housing affordability

Urban Center

Tours of DTLA and prominent speakers highlight the Urban Land Institute’s Fall Meeting in L.A.

Written by Wendy Bowman

Building resilient communities is high on the agenda at the Urban Land Institute’s (ULI) 2017 Fall Meeting, set for Oct. 23-26 at the Los Angeles Convention Center. The gathering—which unites internationally renowned land-use and urban-development experts for four days of networking and education—will focus on various issues such as housing affordability, gentrification and social equity, technology advancements and demographic shifts, as well as DTLA’s resurgence as a highly sought-after place to live and work.

“ULI’S FALL MEETING IS A MUST-ATTEND EVENT FOR PEOPLE AT ALL STAGES OF THEIR REAL ESTATE CAREERS, AS WELL AS THOSE WHO ARE NOT DIRECTLY INVOLVED IN REAL ESTATE BUT WHOSE WORK AFFECTS OR IS AFFECTED BY REAL ESTATE.”

The event, expected to draw more than 6,500 industry leaders from around the globe, will feature a different focus each day. Among the highlights: tours of some of the metro area’s most innovative developments (Monday, Oct. 23); lessons learned from experts in the real estate industry and beyond (Tuesday, Oct. 24); and industry trends, including what’s next for the residential, hospitality, office, industrial and retail sectors, as well as the impact of driverless transportation technology on all property types (Wednesday, Oct. 25). On Thursday, Oct. 26, real estate “deal day” will feature the chance to explore and initiate development projects and to share best practices in the art of making deals.

Also of note is the impressive lineup of speakers, including NBA basketball legend Earvin “Magic” Johnson, chairman and CEO of the investment conglomerate Magic Johnson Enterprises; Wall Street Journal columnist Peggy Noonan; and globally renowned architect Frank Gehry, designer of L.A.’s Walt Disney Concert Hall.

Findings from ULI and PwC’s Emerging Trends in Real Estate 2018 survey also will be discussed during a general session spotlighting the most favorable markets for investment and development in the coming year. (Last year, L.A. ranked fifth out of more than 75 markets.) “ULI’s Fall Meeting is a must-attend event for people at all stages of their real estate careers, as well as those who are not directly involved in real estate but whose work affects or is affected by real estate,” says Boyd. “There is no better place for sharing knowledge, ideas and lessons learned about creating communities that are resilient, prosperous and livable.”

Market Muse | June 9th, 2017

Market Muse with Warren Dow reports:

  • Home prices are on fire – and look to continue to stay hot through balance of 2017
  • The national housing report 63% of homeowners with mortgages have seen a rise equity since 2016
  • Millennials are the largest group of home buyers for the fourth consecutive year.
  • Fannie Mae has declared it’s a sellers market

 

What’s happening in the housing market

Home prices are on fire – and look to continue to stay hot through balance of 2017

According to its recently released Home Price Index (HPI,) CoreLogic reported that home prices are up both year over year and month over month. Nationwide, home prices increased year over year by 6.9% in April 2017 compared to April 2016 and increase month over month by 1.6% in April 2017 compared with March 2017. The CoreLogic HPI Forecast indicates that home prices will increase by 5.1% on a year over year basis from April 2017 to April 2018.

CoreLogic also reported that U.S. homeowners with mortgages (which is roughly 63% of all homeowners) have seen their equity increase by a total of $766.4 billion dollars since the 1st quarter of 2016 – an increase of 11.2%. Today, nearly 9 million borrowers have regained equity since the height of the housing crisis in 2011.

On the other hand, the total number of residential mortgages with negative equity decreased 3% from the 4th quarter of 2016 – to 3.1 million homes or 6.1% of all mortgaged properties. CoreLogic Chief Economist stated, “One million borrowers achieved positive equity over the last year, which means mortgage risk continues to steadily decline as a result of increasing home prices.”

And there’s more news on mortgages out today – Freddie Mac just released it Primary Mortgage Market Survey, showing the 30-year fixed mortgage dropping for the 4th consecutive week and hitting its lowest level in nearly seven months. 30-year fixed mortgages averaged 3.89% with an average .5-point for the week ending June 8, 2017, down from last week when it averaged 3.94%. For reference, a year ago at this time the 30-year fixed rate mortgage averaged 3.6%.

With the market so hot, one has to wonder what’s happening with home flipping – the practice of buying and then reselling the same property within a 12-month period. Well, ATTOM Data Solutions just released its Q1 2017 US Home Flipping Report, which showed that home flipping fell to the lowest level in two years during the 1st quarter of 2017. Interesting, at the same time, the share of those flips using mortgage financing rose to a 9-year high. The company reported that there were 43,615 single family homes and condos flipped during the 3-month period, down 8% from the previous quarter and 6% from a year ago. Flipping accounted for 6.7% of all single-family home and condo sales during the quarter, an increase from 5.8% in the fourth quarter, but unchanged from a year earlier.

