Consumer Confidence Soars in June

Author: Tory Barringer July 29, 2014 

Share on facebookShare on twitterShare on emailShare on pinterest_shareMore Sharing Services7

U.S. consumer confidence jumped up more than four points from June to July, signaling a brighter economic outlook among Americans.

The Conference Board's Consumer Confidence Index reached 90.9 in the group's July survey, up from 86.4 in June. As of July, the index stands at its highest level since before the Great Recession.

Lynn Franco, director of economic indicators at the Conference Board, said the surge was fueled by strong job growth and a brighter short-term outlook for the labor market and personal incomes.

"Recent improvements in consumer confidence, in particular expectations, suggest the recent strengthening in growth is likely to continue into the second half of the year," Franco added.

The index component measuring consumers' feelings about their present situation increased two points to 88.3, the Conference Board reported, while the index gauging future expectations jumped more than six points to 92.7.

Looking at recent economic developments, 15.9 percent of consumers surveyed said jobs are plentiful at the moment, though nearly double that percentage maintained that work is still hard to find.

Looking ahead, however, Americans were more positive, with a greater share expecting more jobs in the months to come and a smaller number expecting labor to fall—an improvement Federal Reserve leaders might take note of as they sit down this week to decide their next move in monetary policy, says Paul Ashworth, chief U.S. economist for Capital Economics.

"The net difference between those two balances shrank to -14.8 in July, from -16.1. That decline strongly suggests that the amount of slack in the labour market really is diminishing quite rapidly, which many Fed officials still aren't willing to admit," Ashworth said in a note to clients.

3 Tips for Being a Smart Seller in 2014

 AUTHOR:BRENDON DESIMONE 

For the past five years or so, millions of homeowners have been stuck in their homes, unable to refinance or sell because they were underwater. That situation began to change in 2013 when the housing market finally began to show signs of life. Buyers across the country were back in the game and home prices rose in many communities.

For many sellers this meant they could finally move out of a small house, cut down on their commute time, or simply go on with their lives. Almost 2 million homeowners came out from negative equity positions in 2013.

If you plan to sell your home in 2014, be aware that buyers have changed since the economic downturn. They’re savvier than ever, and they’re not desperate. Many of today’s buyers are Millennials (also known as Generation Y) who’ve come of age with access to endless information via the Internet. It’s in their DNA to search, and they love photographs and sharing.

Here are three bits of advice that will make you a smart seller in 2014:

Take your photo shoot seriously

Today, many buyers get their first impression of your home online. Too often, listings go online with photos of a dark room, lights off or blinds closed. Even worse? A new listing withoutphotos or that has only one. If your real agent isn’t hiring a professional photographer to take high resolution photos, then you should invest the few hundred dollars to do so. Have them taken at the best time of day. Clean the home in advance and put away clutter. Prepare for the photo shoot just as you would for an open house. If buyers don’t like what they see online, you may never get them in the door.

Have your home inspected before listing 

Nothing is worse than waiting months or even years for an offer, only to have potential buyers discover that your HVAC system is on the fritz or that there is dry rot. When that happens, you’re forced to reduce the price or give credits.

Even worse, you may scare off the buyer and be forced to go back on the market. Often when this occurs, buyers and agents think there’s a problem with your property—which can make it tough to sell. That’s why a few hundred dollars on a pre-sales inspection is the best investment you can make. If there are issues, you can price the home accordingly. More importantly, you’re providing the buyers with more information. You’ll be in their good graces from the start.

Throw buyers a bone

Receive an offer on your home at a good price? Have you been one of the lucky ones who received more than one offer over a short period of time? Good for you; you’re in the driver’s seat. Even so, you still want to be in the buyer’s good graces during escrow and even after the sale. If you have the opportunity, throw the buyer a bone. If they ask for an early closing and you can do it, give it to them. Negotiate to buy them a one-year home warranty or give them a small credit. These little offerings will go a long way toward a speedy and hassle-free escrow.

The most important thing to remember is that to be a smart seller, you need to put yourself in the buyer’s shoes. Remember that today’s buyers lived through one of the biggest housing and credit crises in generations. They’re motivated but cautious, and they have a wealth of information available to them online. Don’t take anything for granted.

Analysts See Reasons for Housing Optimism

Author: Scott Morgan July 18, 2014

Even though the first half of 2014 didn't live up to the hope and hype, industry insiders are still calling for better days in the housing market for the rest of this year. On Friday, Redfin released its latest market summary, which sees the combination of sales, prices, foot traffic, and inventory as positive signs heading into the fall.

"After an abysmal first quarter that drove a disappointing first half, housing will be playing catch-up for the year," said Nela Richardson, Redfin's chief economist. "Though it won't be a seamless transition, we believe the housing market is positioning itself for a stronger finish in the second half of the year."

