Market Statistcs

Washington, DC, February 09, 2012

Housing affordability conditions improved in most metropolitan areas from softer existing-home prices and record-low mortgage interest rates in the fourth quarter, with rising sales and lower inventory creating more balanced conditions, according to the latest quarterly report by theNational Association of Realtors®.

Introduced with this release is a new annual metro-level housing affordability index, with historically favorable conditions dominating across the country.

The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas¹ (MSAs) in the fourth quarter from a year earlier; two were unchanged and 118 areas had price declines.

Lawrence Yun, NAR chief economist, said the figures reflect greater home sales activity at lower price points. "Sales have risen strongly in lower price ranges from one year ago, while sales at the upper end remain sluggish," he said. "More importantly, we’re seeing a consistent trend of declining inventory, which means supply and demand conditions are becoming more balanced in more areas, which will help stabilize home prices."

The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2 percent from $170,600 in the fourth quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes² – foreclosures and short sales which sold at discounts averaging 15 to 20 percent – accounted for 30 percent of fourth quarter sales; they were 34 percent a year earlier.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times because the level of distressed sales, which artificially depress median prices, can vary notably in given markets. Annual price measures, also reported today, generally smooth out any quarterly swings.

"Broadly speaking, the very middle of the country, from the Dakotas and Nebraska to Oklahoma and Texas, has experienced very stable home price trends because of stronger job creation in those areas," Yun said.

Total existing-home sales,³ including single-family and condo, increased 5.9 percent to a seasonally adjusted annual rate of 4.42 million in the fourth quarter from 4.17 million in the third quarter, and were 9.2 percent above the 4.04 million pace during the fourth quarter of 2010. All regions rose from the third quarter and from a year ago.

At the end of the fourth quarter there were 2.38 million existing homes available for sale, which is 21.2 percent lower than the close of the fourth quarter of 2010 when there were 3.02 million homes on the market.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said market conditions vary widely around the country. "Even with record high housing affordability conditions, all real estate is local," he said. Both buyers and sellers need to be aware of what works in their local market, and Realtors® are the best resource because they have unparalleled knowledge of local market conditions and options."

NAR’s national Housing Affordability Index rose to a record high 184.5 in 2011, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power; recordkeeping began in 1970.

An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small downpayments, the affordability levels are relatively lower.

Metro areas with the greatest housing affordability conditions in 2011 include the Detroit-Warren-Livonia area of Michigan, with an index of 383.4; Toledo, Ohio, at 242.9; and Decatur, Ill., at 236.8. Only 24 out of 152 metros measured had an affordability index below 100 in 2011.

"Clearly, the Midwest has the greatest concentration of areas where home buyers have the strongest purchasing power, followed by the South," Yun said. "Metros on the West Coast and along the Northeastern seaboard have generally higher-priced homes, which account for lower affordability."

Between 2010 and 2011, in markets where comparisons are available, all but 2 out of 148 areas showed improvement in housing affordability, and 69 MSAs had double-digit increases in affordability conditions.

The share of all-cash home purchases in the fourth quarter was 29 percent, unchanged from the third quarter; they were 30 percent in the fourth quarter of 2010. Investors, who are drawn by bargain prices and account for the bulk of cash purchases, accounted for 19 percent of transactions in the third quarter; they were 20 percent in the third quarter and 19 percent a year ago.

First-time buyers purchased 33 percent of homes in the fourth quarter; they were 32 percent in both the third quarter and the fourth quarter of 2010.

In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $160,800 in the fourth quarter, which is 1.7 percent below the fourth quarter of 2010. Ten metros showed increases in their median condo price from a year ago, one was unchanged and 43 areas had declines.

Regionally, existing-home sales in the Northeast rose 6.3 percent in the fourth quarter and are 3.7 percent above the fourth quarter of 2010. The median existing single-family home price in the Northeast fell 4.6 percent to $229,200 in the fourth quarter from a year ago.

In the Midwest, existing-home sales increased 7.0 percent in the fourth quarter and are 14.1 percent higher than a year ago. The median existing single-family home price in the Midwest declined 3.3 percent to $134,100 in the fourth quarter from the fourth quarter in 2010.

