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End of year Housing Report

 

 

Trends in Real Estate

Check out this Report for full details:

https://www.corelogic.com/downloadable-docs/marketpulse/17-mktplse-1118-00-the-marketpulse-vol-7-issue-11-november-2018-screen-112718.pdf

 

 

U.S. Economic Outlook: November 2018
Payment-to-rent affects tenure choice and presages future home price growth By Frank E. Nothaft
Mortgage rates rose in October to their highest level in seven and a half years
and are expected to rise further in the coming year. A rise in rates may dissuade homeowners from moving.

And for households that are relocating, the rise in monthly mortgage payment relative to rent
may discourage home buying. Comparing the mortgage payment with rent not only affects the buy versus rent decision of households, but it can also indicate whether a local area is overvalued. Places, where the mortgage payment is much higher than its historical relationship with rent, could see not
only a falloff in home buyer activity but also a dip in sales prices.
The house-price bubble from 2004 to 2006 is an example of when the mortgage payment increased well above single-family rent and then fell sharply after 2007 as home prices declined. Using CoreLogic’s sales price data and Single-Family Rent Index, we traced the boom-and-bust pattern for
several metros. Los Angeles and Washington, DC are metros that had a doubling in the mortgage payment-to-rent ratio between 2001 and 2006, with a subsequent crash. In contrast, this ratio remained more stable in the Houston area. (Figure 1) By comparing the payment-to-rent ratio in
2018 with its value in 2001, we can determine whether the buy-versus-rent decision has
become more or less favorable for home buyers. We can also see which metros may be at greater risk of a home-price correction. We found several metros that have a mortgage payment-to-rent ratios that were more than 10 percent higher than in 2001. Other Metros had payment-to-rent ratios that were close to or less than what they were in 2001. Metro areas with high payment-to-rent ratios are
more likely to see slowing sales and less price growth. (Figure 2) If mortgage rates move higher in coming months, as expected, then metros that have affordably priced relative to
rental will likely continue to have steady or increasing sales, whereas markets, where mortgage payments are high relative to rents, are at greater risk of experiencing cooler home sales and lower sales prices.
Dr. Frank Nothaft
Executive, Chief Economist,
Office of the Chief Economist
Frank Nothaft holds the title executive, chief economist for CoreLogic. He leads the Office of
the Chief Economist and is responsible for analysis, commentary and forecasting trends in global real

The CoreLogic Home Price Insights report features an interactive view of our Home Price

 

The CoreLogic Home Price Insights report features an interactive view of our Home Price Index product with analysis through September 2018 with Forecasts from October 2018 including live maps.

CoreLogic HPI™ is designed to provide an early indication of home price trends. The indexes are fully revised with each release and employ techniques to signal turning points sooner.

CoreLogic HPI Forecasts™ (with a thirty-year forecast horizon), project CoreLogic HPI levels for two tiers—Single-Family Combined (both Attached and Detached) and Single-Family Combined excluding distressed sales. Check out the site below for a Full report

https://www.corelogic.com/insights-download/corelogic-home-price-insights.aspx

The report is published monthly with coverage at the national, state and Core Based Statistical Area (CBSA)/Metro level and includes home price indices (including distressed sale); home price forecast and market condition indicators. The data incorporates more than 40 years of repeat-sales transactions for analyzing home price trends

September 2018 National Home Prices

Home prices nationwide, including distressed sales, increased year over year by 5.6 percent in September 2018 compared with September 2017 and increased month over month by 0.4 percent in September 2018 compared with August 2018 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results).

 

Forecast Prices Nationally

The CoreLogic HPI Forecast indicates that home prices will increase by 4.7 percent on a year-over-year basis from September 2018 to September 2019, and on month-over-month basis home prices are expected to decrease slightly by 0.6 from September 2018 to October 2018.

The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

In 2018, CoreLogic together with RTi Research of Norwalk, Connecticut, conducted an extensive consumer housing sentiment study, combining consumer and property insights. The study assessed attitudes toward homeownership and the drivers of the home buying or renting decision process. When asked about the desire to own a home, potential buyers in the younger millennial demographic have the desire to buy, 40 percent are extremely or very interested in homeownership. In fact, 64 percent say they regularly monitor home values in their local market. However, while, 80 percent of younger millennials plan to move in the next four or five years, 73 percent cite as a barrier to homeownership (far higher than any other age cohort).

Tavistock buys 1,000-plus acres airport land

is expanding its boundaries south of and it now owns the land it needs.

