[Three Cents Worth #249 Miami] The Miami Housing Trend Breakdown

Posted by Jonathan Miller - Monday, October 28, 2013, 7:56 PM

It’s time to share my Three Cents Worth (3CW) on Curbed Miami, at the intersection of neighborhood and real estate in the Magic City. And I’m simply here to observe.

Check out my 3CW column on @CurbedMiami:

Miami has become a market with a lot of moving parts so it’s best not to throw all the data into one bucket and call it a day. Last week Douglas Elliman released the 4 South Florida market reports I author for them including Miami and this week’s charts were taken from data compiled in the report. I presented a bunch of metrics in the single family and condo market broken out by the distressed and non-distressed markets. Distressed property are defined here as short sales and foreclosures…

[click to expand chart]

My latest Three Cents Worth column on Curbed: The Miami Housing Trend Breakdown [Curbed]

Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami
Three Cents Worth Archive Curbed Hamptons

View the original article here

Housing Recovery to Face Test as Builders Report

Lack of land, labor and credit are all standing in the way of increasing home buyer demand, and leaving many of the small and mid-sized builders frustrated as their costs soar. They simply don't have the access to cash that the bigger players do.

"I think for the short term the people who have the cash will have the advantage. Over the longer haul, I think it will even out. I think the recovery is uneven," says Howard.

(Read More: Is Multi-Family HomeConstruction Overheating?)

The first builder to report Monday is Virginia-based NVR, with Ryland, Pulte and D.R. Horton continuing through the week. Analysts say Texas-based D.R. Horton, whose stock has recently outperformed its peers, is the one to watch, a bell weather for the group.

"They are the largest builder in terms of the number of closings, and they are in the most markets, so they will probably be able to tell us not only about orders, but also about other things that are important to folks now, like what are material prices doing, how are you negotiating with suppliers," notes Megan McGrath, an analyst at MKM Partners.

Most of the big builders have seen dramatic growth in new orders, as first time home buyers slowly come back to the market. These buyers are facing stiff competition from all-cash investors in the existing home market, and are therefore looking to new builds. D.R. Horton is an entry-level builder, but has been able to shift product to move-up buyers when the demand is there. Move-up buyers have been moving out of the market of late, despite the overall housing recovery and rising values.

"I think the recovery we're seeing right now is first-time buyer and the very high end of the market. The move-up buyer has not really shown up as of yet, and if you want to see a very strong recovery in housing we need to see the move-up buyer playing a more prominent role than they are today," says Richard Smith, Chairman and CEO of Realogy Holdings Corp.

Monthly readings on new and existing home sales are also out next week and will offer more insights into the current strengths and weaknesses of the housing recovery in this crucial Spring season.

(Read More: What's Holding Up City Home Prices? Boomers)

"In a worst-case scenario, confidence could weaken further and housing starts could mark time," says Paul Diggle of Capital Economics. "But by far and away the most likely outcome is that the construction industry's growing pains are overcome and homebuilders break ground on many more sites over the next few years."

View the original article here

Best US Housing Markets for Buyers and Sellers

"Much of that strength is driven by investor interest, as many distressed and non-distressed homes are purchased and transformed into rentals," says Stan Humphries, Zillow's chief economist, in the report. "This investor activity is contributing to very low inventory levels, which increases demand and helps drive up prices, particularly for less expensive homes in these markets."

(Read More: Housing's Recovery Means Fewer Can Afford Home)

The best buyers' markets are equally surprising, with Chicago, Cleveland and Philadelphia topping the list.

View the original article here

Yes, Mortgage Rates Impact Housing Prices

Posted by Jonathan Miller - Wednesday, December 26, 2012, 4:50 PM

I few weeks ago I was dressed down by an analytics friend of mine who is in the business. Based on his employment and housing sales analysis in Alabama (I’ve never been) he suggested my comments about mortgage rates influencing housing prices as anecdotal and hypocritical (who says analysts have to have tact) – that only employment can be correlated. And further…since mortgage rates can not be proved to influence housing sales through multiple regression, any such claims are hearsay and anecdotal. While I agree that housing’s largest influence comes from employment, I was a bit surprised by the out-of-left-field agita I inspired.

He was focused on the predictive element of a trend versus a knee jerk reaction to a sudden change in a metric. My comment about a spike in mortgage rates at this moment (not predicting it) as ending the party – is apparently what caused him to lose faith in my analysis. Appreciative of the constructive feedback, I whipped up a couple of US macro price charts.

