Housing Is Healing: Good news on Two Fronts

Change is good, as it turns out, as I have made a change in companies after 8 years to Sotheby’s International Realty providing me (and my sellers) the unique opportunity of global marketing, very important in this resort and largely 2nd home market here on the peninsula.  So I look forward to being able to offer my clients additional services.

Asking Prices Showing Gains in 2012

For the first time in six years, sellers’ asking prices tracked by the Department of Numbers Website have gone positive on a year-to-year basis, another sign that the housing economy is slowly healing itself.

Sellers’ asking prices nationally first showed a positive year-over-year gain in December, and increased to 3.9 % as of March 5.  Locally, average sales prices are up 24% since 2010.

I wanted to see January’s data follow suit lest I prematurely announce a sign change only to have it reverse direction the following month. Of course there’s nothing that precludes that even with two months of positive year over year numbers, but it does tell me that the housing market is slowly healing itself.

As of March 5, 2012 there were about 858,688 single family and condo homes listed for sale in the 54 metro areas. The median asking price of these homes was estimated to be $224,322. Since this time last year, the inventory of homes for sale has decreased by 20.5 % and the median price has increased by 3.9 %.  Locally, our inventory is down 21% year to year.

The year to year inventory decline of roughly 15 % (which puts it at an all-time low for the series) offers additional supporting evidence. That’s not to say that we’ll be returning to rapid price appreciation any time soon; I certainly don’t foresee that.

The median asking price for homes in the U.S. peaked in June 2006 at $319,459 and is now $95,137 (29.8 %) lower. From a low of $211,844 in January 2011, the median asking price in the US has increased by $12,477 (5.9 %). 

In its January data, REALTOR.com, the massive listings site which also tracks asking prices, reported list prices were up 3.69 % on the year in the 146 metros it covers. The site reported the top four markets in terms of year over year increases were all in Florida.  Inventory was down 23.20 % there for the year.

Banks Loosen Credit Standards

Top of FormCapital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.  The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.  Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.  Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74 % reached in mid-2010, banks are now lending at 82 % LTV.  While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements.

In fact, Capital Economics points out that in November 8% of contract cancellations were the result of a potential buyer not qualifying for a loan.

 

© 2012 - Patty Ross.  KRXA Radio Show (Originally aired May 4th, 2012)