Entries in Housing Market (55)


Home Prices Highest Since April 2006

Creatas/Thinkstock(NEW YORK) -- Home prices in cities around the country surged 10 percent in the past year to highs that haven't been seen since the end of the housing bubble.

Prices around the country rose the most since April 2006, though in most places they are still well below their 2006 peak, according to the Case-Shiller house price index, which includes data through March 2013.

Phoenix, San Francisco and Las Vegas had the biggest jump in home prices, with increases of more than 20 percent compared with a year ago.

The housing market, while apparently on the road to recovery, is not yet fully healed.  A large number of homes are still in some stage of foreclosure and investors rather than first-time home buyers make up an outsized chunk of the housing market.

Many economists though are still confident that we are on the way to a healthy market. 

“This is not a bubble,” says economist Diane Swonk.  ”We are regaining lost ground which is a game-changer for most households since their home is what they rely on for wealth.”

Still the rise in home prices could be among the factors contributing to resilience in consumer spending despite a tax hike at the beginning of the year.  As home prices rise consumers feel confident to spend on other items like a new car.

The housing market in cities, including Seattle and Charlotte, is pushing back into positive territory after a couple of months in decline.  Prices were up 3 percent in Seattle compared with a month ago, and 2.4 percent in Charlotte.

Copyright 2013 ABC News Radio


Student Debt Impacting US Economy

JupiterImages/Comstock Images(NEW YORK) -- According to a recent study, students should consider the statistics before taking out a loan to help pay for college.

Two-thirds of students take out loans to pay for college, and their combined debt could have a broad impact on the housing market and overall economy, according to new analysis from the Center for American Progress.

This is because people are taking out more loans than they used to, but their ability to pay them off hasn't kept pace. CAP notes that banks have written off billions of dollars and approximately 850,000 former students have defaulted on loans just in the first few months of 2013.

People used to take out loans, go to school, get jobs and pay off their debt in a reasonable amount of time. However, rising college costs paired with a struggling economy and high unemployment among young people has made that difficult.

In particular, Latinos and African-Americans are more likely to take out private student loans than in the past. That can be problematic because private loans often carry higher interest rates and repayment plans are less flexible than federal loans.

Many people now graduate and return home to live with their parents -- sometimes without a job -- which means they aren't buying their own homes. Home ownership rates among young people are at some of the lowest points in decades. Minorities, who are more likely to be burdened with student debt, are expected to represent more than 70 percent of net household growth between 2010 and 2020, CAP notes, but student debt could undermine that figure.

"By 2020, California real estate brokerage predicts that half of all new homebuyers nationwide will be Latino—assuming Latino families are able to get mortgages," the think tank wrote in a letter to the Consumer Financial Protection Bureau this week.

The housing market isn't the only thing impacted by rising student debt.

As CAP notes, according to the Center for Retirement Research at Boston College, 62 percent of workers in their 30s likely will not have enough resources when they retire. That figure is particularly scary because it's gone up nine points in just three years, 2007 to 2010. It's hard to save for retirement when you're still trying to pay off loans, and nearly one in five people in their 30s has more than $50,000 in student-loan debt.

Complicating the issue is the fact that interest rates on some federal student loans are set to double on July 1. While the general consensus in Washington is that that's not a good thing, opinion on what should be done is anything but unanimous.

President Barack Obama on Wednesday proposed tying interest rates for federal student loans, which are currently fixed, to the government's cost of borrowing.

Three Republican senators recently introduced a bill that would set fixed interest rates on newly issued federal student loans, which would be pegged to the Treasury's 10-year borrowing rate, plus an additional three percentage points.

CAP suggests developing a refinancing program for student-loan borrowers and increasing income-based repayment programs, which would allow people to make payments based on their income instead of a predetermined rate. The organization also wants schools to certify private student loans.

Whatever is done, CAP warns that without action, "the growing student loan burden could make it more difficult for families to achieve future financial security and, if unchecked, could negatively affect the housing market and the broader economy."

