Category: Market Conditons

Chicago Market Summary

Mobility Magazine of Worldwide ERC, June 2016

By Kevin P. Maloney

The northeastern Illinois market is made up of Cook County, which contains the city of Chicago, and five surrounding “collar counties” of Lake, McHenry, DuPage, Kane and Will. The city of Chicago, with a population of around 2.7 million, is the area’s primary economic engine.  This report focuses on Cook and DuPage counties, as they are the most populous counties and see the greatest amount of relocation activity.  These two counties contain more than 6 million residents and account for around 80 percent of the population in the northeastern Illinois market.

LOOKING BACK

Housing prices in the northeastern Illinois market increased from 1997 through 2007. Some areas saw market peaks in 2007, while others continued to see appreciation through the third quarter of 2008.  The Great Recession hit in earnest in September 2008 and brought value declines to all markets.  However, the magnitude of the decline varied significantly.  The greatest percentage losses were typically seen in communities that entered the recession with a median home value that was below average for the region.  Some communities began to see values move upward in 2012.  However the most severely impacted areas did not see an upward trend in value until early 2014.

market-snapshot

The rate of recovery in Cook County for detached home values varies dramatically from one area to another. High-demand areas in the city of Chicago have seen the strongest recovery.  For example, the Lincoln Park neighborhood had a median detached home value of $1,425,000 in 2007.  The median value in this neighborhood dropped 11 percent by 2011.  However, by 2015 the median value was more than 11 percent above the prior peak in 2007.  Median detached home values above the prior peak in 2007 can also be seen in other areas of the city of Chicago, such as West Town and Lincoln Square.  These locations all have strong transportation links to the central business district, and residents have rising levels of disposable income.  The availability of vacant land in the high-demand areas of the city of Chicago has kept additions to the detached home supply at a relatively low level, and most building is on an infill basis.  The city of Chicago is seeing the greatest competition from new construction in the upper end of the market (homes priced above $1.5 million).

 

None of the suburban areas of Cook County have seen median home values push back up to the prior peak levels. The highest-demand areas in suburban Cook County typically remain approximately 8 percent down from the peak.  The worst-hit communities often still have median home values down more than 40 percent from the peak.  An example of a community that continues to be profoundly impacted by the great recession is the town of Cicero, which had a median detached home value for the year of 2015 that was 45 percent below the median value in 2007.

The DuPage County market shows the same broader pattern as Cook. Communities that entered the recession with high median home values typically saw a lower percentage drop during the recession.  For example, the city of Naperville had a median detached home value of $452,000 in 2007.  The median value fell 16 percent below the 2007 number by 2011 but recovered to only 9 percent below the prior peak by 2015.  The village of Hanover Park, on the other hand, had a median home value of $238,000 in 2007.  The median value was 46 percent below the peak by 2011 and by 2015 the median value remained 27 percent below that of 2007.

statistical-snapshot

The condominium market in DuPage and Cook counties has seen appreciation flatten over the past year. Condominium construction remains limited throughout the entire market area.  A large number of rental units are being built in the city of Chicago, and these units may ultimately be converted to condominiums.  However, any major addition to supply will be at least three years down the road.  The limited levels of new supply in most market segments should keep values stable to moderately increasing over the next 12 months.  Higher-priced attached properties face the greatest downside risk, as much of the impending supply is focused at the upper end of the market.

In Cook County, distressed sales (short sales, foreclosures, and bank-owned properties) made up 42 percent of the total sales volume reported in the MLS for the year 2011. Distressed sales in Cook County for 2015 fell to 22 percent of the total sales volume.  In DuPage County, 34 percent of the total sales volume consisted of distressed transactions in 2011.  The number slipped to 15 percent for 2015.  While the numbers above clearly show that the Chicago region is heading in the right direction, the number of distressed sales still remains drastically higher than normal.

LOOKING FORWARD

The hope is that the dynamic growth seen in some areas of the region will exert a positive secondary impact on communities that continue to struggle. While major political and economic challenges still occur, the city of Chicago clearly remains the Midwest’s cultural and economic hub.

