Home Price forecasts for 2013 are on the rise

Source: Wall Street Journal

J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth. Standard & Poor’s, which rates private-issue mortgage bonds, on Friday said it expects a 5% rise in 2013.

The J.P. Morgan analysts boosted their base-case estimate from 1.5% after a convincing rise in the “net demand” for housing this year has surpassed 2 million homes for the first time since 2006, said John Sim, a strategist at the investment bank. Net demand is the pace of existing home sales minus the inventory of homes available for sale.

“Net demand has picked up a lot in 2012,” said Mr. Sim. “Once you get north of the 2 million territory, you are in the positive growth area unless you get a lot of distressed inventory, which this year hit a low point” since at least 2008, he added. J.P. Morgan predicts that net demand to rise to 2.7 million next year from 2.3 million this year.

An expected increase in home prices in 2012 triggered a run into some of the riskiest real estate assets, such as subprime mortgage-backed securities from the real estate boom, and analysts including Mr. Sim expect that trend to continue. Rising home prices and the quest for yield has also given a tailwind to new mortgage bond issuance that has been mired in the fallout of the housing crisis and regulatory uncertainty for the past four years.

U.S. home prices nationwide increased on a year-over-year basis by 6.3% in October, the biggest increase since June 2006, according to CoreLogic. Investors zoning in on the increases bought subprime mortgage bonds, which have posted returns of more than 40% since December.

Home price increases could exceed J.P. Morgan’s base forecast if investors seeking yield push deeper into real estate, according to Mr. Sim’s home price report.

What’s more, just the uncertainty over whether politicians will be able to steer clear of the “fiscal cliff,” the scheduled tax increases and spending cuts next month, may hurt investor confidence, the J.P. Morgan analysts said.

If taxes rise, reduced income for the potential homebuyers will damp housing demand, they added.

But the expectations for higher home prices are still widespread. Nearly three-quarters of investors polled by J.P. Morgan expect home prices to rise 5% in 2013.

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Where you can find me after sales meeting…on caravan

Each week, the real estate professionals at Atlanta Fine Homes Sotheby’s International Realty meet as a group for Sales Meeting. Commonly led by the Managing Broker, the President, or CEO of the company, Sales Meeting is a time for agents to share market updates, learn about market trends, and find out about the hottest new homes on the market. 

I have shared pertinent information from past sales meetings here on the blog, but what I haven’t disclosed is where you can find me and other Metro Atlanta REALTORS® immediately following sales meeting… on caravan. Bill Rawlings, North Atlanta office Managing Broker and Vice President, explains caravan below from The River Club in Suwanee where Tracy Sardelli, a fellow agent in the North Atlanta office, held a listing open.

Caravan at The River Club

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The River Club is exquisite and the 6 bedroom, 5 full and 3 half bath home was exceptional. As we toured the home, I took pictures of my favorite details and have included them below. You can also view the professional photographs here on my website.

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10 Prime Real Estate Markets for First-Time Buyers

A new special report by Inman News reporter Andrea Brambila, “10 Prime Real Estate Markets for First-Time Buyers,” identifies the 10 metro markets with the greatest share of first-time homebuyers relying on mortgages backed by the Federal Housing Administration (FHA) in 2011.

As might be expected, the markets were more affordable than average — eight out of 10 boasted median sales prices that were less than the national median of $162,000 during the first quarter of 2012.

Click here to view the list and a market snapshot of each metro area.

Included at number 9 is this report on the Atlanta-Sandy Springs-Marietta, Ga., market.

The Atlanta metro area’s median sales price peaked in third-quarter 2006 at $186,000. As of the first quarter, the median was down 34.4 percent, to $122,000, considerably lower than the national median.

“I think for the greater Atlanta area, the downturn was a market correction that needed to happen,” said Stacy Carter, a real estate professional in Roswell, Ga.

“Home prices were escalating at an unhealthy and unsustainable rate while at the same time, builders were building new homes from the $400,000s and up, leaving a huge gap in the $150,000 to $250,000 price point for new homes.

“As a result, property values have adjusted and homebuilders are now focusing on the starter-home neighborhoods again.”

At that $122,000 price, some 85 percent of the metro’s homes were affordable to families earning the area’s median income of $69,300. The Atlanta metro had a jobless rate of 8.7 percent in March, just above the national rate, but its job market is expected to grow 2.1 percent between fourth-quarter 2011 and fourth-quarter 2012 — faster than jobs are expected to increase nationwide.

The area’s foreclosure rate was considerably higher than the national rate in the first quarter: 1 in 90 housing units received a foreclosure filing. Four in 10 homes sold were distressed in the fourth quarter.

“In spite of the difficult economic conditions for some, others are reaching the natural progression in their lives where buying a home is the next step,” Carter said.

“Buying conditions are more favorable than ever and the first-time homebuyers are reaping the benefits.”

“We’ve definitely seen an increase in the volume of transactions this year over last and I anticipate the momentum to continue to move in the right direction. As long as interest rates stay low, the first-time-homebuyer demand will remain at higher levels,” Carter said.

