Spring homebuying season starts in January

 Real Estate Market  Comments Off on Spring homebuying season starts in January
Jan 142020
 

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By G. Steven Bray

It used to be that the spring homebuying season was in, well, the springtime. According to Realtor.com, the seasons are a-changing. Homebuyers have started shopping earlier and earlier the last few years. In larger cities this year, the homebuying season may have already started.

This phenomenon is likely the result of the lower number of homes for sale over the last few years. That low inventory combined with rising home prices is leading home shoppers to get an early start. With housing inventory expected to reach record lows this year, Realtor.com says the trend towards early shopping should continue.

The company based its prediction on views of its Web site listings. Jan 2019 was only 1% behind Feb for the highest number of views per listing. That’s a huge change from 2015 when Apr was the top month, and Jan views lagged Apr by 16%.

So, if you plan to buy a home this spring, it’s time to start shopping.

Texas housing market outperforming

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Jan 132020
 

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By G. Steven Bray

A survey of 110 economists and real estate experts conducted by Pulsenomics and Zillow forecasts that Austin has the best chance of all major metros to see above-average home price growth this year. Dallas and San Antonio also ranked in the top 10. According to the survey, home prices will grow an average 2.8% this year, but markets in the South are expected to outperform others.

Austin received a likely-to-outperform score of 76 (out of 100). The next closest metro was Charlotte with a score of 59. 83% of respondents said Austin will outperform the average with only 7% saying it will under-perform. (I think those 7% live in a cave somewhere.)

Dallas placed 5th on the list with a score of 34, and San Antonio placed 8th with a score of 32. A positive score means more respondents think the metro will outpeform than under-perform.

So, what does this mean if you’re planning to shop for a home this year? It most likely means higher home prices. Austin’s current inventory of homes for sale is less than 2 months. (Experts say 6 months is a balanced market.) Dallas is under 3 months, and San Antonio is less than 6 months. As the homebuying season ramps up, you can expect a lot of competition for the home of your dreams.

Or maybe home prices are falling

 Real Estate Market  Comments Off on Or maybe home prices are falling
Aug 122019
 

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By G. Steven Bray

Is the housing market heating up or cooling down? Well, it depends on whom you ask. It also probably depends on where you look.

Last week, we reviewed at a Corelogic report that said home price appreciation is rising again. Today, we’ll look at a Redfin report that says the market is slowing.

According to Redfin, the national housing market has cooled dramatically. The brokerage company says home sellers are four-times less likely to receive multiple offers than a year ago. Only 12% of the offers written by its agents faced competition in Jun.

Redfin says home sales started slipping late last year when mortgage rates rose dramatically. Since then, rates have fallen back, but sales have been slow to recover. The report says properties are staying on the market longer, and more of its seller are having to drop prices than in the last two years.

Redfin reported the most dramatic slowdowns in West Coast markets.

The Case-Shiller price index seems to agree as the national index showed home price appreciation fell again in May. The reading of 3.4% was down a tick from Apr and down about 3 points from a recent peak last year.

While the index shows the pace of appreciation slowing, it’s important to remember that prices still are moving higher. In Case-Shiller’s 20-city composite index, only Seattle home prices were lower than a year ago, and prices there have been rising since Jan. For Dallas, the only TX city in the index, home prices have been rising consistently since the trough of the Great Recession.

Housing index says prices rising again

 Real Estate Market, Residential Mortgage  Comments Off on Housing index says prices rising again
Aug 062019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Home price increases are accelerating again, so says Corelogic, a leading real estate data provider. It reported that its Home Price Index is increasing again on a month-over-month basis. In fact, the index rose 0.9% from May to Jun alone. Corelogic reported the annual increase was 3.6%.

Analyzing the reasons for the increase, Corelogic suggests lower mortgage rates may be the culprit. Rates for fixed-rate mortgages have fallen by nearly one percent since last fall.