Granted, you may have heard the same kinds of optimism in January. The first quarter of 2014 was supposed to show a steady climb in all areas of housing, but hopes were battered by harsh winter weather, a drop in residential construction starts, and a shortage of qualified construction workers.

Things also were supposed to pick up in the second quarter—and they did, but only enough, by most accounts, to stanch the disappointing Q1 numbers.

But entering quarters three and four, Richardson is hanging her predictions on four key points.

First, home sales are catching up to 2013's highs, which were the strongest since the recession. June sales (114,240) were only shy by 2.5 percent from last June's, and sales were up year-over-year in eight of 30 metro markets, including Atlanta, Charlotte, and Oakland, each of which were up more than 8 percent, Richardson said.

Second, foot traffic is on the rise. According to Redfin, the number of customers going on tours with the company's agents in June was up 27.1 percent from a year ago. "Tour growth is bucking seasonality trends, which tend to peak in May," Richardson said.

Whether this trend will translate into stronger sales numbers hinges on whether mortgage supply from banks can meet the increase in demand or whether buyers with large amounts of cash on hand will continue to dominate the market, she said. Cash deals reached their peak in 2011 and have been declining steadily since, but the percentage of cash deals remains higher than the norm and is especially popular forlower-cost homes.

Third, price growth is becoming more sustainable. Even though the median sales price in urban markets topped $300,000 in June, price growth reached a two-year low of 6.4 percent, Richardson said. The stability is most welcome. "Prices over the past three years have been an expensive roller coaster for both buyers and sellers," she said.

According to Redfin, the fluctuation between 2011 and 2012 was depreciation followed by double-digit growth, and price growth through 2013 averaged 14 percent. "In June, the median sales price grew at half that rate, much more in line with a sustainable rate that won't have the market panting to keep up," Richardson said.

Lastly, housing inventory is returning, albeit slowly. Between 2009 and 2012, the number of homes for sale plunged 44 percent, bottoming at 411,555 homes at the end of 2012, according to Redfin. At its highpoint in 2013, inventory rose to just 477,000 homes for sale and then dropped to 411,761 by year's end. Last month, and for a second month in a row, the number of homes for sale was above 500,000, which was up 8 percent from this time last year.

The biggest year-over-year increases in homes for sale were in Riverside-San Bernardino and Orange County, California, and Phoenix, where figures were up at least 24 percent for all areas.

"Metro markets continue to get a boost from pent-up demand caused by the low inventory that plagued housing for the past two years," Richardson said. "The second half will not be without its wobbles. But the housing market can maneuver around the juggernaut of subpar long-term economic fundamentals. Housing is now edging back to normal."

Report: Bubble Fears Unfounded

Author: Scott Morgan July 17, 2014 

Share on facebookShare on twitterShare on google_plusone_shareShare on linkedinMore Sharing Services43

Market trends across the United States indicate a recovering real estate market—but not a bubble—according to the latest Home Value Forecast fromPro Teck Valuation Services. According to the forecast, the housing economy is in healthy rebound, so much so that even the markets showing the greatest appreciation are not near 2006 figures, when the market was at its historical peak.

Pro Teck's conclusion is decidedly more optimistic than other forecasts released in recent weeks. Earlier in July, FICO reported that 56 percent of U.S. lenders fear another bubble is forming. "While every market is different, and every neighborhood is different," said Pro Teck CEO Tom O'Grady, "we see positive trends now being the norm instead of the exception."

Pro Teck's conclusion validates reports by other industry organizations, such as Trulia, which predicted in March that the housing economy would stagger back to stable footing without creating a bubble.

One of the positive trends Pro Teck sees is the recovery of market values in states such as Florida, where processing foreclosure properties through a long judicial process had delayed recovery time. Now that foreclosures from a few years ago are concluding, the markets in judicial states are opening back up and more homes are being listed for sale. This, said O'Grady, is an important ingredient when it comes to market performance and growth. Active listings in any market, he said, have dramatically affect that market's dynamics—fewer listings indicate more competition that results in home price appreciation.

Still, Florida is home to three of the worst-performing markets in the country: Lakeland, Tallahassee, and Tampa. "Although many of the indicators in the bottom ten are trending positive, we are still seeing more than six months of inventory in all but one market and high foreclosure ratios," O'Grady said. "Until those indicators improve, those areas are likely to see weaker housing conditions for the coming months."

Florida's unenviable company at the bottom includes metros in Alabama, Indiana, North Carolina, West Virginia/Maryland and Ohio/Pennsylvania.

According to Pro Teck, listings in three of the top 20 markets (Hawaii, Texas, and California) have dropped by more than 60 percent year-over-year, leading to the most rapid growth in the U.S. But while the forecast is positive for the next three to five years in these areas, these markets will not sustain the recent their recovery pace, and a bubble will not form.