First-time buyers with FHA loans accounted for 27 percent of overall home sales in the Atlanta metro area in 2011; FHA buyers overall accounted for nearly 35 percent of sales.

“The reason a lot of borrowers choose to use FHA is it has some flexibility. It tends to be a little more accessible for certain groups of buyers. For example, someone who doesn’t have a traditional credit profile, (such as) someone who doesn’t have a lot of credit cards and pays cash a lot,” Goldie said.

Sally Hamby, a senior mortgage banker at Fidelity Bank Mortgage in Marietta, said about 85 percent or more of her first-time buyers choose FHA loans.

“FHA was set up to make homebuying possible for … (imperfect) people. Just because you are not the CEO of Coke does not mean you are not capable of owning, maintaining and loving a home of your own,” Hamby said.

“FHA and VA have been the vehicles to make that ownership possible and it is alive and well in Atlanta.”

She anticipates there will be about the same share of first-time buyers with FHA loans this year, despite mortgage insurance premium increases.

“Although the federal government has attempted to slow down FHA with the extremely high fees, I do not see the percentage of FHA buyers (dropping) much,” she said.

“FHA will have to totally restructure itself and its underwriting guidelines to drive their potential borrowers away.”

Click here to view the full snapshot and comparison of the Atlanta market.

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10 US Metros with Greatest Drop in For Sale Inventory

U.S. housing market trends tracked by Realtor.com show a trifecta of promise: a shrinking number of homes on the market, fresher inventory, and an increase in median list price.

In 146 metros tracked by Realtor.com, the number of for-sale listings was down 21 percent in March compared to a year ago. All but two markets — Philadelphia and Hartford, Conn. — saw listing inventory decline, and 78 markets registered declines of 20 percent or more.

Nationwide, the median number of days a home had been on the market was down nearly 20 percent, to 89 days, and median list price was up 5.6 percent, to $189,900.

1. Oakland, CA
2. Bakersfield, CA
3. Phoenix-Mesa, AZ
4. Fresno, CA
5. Miami, FL
6. Fort Lauderdale, FL
7. Seattle-Bellevue-Everett, WA
8. Atlanta, GA

9. Orlando, FL
10. Portland, OR and Vancouver, WA

Data collected and analyzed by Realtor.com through March 2012. Includes single-family homes, condos, townhomes and co-ops. Source: InmanNews

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Americans Predict Rents and Home Prices to Increase

Source: KCMBlog

We report on Fannie Mae’s Quarterly National Housing Survey every ninety days. Fannie Mae also does a monthly survey covering different aspects of the housing market.

Here are some record numbers we found interesting in Fannie Mae’s March report (emphasis added).

• Thirty-three percent of respondents expect home prices to increase over the next 12 months, the highest level over the past 12 months.

• The percentage of respondents who say it is a good time to buy rose to 73 percent, the highest level in over a year.

• Forty-eight percent of respondents think that home rental prices will go up, the highest number recorded to date.

• On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, the highest number recorded to date.

Doug Duncan, chief economist of Fannie Mae, capped the report off by stating:

“Conditions are coming together to encourage people to want to buy homes. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.”

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Real Estate Redux: AIG Is Planning a Return to U.S. Property Investing

Source: Wall Street Journal

American International Group Inc. is planning to jump back into U.S. property investing, reversing yearslong efforts to downsize its real-estate business in the wake of its near-collapse and government bailout in 2008.

AIG until recently had been dismantling what was once a $24 billion real-estate portfolio packed with trophy properties around the world to help pay back U.S. government loans and keep the company afloat. Its investing has been limited primarily to a few European deals with a single partner.

AIG once bought flashy assets, like Stowe Mountain Lodge in Vermont. Photo credit: Associated Press

But now AIG is beginning to make plans for fresh investments across the U.S. that will begin later this year.

A real-estate division of the New York-based company has reached out to developers of new apartment buildings in major metropolitan areas, said people familiar with the matter.

“We’ve done multifamily deals with them before, and we’re interested in working with them again,” said Hal Fetner, president and chief executive of New York developer Durst Fetner Residential LLC who has been contacted by AIG about new developments.

AIG hasn’t set specific targets on the size of its future investments in real estate, but people familiar with the insurer say that eventually it will amount to hundreds of millions of dollars annually.

The company once acquired flashy properties like a Vermont ski village, Shanghai office towers and a Tokyo shopping mall. This time, a humbled AIG has set its sights lower: The U.S. apartment market is where it is focusing now, said people familiar with the matter.

AIG was one of the financial groups that expressed interest in a $100 million development project in Montclair, N.J., a one-time Jaguar dealership that developer Pinnacle Cos. plans to convert into an apartment complex with retail, commercial and office space, said people familiar with the matter. It also has held discussions with brokers or developers in California and the Southeast U.S., the people said.

Some brokers said they first realized that AIG was paving the way to resume property investing when they found members of the real-estate team actively looking to partner with developers at a January multifamily housing conference in Boca Raton, Fla.

AIG’s return to real-estate investing is another sign that the insurer is regaining its footing after paying back most of its $182.3 billion federal bailout. The company is still 70%-owned by the U.S. government, which is now largely a passive shareholder and is expected to sell its holdings over time.

