Real Estate Marketing Specialists

Optimism for the Frederick Housing Market

Optimism for the Frederick Housing Market

Most housing experts and economists are agreeing that the housing bust is over. “The market has turned – at last.” ~ The Wall Street Journal.  There is growing optimism for the housing market.

Optimism for Residential Real Estate

Most of the major housing indexes have turned positive and have stayed on that upward trend for months.

  • The CoreLogic/Case-Shiller Index is one of the most sourced measures of U.S. residential real estate prices. It tracks the values of homes in theoptimism for the frederick housing market summer 2013 top 20 metropolitan regions, as well as tracking values nationally. The CoreLogic data has shown average home prices on the rise since March 2012 in most metropolitan areas. Most recently, areas that were the hardest hit have shown the largest year-over-year price increases: California – 20%, Arizona – 17% and Nevada – 26%.
  • In April 2013, home prices saw a 12.1% rise, the highest year-over-year increase in 7 years. Most housing experts attribute this to low inventories and increased demand. This lack of inventory is affecting the building market…
  • Home Building is beginning its recovery. New home sales hit a 5-year high this summer. For the last six quarters, home building alone is responsible for 20% of GDP growth, according to NAHB, National Association of Home Builders. As a result of this growth in home building, the housing industry’s overall share of the economy is increasing slowly back to historic norms. This, in turn, is adding to job growth.
  • The National Association of Home Builders/Wells Fargo builder sentiment index has risen above 50, the level which indicates more builders view sales conditions as good, for several quarters, with a jump to 57 in June. This is the highest it has been since January 2006.
  • According to the National Association of Realtors, NAR, home sales in May of this year increased above the 5 million number, which had not happened since July 2007.

Challenges and Changes in Today’s Real Estate Market

Every market has it’s challenges, whether a buyer’s market, a seller’s market, or those real estate markets that are in transition. Sometimes, the challenges are in appraisals, lack of inventory, distressed housing, or in financing. Whatever they are, the market eventually recovers. We’re now seeing the market recover from the effect of distressed properties, or short sales and foreclosures.

Distressed Properties

Upside Down and Distressed?Although the number of mortgage defaults has been decreasing over the last several months, there are still a great number of distressed properties out there today, both short sales and foreclosures. Banks have learned their lesson and are not dumping bank owned properties on the market at once, but releasing them gradually.

You would think that there would be more foreclosures on the market… in our market, for instance, less than 1% of the listings are bank owned properties. The answer might be that private equity firms are buying up huge numbers of single-family houses and turning them into rentals, or flipping them.

Hedge fund managers are buying homes in bulk, like a financial instrument, especially in states that have been hit the hardest in the crash. These investors are looking for long-term price appreciation and will most likely rent the homes, doing minor repairs, then sell when the market will return a profit. It would seem that Hedge Fund investors certainly are betting on the return of the housing market!

Although the words “hedge fund” may bring negative connotations to some, these investors are actually helping the real estate market by scooping up large portions of the distressed inventory in many major markets. This reduces the surplus and reduces neighborhood blight.

Goodbye Fannie, Goodbye Freddie

Five years after the $190 billion bailout and the Conservancy of Fannie Mae and Freddie Mac, Congress and the Administration have started to address the issue of housing reform this year. Both sides of the isle and both the House and the Senate are working on bills that call for the disillusion of the Government Sponsored Entities, or GSE’s.

While both parties agree that Fannie and Freddie are outdated models that don’t work anymore, as you may expect, the differences lie in how much of a roll the government should play in the housing and mortgage industry. Many believe that the securitization of mortgages by these GSE’s has increased the housing financial industry in a way that private companies could not accomplish, while others believe that they created, or at least contributed to the troublesome bubble in the first place.

Either way, all parties seem to agree, for now, that Fannie Mae and Freddie Mac will be phased out, probably within a five-year timeframe, and be replaced with more modernized organizations which will still support the housing market, and encourage home ownership for as many Americans as can reasonably afford it. What exactly those will look like, will be played out in the next few months. We might even see this reform by the end of this year, or the beginning of 2014.

Optimism for the Frederick Housing Market – Summer 2013

Is it Safe to Venture Out into the Real Estate Market Again?

Since the Great Real Estate Bust of ’06, we’ve seen many swings in the real estate market. First we saw buyers leave the market in larger numbers, watching home prices fall like Newton’s apple.real estate market Then we saw home sellers with their arms crossed in stubborn denial, their homes languishing on the market for 1, or even 2, yes, and even 3 anniversaries. Good news… it looks pretty safe again out here!

Just recently we’ve seen first-time buyers back in the Frederick real estate market, and some move-up buyers,  ready to take advantage of the historically low rates and the circa 2002 home values. Here’s the positive truth… people become adults, start families, and want to buy houses. We call it the “Circle of Life”… real estate life, that is. Experts might call it “Pent-up Demand”.

Supply and Demand

After hitting bottom in the fall of 2012, interest rates have started to increase, although gradually. We also saw the bottom of the market as far as home values in most communities around the country. While there are locations and price points that are still seeing falling values, most are seeing the bottom in the rear view mirror.

With a lack of equity in their homes, many homeowners still cannot sell. The lack of inventory in many markets is evidence. However, this lack of active listings added to the increased demand has resulted in rising prices. As we see values increase over the next year, we will see more homeowners above water on their mortgages and able to sell. We expect more move-up buyers able to enter the market as this upward cycle continues. However…

As the economy heats up, we will see rising interest rates. The cost of buying a home will increase, thereby decreasing the purchasing power of home buyers. When the real estate market is on the upward climb, the question for buyers is always this: buy now, when I have fewer choices, or buy later when interest rates are higher and I can afford less?

Consumer Confidence On the Rise

As the real estate market continues on its path of recovery, more and more people are gaining confidence and entering the market. Rising rents are making the thought of a home purchase more attractive to many. If you’re thinking of getting your feet wet, this is certainly a good time, with low interest rates and home values just beginning to rise.

Home ownership has proven to be the biggest and safest investment most people will ever make… as long as they stay in it for the long haul. Consumer confidence in real estate is on the rise; it just might be time to dip your toe in the water again.

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consumer confidence
Consumer Confidence is On the Rise!

 

Optimism for the Housing Market
by Karen Highland
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Optimism for the Frederick Housing Market
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Optimism for the Frederick Housing Market
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Optimism for the Housing Market - major indicators are up about the Frederick Real Estate Market, and have been positive for months. Most of the major housing indexes have turned positive and have stayed on that upward trend for months.
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