Arizona Mortgage » Home Values

Case-Shiller Index Shows Near 6% Home Price Gain

Mark Taylor — Thu, 07 Feb 2013 13:45:00 +0000

Home prices continue their upward climb.

Last week, the S&P/Case-Shiller Index showed home prices gaining 5.5 percent during the 12-month period ending November 2012, marking the largest one-year gain in home prices since May 2010.

The Case-Shiller Index measures changes in home prices by tracking same-home sales throughout 20 housing markets nationwide; and the change in sales price from sale-to-sale.

Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.

Between November 2011 and November 2012, home values rose in 19 of the 20 Case-Shiller Index markets, with previously-hard hit areas such as Phoenix, Arizona leading the national price recovery.

The Phoenix market gained 1.4% for the month and was up 22.8% for the previous 12 months combined.

The top three monthly “gainers” for November 2012 were:

Phoenix, Arizona : +1.4 percent
San Francisco, California : +1.4 percent
Minneapolis, Minnesota : +1.0 Percent

Only New York City posted annual home value depreciation. On average, homes lost -1.2% in value there.

It should be noted, however, that the Case-Shiller Index is an imperfect gauge of home values.

First, as mentioned, the index tracks changes in the detached, single-family housing market only. It specifically ignores sales of condominiums, co-ops and multi-unit homes.

Second, the Case-Shiller Index data set is limited to just 20 U.S. cities. There are more than 3,000 cities nationwide, which illustrates that the Case-Shiller sample set is limited.

And, lastly, the home sale price data used for the Case-Shiller Index is nearly two months behind its release date, rendering its conclusions somewhat out-of-date.

That said, the Case-Shiller Index joins the bevy of home value trackers pointing to home price growth over the last year. The Federal Housing Finance Agency (FHFA), for example, reported similar home price growth with its November 2012 House Price Index (HPI).

Home values rose 0.6 percent between October and November 2012 nationwide, the FHFA said, and climbed 5.6 percent during the 12 months ending November 2012.

Economists attribute increasing home prices to higher buyer demand, record-low mortgage rates and the gradual improvement of the U.S. economy.

Case-Shiller index Shows Home Values Rising Nationwide, Too

Mark Taylor — Tue, 02 Oct 2012 12:45:00 +0000

There have been no shortage of “housing market” stories lately. After sinking through much of late-last decade, home values slowly stabilized into mid-2011. By October 2011, values appeared to have bottomed.

Today, nearly five-and-one-half years after the April 2007 housing market peak, home prices are finally showing their ability to rebound. Over the past 12 months, a bevy of housing market data highlights broad-based market growth.

For example, as compared to August 2011, Existing Home Sales are up 9.3 percent nationally; New Home Sales are up 27.7 percent nationally; and home inventories have slipped to multi-year lows in Mesa and throughout the country.

Furthermore, multiple home value trackers show home prices rising both regionally and nationwide.

Last week, the government’s Federal Housing Finance Agency released its Home Price Index (HPI) — a metric which tracks how home values change between sequential property sales. HPI showed home values up 3.7% nationally.

Another home valuation tracker — the S&P Case-Shiller Index — has shown home values to be rising, too.

As compared to one year ago, the private-sector metric puts home prices higher by 1.2 percent via its 20-city composite. 20 cities remains a small subset of the broader U.S. population, but, in looking for a trend, it’s clear that the trend is a positive one.

Some of the Case-Shiller Index highlights from its most recent report :

All 20 tracked cities showed home price gains between June 2012 and July 2012
The previously hard-hit city of Phoenix now leads the nation with a 16.6% annual gain
Versus their respective lows, San Francisco and Detroit are up 20.4% and 19.7%

In addition, on a 12-month basis, only four cities are showing negative home value growth — Atlanta, Chicago, Las Vegas, and New York City.

The Case-Shiller Index is a national index, though, and specifically does not report on valuation changes in specific U.S. cities and their neighborhoods. For local real estate data, make sure to speak with a local real estate agent instead.

Case-Shiller Index Shows Huge Home Price Gain

Mark Taylor — Thu, 06 Sep 2012 12:45:00 +0000

Home prices continue to rise nationwide.

According to the Standard & Poor’s Case-Shiller Index, home prices rose 6.9% between the first and second quarter of 2012, the largest quarter-to-quarter gain since the home-value tracker’s 1987 inception and another signal that the housing market is in recovery.

The private-sector metric’s results are similar to what the government’s Home Price Index showed for June, too — values rising quickly. In addition, for the second straight month, each of the Case-Shiller Index’s 20 tracked markets showed month-to-month improvement.

