Report Suggests Intentional Underbuilding

Daily Real Estate News | Thursday, July 11, 2013

With housing inventories so low, why aren’t homebuilders jumping in by ramping up production to meet demand?
A new housing report by Arizona State University suggests that homebuilders are methodically holding back their inventories and keeping the rate of new-home building low, despite population growth projections.
“New-home builders don’t appear too anxious to help meet the demand,” says Michael Orr, a real estate expert at ASU’s W.P. Carey School of Business.
A few years ago, during the housing bubble, homebuilding outpaced population growth. But builders are taking the opposite approach this time around. In an environment with tight underwriting for loans, builders are exercising some caution and restraint.
“They are trying to make sure they don’t overbuild like they did before the housing crisis, and they want to keep prices moving up,” Orr says. For example, Orr notes that in the Phoenix area, new-home sales rates are less than one-third of what is needed to keep pace with the projected population growth. He added that, with limited supply, builders are able to increase prices for new homes.
Those in the building industry have cited labor shortages, tight underwriting standards, and the rise in lot prices as a reason building hasn’t kept pace.
Source: “Why home builders aren't rushing to meet demand,” Phoenix Business Journal (July 9, 2013)

NAR on Blank Slate Tax Reform: 'Do No Harm'

 

Daily Real Estate News | Wednesday, July 10, 2013

The National Association of REALTORS® today is asking its members to let their senators know that real estate tax provisions are critical to the economy and should remain high on lawmakers’ priority list as they take a blank slate approach to tax reform.
NAR is issuing a Call for Action to its members that emphasizes the need for any tax legislation to do no harm to the economy by retaining the deductions for mortgage interest and property taxes, the capital gains exclusion on proceeds from the sale of a principal residence, and extension of mortgage cancellation relief. Also emphasized are deprecation rules and the continued tax-deferred treatment of 1031 exchanges.
Under the blank-slate approach to tax reform announced by the leadership of the Senate Finance Committee recently, senators are asked to start from scratch and identify the provisions they want to keep in the Tax Code. Sen. Max Baucus (D-Mont.), the Finance Committee chair, says he'd like to start developing a bill this fall.
NAR staff professionals explain the blank-slate approach to tax reform in this short video interview with REALTOR^® Magazine.

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Home Prices Post Biggest Jump in 7 Years

Daily Real Estate News | Wednesday, July 03, 2013

Home prices are moving up at a quicker pace, rising in May by their largest annual amount in more than seven years with more to come, according to the latest report released by CoreLogic.
Home prices increased 2.6 percent in May over April and have shot up 12.2 percent compared to last year’s prices. CoreLogic economists are predicting that home prices will rise by another 2.9 percent in June, making the yearly price gain 13.2 percent year-over-year.
Tight inventories of homes for sale across the nation have pushed home prices higher, according to CoreLogic.
“Home price appreciation, particularly in much of the western half of the U.S., is increasing at a torrid pace,” says Anand Nallathambi, president and CEO of CoreLogic. “Across the country, pent-up demand and continued low interest rates are fueling strong demand for a limited inventory of properties. We expect that trend to continue to drive up prices throughout the balance of the summer months.”
When including distressed sales, the following five states have seen the highest home appreciation in the past year, according to CoreLogic:

• Nevada: +26%
• California: +20.2%
• Arizona: +16.9%
• Hawaii: +16.1%
• Oregon: +15.5%

Source: CoreLogic and “Home prices rise by most in seven years in May: CoreLogic,” Reuters (July 2, 2013)

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Pending Sales at Strongest Pace Since 2006

Daily Real Estate News | Thursday, June 27, 2013

Pending home sales rose in May to the highest level since late 2006, implying a possible spark as mortgage interest rates began to rise, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 6.7 percent to 112.3 in May from a downwardly revised 105.2 in April, and is 12.1 percent above May 2012 when it was 100.2. Contract activity is at its strongest pace since December 2006, when it reached 112.8. Also, pending sales have been above year-ago levels for the past 25 months.
Lawrence Yun, NAR chief economist, said there may be a fence-jumping effect.  “Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” he said.  “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Regionally, the index went unchaged in the Northeast, but is 14.3 percent above a year ago.  In the Midwest, it jumped 10.2 percent to 115.5 in May and is 22.2 percent higher than May 2012.  Pending home sales in the South rose 2.8 percent and 16 percent in the West.

Source: NAR