US home prices jump 12.4 percent in July from a year ago, most in 7½ years

Matt York, File/Associated Press - FILE - In this Tuesday, July 30, 2013, file photo, a realty sign hangs in front of a home for sale in Gilbert, Ariz. Standard & Poor’s/Case-Shiller reports on home prices in July on Tuesday, Sept. 24, 2013.

By Associated Press, Published: September 24

WASHINGTON — U.S. home prices rose 12.4 percent in July compared with a year ago, the most since February 2006. An increase in sales on a limited supply of available homes drove the gains.

The Standard &Poor’s/Case-Shiller 20-city home price index reported Tuesday improved from June, when it rose 12.1 percent from a year ago. And all 20 cities posted gains in July from the previous month and compared with a year ago.

Still, the month-over-month price gains shrank in 15 cities in July compared with the previous month, indicating prices may be peaking. And the month-over-month gains in the 20-city price index have slowed for three straight months.

Stan Humphries, chief economist for real estate data provider Zillow, said home price should continue to rise but at a slower pace. Mortgage rates have increased more than a full percentage point since May. And more homes are being built. That should ease supply constraints that have inflated prices in some markets.

“This ongoing moderation is good for the market overall,” Humphries said.

Home prices soared 27.5 percent in Las Vegas from a year earlier, the largest gain. San Francisco’s 24.8 percent jump was the second largest and the biggest yearly return for that city since March 2001.

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The July figures are the latest available. They are not adjusted for seasonal variations, so the monthly gains reflect more buying activity over the summer.

Since bottoming out in March 2012, home prices have rebounded about 21 percent. They remain about 22 percent below the peak reached in July 2006.

The housing market has been recovering over the past year, helped by steady job growth, low mortgage rates and relatively low prices.

Sales of previously occupied homes rose in August to a seasonally adjusted 5.5 million annual pace, according to the National Association of Realtors. That’s a healthy level and the highest in more than six years.

But the realtors’ group cautioned that the August pace could represent a temporary peak. The gain reflected closings and largely occurred because many buyers rushed to lock in mortgage rates in June and July before they increased further. The Realtors said buyer traffic dropped off noticeably in August, likely reflecting the higher rates.

The average rate on a 30-year fixed mortgage was 4.5 percent last week. That’s near a two-year high. It’s still low by historical standards.

Rates rose in May after Chairman Ben Bernanke suggested the Federal Reserve could slow its bond purchase program before the end of the year.

But the Fed surprised markets last week by deciding against reducing the $85-billion-a-month in bond buys, which have kept longer-term interest rates low. The Fed said a key reason for its decision was the sharp increase in mortgage rates and other interest rates.

The Fed’s decision could ease rates temporarily, although many economists expect the Fed will ultimately slow the purchases, perhaps as early as December. Rates would likely rise after that.

Fannie Economists Project 1.8M Borrowers Could Regain Equity in 2013

The broadening housing recovery has firmed up home prices around the country, with the potential to restore many underwater mortgages to a position of positive equity, according to Fannie Mae’s Economic and Strategic Research (ESR) group.

Citing data from CoreLogic, Orawin Velz, Fannie Mae’s director of economic and strategic research, notes that 1.7 million properties moved from negative to positive equity last year. Provided the home price gains seen so far this year continue, Velz anticipates another 1.8 million properties will rise out of their underwater positions by the end of 2013.

In a new commentary piece entitled “Down But Not Out: Many Underwater Borrowers Will Likely Regain Buoyancy This Year,” Velz examines the extent to which home price appreciation can lift underwater properties into positive equity positions and the anticipated recovery time for transitioning the nation’s housing markets toward “normal” activity.

“The first annual rise in home prices on a national basis in six years has contributed to a positive feedback loop for the housing market by helping many underwater homeowners … regain their positive equity positions,” Velz said. “This improving trend should help spur mobility and housing turnover….The broader economy also should benefit.”

Main measures of home prices showed continued robust gains through the first part of 2013, thanks to an improving labor market, low mortgage rates, and very lean inventory—which Velz contends has been the principal driver of price gains so far.

