We had one little uptick in home value and Zillow it calling it the end of the housing bubble. Please keep in mind we have:
- Artificially low borrowing costs
- Federally guaranteed loans
- Federally guaranteed and insured low downpayment loans
- Shadow Inventory
- Increasing taxes due to debt costs
- Decreasing incomes compared to 2007
With all these threats is the housing bubble really over?
Home Price Bottom or Bubble?
Published: Tuesday, 24 Jul 2012 | 11:23 AM ETBy: Diana Olick CNBC Real Estate Reporter
Home prices rose, just barely, in the second quarter of this year annually for the first time since 2007, according to online real estate firm Zillow. That prompted the popular site to call a “bottom” to home prices nationally. The increase was a mere 0.2 percent, but in today’s touch and go housing recovery, that was enough.
Nearly one third of the 167 markets Zillow tracks in this survey saw annual price gains from a year ago.
“After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values,” said Zillow Chief Economist Dr. Stan Humphries. “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own.”
Zillow’s report, which compares prices of homes sold in the same neighborhood, also showed a stronger 2.1 percent gain quarter to quarter, which is the biggest uptick since 2005. The biggest price gains, however, are in the markets that saw the biggest price drops during the latest housing crash. Phoenix, for example, saw a 12 percent annual price gain on the Zillow index.
That has other analysts claiming that the overall surge in national prices is due to price bubbles in certain markets.
“Strong demand, particularly in areas of California, Arizona and Nevada, are pushing up home prices very quickly in the short-term. And because many of the home purchases in these areas are cash transactions, there appears to be less braking of prices by our current appraisal system than seen in other parts of the country,” noted Thomas Popik, research director for Campbell Surveys and chief analyst for HousingPulse. “The trend raises the distinct possibility of housing price bubbles emerging in some of these hot housing markets.”
The supply of foreclosed properties for sale has been dropping steadily, as lenders try to modify more loans or actively pursue foreclosure alternatives, like short sales (where the home is sold for less than the value of the mortgage). Investors, eager to take advantage of the hot rental market, are having to spread out to more markets in order to find the best deals.
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Proprietary OC Housing News home purchase analysis
5401 OHIO St Yorba Linda, CA 92886
$729,000 …….. Asking Price
$1,075,000 ………. Purchase Price
5/20/2004 ………. Purchase Date
($346,000) ………. Gross Gain (Loss)
($86,000) ………… Commissions and Costs at 8%
============================================
($432,000) ………. Net Gain (Loss)
============================================
-32.2% ………. Gross Percent Change
-40.2% ………. Net Percent Change
-4.7% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$729,000 …….. Asking Price
$145,800 ………… 20% Down Conventional
3.70% …………. Mortgage Interest Rate
30 ……………… Number of Years
$583,200 …….. Mortgage
$135,423 ………. Income Requirement
$2,684 ………… Monthly Mortgage Payment
$632 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$182 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$3,498 ………. Monthly Cash Outlays
($425) ………. Tax Savings
($886) ………. Equity Hidden in Payment
$178 ………….. Lost Income to Down Payment
$202 ………….. Maintenance and Replacement Reserves
============================================
$2,567 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$8,790 ………… Furnishing and Move In at 1% + $1,500
$8,790 ………… Closing Costs at 1% + $1,500
$5,832 ………… Interest Points
$145,800 ………… Down Payment
============================================
$169,212 ………. Total Cash Costs
$39,300 ………. Emergency Cash Reserves
============================================
$208,512 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Nearby Foreclosures
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Are you ready to make an offer, but you are worried you will either (1) underbid and miss the property or (2) overbid and pay too much? Don't make a mistake and miss your dream home, or worse yet, overpay for it! Get the advice of a seasoned professional. Contact us at info@ochousingnews.com today!
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$729,000 18672 BUENA VISTA Ave |
0.22 miles 4 bd / 2 ba 2,336 Sq. Ft. |
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$899,900 5132 OHIO St |
0.28 miles 3 bd / 1.75 ba 2,157 Sq. Ft. |
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$599,950 5596 MOUNTAIN VIEW Ave |
0.4 miles 4 bd / 3.5 ba 2,529 Sq. Ft. |
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$799,000 5092 FAIRWAY VIEW Dr |
0.47 miles 5 bd / 3.75 ba 2,680 Sq. Ft. |
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$649,000 5381 DANZA Plz |
0.62 miles 4 bd / 2 ba 1,909 Sq. Ft. |
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$748,999 5952 SUNMIST Dr |
0.71 miles 4 bd / 2.75 ba 2,540 Sq. Ft. |
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$799,900 18271 TIMBERLANE |
0.79 miles 4 bd / 3 ba 2,700 Sq. Ft. |
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$625,000 4873 KENNEDY Ln |
0.9 miles 4 bd / 2.75 ba 2,261 Sq. Ft. |
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$650,000 18782 LA CASITA Ave |
0.9 miles 3 bd / 2.25 ba 2,326 Sq. Ft. |
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$659,000 18912 HIDEAWAY Dr |
0.91 miles 3 bd / 2.5 ba 2,200 Sq. Ft. |
The lack of resale supply is making the builders happy.
Builder Confidence Improves to Highest Reading Since 2007
Builder confidence improved two points in August to 37, its highest level since February 2007, the National Association of Home Builders (NAHB) reported Wednesday. Economists had expected the index to remain flat at 35.
The improvement in the index in August marked the fourth straight month-month gain. The overall index has gained 22 points in the last year, the largest one-year gain since February 1992. The August reading also marked the third straight month the index was more than double what it had been one year earlier.
The Housing Market Index (HMI), considered a measure of builder confidence, could be reflected in permits and starts data reported for August. That report from the Census Bureau will be issued in September. Meanwhile, Census will report on July permits Thursday.
All three components of the index – the assessment of current sales, of sales six months out, and traffic at showrooms and model homes – improved.
The current sales measure rose three points to 39, its highest level since February 2007. The August gain followed a jump of five points in July. The current sales gauge is up 24 points in the last year, the last year, the strongest year-year surge since February 1992.
Buyer traffic also rose three points to 31, its highest reading since May 2006. Year-year the buyer traffic index is up 20 points, the largest 12-month improvement since March 1996.
The index of the outlook for sales in sales months rose one point to 44, the highest level since April 2007. The six month sales outlook index has increased 25 points in the last year, the largest annual gain since January 1992.
“This fourth consecutive increase in builder confidence provides further evidence of the gradual strengthening that’s occurring in many housing markets and providing a needed boost to local economies,” said NAHB Chief Economist David Crowe. “However, we are still at a very fragile stage of this process and builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values, and the difficulty of accessing credit for both building and buying homes.”
Gains in the index – or its components – do not always translate into new home sales. New home sales, for example, fell 32,000 in June to 350,000 although the HMI rose that month. The current sales measure rose in June as well but the buyer traffic index was flat. Six months earlier in December, the outlook for sales six months ahead had improved.
The index, built based on surveys conducted jointly by the NAHB and Wells Fargo, gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”
Regionally, the index improved in two of the four census regions: up nine points to 42 in the Midwest and two points to 35 in the South but down nine points to 25 in the Northeast and down three points to 40 in the West. The regional confidence measures are consistent with the most recent report (for June) on new home sales, which showed new home sales plunged in the Northeast.
The HMI survey followed a surprisingly strong payroll report for July which showed the nation added 163,000 jobs, far more that what the market had been expecting but the unemployment rate rose to 8.3 percent in the same month. However recent housing specific survey such as the Case Shiller Home Price Index show improvements in home prices.