Tag: Boston real estate

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Tipping Point?

Interesting post by Scott.

“Tipping point” for housing market?

Posted by Scott Van Voorhis  June 12, 2013 08:22 AM

South End Heli ShotOK, when Realtors start talking about the market reaching a “tipping point,” it can only be bad news for buyers worried about soaring prices.

It means things are starting to get a little crazy.

As we head into summer, sales activity is soaring, with buyers spooked by rising rates and the prospect of more price hikes ahead.

 

 

More than 9,000 homes across Massachusetts were put under agreement this May, an 83 percent jump from May 2012, the Massachusetts Association of Realtors reports.

Pending sales of condos rose more than 63 percent in May, to 3,469.

Both increases where the highest recorded since MAR began tracking pending sales in 2004.

Here’s what President Kimberly Allard-Moccia, president of the local Realtors group, had to say.

“May was a tipping point as increasing prices and interest rates pushed qualified buyers to make offers that sellers accepted in great numbers,’ said Allard-Moccia, broker-owner of Century 21 Professionals in Braintree, in a press statement.

“However, we still need more homes on the market and hopefully this activity will spark potential sellers to list their homes to help meet the demand,” she added.

Tipping point?

 

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Pending home sales jump 10.3% in one year.

Great national market recap from Tara Steele at Agent Genius.

by 

Pending home sales continue to rise.

9 Telegraph Hill. List price $2.295M Pending.
9 Telegraph Hill. List price $2.295M Pending.

Although pending home sales improved only 0.3 percent in April, according to the National Association of Realtors, contract signings actually rose 10.3 percent compared to April 2012. Pending sales have now been above year-ago levels for the past 24 months, marking a very slow but somewhat sure recovery for housing.

Regional pending home sales varied, as the Northeast and Midwest saw improvement, while the South and West both dropped. NAR reports that home contract activity is at the highest level since April 2010, immediately before the deadline for the home buyer tax credit which spurred a metaphorical gold rush on homes.

Existing home sales expected to rise to 5M

Dr. Lawrence Yun, NAR’s chief economist said, “The housing market continues to squeak out gains from already very positive conditions. Pending contracts so far this year easily correspond to higher closed home sales in 2013. Total existing-home sales are expected to rise just over 7 percent to about 5 million this year.”

“Because of inventory shortages, higher home sales will push up home values to the highest level in five years,” Dr. Yun added. NAR says the national median existing-home price should increase close to 8.0 percent and exceed $190,000 in 2013.

Sales varied according to region

Home contract activity rose 11.5 percent in the Northeast, marking a 17.7 percent increase from April 2012 and jumped 3.2 percent for the month in the Midwest, and a whopping 15.1 percent for the year.

Meanwhile, pending home sales slid 1.1 percent in the South, but rose 12.3 percent compared to April 2012. The tough spot is currently the West region which saw a 7.6 percent dip in signed contracts, pulling the region down 2.6 percent for the year.

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Rising Rates!

interesting post on rising rates from Scott at Boston.com

Will rising rates spur panic buying?

Posted by Scott Van Voorhis

But before the chill sets in, sales could very well go into overdrive as buyers seek to lock in rock-bottom rates before they are gone.

Interest rates have just topped 4 percent. OK, that’s still incredibly low, but up sharply from 3.4 percent at the beginning of May.

If you doubt the power of the herd mentality to drive sales and prices in the real estate market, just recall what happened back during the nutty spring of 2010 as the expiration of the home buyer tax credit loomed.

Buyers bid up prices on homes in a scramble to grab the seemingly free government money before the offer expired, often negating the value of the $8,000 credit.

Could we see some panic buying over the summer if rates keep pushing up?

Don’t bet against it.

That said, in the longer term, higher rates could put a chill on sales, especially in high-priced markets like Greater Boston, or so says Lawrence Yun, chief economist for the National Association of Realtors.

OK, NAR is not exactly the first place I look for candid insight, but I thought Yun’s observations in this Forbes piece were worth looking at.

“In Middle America I don’t see much impact since homes are so affordable,” explains Yun. “The more expensive coastal regions is where one will begin to feel the first decline or impact.” He suspects that California metro areas and east coast hubs like Boston, New York, and Washington D.C. could begin to experience slackening sales because low-interest monthly mortgage payments in these relatively pricier places have helped make homes seem more affordable to more buyers despite the fact that relative to income, principal amounts are still expensive.

