Home Affordability Reaches Record-Levels… Last Quarter.

December 9, 2010 By Leave a Comment

Home Affordability - Top and Bottom 5 markets 2010 Q3

Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, the cost of home ownership was extraordinarily low in Arizona and most U.S. markets.

According to the National Association of Home Builders’ quarterly Home Opportunity Index, 72.5 percent of all new and existing homes sold between June-September 2010 were affordable to families earning the national median income. This ties the all-time high for home affordability, set in the first quarter of 2009.

The data also underscores that, when compared to historical norms, it’s a fantastic time to be a Tempe home buyer.

Prior to 2009, the Home Opportunity Index rarely topped 65. The index has remained above 70 ever since.

All real estate is local, though, and on a city-by-city basis, home affordability varied last quarter.

For example, 96% of homes sold in Kokomo, IN are affordable for families earning the area’s median income. This handily beat the average figure and led the nation. Looking at major cities, Indianapolis led the pack.

93% of homes in Indianapolis are affordable to families earning the area’s median income. This ranks #9 nationwide.

On the opposite end of the affordability scale is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranks last in U.S. home affordability. Just 23% of homes are affordable to families earning the local median income, although this is 3 points higher versus Q1 2010.

The rankings for all 225 metro areas are available online.

Regardless of where your hometown ranks relative to its neighbors, home affordability remains high as compared to historical values. That said, with mortgage rates rising and home sales expected to climb this winter, it’s unlikely that the Home Opportunity Index will improve.

Buying a home may never be this inexpensive again. If you planned to buy in mid-2011, consider moving up your time frame.

Filed Under: Home Values Tagged With: , ,

Homes For Sale In Mesa – Work With An Agent To Prevent Kissing Frogs

October 5, 2010 By Leave a Comment

Recent reports from from the National Association of Realtors points to Pending Home Sales Index a rebounding national real estate market. For the the second straight month Pending Homes Sales are going up. This seems to indicate that there are more deals in the works. I still hold my breath a little bit about this as the Phoenix and Mesa housing markets still seem a bit soft. What this does mean though is that there are some great home buying opportunities if you are willing to keep looking.

One thing I recently heard from a friend of mine who has been looking at homes is that they are tired of looking at homes on the Internet and then going to look at the homes in real time only to find that they are not the same home. Many homes on the market today have been abandoned, foreclosed, or just left to deteriorate while the owner waits to get kicked out due to a pending foreclosure.

If you are willing to be patient and work with an agent to help you with your home search versus spending a ton of time searching through the MLS online you may just find that your agent can save you time, effort and your whits. Agents know their markets, just like I know my market – Mesa AZ – so catch me early, or start working with an agent early in your house hunting so that you can avoid spending time kissing frogs while you can be looking at princes.

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Housing Price Index Shows Home Values On Upswing Nationwide

August 10, 2010 By Leave a Comment

Home Price Index from April 2007 peak

According the Federal Home Finance Agency’s Home Price Index, home values are now off just 12.5 percent from their April 2007 peak nationwide.  This, after a half-percent monthly increase in prices in May, on average.

Given the state of the market since April 2007, the Home Price Index results are a positive for both the housing market and the economy, but we have to remember that May’s half-point increase is an average, and not specific to a particular area.

In contrast to “national markets”, the real estate markets in which you and I live are decidedly local.  It’s a major difference and the distinction renders the Home Price Index somewhat less important.

After all, the HPI doesn’t account for housing activity in individual neighborhoods like Las Sendas , nor does it track value across cities like Mesa. Instead, it summarizes data in giant chunks of geography.

A quick look at the HPI regional data proves the point. Of the HPI’s 9 tracked regions, only one was within one-tenth of one percent of the national, half-point average.  The others varied by as much 1.3 percent.

As a sample:

  • Mountain Region : + 1.7 percent
  • New England : + 0.2 percent
  • South Atlantic : +1.0 percent

And this is on a regional basis. The HPI’s applicability to state, city and neighborhood markets is even less appropriate.

