In the height of the spring homebuying season, California’s housing market shrugs off housing shortage as sales and median home price bound higher in June

 

– Existing, single-family home sales totaled 443,150 in June on a seasonally adjusted annualized rate, up 3.3 percent from May and 2.4 percent from June 2016.

– June’s statewide median home price was $555,150, up 0.9 percent from May and up 7.0 percent from June 2016.

– The median number of days on the market fell to 22.4 days in June from 27.1 days a year ago, the fastest pace since May 2004, when it took 21.9 days to sell a home.

– At the regional level, the San Francisco Bay Area, Inland Empire, and Los Angeles metro area all registered year-to-year sales increases of 6.1 percent, 10.4 percent, and 8.3 percent, respectively.

LOS ANGELES (July 17) – Amid the lowest housing inventory levels of the year, existing home sales in California took off in June to their highest pace in nearly four years as existing home sales and median home price recorded strong gains on both a monthly and annual basis for the second straight month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California not only remained above the 400,000 benchmark for the 15th consecutive month, they totaled a seasonally adjusted annualized rate of 443,150 units in June, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The June figure was up 3.3 percent from the revised 428,890 level in May and up 2.4 percent compared with home sales in June 2016 of a revised 432,880. Year-to-date sales are running 3.2 percent ahead of last year’s pace.

“A lack of available homes for sale continues to be the largest single factor influencing California’s housing market,” said C.A.R. President Geoff McIntosh. “With active listings 13.5 percent lower than last June, we’ve now experienced a full two years in which active listings have fallen on a year-over-year basis and the lowest inventory level this year. Would-be sellers aren’t listing their homes as many of them would also face an inventory challenge if they were to turn around and buy another property.”

The statewide median price remained above the $500,000 mark for the fourth straight month and reached the highest level since August 2007. The median price was up 0.9 percent from a revised $550,080 in May to reach $555,150 in June, and was 7.0 percent higher than the revised $518,830 recorded in June 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

“While June home sales improved at a healthy pace, the growth in sales was primarily in the mid- to higher-end price ranges. In fact, sales in the lower price ranges were down significantly as a tight supply of affordable homes continues to plague the market and impede the sales of starter homes,” C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “This factor has disproportionately pushed prices higher at the lower end of the market, leading to eroding affordability that either prevents or delays first-time buyers from getting on the housing ladder.”

Other key points from C.A.R.’s June 2017 resale housing report include:

• The June sales increase was wide reaching as every major region in the state posted an increase over the previous month and year. The Inland Empire experienced the largest year-over-year sales gain with a 10.4 percent increase in existing home sales from last June, followed by an increase of 8.3 percent in the Los Angeles Metro Area, and a 6.1 percent rise in the San Francisco Bay Area.

• New statewide active listings have declined for a full two years straight in June, falling 13.5 percent from a year ago.

• The increase in sales, coupled with the double-digit decline in active listings, lowered June’s available housing supply. C.A.R.’s Unsold Inventory Index fell from 2.9 months in May to 2.7 months in June. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate. The index stood at 3.2 months in June 2016.

• At the county level, 39 of 51 reported counties experienced a drop in the unsold inventory index compared to a year ago. San Mateo (1.3 months), Santa Clara (1.4 months), and Alameda (1.6 months) counties had the lowest inventory, followed by San Francisco (1.7 months) and Contra Costa (1.9 months) counties.
• The median number of days it took to sell a single-family home was unchanged from May at 22.4 days but was down from 27.1 days in June 2016.

• C.A.R.’s sales-to-list price ratio* was 100 percent of listing prices statewide in June, 100 percent in May, and 99.5 percent in June 2016.

• The average price per square foot** for an existing, single-family home statewide was $270 in June, $267 in May, and $252 in June 2016.
• San Francisco County had the highest price per square foot in June at $909/sq. ft., followed by San Mateo ($848/sq. ft.), and Santa Clara ($662/sq. ft.). Counties with the lowest price per square foot in June included Del Norte ($114/sq. ft.), Lassen ($131/sq. ft.), and Siskiyou ($133/sq. ft.).

• Mortgage rates continued to dip further since the beginning of the year. The 30-year, fixed-mortgage interest rate averaged 3.90 percent in June, down from 4.01 percent in May but up from 3.57 percent in June 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates edged up in June to an average of 3.14 percent from 3.12 percent in May but was up from 2.78 percent in June 2016.

