Economists' Outlook

Happy Memorial Day Weekend: Info from 2013 Member and Investment/Vacation Reports

Jessica Lautz, Survey Research Manager — Fri, 24 May 2013 17:14:56 +0000

Welcome to the unofficial start of summer! Our REALTOR® members work long hours and are in need of a break! Sixty percent of members work 40 or more hours a week and 17 percent work 60 or more hours a week. Among appraisers in the industry, 38 percent work more than 60 hours a week.
Among REALTOR® members, 13 percent own a vacation home.
Among recent buyers in the market, 11 percent of home buyers bought a vacation home in the last year.
Perhaps this weekend both recent buyers and our members will get a well needed break.
And of course a special thank you on this Memorial Day weekend to all of the members who served in the military. Two percent of the association membership were members of the military before becoming REALTORS®.
For more information, check out the 2013 Member Profile and the 2013 Investment and Vacation Home Buyers Survey.

Home prices rose in 41 states and D.C. in the 1st quarter of 2013

Danielle Hale, Research Economist — Fri, 24 May 2013 12:58:24 +0000

FHFA (Federal Housing Finance Agency) price data shows that home prices across the United States rose 6.7 percent from the first quarter of 2012 to the first quarter of 2013. In 41 states and the District of Columbia prices were higher than the fourth quarter of 2012, and from one year ago the District and all states except Connecticut and West Virginia showed higher prices. In Connecticut and West Virginia, prices were weaker by less than one percent.
Price gains were largest in the West. Nevada, Arizona, California, and Idaho each saw gains exceeding 15 percent from one year ago. The map above shows the breakout of annual gains for each state.
Nationally, prices rose 1.9 percent from the fourth quarter. Note that this is seasonally adjusted, but not annualized, meaning that if prices continue to gain at this pace, it would imply an 8 percent gain for home prices nationally in the course of a year.
FHFA uses a weighted repeat sales index that compares the prices of properties that involve a conforming conventional mortgage purchased or securitized by Fannie Mae or Freddie Mac. Thus, the FHFA index is based on a broad geographical sample of home transactions, though it misses out on transactions involving cash, jumbo or FHA/VA loans. In spite of this limitation, its price trend is usually similar to that of other price measures.

Monthly Payment as a Percentage of Income

Ken Fears, Manager, Regional Economics — Fri, 24 May 2013 12:01:26 +0000

In the wake of the housing recession, the sharp decline in median home prices and record low mortgage rates combined to boost affordability to record levels in nearly all markets.
Affordability varies greatly across markets, though, even when compared to local median household income.
Markets in the West, particularly California, require the highest share of income to be devoted to the monthly principle and income payment, while markets in the Midwest and Upstate New York are among the most affordable.
The recent increases in home prices will erode some of the gains, but record low mortgage rates will help to ameliorate this impact, while prices and rates are likely to remain below levels seen during the peak of the housing market for several quarters.
For more information about affordability conditions in other markets, see the Local Market Reports for the 1^st quarter of 2013.

Jobless Claims Drop to Normal Level

Scholastica (Gay) Cororaton, Research Economist — Thu, 23 May 2013 15:09:58 +0000

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses unemployment insurance claims.

After a worrying uptick in last week’s initial claims for unemployment insurance, this week’s report is a relief. Initial claims for unemployment insurance filed in the week ending May 18 dropped to 340,000, a decrease of 23,000 claims from the previous week’s upwardly revised level.
A lower level of initial claims for unemployment insurance means fewer layoffs in existing jobs and greater job security. Claims for unemployment insurance are back to the levels seen before the Great Recession.
Still, fewer layoffs are just one part of a healthy job market; job creation has to pick up to fully recover the jobs lost during the recession and absorb new entrants. About 3 million lost jobs are still to be recovered.
What this Means for REALTORS®: Job additions help both commercial real estate occupancy demand and enlarge the pool of potential homebuyers. Improving times ahead for real estate practitioners.

Roughly 40% of existing homes sold in the US are sold in the South

Danielle Hale, Research Economist — Thu, 23 May 2013 12:41:12 +0000

April home sales data show that about 40 percent of all existing homes in the US are sold in the South. At the current seasonally adjusted sales rate, that’s more than 2 million a year.
For decades, the South has had the largest number of housing units and owner-occupied housing units. As the South’s share of population has increased over the last decade, so too has its contribution to home sales nationally.
While all regions showed year over year sales growth in the data released today, the South showed the strongest growth at around 15% which helped boost national sales growth to nearly 10 percent above one year ago.
By price, the South is the 3^rd most expensive compared to other regions with an April 2013 median price of $168,700. From one year ago, the median price of homes sold in the South has jumped more than 10 percent, but affordability remains high. According to March data, the median income family earns nearly twice what is needed to qualify to purchase the median priced home[1].
The South can be broken down further into 3 Census divisions which include the South Atlantic, East South Central, and West South Central.

[1] For details see NAR’s Housing Affordability Index Release: http://www.realtor.org/topics/housing-affordability-index