June would have marked three straight months if not for Detroit’s value-setback in April.

The top performing markets in June, as tracked by the Case-Shiller Index were :

Detroit, Michigan : 6.0 percent gain
Minneapolis, Minnesota : 4.8 percent gain
Chicago, Illinois : 4.6 percent gain

However, it should be noted that the Case-Shiller Index pulls from a limited sample set. It does not include condominiums or multi-unit homes in its findings, nor does it account for new construction. These exclusions make a material impact on the results of both Minneapolis and Chicago, as examples. Both cities feature a large concentration of condos.

Overall, though, the June data looks sound. Said a spokesman for the Case-Shiller Index, “The market may have finally turned around.”

Furthermore, home buyers in desert ridge and nationwide can corroborate what the Case-Shiller Index has uncovered. Falling home inventory and rising home demand have helped to move home prices higher in many U.S. markets.

Low mortgage rates make new homes affordable and rising rents are turning the Rent vs Buy equation on its head. In July, according to the National Association of REALTORS®, first-time home buyers accounted for 34% of all home resales. This trend is expected to continue into 2013.

As compared to one year ago, today’s home buyers have 8% more purchasing power and, with rising home prices, they’re going to need it.

Home Purchasing Power Jumps To New Highs

Mark Taylor — Tue, 10 Jul 2012 12:45:00 +0000

With mortgage rates down to all-time lows, you can buy a lot more home for your money. Home affordability is at an all-time high.

According to last week’s Freddie Mac mortgage rate survey, the average 30-year fixed rate mortgage has dropped to 3.62% nationwide. This is down from 4.08% in March, and down from 4.60% from one year ago.

Mortgage rates are “on sale”.

Falling mortgage rates can make one of two changes to the way a Phoenix home buyer looks at properties. They can either make a given home’s monthly housing payment that much more affordable to a buyer, or they can expand that buyer’s home purchasing power to a higher, maximum price point.

Since July 2011, that maximum price point increase has been significant.

Assuming a principal + interest payment of $1,000 per month and a 30-year loan term, a category that includes 30-year fixed rate mortgages and most adjustable-rate mortgages, here’s a maximum loan size comparison of the last 12 months :

July 2011 : A payment of $1,000 affords a maximum loan size of $197,130
July 2012 : A payment of $1,000 affords a maximum loan size of $219,409

With an increase in maximum loan size of more than $22,000 in just 12 months, it’s no wonder that multiple-offer situations are becoming more common — today’s buyers know that low home prices and low mortgage rates are combining to make home buying more affordable than at any time in recent history.

However, the buyer-friendly environment can’t last forever.

First, home prices have started to rise nationwide. Demand for homes has outpaced home supply in many U.S. markets and that leads home prices higher. Second, low mortgage rates can’t last forever.

A recovering economy will lift mortgage rates back above 4 percent, a scenario that will hit home affordability hard.

Home-buying conditions are optimal this season. If you’re in the market for a new home, talk to your real estate agent and loan officer about maximizing your home purchasing power.

Pending Home Sales Index Hits A 2-Year High

Mark Taylor — Tue, 03 Jul 2012 12:45:00 +0000

Homes are going under contract at a quickening pace.

In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A “pending home sale” is a home under contract to sell, but not yet sold.

Statistically, the Pending Home Sales Index reading is significant for two reasons.

First, the index’s reading is at its highest since April 2010. From this, we infer that today’s pace of home buying in Arizona and nationwide is approaching the “stimulated” levels of two years ago — but without the federal stimulus.

This is a positive signal for the housing market.

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index’s first year.

2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.

And, there’s another reason why the Pending Home Sales Index matters so much to buyer and sellers of Scottsdale — the Pending Home Sales Index is among the few “forward-looking” housing market indicators.

Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.

80% of homes under contract sell within 2 months so, as the Pending Home Sales Index goes, so goes housing. Based on May’s data, therefore, we can assume that home sale figures will rise through the summer.

If you’re shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.

Phoenix Leads Annual Home Price Gains, According To Case-Shiller Index

Mark Taylor — Fri, 08 Jun 2012 12:45:00 +0000

Standard & Poors released its March 2012 Case-Shiller Index last week. The index is meant to measure changes in home prices from month-to-month, and from year-to-year, in select U.S. cities.

According to the report, home values rose in 12 of the Case-Shiller Index’s 20 tracked markets, and one market remained unchanged.

Of the Case-Shiller markets, Phoenix, Arizona posted the largest one-year gain, climbing 6.1 percent. Atlanta, Georgia posted the largest one-year loss. Values falling more than seventeen percent there year-over-year.