Existing-home sales in the South rose 3.8 percent in the fourth quarter and are 9.1 percent above the same quarter in 2010. The median existing single-family home price in the South was $146,500 in the fourth quarter, down 3.8 percent from a year earlier.

Existing-home sales in the West increased 8.1 percent in the fourth quarter and are 8.4 percent higher than a year ago. The median existing single-family home price in the West declined 4.2 percent to $205,200 in the fourth quarter from the fourth quarter of 2010.

The National Association of Realtors®, "The Voice for Real Estate," is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE: NAR releases quarterly median price data for approximately 150 Metropolitan Statistical Areas (MSAs). In some cases the estimated MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for specific business purposes, local data from their association may be more relevant.

Data tables for MSA home prices are posted atwww.realtor.org/research/research/metroprice. For areas not covered in the tables, please contact the local association of Realtors®.

¹Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. A list of counties included in MSA definitions is available at: www.census.gov/population/estimates/metro-city/0312msa.txt.

Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

²Distressed sales, first-time buyers, investors and all-cash transactions are from a survey for the Realtors® Confidence Index.

³The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing.

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

NAR has discontinued the state-level home sales data series. NAR’s existing-home sales series will only be provided for the four major regions and for the nation; this method of reporting aligns with new-home sales releases by the U.S. Census Bureau and HUD. Most state and local associations of Realtors® are already providing this data for their service areas. Contact the state or local Realtor® association in your area for more information.

The relevant consumer information for home buying and selling is at a very localized level, and consumers can access such information from a local multiple listing service (MLS) by working with a Realtor®. Sales data from local Realtor® associations and MLSs are unambiguous in their intended purpose for the geographic areas and property types covered. Availability and format of data varies.

NAR may be able to furnish consultancy services to estimate state-by-state home sales data to analysts. The estimate will not be strictly based on Census benchmarking because of reliability issues at the state sample size, and hence, incorporate more expanded alternative data sources that account for FSBOs, etc., using a number of sources: the Census’ American Community Survey, data from Home Mortgage Disclosure Act, housing permits, and courthouse level data. For this consultancy-for-fee service, please contact Jed Smith atjsmith@realtors.org.

First quarter 2012 metro area home prices and quarterly existing-home sales will be released May 9 at 10:00 a.m. EDT.

NWporter April 2009

Four primary sections of the recently enacted economic stimulus plan will benefit home owners and buyers, according to the CMPS Institute, an organization that certifies mortgage bankers and brokers.

The key benefits CMPS cites are expansion of the home improvement tax credit, expansion of the first-time home buyer tax credit, increased limits for reverse mortgages, and higher FHA loan limits.

Benefit #1 ? Expansion of Home Improvement Tax Credit
The tax credit for making energy efficient home improvements is now 30 percent of the cost of the improvements up to a maximum of $1,500. Previously, homeowners could get a tax credit worth just 10 percent of an upgrade cost and the credit was capped at $500. Eligible improvements include energy efficient exterior doors and windows, roofs, insulation, heating and air conditioning systems and hot water heaters. In general the improvements must pass the International Energy Conservation Code or qualify for an Energy Star rating.

The stimulus also lifts tax credit caps for certain alternative-energy improvements for businesses and individuals. Under the new law, owners may claim a 30 percent tax credit for qualified solar water heating systems, small wind energy systems and geothermal heat pumps.

Benefit #2 ? Expansion of First-time Home Buyer Tax Credit
The tax credit available to first time home buyers was increased from $7,500 to $8,000 for homes purchased between Jan. 1, 2009, and Dec. 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least three years. The previous version of the credit required home buyers to pay the funds back over a 15 year time frame, making it an interest free government loan.

The income limits are unchanged from the previous version ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as are most other qualification requirements. Also, the credit remains refundable. The credit may be claimed on 2008 tax returns that are filed by April 15 of this year, even if the home is purchased in 2009, according to CMPS.

One catch: if you bought the home in 2008, the credit remains $7,500, and still needs to be paid back over a 15 year timeframe beginning in 2011 when you file returns for 2010.

Benefit #3 ? Higher Reverse Mortgage Loan Limits
Loan limits on Home Equity Conversion Mortgage (HECM) - or "reverse mortgage" loans - will rise to $625,500 until the end of 2009. Current limits, which mirror conforming loan limits, will be raised to open up reverse mortgage options for many seniors who may want to rely on home equity as a stable source of income.