Graphics (click links to open):

• Calif. home sales highest in four years.
• Calif. median home price highest since 2007.
• Sales at lower end impacted by low inventory.
• Calif. price per square foot highest since 2007.
• Calif. sales to list price ratio.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.

**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 39 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #
June 2017 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

June-17 Median Sold Price of Existing Single-Family Homes Sales
State/Region/County Jun-17 May-17 Jun-16 Price MTM% Chg Price YTY% Chg  Sales MTM% Chg  Sales YTY% Chg
CA SFH (SAAR) $555,150 $550,080 r $518,830 r 0.9% 7.0% 3.3% 2.4%
CA Condo/Townhomes $451,450 $440,890 $413,260 r 2.4% 9.2% 5.1% 2.0%
Los Angeles Metro Area $500,240 $488,720 $473,670 r 2.4% 5.6% 8.6% 8.3%
Inland Empire $346,380 $340,710 $319,100 1.7% 8.5% 9.7% 10.4%
San Francisco Bay Area $908,740 $899,730 $841,960 1.0% 7.9% 10.4% 6.1%
San Francisco Bay Area
Alameda $900,000 $862,000 $803,000 4.4% 12.1% 11.9% 4.8%
Contra-Costa $660,000 $653,000 $625,000 1.1% 5.6% 13.9% 8.2%
Marin $1,272,500 $1,315,000 $1,218,500 -3.2% 4.4% 7.4% 6.0%
Napa $685,000 $673,250 $619,000 1.7% 10.7% 3.3% -8.0%
San Francisco $1,469,000 $1,501,680 $1,350,000 -2.2% 8.8% 3.3% -5.6%
San Mateo $1,433,750 $1,480,000 $1,306,250 -3.1% 9.8% 10.4% 9.4%
Santa Clara $1,182,500 $1,200,000 $1,050,000 -1.5% 12.6% 8.1% 9.4%
Solano $420,000 $415,000 $390,000 1.2% 7.7% 6.3% -1.9%
Sonoma $627,250 $625,000 $608,000 0.4% 3.2% 16.6% 10.8%
Southern California
Los Angeles $548,220 $492,040 $502,190 11.4% 9.2% 8.2% 8.5%
Orange County $795,000 $795,000 $754,000 0.0% 5.4% 4.0% 5.6%
Riverside County $385,000 $375,000 $360,000 2.7% 6.9% 6.6% 8.7%
San Bernardino $274,330 $272,200 $245,220 0.8% 11.9% 15.5% 13.4%
San Diego $612,750 $605,000 $560,000 1.3% 9.4% 5.7% 6.1%
Ventura $666,520 $657,890 $662,500 r 1.3% 0.6% 22.2% 1.0%
Central Coast
Monterey $624,500 $617,000 $537,000 1.2% 16.3% 19.3% 2.2%
San Luis Obispo $556,000 $569,000 $525,000 -2.3% 5.9% -2.8% -7.3%
