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Monthly Archives: November 2013

Despite positive conditions, pending home sales down in October

There has been a bevy of good news of late regarding the housing market, as foreclosures are down and property values are up from coast to coast. However, a number of factors leading up to the Pending Home Sales Report released on Tuesday, November 26, by the National Association of Realtors (NAR) indicate that obstacles are still hindering a full-scale economic recovery.

For the fifth consecutive month, the index, which measures the number of signings on new home purchasing contracts, was down in October, sinking 0.6 percent from the reading in September and a hefty 1.6 percent lower than the number of signings one year ago.

Property values continue to build momentum

According to the latest information from the Standard & Poor's/Case-Schiller Home Price Index for the third quarter of 2013, the nation's largest metropolitan areas have seen prices increase yet again over the period, as prices have risen in consecutive months for almost an entire year.

The third quarter saw home prices jump 3.2 percent from the second and 11.2 percent from the same period a year before, showing that property values are increasingly on track to returning - if not exceeding - levels they were at before the Great Recession. However, an uptick in property values is happening as a result of a major lack in housing stock in many of the country's most in-demand markets, making homeownership a harder goal to attain for many middle- to lower-income families.

A look at the most and least affordable housing markets

With the housing market continuing to be on an upswing of late, property values across the country have been surging after plummeting to all-time lows at the height of the Great Recession. In fact, conditions have been gaining so much traction over the past few years that some markets are seeing house values increase beyond the point of affordability for the average home buyer.

However, there are still several markets throughout the country where shoppers can find properties at a relatively cheap price, according to the latest data from the National Association of Home Builders (NAHB).

Homeowners gaining equity at fastest pace ever

According to the latest data from real estate analytics group Zillow, there are fewer underwater homeowners today than there have been since before the Great Recession. The group found that negative equity rates in almost every state have greatly declined, as property values increased and homeowners were able to get returns on a sale.

At the end of the third quarter, home values increased by 6.4 percent across the nation at an annual pace, which helped roughly 1.4 million households return to a state where they didn't owe more on their mortgage than their house was worth. This data indicates that between July and September, negative equity fell at the fastest pace that the company had ever seen.

Home sales soft as inventory continues to shrink

According to the latest data from the National Association of Realtors (NAR), home sales were down slightly in October for the second consecutive month, while prices on new residential properties continued their upward momentum.

Total existing-home sales - transactions that include single-family properties, townhouses, condos and co-ops - dropped 3.2 percent from September to a seasonally adjusted 5.12 million compared to the previous month's 5.29 million. However, back in October 2012, sales were only at a pace of 4.83 million, making October the 28th consecutive month of year-over-year gains.

Foreclosures down nationwide, but remains an isolated problem

At the height of the Great Recession, no area of the country was immune to the massive tide of foreclosures that swept the nation from coast to coast. However, thanks to government initiatives like the Home Affordable Refinance Program (HARP 2.0), which effectively helped millions of borrowers restructure their mortgages, and an increase in property values across the country, this disturbing trend was largely curbed.

However, in some states, the rate of foreclosure continues to be extremely high, despite an overall drop in the nationwide rate. In fact, foreclosures that are in a judicial state, as in those that are subject to court approval, have been higher than they were one year ago for 16 consecutive months, according to the recent Housing Market Index (HMI) from analytics group RealtyTrac.

More refinancers looking to shorter-term loans

When President Barack Obama first enacted the Home Affordable Refinance Program (HARP) in March 2009, he had anticipated that it would help millions of homeowners climb out from mortgage debt and help get monthly payments more in line with sinking property values. However, it wasn't until HARP was revamped in 2011 with lower qualification standards that the initiative really took hold and became an effective tool for a wide swath of Americans.

To date, millions of Americans have been able to refinance their government-backed mortgages through the program, obtaining lower interest rates and, as a new Freddie Mac Product Transition Report shows, changing the terms of their loan to lower its lifespan.

Builders increasingly confident for 55+ housing market in third quarter

The real estate market has been on an upswing that only appears to be hindered by a lack of new construction. It's not that builders aren't doing all they can to create new homes for prospective buyers, but the current consumer demand for new properties far exceeds the number of homes available.

Because demand is so high for new residences, builder confidence has been skyrocketing over the past year, as the number of buyers looking to occupy new developments remains large. This is especially true in the 55+ demographic, which the National Association of Home Builders (NAHB) has deemed healthier than ever, with improvements being felt in all segments of the market, from single family homes to multifamily rentals and condominiums.

Real estate activity bucking seasonal trends

Normally, as colder weather settles in across the United States, realtors tend to notice a major drop in home buying activity. This is generally attributed to individuals conserving resources going into the holiday season, as well as the fact that children are in school and relocating during this time of year can unnecessarily disrupt a family's schedule.

However, autumn 2013 is shaping up to be an exception to the rule, as real estate activity has actually been picking up over the month of October. The latest market activity report from industry analytics group Redfin shows that buyers are showing up to open houses and signing loan agreements at a pace much higher than the same month in previous years.

In some cities, wealth distribution skewed remarkably

When the national economy dipped into a recession following the stock market crash at the tail end of the last decade, one of the major headlines involved the shrinking middle class. A report released earlier in the year from the U.S. Census Bureau found that roughly 51 percent of the population was considered middle class, markedly lower from 61 percent 40 years earlier.

While this phenomenon isn't being felt in all of the nation's major metropolitan areas, it has become an issue in a few markets where the real estate scene is experiencing extremes in terms of property values and population incomes.