To help the economy succeed, the Fed is certainly using its ability to the max. Coming out of the FOMC meeting Wednesday, September 21st, the Fed announced “Operation Twist” – a strategy of selling its short-term securities to buy long-term bonds to drive down long term interest rates, especially for mortgages. This latest Fed effort to help the housing market is great news for anyone thinking of buying a home, as mortgage rates should stay very very low.

Wednesday’s other great news for housing was August Existing Home Sales came in UP 7.7%, to an annual rate just the other side of 5 million units, the best reading since March. This dropped the supply of existing homes to 8.5 months. Tuesday, August Housing Starts were down 5%, to a 571,000 unit annual rate. But, hey, dealing with a hurricane and floods, builders across a good part of the East were hesitant to break ground. Better news came with building permits – UP 3.2% for the month and now UP 7.8% versus a year ago. As for the long dormant consumer, here are some more good economic signs. Same-store sales were UP 3.4% versus a year ago, as measured by the International Council of Shopping Centers. Redbook Research reported an even better 4.1% boost in same-store sales. Then, some economists said they expect consumer spending to climb at a 1.5%–2% annual rate in Q3. The economy may not be booming, but it’s not double-dipping back into recession either.

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Jim’s Corner – Market Updates is a post from: Stonecrest Homes

The following article was written by John Gittlesohn “Phoenix and Atlanta Will Be Best New-Home Markets in U.S., Barclays Says”.

Phoenix, where foreclosures have surged and prices plummeted since the U.S. housing bubble burst, and Atlanta are the best potential markets for the sale of newly built homes, Barclays Capital said in a report today.

Atlanta has the potential for 47,317 new houses a year, followed by Phoenix with 46,485 and Dallas with 33,997, Jeff Meli, Vincent Foley, Cedric Morris and Robert Tayon, analysts with Barclays, wrote in the study. Phoenix leads 16 metro areas examined for potential revenue with $4.45 billion in new home sales. It’s followed by Washington with $3.94 billion and San Diego with $3.31 billion.

“The reality is that housing is a region-by-region story,” Foley said in a telephone interview from New York.“And most of the big public homebuilders are reasonably positioned to benefit from an upturn because they’re in the right markets.”

The projection for revived home construction in Phoenix, which the Barclays analysts called “surprising,” is based on the city’s growing population and speedy absorption of distressed real estate, according to the report. Barclays gave no time frame for its sales forecasts, which will occur after the cities “clear themselves of distressed inventory and excess supply,” it said.

“Regions that have pushed foreclosures through the pipeline quickly should see demand for new homes earlier than those that have allowed their backlog to grow,” Meli, Foley, Morris and Tayon wrote.

Second-Highest Foreclosures

Phoenix-area home prices are 56 percent below the June 2006 peak, according to the S&P/Case-Shiller index, compared with a 32 percent decline for the 20 cities tracked by the index. The Phoenix metropolitan area had the second-highest rate of foreclosure filings in the first six months of this year, behind Las Vegas, with one in 28 households receiving a notice compared with a national average of one per 111 homes, RealtyTrac Inc. reported July 28.

“After falling to a low of 1.1 percent in 2009, population is expected to grow 2.6 percent annually in Phoenix for the next five years,” according to the Barclays report. “Such renewed inflows should support demand for new homes, leading to a recovery in several of the top 15 largest builders that have a presence in the region.”

For the full article click here.

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Jim’s Corner – Atlanta Expected to be One of Best New-Home Markets in US is a post from: Stonecrest Homes

The following is an article written by Jon Dienhart and Ken Lee.

Despite the continuing trend of new homes comprising a

shrinking share of total home sales, builders have managed to strategically focus their efforts and firm up pricing on a price per square foot basis.  Our data feature this week, courtesy of Housing IntelligencePro, illustrates that after hitting a trough of $126 per square foot in 2009, new homes so far in 2011 are selling for $148 per square foot, a level not seen since 2007.  Meanwhile, the share of total home sales captured by new homes continues to shrink, falling to only 8.6% so far this year.  Typical resales have also declined from 63% in 2010 to 60% in 2011.  Both new and resales have been offset by the continual stream of distressed property sales,  with REOs growing from 27% of the market in 2010 to 31% so far this year, with pricing in the difficult-to-compete-with $90 per square foot range.

