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Market Snapshot: June 2013 vs June 2012

Let’s compare the June 23, 2013 stats with the June, 24 2012 stats for the Louisville, Elizabethtown, and Southern Indiana real estate markets.

Greater Louisville

The Months of Inventory is 17.1% lower than this time last year. This is the amount of time it would take to sell all the properties that are currently listed in the area. On June 24, 2012, it would have taken approximately 7.0 months to sell every listed property in the area; on June 23, 2013 it was recorded to only take 5.8 months.

The amount of Unsold Residential Inventory is also down 11.5% from last year. As of June, 23 2013 there were 6,794 residential homes listed for sale in the Greater Louisville area. This time last year there were 7,679. This gives buyers less to choose from and become more competitive with each other to get the home they want.

On average homes are selling for prices 7.7% higher than last year, and it less time – 19 days less than in 2012.

Average Sales Price – 2012: $181,173 vs. 2013: $195,150

Average Days on Market – 2012: 82 days vs. 2013: 63 days

 

Elizabethtown

In the Elizabethtown market, the Months of Inventory is actually 1.1% higher than it was in 2012.

2012: 9.3 months vs. 2013: 9.4 months

Unsold Residential Inventory is 4.5% lower, with 1,481 unsold homes on June 24, 2012 and 1,415 properties still listed for sale on June 23, 2013.

Unlike what is being seen in the Greater Louisville area, real estate in Elizabethtown has an Average Sales Price that is 11.6% lower than what is was this time last year. In 2012, properties were selling for an average of $153,496, this year the average price is down to $135,760.

However, similar to the Louisville market, properties are on the market for less time.

Average Days on Market – 2012: 163 days vs. 2013: 143 days

 

Southern Indiana

Months of Inventory – 23.9% lower than last year

2012: 8.8 months vs. 2013: 6.7 months

Unsold Residential Inventory – Down 3.9% this year

2012: 2,101 vs. 2013: 2,186

Average Sales Price – Increased 15.0% since 2012

2012: $123,404 vs. 2013: 141,921

Average Days on Market – 1 days less than last year

2012: 116 days vs. 2013 115 days

Data is complied through the GLAR, HKAR, and SIRA MLS systems

Pending Contracts Up Over 12%

From The KCM Crew, http://www.KCMblog.com

Last week the National Association of Realtors (NAR) released their Pending Home Sales Index. The Index, a forward-looking indicator based on contract signings (not closings), rose 2.4 percent to 101.7 in July up 12.4 percent above July last year. The index is at the highest level since April 2010, which was shortly before the closing deadline for the home buyer tax credit. Lawrence Yun, NAR chief economist, said:

“While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity.”

This preceded NAR’s Existing Home Sales Report which showed closed sales were up 10.4% over last year. Prices were also up 9.4% year over year. NAR expects existing home sales to rise 8 to 9 percent in 2012, followed by another 7 to 8 percent gain in 2013. Home prices are expected to increase 10 percent cumulatively over the next two years.

And even though new construction sales showed a 25% increase over last year, Yun explained that should not dramatically impact prices:

“Falling visible and shadow inventories point toward continuing price gains.Expected gains in housing starts of 25 to 30 percent this year, and nearly 50 percent in 2013, are insufficient to meet the growing housing demand.”

Housing is in the middle of a recovery without a doubt.

Americans Predict Rents and Home Prices to Increase

From The KCM Crew at http://www.KCMBlog.com

We report on Fannie Mae’s Quarterly National Housing Survey every ninety days. Fannie Mae also does a monthly survey covering different aspects of the housing market.

Here are some record numbers we found interesting in Fannie Mae’s March report (emphasis added).

  • Thirty-three percent of respondents expect home prices to increase over the next 12 months, the highest level over the past 12 months.
  • The percentage of respondents who say it is a good time to buy rose to 73 percent, the highest level in over a year.
  • Forty-eight percent of respondents think that home rental prices will go up, the highest number recorded to date.
  • On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, the highest number recorded to date.

Doug Duncan, chief economist of Fannie Mae, capped the report off by stating:

“Conditions are coming together to encourage people to want to buy homes. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.”

Is the Housing Market Actually Recovering?

From the KCM Crew at http://www.KCMblog.com

Everyone wants to know if the housing market is truly showing signs of a recovery. There are conflicting headlines every day. One day, we hear sales are up. The next day it is reported that prices are down. Is the real estate market coming back? The answer is ‘yes’ and ‘no’.

There are two aspects that must be evaluated: house sales and house prices. They will not recover at the same time. Sales are already increasing rather nicely while prices will still soften in many markets through 2012.

Home Sales

The National Association of Realtors (NAR) issues a Pending Home Sales Report each month. We can see by the graph below that sales have been increasing nicely over the last twelve months. Real estate professionals across the country are reporting that activity has increased compared to last year. The sales side of the recovery is starting to show great promise.

Home Prices

Many price indices have shown that national home prices are continuing to stumble. Even with demand increasing, we must look at where the supply of housing stock stands. Though ‘visible’ inventory (homes currently on the market) is shrinking, there is still a large overhang of ‘shadow’ inventory (foreclosures about to come to market as a result of the National Mortgage Settlement). This increase in inventory will outpace the increase in demand and thereby cause prices to continue to soften in many parts of the country.

Bottom Line

Housing is coming back. However, sales will come back before prices. We will not see prices appreciate until we work through the oversupply of homes on the market.

Warren Buffett: It’s Time to Buy Real Estate

From THE KCM CREW 

Warren Buffett appeared live on CNBC’s Squawk Box this week. During the interview, he was asked about the current real estate market and whether he felt now was the time to buy. His response was rather emphatic and has been used as a headline in hundreds of articles since the interview:“If I had a way of buying a couple hundred thousand single-family homes I would load up on them.”

However, throughout the interview, he addressed the market from a few angles. Here is what he said:

Why invest in real estate now? 

“It’s a way, in effect, to short the dollar because you can take a 30-year mortgage and if it turns out your interest rate’s too high, next week you refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for 30 years. So it’s a very attractive asset class now.” 

Is buying your own home better than investing in stocks right now?

“If I knew where I was going to want to live the next five or 10 years I would buy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.”

 Should we buy multiple houses?

“If I was an investor that was a handy type and I could buy a couple of them at distressed prices and find renters, I think it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.”

Over the last couple of months, there have been more and more financial analysts coming to the same conclusion: It’s time to buy real estate.

Foreclosure Roadmap Included in Mortgage Settlement

Posted by the KCM Crew at http://www.KCMBlog.com

There has been much written on the recently negotiated National Mortgage Settlement. Most of the reporting has revolved around the $25 billion that will be issued to consumers and states that have been impacted by the robo-signing scandal of 2010. We want to talk about a different issue addressed by the settlement.

Foreclosures have been slowed to a snail’s pace since the third quarter of 2010. Banks were concerned about the penalties that would be imposed by the settlement and decided to delay the actual seizure of foreclosed properties until the settlement was reached. This group of properties is known as the ‘shadow inventory’ which is currently hanging over the market.

The banks now have the roadmap they can follow which will allow them to repossess a home without penalty. The backlog of these distressed properties will now find their way through the process and be put on the market for sale.

Rick Sharga, executive vice president for Carrington Holding, explains:

“The bottom line is that 2012 will see a lot of foreclosures that should have taken place in 2011 and didn’t.”

How many foreclosures could we be talking about?

The Washington Post reported:

“Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled.”

This leaves three important questions:

  1. When will these properties hit the market?
  2. What impact will they have on housing values?
  3. Which areas will be affected the most?

Every buyer and seller should contact a local real estate professional for the answers to these questions in their region.

House Prices Through 2015

From: www.KCMBlog.com

Everyone seems to have an opinion on where home prices are headed. Housing bulls are saying prices may start rebounding as early as later this year. Some housing bears are saying that prices may still drop another 10-15%. What actually is going to happen? No one knows for sure.

However, Macro Markets, a financial technology company, actually surveyed 108 economists, real estate experts, and investment and market strategists for their June 2011 Home Price Expectations Survey. They then averaged all 108 opinions. Here is what the report says about house prices over the next five years:

  • 2011: prices will depreciate3.52%
  • 2012: prices will appreciate.46%
  • 2013: prices will appreciate2.18%
  • 2014: prices will appreciate2.92%
  • 2015: prices will appreciate 3.47%

Accumulative appreciation (including this year’s projected depreciation) will stand at 5.71% in 2015.

Bottom Line

The experts say home prices will begin to see appreciation next year and return to historic levels of annual appreciation by 2015.

Is the Housing Market Starting to Come Back?

Courtesy of KCM Blog

It seems that the housing market is finally showing signs of a recovery. We are not suggesting that it will come roaring back and we will see 2006 numbers again. However, the National Association of Realtors released their December Existing Home Sales Report yesterday. The report showed a 12.3% increase in closed transactions over the month before. Earlier in the week the Census Bureau  reported that:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Should we believe that real estate is starting to make a comeback? To some degree, we think yes. Both of the above reports are promising.

However, not all the news in the reports was positive. Existing home sales were slightly down from the same month last year. Housing completions were down 22.2% from last year’s numbers. Yet, we must also factor in that the numbers from the end of last year were artificially inflated by the Homebuyer Tax Credit. Any correlation between these numbers is not an apple-to-apple comparison.

These reports, coupled with anecdotal information we are receiving from the agents we coach all across the country, seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry.

Bottom Line

Even though there is a huge amount of visible and shadow inventory which will continue to put downward pressure on prices, it seems that buyers are beginning to realize that there are tremendous opportunities in the market.

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