Santa Barbara $767,500 $725,000 $742,000 5.9% 3.4% 8.5% 28.9%
Santa Cruz $860,000 $875,000 $800,000 -1.7% 7.5% 46.7% 20.0%
Central Valley
Fresno $260,000 $250,000 $241,000 4.0% 7.9% 10.9% 7.0%
Glenn $210,000 $200,000 $205,000 5.0% 2.4% 13.6% -3.8%
Kern $229,450 $230,000 $239,700 -0.2% -4.3% 15.1% 0.5%
Kings $230,000 $211,000 $207,000 9.0% 11.1% 12.5% 25.6%
Madera $279,000 $255,000 $230,380 9.4% 21.1% 40.0% -4.9%
Merced $250,100 $243,500 $213,500 2.7% 17.1% -2.8% -9.2%
Placer $472,000 $460,000 $430,000 2.6% 9.8% 1.1% -0.6%
Sacramento $347,000 $342,100 $329,000 1.4% 5.5% 5.7% -0.7%
San Benito $535,000 $520,000 $511,500 2.9% 4.6% 21.3% -13.6%
San Joaquin $340,000 $331,950 $315,000 2.4% 7.9% 10.3% 11.0%
Stanislaus $289,000 $290,000 $276,000 -0.3% 4.7% 2.2% -1.6%
Tulare $225,450 $225,000 $210,000 0.2% 7.4% 13.1% 17.4%
Other Calif. Counties
Amador $337,500 $350,000 $319,000 -3.6% 5.8% -18.6% -5.9%
Butte County $306,500 $308,000 $275,000 -0.5% 11.5% -0.6% -7.8%
Calaveras $310,000 $295,000 r $315,000 5.1% -1.6% 0.0% -3.5%
Del Norte $165,000 $220,000 $198,750 -25.0% -17.0% -18.8% -50.0%
El Dorado County $499,000 $469,000 $461,550 6.4% 8.1% 14.0% -3.4%
Humboldt $302,500 $289,500 $284,000 4.5% 6.5% 5.9% -7.7%
Lake $259,500 $240,000 $259,000 8.1% 0.2% 2.1% 18.1%
Lassen $193,000 $192,500 $166,000 0.3% 16.3% 66.7% -7.4%
Mariposa $300,000 $271,000 $264,000 10.7% 13.6% 0.0% 5.3%
Mendocino $445,000 $410,000 $350,000 8.5% 27.1% -19.0% -34.7%
Mono $482,850 $627,500 $664,250 f -23.1% -27.3% -16.7% 0.0%
Nevada $380,000 $389,000 $352,000 -2.3% 8.0% 1.3% -3.8%
Plumas $297,000 $285,000 $270,000 4.2% 10.0% 52.9% 48.6%
Shasta $269,900 $255,000 $243,000 5.8% 11.1% 17.6% 5.1%
Siskiyou County $235,000 $211,500 $215,000 11.1% 9.3% -13.0% 20.5%
Sutter $277,000 $283,000 $251,000 -2.1% 10.4% 10.3% -10.3%
Tehama $187,500 $203,000 $235,000 -7.6% -20.2% -7.7% 11.6%
Tuolumne $287,000 $299,000 $245,000 -4.0% 17.1% 12.8% 22.2%
Yolo $445,000 $453,450 $399,900 -1.9% 11.3% 10.0% 15.5%
Yuba $275,470 $255,570 $250,000 7.8% 10.2% 23.6% 23.6%