Kevin P. Maloney is a certified general appraiser with Maloney Appraisal, Inc., in Chicago and is a member of RAC (Relocation Appraisers & Consultants). He can be reached at +1 773 281 6013 or maloneyappraisal@comcast.net.

Salt Lake City Market Summary

Mobility Magazine of Worldwide ERC, April 2016

By Don Mueller, CRP, RAC Member

Northern Utah, aka the Wasatch Front, is a metropolitan region in the north-central part of the state, consisting of a chain of cities and towns stretched along the Wasatch Range from approximately Nephi in the south to Brigham City in the north.  Roughly 80 percent of Utah’s population resides in this region, as it contains the major cities of Salt Lake City, Provo-Orem, West Valley City, West Jordan, and Ogden.

The Wasatch Front is long and narrow.  To the east, the Wasatch Mountains rise abruptly several thousand feet above the valley floor, climbing to their highest elevation of 11,928 feet (3,620 m) at Mount Nebo.  The area’s western boundary is formed by Utah Lake in Utah County, the Oquirrh Mountains in Salt Lake County, and the Great Salt Lake in northwestern Salt Lake, Davis, Weber and southeastern Box Elder counties.  The combined population of the five Wasatch Front counties totals approximately 2,125,000 according to the 2008 census estimate.

Although most residents of the area live between Ogden and Provo – a distance of 80 miles – which includes Salt Lake City proper, the fullest built-out extend of the Wasatch Front is 120 miles long and an average of five miles wide.  Along its length, the Wasatch Front never exceeds a width of approximately 18 miles because of the natural barriers of lakes and mountains.

The region on the other side of the Wasatch Range, including cities such as Park City, Morgan, Heber City, and Midway, sometimes referred to as the Wasatch Back, has recently shared in the rapid growth of the region.

Utah’s first settlers of European decent were the Mormon pioneers, who migrated from the Midwest in 1847, led by Brigham Young, the prophet and president of the Church of Jesus Christ of Latter-Day-Saints.  Upon entering the Salt Lake Valley, Young made this declaration:  “This is the place.” (Some say he said, “This is the right place.”) The famous statement still holds true today in regard to real estate values and investment in the Wasatch Front.

LOOKING BACK

The trends noted here are for Salt Lake County but also reflect the adjoining Wasatch Front area.  A report in February by the Salt Lake Board of Realtors notes that real estate agents in Salt Lake County sold 13,323 existing single-family homes last year.  This is a nine-year high surpassed only before the Great Recession with 15,317 homes sold in 2005 and 15,283 the following year.  The combined value of single-family homes sold in 2015 rose 22 percent over the previous year, to $4.1 billion.   The upward trend in housing prices persisted last year, logging an increase of almost 7 percent over 2014 for a single-family home, to a $272,000 median sales price, and 8 percent for a multifamily unit, to $189,000.market-at-a-glance

“There is still room for moderate house-price increases, provided mortgage rate increases are gradual,” says Cheryl Acker, president of the Salt Lake Board of Realtors.  The board report characterizes real estate in Salt Lake County as “still relatively affordable” for qualified buyers, as a family earning the median household income and devoting 30 percent of its income to a mortgage payment could afford 56 percent of the homes sold in the county in 2015.

LOOKING FORWARD

The Salt Lake Board of Realtors expects an 11 percent gain in total residential home sales of all types this year in Salt Lake County, to more than 19,000 units.  An increase of 5 to 7 percent in the median single-family home price, to $290,000, is predicted as housing demand continues to exceed available inventory.statistical-snapshot

The number of homeowners with negative equity has now dropped to 2.5 percent of all mortgages.  In previous years, homeowners were locked in to their current home and could not move up.  Hence, in 2015 the move-up market was again supporting higher levels of sales, which put upward pressure on prices.