Copyright 2013 ABC News Radio


Lumber Prices Jump with Housing Market Recovery

iStockphoto/Thinkstock(NEW YORK) -- With lumber prices on the rise, analysts are watching whether the commodity could cause a logjam in the recovery of the housing market.

Housing prices have risen for six months in a row, according to the latest data from the S&P/Case-Shiller home price index, signaling that the country is recovering from the housing bubble burst about six years ago.  Along with the housing market, the logging industry has also rebounded strongly since the recession, said Robb Granado, analyst with financial analysis firm Sageworks.

The industry's profit margins are relatively low; over the past year it has had a 0.3 percent net margin on average, he said.  Compared with 2006, there are 23 percent fewer businesses in the logging industry today, according to the North American Industry Classification system used by the Census Bureau.

With demand for new homes rising, Granado said there has been rising pressure in its complicated supply chain, which includes raw materials, equipment, and labor.

"A lot of it has to do with the wood as a commodity itself and the inability to differentiate," Granado said.

Mannington Mills, Inc., a lumber manufacturer, is increasing prices for its engineered wood floors by up to 6 percent starting Monday, citing increases in log and transportation costs.

"This is an industry that has been in need of a price increase for a very long time.  Excess capacity and competitive pressure Asia has made this difficult," said Dan Natkin, director of Mannington Mills' hardwood and laminate business.  "We have reached a breaking point where we have to raise prices."

The last time the company had a line-wide increase across its entire hardwood products was about a decade ago, he said.

"Because the home industry has been so depressed, businesses in that sector have kept prices historically low," he said.

Natkin said he has seen lumber prices creep up, due to the laws of supply and demand.  Wood, in general, is closely tied to raw material pricing, he said.

While the homebuilding and logging industry are "very closely related," he said, raw material is just one component of the construction industry.  Wages and fuel and trucking prices are also another component.

Natkin said he does not know when his company will increase prices next, but if it does, the rise will be "modest."

Armstrong World Industries, which designs and manufactures floors and ceilings and is based in Lancaster, Pa., also said it is increasing prices.  Starting Monday, the company is implementing a 6 percent price increase on all its engineered and solid wood flooring to offset the cost of lumber.

Jennifer Johnson, spokeswoman for Armstrong, said the impact its wood flooring increase could have on the overall price of a house is "negligible."

"The real meter to watch on the housing market continues to be consumer confidence," she said.  "As that strengthens so should the housing market."

Copyright 2012 ABC News Radio


Shortage of Construction Workers as Housing Market Improves

 iStockphoto/Thinkstock(NEW YORK) -- Construction jobs are coming back, but where are the workers?  

The revival of the housing market and commercial real estate has many contractors scrambling to find qualified workers.

“The crunch is affecting a handful of states, including Texas, Arizona, Iowa and Florida,” says USA Today.  “It’s expected to worsen across the USA over the next few years.”

Contractors reportedly are raiding each other's job sites in some states to look for workers who either left the field, retired or moved somewhere else.  It’s a problem that could spread as the economy improves.

Copyright 2012 ABC News Radio


Man Buys 650 Foreclosures: How Much Did He Pay?

iStockphoto/Thinkstock(MACOMB COUNTY, Mich.) -- Until a year ago, Bill McMachen, 71, had never bought or sold a foreclosed home. Then in 2011 he bought one for $12,000 and flipped it a week later for $18,000. “That went pretty good,” he says. “So I said to my wife, ‘I think I’ll buy them all.’”

He was referring to all 650 tax foreclosed properties in Macomb County, Michigan. McMachen bought them in one fell swoop for $4.8 million at a July 31st auction. Afterward, he says, he told his wife, “Phew, I might be in over my head.”

