The 2 Big Ways The Fiscal Cliff Is A Problem For The #Housing #Market

Housing is considered a bright spot in the U.S. economy. But the fiscal cliff – over $600 billion in tax and spending provisions set to expire at the end of the year – could deliver a blow the housing recovery.

screen shot 2012-11-20 at 9.47.20 amBank of America’s Michelle Meyer writes that the hosing market is exposed to the cliff in two ways.

First, policies that impact growth and that could potentially send the economy in to a recession or create uncertainty could weigh on housing demand and construction.

Second, policymakers also need to hash out how they intend to support the housing and mortgage market.

“Tax policies for housing and the government’s role in the mortgage market are up for debate. The biggest concern is removing or reducing the mortgage interest tax exemption, which costs the Treasury about $80bn a year. Homeowners with a mortgage can deduct interest payments from household income if they chose to itemize allowable expenses. If homeowners do not itemize, they can take the “standard” deduction, which is up to $11,900 for couples and $5,950 for singles. About two-thirds of the population takes the standard deduction.

Those who chose to itemize have large mortgage payments and/or other deductions such as charitable contributions; this mostly captures the upper income cohort. Of those who itemize deductions, 90% earn more than the median income.1 This means that if the mortgage tax deduction was removed or phased out it would hit the higher priced markets disproportionately. Home prices would have to adjust lower as effective mortgage payments would be higher.”

Meyer doesn’t anticipate any changes immediately but expects them to be part of the ‘grand bargain’. She thinks the high-priced housing market would be most affected.

She projects that home prices will increase 3 percent in 2013, and that housing starts will increase 25 percent to an average of 975,000.

Read more:

Fannie Mae predicts record-low mortgage rates entering 2013

MortgageBond_1Mortgage rates are anticipated to remain at an all-time low for the first half of 2013, then slowly rise during the second half of the year, although they will remain below 4%, reported Freddie Mac.

On the same day that Fannie Mae released its National Housing Survey, showing increased consumer confidence in the housing industry, Freddie Mac revealed its U.S. Economic and Housing Market Outlook for December.

The housing outlook predicts what some of the market features are expected to look like in 2013.

“The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive,” said Frank Nothaft, vice president and chief economist of Freddie Mac.

Property values are expected to gain strength with most house price indexes increasing as much as 3% next year.

Housing starts are expected to jump to a net 1.20 to 1.25 million household increase in 2013, with starts up around the 1 million annualized pace by the fourth quarter.

Vacancy rates should fall significantly for both apartments and single-family homes for sale, dropping to 2002 to 2003 levels.

The 2012 refinance boom will continue into early 2013, suggesting single-family mortgage originations may decline by as much as 15%, while multifamily lending is believed to rise approximately 5%.

“This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery,” said Nothaft.

Available Housing Inventory Is Collapsing

Tuesday economic releases:
• At 10:00 AM ET, Trulia Price & Rent Monitors for November. This is the index from Trulia that uses asking prices adjusted both for the mix of homes listed for sale and for seasonal factors.

Here is another update using inventory numbers from HousingTracker / DeptofNumbers to track changes in listed inventory. Tom Lawler mentioned this last year.

According to the for (54 metro areas), overall inventory is down 22 percent year-over-year and probably at the lowest level since the early ’00s.

This graph shows the NAR estimate of existing home inventory through October (left axis) and the HousingTracker data for the 54 metro areas through early December.

Since the NAR released their revisions for sales and inventory last year, the NAR and HousingTracker inventory numbers have tracked pretty well. HTearlyDec2012

On a seasonal basis, housing inventory usually bottoms in December and January and then increases through the summer. So inventory will probably decline a little further over the next month or so, before increasing again next year.

The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.HTEarlyDecYoY2012

HousingTracker reported that the early December listings, for the 54 metro areas, declined 21.7 percent from the same period last year.