r = revised
NA = not available

 

June 2017 County Unsold Inventory and Time on Market
(Regional and condo sales data not seasonally adjusted)

June-17 Unsold Inventory Index Median Time on Market
State/Region/County Jun-17 May-17 Jun-16 Jun-17 May-17 Jun-16
CA SFH (SAAR) 2.7 2.9 3.2 22.4 22.4 27.1
CA Condo/Townhomes 2.2 2.4 2.7 r 21.2 21.0 27.3
Los Angeles Metro Area 2.9 3.2 3.6 r 24.6 24.5 43.9 r
Inland Empire 2.9 3.2 3.7 26.4 27.1 45.2
San Francisco Bay Area 1.8 2.1 2.3 20.4 20.0 21.1
San Francisco Bay Area
Alameda 1.6 1.7 2.1 17.8 17.7 17.7
Contra Costa 1.9 2.1 2.2 18.6 18.6 19.0
Marin 2.4 2.6 2.5 27.4 26.2 27.7
Napa 3.8 3.8 3.9 48.8 43.9 47.5
San Francisco 1.7 1.9 2.0 21.2 19.9 24.3
San Mateo 1.3 1.7 2.0 r 17.6 17.5 18.3
Santa Clara 1.4 1.7 2.1 r 17.9 17.6 18.6
Solano 2.3 2.3 2.7 32.7 32.0 34.1
Sonoma 2.7 3.0 3.1 39.4 35.7 41.5
Southern California
Los Angeles 2.7 3.0 3.2 22.5 22.3 38.8
Orange 3.0 3.1 3.6 23.5 22.2 50.5
Riverside 2.8 3.2 3.6 26.8 28.1 48.9
San Bernardino 3.0 3.4 3.9 25.8 25.5 37.1
San Diego 2.5 2.6 3.1 20.3 20.4 21.4
Ventura 4.1 5.0 4.8 r 44.0 46.4 50.2 r
Central Coast
Monterey 3.5 4.2 3.9 r 24.3 24.0 24.9
San Luis Obispo 3.8 3.6 3.9 23.2 23.7 27.7
Santa Barbara 3.7 4.0 4.5 25.4 24.0 32.5
Santa Cruz 2.9 4.0 3.7 r 20.5 21.4 20.5
Central Valley
Fresno 2.9 3.1 3.3 21.5 22.8 25.1
Glenn 3.6 3.7 3.2 28.9 40.7 41.9
Kern 2.9 3.3 3.3 24.5 25.1 26.1
Kings 2.7 3.0 3.2 27.1 23.8 25.9
Madera 4.4 6.4 4.9 24.3 45.5 62.0
Merced 3.0 2.7 2.7 21.8 23.4 25.2
Placer 2.3 2.2 2.6 20.2 19.3 20.8
Sacramento 2.0 2.0 2.4 18.3 18.3 18.7
San Benito 3.1 3.7 2.8 r 22.8 23.0 25.5
San Joaquin 2.2 2.3 2.7 20.2 20.2 21.3
Stanislaus 2.5 2.4 2.6 20.5 21.1 20.3
Tulare 3.1 3.5 3.3 26.6 26.8 28.2
Other Calif. Counties
Amador 5.6 3.8 5.0 23.5 29.5 24.1
Butte 3.0 2.9 3.4 22.2 19.3 27.4 r
Calaveras 5.4 4.8 5.3 27.8 27.1 44.0
Del Norte 13.0 9.4 5.8 126.4 80.3 100.7
El Dorado 4.1 4.2 3.9 24.6 23.9 27.8
Humboldt 5.1 5.0 3.9 23.7 23.4 23.3
Lake 4.9 4.6 6.0 26.4 37.8 66.6
Lassen 7.2 10.9 NA 68.3 64.6 85.9
Mariposa 4.2 4.2 5.1 33.9 26.0 115.2
Mendocino 7.1 5.8 5.6 57.4 72.6 56.1
Mono 11.7 8.4 NA 121.0 130.7 125.8
Nevada 3.5 3.2 3.5 21.1 24.0 22.9
Plumas 7.3 10.4 12.7 87.4 125.4 75.5
Shasta 3.8 4.3 4.1 23.8 23.7 28.2
Siskiyou 6.2 5.1 8.2 32.8 31.0 45.5
Sutter 2.5 2.4 2.0 20.6 22.0 24.5
Tehama 4.8 4.3 5.3 46.8 39.7 55.7
Tuolumne 5.3 5.0 6.6 31.6 41.6 38.3
Yolo 2.0 2.2 2.5 19.3 19.6 20.3
Yuba 2.0 2.3 2.6 20.9 20.9 19.4

r = revised
NA = not available

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Quick & Easy Avocado Ideas and How To Freeze Leftovers

Quick & Easy Avocado Ideas and How To Freeze Leftovers

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We love avocados!

A box of bliss was delivered to my door last week – a case of Bravocado Avocados from my friends at the California Avocado Commission.  With the peak season being from May though September, California avocados are always on hand for my summer entertaining and I’ve been known to use avocados in everything from guacamole and “green eggs” to salads and smoothies.

Avocado Corn Relish

In fact, this latest windfall of ripe avocados was a reward for winning first place in the 2014 All-American Recipe Contest.You’ve might have seen my recipe for  Mom’s Black Bean Avocado & Corn Salad, it’s a favorite on Pinterest and has been popular pick at potlucks and family get-togethers.  The judges said it was packed with flavor and “combines sweet corn, black beans, bell pepper, red onion, tomatoes, jalapeno, cilantro, lime juice, vinegar and spices with fresh avocado for a flavor combination that stands strong all on its own, but goes perfectly with grilled meats or tortilla chips as a dip. Put this one on your must-try list stat”

There are just so many delicious things you can do with a case of creamy, dreamy avocados – but two of my favorite ways to eat them are just so simple. And, surprise – these quick and easy recipes not straightforward guacamole (although, if I could jump in a bathtub of mashed avocado with lime and jalapeno, I would).

Bacon Avocado Stuffed Tomatoes: These cute little cups made out of super sweet Campari tomatoes are the perfect vessels for avocado blended with lime, jalapeno, cilantro – okay, I guess that is guacamole. But, sprinkle on some crumbled bacon and serve on a bed of lettuce with black beans and corn and you have a light and healthy summer meal.

