The positive indicators seen in housing markets across the country are not a mirage, but a true recovery, according to RealtyTrac VP Daren Blomquist and a panel of six real estate professionals who spoke during a roundtable discussion Friday.
RealtyTrac ranked 100 markets in terms of recovery and found a smattering of markets from all regions in the top 20.
Florida and California markets were notable in both the top 20 and the bottom 20 recovering markets.
Blomquist said the defining factors for where a market landed on the ranks were location and employment. Inland Florida cities tended to rank near the bottom, while coastal cities ranked near the top.
During a Bipartisan Policy Center forum Tuesday, experts generally agreed the housing market is on the path to recovery, but the strength of the national recovery remained in question.
According to Douglas G. Duncan, chief economist at Fannie Mae, we may be in a recovery, but it has been the “weakest recovery since World War II” when considering income growth.
Richard Smith, CEO and president of Realogy, took a more optimistic approach and stated we are in the early stages of a “fairly strong recovery,” with prices reacting to inadequate supply.
Even if the recovery is happening, Paul Weech, EVP for policy and external affairs at the Housing Partnership Network, stated he does not want to see policy makers take their foot off the gas just yet since work still needs to be done.
An area of concern the panel addressed included the difficulty in obtaining housing when considering weak income growth and lending restrictions.
Following a speech Tuesday night in Phoenix, in which President Barack Obama discussed his ideas for housing finance reform, the president today took questions from American citizens during a live discussion hosted by ZillowCEO Spencer Rascoff.
During the question and answer session Wednesday, Obama reiterated his stated goals to bring a gradual end to Fannie Mae and Freddie Mac, to bring private capital into the housing market, and to offer affordable housing options—both rental options and 30-year mortgages.
Obama admitted that while it is the American dream to own a home, not all Americans are in a position to purchase a home. In particular, younger Americans with student debt may not be in a position to accrue more debt through a mortgage loan.
In a speech Tuesday, President Barack Obama will stress the need for a new housing finance system based on specific core principles that include putting private capital first, ending Fannie Mae and Freddie Mac’s “failed business model,” and ensuring broad access to the 30-year fixed rate mortgage, according to a fact sheet from the White House.
“Fannie Mae and Freddie Mac should be wound down through a responsible transition, and the government role during normal times should be no bigger than necessary to achieve the principles laid out here,” officials stated in the fact sheet released prior to the speaking event in Phoenix.
The call to wind down the GSEs reflects separate housing finance reform bills recently introduced by members of the Senate Committee on Banking and the House Committee on Financial Services. However, the bill from the House would provide for a non-government nonprofit to replace the GSEs rather than a government agency.
It is looking more likely that the comprehensive immigration bill the Senate passed last month will end up stalling in the GOP-controlled House. Although Republican partisans probably don't realize it, killing immigration reform could do serious collateral damage to the housing recovery.
Most economists believe that bringing 11 million undocumented immigrants out of the shadows would be a boon to the economy, and boost tax revenues in the bargain. It could also put as many as three million legalized immigrants in the market for a home, according to the National Association of Hispanic Real Estate Professionals.
The housing market has seen such a sharp and furious rebound in the last year that many experts are now wondering if we are repeating the crazy go–go days of 2007. That's not likely with rates still at historic lows thanks to the Federal Reserve. We could see some corrections, but nothing like the sickening 30 to 40 percent plunge housing prices took when the bubble burst last time.
One troubling sign, however, is the dearth of first–time homebuyers. In normal times, first–time homebuyers account for about 40 percent of new home sales. In May, that number fell to just 28 percent, down from 36 percent two years ago. The decline was due to cash–heavy investors, a tepid job recovery and tighter credit. That number won't sustain growth in housing.
Whether the decline proves to be a reflection on current market conditions or a true paradigm shift away from homeownership remains to be seen. But if there aren't enough first-time buyers to buy starter homes from others, current homebuyers can't move up to more expensive homes, and the homeownership ladder starts to calcify. Three million new homebuyers would change the calculus substantially.
NAHREP estimates that over a five–year period, three million newly legalized immigrants would pursue homeownership. The economic impact of the buyer influx? $500 billion in home purchases and new mortgages, not to mention more than $180 billion in downstream activity associated with buying a house.
These factors are extremely relevant when you look at the housing market, which accounts for 20 percent of our GDP. Investors with deep pockets are squeezing out potential buyers right now. But that won't last forever. As home prices rise and rates increase, the opportunities for juicy returns start to diminish.
With the sudden jump in mortgage rates, market spectators are wondering what the impact might be on the housing recovery.
After analyzing previous instances when mortgage rates increased significantly, Mark Palim, VP of Fannie Mae’s Economic and Strategic Research Group, determined history suggests rate increases won’t stop the current recovery. Instead, a rapid rise in rates is “more likely to contribute to a decrease in home purchase volume and an increase in the market share of adjustable-rate mortgages (ARMs),” wrote Palim in a recent commentary.
Michigan real estate agents, who left the profession in droves as the housing market tanked, are returning to the industry as home prices and sales in the Great Lakes State continue to rise.
Real estate firms are hiring new agents as well as former ones who want to sell houses again. And, in another barometer of the resurging market, enrollment at some real estate license classes has doubled in recent months.
Business at Coldwell Banker Weir Manuel in Troy is so brisk the company recently hired 14 new agents to staff offices from Birmingham and Clarkston to Northville and Grosse Pointe. The company has more than 400 real estate sales associates.
“Business is rebounding,” said John North, COO of Troy-based Coldwell Banker Weir Manuel. “People are looking at this as a good way to make a living.”
The number of real estate licenses issued by Michigan has spiked about 10 percent already this year, to 49,146 from 44,566 in all of 2012. Other real estate organizations also have reported upticks in services or membership.
While the increases are more of a steady stream than a flood, Michigan contrasts the rest of the nation, where agent numbers continue to fall. That’s because Michigan is at the leading edge of the housing revival, experts said.
“We were the first to experience the negatives, so it’s nice to watch us be the first to climb out of it,” North said.
Just a few years ago, as home values began to plunge, real estate agents left the profession by the thousands. The number of Michigan real estate agents fell by more than 14,000 within a single year, according to state data.
The housing market made it to 61 percent “back to normal” in May, according to the latest Housing Barometer from Trulia.
May’s percentage is the first time the recovery has passed 60 percent since the crash. April’s barometer was 54 percent. A year ago, the barometer was at only 35 percent.
The monthly report measures three key housing market indicators—construction starts, existing-home sales, and the delinquency-plus-foreclosure rate—to track how quickly the market is recovering to its normal, pre-bubble state.