Another benefit of improving market conditions is the huge reduction in the sale of distressed homes (short sales and foreclosed properties).  For five years, the “fire sale” prices of distressed homes dragged down overall housing prices.  In 2011, one-third of all homes sold in Salt Lake County were distressed properties; it’s no coincidence that 2011 was the year of the largest decline in prices, 9.5 percent.  The near elimination of short sales and REO sales by 2015 was also a contributing factor to the acceleration of price increases in 2015.

There is no sign of a bubble – both prices and sales are sustainable.  There is very little inventory, and prices are increasing.  The market is free of REO and short sales.  From a market perspective, Utah and Salt Lake County seems to be “the right place” to buy and invest in a single family home.

Don N. Mueller, CRP, is a professional appraiser and real estate consultant based in Ogden, Utah, and a member of RAC (Relocation Appraisers and Consultants). He can be reached at +1 801 479 6123 or donm@mstar.net.

Mortgage Rates Remain Near Long Term Lows

“THIS IS GOOD NEWS FOR THE HOUSING MARKET AND FOR THE SALES OF TRANSFEREE’S HOMES.” Michael Cook, MAI, SRA, RAC Past President

Mortgage News Daily, February 1, 2016

Mortgage rates were in line with the best levels in 8 months as of last Friday.  Although they moved slightly higher to begin the new week, today is still the 2nd best day in the past 8 months.  Lenders continue quoting conventional 30yr fixed rates of 3.75% for the most part with 3.625% being the next most prevalent rate.

In general, rates are taking cues from the big picture economic considerations and global financial market turmoil.  Low oil prices and volatile stock markets have been helping.  Most of the more focused economic data has been falling short of its usual potential to move markets.  An exception will certainly be made for this Friday’s Employment Situation report, which is the most important economic report of any given month.  In the bigger picture, the trend toward lower rates continues, but any day that rates bounce slightly higher (like today) can mark the end of that trend.

mortgage rate1

30 Year Fixed Rate Mortgage

mortgage rate2

15 Year Fixed Rate Mortgage

 

View the full article at: Mortgage News Daily

Southern California Market Summary

Mobility Magazine of Worldwide ERC, December 2015

By Craig Gilbert, CRP, SRA, RAC Founding Member

Southern California consists of eight counties, from Santa Barbara in the north to San Diego in the south, and from the Pacific Ocean on the west to Nevada and Arizona on the east. This report focuses on the five most prominent counties:  Los Angeles, Orange, San Diego, Riverside, and San Bernardino. These are also the five most populous counties in the state, with a total combined population of almost 21 million.

LOOKING BACK

Housing prices increased throughout Southern California from approximately 1997 through mid-2006. The market peaked at varying times geographically and by price range. This peak was followed by a steep decline in prices. The credit crisis of 2008 and lack of credit for potential homebuyers, together with a weakened economic base during the Great Recession, led to a high number of foreclosures and short sales. The Inland Empire (Riverside and San Bernardino counties) was among the hardest hit and experienced the greatest percentage of decline in prices. No areas of Southern California were completely immune from economic problems. Some of the older, lower-priced, lower-income coastal areas also experienced significant price depreciation compared to more affluent areas nearby. Housing prices bottomed between 2009 and 2011, differing by geographic location and price range. The coastal and higher-income areas fared better than the Inland Empire and the lower-income and lower-priced areas. The coastal areas had a lower percentage of decline and recovered more quickly. This was related primarily to employment growth and stability. All counties experienced price appreciation from 2012–13 to 2015. Current prices are still below previous market peak prices, and none of the counties in Southern California has yet achieved median prices equal to or higher than previous market highs.Market at a Glance

The annual percentage of change in median housing prices for all counties peaked from 2013 to 2014, with annual increases between 10.3 percent in Orange County and 19.2 percent in San Bernardino County. However, although housing prices have continued to appreciate, the rate of appreciation has decelerated significantly in all counties, from 0.5 percent in San Diego County to 7.8 percent in San Bernardino County for the most recent period.

