Case-Shiller Home Prices Take Off

The Mortgage Corner

 Case-Shiller Home Prices Take Off

The S&P Case-Shiller home price index shows home prices are in full recovery mode.  Over the last 12 months, prices rose 12.3 percent and 12.4 percent as measured by the 10- and 20-City Composites, which are a 3-month average of same-home increases. And because the Fed still in full credit easing mode with its September decision to maintain QE3 securities’ purchases at $85 billion per month, interest rates are beginning to decline

Graph-Calculated Risk

Data through July 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices showed increases of 1.9 percent and 1.8 percent from June for the 10- and 20-City Composites. For at least four months in a row, all 20 cities showed monthly gains. Phoenix posted 22 consecutive months of positive returns. Although home prices in all the cities increased, 15 cities and both Composites those increases slowed in July versus June.

“Home prices gains are holding their 12 percent annual rate of gain established by the two Composite indices in April,” says Chairman David M. Blitzer, of the S&P Dow Jones Indices. “The Southwest continues to lead the housing recovery. Las Vegas home prices are up 27.5 percent year-over-year; in California, San Francisco, Los Angeles and San Diego are up 24.8, 20.8 and 20.4 percent, respectively. However, all remain far below their peak levels.”

The result of lower mortgage rates is mortgage applications are also increasing, after falling sharply in May when the Fed first hinted it would begin to tighten credit in the fall. Mortgage applications increased 5.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 20, 2013.

The Refinance Index increased 5 percent from the previous week. The seasonally adjusted Purchase Index increased 7 percent from one week earlier.  The Purchase Index was at its highest level since July 2013.

Graph-Calculated Risk

The HARP share of refinance applications increased to 41 percent from 40 percent the week before, and is the highest since MBA started tracking this measure in early 2012.  So there is the feeling that many home owners with negative home equity are only now taking advantage of refinancing their underwater mortgages at current interest rates.  The HARP program allows mortgage holders to refinance when debt can be as much as 150 percent of their home’s value.
            So the Federal Housing Finance Authority has stepped up its campaign to encourage more homebuyers to apply for HARP refinancing.  Acting FHFA Director Edward J. DeMarco said that 2.8 million homeowners have refinanced through HARP but with mortgage rates still historically low and HARP eligibility requirements expanded, other qualified homeowners could reduce their monthly mortgage payments or build their equity faster with a shorter term mortgage through the program.

DeMarco told Bloomberg News in an interview this weekend that FHFA used focus groups to find out why borrowers with high rates hadn't yet tried to refinance through HARP. They found many didn't realize they were eligible. They thought they had to be delinquent on their mortgages before the government would help them. DeMarco said he hoped the educational outreach would bring in an additional 2 million HARP borrowers.

This is while total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose to a seasonally adjusted annual rate of 5.48 million in August from 5.39 million in July, and are 13.2 percent higher than the 4.84 million-unit level in August 2012, reported the National Association of Realtors.

           

Harlan Green © 2013

Case-Shiller Prices, Consumer Confidence Up

Housing prices continue to climb, but not as fast in the hardest hit areas.  This is probably because mortgage rates have risen some 1 percent.  But they are no longer rising, as the bond market seems to have already digested the possibility of QE3 ending.

Home price appreciation is very strong but has slowed from early in the year. Case-Shiller's 20-city adjusted index is up 0.9 percent in the June report vs an average monthly gain of 1.4 percent from January to May. But the year-on-year adjusted gain, at a very sizable 12.0 percent, is just off its best level of the recovery which is May at plus 12.2 percent.

Graph:Econoday 

Monthly declines have been popping up in the data for the first time this year but are still isolated and mostly marginal. The West had the highest gains, around the 20 percent area led by Las Vegas at 24.8 percent and San Francisco at 24.4 percent. Note that West coast cities posted some of the sharpest declines during the 2008 meltdown. Cities showing the least gains this year are New York, at a year-on-year plus 3.2 percent, and Cleveland at 3.4 percent.

“Overall, the report shows that housing prices are rising but the pace may be slowing. Thirteen out of twenty cities saw their returns weaken from May to June. As we are in the middle of a seasonal buying period, we should expect to see the most gains. With interest rates rising to almost 4.6 percent, home buyers may be discouraged and sharp increases may be dampened," said David M. Blitzer, Index Committee Chair at S&P Dow Jones Indices.

