Forecast improves for late ‘13 economy

WASHINGTON – May 13, 2013 – Political paralysis in Washington won’t stall an economic recovery that’s revving up across the rest of the country. That’s the consensus of economists surveyed by USA Today, who predict the recovery will accelerate late this year even without a deal by Congress and the White House to lessen the impact of automatic federal budget cuts.

The across-the-board spending cuts will cause growth to slow in the middle of 2013. But the negative effects will ease by the fourth quarter as the private sector gathers strength, according to the 43 leading economists surveyed May 6-9.

This year, the budget cuts are expected to pare federal spending by $65 billion and shave half a percentage point off economic growth, according to the Congressional Budget Office (CBO) and Moody’s Analytics.

The economy expanded at a 2.5 percent annual rate in the first quarter. Economists’ median estimates project growth is likely to average about 2 percent annually this quarter and next.

Monthly job growth, which averaged 206,000 in the first quarter, will average 165,000 in the second quarter and 172,000 in the third quarter, the economists say.

Many top economists, including Federal Reserve Chairman Ben Bernanke, have urged delaying much of the belt-tightening until the economy is on more solid footing. While the White House and a divided Congress are making little progress in talks, more than two-thirds of the economists surveyed say it’s unlikely even the fiscal 2014 budget cutbacks will be tempered.

An additional $40 billion in cuts next year will reduce 2014 economic growth by 0.3 percentage points, the CBO and Moody’s say. Even so, the economists expect growth to pick up in the fourth quarter and approach 3 percent by early next year as job gains climb to a 200,000 monthly average.

Since the job market hit bottom in early 2010, the economy has grown about 2 percent annually and monthly job growth has averaged 162,000.

“There are some powerful positive forces to offset” budget cuts, says Jim O’Sullivan, chief U.S. economist of High Frequency Economics.

The Fed’s bond-buying initiative, he says, has held down long-term interest rates, juicing housing and driving up stock markets.

Housing starts are likely to total 990,000 this year and about 1.2 million in 2014, according to Standard & Poor’s, up from 780,000 in 2012.

O’Sullivan says higher home and stock prices are making consumers feel wealthier, so they’ll spend more. Continued job gains, he says, will further bolster spending.

Wells Fargo economist Mark Vitner says the stock market rally has mostly benefited the wealthy while wage gains for average Americans have languished: “We’re getting a recovery. It’s just a slow recovery.”

Copyright © USA TODAY 2013

Average on 30-year mortgage rises to 3.42%

Mortgage Rate Trend Index

Expect no change over the short term, say 54% of the mortgage industry experts polled this week by Bankrate.com. The rest break evenly: 23% foresee an increase while 23% predict a decline.

WASHINGTON (AP) – May 10, 2013 – Average U.S. mortgage rates rose this week but remained near historic lows. Cheaper mortgages have encouraged more homebuying and refinancing.

Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year fixed mortgage edged up to 3.42 percent from 3.35 percent last week. That’s still near the average of 3.31 percent reached in November, the lowest on records dating to 1971.

The average on the 15-year fixed-rate loan rose to 2.61 percent from 2.56 percent last week, which was the lowest on records going back to 1991.

Low mortgage rates have buttressed the housing recovery that began last year. Home sales and construction are up from a year ago, and prices are rising in most U.S. markets.

A survey released Tuesday showed that U.S. home prices rose 10.5 percent in March compared with a year earlier, the biggest year-over-year gain since March 2006.

The survey from Core Logic, a real estate data provider, showed that year-over-year prices have risen for 13 straight months. Prices are rising in part because more buyers are bidding on a limited supply of homes for sale.

Prices rose in 46 states over the past year. Eleven states posted double-digit gains.

And excluding distressed sales, which comprise foreclosures and short sales, prices rose in every state. A short sale is when a home sells for less than what’s owed on the mortgage.

Sales are rising in some markets hit hardest by the housing bust in part because investors are scooping up homes in hopes of turning a profit.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year mortgages was 0.7 point, unchanged from last week. The fee for 15-year loans also held steady at 0.7 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.53 percent from 2.56 percent last week. The fee for one-year adjustable-rate loans rose to 0.4 point from 0.3 point.

