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Forget the meh ADP report.
The best jobs news of the day was that stronger-than-expected construction number and a particularly strong residential construction number for December.
As the chart above makes clear, growth in residential construction leads construction jobs, so this seems like a pretty sure driver of more construction jobs on the way in the coming months.
Red: Construction spending growth. Blue: Residential construction spending growth. Green: Construction employment growth.
Last week I had the opportunity to hear one of the premier economists on the West Coast, Matthew Gardner. Each time I listen to him, I come away more educated, and because I provide real estate services in the greater Seattle area, encouraged.
In regards to homeownership in our area, the data below would suggest that we are in good shape in the Puget Sound.
The homeownership rate is reversing toward it’s historic norms. Excluding owners who haven’t made a payment in a year, it is currently at 62%.
If we believe that there was a “Normal” market back in the 1990’s, then it is conceivable that prices should be higher.
Here are Matthew’s conclusions.
• Prices Will Start to Solidify this Year
• Overly Stringent Financing constraining the Market
• 4-County Area Listings are Down 17% but Sales are Up 12%
• Faster Drop Off in Foreclosures in 2012
• Positive Price Growth in 2012 (1.6%).Conclusions
• Local Prices are down by 15.8% but Non-REO prices are down by 9%
• Limited Income Growth will Slow Home Value Appreciation
• Homeowners, as opposed to investors, would rather wait to pay a higher price than admit to their friends that they bought too soon!
• Recovery Will Be Unequal.
Despite mixed results in the housing sector, many homebuilder stocks are outperforming the overall market by a large margin.
A new report released Thursday showed that U.S. housing starts in December were worse than expected, posting a 4.1 percent decline after rising 9.1 percent in November.
On the other side of the spectrum, the National Association of Home Builders (NAHB) announced last week that its housing market index beat expectations and rose to its highest level in 4 and a half years.
Following last week’s positive news, the PHLX Housing Sector Index closed at an 11-month high of 117.56.
Could all this be perceived as the dawn of a recovery for the country’s battered housing market?
The verdict is still out. Confidence remains low from a historical perspective, although the numbers show the HGX is off to its best start ever this year — up more than 14 percent.
Nonetheless, the HGX has ended four of the past six years in negative territory, witnessing its worst loss in 2008 when the index closed down more than 40 percent. Will this be the year of a turnaround in housing?
“Will 2012 See a Housing Turnaround?” was provided by CNBC.com.
click image for larger view
When the news reports our current rates as “Record Low rates”, this chart gives that reporting credibility.
The graphic depicts pricing of all homes from their ‘peak through current declines’ as per Case Shiller. This index looks at prices in 20 major metropolitan areas. Keep in mind that for what is categorized as “Seattle” is comprised of Snohomish, King and Pierce Counties.
Each market peaked at different times. Therefore, the InfoGraphic doesn’t cover one segment of time. Here is a site where you can see when each market actually peaked:
Homes in Washington state are at record high affordability, thanks to the combination of lower prices and record-low mortgage interest rates.
A report on the Housing Affordability Index (HAI) for third quarter 2011 showed a statewide index of 160.7, which means a median income family had 60.7 percent more income than the minimum needed to qualify to purchase a $225,300 home (the estimated median-price).
Comparing counties, the HAI ranged from a low of 96.4 in San Juan County, where the median priced home sold for $345,000, to a high of 459.4 in Wahkiakum County, where the median price for third quarter sales was estimated to be $62,500.
The index, prepared by the Washington Center for Real Estate Research, assumes a 20 percent down payment and a 30-year mortgage.
The HAI for counties served by Northwest Multiple Listing Service shows a range of 96.4 (San Juan County) to a high of 243.4 in Pacific County. As revealed in the chart, first-time buyers remain challenged, with the statewide index pegged at 87.4.
WCRER’s report shows a three-year downward trend in prices, including a 9.5 percent drop in the statewide median sales price for Q3 compared to same period in 2010. Prices range from King County’s high of $350,000 to a low of $62,500 in Wahkiakum County.
The WCRER was created in 1989 by the WSU Board of Regents to achieve the university’s tripartite mission of education, research and service in real estate. The Center strives to provide a wide range of useful and understandable information, analysis and knowledge using academic methods in practical context while reporting findings in common language.
HOUSING MARKET SNAPSHOT
State of Washington and Northwest MLS Counties - Third Quarter 2011
NOTES:
Despite survey after survey showing that consumers expect home prices to continue to decline next year, most home owners still believe their houses are worth more than what their agents recommend.
Nearly three out of four home owners, 76 percent, believe their homes are worth more than the recommended agent listing price. By contrast, 68 percent of home buyers believe homes are overpriced, according to the latest HomeGain. Thirty-two percent said homes are overpriced by more than 10 percent.
The gap between what sellers expect and what agents recommend has actually grown slightly over the past year even though national median prices have declined about 4-7 percent this year. A year ago, some 73 percent of owners thought their homes were worth more than their agent’s recommended listing price and 69 percent of buyers thought homes were overpriced.
“The market in the Syracuse, NY area is classified as a buyers market. Sellers are still not understanding the importance of proper pricing as most sellers properties are priced 5 to 10% over market value,” said one professional.
“Seller pricing is not necessarily the problem. The issue is making it possible for buyer candidates to buy a home. More buyers equal better quality offers. The credit system needs to be reinvented,” commented another.
Forty-two percent of real estate agents and brokers and 37 percent of homeowners think that home values will decrease in the coming six months. Only 15 percent of real estate professionals expect home values to increase in the next six months, up four percent from last quarter. Fifteen percent of home owners also expect home values to increase in the next six months, up three percent from last quarter.
“Home owners and real estate professionals appear to be in sync regarding the direction of home prices. Home buyers and sellers, however, continue to remain apart as to home valuations with the vast majority of home owners thinking their homes are worth more than their agents and the market are telling them,” said Louis Cammarosano, General Manager of HomeGain.
Over 400 real estate agents and brokers and over 2,000 home owners were surveyed in HomeGain’s nationwide fourth quarter 2011 home values survey.
For more information, visit www.realestateeconomywatch.com