Are you ready to hit the panic button? Ready to buy now and ask questions later before rates go higher?

 

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Home Values Rise In Boston Area

Great Case-Shiller chart illustrating the 2005 peak and where we are now.

Home values rise in the Boston area

Region’s prices less than 15% below peak; national numbers also show increase

By Jenifer B. McKimGLOBE STAFF

Home values in the Boston area increased by 6.7 percent in March compared with the same time last year, according to data released Tuesday by the S&P/Case-Shiller Home Price Indices, another indicator of a rejuvenated housing market.

Nationwide, home prices increased 10.9 percent compared with March 2012, according to Case-Shiller, and values increased in all 20 metro areas measured by the firm. Because Case-Shiller measures repeat homes sales, it is considered one of the best markers of the nation’s housing health.

“Other housing market data reported in recent weeks confirm these strong trends: Housing starts and permits, sales of new homes and existing homes continue to trend higher,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.

<br /><br /><br /><br /><br /><br />

The increase in the Boston area was less dramatic than in other regions that were harder hit by the housing downfall. Between 2005 and 2009, home prices in the Boston region dropped about 20 percent, but the market has generally been more stable than the nation as a whole. Since 2009, area home values have fluctuated and now are less than 15 percent below their September 2005 peak.

Barry Bluestone, director of the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University, expects steady but moderate price increases for single-family homes in the Boston area over the next few years, as more people put their homes on the market. Bluestone said he expects prices for multifamily homes and condominiums to rise even faster. “Older baby boomers are going to look to downsize and younger professionals will be less interested in moving into the suburbs and having to put up with long, tedious commutes,” he said.

Jenifer B. McKim can be reached at [email protected]. Follow her on Twitter@jbmckim.

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Mass Home Prices Jump 14%

 

Mass. home prices jump 14%

By Jenifer B. McKim

MAY 29, 2013

 

The median price for single-family homes in Massachusetts rose to $313,000 in April, a near 14 percent increase compared to the same time last year as increased buyer demand and a tight housing inventory pushed up home values, new data released Wednesday shows.

April marked the seventh month in a row of rising home prices, according to the Warren Group, a Boston company that tracks local real estate. Between January and April, the median selling price climbed to $294,000, an 11 percent jump compared to the same time last year, according to Warren.

The steep price increase comes as home sales decline. Single-family home sales dropped to 3,504 in April, about 1 percent less than the same time in 2012.

”There is high demand and low inventory this spring, which is causing this pattern of rising prices and dropping sales volume,” said Timothy M. Warren Jr., chief executive of The Warren Group. “Low mortgage rates and steady home values are helping buoy consumer confidence.”

Tight inventory, however, did not hinder sales of condominiums, which climbed more than 8 percent in April compared to the same time last year, the Warren Group reported. Median prices for condos rose to $280,000, a near 1 percent jump compared to April, 2012.

Housing specialists worry that if more sellers don’t come to the table, the housing market could sputter. Inventory of single-family homes in April fell 27.1 percent compared to the same time last year, according to the Massachusetts Association of Realtors, which also released data Wednesday. The number of condos for sale fell 32.4 percent last month, compared to the same time last year.

Providing some relief, new listings for both condos and single-family homes rose in the double digits in April.

“With home prices improving, sellers are finally gaining the confidence they need to list their home,” said association president Kimberly Allard-Moccia, owner of Century 21 Professionals in Braintree. “This should help move us closer to a more balanced market.”

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Shadow Demand Outweighs Shadow Inventory

Very interesting post from Mike Simonsen at Altos Research. In essence he is saying that buyers who held back buying in a sluggish economy are now entering the market in a time of low inventory, creating additional demand, which becomes hard to satisfy.

Real Estate Shadow Demand Outweighs its Shadow Inventory

by MIKE SIMONSEN

Quit your yapping about how strong the real estate market is, Simonsen. It’s a fake rally. There is no actual demand.

That’s the bearish argument I’ve been hearing lately. I’m not buying it.