So what’s up with the millennials?

The National Association of Realtors (NAR) just released it 2017 Home Buyer and Seller Generational Trends study, which found that millennials were the largest group of home buyers (34%) for the fourth consecutive year. By comparison, baby boomers were 30% of buyers.

“Millennials have been fairly slow to get into the market, but we are seeing an uptick in millennial buyers this year – which is a good sign, because as home values rise, we want a wider number of people to participate in this housing recovery,” said Lawrence Yun, chief economist at NAR. “There’s a pent-up demand and as the economy continues to improve, we expect to see more people in their early thirties, adults who are still living with their parents – clearly not their idea of the American dream – to begin to look for their own housing units.”

In other housing news, economists at Freddie Mac see the U.S. housing market “on track to eclipse last year as the best in over a decade.” The company’s May Outlook gives credits to the housing market’s strong start to 2017 in part to the surprising downward movement of interest rates since March. After rising to 4.3% in March, mortgage rates have dipped back down near the 4.0% range and have been holding pretty steady. The general sentiment is that the Fed will increase rates a few times before the end of 2017. All told, Freddie Mac thinks 2017 is shaping up to be the best year for housing in over a decade.

Finally, Fannie Mae has declared it’s a sellers market.

Based on Fannie Mae’s monthly National Housing Survey, the net share of Americans who said that now is a good time buy a home reached a record low of 27%, (a decrease of 8%,) while the net share who stated that it is a good time to sell a home reached a record high of 32%, a gain of 6% in May 2017.

Fannie Mae said it was only the 2nd time in the survey’s history that the net share of those saying it’s a good time sell surpassed the net share of those saying it’s a good time to buy. In fact, the “sell” component is 19 point higher that the same time in 2016. All of this makes perfect sense since the market has been on fire and continues to stay hot.

Look for more market muse episodes soon.

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The Year Ahead: California Real Estate Market Forecast

 

After a mostly flat 2014, slow and steady is the theme of California housing predictions for 2015

 

BY RACHEL DOTSON

California home sales tempered in 2014, falling roughly 8.2 percent behind the previous year. But with positive housing indicators and a strengthening economy, experts are predicting a 2015 marked by increased home sales and a better balance between sellers and traditional home buyers.

According to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) “2015 California Housing Market Forecast,” economists expect a 5.8% increase in existing home sales in 2015, which translates into 402,5000 total units. They further expect median prices to continue upward, with a forecasted 5.2% increase bringing the median home price up to $478,700.

Last year’s sluggish home sales resulted in large part from dramatic increases in home price coupled with depleted market inventory — an environment that caused many investors to exit. Without traditional consumers stepping in to take their place, 20 months of double-digit year-over-year home price growth finally normalized to single digits in 2014.

“Stringent underwriting guidelines and double-digit home price increases over the past two years have significantly impacted housing affordability in California, forcing some buyers to delay their home purchase,” said C.A.R. President Kevin Brown in a press release. “However, [in 2015], home price gains will slow, allowing would-be buyers who have been saving for a down payment to be in a better financial position to make a home purchase.”

C.A.R. expects 30-year mortgage interest rates, which repeatedly defied forecasts last year, to remain at historically low levels despite a slight increase to a year average of 4.5 percent. This bodes well for potential buyers, who Brown wants to remind that 20 percent down is not always required to buy a home.

“There are numerous programs available that allow consumers to buy a home with less down payment, including FHA loans, which lets buyers put down as little as 3.5 percent,” he said.

Looking to economic recovery, last year was the strongest since the recession hit in 2008 and closed out with a 5.6 percent unemployment rate nationwide. Currently hovering around a 7.9% unemployment rate, Los Angeles is is forecast to return to pre-recession employment numbers in the coming year.

Yet even with job growth, low interest rates, and slowing gains in home prices, affordability remains a key issue, particularly in the state’s luxury markets. According to C.A.R.’s Traditional Housing Affordability Index, just 27 percent of households will be able to purchase a median priced home in California based on traditional assumptions. This forecast is 3 percent lower than 2014 projections, and is down significantly from 56 percent in the first quarter of 2012. Much of this is attributable to the fact that household income declined while home prices swelled.

With affordability where it is, the homeownership rate for 18- to 34-year-olds continues to fall as the number of Millennials renting or living with parents continues to rise. Household formation for this same demographic is remarkably slow, contributing to Census data that shows an addition of just 476,000 new households in the 12-month period ending in March 2014. By contrast, the two periods prior had an average of 1.3 million added households. Even in today’s “renter nation,” the C.A.R. 2014 Millennial survey shows that over half of this group places homeownership as an eight or above on a scale of one to ten, where ten is “extremely important.” Roughly the same percentage expects to purchase a home within five years.

“With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015,” concluded C.A.R. Vice President and Chief Economist Leslie Appleton-Young.