Headlines – Week of August 28, 2011

September 8, 2011

Home Price Index Shows Fourth Consecutive Month-Over-Month Increase

According to CoreLogic, a leading provider of consumer, financial and property information, home prices in the U.S. increased for the fourth consecutive month, up 0.8 percent on a month-over-month basis.

On a year-over-year basis, however, national home prices, including distressed sales, declined by 5.2 percent in July 2011 compared to July 2010. In June 2011, prices declined by 6.0 percent compared to June 2010.

Excluding distressed sales, year-over-year prices declined by 0.6 percent in July 2011 compared to July 2010 and by 1.9 percent in June 2011 compared to June 2010. Distressed sales include short sales and real estate owned (REO) transactions.

Highlights in the CoreLogic July 2011 report:

  • Including distressed sales, the five states with the highest appreciation were: West Virginia (+14.0 percent), New York (+3.3 percent), Wyoming (+3.2 percent), Mississippi (+2.4 percent), and the District of Columbia (+2.3 percent).
  • Including distressed sales, the five states with the greatest depreciation were: Nevada (-12.2 percent), Arizona (-11.9 percent), Illinois (-10.0 percent) Minnesota (-8.6 percent), and Idaho (-7.8 percent).
  • Excluding distressed sales, the five states with the highest appreciation were: West Virginia (+16.8 percent), South Carolina (+5.5 percent), New York (+4.1 percent), Wyoming (+3.8 percent), and North Dakota (+3.6 percent).
  • Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.6 percent), Arizona (-8.1 percent), Delaware (-6.5 percent), Minnesota (-5.7 percent), and Michigan (-4.7 percent).
  • Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to July 2011) was -30.5 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -20.7 percent.
  • Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 86 are showing year-over-year declines in July, two fewer than in June.

Full Article

White House weighs mass refinancing plan

According to a recent article in the N.Y. Times, the White House is considering a housing proposal that would allow millions of homeowners with government-backed mortgages to refinance into lower interest rates.

Many homeowners have been unable to take advantage of today’s low interest rates (averaging around 4 percent), because they don’t qualify for refinancing at the best rates since they owe more on their home than it is currently worth or because of poor credit. The refinancing plan is still under discussion of how it would work.

The White House is also considering other options to try to stimulate the housing market or save homeowners from foreclosure. Such options include more changes to its refinancing programs so more homeowners can participate or a home rental program to that would rent out foreclosures instead of putting them for sale so foreclosures would stop weighing down overall home prices.

Full Article

Fort Myers’ taxes among the lowest for tourists

According to an article in Florida Weekly, Fort Myers was ranked second for the lowest tax-burdened central cities out of 50 U.S. destinations recently rated in an annual study by the Global Business Travel Association Foundation.

In the 2011 survey, which reviewed general sales tax and tax on travel-related services such as car rentals, hotel stays and meals, drastic tourism tax differences between cities, in some cases 80 percent more in comparison.

The five highest-tax imposing cities on travelers according to the study were Chicago; New York; Seattle, Wash.; Boston; and Kansas City, Mo.

Information included taxes paid by travelers staying at a hotel, renting a car and eating restaurant meals for one day and one night, as well as for a longer stay of three days and two nights.

Full Article

Linkage in Income, Home Prices Shifts

In a recent analysis, real-estate firm Zillow Inc. studied the correlation between home prices and annual incomes over the 15-year period that ended in 2000, before home prices began to surge.

Home prices in some of the nation’s hardest-hit metro areas have fallen far below pre-bubble levels, as some believe properties in those markets are undervalued.

According to the analysis, for decades, price-to-income levels have moved in tandem, with a specific housing market’s prices rising or falling in line with local residents’ incomes. Many economists say that makes the price-to-income ratio a good gauge for determining whether housing is undervalued or overvalued for a given market.

Zillow found property prices in one-third of nearly 130 housing markets across the nation were undervalued, when compared with residents’ current income and the pre-bubble trend.

The Zillow analysis shows that many markets still appear to be overvalued and underscores the point that while the nation’s housing markets largely fell and rose together during the housing boom and bust, they aren’t likely to hit bottom and begin recovery at the same time or pace.

For the U.S. as a whole, home prices were around 2.9 times incomes from 1985 to 2000. But during the housing boom, values increased at a much faster rate than incomes. The price-to -income ratio peaked at around 5.1 in 2005.  Home prices have since fallen so that on average, nationally, prices are around 3.3 times incomes, or about 14% above the historical trend.

Housing Affordability Chart

Click Here for WSJ Interactive Chart

In certain markets prices have fallen much faster. For example, in Las Vegas, home prices are now 25% below their historic price-to -income trend of 2.7. During the housing bubble, that ratio more than doubled to 5.6. Home prices have been falling for the past five years, and by March, prices were just 2.1 times household incomes.

Home prices are undervalued by 35% in Detroit; by 18% in Modesto, Calif.; and 13% in Fort Myers, Fla.

Housing also has grown more affordable thanks to mortgage rates falling to near their lowest levels since the 1950s. Last week, the 30-year fixed-rate mortgage averaged 4.32%, according to a survey by Freddie Mac.

Some of the most overvalued housing markets, according to the Zillow analysis, include Virginia Beach, VA,  Honolulu and Charleston, SC In Virginia Beach, for example, prices would have to fall by 50% to hit their traditional relationship to incomes.

Other areas where price-to-income levels show that housing is still overvalued, such as Washington, D.C., may not see prices fall further due to structural changes in the economy. Second-home markets that have more out-of market homebuyers also tend to have more volatile price-to-income levels.

Full Article

Posted by Scott R. Lodde

Comments

No Comments Yet.

Got something to say?





Our Philosophy

Our philosophy revolves around a simple goal - To achieve the objectives of our clients. Our plan is to introduce the necessary talents and resources to our clients and enhance their business goals and profitability

Our Services

*Hotel Management---------------------- *Asset Management---------------------- *Advisory Services----------------------- *Distressed Property Services------------- *Insurance Claim Support Services------- *Development Services-----------------

Warning: Unknown: open(/home/content/28/4334028/tmp/sess_peqlsb63ou1ml4fhknl6tnuib6, O_RDWR) failed: No such file or directory (2) in Unknown on line 0

Warning: Unknown: Failed to write session data (files). Please verify that the current setting of session.save_path is correct () in Unknown on line 0