Yes, US employment trends correlate with US housing prices and mortgage rates correlate by showing an inverse trend against housing prices.

Predictive? Only if considered with other metrics.
Anecdotal? Hardly.

View the original article here

Housing Recovery Is Leaving Behind First-Time Buyers

Unfortunately, first-time home buyers are seeing just the opposite, largely left out of this surge in sales and prices. Their share of the market, usually up in the 40 percent range historically, fell to 34.7 percent in October, the lowest in the Campbell/IMF survey's three-year history.

The National Association of Realtors put their share even lower, at 31 percent.

Either way, they are the only group of buyers that have not seen their share of non-distressed home purchases rise over the past five months. The mortgage of choice for these buyers, FHA-insured loans, are increasingly tough to obtain. (Read More: Yes, Housing Starts Surge, but Rentals Are the Drivers)

"Financing of first-time homebuyers with low down payments threatens to become a significant problem in the U.S. housing market," wrote Thomas Popik, research director for Campbell Surveys. "Fifty percent of first-time homebuyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict. Private mortgage insurance has started to fill the gap, but the long-term status of private mortgage insurance is in question pending the publication of the Qualified Residential Mortgage regulation resulting from Dodd-Frank." (Read More: Builders Bump Up Thanks to Drop in Existing Home Supply)

Real estate agents answering this latest survey also noted that the recent hike in FHA mortgage insurance premiums is hitting first-time buyers harder because some sellers are refusing to accept offers that include FHA financing. Adding insult to injury, the FHA, after reporting a major shortfall in its insurance reserve funds, announced it would raise premiums yet again, another 10 basis points early next year. (Read More: To Stem Losses, FHA Mortgages Get More Expensive)

View the original article here

Housing Recovery Is Leaving Behind First-Time Buyers

Current homeowners are finally moving up, and distressed sales are making up less of the overall market—all signs of much-needed improvement in housing.

Current homeowners accounted for 54 percent of October’s non-distressed market, up from 50 percent in June, according to a new survey by Campbell/Inside Mortgage Finance.

This as the share of non-distressed sales surged to 64.7 percent, up from 55.7 percent as recently as February.

Unfortunately, first-time home buyers are seeing just the opposite, largely left out of this surge in sales and prices. Their share of the market, usually up in the 40 percent range historically, fell to 34.7 percent in October, the lowest in the Campbell/IMF survey’s three-year history.

The National Association of Realtors put their share even lower, at 31 percent.

Either way, they are the only group of buyers that have not seen their share of non-distressed home purchases rise over the past five months. The mortgage of choice for these buyers, FHA-insured loans, are increasingly tough to obtain. (Read More: Yes, Housing Starts Surge, but Rentals Are the Drivers)

“Financing of first-time homebuyers with low down payments threatens to become a significant problem in the U.S. housing market,” wrote Thomas Popik, research director for Campbell Surveys. “Fifty percent of first-time homebuyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict. Private mortgage insurance has started to fill the gap, but the long-term status of private mortgage insurance is in question pending the publication of the Qualified Residential Mortgage regulation resulting from Dodd-Frank.” (Read More: Builders Bump Up Thanks to Drop in Existing Home Supply)

Real estate agents answering this latest survey also noted that the recent hike in FHA mortgage insurance premiums is hitting first-time buyers harder because some sellers are refusing to accept offers that include FHA financing. Adding insult to injury, the FHA, after reporting a major shortfall in its insurance reserve funds, announced it would raise premiums yet again, another 10 basis points early next year. (Read More: To Stem Losses, FHA Mortgages Get More Expensive)

Lower priced, distressed properties, like foreclosures and short sales, would seem like the best answer for first time buyers, but hungry, all-cash investors are proving to be too much competition. Investors purchased one fifth of all homes that sold in October, up from 18 percent the previous month, and all-cash buyers (largely investors) made up 29 percent of all sales, according to the Realtors. (Read More: How 'Fiscal Cliff' Could Affect Mortgage Interest Deduction)

This is why, despite increasing household formation, rental occupancies continue to fall and rents to rise. Would-be first time home buyers are either choosing or are forced to rent.

