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Mid-Summer Real Estate Report

August 13th, 2013 by Bill Collins Leave a reply »

Recent Real Estate Reports

On August 6th, CoreLogic released their Home Price Index (HPI) for June which reported a year over year nationwide price increase of 11.9%.  Excluding distressed sales, the national figure was 11.0% higher in June from the prior month last year.  The report noted that this was the 16th consecutive monthly increase in home prices nationally.  On a month to month basis, prices in June increased by 1.9% from the previous month.  CoreLogic projects that their Home Price Index for July will be 12.5% higher on a year-to-year basis and 1.8% greater on a month to month basis.

Some report highlights:

Including distressed sales, the five states with the highest home price appreciation were: Nevada (+26.5%), California (+21.4%), Wyoming (+16.7%), Arizona (+16.2%) and Georgia (+14.3%).

Just two states posted home price depreciation: Mississippi (-2.1%) and Delaware (-1.1%).
Excluding distressed sales: the five states with the greatest price appreciation were: Nevada (+23.6%), California (+18.7%), Arizona (+14.1%), Utah (+13.8 %) and Florida (+12.7%).

No states posted home price depreciation in June.

Including distressed transactions: Peak-to-current change in the national HPI (from April 2006 to June 2013) was down by 19%. Excluding distressed transactions, prices in the HPI declined by 14%.

The five states with the largest peak-to-current declines, including distressed transactions, were Nevada (-44.3%), Florida (-38.6%), Arizona (-33.9%), Rhode Island (-31.7%), and Michigan (-31.1%).

Only one of the top 100 Core Based Statistical Areas (CBSAs) measured by population did not show a year-over-year increase in June.

On August 8th, Zillow released the results of a survey they commissioned of more than 100 “forecasters” in which they revealed their longer term projections.  The consensus of these “experts” was that home prices would increase by 6.7% in 2013, year over year with increases at the following rates in future years: 4.4% in 2014 followed by 3.6%, 3.5% and 3.4% respectively in 2015, 2016 and 2017.

Last week, Reis Reports released their “Apartment Trends 2Q 2013” which indicated that the apartment vacancy rate during the second quarter of this year remained unchanged from the first quarter, at 4.3%.  They noted that this ended a streak of 13 consecutive quarters since late 2009 during which rates declined from a high of 8.0%.  27,000 new apartment units came online during this most recent quarter but the market absorbed them well.  Vacancy rates are particularly tight in California and along the east coast, with New York vacancies at 2%.

“Asking and effective” rates rose by 0.6% and 0.7% respectively, a slightly higher pace than during the first quarter.  In a short video, Reis VP of Economics & Research, Dr. Victor Calanog noted that landlords are beginning to lose their “their pricing power given how expensive apartments have become”.  Dr. Calanog noted that many tenants are now paying more than 1/3 of their disposable income in rent and that in most markets rent levels have now exceeded their 2008 peaks.
A link to the Reis video is found here:

Reis Reports Apartment Trends Q2 2013

Writing on August 7th, CoStar’s Mark Heschmeyer noted that some prominent  commercial market analysts were projecting that concerns related to higher mortgage rates were largely offset by strengthened economic activity.  Loans coming due in the next several years may face less likelihood of default because 1) the loans written after 2007 were written during times of distress and had higher underwriting standards or 2) loans made during 2006 or 2007 were made at rates that would still be higher than now.

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Comments on Appraiser Fees from Recent Newsletters

Cape Cod, Massachusetts appraiser Vincent DiSangro had this to say about appraisal fees in his market area:

“I greatly appreciate all the Appraiser specific info in your postings. I had a customer who was complaining about my fee for a 1004 UAD Appraisal ($400), and I sent them a copy of the survey. Not only did they not complain any more, my orders increased! I have another customer who shrugged off the report because it was not done in the northeast, completely ignoring the cost of living differences between the two areas. If a survey is done in the New England area, please post and I will let you know how they react to that one.

