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Existing home sales up, pent up demand sustaining housing market

As one in a string of positive indicators for housing, although closed transactions slipped slightly in December, the market is finally seeing pre-recession signs of health on the long road to recovery.

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Existing home sales slow in December

According to the National Association of Realtors (NAR), existing home sales (completed transactions) slowed by 1.0 percent compared to November, as inventory levels continue to move home prices up, with annual prices rising the most since 2005. Total sales in 2012 were the highest in five years, and although the month slipped a bit, existing home sales for the month rose 12.8 percent from December 2011.

The trade group is reporting preliminarily that existing home sales totaled 4.65 million for 2012, up 9.2 percent from the 4.25 million units closed in 2011, marking the highest volume since 2007, just prior to the economic collapse. 2012 saw the strongest annual increase since 2004.

The national median existing home price was $180,800 in December, fully 11.5 percent above December 2011, marking the tenth consecutive month of annual gains, which has not happened since August 2005 to May 2006, and is the strongest increase since November 2005 when it jumped 12.9 percent.

The median time on market rose to 73 days in December, up from 70 days in November, but is 26.3 percent below 99 days in December 2011. The median time on market for short sales was 117 days, and 45 days for foreclosures, while non-distressed homes’ median average was 74 days on market. Fully 31.0 percent of all homes sold in December were on the market for less than a month.

“Pent-up demand is sustaining the market.”

Dr. Lawrence Yun, NAR chief economist, said pent-up demand is sustaining the market. “Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales.”

“The number of potential buyers who stayed on the sidelines accumulated during the recession,” Dr. Yun added, “but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013.”

Inventory levels in December

As Dr. Yun noted, inventory levels remain tight, falling 8.5 percent in December compared to November, representing a 4.4 month supply at the current sales pace, down from 4.8 months in November. NAR data shows December as having the lowest housing supply since May of 2005 when it was 4.3 months.

Listed inventory is 21.6 percent below a year ago when there was a 6.4-month supply, and raw, unsold inventory is at the lowest level since January 2001 when there were 1.78 million homes on the market.

Distressed homes accounted for 24 percent of all sales in December (12 percent were foreclosures and 12 percent were short sales), up from 22 percent in November but below the 32 percent share in December 2011. Foreclosures sold for an average discount of 17 percent below market value in December, while short sales were discounted 16 percent.

Affordability conditions

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said affordability conditions will be fairly stable in the near term. “Although mortgage interest rates should gradually rise as the year progresses, they’re expected to stay below 4 percent during the first half of the year, meaning qualified buyers generally can stay well within their means,” he said.

“Although tight inventory is limiting home sales in many areas, overall sales are expected to stay on an upward trend. The biggest impact of tight inventory is upward pressure on home prices, but after values fell below replacement construction costs, prices are still affordable in most of the country.”

Key stats: types of buyers and sales

According to the NAR:

  • First-time buyers accounted for 30 percent of purchases in December, unchanged from November; they were 31 percent in December 2011.
  • All-cash sales were at 29 percent of transactions in December, compared with 30 percent in November and 31 percent in December 2011. Investors, who account for most cash sales, purchased 21 percent of homes in December, up from 19 percent in November; they were 21 percent in December 2011.
  • Single-family home sales slipped 1.4 percent to a seasonally adjusted annual rate of 4.35 million in December from 4.41 million in November, but are 11.5 percent above the 3.90 million-unit pace in December 2011. The median existing single-family home price was $180,300 in December, up 10.9 percent from a year ago.
  • Existing condominium and co-op sales rose 1.7 percent to an annualized level of 590,000 in December from 580,000 in November, and are 22.9 percent higher than the 480,000-unit level a year ago. The median existing condo price was $184,100 in December, up 16.0 percent from December 2011.

Key stats: regional sales varied widely

According to the NAR:

  • Regionally, existing-home sales in the Northeast rose 3.2 percent to an annual rate of 640,000 in December and are 10.3 percent above December 2011. The median price in the Northeast was $231,600, up 5.3 percent from a year ago.
  • Existing-home sales in the Midwest fell 5.9 percent in December to a pace of 1.12 million but are 15.5 percent higher than a year ago. The median price in the Midwest was $144,800, which is 12.3 percent above December 2011.
  • In the South, existing-home sales declined 3.0 percent to an annual level of 1.95 million in December but are 14.7 percent above December 2011. The median price in the South was $161,100, up 11.0 percent from a year ago.
  • Existing-home sales in the West rose 5.1 percent to a pace of 1.23 million in December and are 8.8 percent higher than a year ago. The median price in the West was $239,900, which is 17.3 percent above December 2011.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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