Real estate values cannot be captured in a national survey. For home buyers and seller, what matters is the economics of a block, on a street, in a neighborhood.  That type of granularity can’t be tracked in a report like the Home Price Index.

The best place to get that data is from a local real estate agent that knows the market well.

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How Did Housing Predictions Fare For The First Half Of 2010?

July 8, 2010 By Leave a Comment

Housing and mortgage rate forecastsAs 2009 was ending, the “experts” were busy making forecasts about the U.S. economy and what to expect in 2010.

With respect to the housing markets, two predictions were made again and again:

  1. Home prices would fall in the first half of 2010
  2. Mortgage rates would be higher in 2010

Well, it’s July 1 and the year is half-over.  Both predictions are proving to be incorrect. Home values are rising in most markets and mortgage rates are down. Way down.

It reminds us that economists are much more skilled with analysis of the past versus predictions of the future.

A pile of data can only get you so far.

Think of Tempe housing market predictions like watching a local weather forecast. A meteorologist can look at the radar and tell you that rain is coming, but it’s never with 100% certainty.  There is always a chance of change.

The housing market is the same way.  Just as the U.S. economy is unpredictable, so are housing prices, and so are mortgage rates.

Therefore, when you have a personal finance decision to make, evaluate your options based on the information at hand today rather than an educated guess about the future. The future, after all, is subject to change — despite what the experts forecast.

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Consumer Confidence May Lead To Rising Home Prices And Mortgage Loan Interest Rates

June 8, 2010 By Leave a Comment

Consumer Confidence Index May 2008-May 2010The Consumer Confidence Index is rising, a potentially double-edged sword for residents of Tempe and for Americans, in general.

According to The Conference Board, economic confidence is as high as it’s been since August 2007 — 4 months before the start of the recession.  Americans are optimistic again.

Confidence matters to the economy because as confidence increases, in theory, consumer spending follows.  Consumer spending accounts for 70 percent of the U.S. economy.

It’s why Wall Street is responsive to confidence data.

When consumer confidence is rising, households start to make big-ticket purchases they may have otherwise put off indefinitely.  Maybe it’s a replacing old appliances; or, trading in an old automobiles; or, splurging on a vacation.

Rising confidence can also spur real estate sales.

When confidence is rising, a growing family that chose to “make do” in their 3-bedroom, 1.5-bathroom starter home may opt to move-up to a 4-bedroom, 3-bath instead at a slightly higher monthly carrying cost.  And there are families in every city in every state making those same decisions.

As a result, the housing market gets a boost — especially in the mid-to-upper price ranges. Values rise on higher demand for homes.

The downside is that growing confidence tends to push conforming and FHA mortgage rates up.  This is because an expanding economy draws investment dollars away from bonds and into stocks — including mortgage bonds.

The reduced demand for mortgage-backed bonds leads bond prices to fall and mortgage rates to rise.  Sometimes by a little, sometimes by lot.

So, if you’re buying a home or thinking of a refinance, rising confidence in the economy may be a signal to act sooner rather than later.  Talk to your real estate agent and/or your loan officer about next steps and get your plan in place.

Filed Under: Mortgage Rate Info Tagged With: , ,

National Home Values Low, Home Price Index Shows

March 26, 2010 By Leave a Comment

Home Price Index April 2007 to January 2010

Home values fell again in January, according to the Federal Home Finance Agency’s Home Price Index. Values were reported down 0.6 percent, on average.

We say “on average” because the Home Price Index is a national report. It doesn’t capture the essence of a local market like Mountain Bridge , or even a city market like Mesa.

The most granular that the monthly Home Price Index gets is regional and January’s report shows that:

  • Values in the Mountain states rose 2.0%
  • Values in the Pacific states were flat
  • Values in the East North Central states fell 1.8%

It’s hardly helpful for home buyers entering the market, or home sellers trying to properly price a home.  Furthermore, because the Home Price Index reports on a 2-month delay, its data fails to reflect the current market conditions.

