Monthly Archives: July 2013

Clear Capital(R): Bakersfield, CA Tops Metros With Largest Projected Gains Through Last Half of the Year. Really.

Las Vegas Projected to Lead Metros With Total 2013 Price Growth.

TRUCKEE, Calif., July 2, 2013 (GLOBE NEWSWIRE) — Clear Capital (www.ClearCapital.com), the premium provider of data and solutions for real estate asset valuation and collateral risk assessment, today released its Home Data Index(TM) (HDI) Market Report with data through June 2013. Using a broad array of public and proprietary data sources, the HDI Market Report publishes the most granular home data and analysis earlier than nearly any other index provider in the industry.

June 2013 highlights include:

— The forecast through June 2013 reveals trends that highlight the overall
recovery’s strength and potential for sustainability. Nationally, home
prices continue to benefit from the more active spring buying season.
— Quarterly, yearly and two quarter forecasts all came in stronger at 1.4%,
8.6%, and 1.7% respectively, relative to months past.
— A more optimistic update to our total 2013 national forecast of 6.0% over the 2.6% growth projected

in our April 2013 report is attributed to increasing home price gains across much of the nation, continuous

improvements in distressed market measures and improvements in broad-based economic inputs, such as

consumer confidence.

— Should 2013 forecasts be realized, the housing market would outperform
historical average gains between 4.0% and 5.0%, but indicate moderation
from the current yearly gains of 8.6%.

— Regionally, home price gains saw moderate growth in the short-term,
long-term and forecast.
— The West, South, Midwest and Northeast are forecasted to see total 2013
gains of 10.1%, 5.2%, 4.6% and 4.1%, respectively. These gains are
comprised of year-to-date growth and two quarter forecasts of 2.2%, 1.5%,
1.8% and 1.5%, respectively. Moderation is key to a sustained recovery.
With this in mind, projected regional growth rates are healthy compared
to year-over-year gains through June of 17.1%, 7.1%, 6.2% and 4.3%,
respectively.
— While metro level market trends showed continued variability, they
remained positive overall. Local market economic fundamentals continue to
drive varying degrees of price growth.
— 45 out of the top 50 major metro markets are forecasted to see yearly
growth over the final two quarters of 2013. Four of the five markets not
expected to see home price gains over the next two quarters are projected
to see declines of less than 0.5%.

— Las Vegas held its lead in June with yearly gains of 29.3%. The metro is
one of six others to have realized more than 20.0% in yearly growth.
Considering the two quarter forecast for Las Vegas of 5.0%, the metro
will likely end the year as the recovery front runner with total 2013
gains of 19.4%.

— Bakersfield, CA’s two quarter forecast of 5.2% puts this metro in the
lead for short term anticipated gains out of the top 50 metros.
Bakersfield moved from 29 in March’s Forecast to the first position in
June. This leap is an example of the fundamentals driving the overall
recovery. Bakersfield shares many characteristics of a First In First Out
Recovery and serves as a reminder that the recovery continues to unfold
market by market. This market was hard hit in the downturn and now offers
an attractive opportunity for homebuyers. From the peak, prices are
currently down 54.3%, substantially more than the national losses of
34.2%. Additionally, REO saturation remains relatively high, but on the
decline at 21.3%. And overall median prices are relatively low at
$160,000.

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All-Cash Offers: Healthy for Real Estate Market, or a Hindrance?

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With many pointing to the housing market as the backbone of the economic recovery, investors are flooding the market with all-cash offers and it’s squeezing out many traditional homebuyers.

“People are worried about the returns on alternative investments,” says Karen Dynan, vice president and co-director of economic studies at the Brookings Institute. “There is still a lot of uncertainty about bonds and the stock market, which makes the housing market look good.”

According to the National Association of Realtors May 2013 Confidence Report, all-cash offers account for 33 percent of home sales, with international buyers taking the lead. In addition, 87 percent of surveyed Realtors say they are expiring constant or increasing home prices. Homebuyers, particularly first-time homebuyers, are already battling low inventory and rising home prices, but the added pressure from investors creates stiff competition.

William Delwiche, investment strategist at Baird Research & Insights, says cash buys are being bolstered by investor pools snapping up real estate, and less so by individuals looking to live in the home. “These are investment pools paying cash for houses to hopefully get returns,” he says. “It’s not necessarily a trend among individual homeowners because most people going to buy houses don’t have that kind of cash sitting around.”

And for sellers, an all-cash deal is ideal since is cuts down on complications, says Patrick Newport, U.S. economist at IHS Global Insights. “If you own a home and are selling yourself, it’s probably easier if someone pays you cash — it cuts out the messiness and having the homebuyer get approved for a loan.” Typical cash buyers are either young people who come into a lot of cash, or international investors, he says.

Cash buys signal a housing market that people are more willing to invest in, says Delwiche, but the market’s attractiveness may also be due to a lack of other solid investment options. “The housing market is recovering, but people are also looking to diversify their portfolios,” he says. “They don’t’ want to put it all in stocks and bonds.”

It’s a sign that people are under the impression the market is turning around, says Dynan, which may be a self-fulfilling prophecy if enough investors follow. “A lot of those cash investors are looking for a return,” she says. “If a lot of people think home prices will rise, they will put money into the market, and that increases demand and pushes up prices.”

The cash-buying trend also gives the overall economy a short-term boost, according to Delwiche.
“This helps to bid up asset values for houses, and is good for homeowners who already own houses,” he says. “There is also a benefit to state and local government finances because of the taxes associated with these purchases.”

Dynan says the trend will reinforce the momentum in the housing market, but will impact hopeful first-time homeowners negatively in the future. “It just makes the housing market less affordable,” she says. “It’s good for the overall economy, but not for every person in the economy.”

Delwiche agrees, and says it may prevent more people from getting into the market in the future.
“Home prices go up and it affects housing affordability,” Delwiche says. “You can’t have first-time homeowners who are seeds for long-term growth, because they are then crowded out of the market. So short term it’s something of a positive, but is a headwind for first-time homeowners.”

Delwiche says he’d be surprised to see the trend continue, as well. “It’s just a reflection of poor alternatives for investment dollars,” he says.

By Kate Rogers
http://realestate.aol.com/blog/2013/06/28/all-cash-offers-healthy-for-real-estate-market-or-a-hindrance/

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