Overall, the Case-Shiller Index was relatively unchanged in March as compared to the month prior, but down nearly 3 percent on an annual basis. Nationwide, says Standard & Poor’s, home values are back to the levels of late-2002.

Don’t be overly concerned, however. Though widely-cited, the Case-Shiller Index is a flawed and misleading metric. It’s methodology almost guarantees it.

The first flaw in the Case-Shiller Index is its limited geography. Despite there being more than 3,100 municipalities nationwide, the Case-Shiller Index tracks just 20 of them. They’re not the 20 largest ones, either. Houston, Philadelphia, San Antonio, San Jose are specifically excluded from the Case-Shiller Index and each is among the Top 10 Most Populous Cities in the United States.

Minneapolis (#48) and Tampa (#55), by contrast, are included.

The Case-Shiller Index’s second flaw is that only tracks the sales of single-family, detached homes. Sales of condominiums and multi-unit homes carry no weight in the index whatsoever — even in cities such as Chicago and New York in which condos can account for a large percentage of the overall real estate market.

And, lastly, when the Case-Shiller Index is published, it’s published on a two-month delay. Buyers and sellers in Phoenix don’t need housing data from two months ago — they need data from today. The Case-Shiller Index tells us what housing was, in other words. It doesn’t tell us how housing is.

Buyers and sellers need real-time, actionable information. You can’t get that from the flawed Case-Shiller Index. For more accurate, relevant real estate data, talk to your real estate professional instead.

Case-Shiller Index Shows Home Values Rising In Detroit

Mark Taylor — Thu, 01 Mar 2012 13:45:00 +0000

Standard & Poors released its December 2011 Case-Shiller Index this week. The report is the most widely-cited, private-sector metric for the housing market. The index aims to measures change in home prices from month-to-month, and from year-to-year, in select U.S. cities and nationwide.

According to the report, between November and December 2011, home values fell within 18 of the Case-Shiller Index’s 20 tracked markets; and through the 12 months leading up to December 2011, 19 of 20 tracked markets fell.

Only Detroit posted year-over-year gains, adding 0.50% since December 2010.

Now, these statistics may look dire for the housing market, but it’s important to remember that the Case-Shiller Index — though widely-cited — remains a flawed statistic for everyday buyers and sellers in Phoenix. Rather, the monthly Case-Shiller Index is more appropriately applied by policy-makers and economists to macro-economic issues than by you and me for buy-or-sell decisions..

There are three ways in which Case-Shiller is flawed — each tied to the way by which Case-Shiller Index is calculated.

The first reason why the Case-Shiller Index is flawed is that, although it’s purported to be a “national” housing index, the index tracks just 20 cities nationwide. The United States, by comparison, houses more than 3,100 municipalities. The Case-Shiller Index is not a representative sample of the U.S. housing market.

And then, even within its tracked markets, Case-Shiller fails provide sufficient details to be useful.

Within each Case-Shiller Index city, there are innumerable “local markets”, each with its own local economy. When home values are shown to be falling in Phoenix, for example, that doesn’t mean that values are falling everywhere in Phoenix — only in the aggregate. There are multiple neighborhoods in Phoenix in which home values improved in December.

The Case-Shiller Index doesn’t capture that.

As another reason to ignore the Case-Shiller Index, note that the Case-Shiller Index only includes home sale data for single-family, detached homes — sales of condominiums and of multi-unit homes are specifically excluded. In some markets — Chicago and New York, for example — sales of these types can represent a large percentage of overall monthly sales.

Lastly, as a third reason to reduce the Case-Shiller Index’s significance — it’s “old”.

The Case-Shiller Index is published on a 60-day delay and includes sales contracts from even 60 days prior to that. In other words, the data used in this week’s Case-Shiller Index dates back to October 2011.

Data from 5 months ago is of little relevance to buyers in AZ today. Up-to-date and current information is what matters.

For actionable, real-time housing market data, therefore, look past the Case-Shiller Index. Look to your local real estate agent instead.

Case-Shiller Index Says Detroit And Washington DC Lead The Market

Mark Taylor — Wed, 01 Feb 2012 13:45:00 +0000

Standard & Poors released its November 2011 Case-Shiller Index this week. The index measures the change in home prices from month-to-month, and year-to-year, in select U.S. cities.

According to the data, for the second straight month, home values fell in 19 of the Case-Shiller Index’s 20 tracked markets. In addition, also for the second straight month, Phoenix, Arizona was the lone Case-Shiller-tracked city in which home values rose.

Overall, November’s Case-Shiller Index showed a 1 percent decrease in home values between October and November 2011, and a near-4 percent decrease between November 2010 and 2011, putting home values at roughly the same levels as 8 years ago. Don’t read too far into it, however.

The Case-Shiller Index, though widely-cited, remains widely-flawed.

As a buyer or seller in grayhawk, for example, , relying on the Case-Shiller Index for market research can lead you to improper conclusions. To understand the Case Shiller Index’s methodology is to understand why.

First, the Case-Shiller Index draws its data from a very limited geography.

There are more than 3,100 municipalities nationwide. The Case-Shiller Index tracks just 20 of them. And they’re not the 20 largest, either. Four of the Top 10 Most Populous U.S. Cities are excluded (Houston, Philadelphia, San Antonio, San Jose) whereas Minneapolis and Tampa are not.

Minneapolis is the 48th largest city in the United States. Tampa is #55.

Next, when Case-Shiller Index gathers its data from its 20 cities, it only includes the home sale data of single-family, detached homes. This means that sales of condominiums and multi-unit homes are specifically excluded from the index. There are some cities — Chicago and New York, for example — where condominium sales represent a large percentage of the overall market.

The Case-Shiller Index ignores that.

And, lastly, when the Case-Shiller Index is published, it’s published on a 60-day delay. Its data is not “current”, therefore, and does little to tell buyers and sellers of Scottsdale and the country what’s happening in their home markets right this minute. Instead, the Case-Shiller Index tells us how the housing market looked two months ago.

If you’re active in the real estate market, either as a buyer or a seller, the Case-Shiller Index does you little good. For real-time data that actionable, speak to a real estate professional instead. It’s where you’ll find your best, most reliable and relevant information.

Will Home Values Rise This Year?

Mark Taylor — Fri, 13 Jan 2012 13:45:00 +0000

Will your home gain value over the next 12 months? Nobody can know for sure, of course, but should recent housing trends continue, there’s concrete cause for optimism.

The housing economy has suffered since 2007, knocking home values down nearly 20% nationwide. And while some areas have fared better as compared to others but, in general, home values are down.

Mortgage rates are down, too, and that’s good news for buyers in Scottsdale. The combination of low rates and low prices has led home affordability to an all-time high. As you’ll hear in this 4-minute interview with NBC’s The Today Show, carrying a mortgage costs 25% less per month as compared to just 3 years ago.

Some other notes from the interview include :

There are more buyers out looking for homes today, which leads to more sales
The housing market is expected to get gradually better, month-by-month, in 2012
Foreclosures will continue to be a big part of the housing market

With housing supplies shrinking, buyers throughout AZ may find their best “deals” today — before the Spring Buying Season begins in February.

However, we can’t forget that housing markets are local — not national. Each town and neighborhood has its own market drivers and prices where you live may have already started to climb.

For accurate, up-to-date data on the housing market, talk with a local real estate agent.

Housing And Mortgage : The Experts Make Their 2012 Predictions

Mark Taylor — Wed, 04 Jan 2012 13:45:00 +0000

As the new year begins, there are no shortage of stories telling us what to expect in 2012. Housing finished 2011 with momentum and mortgage rates closed at the lowest rates of all time.

Some expect those trends to continue through the first quarter and beyond. Others expect a rapid reversal.

Who’s right and who’s wrong? A quick look through the newspapers, websites and business television programs reveals “experts” with opposing, well-delivered arguments views. It’s tough to know who to believe.

For example, here are some “on-the-record” predictions for 2012 :

Home prices will rise in 2012 (says Freddie Mac)
Home prices will fall in 2012 (says CBS News)
Mortgage rates will rise in 2012 (says American Banker)
Mortgage rates will fall in 2012 (ays the LA Times)

The issue for buyers, seller, and would-be refinancers in Phoenix and nationwide is that it can be a challenge to separate a “prediction” from fact at times.

When an argument is made on the pages of a respected newspaper or website, or is presented on CNBC or Bloomberg by a well-dressed, well-spoken industry insider, we’re inclined to believe what we read and hear.

This is human nature.

However, we must force ourselves to remember that any analysis about the future — whether it’s housing-related, mortgage-related, or something else — are based on a combination of past events and personal opinion.

Predictions are guesses about what might come next — nothing more.

For example, at the start of 2009, few people expected the 30-year fixed rate mortgage to stay below 6 percent, but it did. Then, at the start of 2010, few people expected the 30-year fixed rate mortgage to stay below 5 percent, but it did.

All we can know for certain about today’s market is that both mortgage rates and home values are low, creating favorable home-buying conditions nationwide.

At that start of last year, few people expected mortgage rates to even reach 4 percent. Today, rates “with points” price in the 3s.

What 2012 has in store we just can’t know.

Arizona Mortgage » Home Values

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