What's Driving the Rise in Home Prices?

The Wall Street Journal recently cited five significant factors behind the rise in home prices, as numerous markets see significant year-over-year gains. The big price drives are: 

1. The rise in housing affordability - which is drawing more buyers out into the market who are looking to cash in on low mortgage rates and fallen home prices compared to a few years ago.

2. The rise in household formation - which is expected to hit 1 million new households this year. That is up from an average of 570,000 over the last five years, according to data by Bank of America Merrill Lynch.

3. The rise in rents - which has prompted more investors to purchase properties to rent out and more renters to second-guess why they are paying so much in rent when they could buy.

4. The decline in distressed sales and foreclosures - which has fallen significantly this past year. While distressed sales are still high by historical standards, they have fallen from their peaks in most markets, helping to alleviate the downward pressure on home prices in many areas.

5. Inventories of homes for-sale are at their lowest levels in nearly 50 years - and builders have cut back on construction and many home owners are waiting to sell until they can recover some equity on their properties. 

Source: “Five Reasons Home Prices Have Been Rising,” The Wall Street Journal (Nov. 27, 2012)

Homes Are Selling Faster

Inventories of for-sale homes aren’t the only thing that is dropping. The amount of time homes are staying on the market is growing shorter as well—down 11 percent in the last year—according to the latest Realtor.com data.

Homes were listed on average 95 days, according to September housing data. That is down from 107 days a year earlier. 

As the median age of the inventory is falling, inventories of for-sale homes continue to hover at record lows too, dropping 18 percent last month compared to a year ago.

“There’s a recovery,” Curt Beardsley, vice president of Realtor.com, told BusinessWeek. “Our market times are low and there’s actually a compression of inventory.”

Home buyer demand is increasing, with housing affordability still high and ultra low mortgage rates that have pushed home buyers’ purchasing power higher. The rise in demand has caused asking prices to also rise. Last month, the median asking price was $191,500, which is up 0.8 percent compared to a year earlier, Realtor.com reports. 

Source: "Listings of Homes for Sale Drop as U.S. Housing Recovers," BusinessWeek (Oct. 15, 2012) and REALTOR® Magazine Daily News

Housing Recovery Expanding

The recovery in the housing market is showing itself beyond just rising new and existing-home sales and home price increases.

Home builder stocks, for example, have become srovme inome of the strongest performers of the year in the stock market. Some home builder stocks, like Pulte Group, have even more than doubled in the last year.

With home prices showing signs of stabilizing or even rising too, more home owners also are investing in their homes, either remodeling or purchasing new furniture or appliances, says Brian E. Peery, co-manager of the Hennessy Cornerstone Growth fund. For example, home improvement items like cabinets and plumbing fixtures are seeing sales volumes rebound.

Home Equity on the Rise

Rising home values are helping more home owners to find equity in their homes, according to the September Housing Scorecard from the Obama administration. 

Home equity is at its highest level since the third quarter of 2008 and has risen by $860 billion since the end of 2011, according to the report. The rise in equity has helped lift 1.3 million families from being underwater, or owing more on their mortgage than their home is currently worth. 

Vote Yes! Florida Amendment 4

Amendment 4 is a constitutional amendment on Florida's ballot this year.  This proposal will lower property taxes for new homebuyers and spur much-needed economic growth in the housing market by offering a healthy new exemption for first-time homebuyers.  Amendment 4 will also protect working families, small businesses and homeowners from unfair and unexpected tax increases by helping to stop "recapture," a tax gimmick that increases property taxes even when property values decline.  Finally, Amendment 4 will lower assessment increases on non-homestead properties from a burdensome 10 percent to a more reasonable 5 percent.

Bottom Line

• Amendment 4 creates an additional homestead exemption for first-time homebuyers for 5 years.
• Amendment 4 protects Floridians from increased property taxes when their property values have declined.
• Amendment 4 lowers the maximum yearly assessment increase on non-homestead properties from 10 percent to 5 percent.

Additional information from Florida Realtors®

Mortgage Back to Record Lows

Fixed-rate mortgages are back at all-time record lows or hovering near them, Freddie Mac reports in its weekly mortgage market survey. For those who can qualify for a loan, the ultra-low mortgage rates are pushing housing affordability higher. 

"Following the Federal Reserve's announcement of a new bond purchase plan, yields on mortgage-backed securities fell, bringing average fixed mortgage rates to their all-time record lows, which should aid in the ongoing housing recovery,” says Frank Nothaft, Freddie Mac’s chief economist. 

Here’s a closer look at the national averages with mortgage rates for the week ending Sept. 20:

Housing Prices Hit Bottom

Economists are increasingly confident that home prices have bottomed out. 

For the last three years, home prices have usually risen in the spring and summer to only then lose all of those increases—plus more—in the fall and winter months. However, economists expect this year to be different and do not foresee such a big drop to occur to home prices in the colder months ahead, The Wall Street Journal reports. 