Salad with Guacamole Stuffed Tomatoes

Avocado and Lime on the “Half Shell”: It doesn’t get any easier than this – slice your perfectly ripe an creamy avocados in half lengthwise and pull out the seed. Sprinkle with sea salt and squeeze fresh lime – and eat with a spoon!

avocado halves with lime

If, in the rare instance, you find yourself with too many avocados to eat before spoiling sets in, you CAN freeze them. Earlier in the year, I did a tutorial on how to freeze guacamole — check out the link. You can also freeze avocado slices with a pretty good outcome too! The texture is not quite as creamy when you thaw the frozen slices, but it’s still yummy and so much better than tossing your ripe avocados out.

A Seller’s Market? Consumers Express Diverging Sentiment on Home Buying and Selling in May

June 07, 2017

A Seller’s Market? Consumers Express Diverging Sentiment on Home Buying and Selling in May

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 0.5 percentage points in May to 86.2. The slight decrease can be attributed to decreases in three of the six HPSI components being larger on net than the three increases. The net share of Americans who reported that now is a good time to buy a home reached a record low after falling 8 percentage points, while the net share who reported that now is a good time to sell a home reached a record high, increasing 6 percentage points. This is only the second time in the survey’s history that the net share of those saying it’s a good time to sell surpassed the net share of those saying it’s a good time to buy. Americans also expressed greater belief that mortgage rates will go down over the next 12 months, with that component increasing 5 percentage points. Finally, the net share of consumers who think home prices will go up fell by 5 percentage points this month.

“High home prices have led many consumers to give us the first clear indication we’ve seen in the National Housing Survey’s seven-year history that they think it’s now a seller’s market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, we continue to see a lack of housing supply as many potential sellers are unwilling or unable to put their homes on the market, perhaps due in part to concerns over finding an affordable replacement home. Prospective homebuyers are likely to face continued home price increases as long as housing supply remains tight.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2017 Home Purchase Sentiment Index (HPSI) decreased in May by 0.5 percentage points to 86.2. The HPSI is up 0.9 percentage points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a home fell 8 percentage points to 27%, reaching a new survey low
  • The net percentage of those who say it is a good time to sell increased by 6 percentage points to 32%, rising from last month’s decline to a new survey high.
  • The net share of Americans who say that home prices will go up decreased by 5 percentage points in May to 40%.
  • The net share of those who say mortgage rates will go down over the next twelve months rose 5 percentage points to -52%, following the trend from last month.
  • The net share of Americans who say they are not concerned about losing their job fell 6 percentage points to 71%, back near the level seen in March.
  • The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 5 percentage points to 18% in May.

ABOUT FANNIE MAE’S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

ABOUT FANNIE MAE’S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 60 percent of respondents via their cell phones (as of October 2014). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The May 2017 National Housing Survey was conducted between May 1, 2017 and May 23, 2017. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the May 2017 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

June 07, 2017 A Seller’s Market? Consumers Express Diverging Sentiment on Home Buying and Selling in May Matthew Classick 202-752-3662 WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 0.5 percentage points in May to 86.2. The slight decrease can be attributed to decreases in three of the six HPSI components being larger on net than the three increases. The net share of Americans who reported that now is a good time to buy a home reached a record low after falling 8 percentage points, while the net share who reported that now is a good time to sell a home reached a record high, increasing 6 percentage points. This is only the second time in the survey’s history that the net share of those saying it’s a good time to sell surpassed the net share of those saying it’s a good time to buy. Americans also expressed greater belief that mortgage rates will go down over the next 12 months, with that component increasing 5 percentage points. Finally, the net share of consumers who think home prices will go up fell by 5 percentage points this month. “High home prices have led many consumers to give us the first clear indication we’ve seen in the National Housing Survey’s seven-year history that they think it’s now a seller’s market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, we continue to see a lack of housing supply as many potential sellers are unwilling or unable to put their homes on the market, perhaps due in part to concerns over finding an affordable replacement home. Prospective homebuyers are likely to face continued home price increases as long as housing supply remains tight.” HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS Fannie Mae’s 2017 Home Purchase Sentiment Index (HPSI) decreased in May by 0.5 percentage points to 86.2. The HPSI is up 0.9 percentage points compared with the same time last year. The net share of Americans who say it is a good time to buy a home fell 8 percentage points to 27%, reaching a new survey low The net percentage of those who say it is a good time to sell increased by 6 percentage points to 32%, rising from last month’s decline to a new survey high. The net share of Americans who say that home prices will go up decreased by 5 percentage points in May to 40%. The net share of those who say mortgage rates will go down over the next twelve months rose 5 percentage points to -52%, following the trend from last month. The net share of Americans who say they are not concerned about losing their job fell 6 percentage points to 71%, back near the level seen in March. The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 5 percentage points to 18% in May. ABOUT FANNIE MAE’S HOME PURCHASE SENTIMENT INDEX The Home Purchase Sentiment Index (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier. ABOUT FANNIE MAE’S NATIONAL HOUSING SURVEY The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 60 percent of respondents via their cell phones (as of October 2014). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The May 2017 National Housing Survey was conducted between May 1, 2017 and May 23, 2017. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae. DETAILED HPSI & NHS FINDINGS For detailed findings from the May 2017 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

