Discussing home prices and why they are increasing, financing for residential development, consumer confidence, conforming loan limits and more!
Case-Shiller Reports Home Prices Continue to Increase
From S&P Dow Jones:
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in September, up from 5.9% in the previous month. The 10-City Composite annual increase came in at 5.7%, up from 5.2% the previous month. The 20-City Composite posted a 6.2% year-over-year gain, up from 5.8% the previous month.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said:
Most economic indicators suggest that home prices can see further gains. Rental rates and home prices are climbing, the rent-to-buy ratio remains stable, the average rate on a 30-year mortgage is still under 4%, and at a 3.8-month supply, the inventory of homes for sale is still low. The overall economy is growing with the unemployment rate at 4.1%, inflation at 2% and wages rising at 3% or more. One dark cloud for housing is affordability – rising prices mean that some people will be squeezed out of the market.
First, while the Case-Shiller Home Price Index is one of the big boys in tracking home prices, it is still a national report. Home buyers and sellers must rely upon local real estate market expertise when making decisions…
Looking at Anderson County SC:
| September 2017 | September 2016 | |
| Average Home Price | $162,937 | $158,012 |
|
Median Home Price |
$142,950 | $140,000 |
I must caution you that these prices are for all homes and only shows the general direction of homes prices in Anderson County. More in depth analysis is needed to determine the market value for a specific home.
Blitzer said we can expect home prices to continue increasing and that this could squeeze some people out of the market. I think we should see home prices continue increasing both nationally and right here in the Anderson SC area.
AD&C Financing Conditions Ease At A Slower Pace
From Eye On Housing:
Builders and developers responding to NAHB’s AD&C Financing Survey continue to report easing credit conditions for acquisition, development, and single-family construction loans. In the third quarter of 2017, the overall net tightening index based on the AD&C survey was -7.7, indicating net easing. All major categories of AD&C financing also recorded net easing, with lending standards on land acquisition loans being easier than standards on land development loans, and net lending standards on single-family construction loans easing the least.
Excellent news considering the low inventory of homes for sale in many areas. However, the factors for a healthy housing market and economy go far beyond just an increase in AD&C financing.
Only 35% Think Country Headed in Right Direction
From Rasmussen:
Thirty-five percent (35%) of Likely U.S. Voters now think the country is heading in the right direction, according to a new Rasmussen Reports national telephone and online survey for the Thanksgiving-shortened week ending November 21.
This is from last week and probably will change. With the ongoing tax reform and today’s news about Trump’s former national security advisor pleading guilty for lying to the FBI, we can expect this to decrease…
I read that the stock market started going down and gold started increasing with the news about Flynn.
However, none of this changes the fact that people always have and always will need a place to live. Whether or not people will have the confidence to buy a home with this kind of crap happening is the big question…
Majority of Millennials Want a Third Political Party
From NBC News:
A strong majority of millennials — 71 percent — say the Republican and Democratic parties do such a poor job of representing the American people that a third major party is needed. Sixty-three percent of millennials disapprove of the way President Donald Trump is handling his job as president. But millennials also hold a variety of political institutions in poor regard, and 65 percent think the country is on the wrong track overall.
I sense a recurring theme here…
Consumer Confidence at 17 Year High
Speaking of consumer confidence, Lynn Franco, Director of Economic Indicators at The Conference Board just said:
Consumer confidence increased for a fifth consecutive month and remains at a 17-year high (Nov. 2000, 132.6). Consumers’ assessment of current conditions improved moderately, while their expectations regarding the short-term outlook improved more so, driven primarily by optimism of further improvements in the labor market. Consumers are entering the holiday season in very high spirits and foresee the economy expanding at a healthy pace into the early months of 2018.
Somewhat puzzling that so many people think the country is headed in the wrong the direction yet consumer confidence is high.
Conforming Loan Limits to Increase in 2018
From FHFA:
The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2018. In most of the U.S., the 2018 maximum conforming loan limit for one-unit properties will be $453,100, an increase from $424,100 in 2017.
The maximum conforming loan limit for Anderson County will be $453,100. You can find an interactive map showing the loan limits for the entire US here
Pending Home Sales Increase
NAR just reported that pending home sales in October increased from the level in September. However, pending home sales are still down compared to one year ago. The increase was mainly due to the increase in the South that was due to bouncing back after the hurricanes.
Again, we heard that tight inventory is an issue. If someone was thinking about selling their home, it is a seller’s market in many areas. I strongly suggest reaching out to a local Realtor to discuss what is happening in your local market!
Unsustainable Boom in Home Prices?
The home price boom that started in mid-2012 is accelerating, with year-over-year increases now running at 6-7 percent. With prices of entry-level homes increasing 10–11% year-over-year, FTBs are taking on even greater levels of risk to chase this ultimately unsustainable boom in home prices.
While we must always remember the painful lesson that home prices can decrease, I am not quite as pessimistic as Pinto. Unless something happens to really screw up the economy, I don’t see home prices falling so much as the rate of appreciation slowing.
So why are home prices increasing so rapidly?
Lack of Inventory and Home Prices
The rise in home prices is simply due to the limited inventory. This is just basic supply & demand. If there’s a low supply of something that has strong demand, the prices normally increase.
In real estate, if there is 6 month supply of homes for sale, prices will stay stable. When there is less than 6 months of inventory, house values will increase. If there is more than 7 months of inventory, home prices could start to fall. Check out the chart:
Impact of Inventory on Home Prices
Based on the NAR Existing Home Sales Report, the monthly supply of houses for sale has been below 6 months for 4 years!
Months Supply Inventory End of October
Nationally, we have been firmly in a seller’s market for quite some time. Again, if you are thinking about selling, it is a great time to contact a local Realtor to discuss what is possible. If you have questions about real estate in the Anderson SC area, shoot me an email!
Stick a Fork In It!
That is all I have time for today but be sure to check back or subscribe so you never miss another post!