Another reason may be homeowners’ reluctance to sell. As home prices rise, homeowners are questioning their ability to afford a replacement home, especially one in the same area. In a survey in higher-priced markets, Corelogic found three times as many people planning to buy as sell. Simple economics says that situation will put pressure on home prices.

While the current home price index remains near its recent low, Corelogic forecasts that it will rise above 5% again in the next few months. Even with continued low interest rates, that is likely to exacerbate the housing affordability problem, especially for moderate income homebuyers.

Housing survey shows strength and caution

 Real Estate Market  Comments Off on Housing survey shows strength and caution
Jul 252019
 

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By G. Steven Bray

Homebuyers remain cautious about the housing market according to the most recent Fannie Mae National Housing Survey. The overall index dipped slightly last month after peaking at a near survey high in May.

The index was buoyed by a rise in one component: the net percentage of respondents who thinks mortgage rates will fall. The remaining components were flat or fell slightly. Interestingly, even though more folks said they think rates will fall, they’re still outnumbered by those who think they’ll rise 4 to 1.

The good-time-to-buy component fell four points last month. However, positive sentiment outweighs negative more than 2 to 1, and a majority still thinks it’s a good time to buy a home.

The good-time-to-sell component was flat, and it remains strongly positive, most likely reflecting the strong price appreciation in most markets over the past few years.

Two measures that aren’t part of the overall index concern rental prices. Respondents still think rents will rise almost twice as fast as home prices, and a majority still believes rents will rise in the coming year. Only 2% think they’ll fall. So, renters still have a strong incentive to become homebuyers.

Click here for the full report.

Homebuyers cautious despite strong economy

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May 232019
 

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By G. Steven Bray

Homebuyers remain somewhat cautious about the housing market according the most recent Fannie Mae National Housing Survey. After last month’s blip higher, the share of respondents saying it’s a good time to buy a home resumed the downward trend that started over 5 years ago. Even so, a 14% majority of respondents still thinks it’s a good-time-to-buy.

That decline in buying sentiment largely was responsible for the 1.5 point decline in the overall survey index. It now stands almost 3 and a half points lower than at the same time last year.

The decline was a little surprising given the positive change to two of the other survey components. The net share of respondents who thinks home prices will continue rising fell 2 points, and while a 36% majority still thinks prices will rise, this share is 13 points lower than last year. A large majority, 40%, still thinks mortgage rates will rise in the next year, but that share has fallen 12 points in the last two months.

Among the other survey components, those related to personal finances remain bullish. Consumers overwhelming are unconcerned about job security and by a 22% margin say their income this year is significantly higher than it was 12 months ago.

In addition, a strong majority of respondents, 43%, still thinks it’s a good time to sell a home. That share hasn’t changed much since peaking a year ago.

Here is a link to the full report.

3 reasons the next recession won’t lead to a housing collapse

 Real Estate Market  Comments Off on 3 reasons the next recession won’t lead to a housing collapse
May 132019
 

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By G. Steven Bray

Some pundits have suggested we’re staring at the beginnings of a new recession fueled by the housing market. Not so, says Ralph DeFranco, Global Chief Economist for Arch Capital Services. He says current housing trends bare no resemblance to conditions that existed prior to the Great Recession.

A recession is inevitable at some point in the future, but DeFranco says it should be less severe for the housing market than the 2008 recession due to three factors:

  • He estimates the current market is underbuilt by 1 million homes;
  • Homebuyers are more cautious; and
  • The quality of loans originated since the Great Recession is much higher.

Conditions were exactly opposite before the Great Recession.

DeFranco also noted that big price drops during recessions are the exception rather than the norm. In the five recessions since 1975, home values have declined only once. Moreover, the current housing inventory shortage likely would soften the effects of a recession on the housing market.

