Home Prices Rise for First Time in Almost a Year

Latest Adjusted Prices Show Slight Increase

S&P/Case-Shiller Report Reports 0.2% Rise

According to the S&P/Case-Shiller report released last week, the composite index for 20 metropolitan areas gained 0.2 percent this February when seasonally adjusted — meeting forecasts made by economists. The rise is the first increase since April of last year. S&P’s index committee chairman noted that the news was a mix of good and bad news — prices in some areas continue to decline, and without the seasonal adjustment, the 20-city index was down 0.8 percent to reach 134.20, the lowest it’s been since 2002. (via Reuters)

Barclays Capital sees first signs of price increases

Analysts from Barclays Capital consider the 22 pecent order growth seen by homebuilders in the first quarter of 2012 as an early sign of the market beginning to see price increases return. The managing director of Barclays’ homebuilding division said that Phoenix, Denver, Orange County, CA, among others are seeing pricing comebacks. Three builders concurred with that perspective — Lennar, Meritage Homes and Ryland Group have reported the strongest order growth across both location and buyer type. Other homebuilders, D.R. Horton, PulteGroup, and M/I Homes also showed order growth, but without the same strong feeling for the trend to continue.

It’s possible that the last 12 to 24 months of increased investor activity buying existing homes has raised consumer demand for new homes. If so, that could mean good news for the homebuilding sector and the housing market. (via Housing Wire)

Homes More Affordable Than Ever?

Affordability at 40-year high

Judging housing affordability by the relationship between median home price, median family income and average mortgage interest rates, the National Association of Realtors (NAR) says that homes are the most affordable they’ve been since record-keeping was started more than 40 years ago.

According to the president of NAR, for the first time ever the affordability index has broken two hundred — meaning the average family has roughly twice the income required to purchase a median-priced home.

Owning less than renting

Marshall Vest, author of the the Eller College of Management’s 2012-2013 Economic Outlook Report (updated quarterly) notes that affordability in Tuscon, AZ in 2012 has been so high that on a monthly basis, owning a home can cost the same or even less than renting one.

It is still a tough market— tight credit for builders and buyers alike along with ongoing issues obtaining accurate appraisals continue to slow recovery and constrain the market to the most qualified and determined buyers.

(via The Arizona Daily Wildcat and Realty Times)

Improving Metro Markets On the Rise

There are now 35 states represented on the Improving Markets Index — tracked and reported by the National Association of Home Builders (NAHB) and First American Title Insurance.

To make the “improving market” list, a metropolitan area must show continuous improvement for six months in three areas:

• Housing permits (data from U.S. Census Bureau)
• Employment (data from the Bureau of Labor Statistics reports)
• Home prices (data from Freddie Mac reports)

This month’s index shows 101 metro area markets on the list in 35 states — a significant increase from the 12 markets that appeared on the list last September when the index was launched. Of the markets on the list from the previous month (March), 88 stayed steady, while 11 areas were dropped and 13 areas added.

“While housing markets across the country continue to struggle under the weight of overly tight lending conditions and other challenges, the April IMI indicates that at least 101 individual metros are showing measurable and consistent signs that they are headed in the right direction,” said NAHB Chairman Barry Rutenberg. “A total of 35 states are now represented on the list, with 10 states having four or more entries. This positive news is in line with what our builder members have observed regarding firming conditions and improved buyer interest in certain locations.”

It’s important to remember that the index focuses on improving markets, notes NAHB’s chief economist — as markets stabilize, their performance in the three areas tracked by the index will be less likely to improve from the previous month, which will drop them from the list.

For more on the Improving Markets Index, visit NAHB’s IMI page here.

Mortgage Rates Up and Down

Mortgage rates dropped last week

Although mortgage rates rose recently in response to a generally positive outlook on the economy, last week saw rates fall with news of Europe’s economy continuing to crumble and reports of uninspiring March employment numbers.

HSH.com’s mortgage tracker showed the overall rate for 30-year fixed-rate mortgages dropping to an average of 4.30 percent, while 15-year rates dropped to average 3.54 percent.

Fluctuating recovery means fluctuating rates

The economy continues to recover — but with less momentum than has been seen recently.

The Federal Reserve’s most recent meeting indicated a positive assessment of the economy, making it seem unlikely that the Fed will take new measures to expand or institute economic relief programs. The labor market, a key element to economic recovery, slowed considerably from its strong showing in the past three months — new job activity in March was half of the new job activity reported in February.

Spring is likely to see mortgage rates continue to be buffeted about, with no drastic increases or drops, as economic indicators — the state of the economy in Europe, the Fed’s stance on relief programs and the labor market — impact the market and consumer confidence.

(via HSH.com)

2012 - The Year The Housing Crisis Ended

Experts find the silver lining in the market cloud

Good news/bad news

Last week’s Case-Shiller index seemed to be a case of “good news/bad news,” according to economic experts.

Although the index showed housing prices at their lowest level since 2003, many economists feel that in combination with the increase in home sales velocity and an encouraging labor outlook, the falling prices are more a reflection of market clearing out the distressed properties at attractive prices for cash buyers.

Home prices are on the mend

In an article in the LA Times, an economist from Capital Economics was quoted as saying that “home prices were ‘on the mend,’” and that they see home prices stabilizing, the first step in recovery.

 2012 will go down in history as the year that the most severe house price crash on record ended… The improvement in general price trends is being driven by the 13% rise in home sales since last July. In turn, this reflects the strengthening in the economy and signs that banks have become a bit more willing to lend.

Expert opinions see this year as the bottom

Marketbeat, a blog from The Wall Street Journal, gathered a few more opinions from “economists and market observers,” agreeing that the index drop is not a red alert on the crisis and recovery timeline. An economist from MFR points out that in the six years leading up to the market’s peak in 2006, the price index rose by 155% — in the six years since, the index has dropped only 34%. Other economists point to a six-year cycle, in which housing bubbles tend to bottom out six years after peaking.

On the whole, if 2012 sees home sales continue to rise, the distressed property inventory continue to shrink and the job market continue to improve — it could well be the low point on the housing market graph.