Friday, May 22, 2015

It's getting more expensive to be a renter

Rents have been rising at it's fastest pace up 4% compared to a year ago. Rental affordability continues to get worse and is outpacing home prices as there has been no slowdown since 2000. Even with high rents and incomes not keeping up with increases there is still a strong demand. 


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golden gate bridge 

Rents have increased faster than home values since last summer in San Francisco, according to Zillow

Rent checks are getting bigger.

Rents in April were 4% higher than a year before, according to a report from Zillow. That's the fastest increase in two years, outpacing home prices which rose by 3%, the report showed.

Rental affordability is getting worse, and it doesn't look like it will be improving anytime soon. "This is here to stay," said Svenja Gudell, senior director of economic research at Zillow. "We will continue to see rental increases, and affordability will worsen before it gets better."

Rents have been steadily rising since 2000 and unlike home prices, which took a hit when the bubble burst, there's been no disruption to slow rent prices, explained Gudell.

"Income hasn't kept up with rental increases. You are having to spend much more your monthly income on rent and it's a concern. It's a national concern."

Rents increased faster than home values in 20 of the 35 largest markets.
But even as rents climb, there is still strong demand for rentals, creating a housing crunch in some cities.

"Places hard hit like Seattle, San Francisco and Denver are having a hard time keeping up and building enough units to satisfy demand," said Gudell.

Renters in San Francisco face a nearly 15% rise in payments while rents in Denver went up 11.6% in April from last year, according to Zillow's Rent Index. Only two cities on the list experienced a drop in rent from last year: Chicago and Minneapolis.

Low mortgage rates make home buying an attractive option, but large rent checks can make saving for a down payment tough. On a national level, homeowners can pay an average of 15.3% of their income on mortgage payments each month, the report found, while renters will dish out roughly 30% on rent. Gudell said tenants in high-income areas can expect to pay closer to 50% of their income on rents.

"There are bunch of things keeping renters on the sidelines and that means usually the folks that would be normally making the switch to become homeowners are still taking up the rental units."
Here's how much rent prices rose in the largest markets in the country in April from last year, according to Zillow's Rent Index:

San Francisco, 14.9%
San Jose, 12.9%
Denver, 11.6%
Kansas City, Mo., 9.5%
Portland, Ore., 8.6%
Charlotte, N.C., 6.6%
Austin, Texas, 6.2%
Cincinnati, Ohio, 6.2%
Seattle, 6.2%
Houston, 6.1%
Detroit, 6.0%
Sacramento, 5.9%
Los Angeles, 5.6%
Dallas-Fort Worth, 5.5%
Phoenix, 5.4%
Boston, 5.2%
San Diego, 5.1%
Atlanta, 4.9%
San Antonio, Texas, 4.6%
St. Louis, 4.5%
Pittsburgh, 4.4%
Riverside, Calif. 4.2%
Tampa, Fla., 4.1%
New York, 3.4%
Miami-Fort Lauderdale, 3.2%
Philadelphia, 2.8%
Baltimore, 2.7%
Columbus, Ohio, 2.6%
Cleveland, Ohio, 2.4%
Las Vegas, 2.1%
Washington, D.C., 2.1%
Orlando, 2.0%
Indianapolis, 1.5%
Minneapolis-St. Paul, -0.3%
Chicago, -1.0%


Thursday, May 21, 2015

Sales of existing homes cool off again

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Median home prices have climbed 8.9% compared with a year ago. Sales have slowed due to tight inventory in many parts of the country. Homes are selling in an average of 39 days which is the fastest since June 2013 which is driving prices up. Demand is strong due to an improving job market and relatively low interest rates.

Sales of existing homes cool off again in April amid tight supply

Home sales 

By Tim Logan - May 21, 2015

The U.S. housing market's stop-and-start recovery slowed again in April as home sales dipped.

Sales of previously owned homes fell 3.3% in the month, according to figures released Thursday by the National Assn. of Realtors. The median price climbed 8.9% compared with a year ago, the 38th consecutive month of annual gains.

The Realtors group's chief economist, Lawrence Yun, pegged the sales dip -- which came one month after existing home sales hit their highest level in almost two years -- on tight supply in many parts of the country. Homes are selling in an average of 39 days, their fastest clip since June 2013, and that's driving prices up.