Loan limits for FHA-insured reverse mortgages are increased to the $625,000 level nationwide, not just the higher cost areas. The previous limit was $417,000 across the country.

CMPS officials called this "especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated."

This increased limit coincides with another little-known change in the reverse mortgage arena: the availability of reverse mortgages on home purchase transactions. "This is a fantastic opportunity for senior citizens to buy a new home and be relieved of mortgage payments without having to wait for their old home to sell," said Gibran Nicholas, chairman of the CMPS Institute. He suggested seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home."

Benefit #4 ? $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas
"The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009," Nicholas said. "The economic stimulus plan restores the $729,750 maximum in high-cost areas (King County is $567,500)." This makes higher cost homes more affordable ? especially in the coastal housing markets that tend to have above-average home values. Now, residents in these areas will benefit from FHA´s lower rates and easier qualification standards.

The bill also provides the option, if warranted, to increase loan limits for any "sub-area," i.e. an area smaller than a county. These limits will expire December 31, 2009.

About CMPS

Discover News > NWREporter

NAR Chief Economist Expects Stimulus Package Will Spur Up to 900,000 Home Sales in 2009

NWREporter April 2009

Prefacing his comments with the caveat that forecasting in the current economic environment is extremely difficult, Lawrence Yun, chief economist of the National Association of REALTORS®, told King County brokers he believes components of President Barack Obama's stimulus package will prompt hundreds of thousands of home sales.

Home prices have fallen to levels that are "fundamentally justifiable," Yun stated. In fact, he remarked, any further drops could be an overcorrection. He forecasts price stabilization by the end of the year and a 10 percent to 20 percent increase in sales of existing homes nationwide as the impact of the housing stimulus package kicks in.

The shaky job market and buyer hesitancy are restraining activity, Yun suggested. "Incentives are out there," he emphasized, adding, "Momentum is rising. What's missing is consumer confidence." He characterized the economy as being in a "great recession" or possibly a "mild depression" because "consumers have completely given up."

Yun predicts the $8,000 first-time home buyer tax credit for homes purchased before Dec. 1 will generate up to 300,000 additional buyers. Higher jumbo loan limits could prompt an additional 600,000 sales.

Yun, who also serves as NAR's senior vice president of research, was the featured speaker at a Feb. 27 Broker Summit presented by the Seattle-King County Association of REALTORS®.

Noting he is grateful for some housing market component in the stimulus plan but "wished it had more," the economist acknowledged not every element of NAR's housing agenda was included at desired levels. The American Recovery and Reinvestment Act of 2009, signed by President Obama on Feb. 17, includes ten housing-related provisions in the $780 billion package.

In response to a question, Yun denounced a proposal in the Obama budget that would reduce the mortgage interest deduction (MID) for thousands of families, resulting in unintended fallout. Yun said NAR's analysis shows a change could depress home prices and values for the nation's 75 million homeowners, not just the 2 percent with incomes of $250,000-plus who are targeted. Among the negative consequences, cutting the MID will hamper the economic recovery, raise foreclosures and hurt the ability banks to lend, according to NAR.

Yun told Seattle-King County brokers he expects to see some recovery in the housing sector the latter part of the year, but whether it will be sustainable going into 2010 is uncertain due to the huge deficit and expectation of another 1.5 million job cuts over the next six months. The unprecedented nationwide housing downfall and the economy's multiple moving parts make short-term forecasting even more challenging, Yun noted.

On a positive note, Yun said the Housing Affordability Index is at its highest-ever level, thanks in part to declining home values and historic low interest rates. Stricter underwriting standards, "frozen" jumbo loans (a big factor in the high-cost markets such as the Puget Sound area), and shaky consumer confidence are impeding sales activity, Yun believes.

To illustrate that "things were out of whack," and needing correction Yun showed charts that depicted wide gaps between home prices from 1998-2006 at the height of the boom, when compared to income, the cost of construction and rent.

Yun also spoke of the correlation (or lack or correlation) between jobs, the recession, interest rates and home sales. In the 2000 recession, "we lost jobs yet had rising home sales because of falling interest rates." Interest rates make the difference, he said.

