Rates and Home Prices Predicted to Rise

By Nick Caruso, RISMedia.com

The real estate market will continue its road to recovery in 2014, with home prices rising 6 percent and mortgage rates
hitting 5.4 percent. In addition, demand is predicted to plateau, all according to Lawrence Yun, chief economist and senior vice president of Research for the National Association of REALTORS®, who presented his 2014 market forecast during last week’s REALTORS® Conference and Expo.

Other factors aim to set the market back on the right path.  Although there could be a possible negative impact due to rising
mortgage rates, job creation and loosening underwriting standards should balance out 2014’s sales volume.

“There were two million jobs created in the past few months and we’ll see the same next year,” says Yun.  “These people could potentially enter the market.”  Yun does not see, however, an increase in unit sales nationwide, as inventory levels remain an issue to keep an eye on.  Currently, the nation is under one million and this number needs to increase 50-60 percent in order to get back to normal numbers.

“I don’t foresee that next year, but maybe we can at least make up half the needed gain to steadily reduce the inventory pressure,” he says.  While existing home sales are expected to remain flat at roughly 5.1 million units, new homes could rise by 25 percent from 430,000 to 510,000 next year.  This part of the market is still in recovery due to the difficulties for smaller builders to obtain financing.  This should continue easing throughout the next year.

When prompted further about how the rising mortgage rate will affect sales and the market, Yun responded, “Assuming nothing changes further, I believe it takes about 10 percent right off the top in terms of people who qualified this year versus the same people who would qualify next year. If need be, NAR will be pushing for new legislation to clarify what QM and QRM are so that we don’t get hit by that 10 percent.”

With the housing market is recovering for most Americans, homeowners will be more concerned than ever about their home values in 2014.  Actual price increases for 2013 was 11 percent, which is now expected to be a six percent rise next year.  The way to relieve home price pressure is for more inventory to come into the market, says Yun.  “We were surprised by how fast inventory would decline, but there was always a fresh set of inventory trickling in as it went out,” he says.

Overall in 2013, investor activity has been normal, but numbers slightly declined.  Though, more small-time investors entered the market, staying one step ahead of the population, consistently punching numbers to see what transactions made the most sense for them.  “If investors remain active, it implies that housing is a good buy,” says Yun.  Despite some cautionary areas, the real estate market has its beacons of potential.  The industry may not be back to its best numbers yet, but we are still heading in the right direction and making our way down that road to recovery.  “We’ve had a decent year this year and next year will be roughly the same.”

2nd Place Winner:  Canyon Road in Santa Fe, New Mexico

Santa Fe uniquely captures the spirit of the American Southwest, while offering visitors 400 years of history and amazing art . . . all along historic Canyon Road. The half-mile stretch of adobe buildings in Santa Fe’s arts district has more than 100 galleries – many specializing in Native American arts and handicrafts – and restaurants serving Southwestern cuisine.

Read more…

10 Great Places to Live, 2013

by the Editors of Kiplinger’s Personal Finance magazine

What makes a city a great place to live? By our definition, good jobs, reasonably priced homes, decent schools, great health care and manageable size are all essential parts of the mix.  We started with metro areas that have a population of 1 million or less and came up with a list of cities that met those criteria.

Then we whittled the list to ten cities and sent Kiplinger’s reporters to each one to find the extra ingredients that make them special: say, a gorgeous setting, a green sensibility, a brainiac population or a rah-rah sports culture.  Want to see a moose on your daily walk?  They’re a common sight in our #9 city.  Rub elbows with celebrities?  A surprising number of them call our #4 city home.

#4 – Santa Fe, New Mexico

Population:  144,170 (metro area)

Unemployment rate: 5.0%

Cost-of-living index:  NA

Median household income:  $53,698

Median home value:  $379,000

What the locals love:  The diversity, the climate and the free “Music on the Hill” jazz concert series in the summer.

Wander among the pueblo-style structures of Santa Fe’s downtown on a sunny day and you’ll see craftspeople spread their wares outside the 400-year-old Palace of the Governors, now part of the New Mexico History Museum.  Or you can stop in at restaurants such as The Shed, which serves dishes reflecting Spanish and Native American influences.  Art galleries line Canyon Road.

Locals enjoy free outdoor concerts at the central plaza bandstand, and six miles from the heart of town, the outdoor amphitheater enthralls opera-goers.  Outdoor enthusiasts can hit nearby hiking and biking trails or head to the ski slopes at the Sangre de Cristo Mountains, about a half-hour drive from downtown.  Getting around on foot can be a challenge, but efforts are under way to improve sidewalks and clean up sections between popular attractions.

Tourism, government (Santa Fe is the state capital of the Land of Enchantment) and the Los Alamos National Laboratory dominate the local economy; and the health care sector is set to grow.  The city also fosters programs to encourage entrepreneurship in areas such as green technology and new media, to diversify the economy and to encourage young people to stick around.  Santa Fe’s cost of living is a little higher than in other parts of the state.  Many of the public schools are underperformers, so some families choose to live in districts with better schools or send kids to one of 43 private schools in Santa Fe County.  But the setting truly is enchanting.

