Low US housing inventory dampens market

The latest nationwide housing market reports are indicating that the housing recovery is being hit by low inventory, which is resulting in a drop in sales.

Low supply is blamed for a decrease of 1% in existing home sales in December, although sales were still at the second highest level since November, 2009, according to the National Association of Realtors (NAR).

NAR also reported that pending homes sales fell 4.34% in December, although it was 6.9% higher than December 2011.

New home sales in December fell 7.3%, but was 8.8% higher than December 2011, according to the Census Bureau and the Department of Housing and Urban Development.

Despite these numbers, total new home sales in 2012 were at the highest level seen in three years.

These results are being blamed on the inventory of homes for sale which dropped 8.5% from November and is at the lowest level since January, 2001. With inventories down 21.6% from December 2011, rise in home prices is occurring as home sellers are receiving multiple bids for their homes.

Less inventory and higher home prices may be turning the housing market around to a sellers market, which may also make it difficult for some home buyers to qualify for a mortgage. 

For the week ending January 18th, loan applications rose 7.0% on a seasonally adjusted basis and 8% on an unadjusted basis, according to the Mortgage Bankers Association. The Refinance Index was up 8% with refinances accounting for 82% of all applications. The seasonally adjusted Purchase Index increased 3% and reached the highest level since May, 2010.

According to the most recent survey of wholesale and direct lenders done by FreeRateUpdate.com, conforming mortgage rates have remained steady over the past week.

Current 30 year fixed mortgage rates are as low as 3.125%, 15 year fixed interest rates are as low as 2.375% and 5/1 adjustable mortgage rates are as low as 2.375%. These rates require that borrowers have good credit, and qualifications are necessary for approval.

The FHA Streamline Refinance with no Cash Out is one of the best refinance deals available to homeowners. The streamline does not require an appraisal, credit history or any other documentation as long as there is no cash taken out and the current mortgage has been paid on time.

The high priced property market has been on the increase which is creating more competition in the jumbo loan market.

Increasing by .125%, jumbo 30 year fixed mortgage rates are now as low as 3.500%. Jumbo 15 year fixed rates are as low as 2.700% and jumbo 5/1 adjustable interest rates are as low as 2.125%. But borrowers must have a history of excellent credit, and substantial assets must be available for the higher down payment and additional months of reserves.

The next post on this blog will examine the housing market conditions in Southeast Florida.

______________________________________________
Published by Realty Times, 30 January 2013, graph by Housing Tracker.

South Florida Housing Market in October

Sorry for being a bit later than usual with the October data; I had to revise the numbers not once but twice.

As you see below, like in previous months the economic oddity of low inventory paired with flat prices continued in October. 

Palm Beach asking prices for single family homes went through the roof, but caused nothing but frustrations – like in previous months, buyers were not impressed and sat on their hands.  

The PB county gap between sellers' expectations and buyers' willingness reached an astonishing 208%, the second highest score since 2008. In Jan-Mar '12 it was even higher at 213% – and then it didn't work either. As a result, absolute selling prices and SP per square feet dropped.

Broward county sellers were much more modest – the gap is at 155%, practically the same as in September, and promptly selling prices saw a slight increase. In the meantime, Miami-Dade county wobbled along, sort of a mix between Broward and Palm Beach. 

The table and the chart for single family home sales in Southeast Florida for the month of September:

South Florida home sales October 2011-2012, Source: SEF-MLS, ©tckaiser/modernsouthflorida.com

Slowly I am running out of ways to describe a flat market. And as the Holiday season is here, if past years are an indicator November and December are going to be even flatter (and more difficult to describe?).

Leaves me only to wish you a nice weekend – enjoy the Holiday Season, hopefully not in a mall.

South Florida plummeting residential inventory

Even as housing prices seem to bottom out in South Florida, supply has shrunk close to 2005 levels, according to Bloomberg's Businessweek.

BW reports that inventory has become so scarce that Realtors are resorting to unconventional methods to get listings. An agent based in Broward County began hosting happy hour soirees for potential sellers, a tactic that led to four listings, all of which landed buyers within a week.

“I tell them if they sell today or in two years, there won’t be a considerable amount of appreciation in their house and they might miss an opportunity to buy at the low end,” she said.

Southeast Florida total housing inventory. Source: SEF-MLS

Above chart includes all types of housing, including single family homes, townhomes and condominiums. Below are the current numbers for single family homes only for Palm Beach, Broward and Miami-Dade counties for the month of April:

Southeast Florida single family housing inventory, April'11 - April'12. Source: SEF-MLS

[Businessweek via The Real Deal, own statistics compiled from SEF-MLS]

Fort Lauderdale leads Inventory Decline

Housing inventories declined month-to-month

The streak of declining inventories of homes listed for sale nationwide continues into its eighth month. Inventories in January fell 6.6 percent to 1.77 million last month from December 2011, the Wall Street Journal reported from a Realtor.com tally.

The largest year-over-year decline occurred in Fort Lauderdale, Fla, in January. Compared with one year earlier, listings were down by a whopping 55%.

Other cities which saw large annual declines were Miami, Phoenix, and Bakersfield, Calif., where the number of listings fell by nearly half. Both New York and Philadelphia ranked among cities with the smallest declines: 1.7 percent and 3 percent, respectively.

Month-over-month, four Florida-based markets saw increases between December 2011 and last month. On the other hand, both San Francisco and Boston showed respective 16 and 10 percent declines since December.

The Wall Street Journal said that low housing inventories are a normal part of any housing recovery. But it remains to be seen whether these figures show true signs of improvement in the market. [WSJ]