HOUSING DEMAND PICKS UP STEAM

Demand for single-family housing reached its highest level since June 2013, having picked up momentum after Labor Day, according to Redfin’s Housing Demand Index for September 2016.

According to Redfin, buyer demand rose by 13.3 percent over-the-month in September up to a level of 105, its highest level in three-plus years, after nearly 32 percent more potential buyers toured homes and nearly 27 percent more potential buyers made offers.

A reading of higher than 100 for the Redfin Housing Demand Index indicates stronger or higher-than-expected demand, while a reading of lower than 100 indicates weak demand. For September 2015, the reading was 101.

This data indicates that there is a healthy pool of buyers ready and willing to purchase a home as long as they find the right one, according to Redfin.

“Buyer demand gained momentum after Labor Day when a pop of fresh listings hit the market,” said Redfin chief economist Nela Richardson. New listings are up 3.3 percent compared to last year at this time. “More than any other factor, new listings pulled buyers into the market in September. The pace of this demand will only be sustained if the supply of homes for sale continues to improve.”

Despite the new listings that hit the market after Labor Day, Redfin agents still reported a need for more inventory in what has turned out to be a lengthy housing supply shortage. The National Association of Realtors (NAR) reported that in September, there were 2.19 existing homes for sale, which was 6.8 percent lower than September 2015’s inventory despite a slight monthly increase.

“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in,” NAR Chief Economist Lawrence Yun said. “Unfortunately, there won't be much relief from new home construction, which continues to be grossly inadequate in relation to demand.”

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SEPTEMBER 2016 PENDING HOME SALES AND MARKET PULSE SURVEY

Amid declining affordability and tight housing supply, California pending home sales rise in September

LOS ANGELES (Oct. 24) – California pending home sales improved from the previous month and year, however, overall market conditions appear to be slowing down and closed transactions plateauing, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Cooling market conditions were reflected in C.A.R.’s September Market Pulse Survey,** with most leading indicators showing a decline in growth and REALTORS® becoming less optimistic about market expectations and more concerned with lower housing affordability.

Pending home sales data:

• Statewide pending home sales increased in September on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* rising 5.3 percent from 121.3 in August to 127.7 in September, based on signed contracts. On an annual basis, California pending home sales were up 10.5 percent from the September 2015 index of 115.5 – the sixth consecutive year-to-year increase.

• At the regional level, for Southern California as a whole, pending sales dropped 4.6 percent on a monthly basis, the third month-to-month decline. On an annual basis, pending sales were up 15.3 percent in the region. Los Angeles, Orange, and San Diego counties posted healthy year-over-year increases of 15.9 percent, 13.3 percent, and 15.7 percent, respectively.

• For the Bay Area as a whole, pending sales were 2 percent higher than August and 8.6 percent higher than September 2015, driven by strong year-over-year pending sales gains of 20.2 percent in San Mateo County and 24.2 percent in Santa Clara County. In San Francisco County, pending sales inched up 1.9 percent.

• Overall pending sales in the Central Valley posted a 5 percent monthly increase and a 7.5 percent annual gain. One exception for the region was Kern County, where pending sales declined 4.5 percent from a year ago, due to a decline in oil prices and the economy’s reliance on the energy sector.

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WHAT YOU SHOULD KNOW

• Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,142,000, according to a report released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This is 5.8 percent below the revised July estimate of 1,212,000, but is 0.9 percent above the August 2015 rate of 1,132,000.

• Small, mortgage applications ticked up 2.9 percent from one week earlier, according the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey for the week ending Sept. 30.

• The refinance share of mortgage activity edged up to 63.8 percent of total applications, increasing from 62.7 percent the previous week. The adjustable-rate mortgage share of activity increased to 4.5 percent of total applications.

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased from 3.66 percent to 3.62 percent, marking the lowest level since July 2016.

• The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.6 percent from 3.64 percent.

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SUMMER HOUSING MARKET NOT COOLING DOWN THIS FALL

The summer housing market saw high demand next to rising home prices, but don’t expect Fall to bring any relief. In fact, it could bring the hottest fall in a decade, new data from realtor.com shows.

Home sales in September moved 4% faster than last year, according to the data. The number of days on market is also expected to decreased by three days from last year.

In August, Lawrence Yun, the National Association of Realtors Chief Economist, said that without new housing construction, the housing recovery could stall.

Housing inventory declined annually for 15 consecutive months, and properties closed 11 days quicker than August last year, according to the Pending Home sales report by NAR.

Inventory also remains down as less than 450,000 new listings came on the market in September, while the median home price rose 9% from last year to $250,000, a new high for the month.

“House hunters who were shut out this summer because of fierce competition could fare better this fall, with more opportunities to buy and mortgage rates still near all-time lows,” realtor.com Chief Economist Jonathan Smoke said. “But don’t expect bargains—prices haven’t come down from this summer’s record highs.”

“Overall, the fundamental trends we have been seeing all year remain solidly in place as we enter the traditionally slower sales season, and pent-up demand remains substantial as buyers seek to get a home under contract while rates remain so low,” Smoke said.

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2016's BEST PLACES TO RAISE A FAMILY IN CALIFORNIA

California once drew legions of fortune seekers to its short-lived Gold Rush. Although few newcomers are likely to strike gold in the literal sense today, the Golden State continues to charm big dreamers — not just aspiring actors and tech-preneurs, either. California’s many other riches are a magnet for families in search of opportunity.

There’s no shortage of economic activity in the state, for one. California’s GDP of $2.5 trillion in 2015 exceeded those of all but five countries. That’s due in part to its way of setting kids up for success, by establishing some of the best universities in the world. And once employed, workers benefit from a comprehensive paid family-leave program. California was the first state to offer that incentive to American families and remains one of only a handful of states to implement such a policy.

Add to that list of priorities an abundance of fun and entertainment options, including Disneyland and Universal Studios. For outdoor-loving families, the state teems with natural beauty, providing plenty of opportunities to explore.

Such a combination of qualities makes California the ideal place for parents to raise their children. But it’s not all moonlight and roses throughout the state — some cities are more family-friendly than others. WalletHub’s analysts therefore compared 240 Golden State cities to determine which among them is most conducive to family life. In making such a comparison, we examined each city across 21 key metrics, ranging from “number of attractions” to “number of pediatricians per capita” to “unemployment rate.” Scroll down for the winners, additional expert commentary and a full description of our methodology.

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CALIFORNIA HOME SALES EXPECTED TO EDGE UP SLIGHTLY IN 2017

Following a dip in home sales in 2016, California’s housing market will post a nominal increase in 2017, as supply shortages and affordability constraints hamper market activity, according to the “2017 California Housing Market Forecast,” released last week by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). 

Making sense of the story
• The C.A.R. forecast sees a modest increase in existing home sales of 1.4 percent next year to reach 413,000 units, up slightly from the projected 2016 sales figure of 407,300 homes sold. Sales in 2016 also will be virtually flat at 407,300 existing, single-family home sales, compared with the 408,800 pace of homes sold in 2015. 
• “Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said C.A.R. President Pat “Ziggy” Zicarelli. “The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales. As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”
• The California median home price is forecast to increase 4.3 percent to $525,600 in 2017, following a projected 6.2 percent increase in 2016 to $503,900, representing the slowest rate of price appreciation in six years.
• “With the California economy continuing to outperform the nation, the demand for housing will remain robust even with supply and affordability constraints still very much in evidence. The net result will be California’s housing market posting a modest increase in 2017,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity.”

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TIME TO SELL?

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