The average rate on a five-year adjustable-rate mortgage increased to 2.58 percent from 2.56 percent. The fee was unchanged at 0.5 point.
 Copyright © 2013 The Associated Press, Marcy Gordon, AP business writer.

Fla.’s housing market shows momentum in 1Q 2013

Related: NAR: Metro area home price growth trend continues in 1Q

ORLANDO, Fla. – May 9, 2013 – Florida’s housing market gained strength in first quarter 2013 with increased closed sales, more pending sales, higher median prices and a reduced supply of homes for sale compared to the same quarter in 2012, according to the latest housing data released by Florida Realtors®.

“The first three months of 2013 demonstrate that Florida’s housing market is gaining momentum and continuing to bolster the state’s economy,” said 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “More people went back to work as more jobs were created in Florida during the first quarter, and our population is also growing – which provide a solid foundation for growth in the housing market. It’s taking less time to sell a home and, coupled with tight inventory, that shows buyers are eager to lock in historically low mortgage interest rates and take advantage of favorable, but rising prices.”

Statewide closed sales of existing single-family homes totaled 48,976 in 1Q 2013, up 10.2 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – contracts that are signed but not yet completed or closed – for existing single-family homes rose 26.8 percent in the first quarter compared to the 1Q 2012 figure. The statewide median sales price for single-family existing homes in 1Q 2013 was $153,000, up 13.4 percent from the same quarter a year ago.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida’s year-to-year comparison for sales of townhouse-condos, a total of 24,655 units sold statewide in the first quarter, up 3.2 percent from the first three months of 2012. Pending sales for townhouse-condos in 1Q 2013 increased 13.7 percent compared to a year ago, while the statewide median for townhouse-condo properties was $116,000, up 18.4 percent over the same quarter last year.

In 1Q 2013, the median days on market (the midpoint of the number of days it took for a property to sell that month) was 60 days for both single-family homes and for townhouse-condo properties.

The inventory for single-family homes stood at a 5.3-months’ supply for 1Q 2013; inventory for townhouse-condos was at a 5.8-months’ supply for the same period, according to Florida Realtors.

Florida Realtors Chief Economist Dr. John Tuccillo said, “In a sense, these numbers are old news since we release the monthly numbers separately. But they are important in that they confirm the sales and price trends we have seen shaping up in the market. If you look back at the quarterly numbers, comparing year to year, you see, at least in single-family sales, the steadiness of the market since 2009. We expect that the year-over-year increases we have seen for the past several years will continue into 2014.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.50 percent for 1Q 2013 down from the previous year’s average of 3.92 percent, according to Freddie Mac.

To see the full statewide housing activity reports, go to Florida Realtors Media Center and look under Latest Releases, or download the 1Q 2013 data report PDFs under Market Data.

© 2013 Florida Realtors®

Turning point: Over 50% expect home price increases

WASHINGTON – May 8, 2013 – More than half of Americans now expect the country’s home prices to climb within the next year – a growing optimism toward the health of the housing industry.

The share of respondents to Fannie Mae’s April 2013 National Housing Survey who expect home prices to go up rose another 3 percentage points in April to 51 percent. By comparison, only 32 percent had that optimistic outlook one year earlier.

“Crossing the 50 percent threshold marks a significant milestone as most Americans believe a housing recovery is truly occurring throughout the country,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. In addition, the “share of Americans who think it’s a good time to sell has doubled during the last year. Many homeowners who have been underwater are gradually returning to positive equity, and selling is now becoming an available and attractive option again.”

The share of respondents who say think it’s a good time to sell remains low, but it increased 4 percentage points in April to 30 percent; one year earlier, it was 15 percent.

Survey highlights

• The average 12-month home price change expectation held steady at 2.7 percent.
• The share of people who believe home prices will go down remained at the survey low of 10 percent for the fourth month in a row.
• The share of respondents who say mortgage rates will go up fell 3 percentage points to 43 percent, while those who say rates will go down increased slightly to 7 percent.
• The average 12-month rental price change expectation held steady at 4.1 percent.
• 48 percent of those surveyed say home rental prices will go up in the next year, a 2-percentage point decrease from last month’s survey high.
• The share of respondents who said they would buy if they were going to move increased slightly to 65 percent.

© 2013 Florida Realtors®

Home prices near new highs in some markets

NEW YORK – May 6, 2013 – Home prices in 10 percent of the nation’s top 200 housing markets have recently hit new peaks or are only a hair away, new data show.