            Meanwhile, the Conference Board’s consumer confidence index improved, but mainly in future wage growth, believe it or not.  The report's composite headline index showed a slight increase, to 81.5 this month from July's revised 81.0.

            But consumers’ expectation took a big jump in income, believe it or not.  The expectations component rose to 88.7 for a 2.7 point gain. And it was mostly their outlook on income which, after sliding at the beginning of the year in reaction to the hike in payroll taxes, is now at a 2-1/2 year high. The consumer's outlook on business conditions and the jobs market are also up.

Graph:Econoday

This is huge, needless to say, as consumers have been spending less because of the higher payroll tax rate until now.  In fact, if interest rates do hold at, say, 4.50 percent with zero origination points in California, at least, then housing prices should continue to climb this year with confidence rising.

Harlan Green © 2013

2013 Home Prices Soar

The Mortgage Corner

 

2013 Home Prices Soar

Housing prices are soaring, with both the S&P Case-Shiller Home Price Index 3-month average (for November, December and January) and FHFA conforming loan indexes accelerating. Mortgage delinquencies also continue to decline, which should help depleted inventories.

The S&P/Case-Shiller Home Price Indices showed average home prices increased 7.3 percent for the 10-City Composite and 8.1 percent for the 20-City Composite in the 12 months ending in January 2013.

“The two headline composites posted their highest year-over-year increases since summer 2006,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “This marks the highest increase since the housing bubble burst."

In January 2013, nine cities -- Atlanta, Charlotte, Las Vegas, Los Angeles, Miami, New York, Phoenix, San Francisco and Tampa -- and both Composites posted positive monthly returns. Dallas was the only Metro Area where the level remained flat. 

Graph: Calculated Risk 

The FHFA price index for January increased 0.6 percent, following a rise of 0.5 percent the prior month.  The January gain was led by the Pacific region, increasing 1.6 cent.  The weakest region was New England, down 0.7 percent for the month. But the index is up 6.5 percent year-over-year.

 

More good news was the continuing decline in mortgage delinquencies, according to LPS lenders’s services, as reported by Calculated Risk. LPS reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) decreased to 6.80 percent from 7.03 percent in January. The percent of loans in the foreclosure process declined to 3.38 percent in February in January. 

Both numbers are still high, with 4.25 percent being the long term delinquency rate and 1 to 2 percent the historical foreclosure rate. This decline is already showing up in increasing for sale inventories, with Calculated Risk also reporting that through March 25th - inventory is increasing faster than in 2011 and 2012. But Housing Tracker reports inventory is down -21.2 percent compared to the same week in 2012—still a rapid year-over-year decline (2013 is red line in graph).

Graph: Calculated Risk 

What does all this mean? As delinquency/foreclosure rates continue to decline, inventory should continue to increase, which means more housing sales. Although new-home sales declined slightly in February, sales are still 12.3 percent higher than February 2012.

And February existing home sales rose 0.8 percent to an annualized pace of 4.98 million units.  January was revised to up 0.8 percent from the initial estimate of 0.4 percent. Low supply had been holding down sales but that appears to be changing as higher prices are bringing more homes into the market.  Supply jumped 9.6 percent to 1.94 million units.  Months’ supply rose to 4.7 months from 4.3 months in January.

 

Harlan Green © 2013

The 15 Best Housing Markets for the Next Five Years

Yahoo! Finance/Thinkstock - Santa Barbara, California

National home prices are expected to climb 0.3 percent in the next year, according to the latest home price report by Fiserv Case-Shiller. But over the next five years, home prices are projected to rise 3.3 percent.

We drew on Fiserv Case-Shiller data to identify the best housing markets for the next five years. The top 15 cities are ranked by the projected annualized change in home prices between Q2 2012 and Q2 2017. We also included the median home price, median household income, unemployment rate, and the change in home prices since their peak to offer a broader view of the local economy and housing market.

Note: The median family income is for Q1 2012, home price data is for Q2 2012. Unemployment data is as of August 2012, and population data is for 2011.

Glens Falls, New York
Google MapsAnnualized expected growth from 2012 - 2017: 7.7 percent

Home prices have declined 7.8 percent in Glen Falls since they peaked in Q4 2008. The median home price is $159,000 which is lower than the national median of $181,000.

Glen Falls has a population of 128,996, an unemployment rate of 9.1 percent, and a median family income of $64,300.

