Home Prices On The Rise, Says The October Home Price Index Report
More positive signals from housing — home values are still on the rise.
According to the Federal Housing Finance Agency, after posting its first quarterly increase since 2007 this past September, the Home Price Index rose by another 0.6 percent in October.
Prices are up in 4 of the last six months.
But before we take the stats to the proverbial bank, it’s important that we recognize the Home Price Index for its shortcomings.
- HPI only accounts for homes with mortgages backed by Fannie Mae or Freddie Mac
- HPI only accounts for re-sold homes — newly-built homes are excluded
- HPI aggregates national data whereas real estate markets are local phenomena
On a broad scale, the Home Price Index can be useful, but it doesn’t specifically apply to any specific U.S. market. For that, analysts tend to turn to the Case-Shiller Index, a privately-produced report that assesses home values in 20 cities nationwide.
The good news for home sellers is that Case-Shiller’s most recent report corroborates the government’s conclusion — home values are creeping back.
Home buyers should pay attention. When public and private sector data is in accord, markets tend to go along and, looking back, housing likely bottomed in February 2009. Since then, home sales are up, home supplies are down, and values have increased in most U.S. markets. Furthermore, so long as mortgage rates remain low and government stimulus is in place, the trend should continue through at least the first quarter of 2010.
If you’re on the fence about buying a home right now, or wondering about timing, consider your options vis-a-vis today’s market. Into the new year, homes won’t likely be as cheap to buy, nor to finance.
Moving To A New City? Check The Local Cost Of Living First.
It’s not only the real estate markets that differ from town to town — the Cost of Living does, too.
Insurance costs, tax bills and just plain, day-to-day living will dent a household budget differently depending on where that household is. It can be a nerve-wracking fact for families moving across state borders.
As an aid for the budget-aware, Bankrate.com keeps a Cost of Living Comparison Calculator on its website. The calculator asks 3 questions: (1) Where do you live now, (2) To where you are moving, and (3) What is your salary. It then spits out a detailed, 58-item cost comparison list between the two cities.
Some of the key costs compared include:
- Everyday groceries
- Energy bills
- Routine healthcare
- Home ownership
- Clothes
- Sporting goods
The Cost of Living Comparison Calculator is thorough, with data culled from the ACCRA. You’ll be surprised at how granular the list can get. On the ACCRA website, you can buy a similar report for $5.
On the Bankrate.com site, the data is free.
REAL ESTATE MARKET STATS 12/20 – 12/27: NORTHEAST LOS ANGELES
These zip codes include the Northeast Los Angeles communities of Eagle Rock, Highland Park, Mount Washington, Glassell Park, Sycamore Grove, Garvanza, Montecito Heights, Cypress Park, Lincoln Heights, El Sereno, Monterey Hills, and Hermon.
Home Inventories Plummet, Foreshadowing Higher Prices By Spring 2010
Home resales are soaring.
For the 4th consecutive month, the Existing Home Sales report revealed what today’s buyers and sellers already know — there’s a lot of buyer activity right now.
Existing Home Sales surged 7-plus percent in November, posting its largest number of recorded sales in 33 months. Sales volume is up 44% higher versus last year.
It’s another example of the housing market in recovery.
There were other interesting statistics buried in the November data, too. According to the National Association of Realtors:
- 51 percent of home buyers were first-timers
- Distressed properties accounted for one-third of all sales
- The median home sale price rose slightly
But of all the stats from the November Existing Home Sales report, perhaps the most important one is the one showing home supplies falling to 6.5 months. It’s nearly half of the home supply available last November.
The rapid run-off of inventory throughout 2009 is more than a trend at this point and suggests higher home valuations in 2010. Especially because mortgage rates are low, tax credits are available, and the press is giving housing positive coverage.
You shouldn’t feel rushed to buy, but you probably don’t wait too long, either. The best deals of 2010 may be gone before that Spring Buying Season even starts.
When It’s A Holiday Week, Mortgage Rate Shoppers Should Be Extra Vigilant
Mortgage pricing worsened Monday, driving mortgage rates to their highest levels since October.
The day’s action was drastic, too.
Some banks issued as many as 3 rate sheets Monday — each worse than the preceding and one reason why rates got so bad, so quickly, is because this week marks the beginning of mini-Vacation Season on Wall Street.
Between now and January 4, 2010, be prepared for big swings in pricing from day-to-day. Shopping for a mortgage could be a challenge.
The relationship between vacation days and mortgage rate volatility is rooted in how mortgage rates are “made”.
- Conforming mortgage rates are based on the price of mortgage-backed bonds, a security that is sold on Wall Street
- Mortgage-backed bonds can’t sell without a bond buyer and a bond seller agreeing to a specific sale price
So, during vacation week, when the total number of market participants are less, there are fewer opportunities for buyers and sellers to meet at a specific price. As a result, bond prices rise and fall with a higher velocity than on a “normal” day. Rallies and momentum plays are exaggerated, too.