April comes to a close with a couple more bits of decent housing news.  Last week, data on both the existing homes market and the U.S. construction market were more positive and this week’s release of new homes data completed the trifecta.  New home sales increased 11% from record low levels in February to reach a seasonally-adjusted annual pace of 300,000 units in March, although they are still down year-over-year.  All the other major indicators for the new homes market also incrementally improved.  We continued to saw a drawdown in inventory levels while median new home prices firmed.  While positive, these improvements are again coming off very low levels.

Not all housing news was positive.  Purchase mortgage applications declined this past week after reaching its highest levels since December.  Last week, we mentioned that the jump in the Mortgage Bankers Association’s Purchase Index was a positive sign heading into the spring home-buying season.  However, new lending guidelines, which include higher premiums, on FHA loans resulted in a sharp drop in government purchase mortgage applications.  New FHA guidelines may hurt demand this coming home-buying season as less borrowers will qualify for these loans.

In broader economic news, equity markets continued to rally this week despite rising gasoline prices, an unexpectedly large increase in initial jobless claims, and slower GDP growth.  The uptrend comes as a bit of a surprise as gasoline prices near record-highs have heightened concerns over inflation.  Most indicators monitoring inflation and price levels have shown a steady rise over the past couple of months.  Exploding precious metals prices and persistently high commodity costs are warning clouds that not all is well with the economic recovery.

The Economy
Advance estimates for first quarter gross domestic product showed that economic growth slowed to begin the year.  The U.S. economy grew at only 1.8% during the first quarter, much weaker than the 3.1% pace in the final fourth quarter report.  This is the slowest pace of growth since the second quarter of last year.  However, this marks the seventh straight quarter that the U.S. economy has expanded.  Weaker government and consumer spending in the first quarter attributed to the slowdown in economic growth.

First-time unemployment claims surged by 25,000 to a seasonally-adjusted 429,000 in the week ended April 23rd from an upwardly revised figure of 404,000 last week.  This is the third straight week that initial jobless claims have remained above the 400,000 level.  It is also the highest the claims figure has been in three months which may suggest that improvement in the U.S. labor market is slowing.

Personal incomes in March increased to $13,042.4 billion compared to an upwardly revised figure of $12,975.4 billion in February.  This is the sixth straight monthly increase for personal incomes.  Personal incomes are up 5.3% from $12,389.4 billion in March of last year.  This is the strongest year-over-year increase for personal incomes in any month since June 2008.

Consumer confidence increased to 65.4 in April compared to a reading of 63.8 in March.  Although the consumer confidence index has posted increases in six out of the past seven months, it still remains at historically low levels.  The present situation index increased from the previous month to a reading of 39.6 from 37.5 last month.  This is the highest the present situation index has been since November 2008.  The expectations index increased to a reading of 82.6 from 81.3 in the previous month.

The number of people surveyed that plan to buy a home within the next 6 months increased to 5.5% from 4.1% while the portion that plans to buy a new home increased to 1.2% from 0.4% last month.

Housing Market
The National Association of Realtors’ Pending Home Sales index, which is a forward-looking indicator of housing activity based on sales contracts signed, increased 5.1% from the previous month to a reading of 94.1 in March from a reading of 89.5 in February.  This is the second straight month that the pending home sales index has increased.

New home sales in March rebounded from the record all-time lows that were set last month in February.  Sales activity jumped 11.1% from the previous month in March to a seasonally-adjusted annual rate of 300,000 units.  This is the first month since December that new home sales have recorded an increase.  New home sales for the previous three months were also revised higher by a combined 32,000 units.  However, new home sales are still down 21.9% compared to the same period last year although it is important to note that sales activity last year was artificially driven higher by the federal homebuyer tax credit.