He’d seen the auction advertised, and had asked county officials if it was possible for him to buy the entire lot, which included 403 homes, 120 residential lots, 14 condos, 9 commercial buildings and some undeveloped land. They told him nobody had ever done that before, but that there wasn’t any reason he couldn’t. He snapped them up for no more than their combined back taxes.

The real estate newbie says he made his fortune selling yachts for 40 years. After the recession hit, he says, the yacht business suffered, and he started getting interested in real estate.

What’s he going to do with all those houses? Resell them to investors, he says, most of whom he expects will rent them out to tenants.

How’s McMachen going to manage all these properties in the meantime? There won’t be a ‘meantime,’ he says: He’s selling them too fast: “Last week I sold 181. This week, it’ll be 150. In the third week I’ll sell the balance. More people want homes than I have homes to sell.”

He says he’ll happily sell to someone who wants to occupy a home himself. “If somebody tells me the house was his grandpa’s, or that there’s some sentimental connection, I’ll consider that.”

Anybody who buys from him, he says, is going to get a better deal than they would have from the county. Whereas the county, he says, doesn’t give potential buyers a chance to inspect foreclosure in advance, he’ll be happy to. “They can look around and see what’s there. Maybe there’s a furnace missing. Maybe it needs $15,000 worth of repairs. We’ll adjust the price.”

McMachen says his wife has asked him what he intends to do next. “I don’t know yet,” he says. “I enjoy wheeling and dealing.”

Copyright 2012 ABC News Radio


Existing Home Sales Declined in June

Phillip Spears/Digital Vision(WASHINGTON) -- The housing market lost some steam in June as existing home prices fell by 5.4 percent from the prior month, although prices continued to rise.

According to the National Association of Realtors, existing home prices declined 5.4 percent to a seasonably adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million May.

“Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities,” Lawrence Yun, NAR chief economist, said in a statement. “This, in turn, is pushing up home prices in many markets. The price improvement also results from fewer distressed homes in the sales mix.”

Existing home sales are up 4.5 percent from June 2011, which could be a good sign for the battered market.

According to the report, the median price for all housing types was $189,400 in June, up 7.9 percent from a year ago.

Foreclosures and short sales accounted for a quarter of June home sales, unchanged from the previous month. But, the figure was down from June 2011 when foreclosures and short sales accounted for 30 percent of home sales.

“The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling,” Yun said.

The number of first-time buyers declined by 2 percent to 32 percent of purchases. While up from a year prior, NAR’s economist says the figure in a healthy market should be around 40 percent.

“A healthy market share of first-time buyers would be about 40 percent, so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity,” said Yun.

Copyright 2012 ABC News Radio


Mortgage Rates Hit Another Record Low

iStockphoto/Thinkstock(WASHINGTON) -- The average fixed mortgage rates reached all-time record lows again following June’s poor unemployment report.

Freddie Mac reported the 30-year fixed-rate mortgage fell to 3.56 percent for the week ending July 12, from last week when it averaged 3.62 percent and a year ago when it was 4.51 percent. The 15-year rate averaged 2.86 percent, down from 2.89 percent last week and 3.65 percent one year ago.

Both averages were all-time record lows, according to the government-created mortgage financing agency.

The average 30-year fixed rate has been under 4 percent for 16 weeks and the average 15-year rate has been below 3 percent for seven weeks.

Copyright 2012 ABC News Radio


Housing Revival: Fewer Homes Underwater

Creatas/Thinkstock(NEW YORK) -- For the first time since the deep slump began more than five years ago, a new report from the business information and analytics firm Core Logic says fewer Americans have negative equity in their homes.

In the first three months of the year, 11.4 million homeowners, or 23.7 percent of all residential properties with a mortgage, had negative equity.  That compares with 12.1 million properties -- 25.2 percent -- in the fourth quarter of 2011.

Mark Fleming, chief economist at Core Logic, says, “More than 700,000 households have regained buoyancy.”  They’re no longer underwater, and “one of the main reasons why we’ve seen the improvement in negative equity is that house prices have risen.”