Now, mortgage market action like this can work in your favor, or it could work out of your favor. Unfortunately, on Monday, rates moved out of favor.
This rest of this week is stacked with market-moving economic data. The data could be better-than-expected, or worse-than-expected. Either way, markets will react a little more feverishly than normal. Therefore, if you have a chance to lock a favorable rate, consider taking it.
Before long, the rate could be gone.
What’s Ahead For Mortgage Rates This Week : December 21, 2009
Mortgage markets improved last week as pricing followed a roller coaster-like pattern. After touching a 6-week high Tuesday, rates rallied to weekly lows Thursday, and then jumped back higher Friday.
Despite the improvement last week overall, mortgage pricing remains significantly worse from the all-time lows set in late-November.
Oddly, last week’s most prominent mortgage-related story wasn’t the most influential one.
On Wednesday, the Federal Open Market Committee adjourned from a two-day meeting. It voted to leave the Fed Funds Rate unchanged from its current target zone of 0.000-0.250 percent. This wasn’t news, per se — markets expected the “no change” vote.
However, in its accompanying press release, the Fed appeared more rosy in its economic outlook, citing improving labor markets and low levels of inflation. Results like this are a mixed bag for rate shoppers, but is generally welcomed as good news.
Rates were unchanged after the FOMC release.
The bigger story last week comes from Greece.
Concerns for the country’s debt burden have been in play for weeks, but last week, Standard & Poor’s officially downgraded Greece’s debt rating. The move triggered concerns regarding broader Eurozone debt, especially considering the recent issues in Dubai.
U.S. mortgage markets benefitted from Greece’s troubles as “safe haven” attracted investors, driving down rates Thursday afternoon.
Debt concerns should remain in focus this week. Furthermore, there’s a bevy of domestic data that could swing rates in either direction, too. Most notably, watch for Tuesday’s housing data, Wednesday’s inflation data, and Thursday’s consumer confidence data. Each can be a powerful influence on rates.
There will be less volume on Wall Street because of Christmas and less volume tends to spur mortgage rate volatility. Be wary of swings in either direction.
Markets close early Thursday and will be closed Friday.
REAL ESTATE MARKET STATS 12/13 – 12/20: NORTHEAST LOS ANGELES
These zip codes include the Northeast Los Angeles communities of Eagle Rock, Highland Park, Mount Washington, Glassell Park, Sycamore Grove, Garvanza, Montecito Heights, Cypress Park, Lincoln Heights, El Sereno, Monterey Hills, and Hermon.
OPEN HOUSES FOR SUNDAY DECEMBER 20 IN NORTHEAST LOS ANGELES
Listing of Sunday’s Open Houses from I-Tech MLS
Listing of Sunday’s Open Houses from Combined L.A. Westside MLS
Featuring Open Houses in the Los Angeles communities of Eagle Rock, Highland Park, Mount Washington, Glassell Park, Sycamore Grove, Garvanza, Montecito Heights, Cypress Park, Lincoln Heights, El Sereno, Monterey Hills, and Hermon.
Housing Starts Jump; Home Sellers Lament.
Housing Starts jumped last month as builders got back to business. It’s a telling sign for the economy, but bad news for next season’s sellers.
With more homes coming online, home prices may be slow to rise nationwide.
A “Housing Start” is a privately-owned home on which construction has started. In November, starts rose by nearly 9 percent while remaining within the same tight range we’ve seen since June.
More interesting that Housing Starts, though, is the accompanying data for Housing Permits. After a 5-month plateau, Housing Permits finally broke through, posting its largest number in 12 months.
This, too, bodes poorly for sellers.
Housing permits are precursors to housing starts so because the number of permits are higher today, we expect that the number of starts will be higher just a few months from now.
According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.
More permits means more starts which, in turn, leads to a larger home inventory. And when home supplies grow faster than the home demand, prices fall.
Throughout the early part of 2010, low mortgage rates and federal tax credits should help hold demand high but if builders flood the market with new, quality product, sellers may find that they’ve lost some of their leverage.
For home buyers, the rise in starts is welcomed.
917 N. Avenue 52, Highland Park
917 N. Avenue 52, Highland Park, Offered for sale at: $249,000
Stairway to Heaven… in this wonderful 2 bedroom updated home with wide views and privacy. Perched high from the street, you can either use the stairs as your stairmaster or drive the long driveway to the top. There is also a garage at street level for additional parking. Copper plumbing, roof with elastromeric coating, newer bath fixtures including tub, vanity, toilet, tile, lighting, floor, Kitchen includes cabinets, counters, sink, faucet, flooring and energy saving appliances. Newer water heater and more. Seismic gas shutoff installed. Plenty of parking on the property, too.