How high can Southern California housing prices go? Sky’s the limit, experts say

How high can Southern California housing prices go? Sky’s the limit, experts say

While housing prices continue to rise in Southern California, experts say there is no sign of a bubble at this time. (ANA VENEGAS, ORANGE COUNTY REGISTER)
While housing prices continue to rise in Southern California, experts say there is no sign of a bubble at this time. (ANA VENEGAS, ORANGE COUNTY REGISTER) 

All hair stylist Erin Bond wants is a decent two-bedroom condo in Orange County, preferably in Huntington Beach.

But all she can afford is $400,000 to $420,000.

In a county where the median price of a condo in May was almost $500,000, she’s not sure there’s anything in her price range she can live with.

“It’s pretty disappointing,” said Bond, 35. “You can’t even buy anything that low. I mean, there are things out there, but they’re not nice.”

So Bond’s plan is to wait until the market goes down again. And if it doesn’t, “I would continue to rent.”

A lot of homebuyers are facing Bond’s conundrum.

For 62 straight months, Southern California home prices have gone in one direction. Up.

Five years ago, you could snatch up a median-priced condo in Orange and Los Angeles counties for about $280,000, 76 percent less than today’s prices. A median-priced house cost $323,000 in L.A. County five years ago and $495,000 in O.C., about $260,000 less than today’s prices in both counties.

That was then.

What should a buyer do now?

Will prices keep rising? Or as Bond thinks — along with some real estate agents — are prices close to the top?

We asked a half-dozen economists and industry analysts what the future holds for home prices in the region. Among their answers:

Southern California home prices aren’t about to drop. In fact, they believe prices will keep rising for two more years, at least, and possibly longer.

The market isn’t in a bubble — yet — although bubble talk is starting to “raise its ugly head” at cocktail parties, one economist said. Some analysts are saying Southern California home prices are showing signs of being overvalued.

If you’re thinking about buying a home, now just might be the time to act — provided you don’t overextend yourself and you plan to live there awhile.

Here are five key questions about where Southern California home prices are heading in the future.

Are we at the peak?

Not one of the economists we interviewed thinks we are, at least not for entry-level homes.

Luxury homes, priced at $2 million and up, may have reached a price peak and are facing an oversupply of listings, analysts said.

Nominal home prices have surpassed pre-recession highs in Orange and Los Angeles counties. Riverside and San Bernardino counties are about 18 percent below their price peaks. But none of those counties has reached pre-recession peaks in inflation-adjusted dollars.

One back-of-the-envelope calculation shows if home prices were to keep rising at the current appreciation rate, and inflation were to continue at the current rate, Orange County’s median home price won’t get back to the pre-recession peak after inflation for about two to three years.

Another fact to consider: During the last market run up, Southern California home prices increased year over year for 126 consecutive months, or 10½ years. That’s twice as long as the current streak in home price gains.

Lastly, analysts say home prices aren’t rising that much.

Price increases averaged 6.3 percent in Southern California in the past year, ranging from a low of 5.4 percent In Orange County to a high of 7.9 percent in San Bernardino County.

Christopher Thornberg, a founding partner of Beacon Economics and former UCLA economics professor, noted that’s only slightly greater than the rate of inflation. Pat Veling, president of Brea-based Real Data Strategies, believes the true rate of inflation is closer to 4-5 percent.