She says rising home prices should help some homeowners who have involuntarily remained on the sidelines to put their homes on the market. According to CoreLogic’s data, the number of underwater residential properties peaked in the fourth quarter of 2011 at 12.1 million and declined in each quarter of 2012, with 10.4 million properties remaining in negative equity by year-end.

About 3.7 percent of those—or 1.8 million—were in a slightly negative position, which Velz defined as those with loan-to-value (LTV) ratios of 100 to less than 105 percent. She says these properties may switch to positive equity positions this year assuming home prices continue their upward trend. Based onCoreLogic’s latest negative equity report, the share of properties with a slightly negative equity position varied across the country, ranging from 1.3 percent in North Dakota to 5.4 percent in Georgia.

Velz concludes that all but about 10 percent of properties currently underwater will be back in positive territory within three and a half years. Most analysts expect home prices to trend up this year. Zillow polled more than 100 economists, housing analysts, and other industry experts in March. The consensus for median appreciation in 2013 was 4.8 percent, with only two respondents out of 117 indicating a decline.

Applying the Zillow survey’s consensus expectation for home prices—a cumulative gain of 17.5 percent between 2013 and 2016—and assuming continued amortization, Velz says most of the underwater properties at the end of 2012 would likely regain their positive equity positions by 2016—all except the most severely underwater, meaning those with LTVs of 120 percent or higher.

Underwater properties remain concentrated in a few states with those in the worst five states—Nevada, Florida, Arizona, Georgia, and Michigan—accounting for nearly a third of total underwater properties, according to CoreLogic’s assessment. Velz stresses the speed of the transition of underwater loans to positive equity positions is expected to vary regionally.

Nevada and Arizona are among the states with the highest share of negative equity properties, yet these states witnessed very robust home price gains over the past year, Velz points out. On the other hand, Michigan’s negative equity share is the lowest among the five worst states, but its home price appreciation has been the most modest.

Fannie Mae’s economic and research director also noted strong home price appreciation bodes well for California, which was consistently among the five worst underwater states until the second quarter of 2011. Since then, California has moved out of the worst five states, as its home prices troughed in the first quarter of 2011—much sooner than trends have demonstrated in other severely underwater states and much earlier than national prices, which didn’t witness a trough until 2012.

According to Velz, that rate at which underwater borrowers are elevated above the break-even surface will depend on the severity of their underwater conditions—or their LTV ratios—and the pace of home price gains in specific markets.

BY: CARRIE BAY

Accuracy of Zillow, Trulia listing data under fire again

Summary of ZipRealty study findings

Site	% of listings on the site versus the MLS	% of listings on the site listed as for sale while not listed for sale in the MLS
Zillow	73%	16%
Trulia	78%	17%
ZipRealty	99%	1%

Source: ZipRealty

ZipRealty looked at a control set of 2,981 homes actively listed for sale in the 16 MLSs in the markets above on Oct. 28, 2012. That set of homes was then cross-referenced, using both the properties' addresses and MLS listing identification numbers, with the homes listed for sale on Zillow, Trulia and ZipRealty in those markets.

If an MLS-listed home was not found on one of the three sites, ZipRealty manually double-checked for incorrect information and updated its results as needed.

For homes listed for sale on the three sites that were not listed for sale in the MLS, the properties' historical information in the MLS was looked at.

"In many cases," the report noted, "these 'extra' homes shown within the portals' home listings results reflected listings that had previously expired, sold or otherwise been deactivated within the MLS database while still shown as 'for sale.'"

Last fall, technology-based brokerage Redfin hired a consulting firm, WAV Group, to compare the accuracy of listing data published by Zillow and Trulia in 11 major markets with IDX listing data displayed by Redfin and two other brokerages.

The WAV Group study found that about 36 percent of the listings shown as active on Zillow and Trulia were no longer for sale in the local MLS, while brokerage websites had few or no such errors.

Trulia and Zillow, which have both instituted programs to improve listings accuracy, said the WAV Group study did not tell the whole story.

Both companies said they offer tools that are often now found on broker and MLS sites that allow consumers to research market conditions. Some homes -- such as those being sold by owners, and newly constructed homes -- are not listed in the MLS because they are not represented by a real estate broker.

Trulia spokesman Ken Shuman said ZipRealty didn't detail which ZIP codes were looked at in its report, or why the markets that were studied were chosen.