Rebound Report Shows All Top 100 Markets Improve, Positive Equity Returns

 Monday, July 1, 2013 – RISMedia

In the latest round of positive housing news this week,  Homes.com is reporting gains for single- family properties in all top 100 markets for the first time, improving from 96 and 91 markets in the two previous reporting periods. This, according to its latest Local Market Index, a price performance summary on repeat sales of properties in the U.S. based on home pricing data for the period ending April 2013.

As a complement to the Local Market Index, Homes.com released an exclusive Rebound

Report, highlighting how the housing recovery process is unfolding across the country. Rebound data for April 2013 revealed that 14 markets across the U.S. are fully recovered – up from the previous month’s nine markets.

Additionally, 35 U.S. markets now show a rebound of 50 percent or more.

“The latest round of report findings supports a growing confidence in the housing market,” says Brock MacLean, executive vice president of Homes.com. “With home prices posting the strongest gains in seven years, the Rebound Report is another indicator of a positive turn. In one month alone, we have seen five new markets reach recovery. Adding to that momentum, all top 100 markets recorded gains for the first time, indicating the recovery continues to build across the country.”

This news comes following a wave of positive housing recovery news we reported last week including a significant jump in April home prices – posting record monthly growth and the fastest year-over-year growth in seven years; and both new-home sales and consumer confidence each reaching five-year highs.

Several Great Markets and Music Festivals

INDIAN MARKET WEEK™ – August 12th through August 18th

SWAIA will celebrate its 92nd annual Santa Fe Indian Market the week of August 12-18, 2013. This spectacular festival brings over 150,000 people to Santa Fe every August with its unique, exciting and inspiring events. From families with young children to avid art collectors, Santa Fe Indian Market attracts international visitors from all walks of life. For many visitors, this is a rare opportunity to meet the artists and learn about contemporary Indian arts and cultures. Most events are free and open to the public. Join us! It will be an experience of a lifetime.

Indian Market Week

62^nd ANNUAL TRADITIONAL SPANISH MARKET – July 27th & 28th

The rich Hispanic culture of New Mexico will be celebrated at the 62^nd Annual Traditional Spanish Market, Saturday and Sunday, July 27th & 28^th, 2013 on the Santa Fe Plaza.  A popular event for residents and visitors alike, Spanish Market features handmade traditional art from hundreds of local Hispanic artists, as well as on-going live music and dance, art demonstrations, and regional foods throughout each day.  Come meet the artists and their families as they share the experience of their living Hispanic heritage as it has existed in New Mexico for more than 400 years!
Spanish Market

SANTA FE OPERA – June 28th through August 24th

There are plenty of treats at this prestigious festival, which includes Stephen Lord conducting Joyce DiDonato and Lawrence Brownlee in Rossini’s “Donna del Lago.”  Emmanuel Villaume leads Offenbach’s comic “Grand Duchess of Gerolstein,” with Susan Graham in the title role; Lisette Oropesa, Susanna Phillips and Daniel Okulitch star in Mozart’s “Marriage of Figaro”; Laurent Pelly directs Verdi’s “Traviata.”  The lineup also includes the premiere of Theodore Morrison’s “Oscar,” based on the life of Oscar Wilde and featuring the countertenor David Daniels in the title role.
The Santa Fe Opera, (505) 986-5900

SANTA FE CHAMBER MUSIC FESTIVAL – July 14th through August 19th

A host of distinguished visiting artists including Jeremy Denk, Daniel Hope, and the Orion and Shanghai String Quartets will perform at this festival nestled in the Sangre de Cristo Mountains, where Garrick Ohlsson is artist in residence.  A workshop for young composers will culminate in three world premieres presented alongside Marc Neikrug’s String Quartet No. 4.
Santa Fe Music Festival, (888) 221-9836

ByNick Timiraos

Sales of previously owned homes fell in March from February, but were still above last year’s levels.

Sales of previously owned homes fell by 0.6% in March from February, causing some analysts to second guess the housing rebound. What’s going on? Here are four takeaways from the National Association of Realtors’ report on Monday.

1) The problem for the housing market right now is a lack of supply—not a lack of demand. This isn’t a surprise to anyone who’s tried to buy a house in many parts of the country over the last year. The number of homes listed for sale rose by just 1.6% in March, meaning just 30,000 net new units hit the market. The 1.93 million homes for sale in March was down by 16.8% from one year ago and is the lowest inventory level for the month of March in 13 years. “Inventory is definitely gating demand,” says Glenn Kelman, chief executive of real estate brokerage Redfin. Monday’s report showed that sales were still 10.3% above last year’s levels on a seasonally adjusted basis, continuing a streak of 21 consecutive months in which home sales have increased from their year-ago level.

2) Rising demand and falling supply continue to push prices higher. The median home price in March rose 11.8% from one year ago to $184,300. (Changes in the median price often reflect a shift in the “mix” of homes being sold, meaning they can rise when more expensive homes transact in a given period.) In the West, median prices were up by 26.1% from one year ago, a clear sign that more homes are selling at higher price points. Median prices have risen from their year-ago levels in 13 straight months.