For years we’ve been watching the phenomenon of “Shadow Inventory” of potential homes that need to be sold, and looking for impact on the market. This set of underwater or distressed properties is now shrinking rapidly.  The number of homes with underwater mortgages fell by nearly two million last year. According to the Fed, home price gains of 10% will be enough to move 40% of underwater borrowers back above water. These home sellers are highly likely to buy another home in the same or comparable market, off setting new supply with new demand.

Meanwhile another phenomenon that emerged from the bubble burst has been developing, and it’s hit the market with full force. Shadow Demand. Demand for homes that went unsatisfied, primarily due to financial and economic uncertainty, that can now emerge as jobs recover and mortgages remain cheap.

Housing’s Shadow Demand

Let’s look at the source of new demand. Increased demand for housing comes from new “households.”

household formation

Cumulative Household formation surpluss/defecit relative to 5 year average (millions). Source: Federal Reserve Bank, Altos ResearchFrom 1997 through 2007, each year an average of 1.3 million new households were formed per year. Our population grows via immigration and kids maturing. These people need to  rent or buy homes, or they double up with friends and family. During the Great Recession, household formation was closer to 600,000 per year. Population growth continued at about the same pace but people didn’t move into homes of their own.  That means for the three years of 2008, 2009, 2010 we had “Shadow Demand” forming around 2 million potential homes that can’t wait to launch on their own.

In the chart above, you can see that households get formed during times of economic strength. People hide when the economy is bad.

Household formation in the five years of the housing bust was lower than any five year period since the 1960s.  This is the Shadow Demand and it’s now hitting the real estate market. These millions of potential buyers were waiting until they were financially stable and until the bargains arrived. In 2012, these conditions converged. In 2013 employment and recovery is stronger. Real estate demand is higher.

Despite all the risks in the US and global economies, the 2012 real estate market’s demand is a function of years of pent up purchases. After years of historic lows, this demand trends seems poised for a multi-year recovery.

 

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Are 2013 Forecasts Too Low?

Here is a great article by Mike Simonsen of Altos Research.

 

Why Forecasts for the 2013 Housing Market are Too Low

MARCH  2013

by MIKE SIMONSEN

I’m in Washington DC to talk to the National Association of Business Economics on the state of the housing market. I ran into Lawrence Yun, the chief economist for the National Association of Realtors and he mentioned that he just raised his forecast for 2013 from 4% year over year to 7-8%. That’s pretty bullish. Yun, of course, takes a lot of flack for being an industry cheerleader rather than objective. So he should be bullish, right? I told him he’s still too low.

The logic is this: in 2012 US Housing Prices climbed between 5 and 12%, depending on which measure you choose.  The Case-Shiller Index climbed 6.8% year over year at the end of 2012. Here in 1Q 2013, all the leading indicators are stronger than they were a year ago. (For those of you just tuning in, this is the third in a series of “home prices are stronger than you think” posts from me this winter.)

Contact Altos if you want details on the our housing market data.

2012 (December) 2013 Forecast
Altos Research 7.9% 10%
CoreLogic 6.8% 6%
NAR 11.5% 8%
Clear Capital 4.9% 5%

Note that all these measures, except for Altos, focus on the closed transactions. They are, by definition, lagging. It makes sense that, in an accelerating market, the Altos number is going to hit it’s high several months before the others do.

The always-lucid Bill McBride at CalculatedRisk saw homes prices rise in 2012 but anticipates a slowdown in 2013, though he doesn’t say why.

 

US Home Prices 2012Composite Prices. Single Family Homes. Altos 20-city (national) composite. Data as of February 22, 2013. Source: Altos Research

If you observe that home prices rose at x% last year and that the conditions (low supply, high demand) that created that rise are stronger this year, it’s reasonable that your models should indicate stronger price appreciation this year. Don’t be surprised when 2013 turns out to be another roaring year for home prices.

 

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Towns Rush Past Their 2005 Peak Values!

WOW!!!  Interesting post by Scott on BostonRealEstate.com

Posted by Scott Van Voorhis

South End Heli Shot

OK, I guess the rich towns just keep getting richer.

Home values in Cambridge, Arlington and Brookline have all shot past their peaks reached during the bubble years, Zillow finds in its latest quarterly report.

The median home value in Cambridge (yes trolls, I know, it’s a city, was using “town” loosely) is now $463,000, a level last seen back in 2005, one of the bubbliest years on record. That’s compared to $453,000 in April, 2005.