The year-over-year declines will probably start to get smaller since inventory is already very low. It seems very unlikely we will see 20%+ year-over-year declines next summer, but it does appear that inventory will be very low in 2013.

Home affordability strong in many real estate markets

The average listing price for a home in the U.S. is $292,152. About 36% of the real estate markets analyzed had an average home listing price of less than $200,000, indicating affordability remains strong in many markets, according to Coldwell Banker Real Estate’s Home Listing Report.

The Coldwell Banker report analyzed more than 72,000 home listings in more than 2,500 markets by comparing the listing prices of similar homes in markets across from the country from January to June of this year.

Five of the most expensive real estate markets are located in California, with four out of the five markets located in the San Francisco Bay Area.

Los Altos, Calif. tops the list, followed by Newport Beach, Saratoga, Melo Park and Palo Alto.

“The success of many of our native tech companies has shined a spotlight on Silicon Valley and our real estate market in the San Francisco Bay Area,” said president Rick Turley of Coldwell Banker Residential Brokerage in the San Francisco Bay Area.

The most expensive state to live in is Hawaii with the average listing price of a four-bedroom, two-bathroom home is $742,551.

In contrast, the most affordable market is Redford, Mich., with the average home listed at $60,490.

Four of the top 20 most affordable markets are located in Michigan, particularly in the metro-Detroit region.

“Where Michigan was one of the first states impacted by the recession, it’s also been one of the first states to recover,” said chief executive officer Kelly Sweeney of Coldwell Banker Weir Manuel. “Nobody ever gets priced out of Redford, putting the American Dream within grasp of nearly everybody.”

In the South, Georgia and Florida each have four of the 20 most affordable markets.

“Each year, our home listing report captures an insightful look at local market conditions and emerging trends in real estate,” said president Budge Huskey of Coldwell Banker Real Estate. “We recognize that buying a home is a significant life decision, and we do this apples-to-apples comparison of similar homes to provide homebuyers with useful information about the many great opportunities that exist around the U.S.”

Bank of America holds event to discuss home #foreclosures in #Phoenix

With nearly 54,000 foreclosure homes in Arizona this year, Bank of America held an event in downtown Phoenix Tuesday for homeowners to meet with home loan specialists and discuss their current financial situation. Cronkite News reporter Bill Melugin has more on the story.

Eastmark in #Mesa to get more #homes – #az #realestate


More developers are signing up for pieces of the former General Motors Desert Proving Ground in southeast Mesa.

Scottsdale-based AV Homes Inc. and JEN Partners LLC of New York City announced Tuesday they have combined to buy 527 acres in the Eastmark property being developed by DMB Associates of Scottsdale.

A new entity called TerraWest Management Co. LLC will coordinate the two developments aimed at very different demographics:

AV Homes is spending $18.6million for 310 acres on which it plans to build a 1,000-home active-adult community under its Vitalia brand. The company already is in the Phoenix-area market with its CantaMia adult community in the West Valley.

JEN Partners is spending $13.6million for 217 acres where it will develop 550 lots for a gated executive-housing community. The lots then will be sold to luxury-home builders.

Carl Mulac, executive vice president of AV Homes, said in a news release that Eastmark “is clearly one of the best development locations in the region.”

DMB bought 5 square miles of the former GM property for $265million in late 2006 and then had to sit on the property as the Great Recession ravaged the real-estate market.

Early plans for a luxury resort on the north end of the GM land fell through, and a 1.3million-square-foot First Solar Inc. factory built on its northeastern corner last year is largely idle because of the economy.

But, early this year, DMB announced plans to break ground on about 700 homes in nine subdivisions northwest of Ray and Signal Butte roads. In June, seven builders said they were spending $50million to buy those lots in hopes of having homes for sale by next May.

The developments announced Tuesday will be south of there, between Signal Butte and Crismon roads.

Plans for another big chunk of the former GM property, purchased in 2004 by Phoenix businessman William Levine, lay fallow until this year.

