By Nick Taylor-Vaisey - Thursday, February 7, 2013 - 0 Comments
America’s housing prices are rising, making homeowners feel richer. And that’s good for the economy.
Across the United States, home prices are rising at an impressive rate, and increased residential construction was the biggest bright spot in an economy that contracted slightly in the final quarter of 2012. Even in Phoenix, among the hardest-hit when the last bubble burst in 2007, average home prices shot up 22 per cent last year. It was housing woes that sent the U.S. into an economic tailspin in 2008, and that market is now carrying the recovery. “A lot is riding on the continued upswing in the U.S. housing market to support a stronger U.S. economy this year and next,” says BMO Financial Group senior economist Sal Guatieri.
The housing market is so critical because as prices go up, homeowners feel richer. And that has a big ripple effect across the economy. People who buy homes—particularly new homes—spend more on furniture and appliances. Construction also creates jobs. Consumer confidence as a whole rises. It is what’s known as a “virtuous circle.” Guatieri says all these positive signs in the market should encourage banks to ease lending standards, a move that “would open the doors for many more potential homebuyers to get into the market, and would reinforce the housing market recovery.”
Any hint of a coming interest rate hike could heat up the market even more, as people rush to buy new homes while borrowing rates are still low. That would be enough to spark another U.S. housing boom. Some bloggers south of the border are even murmuring about the foundation for a new housing bubble. Such a bubble could be “born of tight supply and low interest rates,” says one post on the Economist website. The theory has no shortage of critics, who point out that it is far too soon to suggest prices have recovered enough from historic lows just last year to be talking about a bubble. “Most measures of valuation suggest that housing is very cheap across the U.S., even with prices rising significantly in some areas,” says Guatieri. “Affordability is still close to the lowest levels in at least the last four decades.” A perfect time to get in on the ground floor.
By Erica Alini - Tuesday, January 22, 2013 at 11:35 AM - 0 Comments
- Sales of U.S. existing homes declined one per cent to a seasonally adjusted annual rate of 4.94 million in December, the National Association of Realtors said today. That was lower than the consensus expectation of a 5.1 million rate.
- Although disappointing, the reading was still 12.8 per cent above the December 2011 rate.
- Sales activity might have been hampered by a supply bottleneck: the stock of houses available for sale was the lowest since May 2005.
- Reflecting tight inventories, the median price of a U.S. home was $180,800 in December, up 11.5 per cent from the same month last year.
- Foreclosed and other distressed homes made up 24 per cent of sales, up from 22 per cent in November but down from 32 per cent in December 2011.
- Single-family homes sales dipped 1.4 percent, while condominiums and co-ops purchases rose 1.7 percent.
- Most of the decline happened in the South, where home purchases were down three per cent last month.
What the analysts are saying:
- The weaker-than-expected reading is no cause for concern, according to RBC’s Nathan Janzen. Despite the December disappointment, average sales in the last three months of the year were 21.6 per cent above third-quarter levels on an annual basis.
- TD’s Thomas Feltmate concurred, noting that, for the year as a whole, home sales grew 8.9 per cent in 2012 compared to a meagre 2.4 per cent increase in 2011. With mortgage rates at rock-bottom and the labour market showing signs of life, residential real estate sales should support consumer spending (think furnishing and renovations) and construction activity through the year.
By Erica Alini - Thursday, January 17, 2013 at 10:25 AM - 0 Comments
- December housing starts came in at a seasonally adjusted on a annual rate of 954,000, an increase of over 12 per cent from November and up nearly 37 per cent from December of last year, the U.S. Department of Commerce said today. The figure was far higher than the consensus forecast of 890,000 starts and the strongest reading since mid-2008. It also represents the largest monthly jump since May 2006.
- Building permits for private residential construction were at a seasonally adjusted annual rate of 903,000, up a small tick from November, but nearly 29 per cent above December 2011.
What the analysts are saying:
Today’s release is further confirmation that the residential real estate market is back to being a key engine of growth for the U.S. economy, writes RBC’s David Onyett-Jeffries. The real estate comeback is starting to show in the labour market as well, notes TD’s Michael Dolega, with construction employment up by 30,000 in December in a the sector that has shed around two million jobs since 2006-2007 . Although the modest increase in building permits foreshadows a slowdown in new construction in the next few months, Dolega predicts the annual pace of home construction will reach one million by the end of the year providing jobs for half a million Americans.
By Jaime Weinman - Tuesday, January 8, 2013 at 12:51 PM - 0 Comments
Networks are banking on a new cycle of housing shows
Who’s placing the biggest bet on the comeback of the U.S. housing market? Not Wall Street, but cable TV channels that run home-buying shows with titles like Love It or List It. The crash of 2008 wiped out a lot of reality shows about purchasing expensive homes; instead, channels like Home and Garden Television and the Learning Channel (TLC) shifted toward shows like The Unsellables, about people whose homes had become worthless. Now, according to the Wall Street Journal, these networks are working on a new cycle of housing shows, though like many cautious owners, they’re starting with cheap homes: HGTV’s future projects include Power Broker and Fixer Upper, about helping young buyers improve their first houses, and TLC is bringing back the show My First Home after a three-year break. Network executives had better hope they’re right about the market. If not, the only people in bigger trouble will be those who actually bought the houses.
By The Canadian Press - Monday, January 7, 2013 at 12:46 PM - 0 Comments
WASHINGTON – Ten major banks and mortgage companies agreed Monday to pay $8.5 billion…
WASHINGTON – Ten major banks and mortgage companies agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.
The banks, which include JPMorgan Chase, Bank of America and Wells Fargo, will pay billions to homeowners to end a review process of foreclosure files that was required under a 2011 enforcement action. The review was ordered because banks mishandled people’s paperwork and skipped required steps in the foreclosure process. Continue…