In reading some of the responses regarding the survey, it amazes me that some people would waste their time with a $250 fee. Assuming they are doing the job completely, have they figured out what that equates to after expenses (computer and internet, software, update classes, license fee, E & O, auto and gas expenses, phone, paper, toner, health insurance, and taxes? I was in a McDonalds the other day, and the Assistant manager’s job was posted at $45,000 with full benefits, including paid vacation”!

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Rates & Dates

Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends all reported little change in mortgage interest rates in their most recent surveys. 

On August 8th, Freddie Mac reported that 30-year fixed-rate mortgages increased to 4.40% from the previous week’s rate of 4.39%. They also noted that last year at this time the 30-year rate was 3.59%. 

The MBA in its most recent Weekly Mortgage Applications Survey released August 7th for the week ending August 2nd, reported that 30-year rates with conforming loan balances ($417,500 or less) rose to 4.61% from 4.58% during the previous week.   The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) remained unchanged at 4.64%.  Rates for FHA backed mortgages increased to 4.33% from 4.30% the previous week. 

In their press release of August 7th, the MBA reported a rise of 0.2% in mortgage applications.  Refinance applications remained unchanged at 63% of all applications and the HARP share of refinance applications declined to 36% from 37% last week. 

One day earlier, the MBA released their National Delinquency Survey which showed that mortgage delinquencies and foreclosures involving one-to-four unit residential properties continued to decline.  They noted that “the percentage of loans at least one payment past due or in foreclosure was at its lowest level in five years”.  Foreclosure starts fell or had not changed in 43 states and the rate of foreclosure inventory also fell or was unchanged in 45 states. 

Several “judicial” states in the northeast bucked the national trend, however.  Jay Brinkmann, the MBA’s Chief Economist and SVP of Research and Economics stated that “some of the highest numbers are in New York, New Jersey and Connecticut” and that the “rate of new foreclosures in New York hit an all-time high during the second quarter and is now essentially equal with Florida”.

On August 9th, HSH Market Trends reported a drop in 30-year mortgage rates to 4.58% from 4.59% the previous week.  Rates for FHA-backed mortgages also fell from 4.23% to 4.22%.  HSH characterized the mortgage market as essentially being in the summer “doldrums” and predicted that mortgage interest rates would not change much during this coming week.  They noted that the refinance market “ground to a halt” as a result of the rise in interest rates earlier this spring and summer and suggested that the strong price gains found in recent real estate reports might also be slowing due to these rate increases.

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac

Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association

Additional information from HSH can be found by going to: HSH.Com

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Ask Angie

We would first like to congratulate our most recent winner: Winter Park, Florida appraiser Maria Huff of Appraiser Alternatives, LLC.  Appraiser Alternatives, LLC covers the central Florida counties of Osceola, Orange, Seminole, Lake and Polk. Maria was the first to answer correctly that Andrew Carnegie was the author of the quote “90% of all millionaires became so through owning real estate”; Theodore Roosevelt said that “Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth”; and that the comment "I would give a thousand furlongs of sea for an acre of barren ground” is attributed to William Shakespeare’s character Gonzalo in The Tempest.  Today’s Questions:

Today’s questions:

1. Who Said: "Summer afternoon, summer afternoon; to me those have always been the two most beautiful words in the english language."

a) Henry James
b) Dr. Seuss
c) Alfred Tennyson
d) Walt Whitman
e) None of the above

2. Who said: “Rest is not idleness, and to lie sometimes on the grass under trees on a summer’s day, listening to the murmur of the water, or watching the clouds float across the sky, is by no means a waste of time.”

a) John Lubbock
b) Mahatma Gandhi
c) Dalai Lama
d) Abraham Lincoln
e) None of the above

3. Who said: "People don’t notice whether it’s winter or summer when they’re happy”.

a) Anton Chekhov
b) Edna St. Vincent Millay
c) Oprah
d) Mark Twain
e) None of the above

The first person to respond with the correct answers wins a choice of one of the following:

One Free Regular Listing on AppraiserHelp.com

A Free Copy of the Directory of Appraisal Management Companies (Available to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at www.appraisernews.com

Regards,

Bill Collins, Appraiser Help Inc.

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