"I raise an eyebrow at this," Shuman said. "Did they look at all 15 ZIP codes in San Francisco. or just the four where Trulia had the most discordant match with the MLS?"

Shuman said Trulia has "invested heavily in delivering quality data to consumers," pointing out the firm's Trulia Broker Program, which gives brokers incentives for providing a direct listing feed to the portal, and new continuously updated protocol for data it gets directly from MLSs.

Zillow has also been focused on improving listing coverage and accuracy. Itannounced its 49th broker in the Zillow Pro for Brokers program last month and in July it started ramping up its efforts at getting listing feeds directly from MLSs.

"What's more important to understand about a study like this is that there is no gold standard for real estate listings," said Zillow spokeswoman Cynthia Nowak.

Nowak said Zillow has information on many listings -- like for-sale-by-owner, pre-market and new construction homes -- that aren't in MLSs because they aren't represented by real estate brokers.

Nowak also pointed out that home shoppers use Zillow for reasons beyond looking for for-sale homes, but also for "deep information on all homes, the Zestimate, price cuts, communities, rental listings and historical home information."

"If (Zillow and Trulia) are saying this isn't right, God bless them. Let's see the data," ZipRealty CEO Lanny Baker told Inman News. The study looked at the prime ZIP codes in the markets covered, he said.

Baker says he's aware that consumers use real estate sites for different reason. The new ZipRealty tool and study, he said, is an effort to point out where he thinks ZipRealty excels -- providing search for MLS-listed homes.

Baker said many consumers aren't aware that popular portals like Zillow and Trulia don't have all the for-sale listings in some markets. Studies like ZipRealty's are meant to bring the issue to light, he said.

Editor's note: This story has been updated with comments from Zillow and Trulia, and additional details on ZipRealty's study of listings accuracy.

Following in the footsteps of Redfin, ZipRealty Inc. is emphasizing the timeliness and accuracy of the Internet Data Exchange (IDX) listing data it serves up on its website in comparison to the sometimes dated and incomplete information on third-party listing portals like Zillow and Trulia.

ZipRealty is offering a "Listing Check" tool that it says will allow consumers to use its website to double-check whether a home they've seen listed for sale on another site is actually for sale.

The Listing Check tool is available in 34 markets where ZipRealty has access to IDX listings. The company operates as a brokerage in 19 markets, and is also able to display IDX listings in 15 other "Powered by Zip" markets where it provides leads and customer relationship management tools to other brokerages.

Websites operated by real estate brokerages and agents receive listings directly from multiple listing services, which provide IDX listing feeds to members. The feeds include all listings represented by participating brokerages in a given market.

Thanks to its ties to the National Association of Realtors, Realtor.com gets listings directly from most of the nation's more than 900 MLSs.

Other third-party listing portals, like Zillow and Trulia, receive some of their listings directly from MLSs. But brokers have the right to withhold listings they represent from the portals, and in many markets, portals must rely on individual brokerages, agents and third-party syndicators for listing data. Difficulties in managing feeds from multiple sources means that portals sometimes have incomplete or inaccurate listing data.

Brokerages in "Powered by Zip" markets can withhold listings from third-party websites like Zillow and Trulia, but cannot prevent their listings from appearing on ZipRealty.com without withdrawing entirely from IDX agreements.

To emphasize the accuracy of the IDX listing data displayed on ZipRealty.com, the company says it analyzed listings published by Zillow and Trulia in 50 ZIP codes across the following 13 major metropolitan areas: Boston, Chicago, Dallas, Denver, Houston, Las Vegas, Los Angeles, Philadelphia, Portland, the San Francisco Bay Area, San Diego, Seattle and Washington, D.C.

In the areas studied, ZipRealty claims that more than 15 percent of homes shown for sale on Zillow and Trulia weren't actually on the market, and up to 30 percent of homes that were listed for sale in an MLS were not identified by the portals as being on the market.

"Finding that perfect home online and then discovering that it's already been sold presents an extremely frustrating scenario to homebuyers," said ZipRealty CEO Lanny Baker in a statement. "Other major online real estate websites continue to show homes listed as 'for sale' for several days -- even weeks -- after they have sold, and no homebuyer wants to waste time chasing after properties that are already off the market."