Lake Nona developer Tavistock Development Co. LLC’s related entity TDCP LLC spent $63.9 million, or roughly $55,700 per acre, on May 10 for nearly 1,147 acres south of Orlando International Airport from the Greater Orlando Aviation Authority and the city of Orlando, Orange County records showed.

The three different parcels, two in Orange County and one in Osceola County along Narcoossee and Boggy Creek roads, will be used by  to develop a portion of a mixed-use project west of Narcoossee Road, north and east of Boggy Creek Road near the Orlando VA Medical Center, Tavistock spokeswoman Jessi Blakley told Orlando Journal.

The project, known as the Poitras planned development, includes:

  • 2,973
  • 100,000 square feet of commercial use
  • A school on 25 acres

Tavistock previously sought approval from the city earlier this month to rezone the property as a planned development with aircraft noise.

The 11,000-acre Lake Nona already has billions of dollars worth of underway and there’s even more growth ahead.

NAR Pending Home Sales Report

WASHINGTON (August 29, 2018) — Pending home sales stepped back in July and have now fallen on an annual basis for seven straight months, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.7 percent to 106.2 in July from 107.0 in June. With last month’s decline, contract signings are now down 2.3 percent year-over-year.

Lawrence Yun, the NAR chief economist, says the housing market’s summer slowdown continued in July. “Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity,” he said. “It’s evident in recent months that many of the most overheated real estate markets – especially those out West – are starting to see a slight decline in home sales and slower price growth.”

Added Yun, “The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”

https://goo.gl/AFukQb

Pointing to annual changes in active listings data at realtor. com®, Yun said increasing inventory in several large metro areas, and especially many out West, will likely help cool price growth to more affordable levels going forward. Even as days on market remains swift in many of these areas, Denver, Santa Rosa, California, San Jose-Sunnyvale-Santa Clara, California, Seattle, Nashville, Tennessee, and Portland, Oregon was among the large markets seeing a rise in active listings in July compared to a year ago.

Earlier this week, NAR released commentary reflecting on the past decade since the beginning of the Great Recession. Although supply and headwinds are the biggest issue right now, Yun said it is important to note just how much the housing market has recovered since the depths of the financial crisis. Today, thanks to several years of solid job growth, as well as safe lending and regulatory policy reforms, foreclosures sit near historic lows and record high home values have helped millions of households build substantial wealth.

“Rising inventory levels – especially if new home finally starts picking up – should help slow price appreciation to around two-and-four percent, which will help aspiring first-time buyers, and be good for the long-term health of the nation’s housing market,” said Yun.

Yun expects existing-home sales this year to decrease 1.0 percent to 5.46 million, and the national median existing-home price to increase around 5.0 percent. Looking ahead to next year, existing sales are forecast to increase 2 percent and home prices around 3.5 percent.

July Pending Home Sales Regional Breakdown

The PHSI in the Northeast climbed 1.0 percent to 94.6 in July but is still 2.3 percent below a year ago. In the Midwest, the index inched up 0.3 percent to 102.2 in July but is still 1.5 percent lower than July 2017.

Pending home sales in the South declined 1.7 percent to an index of 122.1 in July, and are 0.9 percent below a year ago. The index in the West decreased 0.9 percent in July to 94.7 and is 5.8 percent below a year ago.

The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

# # #

* The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing . A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: NAR’s August Housing Minute video will be released on August 31, Existing-Home Sales for August will be reported September 20, and the next Pending Home Sales Index will be September 27; all release times are 10:00 a.m. ET.

HOUSING INVENTORY: LOWEST IN DECADES

 

 

 

 

 

 

Resale inventory is at the lowest level in more than 18 years and continues to decrease. New home construction hasn’t kept pace with demand, and the result is an inventory shortage at a time when demographic and economic indicators are moving upward for the .

One way to measure for-sale housing inventory is with “months’ supply,” which shows how many months it would take to sell the available inventory at the current sales pace, as if no other came on the market, which is unlikely but it is a good snapshot to measure health.

Month's Supply Lowest In More Than 18 Years

The housing market is seasonal, so when comparing the data over time we look at these numbers for the same month of each year. In March 2018, the months’ supply was approximately 3.8 months measured across the country, which means it would take only 3.8 months to sell all the existing houses listed at the March 2018 sales pace.  The March 2018 supply was about the same level as in March 2017, but well below where it was during the Great Recession, and tighter than it was before the housing boom. By this measure, inventory is the tightest it’s been in over 18 years.