How much longer will home prices go up?

Two years at least, most economists interviewed said. Possibly longer.

How much longer prices rise depends on what happens to the overall economy.

“At some point, there’s going to be a correction, but I don’t see it on the horizon,” said Veling. “Sellers want more than sellers got six months ago.”

Projections by the California Association of Realtors show a gradual decrease in home price appreciation over the next few years, said Oscar Wei, a senior economist for the group. For example, CAR projects prices will go up 5 percent statewide in 2017, 4 percent in 2018, and 2.5 percent in 2019.

Home prices are forecast to rise 5 percent to 6 percent this year in Orange County, while rising between 8 percent and 9 percent in the Inland Empire, Wei said.

“But I don’t think in the next couple of years you’re going to see a dip in price,” he said.

Assuming the Gross Domestic Product continues to grow at 2.5 percent and mortgage interest rates stay below 4.5 percent, Southern California home prices could be going up at 6 percent a year for the next six to seven years, Thornberg said.

At 6 percent a year, the median home price could reach almost $700,000 in Southern California by 2023, $500,000 in Riverside County, $800,000 in Los Angeles County and nearly $1 million in Orange County.

“Given the supply shortage and the strength of the California economy, (that’s) perfectly reasonable,” Thornberg said. He added: “Reasonable here means it’s not a bubble and they won’t collapse.”

Are we in a bubble now?

No.

“To me, there’s nothing like these numbers that smells (like a bubble), that walks like a bubble. … We don’t have nearly enough housing to meet the demand,” Thornberg said. “The reason that (2005) was such a huge nasty bubble is because a lot of people were borrowing money they couldn’t afford to pay back. … Now, credit is hard to get. Credit is locked down.”

Statistics show vast differences between the pre-recession housing bubble and today’s market, Wei added.

Consider: Los Angeles and Orange counties had an 11½-month supply of homes for sale in the spring of 2007 compared with under four months available this year. Riverside County had an 8½-month supply of listings for sale, vs. just under four months today; San Bernardino County had a 16½-month supply, vs. four months today.

In California as a whole, 43 percent of borrowers had second mortgages in 2006, vs. 4.8 percent last year.

California’s median down payment was 11.8 percent of the purchase price in 2006, vs. 18.6 percent last year.

“We don’t have as many people over-leveraging (their homes),” Wei said.

G.U. Krueger, president of Krueger Economics, said talk about a housing bubble “is starting to raise its ugly head.”

Some of that is “cocktail party talk” and some analysts are questioning whether the Southern California housing market is overvalued.

“It doesn’t mean there is a bubble. The problem with this talk is it could affect expectations,” Krueger said. “People will start to question whether to pay the prices the housing market is asking for. There could be more negotiation going on. … But I don’t think it will result in home price declines.”

CoreLogic data suggest that Orange and Riverside counties are overvalued and Los Angeles County is modestly overvalued, said Khater, the firm’s deputy chief economist.

U.S. home prices and rents are high relative to incomes and are back to 2003, pre-bubble levels, he said. Down payments also are higher today nationally and most likely in California than at the peak of the last housing boom in 2004-06.

“More importantly, prices continue to rapidly increase in the lower end of the price distribution, where borrowers are most stretched,” Khater said. “In Los Angeles, lower end prices are up 8 percent to 10 percent on a year-over-year basis, compared to 4 percent to 6 percent for the upper end.”

When is the next recession?

Not for at least two years, economists said.

“Over the next two years, the recession probability is very low,” said UCLA economics professor William Yu, a member of the team producing the UCLA Anderson Forecast. “But beyond two years, that is very difficult to say.”

A recent report by Newport Beach-based investment firm Pimco determined the probability of a recession in the next year is less than 10 percent. But, the probability is much higher for a recession in the next five years, said the company’s annual “secular outlook.”

“If history is any guide, we believe the probability of a recession sometime in the next five years is around 70 percent,” the outlook said.

A major global calamity — like a new Korean War, a messy breakup of the euro, or a surge in oil prices — could trigger a recession, but forecasting exactly when is an extremely murky business, said Joachim Fels, a Pimco managing director and global economic adviser.

