Nearly 80% of Housing Markets Are Stabilizing

Nearly 80% of Housing Markets Are Stabilizing

Thirty-eight of the 50 states, plus the District of Columbia, are now SHOWING an improving three-month trend in housing activity, according to Freddie Mac’s latest Multi-Indicator Market Index. What’s more, 40 of the 50 major metros Freddie Mac tracks are also showing a three-month improving trend.
Yet, Freddie Mac’s national MiMi value stands at 74.9, which still indicates a weak housing market overall. The all-time MiMi high was 121.7, recorded in April 2006; its lowest point was 57.2 in October 2010, when the housing market was at its weakest point. Since its low in 2010, the housing market has rebounded 31 percent.
Freddie Mac’s MiMi index monitors the stability of the nation's housing market by assessing each single-family housing market relative to its long-term stable range. It takes into account such data as home purchase applications, payment-to-income ratios, on-time MORTGAGE PAYMENTS, and the employment market.

Overall, "housing markets are getting back on track,” says Len Kiefer, Freddie Mac’s deputy chief economist. “The national MiMi improved for the fourth consecutive month. Nearly 80 percent of the state and metro housing markets MiMi tracks are improving or in their stable range of activity. … Low MORTGAGE RATES and moderating house price growth are helping to keep payment-to-income ratios favorable for the typical family in most of the country. In fact, Los Angeles is the only metro market with an elevated MiMi payment-to-income indicator whereas most other markets remain quite affordable. And of course, labor markets are generally improving.”

The most improving states on a year-over-year basis, according to the index, were:

Nevada
Colorado
Rhode Island
Illinois
Ohio
Meanwhile, the most improving metros year-over-year were:

Las Vegas
Denver
Chicago
Providence, R.I.
Columbus, Ohio

Source: “U.S. Housing Stability Improves for Fourth Consecutive Month,” Freddie Mac (Feb. 25, 2015)

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Income Increases Boosting Housing Optimism

The number of households saying their income is significantly higher than it was a year ago is on the rise, as is the number expecting their financial situation to continue to move significantly higher over the next year — both reaching all-time survey highs in Fannie Mae’s January 2015 National Housing Survey, a poll of 1,000 Americans’ attitudes toward owning and renting a home.

Twenty-nine percent of households say their income is “significantly higher” now than it was 12 months ago. Also, 48 percent say they expect their personal financial situation to improve over the next year.

The increases in income are translating into higher optimism about the housing market. The number of households who said it was a good time to buy a home rose 3 percentage points in January to 67 percent, according to the survey. Also, the share of households who say they’d rather buy than rent if they were to move rose 5 percentage points to 66 percent, marking the first increase since September 2014, the survey shows. What’s more, 44 percent of households now say it’s a good time to sell, tying an all-time survey high.

"Consumers are as positive about their personal finances at the start of 2015 as they have been since we launched the National Housing Survey in 2010, and this optimism seems to be spilling over into housing market attitudes," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "Consumers are more optimistic about the environment both for buying and for selling a home today, and the share who plan to own on their next move has jumped back up, reversing a three-month trend toward renting. … Overall, these are good signs to start off 2015 and are consistent with our expectation that strengthening employment and economic activity will boost the speed of the housing recovery."

Additional findings from Fannie Mae’s January survey include:

The majority of households believe home prices will rise over the next year, an average of 2.5 percent over the next 12 months.
45 percent of respondents say they believe mortgage rates will also rise over the next year, falling by 3 percentage points compared to one month earlier.
52 percent of respondents believe home rental prices will rise over the next year — a slight decrease month over month. The average 12-month rental price expectation fell to 3.6 percent.

Source: “Consumers’ Positive Financial Attitudes a Good Sign for Housing,” Fannie Mae (Feb. 9, 2015)

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The Difference Between A Home’s Cost vs. Price

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned only about price but also about the ‘long term COST’ of the home.

Let me explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the INTEREST RATE at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen in 2015?

A nationwide panel of over one hundred economists, REAL ESTATE experts and investment & market strategists project that home values will appreciate by almost 4% by the end of 2015.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30-year fixed MORTGAGE RATE will appreciate to 4.5% by the end of 2015.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the MORTGAGE PAYMENT of a home selling for approximately $250,000 today:

by The KCM Crew on February 4, 2015 in For Buyers

It was another good year for Hilton Head area home sales

Following similar footsteps from 2013, real estate sales in the Hilton Head area for the past year fared well. While not a boom year, 2014 was another solid recovery year.
Last year, home prices posted modest gains, that's two consecutive years of increased property prices, a very positive real estate trend.
The median sale price of area properties for the 12-months period of 2014 increased by 2.3 percent. For the same period, the average sales price increased by 2 percent.
The percent of list price received was 95.4, the same for the past two years. In some plantations and developments, a number of offers came in at the full asking price.
Last year's inventory of homes for sale improved from the year before, up nearly 10 percent. This increase represent a movement from 'not many homes to choose from' to a market approaching normalcy.

Other measures of real estate market activity (e.g., pending sales, and days on market) did not experience major fluctuations.
There were some ups and some downs from 2013 to 2014, which strongly suggested market stabilization, which is a precursor to growing market values.
Interest rates also affect real estate sales. Fortunately, the rates continued to remain low for the entire year, and they are still very attractive.
Two other pluses for Hilton Head and Bluffton areas are our "coastal attractiveness" and the fact that this is a great place to retire, which helps keep the areas economy very strong.
As a matter of fact, Beaufort County continues to be one of the fastest growing counties in the US, with more people, organizations and business moving here on an ongoing basis.
After long 5 years (2007-2011) of depressed real estate sales and declining property values, it's great to see the housing pendulum beginning to move in the right direction.
No one know for sure what will happen with Hilton Head real estate in 2015. However, based upon the past three years of positive market statistics and January's current sales activity, things are looking bright.
Sellers seem confident, out-of-state buyer calls are increasing, and many agents, including me, are busy showing properties.