Inventory Tight for Entry-Level Buyers

When we dig deeper into inventory at different price levels we see that inventory for entry-level homes is even tighter. Using the median price as the reference, we look at months’ supply for homes listed at different price points, for those homes listed at the entry-level (priced from 50 percent of median sale price up to 25 percent above) there was only a 3-month supply available for sale. There is more supply at higher price points – close to 7 months for homes listed for more than twice the median sale price.

Areas of the country with strong job growth have even lower supply. Denver, Seattle, and San Francisco have about 2 months of supply, making each of those cities a sellers’ market. Miami, with a supply made up mostly of condos, has the highest supply of the largest metros at 9 months.

Month's Supply in Large Metro Areas

The incredibly tight inventory on the low end has pushed prices up for that segment of the market. As measured by the CoreLogic Home Price Index, prices for lower-end homes increased by almost 10 percent year over year in March 2018, while prices for higher-priced homes increased by 6 percent. Increases for lower-end homes can price entry-level buyers out of the housing market, keeping a lid on overall home sales.

© 2018 CoreLogic, Inc. All rights reserved.

 

 

 

Resale inventory is at the lowest level in more than 18 years and continues to decrease. New home construction hasn’t kept pace with demand, and the result is an inventory shortage at a time when demographic and economic indicators are moving upward for the housing market.

One way to measure for-sale housing inventory is with “months’ supply,” which shows how many months it would take to sell the available inventory at the current sales pace, as if no other homes came on the market, which is unlikely but it is a good snapshot to measure health.

Month's Supply Lowest In More Than 18 Years

The housing market is seasonal, so when comparing the data over time we look at these numbers for the same month of each year. In March 2018, the months’ supply was approximately 3.8 months measured across the country, which means it would take only 3.8 months to sell all the existing houses listed for sale at the March 2018 sales pace.  The March 2018 supply was about the same level as in March 2017, but well below where it was during the Great Recession, and tighter than it was before the housing boom. By this measure, inventory is the tightest it’s been in over 18 years.

Inventory Tight for Entry-Level Buyers

When we dig deeper into inventory at different price levels we see that inventory for entry-level homes is even tighter. Using the median price as the reference, we look at months’ supply for homes listed at different price points, for those homes listed at the entry-level (priced from 50 percent of median sale price up to 25 percent above) there was only a 3-month supply available for sale. There is more supply at higher price points – close to 7 months for homes listed for more than twice the median sale price.

Areas of the country with strong job growth have even lower supply. Denver, Seattle, and San Francisco have about 2 months of supply, making each of those cities a sellers’ market. Miami, with a supply made up mostly of condos, has the highest supply of the largest metros at 9 months.

Month's Supply in Large Metro Areas

The incredibly tight inventory on the low end has pushed prices up for that segment of the market. As measured by the CoreLogic Home Price Index, prices for lower-end homes increased by almost 10 percent year over year in March 2018, while prices for higher-priced homes increased by 6 percent. Increases for lower-end homes can price entry-level buyers out of the housing market, keeping a lid on overall home sales.

© 2018 CoreLogic, Inc. All rights reserved.

National Association of Realtors

Pending home sales slid in April to their third-lowest level over the past year according to the latest Pending Home Sales Index data released by the National Association of Realtors (NAR) on Thursday. The report indicated that the index declined 1.3 percent in April to 106.4 from an upwardly revised 107.8 in March. On a year over year basis, the index was down 2.1 percent and declined for the fourth straight month.

“Pending sales slipped in April and continued to stay within the same narrow range with little signs of breaking out,” said Lawrence Yun, Chief Economist at NAR. “Listings are typically going under contract in under a month and instances of multiple offers are increasingly common and pushing prices higher.”

Watch what Yun had to say about the other factors that impacted pending home sales and his take on the :

 

Millennial homebuyers are not actively seeking

 

Good morning, Orlando!

Millennial homebuyers are not actively seeking to buy a house in Orlando, according to a new study by LendingTree.

In fact, out of the 100 cities ranked, Orlando came in at No. 80. See the data here.

Mortgage requests for buyers under 35 were analyzed between Feb. 1, 2017, and Feb. 1, 2018, then ranked alongside data about the average age of the buyer under 35, credit score, down payment and requested loan amount.

The study found cities in the Sun Belt like Las Vegas, Tuscon, Ariz., and five Florida cities as least popular, which could be because of their popularity instead with retirees, as well as high cost of living, according to LendingTree.

