the report. Purchases climbed 11.7 percent in the Midwest, 6.6 percent in the Northeast, 4.1 percent in the South, and 1.4 percent in the West.
Fannie Mae, the nation’s biggest mortgage-finance company, today reported a $2.7 billion first-quarter profit after a $6.5 billion loss a year earlier, citing smaller declines in home prices as one of the reasons for improvement. The Washington-based company said that it won’t need Treasury Department aid to balance its books for the first time since it was seized by federal regulators in 2008.
by The KCM Crew on April 17, 2012 · 2 comments
If you are thinking about purchasing a home right now, you are surely getting a lot of advice. And some of that advice is probably negative. Why buy now with prices still falling? Don’t you realize real estate is no longer a good investment? Don’t you know that people who bought six years ago lost their shirt? We understand the concern your friends and family have. However, let’s look at whether or not now is actually the perfect time to buy a home.
There are three questions you should ask before purchasing in today’s market:
In the last 120 days, many experts have said that buying now makes sense. This list includes: John Talbott, Christopher Thornberg and Warren Buffett.
This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010. They ask 100+ housing industry experts to project housing prices through 2016. The most current survey shows that the experts are predicting prices to remain relatively flat in 2012. The experts then project prices to rise reaching a cumulative appreciation of over 10% by 2016.
Purchasing a home today makes great sense from a financial standpoint. Think of the old axiom: you want to buy low and sell high. This decision should not only be a financial one however.
That leads us to our third and final question:
This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:
What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the reason you decide to purchase or not.
Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway.
HSH.com studies trends in mortgage rates. They explain:
“A better economic climate almost always brings higher rates, and a lessening of the troubles in Europe from massive central bank assistance adds to the movement of money from safe havens to more risky assets, driving rates upward.”
Dan Green of The Daily Market Reports recently stated:
“The Fed sees growth coming faster than originally expected. There’s suddenly less chance that the Federal Reserve will intervene to help keep mortgage rates low. Absent Fed intervention, mortgage rates are apt to rise and Wall Street is now betting that the Fed has bowed out. With no stimulus, mortgage rates rise.”
Lawrence Yun, chief economist for the National Assoc of Realtors, recently wrote:
“Mortgage rates will be starting to rise. From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent.”
Yun explains his logic here.
We do not attempt to predict future interest rates. We leave that up to the experts in the field. However, we want our readers to understand the potential impact on the cost of purchasing a home if they do rise. Here is a simple table that shows, even if the PRICE of a home softens, the COST of a home could increase.
Many purchasers think they should wait until they are sure that prices have hit bottom. Deciding whether or not to wait should be determined by where the COST of a home is headed.
Wednesday, March 14, 2012 · 10:00 am
Construction has started at the Princess Anne Commons Gateway Park, which is a major renovation of the former Princess Anne Park site located at the corner of Princess Anne Road and Dam Neck Road. For the safety of all citizens, the current park site will be closed during construction.
As a planned gateway to the Princess Anne Commons corridor that contains a mix of public and private uses, quality development and exceptional recreation and open spaces, Princess Anne Commons Gateway Park will feature various components that will provide a strong sense of arrival to the area. The project is being coordinated with Princess Anne Road improvements and will be completed in two phases.
Phase I of the renovated park project will include a new trail system, shelters, restrooms, new gateway signage, extensive tree planting and expanded parking. Also included is a light garden sculpture which was originally located at the former Virginia Beach Pavilion. Consisting of 31 glass sun-refraction panels affixed to white poles and arranged in a clustered fashion to resemble a grove of trees. The light garden will have blue LED lighting for night illumination. The work was acquired in 1983 and was one of the first pieces of art funded by the Percent for Art program. The second phase of the Princess Anne Commons Gateway Park project will include new picnic shelters, playground equipment, and other park amenities such as benches and tables. Project completion date for both phases is scheduled for late 2012.
An essential change to this park site will be the removal of some mature and infirm trees that will be replaced with new tree plantings to promote a healthy, extensive urban tree canopy. Twelve new species of trees will be planted, including large canopy trees like Oak, Beech, Sycamore and Southern Magnolia; others will be smaller understory/flowering trees. This tree species diversification will help protect against disease/pest damage and will enhance the natural beauty of the park site.
Princess Anne Park originally opened in 1971. Over the years, substantial area investments by private industry including Sentara Princess Anne Hospital, LifeNet, Operation Smile and the Virginia Beach Field House, as well as municipal and educational buildings and quality recreational facilities, have enriched the economic and community landscape of the Princess Anne Commons corridor.
Friday, March 09, 2012 · 02:00 pm
The Virginia Beach Fire Department wants to remind citizens that the time is here to “turn ahead” your clocks by one hour. Daylight saving time begins this weekend. The official time change occurs at 2 a.m. this Sunday, March 11.