“Everybody knows that it is impossible to forecast the ups and downs of the business cycle several years ahead,” Fels wrote in 2016.

Is it too late to buy a home?

Veling, the Brea industry analyst and consultant, has advised renters for the past four years to get into the housing market while interest rates and prices still are low.

“All those who did not act are in a world of hurt,” Veling said. But, he added, it’s not too late.

“Anybody who buys houses today will probably be fine,” provided they treat it as an asset, he said. “It still boils down to buy what you can afford.”

While it’s definitely more expensive to buy a home today than it was a few years back, the cost of buying will be even greater down the road, added Wei, the CAR economist.

“If you wait, home prices probably will go up about 8 percent or so in the next couple of years. Plus you’re probably going to see some increase in mortgage rates,” he said.

For example, Wei predicted mortgage rates will go up half a percentage point this year and half a percentage point next year.

“You’re most likely seeing an increase of 10 percent or 12 percent in your mortgage payment” if you wait, Wei said.

Seasonal price fluctuations mean home shoppers do get a bit of a breather during the latter half of the year, when homebuying slows and prices dip slightly.

For example, Southern California home prices for deals signed in December averaged 3 percent less than deals signed the preceding spring, CoreLogic figures show. In Orange County, prices averaged 2.5 percent less.

“If you see something you are interested in and you can afford it — maybe not a single-family home, but a condo or a townhome — (buy it) and start building equity,” Wei said. “I wouldn’t wait.”

Complete Staging Tips

60 different tips to follow when staging a home for sale - Infographic.

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Daily market update: June 21, 2017

We’ll add more market news briefs throughout the day. Check back to read the latest.

Most recent market news

Wednesday, June 21

‘Consumer resilience’ boosts May existing-home sales

  • May existing-home sales rose 1.1 percent to a seasonally adjusted annual rate (SAAR) of 5.62 million — up from a downwardly revised 5.56 million in April.
  • This month’s sales pace is 2.7 percentage points above May 2016 and is the third highest SAAR sales pace over the past year.
  • The median existing-home price for all housing types in May rose 5.8 percentage points to $252,800, which marks the 63rd consecutive month of year-over-year gains.
  • Single-family home sales were at a SAAR of 4.98 million — a 1.0 percentage point month-over-month increase and a 2.7 percentage point year-over-year increase. The sales price for single-family homes increased by 6.0 percentage points to $254,600.

“The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level,” NAR Chief Economist Lawrence Yun said. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”

Mortgage rates

News from earlier this week

Tuesday, June 20

30-year fixed mortgage rates fall slightly; current rate is 3.68 percent, according to Zillow Mortgage Rate Ticker

  • The 30-year fixed mortgage rate on Zillow® Mortgages is currently 3.68 percent, down three basis points from this time last week. The 30-year fixed mortgage rate fell Tuesday, then hovered between 3.65 percent and 3.73 percent for the rest of the week before settling at the current rate.
  • The rate for a 15-year fixed home loan is currently 2.96 percent, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 2.94 percent.
  • Below are current rates for 30-year fixed mortgages by state. Additional states’ rates are available at: http://www.zillow.com/mortgage-rates.
State Current30-Year Fixed Rate (6/20/17) Last Week’s 30-Year Fixed Rate (6/13/17) Change in Basis Points
California Mortgage Rates 3.67% 3.72% -5
Colorado Mortgage Rates 3.71% 3.72% -1
Florida Mortgage Rates 3.67% 3.69% -2
Illinois Mortgage Rates 3.71% 3.73% -2
Massachusetts Mortgage Rates 3.67% 3.70% -3
New Jersey Mortgage Rates 3.68% 3.71% -3
New York Mortgage Rates 3.80% 3.76% +4
Pennsylvania Mortgage Rates 3.67% 3.68% -1
Texas Mortgage Rates 3.65% 3.69% -4
Washington Mortgage Rates 3.71% 3.74% -3

“Despite some volatility following the release of weak inflation data and relatively dovish comments from Fed officials after the Central Bank raised short-term interest rates, mortgage rates were flat last week,” said Erin Lantz, vice president of mortgages at Zillow. “We expect less volatility this week, though several Fed speeches and housing data could move markets slightly.”

Email market reports to press@inman.com.

The Road to Homeownership

The Road to Home Ownership #Infographic

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