"April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices," Yun said. "Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace.

Demand from buyers remains strong, the Realtors say, fueled by low interest rates and the improving job market. That could cool off again, Yun warns, if prices continue to rise faster than incomes.
Sales in the West fell 1.7%, while prices climbed 10% from last year.



SoCal home sales, prices show gains

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Home prices climbing once again. It's once again a sellers market as inventory remains tight. Prices are up a moderate 6.2% with sales outpacing new listings.

SoCal home sales, prices show gains 

Home sales 

Prospective buyers meet their real estate agent at a house in Westchester. Home sales and median prices both climbed in Southern California in April.
(Genaro Molina / Los Angeles Times)

By Tim Logan - May 19, 2015

Southern California home prices and sales climbed in April for the second straight month after a period of stagnation.

The gains, however, may signal a tough summer ahead for buyers, who face a dwindling supply of homes in most areas.

The price and sales gains in April, reported Tuesday by real estate firm CoreLogic, followed a long cooling-off period after the torrid price gains of two years ago. This spring's market appears more healthy, with prices up a moderate 6.2% from April 2014, to a median of $429,000 across the six-county Los Angeles metropolitan area. Sales volume climbed 8.5%.

Those sales are outpacing the number of new listings, according to the California Assn. of Realtors.
In Los Angeles County, for instance, every home on the market would sell in 3.6 months at the market's current pace, down from a three-year high of 5.2 months in February — which was close to what economists consider a balanced market between buyers and sellers.

Shrinking supply could signal higher prices and fewer sales ahead.

“Unless this increase in prices encourages more people to come out and list their home, I don't see how it continues,” Selma Hepp, the state association's senior economist, said of the trend of rising sales.

Meanwhile, more buyers are crowding into the market, drawn by an improving economy and the prospect that historically low interest rates may soon rise, said Steven Thomas, who tracks the Southern California market at Reports on Housing.

“There's a bit of a flock to purchase right now,” he said. “It's like, ‘Everyone can go to Disneyland!' But the lines are really long. So not everybody gets to ride.”

A more extreme version of this dynamic played out two years ago, when supply was tight, bidding wars routine and prices climbing 20% or more on a year-over-year basis.

Two years ago, many homeowners couldn't list their homes for sale because they still owed more on their mortgage than the house was worth.

That's less of a problem now. CoreLogic estimated just 6.7% of mortgages were underwater in the fourth quarter of 2014.

That doesn't necessarily mean owners are itching to sell, Thomas said. The ups and downs of the last decade, he says, may have convinced more owners that staying in one house for a long time has some value.

“Everyone's just kind of staying put,” he said.

One traditional solution to tight supply has been new construction, but home builders remain cautious. Permits to build single-family homes fell 12% in Los Angeles and Orange counties in the first three months of the year, according to Census Bureau data. And while permits are up 7% in Riverside and San Bernardino counties, they remain far below the pace set during the Inland Empire's home-building heyday a decade ago.

Still, some builders see opportunities.

Griffin Residential, a century-old home builder based in Corona, had shifted into buying and renovating foreclosures to survive during the downturn. Now it has begun shifting back to its main business of building new again, with six developments, totaling about 200 units, in the pipeline in
the Inland Empire. Sales on the first one to open, in Yucaipa, have been strong, said Chief Executive Ian Griffin. He expects that will continue.

“We've had good sales, good demand,” he said. “I think it'll gradually increase.”
Listings of existing homes are also up significantly in the Inland Empire, unlike many areas of the region.

The number of listings in Riverside and San Bernardino counties is up 24% compared with a year ago, according to data from brokerage firm Redfin. Paul Reid, a Redfin agent in Temecula, said that's allowing buyers to take their time and find a house they truly want.

“When you're rushed and paying more than you want, it's not a fun experience,” he said. “But I think the inventory and relatively flat prices are giving people more confidence.”
Closer to the coast, though, the race is on.

Simon Mills, whose Mills Realty in Toluca Lake specializes in helping sellers, says he has seen well-priced homes get multiple offers fast. That's still driving up prices, maybe still too fast to be sustainable.

“It's not leading to a healthy market,” he said. “There needs to be more supply to feed the demand.”