About one-third of mortgage requests through the company were from those 35 years old and younger.

And be sure to check out these other Monday headlines:

New project with shops, may be on tap for the area near SunRail station
A South Florida developer is eyeing 18 acres near the SunRail station in southwest Orlando for a possible mixed-use development. The project would include apartments, townhomes and a two-story office-and-retail building on Sand Lake Road and Orange Avenue. More here.

RESIDENTIAL REAL ESTATE
Images revealed of apartment buildings at Disney’s Flamingo Crossings
Rendering of the community center at Flamingo Crossings

Online mortgage lender expands into Florida, seeks to disrupt the industry
Lenda, an online mortgage company that claims it can close home loans 3.5 times faster than the industry average is expanding into Florida. Lenda uses a predictive algorithm, rather than going through human loan officers, to determine whether a borrower is creditworthy. More here.

N.C. food production biz considers adding 95 jobs in Melbourne
MG Foods Inc., a North Carolina-based food production, packaging, and distribution company, has applied for property tax breaks with Brevard County in order to expand its workforce by 95 jobs, Florida Today reports. More here.

How to get a piece of the work on the next phase of OIA’s new terminal
Orlando International Airport is looking for some help as it plans the next phase of its $2.15 billion expansion. The Orlando airport — the busiest airport in the state — is a huge driver of the area’s and the new south terminal will raise its capacity by 10 million passengers. More here.

Mortgage rates hold steady
Mortgage rates held steady this week, according to Freddie Mac. The 30-year fixed mortgage averaged 4.45% for the week ending March 22, essentially unchanged from 4.44% the previous week. Favorable mortgage rates have helped propel U.S. home sales and the refinance market.

And higher gas prices are on the way
Expect higher gas prices this week, AAA says. The Florida average has risen 10 of the past 12 days, climbing a total of 6 cents. You can expect prices to climb at least another 10 cents in the coming weeks. Gas prices in Orlando currently average $2.48 a gallon.

KPMG’s revamped plans for Lake Nona center

 

 

 

 

 

Good morning, Orlando!

New York-based audit giant KPMG LLP is revamping the plans for its 55-acre training center.

If you recall, KPMG received $3.8 million in economic development incentives for the training center project, including $3.5 million in tax rebates from Florida and the city of Orlando for a seven-year period and a $320,000 Qualified Target Industries tax refund through the state, which is expected to create 80 jobs by 2019.

More here on what KPMG is requesting approval from the city to change.

The new KPMG center is expected to boost the local by bringing thousands of employees into the market, creating new jobs at the facility and hundreds of third-party contract operator positions.

And be sure to check out these other Thursday headlines:

Hard Rock HQ’s Orlando departure to result in 184 layoffs

Orlando-based casino, hotel and restaurant operator Hard Rock International Inc. told the state via a Worker Adjustment and Retraining Notification notice, that it will lay off 184 workers starting in April through July. The company said the layoffs will be permanent. More here.

First look: Lake Nona teaching hospital plans reveal future expansion

The University of Central Florida and HCA Healthcare’s application for a new teaching hospital in Lake Nona gave a first look of the new facility and the medical spaces it will create. More here.

Orlando ‘Shark Tank’ star to roll out products in Walmart this month

Hummus king Jesse Wolfe has scored one his largest deals yet. His company O’Dang Hummus, featured on CNBC’s show “Shark Tank,” last summer struck a deal with Wal-Mart Stores Inc. (NYSE: WMT). And now, he will roll out his hummus salad dressing in 2,000 Walmart stores and neighborhood markets this month.

Ridership of Brightline — which eventually will extend to Central Florida — has exceeded expectations since the train began service between Fort Lauderdale and West Palm Beach, CEO Patrick Goddard told an audience at the Greater Miami Chamber of Commerce luncheon Wednesday. More here.

Florida House Speaker Corcoran says budget deal reached

House Speaker Richard Corcoran, R-Land O’ Lakes, indicated Wednesday afternoon that legislative leaders have reached agreement on a budget for the fiscal year that starts July 1. More here.

Disney opens StudioLAB to build VR, AI ‘entertainment experiences’

Walt Disney Studios is launching an initiative dedicated to virtual reality and artificial intelligence. StudioLAB will reimagine, design and prototype entertainment experiences and production capabilities to promote feature films, as well as music and stage plays.

