Saturday, July 5, 2014

Housing "Remains the Weakest Link" in the Economic Recovery
Inman News

A report by Fannie Mae shows economists are optimistic that the economy is poised for growth again after stalling out in the first three months of the year, but housing “remains the weakest link” and “there is a lot of concern over the near-term health of the housing sector.”

Fannie Mae Chief Economist Doug Duncan thinks that improving financial and labor market conditions should contribute to a rebound, with economic growth in April, May, and June accelerating to an annual rate of 3 percent.

The outlook for housing “remains more worrisome, with existing-home sales, new-home sales, housing starts and multifamily housing all experiencing year-over-year declines despite improving consumer attitudes,” Duncan said in a statement. “However, we anticipate a modest uptick in housing activity as the spring and summer selling and building seasons get under way.”

When does Fannie Mae expect housing to get back to normal levels? Brace yourself: “Sometime in late 2016.”

In the first three months of the year, existing-home sales, new single-family home sales, single-family housing starts and multifamily housing starts all saw annual declines.

“Though it is likely that extreme winter weather and supply constraints played a significant role in the slowdown of both sales and homebuilding activity, we believe faltering demand in the wake of reduced affordability and more general consumer conservatism about taking on a mortgage are the primary culprits,” Duncan and Fannie Mae economists Brian Hughes-Cromwick and Orawin T. Velz said in their report.

The “disappointing stream of housing data” so far this year has Fannie Mae economists scaling back their projections for 2014 sales, forecasting that existing-home sales will fall by 2.1 percent this year, to 4.98 million.

While existing-home prices are expected to appreciate by 5 percent this year, purchase loan originations — another stat of interest to real estate brokers and agents, because it’s tied directly to commissions — are expected to fall 3 percent, to $710 billion.

With a rise in mortgage rates killing off the refi boom, Fannie Mae expects total first-quarter 2014 mortgage originations to come in at around $237 billion, the lowest level in 14 years.

One factor hurting affordability is a lack of inventory, which, at the lower end of the market, is partly a result of the percentage of homeowners with mortgages who are still underwater, according to a recent analysis by Zillow.

In March, existing homes were selling at the slowest pace (4.59 million units a year) since July 2012, and were down 6.6 percent from a year ago for the first quarter as a whole.

“The composition of sales activity shows a dramatic year-over-year decline in lower-priced units,” driven by affordability issues for consumers and tapering investor demand, Fannie Mae economists said. Despite monthly declines in existing-home sales in seven of the last eight months, the months’ supply of homes is up only slightly, rising from five months to 5.2 months over that time period.

But one bright spot is the growing number of consumers surveyed by Fannie Mae who say it’s a good time to sell a home, the report said. In April, 42 percent of consumers thought so, up 4 percentage points from March.

“As consumers become more confident in the selling environment and more supply enters the market, it will help to boost housing turnover,” Fannie Mae economists said. “Leading indicators of home sales point to cautious optimism in the near-term outlook.”

Breaking a streak of eight consecutive monthly declines, pending home sales were up 3.4 percent in March, to the highest level since November. After hitting a nearly two-decade low in February, applications for purchase mortgages were still down more than 20 percent from a year ago at the end of April (the latest Mortgage Bankers Association survey shows demand for purchase loans down 12 percent from a year ago during the week ending May 16).



Read more...


Burbank/Glendale Report

Total properties sold were down in both the Burbank and Glendale markets as low inventory levels continue.  Prices were up in both cities over last year same period.

Mortgage interest rates trended higher in the first and second quarters of the year, but have started to go lower again.   There is still a mixed sentiment from analysts in terms of when interest rates will start to head up higher in a meaningful way.  I continue to say that this is a good buying opportunity before interest rates go up!


 
Real estate stats 
 
Single Family Home Sales
Burbank CA
Mar-May
2013
Mar-May
2014
% change
Total properties sold 159 135
-15.1%
Average price (sold) $648,298 $697,348 +7.6%
Average price per sq.ft.(sold) $364 $403 +10.6%
Average days on market (sold) 48 51 +6.3%
Average sold price/list price % 100% 99.4% -0.6%
Pending properties(at end of period) 88 64 -27.3%
Total properties for sale( at end of period) 70 79 +12.9%
Average price of properties for sale $722,370 $901,094 +24.7%

 
Single Family Home Sales
Glendale CA
Mar-May
2013
Mar-May
2014
% change
Total properties sold 174 159 -8.6%
Average price (sold) $706,852 $745,502 +5.5%
Average price per sq.ft.(sold) $346 $403 +16.5%
Average days on market (sold) 52 49 -5.8%
Average sold price/list price % 98.9% 99.9% +1.0%
Pending properties(at end of period) 96 67 -30.2%
Total properties for sale( at end of period) 105 133 +26.7%
Average price of properties for sale $891,801 $862,485 -3.3%



























Report was generated using data from CRMLS.  CRMLS does not guarantee and is not in any way responsible for the accuracy of their data.  Data maintained by CRMLS may not reflect all real estate activities in the market.  Information deemed reliable but not guaranteed.

No comments: