MARKET UPDATES JULY 2014
PRESENTED BY JOYCE KIM COLDWELLBANKER
China Fuels Surge in Foreign Purchases of U.S. Housing
Source: Wall St. Journal
Chinese buyers are leading the way in foreign purchases of U.S. housing, and overall, real estate sales to foreign buyers and new immigrants surged to new highs in the last year, according to a new study released by the National Association of REALTORS®.
Making sense of the story
- Overall, foreign purchases of U.S. real estate jumped by 35 percent last year.
- Chinese buyers have become the largest source of foreign cash in the U.S. residential real estate market, accounting for nearly one in four dollars spent by foreigners on American housing last year.
- China accounted for $22 billion in international sales for the 12-month period ending March 2014, or 24 percent of all foreign sales, up from $12.8 billion, or 19 percent, during the year-earlier period.
- Total international property sales rebounded last year to $92.2 billion, up from $68.2 billion in 2013 and $82.5 billion in 2012.
- American real-estate markets have been viewed as a safe haven and a bargain amid concerns over geopolitical instability or unsustainable asset values abroad.
- The median purchase price to international clients ($268,284 last year) is significantly higher than for all sales ($199,575). Consequently, these buyers tend to hunt for trophy properties.
- Chinese buyers, in particular, have an eye for Southern California. Los Angeles and Irvine were two of their top three destinations, according to the survey, with San Francisco ranking second.
Read the full story http://blogs.wsj.com/economics/2014/07/08/china-fuels-surge-in-foreign-purchases-of-u-s-housing/
In other news …
Julián Castro confirmed for Obama’s Cabinet
Source: The Hill
This week Julián Castro was confirmed as secretary of the Department of Housing and Urban Development (HUD). Castro will replace Shaun Donovan, who had held the Cabinet position since President Obama’s first term. President Obama called Castro a “proven leader, a champion for safe, affordable housing, and strong, sustainable neighborhoods.”
Read the full story
http://thehill.com/blogs/floor-action/senate/211706-senate-confirms-castro-to-head-hud
Consumers Increasingly Expect Higher Rents and Lower Home Prices
Source: Mortgage News Daily
According to Fannie Mae’s National Housing Survey, there is slowly increasing confidence in the housing market and in the economy in general; however, the greatest change was in consumer expectations about interest rates. The number of respondents who think this is a good time to buy a house increased 2 percentage points from May to 70 percent, but those who think it is a good time to sell reversed a four-month climb to drop from 43 percent to 40 percent. Fifty-four percent of respondents expect rental prices to rise over the next 12 months compared to 51 percent in May.
Read the full story
http://www.mortgagenewsdaily.com/07072014_national_housing_survey.asp
Tiny Houses Big With U.S. Owners Seeking Economic Freedom Source: Bloomberg
Micro buildings and tiny homes are growing in popularity for many Americans who want to minimize expenses while achieving the dream of homeownership. Dramatic downsizing appears to be gaining interest among Americans based on increased sales of plans and ready-made homes and growing audiences for websites related to the niche. These tiny houses are typically 500 or fewer square feet.
Read the full story http://www.bloomberg.com/news/2014-07-09/tiny-houses-big-with-u-s-owners-seeking-economic-freedom.html
How to Freak Out About Millennials in a Statistically Responsible Manner
Source: The Atlantic
Is the meme about Millennials living in their parents’ basements overblown? The Atlantic argues that it’s money and not basements that should worry the housing market because young people simply aren’t making enough money. There’s just one economy, and it’s slashed median incomes to historic lows. “More years of school + more student debt + lower starting salaries + a nervous housing market + stricter rules for new home-buyers = no new home buyers.”
Read the full story
http://www.theatlantic.com/business/archive/2014/07/millennials-trends-housing/373892/
Playing Semantic Games with Fannie and Freddie Investors Source: The Wall Street Journal
William Isaac, chairman of the Federal Deposit Insurance Corp. during the Reagan administration, writes in an op-ed for the Wall Street Journal that the Federal Housing Finance Agency has poorly handled Fannie Mae and Freddie Mac “by defying and rewriting the terms of the conservatorship. And by keeping investors in the dark about FHFA’s activities as conservator, the government is a destabilizing force, as evidenced by the dearth of private capital flowing into the mortgage market since the conservatorship began.”
Read the full story
http://online.wsj.com/articles/william-isaac-playing-semantic-games-with-fannie-and-freddie-investors-1404683708?mod=yahoo_hs
U.S. Officials Try To Rebuild Momentum In Stalling Refinance and Modification Programs
Source: The Wall Street Journal
A new campaign has been initiated to get more eligible homeowners into the Home Affordable Refinance Program, or HARP. In addition, Treasury Secretary Jack Lew announced that the Making Home Affordable program, which includes the Home Affordable Modification Program, or HAMP, would be extended for another year through 2016. The Obama Administration is hoping that both programs will find more momentum, despite being around for more than five years with mixed results.
Read the full story
Talking Points …
- REALTORS® generally expect home prices to increase in all states over the next 12 months, with most of the heavy growth in Florida, Texas, and California, according to the REALTORS® Confidence Index from the National Association of REALTORS®.
- The median expected price increase is 4 percent. Approximately 41 percent of respondents reported that properties were on the market for less than a month when sold, and about 5 percent were on the market for more than six months.
- REALTORS® reported continued weakness in seller traffic and a decline in buyer traffic. Low supply relative to demand, tougher lending standards, and the lackluster growth in income and savings were reported to be constraining sales.