All the Real Estate News That’s Fit to RE-Print™
Welcome to our weekly edition of Real Estate Investing News This Week. Highlights this week include:
- Broad-Based Slowdown for Home Prices
- October 2014 Home Prices Increased 6.1%
- Early Warning Signs of Possible Home Price Bubble
- Mortgage Delinquency Rate Tumbles
- And much more…
According to the S&P/Case-Shiller Home Price Indices, home prices continue to decelerate.
The 10-City Composite gained 4.8% year-over-year, down from 5.5% in August. The 20-City Composite gained 4.9% year-over-year, compared to 5.6% in August.
The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of September 2014, average home prices for the MSAs within the 10-City and 20-City Composites are back to their autumn 2004 levels.
Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 15-17%. The recovery from the March 2012 lows is 28.8% and 29.6% for the 10-City and 20-City Composites.
Home prices nationwide, including distressed sales, increased 6.1 percent in October 2014 compared to October 2013. This change represents 32 months of consecutive year-over-year increases in home prices nationally.
Twenty-seven states and the District of Columbia were at or within 10 percent of their home price peak. New highs in a total of nine states: Colorado, Louisiana, Nebraska, New York, North Dakota, South Dakota, Tennessee, Texas and Wyoming.
“Home price growth is moderating as we head into the late fall and is currently running at half the pace it was in the spring of 2014,” said Sam Khater, deputy chief economist at CoreLogic. “However, there are still pockets of strength, especially in several Texas markets, as well as Seattle, Denver and other markets with strong economic fundamentals.”
On Tuesday, CoreLogic reported that October 2014 national home prices increased by 6.1 percent year over year. This marks the 32nd consecutive month of year-over-year increases.
Excluding distressed sales, home prices increased 5.6 percent from October 2013. Excluding distressed sales, prices were down 8.9 percent from peak levels.
Including distressed sales, year-over-year home prices were up in every state.
On Thursday, RealtyTrac released a report identifying county-level housing markets with early warning signs of a possible home price bubble — where prices overinflate and eventually decline. The report also identified markets with little risk for a home price bubble.
The report analyzed 475 U.S. counties with a combined population of more than 221 million based on three early warning signs of a possible home price bubble:
- If the market was less affordable in October 2014 than its peak price during the 2005 to 2008 housing bubble;
- If a market was less affordable in October 2014 than its historical affordability average since January 2000; and
- If a market had a rising foreclosure rate on loans originated in 2014 compared to loans originated in 2013.
“Affordability and foreclosure rates by loan vintage are two key metrics that will help consumers, investors, institutions and policy makers identify if a housing market is at risk for another price bubble,” said Daren Blomquist, vice president at RealtyTrac.
“While 99 percent of markets have not returned to the irrational affordability levels during the previous housing bubble, one in five markets have now exceeded their historical affordability norms, which is a strong sign that either a new home price bubble is forming in those markets or that home price appreciation will soon plateau until incomes can catch up….”
—Foreclosure inventory down 30.9 percent nationally from a year ago—
According to CoreLogic, for the month of October 2014, there were 41,000 completed foreclosures nationally, down from 55,000 in October 2013, a year-over-year decrease of 26.4 percent and down 65 percent from the peak of completed foreclosures in September 2010.
As of October 2014, approximately 605,000 homes nationally were in some stage of foreclosure, known as the foreclosure inventory, compared to 875,000 in October 2013, a year-over-year decrease of 30.9 percent and representing 36 consecutive months of year-over-year declines.
According to RealtyTrac’s October 2014 Residential & Foreclosure Sales Report, the median sales price of U.S. single family homes and condos in October was $193,000, up 2 percent from the previous month and up 16 percent from a year ago to the highest level since September 2008 — a 73-month high.
“More than 32 percent of all single family homes and condos purchased so far in 2014 are non-owner occupied compared to 68 percent that are owner-occupied,” said Daren Blomquist, vice president at RealtyTrac. “That is the highest share of investor purchases since we began tracking in 2001.”
By Brian Honea
The nationwide mortgage delinquency rate in October fell to its lowest level in seven years, according to Black Knight Financial Services‘ “First Look” at October 2014 Mortgage Data.
October’s delinquency rate, or the rate of loans that are more than 30 days past due but not in foreclosure, was reported at 5.44 percent, its lowest level since November 2007. The delinquency rate in October was a 13.4 percent decline from October 2013.
Both foreclosure pre-sale inventory (the number of residential homes in some state of the foreclosure process) and foreclosure starts took big year-over-year tumbles in October. Foreclosure pre-sale inventory totaled 1.7 percent in October, a decline of 33.5 percent from the same month a year ago.
Black Knight reported that foreclosure inventory hit its lowest level since February 2008. Foreclosure starts in the U.S. totaled 81,400 for October, a decline of 31.5 percent from October 2013.