"The big difference this time around is that mortgage credit is much tighter due to increased regulation and the zero down, pick-a-pay, stated income, type of exotic mortgages that created the last bubble are no longer an option," O'Grady said.

According to the report, seven of the top 10 performing markets are in California, where they have been since last year and show no signs of taking a back seat to anywhere else anytime soon. "California is leading MRI, active listings, active price change percent, and sales-to-list price ratios," O'Grady said. "These hot markets are leading to very attractive prices for sellers." The other three markets in the top 10 were in Texas (Houston and Lubbock) and Seattle.

Default Falls to Historically Low Levels in Large Metros

Author: Derek Templeton July 15, 2014

Share on facebookShare on twitterShare on google_plusone_shareShare on linkedinMore Sharing Services19

As the unemployment rate and other economic measures continue to improve, American consumers appear to be gaining a greater ability to meet their credit obligations.

A report released Tuesday by S&P Dow Jones Indices and Experian showed a decline in default rates among five of the largest cities in the nation to historically low levels.

The national composite for all types of credit default posted 1.02% in June, its lowest reading since the organization began collecting the data ten years ago.

Consistent with recent reports that payment priorities may be shifting among Americans back to pre-downturn norms, mortgages lead the way with first mortgages clocking in at just 0.89 percent default. The default rate at second mortgages was even lower at 0.57 percent.

"Consumer credit default rates continue to drift lower and have reached a historical low," says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices.

"Recent economic reports are encouraging with the unemployment rate now at a six year low and strong job creation in recent months. The continued declines in consumer default rates confirm other indicators of an improving economy. Credit standards for mortgage loans continue to be somewhat restrictive and may be contributing to low first mortgage default rates”.

Of the large metropolitan areas surveyed, Dallas, Texas was the only city to actually see a rise in default levels. However, the slight increase comes on the heels of the city’s lowest rate of default recorded in the history of the survey the previous month.

Concerns about the direction of the economy and the effect that is has on the credit market are not unfounded but even as the housing recovery slows, the lack of significant default in the market can only be seen as a positive indicator.

Consumers Expect Economic Improvement

Author: Tory Barringer July 14, 2014

Share on facebookShare on twitterShare on google_plusone_shareShare on linkedinMore Sharing Services22

The Federal Reserve Bank of New York released Monday the findings of its June 2014 Survey of Consumer Expectations (SCE), revealing a slight uptick in economic hopes among Americans as housing expectations remained flat.

According to the New York Fed, the median earnings growth expectation among consumers polled in its June survey was 2.5 percent over the next year, up half a percentage point from May.

The increase was "driven primarily by respondents with no college education," the New York Fed reported.

Employment hopes also firmed up. The mean perceived probability of job loss fell to 14.7, matching a low first seen in June 2013. At the same time, consumers put their probability of finding a new job within three months (if they lost their current one) at an average 51.8 percent, a new high.

On the housing front, the median home price change expectation was little changed, dipping slightly to a median expected 3.9 percent over the next 12 months.

The West topped all other census regions in expected price gains, as it has since February. Prices one year out are expected to rise a median 5.3 percent in the region compared to 3.8 percent in the South, 3.6 percent in the Northeast, and 3.3 percent in the Midwest.

Meanwhile, perceptions of credit availability over the next year were essentially unchanged from May, with a combined 18.1 percent of consumers saying they believe it will be "much" or "somewhat" easier to get a loan. The majority—40.7 percent—expect it will be about as difficult to secure a loan as it is today, while nearly a third expect it will be somewhat harder.

New Home Purchases Drop in June

Author: Tory Barringer July 11, 2014

Share on facebookShare on twitterShare on google_plusone_shareShare on linkedinMore Sharing Services13

Applications for new home purchases slipped again in June, though the annualized rate of new home sales is forecast to have increased.

The Mortgage Bankers Association's (MBA) Builder Applications Survey (BAS), a gauge of application volume from mortgage subsidiaries of homebuilders, suggests new home purchase applications slipped 5 percent from May to June, the group reported Thursday. The change does not include any adjustments for typical seasonal movements.

Using application data from the survey and other assumptions about the market, MBA estimates sales of new homes last month ran at a seasonally adjusted annual rate of 386,000 units, an increase of 3.2 percent from May's unrevised estimate of 374,000.

Figures from the Census Bureau put new home sales at an adjusted annual pace of 504,000 in May, a significant increase and substantially higher than MBA's estimate. That data is based on contract signings.

Government estimates for new home sales in June are scheduled to come out July 24.

On an unadjusted basis, the association estimates there were 36,000 new home sales in June, flat from May's total.

MBA reports conventional loans made up 67.2 percent of new purchase applications in June. Mortgages backed by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) accounted for 17.0 percent and 14.6 percent, respectively, while loans through rural services agencies made up 1.2 percent.

The average loan size of new homes was $296,078, down nearly $350 from May.