AIG started its real-estate investing business in 1987 and built it into one of the world’s largest property-investment platforms with $25 billion in assets at its peak a few years ago. Its real-estate team is led by Robert Gifford, a 55-year-old industry veteran who was hired in 2009, shortly before Robert Benmosche was appointed chief executive.

AIG’s real-estate assets are currently around $9.5 billion, or a little more than a third of its peak, and it maintains a staff of 150 people.

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Housing is Healing: Asking Prices to Show Gain in 2012

Source: RISMedia

For the first time in six years, sellers’ asking prices tracked by the Department of Numbers Website have gone positive on a year-to-year basis, another sign that the housing economy is slowly healing itself.

Sellers’ asking prices nationally first showed a positive year-over-year gain in December, and increased to 3.9 percent as of March 5.

“I wanted to see January’s data follow suit lest I prematurely announce a sign change only to have it reverse direction the following month. Of course there’s nothing that precludes that even with two months of positive Y/Y numbers, but it does tell me that the housing market is slowly healing itself,” wrote Ben Engebreth, an independent programmer and data analyst who operates the site.

As of March 5, 2012 there were about 858,688 single family and condo homes listed for sale in the 54 metro areas Engebreth tracks. The median asking price of these homes was estimated to be $224,322.2. Since this time last year, the inventory of homes for sale has decreased by 20.5 percent and the median price has increased by 3.9 percent.

“The Y/Y inventory decline of roughly 15 percent (which puts it at an all-time low for the series) offers additional supporting evidence. That’s not to say that we’ll be returning to rapid price appreciation any time soon; I certainly don’t foresee that,” Engebreth wrote.

The median asking price for homes in the U.S. peaked in June 2006 at $319,459 and is now $95,137 (29.8 percent) lower. From a low of $211,844 in January 2011, the median asking price in the US has increased by $12,477 (5.9 percent).

In its January data, REALTOR.com, the massive listings site which also tracks asking prices, reported list prices were up 3.69 percent on the year in the 146 metros it covers. The site reported the top four markets in terms of year over year increases were all in Florida: Miami (up 32.75 percent), Fort Myers-Cape Coral (up 21 percent), Punta Gorda (up 19.33 percent), and West Palm Beach (up 18.60 percent). Inventory was down 23.20 percent on the year.

For more information, visit www.realestateeconomywatch.com.

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On the incline: Cobb housing market showing signs of steady improvement

The new residential building industry in Cobb County saw a drop in activity in February, but 2012 is showing stronger numbers than 2011 in the year’s first two months.

Cobb and its six cities issued 72 permits to build new residential, single-family homes in February, a 24 percent decrease from the 95 permits issued a year go.

But the county still has momentum over 2011’s year-to-date numbers, as 165 permits have been issued in Cobb in the first two months this year, while last year, there were 160 issued in the same time frame.

As in January, each of Cobb’s six cities issued at least one permit in February — which never happened last year. Many cities often went months without issuing a permit in 2011, and Powder Springs failed to issue a single permit in all of last year but has issued one each month this year.

As usual, unincorporated Cobb issued the most permits in February with 47. Smyrna had the most among the cities with 19 permits, Kennesaw issued two, and Acworth, Austell, Marietta and Powder Springs rounded out the pack with one each.

Tom Heyer of Marietta, senior mortgage loan officer with SunTrust Mortgage in Kennesaw, said he and his company are seeing a pick-up in new construction in Cobb and the Atlanta markets.

“A lot of the loans that have come through lately are for new construction because all of those builders who could make it through this housing crisis and had deep pockets can now buy lots at a quarter of the price and sell for a quarter of the price that they were selling for,” Heyer said. “That makes the construction more affordable, so we’re seeing a lot more first-time homebuyers coming onto the market.”

Heyer said January’s new housing numbers matched November’s three-year high, so the market is starting to come back at a consistent pace. Heyer said he pays attention to the national numbers because they move the bottom market interest rates.

“Most say it was 2007/2008 when everything hit, so we’re starting to see a comeback, and you can definitely feel it,” Heyer said.

Heyer said one positive that seemed to come out of such a dismal economic and housing crisis over the past five years is that people are being smarter with their money.

“A lot more people are holding onto their cash because of what’s happened,” he said. “Over the past two weeks, the majority of people whom I’ve dealt with have said that when they get their IRS refunds, they’re going to pay off their credit card debts and keep that debt off. People are becoming better money managers, which is good.”

Heyer also said more people are renting out their homes rather than selling them.

“It’s a great time to buy, so a lot of people we’ve dealt with are buying new, but renting their old homes instead of selling them, which can be smart,” Heyer said.

Source: The Marietta Daily Journal

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Video: CBS-TV “Public Affairs on Peach”

CBS “Public Affairs on Peach” recently featured Patti Ellis, Atlanta Fine Homes Sotheby’s International Realty Intown Agent. Watch the video below for information on the state of the Atlanta real estate market.

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Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Source: DSNews.com

Capital Economics expects the housing crisis to end this year, according to a report released last Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

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