Click on ticker to follow real estate news:

Commercial Real Estate Firms

—CBRE [CBG  Loading...      ()   ]

—Jones Lang LaSalle [JLL  Loading...      ()   ]

—Grubb and Ellis [BGCP  Loading...      ()   ]

US-Based REITS

—Host Hotels & Resorts [HST  Loading...      ()   ]

—Simon Property Group [SPG  Loading...      ()   ]

—Equity Residential [EQR  Loading...      ()   ]

—Apartment Investment & Management Co [AIV  Loading...      ()   ]

—Vornado Realty Trust [VNO  Loading...      ()   ]

—Boston Properties [BXP  Loading...      ()   ]

—FelCor Lodging Trust [FCH  Loading...      ()   ]

—Avalonbay Communities [AVB  Loading...      ()   ]

—American Capital Agency Corp [AGNC  Loading...      ()   ]

—UDR, Inc [UDR  Loading...      ()   ]

—Camden Property Trust [CPT  Loading...      ()   ]

Questions?  Comments?  document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');

Follow me on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

View the original article here

What Today's Jobs Report Says About the Housing Market

Any jump in jobs is good for housing, and October's gain of 171,000 is no different.

One of the biggest barriers to entry for potential home buyers, new and move-up, has been uncertainty in employment. So this positive report can only add to rising consumer confidence and wealth.

(Read more: Jobs Report Shows Some Gains.)

When you dig down into the numbers, however, you can see where the numbers are not quite as rosy as some would hope for both home buyers and builders.

While overall construction added 17,000 jobs in October, residential-building construction employment fell by 2,000. Residential specialty contractor jobs increased by 6,700, which speaks to the real root of today's housing recovery.

All-cash investors are leading the gains; they buy distressed properties and then repair and remodel them to turn them into rentals. It's no wonder remodelers are seeing greater gains than the home builders.

An industry index of remodeling finally climbed into the positive in October, making a significant jump to its highest level since the end of 2005. Both current conditions and future expectations saw gains on the National Association of Home Builders' remodeling index (RMI). The builders claim it is not just investors, but a result of rising home equity.

(Read More: Homeowners Hit by Sandy May Save Thousands of Dollars)

“The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize,” said NAHB Remodelers Chairman George Moore Jr., a remodeler from Elm Grove, La. “As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off.”

While any construction is better than no construction, housing analysts focus more on home building than remodeling, as the nation's home builders contribute more to the overall economy, with more jobs and materials. Home builders have ramped up production dramatically, as they rise from the ashes of the housing bust.

Housing starts and permits are up significantly from the bottom, and the public builders are all reporting at least double-digit gains in new orders.

They still, however, need to see more demand from their historically strong cohort, the first-time home buyer. Those younger Americans are seeing employment gains, but are still proportionally harder-hit than the rest of the work force.

(Read More: Home Prices Rise, but Analysts See Pressure Ahead)

"Among 25-34 year-olds, the prime age group for housing demand, 75.1 percent were employed in October, up from 74.9 percent in September and from 73.6 percent in October 2011,"" notes Jed Kolko of Trulia.com, a real estate sales and information website. "For this age group, the unemployment rate was 8.3 percent in October, down from 9.7 percent one year ago – an even bigger drop than for the economy overall. Labor force participation increased for this key group."

The downside in October's jobs report, however is that job growth in what Kolko calls “clobbered metros” was just 0.5 percent (annualized rate) through September – behind the national average of 1.6 percent for the same period. (These figures are annualized 3-month growth rates to September, the latest data released for metros.) Kolko defines clobbered metros as the areas with the biggest price declines during the bust and the highest vacancy rates now: "Job growth there is especially important for housing demand," he notes.

Click on ticker to follow real estate news:

US Home Builders

—Toll Brothers [TOL  Loading...      ()   ]

—DR Horton [DHI  Loading...      ()   ]

—Hovnanian Enterprises [HOV  Loading...      ()   ]

—PulteGroup [PHM  Loading...      ()   ]

—Ryland Group [RYL  Loading...      ()   ]

—Lennar Corp [LEN  Loading...      ()   ]

—Beazer Homes USA [BZH  Loading...      ()   ]

—Meritage Homes [MTH  Loading...      ()   ]

—KB Home [KBH  Loading...      ()   ]

Questions?  Comments?  document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');

Follow me on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

View the original article here

Builders Warn on Housing

Tim Boyle | Bloomberg | Getty ImagesIt’s one thing to jump on the bandwagon when things are getting better, it’s quite another to jump off of it when everyone around you, not to mention your own company’s earnings, would seem to confirm that sentiment. But that’s just what Donald J. Tomnitz, CEO of D.R. Horton [DHI  Loading...      ()   ] , the nation’s largest homebuilder by volume did.