Another 24 of the top markets are within 5 percent of their peaks, according to data provided to USA TODAY by real estate tracker Lender Processing Services. Many of those cities are likely to hit new peaks this year, economists say, given projections for continued price increases.

The data show how far prices in many cities have rebounded since the historic housing bust after mid-2006 – and how far they still have to go in most cities. It also underscores the uneven impact of the housing bubble, and the bust, in different regions.

Dozens of markets where prices peaked by 2006 are still 25 percent to 58 percent below those highs, LPS says.

Many cities now at or close to previous highs never saw the price run-ups leading up to the bust that others did. Afterward, they didn’t drop as far, so they have less of a climb back.

Of the cities within 5 percent of their previous peaks, none saw more than an 11 percent decline in home values from mid-2006 to the market’s bottom in early 2012, LPS data show. Nationally, prices fell almost 28 percent during that time.

“We didn’t get invited to the party, so we never had the hangover,” says Ron Croushore, CEO of Prudential Preferred Realty in Pittsburgh.

Denver, which was up almost 1 percent in February from its 2006 peak, suffered almost a 10 percent decline during the national housing bust. Honolulu, which was 2 percent from its 2007 peak in February, had been hit with an 11 percent decline.

Job growth is another factor in recovered markets.

Austin, Denver, Baton Rouge, Houston, Oklahoma City and Knoxville, Tenn., are at previous highs or within 5 percent, LPS’ data show. In March, all posted stronger annual job growth than the national average of 1.4 percent, based on Bureau of Labor Statistics data. Austin’s job growth was 4 percent year-over-year. Home prices there are up 9.7 percent from mid-2006, LPS says.

The strong job market “has helped our housing market recover rather quickly,” says Angelos Angelou of the Austin-based Angelou Economics.

In the past year, U.S. home prices rose faster than many expected. LPS shows a 7.3 percent gain in February year over year.

Some cities have done better. Home prices in Phoenix and San Francisco were up 19 percent.

Even so, Phoenix is 36 percent off its 2006 peak. San Francisco is almost 25 percent off its peak, LPS says.

Copyright © USA TODAY 2013

HUD homes could add to inventory-starved market

WASHINGTON – May 3, 2013 – Housing market observers expect the supply of homes listed by the Department of Housing and Urban Development (HUD) to swell over the next two years.

RealtyTrac reports that patient buyers may benefit from the uptick in distressed properties owned by HUD, which appeal to some buyers because of their discounted selling price. However, the current market is highly competitive, and the real estate is attracting many buyers and generating multiple offers.

Meanwhile, lenders continue to work through a backlog of foreclosures delayed by problems with legal reviews.

A HUD home purchase has pros and cons. Since the rules differ from other home sales, interested buyers should understand the ins and outs of HUD-owned homes, and the best practices for pursuing and making offers in order to land one at a good price.

Source: Housing Wire (04/29/13) Hopkins, Megan

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Is the quick house flip making a comeback?

NEW YORK – May 1, 2013 – More Americans are again on the hunt to snag a home at a bargain price, fix it up, and then try to resell it for a quick profit. These home flippers mostly vanished during the housing downturn, but flipping is starting to return thanks to slowly rising home values.

RealtyTrac says flipping increased for the second year in row, rising a slight 0.33 percent in 2012 from 12 percent in 2011. The company defines flipping as buying and selling a property within six months.

According to RealtyTrac, the average gross profit in a flip was $37,375 in 2012; and some of the best places to flip homes in 2012 were Orlando, Fla.; Richmond, Va.; Tucson, Ariz.; and Charlotte, N.C.

For example, Orlando home flips were purchased for $100,397, on average, and then sold for $174,895 – earning a gross profit, on average, of nearly $75,000.

Flippers are more cautious this time around, however. They tend to come in with an all-cash deal, and many also hold onto properties longer than they once did. On average, the flipping time from purchase to resale stands at about 106 days today, according to RealtyTrac.

“That seems to be the sweet spot for a profitable deal,” says Daren Blomquist, vice president at RealtyTrac. “Back in the housing bubble, many flippers were solely relying on price appreciation, sitting back and selling for big profits within a month or two.”

Source: “The New Rules of House Flipping,” Reuters (April 18, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688