In another example, Yun compared the monthly payment for a median income household buying a median priced home in 2008 with a decade earlier. In 1998, 30-year fixed mortgage rates were around 7 percent with a 1 percent fee. In 2008, rates had dropped to around 6 percent with a 0.5 percent fee. Considering only rates (and not fees), the monthly mortgage payment as a percentage of income was about the same (19 percent) in both 2008 and 1998.

Using California as a barometer, Yun said momentum is rising "much faster than I ever anticipated." In Orange County, where prices are considerably higher than Seattle, activity had been stalled, but began turning around over the past six months. He attributes the shift to a combination of pent-up demand and psychological factors. Some who have been sitting on the fence don't want to be the last ones left sitting," he observed.

Yun also cited a return of multiple offers in some California markets. That suggests prices may be bottoming or have bottomed out," he stated.

Whether what's happening in California will be replicated here is uncertain, Yun said, but noted when California recovers it typically benefits neighboring states. California is experiencing out-migration whereas Washington has a positive inflow of relocating families, many from California. Homeowners who move here from California tend to find Puget Sound area prices attractive and much more affordable.

In other comments during his presentation to more than 150 brokers, Yun asked rhetorically if there would be a refueling of the bubble. He was emphatic in saying no because of recently imposed checks and balances.

One area of concern, according to Yun, is the sharp drop in single family housing starts in the Seattle area. Noting they're even lower than 1984 (the previous low mark), he said it could lead to shortages in the future, depending on the pace of the turnaround and builders' ability to ramp up production.

Among other remarks, Yun encouraged brokers to contact past clients, including those who are under water, to make sure they are aware of new and emerging foreclosure mitigation plans. He also hopes the Feds won't hint at future rate cuts since that causes activity to stall among "wait and see" consumers.

Yun suggested reporters need to correct how they report new home sales. Reports of declining sales should be accompanied by an explanation that it's because builders are scaling back production, a needed correction in the current high inventory situation.

Even though unemployment rates are approaching 10 percent in some markets, Yun reminded his audience that means more than 90 percent of the work force has jobs. Even if 20 percent have job anxiety, that still leaves 70 percent with stable jobs ? "and they respond to incentives." He favors higher limits on jumbo loans. "Why punish successful people," he wondered.

In a final forecast, he was upbeat about Seattle. "Ten years from now it will be one of the best performing areas nationally because there are so many smart people in the area."
etter

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future home sales.

The Realtors reported last week that existing home sales rose 5.1 percent in February, the largest increase in nearly six years. Economists say sales, while still at levels not seen since 1997, may finally be coming back to life since declining sharply following the stock market plunge last autumn.

Prices, however, are expected to keep falling for at least another year. Tens of thousands of homes are tied up in the foreclosure process and not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.

04/01/2009 2:02PM ET

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BATS Real-Time Market Data by Xignite

The Realtors estimate that 45 percent of existing home sales are now foreclosures and other distressed properties.

Many in the real estate industry are counting on an $8,000 tax credit for first-time homebuyers as their best hope for boosting flagging sales. That incentive was included in the economic stimulus package signed by President Barack Obama earlier this year.

Western Washington Home Buyers Starting to Grasp "unique housing opportunities"

KIRKLAND, WA March 4, 2009 ? Home buyers appear to be in a "mental filibuster," according to one real estate executive upon seeing the latest figures from Northwest Multiple Listing Service. The report on February activity for 19 counties across Washington shows slight gains in pending sales and selling prices from January, but brokers say many would-be buyers remain on the sidelines, paralyzed by the uncertain economy.

"I believe these results are reflective of what might be called a "mental filibuster" for potential home buyers -- they are struggling between the desire to buy a home and the uncertainty of what might come next in the way of government stimulus, tax credits or lower mortgage rates," observed Ron Sparks, managing vice president of Coldwell Banker Bain. Agents are reporting "tremendous activity" at open houses, with the last few weekends generating the best activity in several months. Despite the high interest, what's stopping buyers, according to Sparks, is weak consumer confidence.

"Buyers don't yet understand what the stimulus package means to them," said NWMLS director Kathy Estey, managing broker of John L. Scott's Bellevue Downtown office. "Good houses at good prices that are affordable are getting attention," she remarked, noting her office had four multiple offer situations the last week of February for homes priced under the median cost. "Open house activity is up and attendees are serious," Estey reported.