“I still don’t see a lot of jobs being created,” he told an earnings conference call, sending his company’s stock down when it should have been riding higher on a 24 percent year-over-year jump in new orders for homes. He is concerned about the future of this fledgling housing recovery, and he has reason to be. Mortgage delinquencies and foreclosures are driven by unemployment.

The homebuilders are rising from the ashes, after overbuilding and a credit crash sent sales and construction to levels not seen economists began counting all those numbers; they are rising, but not necessarily thriving. While overall buyer demand has been weak, distressed properties (foreclosures and short sales) have stood as the greatest competition, as many of those homes are in fact relatively new construction.

The good news is that mortgage delinquencies are falling, down to 5.41% of all mortgages outstanding in Q3 of 2012 from 5.88% a year ago, according to a new report from TransUnion.

“Continued declines in mortgage delinquency rates are a welcome sign and reflect that relatively more homeowners are able and willing to make their mortgage payments each month,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit. “However, we still have a long way to go to reach more ‘normal’ conditions of a delinquency rate in the 1-2 percent range for the U.S. average.”

(Read More: Let Real Estate Help Pay for Retirement)

The recovery, like all real estate, is becoming increasingly local, with the hardest hit markets, like Arizona and California recovering faster than New Jersey and Illinois. One disturbing finding from TransUnion: 49 percent of metropolitan areas saw quarterly improvement in their mortgage delinquency rates in Q3, down from 76 percent in Q2 and 73 percent in Q1.

The reason areas in Arizona, Nevada and California are improving so dramatically is because of high investor demand. Investors have driven supplies of distressed properties there so low that those markets are now seeing double digit home price increases. Even those higher prices are not driving investors away because there is still so much rental demand that rents are rising.

“Nationally, rental leasing volumes were up sequentially every month during the last two years,” according to CoreLogic’s November ‘MarketPulse’ report. “Over this same period, an average of 42,000 rentals were added to the stock of rental homes each month. This is more than twice the average flow that the U.S. was experiencing prior to the housing recovery.”

This investor-fueled recovery helps in the short term, but in the long term housing needs to be driven by a healthier economy, income growth and consumption and rising home prices, according to CoreLogic.

(Read More: Home Depot Raises Outlook as Housing Market Improves)

“We are in the second inning,” said Ara Hovnanian, CEO of Hovnanian Enterprises [HOV  Loading...      ()   ] on CNBC’s "Futures Now."

Too much uncertainty in the economy lies ahead, and housing lies in the balance.

Sector Watch: U.S. Homebuilders

—Toll Brothers [TOL  Loading...      ()   ]

—DR Horton [DHI  Loading...      ()   ]

—Hovnanian Enterprises [HOV  Loading...      ()   ]

—PulteGroup [PHM  Loading...      ()   ]

—Ryland Group [RYL  Loading...      ()   ]

—Lennar Corp [LEN  Loading...      ()   ]

—Beazer Homes USA [BZH  Loading...      ()   ]

—Meritage Homes [MTH  Loading...      ()   ]

—KB Home [KBH  Loading...      ()   ]

Questions?  Comments?  document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');

Follow me on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

View the original article here

In Miami Housing Market, Cash Really is King

Posted by Jonathan J. Miller -Friday, May 4, 2012, 8:16 AM
Comments Off

[click to expand]

I wanted to illustrate how little of the Miami housing market today is financed with a mortgage. And despite that, sales activity is trending higher. Counter intuitive but a reflection of its two drivers of demand: investor at the lower end and cash buyers, often foreign, at the upper end.

Any thoughts on the FHA, Conventional financing cross over back in 2Q 2011?

I’m slowly starting to build our Miami chart archive.

View the original article here

Will Fed's Mortgage Buying Juice the Housing Recovery?

Home prices are stabilizing, and new construction is bouncing back, but apparently the U.S. Federal Reserve isn't buying a bullish housing recovery. 

Its announcement Thursday that it would buy up to $40 billion in agency mortgage-backed securities every month, with no clear finish line, says loud and clear that the Fed thinks housing needs more stimulus. (Read More: Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates.)