LOOKING FORWARD

The California Association of Realtors has been computing a housing affordability index (HAI) for all counties since 1991. The HAI, which represents the percentage of households that can afford to purchase the median-priced home based on traditional assumptions, is a function of median price, income, down payment, mortgage rates, and current underwriting standards.

The least affordable period for all areas (2005–2007) was just before the market peaked. The indices ranged from 8 percent in San Diego County to 19 percent in San Bernardino County. The most affordable period for all areas (2011–2012) occurred just as housing prices bottomed. The indices ranged from 39 percent in Orange County to 78 percent in San Bernardino County. The indices have subsequently decreased significantly and currently range from 21 percent in Orange County to 56 percent in San Bernardino County.  All areas have been in a transition from more affordable to less affordable, which is primarily a function of price appreciation.

The most significant economic factor has been a substantial improvement in the economic base. There have been positive changes in both employment and unemployment over the past five years, according to the U.S. Department of Labor. Total number of employed in these five Southern California counties increased by 11 percent. The unemployment rates have declined by approximately 50 percent as employment simultaneously increased. The official unemployment rate in the Los Angeles–Orange County metro area declined from 12.3 percent to 6.4 percent, in the Inland Empire from 13.8 percent to 6.8 percent, and San Diego from 11.1 percent to 5.1 percent.Statistical Snapshot

Household income, however, has been relatively stagnant in most areas, with some exceptions. This factor is quite significant with regard to direction and magnitude of future housing prices. A number of corporations in California have been moving to lower-cost areas of the U.S. or offshoring work, in part due to unaffordable housing and the high cost of living and doing business in the state. Toyota Motor Co., for example, is in the process of moving its U.S. headquarters from Torrance (Los Angeles County) to Plano, Texas, along with about 3,000 medium- to high-value-added marketing and finance jobs.

Mortgage rates were at historic lows around the fourth quarter of 2012 (about 3.3 percent), increased slightly through the third quarter of 2013 (about 4.5 percent), decreased through the second quarter of 2015 (about 3.7 percent), and have subsequently increased slightly to about 4.0 percent. Rates will likely remain within 50 basis points of current levels for the near future. This is a favorable factor for buyers and sellers. The favorable year-round climate also has historically contributed to housing demand and desirability of Southern California.

Housing at or near the median price, and those not more than about 20 percent above the median, will likely continue to appreciate in the foreseeable future in most areas. Higher-priced properties, primarily about 25 percent or more above median, are likely to remain stable at best, with a more probable decrease in price due to current and impending oversupply.

The rate of price appreciation has recently decelerated due to a decline in affordability, especially in the higher-priced areas. Housing inventory of 2.5 months (San Diego) suggests a slightly undersupplied market. Housing supply and demand are more balanced in Los Angeles, Orange, and Riverside counties, at 3.3 to 3.9 months’ supply. San Bernardino appears to be moving from a balanced to an oversupplied market at 4.4 months’ inventory. The availability of mortgage financing is a significant factor in the mortgage market. Underwriting standards are quite tight to avoid the pitfalls that led to the 2008 credit crisis.

Craig Gilbert, CRP, SRA, is a professional appraiser and real estate consultant based in Huntington Beach, California, and a co-founder of RAC (Relocation Appraisers and Consultants). He can be reached at +1 714 847 8087 or craig@craiggilbert.net.

Texas home sales and prices up about 7%

 

gallery_03REAL ESTATE CENTER:  Latest Multiple Listing Service (MLS) data show Texas home sales had a 7% year-over-year increase last month while the median price was up 7.4%.
According to August 2015 Texas MLS data, 29,685 homes were sold last month, almost 1,900 more than a year ago but about 1,500 fewer than in July.
The median price was $203,300 compared with $189,300 a year ago and $204,700 in July.

According to Standard & Poors/Case-Shiller, Dallas-area home prices were up 7.5 percent in December compared with 4.6 percent nationwide.