Northwest MLS brokers reported 4,559 pending sales during February for a 4.7 percent improvement over January. That total, which includes single family homes and condominiums, was the highest volume since September 2008 when MLS members notched 5,982 pending sales. Last month's pending sales total (offers made and accepted, but not yet closed) was down about 18 percent from twelve months ago.

Price changes were mixed across the counties in the Northwest MLS service area. The median price for last month's completed sales of single family homes and condos combined was $278,000, up slightly (1.8 percent) from January, but lagging the year-ago area-wide median price of $316,950 (down about 12.3 percent). Ten counties reported increases in median prices for last month's sales when compared with January.

For single family homes only (excluding condos), the median selling price was $283,000, up about 2.5 percent from January. Condo prices dipped slightly from January, dropping from $250,000 to $248,250.

Inventory levels are shrinking in many counties in the NWMLS system. Broker-members added 9,421 new listings to inventory, down more than 22 percent from a year ago when they added 12,104 new listings to the database.

At the end of February, MLS members reported representing 39,299 active listings (32,811 single family homes plus 6,488 condominiums). That's down 10.5 percent from the year-ago total of 43,927 active listings. All but three counties (Grant, Jefferson and San Juan) reported drops in total inventory.

"What we need most is a continued reduction in inventory coupled with a huge reduction in foreclosed and short sale properties on the market," said NWMLS director Dick Beeson, broker/owner of Windermere Commencement Associates in Tacoma. "It could take some time to absorb so many of these types of properties," Beeson, a Realtor since 1979, acknowledged.

Beeson also reported a noticeable increase in open house activity in Pierce County, attributing part of the surge to more transferees moving into the area who are looking to buy rather than rent. "Home values are finally at a point where affordability has returned and the market is slowly beginning to respond to the $8,000 tax credit for first-time buyers," he observed. That incentive "could make a huge difference in the final quarters of the year," Beeson suggests.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, was also upbeat about the housing provisions of the stimulus package that was approved in mid-February. "The $8,000 tax credit for first time buyers does not have to be repaid. . . and first time buyers who purchase before April 15 can apply the tax credit to their 2008 tax return," he emphasized. Scott described the combination of historically low interest rates and increased affordability as "an opportune time for buyers to take a look at purchasing their first home."

Ron Sparks also commented on housing affordability, saying it's at its best in decades. "This certainly appears to be a once in a generation home buying opportunity, but it's also coupled with a once in a generation economy," he stated. The question for all potential home buyers is not whether the current economic troubles, or the unique housing opportunities they now possess, will end, Sparks suggested, adding, "Rather, they might ask where they will be living once they do."

Lawrence Yun, chief economist for the National Association of REALTORS?, who was in Bellevue last week to keynote a Realtor meeting, said he expects buyers will respond to much improved affordability conditions and to the $8,000 first-time buyer tax credit. In a statement accompanying NAR's latest report on pending sales of existing homes, Yun said, "Conditions have been aligning very favorably for home buyers with the exception of consumer confidence. But I am hopeful that sales will turn around by late spring and early summer because history suggests that home sales can rise even in times of job losses when housing affordability rises."

Yun cautioned it will take a while for the stimulus to show in housing data. From the time a buyer starts looking for a home until it is reported as a closed sale, it can take as long as five months, including time for the search, closing the transaction and reporting the data. "This means improvement from the economic stimulus isn't likely to show as closed home sales before summer, although we may see an earlier lift from lower mortgage interest rates," he said.

Fourth Quarter Metro Area Home Prices Boost Affordability, Sales Improving

Published: February 23, 2010

Pending Home Sales Stabilize
Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1.

In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.

Lawrence Yun, NAR chief economist, says it´s important to recognize how the tax credit is skewing market data.

"There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded," he says. "These swings are masking the underlying trend, which is a broad improvement over year-ago levels."

December activity was the fifth highest monthly tally in two years.

The Tax Credit Impact

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010.

"While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010," Yun says. Last year there were 5.16 million existing-home sales.

He added that one of the greatest benefits of rising sales will be firming home prices.

"For several months now we´ve been seeing stabilization in all of the home price measures as inventory is pulled down," Yun says. "As a result, the housing wealth for many middle class families has begun to stabilize."

Regional Data

Here's a breakdown by region for the PHSI: