Home values are rising in many U.S. markets. The S&P/Case-Shiller Index has home values up 1.2 percent as compared to last year, and the government’s Home Price Index shows an increase of 3.7 percent.
This has been partially evidenced by rising median home sales prices nationwide. Versus last year, the median sale price of a new construction home has climbed 17 percent, and the median sale price of an existing home sale is higher by 10 percent.
For home sellers, an improving market means the chance to net more proceeds from a home sale. Or does it?
In this 3-minute piece from NBC’s The Today Show, we hear about the home appraisal process and how it may be limiting the number of home sales nationwide, plus the prices at which homes are selling.
The interview includes several key insights into the home appraisal process :
In a rising housing market, a home’s appraised home value may be lower than its “true” market value
Short sales and foreclosures can make a negative impact on a home’s appraised value
Consolidation in the appraisal industry has lowered product quality and may be harming valuations
One key take-away from the video is that home owners in Worcester County area should provide their home appraisers with as much relevant information as possible — especially information which may not be publicly-available. This includes records of recent “all-cash” sales of comparable homes which were never formally listed for sale.
One in three purchase agreements are canceled because of appraisal issues, according to the interview. Take steps to make sure yours is not among them.
There have been no shortage of “housing market” stories lately. After sinking through much of late-last decade, home values slowly stabilized into mid-2011. By October 2011, values appeared to have bottomed.
Today, nearly five-and-one-half years after the April 2007 housing market peak, home prices are finally showing their ability to rebound. Over the past 12 months, a bevy of housing market data highlights broad-based market growth.
For example, as compared to August 2011, Existing Home Sales are up 9.3 percent nationally; New Home Sales are up 27.7 percent nationally; and home inventories have slipped to multi-year lows in Worcester County area and throughout the country.
Furthermore, multiple home value trackers show home prices rising both regionally and nationwide.
Last week, the government’s Federal Housing Finance Agency released its Home Price Index (HPI) — a metric which tracks how home values change between sequential property sales. HPI showed home values up 3.7% nationally.
Another home valuation tracker — the S&P Case-Shiller Index — has shown home values to be rising, too.
As compared to one year ago, the private-sector metric puts home prices higher by 1.2 percent via its 20-city composite. 20 cities remains a small subset of the broader U.S. population, but, in looking for a trend, it’s clear that the trend is a positive one.
All 20 tracked cities showed home price gains between June 2012 and July 2012
The previously hard-hit city of Phoenix now leads the nation with a 16.6% annual gain
Versus their respective lows, San Francisco and Detroit are up 20.4% and 19.7%
In addition, on a 12-month basis, only four cities are showing negative home value growth — Atlanta, Chicago, Las Vegas, and New York City.
The Case-Shiller Index is a national index, though, and specifically does not report on valuation changes in specific U.S. cities and their neighborhoods. For local real estate data, make sure to speak with a local real estate agent instead.
Mortgage rates dropped to another all-time low last week as concerns for global economic growth helped U.S. home buyers and refinancing households nationwide.
U.S. mortgage rates responded to non-U.S. events and, for rate shoppers and home buyers in Worcester County area , home affordability improved.
Early in the week, with Greece and Spain debating new austerity measures, and with citizen protests rampant, a flight-to-quality helped to boost demand for U.S. mortgage bonds. So did rumors of a weakening Chinese economy.
“Flight-to-quality” is a trading term for when investors shun investment risk in favor of safer, more high-quality portfolio assets. Typically, this involves selling stocks and buying bonds, including mortgage-backed ones.
When demand for mortgage-backed bonds rise, mortgage rates tend to fall.
Demand for bonds is also receiving a boost from the Federal Reserve’s latest market stimulus program — QE3.
“QE3” is a shorthand term for the Fed’s third qualitative easing, a program by which the nation’s central banker buys mortgage-backed securities on the open market in hopes of driving mortgage rates down.
So far, it’s been working. Since the Federal Reserve announced QE3 in mid-September, conforming mortgage rates have been on steady decline.
According to Freddie Mac, the average 30-year fixed rate mortgage rate slipped to 3.40% nationwide last week with an accompanying 0.6 discount points plus closing costs. The average 15-year fixed rate mortgage rate moved to 2.73%, also with 0.6 discount points and closing costs. Both rates are at all-time lows.
This week, mortgage rates have a lot of data on which to trade, and may be poised to bounce higher.
In addition to the release of manufacturing, construction and retail sales reports, the Bureau of Labor Statistics will post its September Non-Farm Payrolls report Friday. More commonly called the “jobs report”, the monthly release takes on added significance now that the Federal Reserve has said that its open-ended QE3 program will be linked to the U.S. jobs economy.
Wall Street expects to see 120,000 net new jobs created in September. If the actual reading exceeds this figure, mortgage rates should rise.
According to the National Association of REALTORS®, the Pending Home Sales Index read 99.2 for August — the fourth straight month in which the index hovered near its benchmark value of 100.
A “pending home” is a home that is under contract to sell, but has not yet closed. The index measures with fair accuracy the future strength of the U.S. housing market.
For today’s Massachusetts home buyers, the August Pending Home Sales Index is relevant for several reasons.
First, the index remains near its highest point since April 2010, the last month of that year’s federal home buyer tax credit. This implies that the current housing market is performing nearly as well as the “stimulated” market of two years ago — except without the accompanying federal stimulus.
The housing market is standing on its own, in other words.
Second, the Pending Home Sales Index suggests that today’s housing market is among the strongest of the last decade. We can make this inference because the Pending Home Sales Index is a relative index, benchmarked to the value of “100” which represents the housing market as it behaved in 2001.
2001 was strong year in housing. With today’s Pending Home Sales Index remaining near 100, it tells us that 2012 is similarly strong.
And, third, the Pending Home Sales Index is relevant because it’s a forward-looking housing metric — one of the few that are regularly published. As compared to the Case-Shiller Index or Existing Home Sales report which both report on how housing fared in the past, the Pending Home Sales Index projects 30-60 days to the future.
Based on August data, therefore, we can expect for home sales volume to remain high as 2012 comes to a close.
If you’re currently shopping for a home, you’ve likely noticed a change in the market. Multiple-offer situations are more common and sellers are regaining negotiation leverage. The longer you wait to buy, therefore, the more you may pay for a home.
The market for new construction homes remains strong nationwide.
According to the U.S. Census Bureau, the number of new homes sold slipped 0.3 percent in August 2012 to a seasonally-adjusted, annualized 373,000 units sold — just 1,000 units less than July 2012 and the second-highest reading since April 2010.
April 2010 was the last month of that year’s tax credit which granted home buyers up to $8,000 off of their federal tax bill.
As compared to one year ago, sales of new homes are higher by 28%.
Furthermore, during the same time frame, the median sale price of a new home moved higher by 17 percent. The rising prices, in part, are the result of a shrinking national new home inventory.
When August ended, there were just 141,000 homes for sale nationwide — a 12% drop from the year prior. This suggests that home builders have stopped building without buyers; that some lessons were learned in last decade’s homebuilding frenzy.
At today’s pace of home sales, the entire stock of new homes nationwide would sell out in 4.5 months. As a comparison point, in January 2009, the new home supply reached 12.1 months.
With home supply below 6.0 months, analysts say, it signifies a “seller’s market” and home supplies have not been north of 6.0 months since October 2011. And, based on recent homebuilder confidence surveys, supply doesn’t appear headed back over 6.0 months anytime soon.
Builders in Worcester County area and nationwide report that prospective buyer foot traffic is at its highest point in 6 years. Low mortgage rates and affordable housing choices have held demand for new homes strong. Rising rents contribute, too.
For today’s home buyers of new construction, then, shrinking supply amid rising demand portends higher home prices into 2013 and beyond. If you’re a buyer of new construction, therefore, think about moving up your time frame.
The best deals left in housing may be the ones you grab while the calendar still reads 2012. By January, low prices may be gone, and low rates may be, too.
Mortgage rates dropped to another all-time low last week as concerns for global economic growth helped U.S. home buyers and refinancing households nationwide. 
The market for new construction homes remains strong nationwide.