Is there is going to be Reversal in Housing Market????

Sales of existing U.S. homes rose to the highest level in eight years, according to the National Association of Realtors, but that may be the peak for the year. One real estate brokerage claims consumer demand for housing took a sharp turn for the worse in June, as potential buyers balked at higher home prices.

"People look at houses and don't pull the trigger," said Glenn Kelman, CEO of brokerage Redfin, which released a new demand index on Thursday. "We know that the number of people writing offers has been declining for 4½ weeks, and based on that data we make a forecast."

The new demand index tracks millions of visits to Redfin's listing pages, as well as customer requests for home tours, customer offer requests on homes and various pricing data; in June it showed demand up 13 percent from a year ago but down 7 percent from May. That was the largest monthly decline since December of 2014.

"I think there's fatigue, frustration with high prices and a feeling that rates have started to move up, so people are packing it in early this season. Sometimes the housing market really has a long summer. I don't think it will this year," Kelman said.

The median price of a home sold in June rose to $236,400, the highest ever recorded by the Realtors association. Continued tight supply is leading to bidding wars in markets across the nation and decreased affordability. While mortgage rates are still historically low, they have been rising slightly since the start of May. Realtors' economists suggest the surge in June closings may have been in part due to some buyers jumping off the fence in May, fearing rates would go higher.

Redfin is predicting home prices will rise just 4.3 percent in July from last July, and 2.2 percent in August. It also predicts sales will increase just over 14 percent annually in July, but just 4.6 percent in August.

Today's housing market is increasingly driven by owner-occupant, mortgage-dependent buyers. Investors had fueled the market in 2013, pushing prices higher far faster than income growth. Investors are now a far smaller share. According to RealtyTrac, all-cash home sales fell to the lowest level since 2008 as buyers using low down payment FHA loans rose to the highest level in over two years.

"As the investor-driven housing recovery faded in the first half of 2015, first-time home buyers, boomerang buyers and other traditional owner-occupant buyers started to step into the gap and pick up the slack," said Daren Blomquist, vice president at RealtyTrac. "U.S. sellers so far in 2015 are realizing the biggest gains in home price appreciation since 2007. In June sellers sold for above estimated market value on average for the first time in nearly two years."

Tight supply has led to a quick turnaround for sellers, just 34 days; that is the shortest time recorded by the Realtors since the association began tracking the metric in 2011.

Economists at mortgage giants Fannie Mae and Freddie Mac put out reports Thursday suggesting continued improvement in the housing market, but noting lean inventories. Fall and winter are traditionally the slowest period in housing, but Redfin analysts say they accounted for seasonality in their new index. Anecdotally, real estate agents across the nation have reported a growing reluctance of buyers to stay in bidding wars and an increasing resistance to higher home prices.

Source: Yahoo Finance

HOME BUYING SEASON COMING UP......

HOME BUYING SEASON COMING UP......

Following the winter lull, forward looking market indicators suggest we may be seeing a strong spring home-buying season. Data on pending home sales from California Association of Realtors (C.A.R.) shows a 23 percent increase in activity between December and January. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually become closed sales transactions one to two months later.

Where is demand coming from? There has been a significant pent-up demand for homes. Following the recession, household formation in California fell dramatically. The latest estimate from C.A.R. showed that some 575,000 fewer households were formed in California between 2008 and 2012 due to economic hardship. If the household formation trends continued at the pace seen before the recession, California would have not only that many new households, but 60 percent of those households would be homeowners. That means we are missing about 345,000 new homeowners in California. With improving economic conditions and solid employment growth across the state, pent-up demand for homes is evident in the pending sales index for January C.A.R. recently released. Nevertheless, what are the obstacles that potential buyers may be facing? Well, inventory of homes listed for sale is still at historical lows. January C.A.R. numbers showed that raw inventory increased 12.1 percent from December of 2013 and increased 6.7 percent from a year ago. Unfortunately, the supply of homes in the lower price segment of the market continues falling, while the inventory of homes priced at million dollars and higher increased. Why is the inventory so low? There are several reasons worth mentioning. On one hand, following the collapse of the housing market, home prices along with historically low interest rate led to a very affordable housing market. Those who were able to take advantage certainly did and absorbed a great share of the lower priced inventory. In the meantime, the supply side of the inventory did not see any progress. California has seen a dramatic decrease in new construction. Permits for new housing units are half of what is needed to meet the household creation trend. Secondly, there are still about 15 percent or nearly 1.3 million of California’s 8.65 million homeowners underwater. Thirdly, foreclosure pipeline which comprised a large share of home sold over the last few years has dried up and not many foreclosures are available for sales. And lastly, the investors, both large and small scale, who recently bought homes, are renting them instead of flipping them. That may change as prices continue to improve. The low inventory environment, however, may be good news for sellers. Potential sellers who have been contemplating putting their home up for sale may want to take advantage of the low inventory of homes available for sale and list their homes.