New home prices also firmed up in March as demand increased.  Median new home prices increased to $213,800 in March from a February figure of $207,700.  New home prices are still down 4.9% from this time last year but 4.2% higher than they were this time two years ago.  This is the second straight month that median new home prices have recorded year-over-year declines.  The increase in new home prices pushed the new home affordability index lower to 59.7% in March from 60.6% in February.

New home inventory levels continued to decline in March to new record all-time low levels.  New home inventories declined to 182,000 units on a non-seasonally adjusted basis.  New home inventory on a non-seasonally adjusted basis have not recorded a monthly increase since May 2007.  New home inventory on a seasonally-adjusted basis declined to 183,000 units in March compared to a February figure of 185,000 units.  New home inventory on a seasonally-adjusted basis have not recorded an increase in 14 months.

National average mortgage declined from the previous week to 4.78% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on April 28th.  This is the second straight week that rates have declined.  They are now back down to their lowest levels since mid-March.  The 30-year fixed-rate mortgage has still averaged below 5.0% for 10 consecutive weeks.

In the week ending April 22nd, the MBA’s seasonally-adjusted purchase index plunged 13.61% from the previous week and was down 29.39% compared to the same time last year.  This is the lowest the purchase has been since the first week of March.  Purchase applications fell mainly due to a sharp drop in government purchase applications as new FHA lending standards, which included higher premiums, went into effect this past week.

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Jim’s Corner – New Prices Firm Despite Volume is a post from: Stonecrest Homes

The below information was received from a colleague of Jim’s, Michael Notartomaso of The Hilton Head Group, Inc.

…Those of us who think we can participate in a housing market recovery sooner rather than later just got welcome support from some industry experts. As reported by Fortune on CNNMoney.com, “After four years of plunging home prices, the most attractive asset class in America is

housing.” Research firm Metrostudy, which tracks new-home inventories for 65% of the U.S. market, reports that the steep drop in construction over the last few years has reversed the supply glut, with starts now well below closings. The firm believes the low inventory should eventually lead to higher prices.

The Fortune posting also cited a new study from a major bank that found homeowners now pay only 9.8% of their income in after-tax mortgage, tax and insurance payments, down from 17.2% at the 2007 peak. This means it’s now cheaper to pay a mortgage and the other major homeowner costs than it is to rent the same house in 28 out of 54 major markets. It further reports that where existing home inventories average close to seven months, a modest boost in demand will result in solid gains in home prices and new construction. This could happen quickly in markets now showing good job growth. Moody’s Analytics forecasts prices going up three to four points faster than inflation over the next few years in virtually all such markets. They see home prices rising with rents, with apartments in short supply. Of course, the housing recovery still requires job creation and consumer confidence back to normal, but we finally seem headed in that direction.

Listen to the experts and buy a Stonecrest Home today!

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Jim’s Corner – Info That Hits Us Where We Live is a post from: Stonecrest Homes

The following is an exerpt from Fortune Finance, daily breaking financial news.

Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

So let’s state it simply and forcibly: Housing is back.

Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction that so amazes [Mike] Castleman [Founder and CEO of MetroStudy]. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.

Of course, home prices are low and home construction is weak for a reason: incredibly low demand. For our scenario to play out, America will need a decent economy, with job creation and consumer confidence continuing to claw their way back to normal.

One big fear is that today’s tight credit standards will chill the market. But we’re really returning to the standards that prevailed before the craze, and those requirements didn’t stop prices and homebuilding from rising in a good economy. “The credit standards are now at about historical levels, excluding the bubble period,” says Mark Zandi, chief economist for Moody’s Analytics. “We saw prices rising with fundamentals in those periods, and it will happen again.”

To see why, let’s examine the remarkable shift in home affordability. A new study by Deutsche Bank measures affordability in two ways: first, the share of income Americans are paying to own a home. And second, the cost of owning vs. renting. On the first metric, the analysis finds that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That’s down from 17.2% at the bubble’s peak in 2007, and by far the lowest number in the Deutsche Bank database, going back to 1999. The second measure, the cost of owning compared with renting, should also inspire potential buyers. In 28 out of 54 major markets, it’s now cheaper to pay a mortgage and other major costs than to rent the same house. What’s most compelling is that in all of the distressed markets, owning now wins by a wide margin — a stunning reversal from four years ago. It now costs 34% less than renting in Atlanta. In Miami the average rent is now $1,031 a month, vs. the $856 it costs to carry a ranch house or stucco cottage as an owner. (For more, see The top 10 cities for home buyers).