Brookline last fall blew past its 2005 price peak of $502,000, with the median home value having skyrocketed over the past five months to just under $530,000, according to Zillow, whose home value index blends both prices of homes sold with assessed values of homes that are not on the market. (Basically, it’s a measurement of the value of all homes in the market, not just a compendium of sale prices.)

Arlington is back as well, with a median home value of $475,000 – higher than Cambridge.

That’s compared to Arlington’s bubble years’ peak of $463,000 reached back in October, 2005, Zillow reports.

Meanwhile, other local cities and towns are on target to equal and then pass their 2005 peaks over the next year.

Boston’s median home value is $372,900, a single percent below peak, while Newton, at $714,400, is just two percent off, Somerville, at $381,400, is within striking distance, at 5 percent below its last peak.

Ready to party? What’s the value of your home?

 

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Core Logic Acquires Case-Shiller

Interesting development. The Case-Shiller guys regularly updated Boston realtors throughout my career in Boston. Nice to hear that they will now have an even broader platform.

by  in Economic News

CoreLogic revenue up, acquires Case-Shiller

The first quarter results are in, and CoreLogic not only reports revenues up by 10.9 percent, operating income is up 22.2 percent and their full-year common share repurchase target has been raised from 3 to 5 million shares. With healthy revenues, the company also unveiled that they have acquired Case-Shiller from Fiserv, Inc. for roughly $6.0 million.

Case-Shiller has long been one of the most widely accepted economic indicators in real estate, strengthening CoreLogic’s role as what they call a “leading residential property information, analytics and services provider.” The acquisition close don March 20, 2013 and was announced this week with the first quarter CoreLogic earnings results.

CoreLogic says they will continue to offer its CoreLogic Home Price Index (HPI), which they say “represents the most geographically comprehensive and current set of home price indexes available.”

What each will be called, how they will operate

The Case-Shiller Indexes will be renamed the CoreLogic Case-Shiller Indexes and the S&P/Case-Shiller Home Price Indices will retain their brand name. The CoreLogic HPI and the Case-Shiller Indexes are complementary measures of home price trends utilizing the same baseline methodology of repeat home sales.

Dr. David Stiff, Chief Economist for Case-Shiller, will continue to supervise the preparation of the CoreLogic Case-Shiller Indexes and comment on the findings of those indexes while Dr. Mark Fleming, Chief Economist for CoreLogic, will continue to supervise the preparation of the CoreLogic HPI reports and comment on the findings of those reports.

The company notes that the CoreLogic Case-Shiller Indexes offer over 6,000 indexes covering states, counties, metros and ZIP codes across the U.S., and 30 year home price forecasts for all indexes which are used to track residential real estate trends, manage price risk, value loan portfolios, estimate default probabilities and loss severity within specific markets, and to determine firm capital sufficiency.

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Inching Towards Normal

Interesting post from Inman. “56% of the way back to normal”.  I’ll examine in a future post relative to our local markets.(Cute barometer.)

Trulia: Housing market inching closer to normal

3 key indicators 56% of the way back to pre-bubble levels
Inman News

Inman News Staff Writer
Apr 23, 2013
Trulia housing barometer.

The housing market continued to trudge towards a recovery in March, with rising construction starts and falling foreclosure and delinquency rates bringing market conditions closer to those of a balanced one, according to Trulia’s Housing Barometer.

The barometer summarizes three key housing market indicators — construction starts, existing home sales, and the delinquency-plus-foreclosure rate — looking at how current conditions compare to those recorded at the depths of the housing crisis and those recorded before the housing bubble.

Trulia noted that while existing home sales dipped slightly from February to March, they were up 10 percent from a year ago. Residential construction posted a 47 percent annual gain in March, and the share of mortgages in delinquency or foreclosure fell to 9.96 percent, down a full percentage point from the same time last year.

As a result, Trulia’s Housing Barometer puts the housing market at 56 percent of the way back to normal in March, compared to 54 percent in February and 33 percent a year ago.

This month’s improvement is even better than it looks, said Trulia Chief Economist Jed Kolko, because of a shift of sales from distressed to conventional and early signs that the inventory crunch may be easing, which would bring some relief to would-be homebuyers.

– See more at: http://www.inman.com/2013/04/23/trulia-housing-market-inching-closer-to-normal/#sthash.TaipRQUa.dpuf