In September the Mesa City Council approved two developments on that property, totaling 590 acres, being purchased by Harvard Investments of Scottsdale.

The GM site is viewed as a prime target for developers because Phoenix-Mesa Gateway Airport lies just to the west, across Ellsworth Road.

If You’re Trying To Sell Your #Home, You Will Be Thrilled By This Chart


With today’s update of Existing Home SalesCalculated Risk has updated the always-useful chart showing how many months of household inventory remains on the market.

The important line here is the red line: Months of housing supply on the market.

The months of supply is down to 5.4 months, which is down from last month, and sharply down from a year ago.

Everybody who is trying to sell their house should be thrilled that the balance between sellers and buyers is coming back into balance.

Says Nomura, with respect to today’s housing news:

The housing data revealed today are quite positive, reflecting the sustained recovery in the housing market that began earlier this year. Housing data for the months of November and December might reflect a slowdown mainly due to Hurricane Sandy. This slowdown would be temporary as people look to rebuild their homes that were destroyed during the hurricane and as transactions affected by Sandy are completed.




Nice number!

Housing starts for the month surged to 894K, well above the 840K that was expected, and nicely above last month’s 872K annualized rate.

This is consistent with the surge in homebuilder sentiment that we got yesterday.

This is the highest level since June 2008.


Big datapoint of the day: Housing starts.

Analysts are expecting 840K (annualized) down from 872K last month.

Hurricane Sandy may be a factor.

As we’ve been writing lately, the creation of new houses and households is becoming a major positive tailwind for the economy.


#Mortgage Rates Fall into Record-Breaking Territory #realestate


Fixed-rate mortgages dropped to new all-time lows this week, pushing homebuyer affordability even higher for those who can qualify.

“Fixed mortgage rates eased this week to record lows on indicators of higher consumer confidence and wholesale prices,” Frank Nothaft, Freddie Mac’s chief economist says.

The following are the national averages with mortgage rates reported by Freddie Mac for the week ending Nov. 15:

  • 30-year fixed-rate mortgages: averaged a new low of 3.34 percent, with an average 0.7 point. The previous record low was 3.36 percent, set the week of Oct. 4. A year ago, 30-year rates averaged 4 percent.
  • 15-year fixed-rate mortgages: averaged a new low of 2.65 percent, with an average 0.7 point. Its previous record low was 2.66 percent, set during the week ending Oct. 18. A year ago, 15-year rates averaged 3.31 percent.
  • 5-year adjustable-rate mortgages: averaged 2.74 percent, with an average 0.6 point, rising slightly from last week’s 2.73 percent average. Last year at this time, 5-year ARMs averaged 2.97 percent.
  • 1-year ARMs: averaged 2.55 percent, with an average 0.3 point, dropping from last week’s 2.59 percent average. A year ago, 1-year ARMs averaged 2.98 percent.

Source: Freddie Mac

#Foreclosure Discounts Vanishing #realestate #phoenix


Foreclosure discounts have nearly dried up due to low inventory levels, according to the latest housing reports.

The average discount nationwide for foreclosure properties has fallen to 7.7 percent, according to Zillow research. In some parts of the country, there is no foreclosure discount when compared to other sales.

“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” says Stan Humphries, Zillow’s chief economist.

The smallest foreclosure discounts can be found in:

  • Las Vegas (0%)
  • Phoenix (0%)
  • Sacramento, Calif. (0.7%)
  • Riverside, Calif. (1.8%)
  • San Diego (2.4%)
  • Miami-Ft. Lauderdale (2.9%)
  • Los Angeles (4.2%)
  • San Francisco (4.7%)

Meanwhile, the places with the largest foreclosure discounts are:

  • Pittsburgh, Pa. (27.8%)
  • Cleveland (25.8%)
  • Cincinnati (20.2%)
  • Baltimore (20%)
  • New York City (15.5%)