California Real Estate Market Report -- Feb 2014

HOUSING MARKET REPORT FOR FEBRAURY 2014

Here are the Statistics for Real Estate Transactions and Home prices for Feb 2014

The above chart shows that the home prices in California State are still in upward movement. The movement doesn’t seem to be as crazy as in 2013 but it is still moving upwards. The data has been separated for Single Family Homes and Condo/Townhomes. The interesting point to note here is that even though the SFH has seen about 21.3% increase over last year; it has seen a decent decrease in average price about 1.6% over last month. On the other hand, Condo/Townhomes have seen constant increase in their prices. This might be because of the fact that there is increase in the newly built Condos and Townhouses all over in California State and may be buyers are inclining to buy much affordable housing than going for comparatively highly priced Single Family Homes.

SF Bay Area is one of the areas which have consistently seen the strong upward movement of the home prices and the trend still continues. The average home prices are above $800K in each of the counties (Note: The average home price in Alameda country is in mid 600’s). The Santa Clara County has seen very big price hike, 9.6% over last month. This shows the demand for homes is growing and this is good sign that economy is recovering and more people want to have their share of Real Estate. This is also very good sign for sellers to come to the market and have their profits locked in. As of today, I say and of course many analysts say it as “sellers market”. The Spring Season is coming up and I believe its good time for sellers to come into market.

The increase in prices are also can be because of other reason too. Before analyzing, lets take a look at the table below:

Now, the above table shows that there is decrease in number of sales both in year-to-year and month-to-month(Note: Condos/Townhomes has seen increased sales over last month). I believe the low inventory is primary reason for this less number of sales. All the counties in bay area have seen lot less sales over last year except San Francisco. This is because the SanFrancisco county have handful of inventory and this is in increasing trend. I believe this is because the home prices in this county have gone so high and more owners are coming into market to sell their homes and lock-in their profits. The other counties still see low inventory thus reflecting in the home sales. So the less supply(along with high demand) is also affecting the prices to go up. But over last month, the inventory has seen a upward trend and its a good sign for buyers as they have more homes to choose from and sometimes can have negotiating power. The Unsold Inventory Index is a very good number used to measure the health of the real estate market. It determines how many months it would take to sell homes currently on the market at the current rate of home sales. Higher is the number more likely it is "buyers market". The above table shows that these numbers have increased from last month and it shows that its going towards "buyers market". But the number itself shows its still in "sellers market". The numbers themselves are still on a lower side which says it is still sellers market but the month-to-month trend in every county shows that the market is going towards "buyers market". 

This spring season looks to be very exciting season for both sellers and buyers. For sellers, the home prices are gone high and market is in sellers hand and the demand is growing and I believe its perfect time to lock-in profits. For Buyers, the good sign is that the market is moving towards buyers market and inventory trend seems to be increasing(I will post inventory data later this week in the same post) and there are going to have more choices to zero-in on their "dream" home. In some cases, this inventory increase can give buyer the negotiating power. Go grab your share.

Good Luck both buyers and sellers this Spring Season.

Real Estate in California

California has one of the biggest real estate industry in US. Much of the credit has to be given to the ever increasing population of this state which is ticking at about 38 million. One of the major part of this fact is mainly because of immigration of people from all around the world. In the last decade, international migration was about 1.8 million. The credit goes to how California transformed into world center of the entertainment and music industries, of technology, engineering and the aerospace industry and as U.S. center of agricultural production. This dragged more and more people into this golden state. When you see geography of the state, about 45% of the state’s surface area is the forestland and considered to be the state with more forestland than any other state in US except Alaska. So the developed areas are getting denser and denser where forestland and other less interested areas remained almost no mans’ land.

