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?
Published: Tuesday, 24 Jul 2012 | 11:23 AM ET
By: 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
$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.Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
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