Glass More Full

There is always more than one way to look at something.  For example, today is the winter equinox, which means the first full day of winter.  Some might bemoan the fact that winter is just starting and the cold has set in for the next three months.  I on the on the other hand prefer to celebrate the fact that we start gaining more daylight each and every day all the way into summer, starting today!

Existing Home Sales, which tracks closings on homes that are over a year old, rose 0.7% last month and 15.4% from this time last year.  We are now on pace this year to see the most sales in almost ten years at 5.61M transactions. Available homes for sale though are declining; listings are down 9.3% from this time last year.  There are currently only 1.84M homes available for sale across the country, representing a four month supply (that’s NAR’s math, not mine).  Declining inventory continues to push sales prices higher: the Median Home Price rose 6.8% this year to $234,900.  Utah’s forecasted appreciation for 2017 is at 4.6%.  The consensus is that higher interest rates will make appreciation tighter going forward, as 88% of home buyers obtain financing to consummate their purchase.  That means that as a lender, I have a shot at participating in 88% of all transactions out there.  That glass just became more full!

It’s the Most Boring Time of the Year

The Mortgage Bankers Association has its annual meeting this time every year.  The content is so stodgy that that they have to host the conference in some place like San Diego just so people will attend.  For anyone who stayed awake during the proceedings however, there was some good news: the MBA expects a 10% increase in home purchases next year.  By contrast, the National Association of Realtors forecasts a 3.5% uptick in purchase transactions over the next 12 months. Perhaps the MBA’s statistic might have been inflated just to see if anyone was paying attention?  Last year, NAR showed a 7.0% increase in purchase transactions from 2014 to 2015.  Personally, I have seen a decent pickup in the number of homebuyers this year and welcome a little boost from 2015, especially considering the anticipated 33% decrease in refinance transactions coming next year as a result of increasing interest rates (another MBA forecast).

Newly issued Building Permits decreased by 5% and Housing Starts increased by 6.5% over last month according to the National Association of Home Builders this morning.  So-so news which pales by comparison to the 17% increase in the construction of multi-unit dwellings.  Anyone who has driven down the length of Orem’s State Street this year would refute that 17% is a low number.

Home Prices Slow

The Case Shiller Home Price
Index shows slowing appreciation across the country. On a year-over-year basis,
prices are up 13.4% through the end of 2013. (SA on the chart stands for seasonally adjusted and
NSA stands for non
seasonally adjusted) 
where most sales–and consequently
pricing variations–transpire during the summer months.  David Blintzer,
chairman of the S&P DOW Index Committee concurs: “Gains are slowing
from month to month and the strongest part of the recovery in home values may
be over”.  I take this with a grain of salt.  Everyone likes to
speculate to appease their own self interest, much in the way that the chair of
NAR might say that stocks are overpriced (that’s just my take on the Blintzer’s
commentary, Steve Brown has not actually depreciated the future of buying
equities).  Given that interest rates have come up about a percent in
the last year, as well as the massive slump in home prices, I think that
it’s only natural that housing values are not continuing at a
break-neck pace, and promotes a healthier, more stable future for us all.