Mortgage rates are already hovering near record lows, but mortgage applications, especially to purchase a home, have been weak. So many have refinanced already at low rates, and so many more are unable to refinance because of lack of home equity or high fees. 

As for home buying, the real growth in that area this year has been among investors on the low end, largely using all cash.

Supplies of foreclosed properties have been shrinking dramatically, as those investors swarm auctions and bid on bulk deals. (Read More: How Investors Are Skewing Home Price Recovery.)

The hot and still heating rental market offers potentially more rewards than the volatile stock market.

In turn, all that activity on the distressed end is pushing up home prices. While overall foreclosure activity is falling, we could see volumes of bank-owned properties for sale rising over the next few months, as banks look to take advantage of rising demand and prices.

We are already seeing spikes in foreclosures activity in states where these cases had been backed up in the courts.

“Bucking the national trend, deferred foreclosure activity boiled over in several states in August,” said Daren Blomquist, vice president of RealtyTrac. “In judicial states such as Florida, Illinois, New Jersey and New York, this was a continuation of a trend we’ve been seeing for several months now. The increases in Florida and Illinois pushed foreclosure rates in those states to the two highest in the country — supplanting the non-judicial states of Arizona, California, Georgia and Nevada. Previous to August, the nation’s top two state foreclosure rates have been from those four non-judicial states every month since December 2010."

As more of these properties come to market, investors will likely prevail, despite many potential owner occupants looking to get in on good deals. Again, this is because investors have the cash advantage. Even low mortgage rates won't help some potential buyers, because Fannie Mae and Freddie Mac are still increasing guarantee fees, which push rates higher. They could, however, mitigate some of the fee hikes.

"For everyday homeowners, QE3 should work to suppress mortgage rates at a time when they're artificially increasing. QE3 will offset the majority of the FHFA's new g-fees, and will help keep FHA loans affordable despite rising mortgage insurance premiums," argued Dan Green of Waterstone Mortgage.

But there is also plenty of uncertainty about the future of mortgage financing, depending on the outcome of the November election, not to mention action the current administration is taking to shrink Fannie Mae and Freddie Mac. (Read More: 'Wind Down' of Fannie, Freddie: 'Positive for Housing'?)

"One new wrinkle is the recent announcement that Fannie and Freddie will be required to shrink their own retained MBS portfolios faster than expected," noted Guy Cecala of Inside Mortgage Finance. "This could slightly dilute the impact of the Fed's action since its increased purchases may be offset by less GSE purchases."

To see the low interest rates are not the housing cure-all, one need look no further than weekly mortgage applications numbers, which have been lackluster of late to say the least. The one benefit could be in the refinance segment of the market, especially as there is a new push to broaden the administration's current refinance program for underwater borrowers. More refinances mean more money in consumers' pockets. Unfortunately the Democrat-led effort is unlikely to make its way into reality, given the rising Republican opposition as election day nears.

No question more and more Americans will be turning to the housing market this fall, as home ownership is now cheaper than renting in all of the 100 largest U.S. markets, "by a wide margin," according to a new report from Trulia.com. (Read More: As Housing Recovers, Will Apartment Boom End?)

What remains to be seen is how many potential buyers will be able to take advantage of these low rates, given the still tight lending standards that rule today's market.

—By CNBC's Diana Olick

Questions?  Comments?  document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick

View the original article here

Bloomberg Manhattan Luxury Housing Market Charts

Posted by Jonathan Miller - Thursday, August 9, 2012, 12:02 AM

A few years ago Bloomberg set indices for the Manhattan Luxury Housing market based on our data seen by their terminal subscribers. Kind of cool.

These charts show the reset when the credit crunch began circa 2007-2009. On a ppsf basis (top chart), the luxury market seems to have begun climbing again at the same trajectory that was seen pre-Lehman bankruptcy.

View the original article here

[The Housing Helix Podcast] Barry Ritholtz Part 2

Posted by Jonathan Miller - Sunday, September 23, 2012, 6:36 PM

[Subscribe to The Housing Helix Podcast for free on iTunes]

Here’s part 2 of my conversation with Barry Ritholtz. If you missed it, listen to part 1 first.

Don’t forget to check out Barry’s Big Picture Conference on October 10th. With the terrific speaker list it promises to be a great event.

Here is the 2nd part of a 2 part conversation (listen to part 1 here):

View the original article here