Versus January — the period from which HPI data is collected — mortgage rates are lower, buyer activity is up, and the federal home buyer tax credit is closer to expiring.  These each can have an impact on housing.

Ultimately, national real estate data like the Home Price Index is best suited for lenders and policy-makers.  National data helps to identify trends that shape formal policy, but it doesn’t help you, specifically.

Since peaking in April 2007, the Home Price Index is off 13.2 percent.

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CNNMoney.com Projects Real Estate Market Trends For 2010

March 23, 2010 By Leave a Comment

Real estate is localCNNMoney.com recently published its 2010 forecast and projections for home prices in the country’s largest metro markets.

Listed as “Top 25″ and also comprehensively by state, CNNMoney.com’s home price forecasts puts Santa Rosa, California at the top of 2010′s home appreciation list and Hanford, California at its bottom.

The 10 cities projected for highest home appreciation in 2010 are:

  1. Santa Rosa, CA : +6.0%
  2. Cheyenne, WY : +4.7%
  3. Kennewick, WA : +4.6%
  4. Merced, CA : +4.4%
  5. Bremerton, WA : +4.2%
  6. Fairbanks, AK : +4.2%
  7. Corvallis, OR : +4.1%
  8. Tacoma, WA : +3.9%
  9. Anchorage, AK : +3.8%
  10. Bend, OR : +3.3%

The Pacific Northwest is the region most heavily-represented among price gainers. The Southeast and Middle Atlantic are most represented on the under-perform list.

However, just because a city’s homes are expected to appreciate (or depreciate) in 2010, that doesn’t mean that every home within its limits will follow suit.  Real estate cannot be grouped on a city level like CNNMoney.com tries to. There will always be areas in demand within city limits in which prices rise, just as there will be out-of-demand areas in which prices fall.

Real estate data can’t be grouped by city or even by ZIP code, really.

Real estate in Tempe is more local than that.

When we say “real estate is local”,  it means that every street in every town has a distinct set of traits that drives its home values. Homes that are one block closer to the train; or, homes that are facing north; or, homes that are made of brick. Each of these characteristics can affect a home’s desirability which, in turn, can affects its sales price.

National surveys can’t capture “essence” like this. They only report on the aggregate.

For local real estate data, look to established, publicly available websites and to active, local real estate agents.  Both will have data and insight that can help you.  National surveys often make for good headlines, but do little to help homebuyers find good value.

Filed Under: Home Values Tagged With: , , , ,

What Are Home Values In Mesa Arizona Doing in 2010?

February 24, 2010 By Leave a Comment

Case-Shiller Monthly Change Nov 2009-Dec 2009

According to a new study released by Standard & Poors – the Case-Shiller Index – Phoenix appears to be showing a slight increase overall in home values actually showing a slight increase. This could be a good sign for what home values in Mesa are doing or going to do in 2010. But overall, what is the national real estate market doing 2010?

Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday.  The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3.

According to Case-Shiller representatives, the housing market is “in better shape than it was this time last year”, but some of the summer’s momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009.

Meanwhile, it’s interesting to note the 5 markets that didn’t decline — Detroit, Los Angeles, Las Vegas, Phoenix and San Diego.  Each of these metro regions were among the hardest hit nationwide when home prices first broke.  Now, they’re leading the pack in price recovery.

For some real estate investors, that’s a positive signal.  But we also have to consider the Case-Shiller Index’s flaws because they’re big ones.

As examples:

  1. Case-Shiller data is reported on a 2-month lag
  2. The Case-Shiller sample set includes just 20 U.S. cities
  3. There’s no “national real estate market” — real estate is local

That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery.

If the markets that led the housing decline will lead the housing resurgence, December’s data shows that full recovery is right around the corner.

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