Core Logic finds prices have increased most in some deeply distressed housing markets in the West and South, including parts of Florida, Arizona and Nevada.

“In the first quarter of 2012, rebounding home prices, a healthier balance of real estate supply and demand, and a slowing share of distressed sales activity helped to reduce the negative equity share,” says Fleming.

Copyright 2012 ABC News Radio


Foreclosure Crisis Remains Despite Housing Market Gains

Stockbyte/Thinkstock(NEW YORK) -- In what may be the closest thing yet to an official pronouncement that the housing market has finally started to get better, economists are increasingly saying that despite a slow down in the foreclosure recovery, the market is improving.

David Blitzer, chief economist of Standard and Poor’s, the company that releases the influential Case-Shiller report, says that in most markets prices are rising.  

The Wall Street Journal reports, “The housing market has turned -- at last.”

And a survey by Wells Fargo Securities economists finds that even as the recovery slows down, “the budding recovery in the housing market appears to be gradually gaining momentum.”

But the foreclosure crisis is far from over.

Foreclosure tracking firm RealtyTrac says foreclosure filings fell 11 percent in the first half of this year, but banks are increasingly putting troubled property owners on notice for possible action.  That means there could be a rise in auction sales and bank repossessions by early next year.

Copyright 2012 ABC News Radio


Mega-Rich Foreigners Heat Up Miami's Luxury Condo Market

George Doyle/Stockbyte/Thinkstock(MIAMI) -- Miami's luxury real estate market is a crystal-chandeliered world of multi-million-dollar condo deals, where prospective buyers roll up to open houses in Lamborghinis or on 70-foot-long yachts.  It's not only booming, say its mavens, it may be passed peak.

A few years ago, multi-million-dollar condo deals were unheard of in the United States because the luxury market had gone bust with the rest of the country.  But now, real estate experts say the market is turning around and astronomical listings are popping up in small real estate bubbles from coast to coast.  Unlike the subprime mortgage scandals, almost all of Miami's expensive real estate is bought and paid for with cash, mostly by foreigners.

Danny Hertzberg, a member of Forbes magazine's real estate "30 Under 30" list, gave up being a lawyer to become a real estate agent for Coldwell Banker in Miami.  The 29-year-old said real estate in this tropical mainland paradise keeps getting more expensive, especially in the last couple of months.

"Top buildings are selling now, per foot, at the height of the market," Hertzberg said. "There was a lot of inventory, maybe, 18 months ago, and then all of a sudden, there was a lot of foreign investment to the Miami market, people coming in from Brazil, Venezuela, Argentina, a lot of Russian buyers, specifically on the high end luxury."

According to the city of Miami, the luxury condo market is hotter than at any point in history.  Nearly 20 percent more million-dollar condos were sold in 2011 than in the previous peak year of 2006.

This is an "other world," where the rest of America's real estate metrics don't really apply.  Most of the country is still creaking into recovery, where home ownership is at a 15-year low and property values are expected to stagnate the rest of the year after prices have been plummeting for the past four years.  But for the super wealthy, the mega-rich "1 percent-ers," a luxury condo bidding war has replaced the recession, not just in Miami, but also in New York and Los Angeles.

The multi-million-dollar luxury market has become so hot, Bravo made a reality TV show about it called Million Dollar Listings, which started in L.A. and then was exported to New York.

So is this just a repeat of what happened during the 2008 housing crash, only on an accelerated level?  Jonathan Miller, the president and CEO of Miller Samuel, a real estate appraising and consulting firm, said that's not the case because luxury condos only make up a "tiny sliver" of the entire housing market.

"It's a fraction of a percent and it's disconnected from the market in general," he said.  "Any time you have a pick-up in activity in real estate, you're influencing the local economy, from goods and services to taxes being paid, it's a win for the local economy."

Copyright 2012 ABC News Radio

ABC News Radio