3) Buyers are getting frustrated, and some sellers are getting greedy. Some sellers are hearing that it’s a sellers’ market and are becoming more determined to ask for more. Inventory is low, of course, because many sellers aren’t willing or able to sell at prices that are down sharply from seven years ago. Some have a “reservation price”—a price at which they’ll sell. Ultimately, rising prices should lead more sellers to put their homes on the market. But until then, buyers may give up. “There are not enough homes to buy,” says Mr. Kelman. “We see so many people dropping out of the process because they’re tired of getting outbid.” Another problem: many sellers aren’t going to be willing to list until they’re more confident they can buy another home to move into.

4) The current market isn’t fun for real-estate agents, who make their living selling homes. But it is good for the home builders. If would-be buyers are motivated to buy now to take advantage of low prices and low mortgage rates but can’t find a home on the resale market, they’re likely to turn to the new-home market. Already, new home sales have rebounded from their depressed levels of a year ago, and Tuesday’s report for March sales will provide the latest indication of just how quickly builders are regaining market share that they surrendered as the foreclosure crisis worsened five years ago.

Data through January 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1Home Price Indices, a leading measure of U.S. home prices, showed average home prices increased 7.3% for the 10-City Composite and 8.1% for the 20-City Composite in the 12 months ending in January 2013.

Home Prices Expected to Rise

The housing recovery is expected to grow at an annualized rate of 0.6 percent through the third quarter of this year, then gain momentum and prices are projected to grow 3.7 percent between the third quarters of 2013 and 2014 until settling down to 3.3 percent annual increases over the next three years according to Fiserv, a financial services technology provider using data from the Federal Housing Finance Agency (FHFA).

Both home prices and home sales volumes increased steadily last year, making 2012 the first positive year for both prices and sales since the housing market crash, excluding gains induced by the home buyer tax credits in 2009 and 2010.

“Although some recent real estate activity has been speculative, it seems as if buyers have more realistic expectations about housing market returns after having lived through the largest housing market crash in U.S. history,” says David Stiff, chief economist, Fiserv.

“2012 was the first year since 1997 that the housing market has resembled something recognizable as normal. For the past 15 years, home price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology,” continues Stiff.

“Back in 1997, housing prices grew 3 percent, just below the 5 percent long-term average rate of appreciation. From 1998 to 2006, prices appreciated at levels above 5 percent, with double-digit price increases in many of those years. Then, after 2006, the market collapsed as euphoria turned to panic. It took until the end of 2011 before housing markets finally started to stabilize. The latest Case-Shiller results show a return to a historically normal pace of price appreciation in the last year.”

The recovery in home prices has been solid and broad-based. At the end of the 2012 third quarter, prices were rising in approximately 62 percent of all U.S. metro areas, compared to 12.5 percent in the same period a year ago. Average U.S. home prices increased 3.6 percent from the third quarter of 2011 to the comparable period of 2012. Many of the metro areas that suffered the most severe declines during the housing market crash enjoyed the highest price increases in that period.

Fiserv Case-Shiller projects that by the end of 2013, home prices will be rising in nearly every metro area in the U.S. Some markets may experience short-term double-digit price jumps that could be partially reversed by price declines as large tranches of bank-owned inventory (REO) are liquidated. In other markets, price appreciation will slowly return to normal rates as home buyers regain confidence that the market has found its footing.

Stiff cautions that the parallels to previous years should not be overstated. Unlike in 1997, there are millions of homes with delinquent mortgages, in the foreclosure process, or in REO inventories listed for sale or waiting to be sold. But many trends are positive. With both prices and mortgage payments at historic lows relative to income, Fiserv Case-Shiller expects stronger demand for housing, and the sector once again having a positive impact on the economy.

“The number of new housing units being built per household is near a record low. As momentum in the housing market builds, we will see the residential real estate sector once again make large contributions to the economic recovery. If residential investment – which encompasses all direct spending on residential real estate construction and activity – returns to its 1997 level over the next two years, then housing will boost overall economic growth by 0.5 percentage points in 2013 and 2014,” Stiff continues.

“In all of the bubble-crash markets, foreclosures will have a persistent but diminishing drag on price appreciation. Since the timing of the disposition of foreclosed properties can be highly uncertain, we will witness choppy price movements as individual metro markets stabilize. For example, in late 2011, prices in Atlanta dropped sharply because of a substantial jump in REO sales, and it is possible that we will see similar, temporary price declines in other markets as subsiding waves of foreclosed properties buffet these markets. In other markets, investor demand is quickly absorbing listed REO properties, and as a result, foreclosures are no longer pulling home prices downward,” Stiff says.

The Fiserv Case-Shiller Indexes, which include data covering thousands of zip codes, counties, metro areas and state markets, are owned and generated by Fiserv. The historical and forecast home price trend information in this report is calculated with the Fiserv proprietary Case-Shiller indexes, supplemented with data from the FHFA. The historical home price trends highlighted in this release are for the 12-month period that ended September 30, 2012. One-year forecasts are for the 12 months ending on September 30, 2013. The Fiserv Case-Shiller home price forecasts are produced by Fiserv and Moody’s Analytics.

For more information, visit www.realestateeconomywatch.com.