Dallas Home Prices 2014 Chart

Preowned home prices in the Dallas area ended 2014 with a 7.5 percent gain from 2013, according to the latest Standard & Poor’s/Case-Shiller Home Price Index.

December’s price increase was slightly lower than the 7.7 percent annual rise reported in November. It’s in line with year-over-year price appreciation during the second half of last year.

“As long as we have a tight sellers’ market, it’s going to be in that area,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University. “The good news is it’s not 12 or 15 percent. “We can live with this for a while.”

The Dallas-area price rise was well above the 4.6 percent nationwide appreciation rate in December.

DallasC-S Home Prices 2014 Chart had the fourth-highest increase among the 20 major markets that Case-Shiller surveys for its monthly report.

“Movements in home prices show clear regional patterns,” said S&P’s David Blitzer. “The western half of        the nation plus Miami and Atlanta enjoyed year-over-year increases of 5 percent or more.

“San Francisco and Miami were the strongest,” he said. “Dallas, Denver, Las Vegas and Atlanta also       experienced solid gains.”

San Francisco prices were up 9.3 percent from December 2013 levels. Prices in Miami were up 8.4 percent.

Dallas-area home prices are now almost 13 percent higher than they were before the recession and have risen more than 30 percent since early 2012.

“The affordability is coming down,” Gaines said. “It’s particularly hitting the low- to moderate-income groups.”

Case-Shiller’s study tracks over time the prices of specific single-family homes in each metropolitan area.  The index survey does not include condominiums and townhouses.

The median price of homes sold in North Texas by real estate agents through their multiple listing service was 11 percent higher in December from a year earlier.

Source: Dallas Morning News

Dallas Area Home Prices Continue to Gain

 

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Steve Brown’s recent article in the Dallas Morning News, “Dallas home prices continue to gain with 7.6% rise over last year” reported the Dallas area is among the top five markets in the country for home price increases in the latest Standard & Poor’s/Case-Shiller Home Price report.

The article also quotes, Metrostudy’s David Brown to say “The Dallas-Fort Worth market is heading into 2015 with even less inventory than was in the market a year ago.”

The Dallas-Fort Worth Metroplex encompasses 13 counties, 9,286 square miles and is a very large housing market.  There are several RAC members in the Dallas-Fort Worth area, so if you need information concerning a specific sub-market, please do not hesitate to give them a call.

 

 

 

 

 

RAC Member Gregg Mitchell Provides Market Overview to Omaha Realtors

gregginomaha
Source: Omaha Area Board of REALTORS

The leading Omaha, Nebraska appraiser and RAC member Gregg Mitchell speaks to a packed house on market conditions in what has become a must-attend annual event for Omaha Realtors.

To read more about the event and Gregg’s views, go to the Omaha Area Board of Realtors publication Focus (page 3).

CoreLogic: Dallas home prices up 11% in March

Texas is one of five states seeing home prices higher than before the recession. (CoreLogic)

Dallas-area home prices were up 11 percent in March from a year earlier, according to a new report from CoreLogic Inc.

The Dallas-area gain was about the same as the 11.1 percent nationwide increase, CoreLogic said Tuesday.

A shortage of homes for sale in many markets – including North Texas – is fueling large home price gains.

“This supply and demand imbalance continues to drive home prices higher, even though transaction volumes are lower than expected,” CoreLogic economist Mark Fleming said.

The biggest annual home price increases in March were in Riverside, Calif., 20.9 percent, and Los Angeles, 17.1 percent.

“Colorado, the District of Columbia, North Dakota, South Dakota, Texas and Wyoming all surpassed their previous home price peaks in March 2014,” CoreLogic said. “In all, 23 states and the District of Columbia are at or within 10 percent of their peak home price appreciation.”

http://bizbeatblog.dallasnews.com/2014/05/corelogic-report-dallas-home-prices-up-11-percent-in-march.html/

Not surprising considering the undersupply many

market segments have been experiencing in North Texas.

— Michael S. Cook, MAI, SRA