To read the full article and why you should buy now, click here.

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Atlanta is ranked as #1 on the 10 Best Cities for Home Buyers - Buy Today!

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Jim’s Corner – Real Estate: It’s Time to Buy Again is a post from: Stonecrest Homes

The following excerpts are from Bowden’s Beat March 2011, the official blog of Bowden’s Market Barometer- a newsletter focusing on residential and resort development trends.

“Reported national economic indicators include an increase in new orders, manufacturing and production; an estimated GDP increase of 2.9% in Q410, up from 2.6% in Q3, and higher than anticipated by the Congressional Budget Office; an increase in retail spending of 5.5% in the 50 days prior to Christmas — a significant and unexpected jump from an anticipated 3% to 4% acceleration; and Wells Fargo, the nation’s largest mortgage originator, gleaned a 21% increase in Q4 income to record earnings of $3.41 billion.  To add to this rosy glow, the DOW closed above 12,000 at this writing.

Optimism is palpable among both large and small US companies. The Business Roundtable’s economic outlook index rose to 101, up from 86 in Q3,  (index readings higher than 50 tend to coincide with economic expansion) and the National Federation of Independent Business (NFIB) reports an increase in its index from 91.7 in October, to 93.2 in December. Nearly half of all respondents reported that they would be adding to payrolls this year, while 80% anticipate increases in sales over the next six months. The small business advocate also reports that Citigroup, Inc., which boasts a majority of the world’s largest corporations as clients, has begun to target US companies with less than $20 million in annual sales.  The New York-based financial institution has plans to hire about 200 employees by the end of 2011 to court smaller businesses. 

According to the Association of Foreign Investors in Real Estate (AFIRE), foreing interest in U.S. real esate is at a ten-year high. More than 70% of AFIRE members report plans to increase their US commercial RE investments in 2011. While the sweet spots are presently confined to New York City and Washington, DC, multi-family housing is one of the strongest investments on the radar that is not geographically contained. And in spite of predominantly cautious momentum, the housing industry appears to be on the road to recovery.

Jim Cramer of Mad Money fame prognosticates that home value depreciation has ended and notes that “the bears who keep saying that the market would fall off a cliff after the tax credit — they were just plain wrong.”  His comments were in reference to significant increases in new, existing and pending residential sales in December.  Other forecasters are finally making a definitive turn toward sustainable, nationwide recovery. 

Hanley Wood Market Intelligence reports builders pushing prices in 18 of the top 100 markets in 2010; and in all 18 markets, builders outsold banks.  Research consistently indicates that Americans prefer new homes to resale properties. NAHB’s chief economist, David Crowe, recently predicted that new home sales will improve by more than 20% in 2011; Fannie Mae predicts that housing starts will triple by 2013; and the Joint Center for Housing Studies at Harvard University estimates the need for 16 to 18 million new housing units over then the next ten years.  The forecast is based on immigration patterns, the need to replace obsolete housing stock, and demand for second homes.

Michael Notartomaso, president of The Hilton Head Group, Inc., shared the results of a new USA Today/Gallup poll in which 58% of respondents said they believe that 2011 will be better than 2010.  Younger Americans and self-identified Democrats are substantially more likely to express optimism than are older Americans or those who identify as independents or Republicans.  Nearly 70% of respondents ages 18 to 34 say 2011 will be better compared to 58% aged 35 to 54, and 51% of those 55 and up.  

Optimism is gathering steam, but the nuances of an individual market or target segment require diligent attention in order for that optimism to translate to success.  Here’s hoping for productive due diligence and a profitable year!”

For further perspective, visit Bowden’s Market Barometer.

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Jim’s Corner – Optimism Is Palpable is a post from: Stonecrest Homes