California is home to eight of the 50 most populous states in United States: Los Angeles (2nd), San Diego (8th), San Jose (10th), San Francisco (13th), Fresno (34th), Sacramento (35th), Long Beach (36th), and Oakland (47th). I think you might already guessed why I am talking about all the number nonsense mentioned above in this “real estate” blog. Yes, you guessed it right. I know you are smart person;). The theory of economics of demand and supply comes into picture. The density of population in many of these metropolitan areas is grown so high that the bidding war for a piece of land has driven the land prices in California so high. The economy of California is largest in United States. Its Gross State Production(GSP) is above $2 Trillion. As of 2010 data, there are about 663 millionaires in California State, more than any other state in US.  The median household income was about $62K and ranked 10^th highest in the US states. This has given people power to fight for the land and pushing the prices higher. The suburban areas, bordering these metropolitan areas, have also seen effect of increase in population driving the real estate business in those areas too.

Real Estate is one of great ways to hedge against inflation. As value of dollar goes down, you need more money to purchase real estate. So if you buy and hold real estate long enough, there is almost certainty that you will make money in real estate. I personally like real estate because it is tangible and useful as it provides housing which is one of the main necessities of every living being on earth. One can use his real estate for say leveraging to invest in other areas, tax savings etc.  Only thing is you must make sure you chose right property as not all properties make financial sense. You are going to invest big chunk of money into real estate and would expect to fulfill your expectations. It can be either using it as perfect retirement home or resale at good profits or can be any other reasons. You would feel very happy and pride when it serves its purpose. That’s where real estate agent comes into picture. He makes sure to guide and assist you to invest in a property that would fulfill your dreams and expectations. It would take other post to write about why one needs real estate agents to buy or sell property.

CONCLUSION:

To end the post, my personal opinion is, lets me stress the word "PERSONAL" again, it would be good to have your share of real estate in California State. It is most probably trending towards pushing the prices higher and higher until its keeps on attracting more and more people into the state and/or the economy and median household income gets bigger and bigger. Following historical data shows that investing in real estate is one of best hedges against inflation. You can worry much less about inflation if you have an investment in real estate. It can give you yield enhancement as part of your investment portfolio. Real Estate allows you to achieve better returns for given level of portfolio risk. Being a tangible asset, you can increase its performance or value by making improvements to it. Unlike other assets, it can provide you shelter(housing) and give peace of mind. 

DISCLAIMER

Terms And Conditions Of Use

All content provided on this "http://www.udayrealestateagent.blogspot.com/" blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.

The owner of http://www.udayrealestateagent.blogspot.com/ will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

This terms and conditions is subject to change at anytime with or without notice.

UdayRealEstateAgent Blog Disclaimer Statements

http://www.udayrealestateagent.blogspot.com/ does not represent or endorse the accuracy or reliability of any information's, content or advertisements contained on, distributed through, or linked, downloaded or accessed from any of the services contained on this website, nor the quality of any products, information's or any other material displayed,purchased, or obtained by you as a result of an advertisement or any other information's or offer in or in connection with the services herein.

You hereby acknowledge that any reliance upon any materials shall be at your sole risk.http://www.udayrealestateagent.blogspot.com/ reserves the right, in it's sole dis-creation and without any obligation, to make improvements to, or correct any error or omissions in any portion of the service or the materials.

THE SERVICES AND THE MATERIALS ARE PROVIDED BY http://www.udayrealestateagent.blogspot.com/ ON AN "AS IS" BASIS, AND http://www.udayrealestateagent.blogspot.com/ EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICE OR ANY MATERIALS AND PRODUCTS IN NO EVENT SHALL TO http://www.udayrealestateagent.blogspot.com/ BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHAT'S OVER WITH RESPECT TO THE SERVICE, THE MATERIALS AND THE PRODUCTS.

http://udayrealestateagent.blogspot.com respects the rights (including the intellectual property rights) of others and we ask our users to do the same. http://www.udayrealestateagent.blogspot.com/ may in appropriate circumstances and in it's sole dis-creation, terminate the accounts of users that infringe or otherwise violate such rights of others.