More Than A High Appraisal

Homes appraised above contract price had above-market appreciation rates

Housing Trends

For homebuyers, the outcome of appraisal is one of these three scenarios: (1) appraised value closely matches sales price, (2) appraisal falls short of sales price or (3) appraisal is higher than sales price. If a home sells for less than its appraised value, does that mean that the buyers got ‘a bargain,’ and should anticipate above-average appreciation during their ownership period?  Conversely, if a home sells for more than its appraised value, does that mean the buyers may have ‘overpaid,’ and could expect a below-market rate of price growth during the length of time they own the home?

Evidence seems to support the hypothesis that there is “money left on the table” in high-appraisal transactions. When property price appreciation was calculated for twice turned-over in the California market – first sale observed with a full appraisal and sales closing price in 2010 or later, and then a second time with a sale by the owner – homes previously appraised with a sizable premium above the contract sales price were found to have above-market appreciation rates.

Yanling Mayer Blog Post

As shown in Figure 1, excess rates of price appreciation averaged about 3.3 percent per year.  By comparison, closely appraised homes appreciated at about the market average, while homes with appraised value below their contract sales price appreciated 0.3 percent per year slower than the market.  Excess appreciation rates were annualized price gains at re-sale—annualized percentage difference between prior purchase price and subsequent re-sale price, in excess of average market appreciation during the same ownership period.  The CoreLogic county-level Home Price Index (HPI) was used as the benchmark of market-wide appreciation.

Yanling Mayer Blog Post

Figure 2 shows that high-appraisal homes – whether a distressed sale or not – had above-market price appreciation, averaging 3.15 percent among non-distressed sales or 3.9 percent among distressed sales. Real estate owned (REO) and short sales exhibited above-market appreciation rates across all three appraisal valuation outcomes, likely driven by their below-market pricing to motivate sales.  Investors’ value-enhancing repair and refurbishing work could also be a factor for their higher re-sale values – despite that only homes that were held for at least 18 months since initial purchase/appraisal were included in the analysis.  For both non-distressed and distressed sales, median prices of high- and low-appraisal homes were lower than closely appraised homes. Since both high- and low-appraisal homes may have drawn disproportionately from lower-priced homes, faster price appreciation experienced by low-valued homes alone could not explain away the large disparities in price appreciation between the two.[1]

In Figure 3, sample homes were further sub-grouped by the year in which they were initially purchased and appraised. Given significant market dynamics during 2010-2015, property appreciation rates were likely to vary depending on the timing of initial purchase.  They ranged between 2 and 5 percent, reaching the highest during the 2012 market bottom when market-wide underpricing was likely the severest.

Yanling Mayer Blog Post

A city-level breakdown is shown in Figure 4. Stockton (5.87 percent) and Riverside (5.22 percent) had the highest excess price gains, followed by San Francisco (4.62 percent), Los Angeles (4.35 percent), Bakersfield (4.24 percent), and San Jose (4.04 percent).  Due to the use of county-wide HPIs for benchmarking, some cities – such as Oakland, Riverside and others – that may have experienced faster-rising prices than its county as a whole could well see across-the-board positive excess price appreciation.

Regardless of the reason(s) why a home may have sold for less than its appraised value, the buyers appear to have benefitted by having a faster-than-market appreciation during their ownership tenure.

Inventory Shortage at Crisis Levels in Nation’s Hottest Housing Markets

For-sale inventory is stuck at crisis levels in some of the nation’s hottest housing markets where home values are appreciating fastest. The number of homes for sale nationwide has declined on an annual basis for the past 35 straight months, and just 16.7 percent of a panel of housing expertsii surveyed in December 2017 expect a meaningful increase of home building in 2018, a sign that limited inventory could continue to drive the housing market this year.

 

“Tight inventory fueled by a tight labor market and low interest rates propelled home values to record heights in 2017, but the outlook is now much less certain,” said Zillow senior economist Aaron Terrazas. “Tax reform will put more money in the pocket of the typical buyer, but will limit some housing-specific deductions. Overall, this should increase demand for the most affordable and ease competition somewhat in the priciest market segments. On the supply side, the market is starving for new homes, but it won’t be easy for builders struggling with high and rising land, labor and lumber costs. Aging millennials and young families may be able to find more affordable new homes this year, but they’ll most likely be in further-flung suburbs with more grueling commutes to urban job centers.”

Lack of inventory, coupled with strong demand from home buyers, is one reason why home values across the country are reaching new peaks. The median U.S. home value rose 6.5 percent over the past year to $206,300, the highest it has ever been.