Mortgage Rates Still Near Record Lows

Fixed-rate mortgages continued to hover near all-time lows, keeping home buyer affordability high. 

Freddie Mac reports the following averages in this week’s mortgage market survey: 

• 30-year fixed-rate mortgages: 
averaged 3.55 percent, with an average 0.7 point, dropping from last week’s 3.59 percent average. A year ago at this time, 30-year rates averaged 4.12 percent. 

• 15-year fixed-rate mortgages: 
averaged 2.86 percent, with an average 0.6 point, holding steady from last week’s average. A year ago, 15-year rates averaged 3.33 percent. 

• 5-year adjustable-rate mortgages: 
averaged 2.75 percent, with an average 0.7 point, dropping from last week’s 2.78 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.

• 1-year ARMs: 
averaged 2.61 percent, with an average 0.4 point, falling from last week’s 2.63 percent average. A year ago, 1-year ARMs averaged 2.84 percent.

Source: Freddie Mac  

Save Electricity

With heating and cooling costs continuing to rise, it makes sense to look at one of the leading causes of energy inefficiency in the home: the windows. Installing energy-efficient windows can mean increased comfort as well as savings on utility bills in any climate. 

The transmission of air and light is generally the most important function of windows. However, this can mean heat loss in the winter, overheating in the summer, and higher energy bills. A typical home may lose up to 30% of its heat or cooling through windows. Properly installed energy-efficient windows can go a long way toward improving this situation. 

The Housing Recovery is Real

Customers, friends and family members have heard me preaching it for several months now: The housing recovery is real, South Florida hit its market bottom last winter, we're on our way back up.

Of course they poo-poo my opinion, choosing instead to believe the talking heads because they're "professionals".  They don't seem to understand that the journalists aren't in the field on a daily basis and the data they receive is typically 30 days or more old by the time it's reported.

It appears the "professionals" are now receiving their old data and are beginning to report the recovery as new news.  Many good articles from reputable sources are out there.  One of the more intuitive articles I have reviewed is available here via The Wall Street Journal.  Enjoy!

Just Listed on the Water

Americans Positive on Housing and Economy

Americans’ concerns over housing and the economy are subsiding, according to Fannie Mae’s National Housing Survey from February. 

An improving job market is a big part of what’s behind Americans feeling more confident about the housing market and the direction of the economy, according to the survey. 

“The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” says Doug Duncan, chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”

Fantastic Value in an Updated Waterfront Home

View from the Home

$89,000 - SOLD
2 Bedroom, 2 Bathroom
Direct Water Views
Take the Virtual Tour

This light and bright home with direct water views has been totally reno/upgraded to include a beautiful new eat-in kitchen, newer applnces, new master bath with gorgeous natural stone accents, newer washer/dryer in-unit, new impact windows and hurricane shutters. The master suite includes two large walk-in closets. This is move-in ready for the new owner. This is truly the best unit in the entire community. There's a tennis court, swimming pool, club house, shuffleboard court and canal. A-rate elementary and middle schools.

Citizens Insurance Makes Wind Policies Stricter Regarding Roofs

Florida's state run insurance company has made a decision to not renew wind storm insurance for homes with roofs that are of a certain age. This is extremely important as for many homeowners and buyers, Citizens is the only option to obtain windstorm insurance. If for example a roof is more than 25 yrs old with an asphalt shingle roof that was never replaced Citizens will not insure it. Furthermore regardless of age Citizens will require a roof report from a qualified roof inspector that states the remaining life of the roof is at least three years.

Please take a moment to read the link to FAQ regarding the new policy.https://www.citizensfla.com/utilitybar/policyholderfaqs.cfm?show=text&link=/shared/faqs/SPL-PHFAQs.html

Miami/Fort Lauderdale Added to Housing Market Improving Index

Here’s something new.  The list of markets showing signs of improvement in home prices and market conditions in February has grown to nearly 100 cities per the National Association of Home Builders/First American Improving Markets Index. 

The index reveals metro areas that have shown improvement in home prices, housing permits, and employment for at least six months. 

In the latest index, some markets that were particularly hard-hit during the housing market crash — Miami — were added to this month’s list. Such cities are seeing a turnaround in their sluggish housing markets, possibly already hitting bottom. 

The 29 metro areas added to the list this month are: 

Housing May Turn the Corner in 2012

01/18/2012 BY: CARRIE BAY for DSNews.com

In the first release of CoreLogic’s new MarketPulse newsletter Wednesday, Fleming explained his rationale for such an assessment.

He notes that housing is an industry with long business cycles. Regional housing recessions have typically taken anywhere from three to five years to find their bottom, and Fleming says the national housing recession has behaved similarly in that it has bounced along a bottom for the past two years.

Ocean and Sky 2 Bedroom/2 Bath Direct Ocean View Condo

http://www.postlets.com/repb/6862982

View this Exclusive Listing from Parks Morgan. And don't forget the Virtual Tour.


**This property is not available through other agents.