Rate update: Stuck in the middle again

 Interest Rates, Real Estate Market  Comments Off on Rate update: Stuck in the middle again
Apr 122019
 

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By G. Steven Bray

After a quick move lower following last month’s Federal Reserve meeting, mortgage rates have moderated a bit. Concerns of a global recession prompted the move lower, and the Fed seemed to add fuel to that concern with the changes to its policy stance, announcing what is in a sense version 5 of quantitative easing, which has helped keep rates low for years.

Rates rebounded a bit when investors realized the US economy certainly isn’t circling the drain. We’ve had two strong jobs reports, and retail sales rebounded after the government shutdown. The data isn’t as strong as it was last year, but it certainly doesn’t seem to indicate an imminent recession.

Overseas is another story. At its meeting this week, the head of the European Central Bank all but predicted a recession in Europe, and European economic data continues to weaken. Britain still hasn’t figured out how it’s going to leave the European Union, which breeds uncertainty, a close friend of low interest rates. And China’s economy also is slowing, and analysts worry that a resolution to the trade dispute may not be enough to stop the slide.

So, that’s the bad news – the news that’s pressuring rates lower. But investors see a US economy that seems to be chugging along. Thus, rates are stuck in the middle – not sure which force is going to be stronger. And they’re liable to stay that way until new headlines tip the scales.

Among the predictable headlines I’m watching right now are the Chinese trade talks and inflation data. I still believe a good trade deal penned in the next couple months will put some upward pressure on rates. However, it has to happen before the Chinese economy slips too far. On the inflation front, recent reports show inflation sliding lower again, which makes the Fed nervous. Receding inflation should put downward pressure on rates.

No need to fear another recession

 Real Estate Market  Comments Off on No need to fear another recession
Mar 252019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

What I call the “recession whisperers” have been active of late, which may be making you nervous about the housing market. Whether you’re a homeowner now or want to be one in the future, the pain associated with falling home prices probably is fresh in your mind given what happened during the Great Recession ten years ago.

According to Ralph Mclaughlin at Corelogic, that worry may be for naught. The housing market generally does pretty well during a recession. Of the last five recessions, three saw home prices continue to rise. Of the other two, prices dipped only 1.9% in 1991, but they fell almost 20% in the Great Recession, and that’s a very recent memory.

However, Mclaughlin cites two other statistics that suggest the housing market is well-positioned to weather any downturn. First, housing inventory is close to a record low. Based on US Census data, the nation has only 15.7 housing units per 1000 households. This compares to almost 35 units per 1000 just before the Great Recession. Thus, even in the event of another recession, it’s unlikely we’d have a glut of unsold homes as we did ten years ago.

Second, demographic factors are favorable for continued home price growth. Currently, 46% of the US population is under age 35, and the Harvard Joint Center for Housing Studies estimates Millennial households will increase by 32 million in the next twenty years. That points to a lot of demand for housing.

Housing index focused on home prices

 Real Estate Market, Residential Mortgage  Comments Off on Housing index focused on home prices
Mar 192019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index was down slightly last month, continuing a slow deterioration of the index that began last year. It’s down 1.5 points since last Feb. While consumers still express strong confidence about their personal finances, their confidence in the housing market is slipping.

The overwhelming majority of respondents still expect their personal financial situation to stay the same or improve in the next year, and a 14-point majority thinks the economy is on the right track. Those percentages have changed little over the last year.

What has changed is the share of respondents who think it’s a good time to buy or sell a home. The “good-time-to-sell” component is down 6 points from last year and down 17 points from its peak last Jun. This may be a reflection of consumer’s softening expectations about home price growth. While a net 33% still expect prices to rise in the next 12 months, that’s down 19 points from the peak last year.

The “good-time-buy” component is down 7 points from last Feb, and has been declining steadily since summer of 2013. Interestingly, this also may be due to rising home prices as it’s the most frequently cited concern of potential homebuyers.

The positive takeaway is that as declining expectations for higher home prices sink in, potential homebuyers may begin to view buying a home as an affordable option again. Consumers still expect rents to rise almost twice as fast as home prices over the coming year.

Link to the full report.