Yuma, Arizona
Google MapsAnnualized expected growth from 2012 - 2017: 7.7 percent

Home prices have fallen 37.1 percent in Yuma since their Q4 2006 peak.

It has a population of 200,870, an unemployment rate of 25.8 percent, and a median family income of $45,400, lower than the national median of $62,900.

Eugene-Springfield, Oregon
Wikimedia Commons

Annualized expected growth from 2012 - 2017: 7.7 percent

Eugene-Springfield home prices have decreased 22.9 percent since their Q2 2007 peak. The metro has a population of 353,416, an unemployment rate of 8.8 percent, and a median family income of $53,200.




Yakima, Washington
Wikimedia CommonsAnnualized expected growth from 2012 - 2017: 7.8 percent

Home prices in Yakima are down 8.1 percent since their Q1 2009 peak. It has a median home price of $168,800.

Yakima also has a population of 247,141, an unemployment rate of 10.2 percent, and a median family income of $47,800.


Brunswick, Georgia
Wikimedia CommonsAnnualized expected growth from 2012 - 2017: 7.9 percent

Home prices in Brunswick have tumbled 32.3 percent since their Q4 2007 peak.

It has a population of 112,923, an unemployment rate of 10.4 percent, and a median family income of $50,500, that is below the national median.

Tucson, Arizona
Byways.orgAnnualized expected growth from 2012 - 2017: 7.9 percent

Tucson's home prices have plunged 42.6 percent since their Q1 2006 peak, and it has median home price of $153,000.

It also has a population of 989,569, a median family income of $57,400, and an unemployment rate of 7.5 percent.


Gulfport-Biloxi, Mississippi
Ed Schipul / FlickrAnnualized expected growth from 2012 - 2017: 8.0 percent

Home prices in the Gulfport-Biloxi metro area have slipped 20.4 percent since their Q4 2007 peak, and the metro has a median home price of $101,000.  It has a population of 253,511, an unemployment rate of 8.4 percent and a median household income of $52,700.



Napa, California
Google MapsAnnualized expected growth from 2012 - 2017: 8.0 percent

Home prices in Napa have plunged 50.1 percent since they peaked in Q1 2006, and the city has a median home price of $342,000.
Napa has a population of 138,088, an unemployment rate of 8.1 percent, and a median family income of $77,700 above the national median.

Ocala, Florida
Annualized expected growth from 2012 - 2017: 8.0 percent
Home prices in Ocala are down 49.1 percent from their Q3 2006 peak.  But Ocala has a high unemployment rate of 10.1 percent, a median family income of $44,600, well below the national median of $62,900, and a median home price of $105,000.


Santa Barbara-Santa Maria-Goleta, California

Wikimedia CommonsAnnualized expected growth from 2012 - 2017: 8.4 percent

The Santa Barbara-Santa Maria-Goleta metro area has a population of 426,878, a median family income of $69,000, and an unemployment rate of 8.1 percent.  Home prices are down 52 percent from their Q3 2006 peak, and the metro has a median home price of $290,000.

Sebastian-Vero Beach, Florida
Google MapsAnnualized expected growth from 2012 - 2017: 8.7 percent

Sebastian-Vero Beach home prices have fallen 50.9 percent since their Q4 2005 peak.

The metro has an unemployment rate of 10.6 percent, and a median family income of $58,600, while the median cost of a home is $150,000.


Madera-Chowchilla, California
Google MapsAnnualized expected growth from 2012 - 2017: 8.8 percent

Home prices in the Madera-Chowchilla metro area have fallen 54 percent since their peak in the third quarter of 2006.  At 14.2 percent, the unemployment rate is much higher than the national average of 8.1. The metro has a population of 152,925 and a low median family income of $52,700.


Santa Fe, New Mexico
Wikimedia CommonsAnnualized expected growth from 2012 - 2017: 8.9 percent

Santa Fe's home prices have fallen 21.7 percent from their Q4 2007 peak. The city has a population of 145,648, an unemployment rate of 5.4 percent below the national average, and a median household income of $59,600, below the national median of $62,900.



Panama City-Lynn Haven-Panama City Beach, Florida

Wikimedia CommonsAnnualized expected growth from 2012 - 2017: 9.5 percent

Home prices in the Panama City-Lynn Haven-Panama City Beach metro area have fallen 45.3 percent since their Q1 2006 peak. It now has a median home price of $137,000.  The metro has a population of 169,856, an unemployment rate of 8.8 percent, and a median family income of $56,300.

