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Monthly Archives: March 2012
admin in Real Estate Headline News,Uncategorized | March 28, 2012
By: Carrie Bay, DSnews.com
Standard & Poor’s reported Tuesday that it’s closely watched Case-Shiller index declined in January for the fifth straight month, with both the 10-city and 20-city composite readings slipping 0.8 percent from December.
But according to John Burns Real Estate Consulting (JBREC), that’s stale news and doesn’t reflect what’s actually happening in the market right now. In fact, the independent research company says home prices are rising.
JBREC conducted its own analysis of home prices in 97 markets and found that over the January-to-March period prices are up in 90 of them. The average price increase over the last three months is 1.1 percent, or a 4.5 percent annual rate, according to data issued by JBREC just before S&P’s Case-Shiller release.
The company also found that home prices have been trending up nationally since January, and even more markets have turned positive recently, with 93 of the 97 markets it analyzed showing appreciation over the last month.
So why are other industry indices still painting a picture of the doom and gloom of freefalling home prices? Wayne Yamano, VP and director of research for JBREC, says it’s because most price indices are on a three-month lag.
Yamano explains that after hundreds of hours of research vetting 23 data sources and running calculation after calculation, JBREC developed the Burns Home Value Index (BHVI), which calculates home values based on prices that are set at the time purchase contracts are negotiated and signed.
Nearly all other indices are based on when the purchase transaction closes, he says, which is typically two months after the purchase contracts were negotiated. Then, it takes one to two months for the closing price data to be compiled and reported, according to Yamano.
He contends that the BHVI is a better assessment of current changes in home prices and precedes median price data from the National Association of Realtors by three months and the S&P/Case-Shiller index by four to six months.
“It is current because it uses what is happening in MLS databases all over the country, as well as some leading indicators we have determined are reliable,” Yamano explained. “We call it a Home Value index because it is partially based on an ‘electronic appraisal’ of every home in the market, rather than just the small sample of homes that are actually transacting.”
JBREC has calculated BHVI index values for the United States and 97 major metro areas, with history going back to January 2000.
“The slow housing market recovery is underway, and it can accelerate or turn down quickly,” said Yamano. “The future is uncertain, and it is even more uncertain when you are using data that is three months old.”
admin in Real Estate Headline News,Uncategorized | March 23, 2012
By: Krista Franks Brock, DSnews.com
Last year was a good year for home bargain-hunters, according to the latest data from Radar Logic. The firm’s January report revealed a 5.42 percent decline in prices from January 2011 to January 2012 and a simultaneous 7.7 percent increase in transactions.
Radar Logic surveys 25 metropolitan statistical areas on a monthly basis.
However, despite the year-over-year increase, home sales decreased 23.5 percent in the month ending January 19. The decline was greater among traditional sales, which fell 25.9 percent, than distressed sales, which declined 15 percent.
The discrepancy between traditional and distressed sales enhanced the overall price decline, according to the Radar Logic report, which stated, “the relative increase in distressed sales weighed on the RPX Composite, exacerbating its decline.”
The 5.42 percent price decline over the year brought Radar Logic’s composite to its lowest rate since July 2002.
However, the rate of decline did slow toward the end of 2011, but Radar Logic nonetheless suggests the market has not yet reached bottom.
“Frankly, I don’t think we’ve reached the bottom in housing prices,” said Quinn Eddins, director of research at Radar Logic.
Supply continues to outpace demand “particularly if you consider homes in the foreclosure process and those under water,” according to Eddins.
“At very least the excess supply will delay the recovery in housing prices, and could well push prices lower,” Eddins said.
Radar Logic predicts prices will remain flat this year and next before increasing “at an accelerating pace” in 2014 and 2015.
admin in Real Estate Headline News,Uncategorized | March 20, 2012
By: Esther Cho, DSnews.com
Even with recent reports of rising mortgage rates and falling home prices, Capital Economics stated it still expects the housing recovery to be underway. The research firm cites two reasons in a report on why mortgage rates won’t threaten recovery: rates can only rise so far when tighter monetary policy is still years away, and homes will still be affordable even if mortgage rates were to rise back to normal levels. Last week ending March 15, Freddie Mac reported the 30-year fixed rate at 3.92 percent, an increase from the 3.88 percent reported the prior week, but still below 4 percent for 15 consecutive weeks.
“We doubt that higher mortgage rates will derail a housing recovery that in the last six months has seen total home sales rise by 13 percent and the NAHB homebuilder activity index more than double to 28,” the research firm stated.
In addition to those recent reports, home prices are still dropping, with data from Zillow showing prices declined 4.6 percent from January 2011 to January 2012. “Also, the fall in house prices over the last five years has been so large that even more normal mortgage rates would leave housing looking very affordable. And with housing appearing undervalued relative to disposable incomes per capita, valuations are also very favorable,” Capital Economics stated.
An economic outlook report from Fannie Mae echoed a similar sentiment about the direction of the housing market in a report Monday and stated, “GDP revisions for the fourth quarter of 2011 indicated a stronger underlying pace of demand with higher consumer spending and business investment.” After four months of private sector payroll growth, the GSE named employment growth as an important factor in housing recovery.
Even with declining home prices, Capital Economics explained it can take up to six months for changes in demand and supply to have their full impact on house prices because even with attractive asking prices, it can still take a few months to find a buyer and another month or so before the contract is closed.
admin in Real Estate Headline News,Uncategorized | March 8, 2012
Reprinted from DSnews.com
Home affordability has reached the highest peak since 1970, which is when the data was first recorded, according to National Association of Realtor’s (NAR) housing affordability index. The index rose to 206.1 in January, and an index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced single-family home, assuming a 20 percent down payment and 25 percent of gross income for mortgage principal and interest payments.
“This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” said Moe Veissi, NAR president.
While projections about future mortgage rates and home prices have been mixed, NAR expects little change and anticipates affordability levels will stay high through 2012.
“Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country,” Veissi said. “If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.”
The index is based on the relationship between median home price, median family income, and the average mortgage interest rate.