The Fire Department also wants to remind citizens that it is equally important to check and replace the batteries in your smoke detectors. It is a vital safety device that everyone should have in their homes. Too often people don’t have smoke detectors and, if they do have them, batteries have been removed for a variety of reasons.
Every home should have at least two detectors. Homes with multiple stories should have smoke detectors on every level. Other places to consider placing smoke detectors:
Smoke detectors need regular attention to guarantee proper functioning by blowing out dust and keeping them free of dust and debris.
The fire department also encourages carbon monoxide detectors for homes that use heating oil or natural gas for heating, cooking or hot water. Carbon monoxide is a deadly by-product of all fossil fuels, including heating oil, natural gas, coal, wood and peat. Carbon monoxide detectors detect the presence of carbon monoxide and alert occupants before carbon monoxide reaches a deadly level.
For Virginia Beach residents in need of a smoke detector, the Virginia Beach Fire Department offers free smoke detectors through “Operation Smoke Detector.” Residents need to call their local fire station, or call the “Operation Smoke Detector Hotline” at 757-471-5826.
For more information regarding smoke detectors contact the Virginia Beach Fire Department at 385-4228 or online at: www.VBgov.com/fire, or http://www.usfa.dhs.gov/citizens/focus/smoke_alarms.shtm.
For more information, please contact Battalion Chief Tim Riley at 757-385-1075 or E-mail at triley@vbgov.com.
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
It is totally within your power to guarantee that your house will sell even in the current market.
“How?”, you ask. Let’s look at the simplicity of the famous Serenity Prayer and apply it to selling a home in today’s real estate market.
“Grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
The two main reasons that the housing prices have softened:
As an individual homeowner, there is no way for you to impact either of those two situations. The best think-tanks in the country are struggling to discover solutions.
There is not a vacuum of buyers in the market. There is a vacuum of homes a buyer in today’s market will purchase. Let us explain: could you sell your home today for $1? … $1,000 … $10,000? Of course you could. There are plenty of buyers in the market for a home they consider priced correctly. You have to decide what the correct price is for your home if you truly want to sell. If you want your house sold, you must list it at a price a buyer will pay for it. Not a buyer from 2006 but today’s buyer who has plenty of homes from which to choose.
It will take courage to sit with a real estate professional and honestly decipher the true value of your home. If you want to sell, you must have that courage.
We all realize that the economic situation will take some time to correct. If we want to wait for prices to return to 2006 levels, we will probably have to wait for 5-7 years.
Look at the reason you decided to sell in the first place and decide whether the extra money you would get from the sale is worth that wait. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
This is where your wisdom must kick in. You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire. That is what is truly important.
SAN ANTONIO, Texas -- Operation Homefront, the national non-profit that provides emergency assistance to military families and Wounded Warriors, recently launched a partnership with Chase bank that will put at least 100 Wounded Warrior, military and veteran families permanently into homes this year. The bank is providing the homes and other support to enable Operation Homefront to administer the "Homes on the Homefront" program. Operation Homefront will provide ongoing transitional services to the families until such time the properties are actually deeded to the recipients.
Operation Homefront and Chase will match homes in the bank's inventory with deserving families served by the non-profit. Some of the requirements that applicants must meet include: 1. Be active duty, Guard or reserve, or have been honorably discharged. 2. Do not currently own a home. 3. Be financially capable of sustaining the home throughout an initial transition period and beyond.
The program's first priority will be to place families who currently live at an Operation Homefront Village, which provides transitional housing for Wounded Warrior families. Other Wounded Warriors, surviving single spouses of those killed-in-action and Post 9/11 disabled veterans will also receive priority consideration under the program. Any veteran of any era, regardless of wounded or disability status, will be eligible to apply.
"This is an incredible gift from Chase to our men and women in uniform," said Jim Knotts, President and CEO of Operation Homefront. "Chase's imaginative, nation-wide approach to providing quality homes to deserving service members and their families will make a huge difference in how these heroes can make that difficult transition and adjustment into productive civilian lives."
"We're proud to partner with Operation Homefront in awarding homes to members of the military and their families," said Frank Bisignano, J.P. Morgan Chase Chief Administrative Officer and CEO of Mortgage Banking. "These individuals have made tremendous sacrifices for our nation, and as they move back into civilian life in a tough economic environment, we hope that a mortgage-free home will make that transition a little easier."
"This is exactly the type of wonderful, collaborative effort that the first lady and Dr. Biden hoped to see when they rolled out ‘Joining Forces' last year - companies and organizations coming together to better serve veterans, service members and their families," said Brad Cooper, Executive Director of Joining Forces in the White House Office of the first lady.
"Every day, we work to give military families financial security so that when service members are in harm's way, they don't have to worry about their families back home," said Knotts. "The homes provided by Chase takes that one step further and will provide these families with additional peace of mind concerning their futures."
Operation Homefront is currently seeking new donated goods and money from other companies to provide every home fully furnished when the families move in.
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