Medford, Oregon
Bailey Weaver / FlickrAnnualized expected growth from 2012 - 2017: 11.2 percent

Medford's home prices have fallen 39.8 percent since their peak in Q2 2006. The metro has a population of 204,822 and median family income of $49,600.

At 10.8 percent Medford's unemployment rate is higher than the national average.

Data provided by Fiserv Case-Shiller Indexes

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Home Prices Rise for the Sixth Straight Month According to the S&P/Case-Shiller Home Price Indices

New York, November 27, 2012 – Data through September 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that home prices continued to rise in the third quarter of 2012. The national composite was up 3.6% in the third quarter of 2012 versus the third quarter of 2011, and was up 2.2% versus the second quarter of 2012. In September 2012, the 10- and 20-City Composites showed annual returns of +2.1% and +3.0%. Average home prices in the 10- and 20-City Composites were each up by 0.3% in September versus August 2012. Seventeen of the 20 MSAs and both Composites posted better annual returns in September versus August 2012; Detroit and Washington D.C. recorded a slight deceleration in their annual rates, and New York saw no change.

The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 3.6% gain in the third quarter of 2012 over the third quarter of 2011. In September 2012, the 10- and 20-City Composites posted annual increases of 2.1% and 3.0%, respectively. 

“Home prices rose in the third quarter, marking the sixth consecutive month of increasing prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In September’s report all three headline composites and 17 of the 20 cities gained over their levels of a year ago. Month-over-month, 13 cities and both Composites posted positive monthly gains.
“The National Composite increased by 3.6% from the same quarter in 2011 and by 2.2% from the second quarter of 2012. The 10- and 20-City Composites have posted positive annual returns for four consecutive months with a +2.1% and +3.0% annual change in September, respectively. Month-over-month, both Composites have recorded increases for six consecutive months, with the most recent monthly gain being +0.3% for each Composite.
“We are entering the seasonally weak part of the year. The headline figures, which are not seasonally adjusted, showed five cities with lower prices in September versus only one in August; in the seasonally adjusted data the pattern was reversed: one city fell in September versus two in August. Despite the seasons, housing continues to improve.
“Phoenix continues to lead the recovery with a +20.4% annual growth rate. Atlanta has finally reversed 26 months of annual declines with a +0.1% annual rate as observed in September’s housing data. At the other end of the spectrum, Chicago and New York were the only two cities to post annual declines of 1.5% and 2.3% respectively and were also down 0.6% and 0.1% month-over-month.

“Thirteen of the 20 cities recorded positive monthly returns; Boston, Charlotte, Chicago, Cleveland and New York saw modest drops in home prices in September as compared to August; Tampa and Washington D.C. were flat. With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market.”

The chart on the previous page shows the index levels for the U.S. National Home Price Index, as well as its annual returns. As of the third quarter of 2012, average home prices across the United States are back at their mid-2003 levels. At the end of the third quarter of 2012, the National Index was up 2.2% over the second quarter of 2012 and 3.6% above the third quarter of 2011. 

The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of September 2012, average home prices across the United States for the 10-City and 20-City Composites are back to their autumn 2003 levels. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 29% through September 2012. For both Composites, the September 2012 levels are approximately 9% above their recent lows seen in March 2012.

In September 2012, 13 MSAs and both Composites posted positive monthly gains. Home prices in Tampa and Washington DC saw no change from August to September. Boston, Charlotte, Chicago, Cleveland and New York saw a slight drop in prices in September. Phoenix recorded the highest increase in annual rate, up 20.4% from its September 2011 level. Chicago and New York were the only two cities that fared worse year-over-year with respective annual rates of -1.5% and -2.3%.

Atlanta, Detroit and Las Vegas remain the only three cities with average home prices below their January 2000 levels. Detroit with a 79.82 print, is nearly 20% below its January 2000 level.

The table below summarizes the results for September 2012. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 25 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com. 

Since its launch in early 2006, the S&P/Case-Shiller Home Price Indices have published, and the markets have followed and reported on, the non-seasonally adjusted data set used in the headline indices. For analytical purposes, S&P Dow Jones Indices publishes a seasonally adjusted data set covered in the headline indices, as well as for the 17 of 20 markets with tiered price indices and the five condo markets that are tracked.