Archive for November, 2011
U.S. house prices rose ever so slightly in the third quarter over the second quarter, according to the Federal Housing Finance Agency’s seasonally adjusted purchase-only house price index.
The HPI, calculated using home sales price information from mortgages purchased by Fannie Mae and Freddie Mac, grew 0.2% on a seasonally adjusted basis in the third quarter from the second quarter. On an unadjusted basis, prices rose 0.75% during the period.
However, seasonally adjusted home prices fell 3.7% in the third quarter of 2011 from the same period a year earlier. (Click on chart to expand.)
FHFA’s seasonally adjusted monthly index for September was up 0.9% from its August value. On an adjusted basis, prices grew 0.7% during the month-to-month period.
“In most regions of the country, third-quarter home values were relatively stable, even in some areas that experienced sharp price declines in preceding quarters,” said FHFA Principal Economist Andrew Leventis.
“While most housing markets still face stiff headwinds, the fact that some beleaguered states — such as Idaho, Florida and Utah — saw quarterly price increases is a positive development,” Leventis said.
FHFA’s all-transactions house price index, which includes data from mortgages used for both home purchases and refinancings, increased 0.9% in the third quarter, but is down 4.3% annually.
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The third quarter brought another dose of persistently disappointing home prices, with the U.S. national home price index up only 0.1% from the second quarter and down 3.9% from year-ago figures, the S&P Case-Shiller report said Tuesday.
The national index decline is not as steep as the 5.8% decline posted in the second quarter, but home prices overall are back to first quarter of 2003 levels.
The report found that the annual rate of change in 14 of the 20 metropolitan statistical areas covered by the report improved in September when compared to August.
The 10-city and 20-city composites saw annual rate declines of 3.3% and 3.6%, respectively. Between the second and third quarter the 10-city index home price index declined 0.4% and 20-city declined 0.6% during that time.
"Home prices drifted lower in September and the third quarter," says David M. Blitzer, chairman of the index committee at S&P Indices. "The national index was down 3.9% versus the third quarter of 2010 and up only 0.1% from the previous quarter.
"Three cities posted new index lows in September 2011 — Atlanta, Las Vegas and Phoenix. Seventeen of the 20 cities and both composites were down for the month," Blitzer said. "Over the last year, home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy."
Year-over-year, Detroit and Washington posted positive annual rates of change and noted an improvement in these rates compared to August. New York, Portland and Washington saw monthly gains between August and September.
"It is a bit disturbing that we saw three cities post new crisis lows," the S&P Case Shiller report said. "For the prior three or four months, only Las Vegas was weakening each month. Now Atlanta and Phoenix have fallen to new lows too. On a monthly basis, Atlanta actually posted a record low rate of -5.9% in September over August."
The relative lack of closed transactions might be exacerbating the downside, the report said.
"The relative good news is that 14 cities saw improvements in their annual rates of change, versus the six that weakened."
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Hispanic households accounted for more than half of the nation's homeowners in the third quarter, evidence of the potential purchasing power of Latinos during the housing recovery.
According to Census Bureau data provided by Alejandro Becerra, former senior housing fellow at the Congressional Hispanic Caucus Institute, the number of Hispanic owner-occupiers grew by 288,000 from 6.21 million in the second quarter to 6.49 million in the third quarter.
Of 545,000 new household units in the third quarter, 53% were Hispanic households. The remaining 47%, or 257,000 units, consisted of other minority groups and non-Hispanic whites.
"We have to give due cause to Hispanic real estate professionals, to the many nonprofit groups out the that are trying to put into place the foreclosure prevention programs to keep people in their homes, to help new homebuyers," Becerra said. "All this is beginning to bear fruit in reaching out to these households."
Minority households are taking advantage of the lower end of the housing market where, Becerra believes, prices have hit the bottom. "It's the only place where the possibility of buying is right now," he said.
In contrast, middle-income families and even upper income households are stalled because many of them owe more than their homes are worth "so the only hope for the future has to come from the younger households who are able to buy now," Becerra said. The chart below, provided by National Association of Hispanic Real Estate Professionals, shows the growth of Hispanic purchasing power has more than doubled.
According to Fannie Mae's 2010 third-quarter housing survey, 61% of Hispanics said they expect their financial situation to get better over the next year, compared to 41% of all Americans and 57% of Hispanics consider owning a home a symbol of success whereas only 33% of all Americans feel that way.
Ernie Reyes and Gary Acosta, co-founders of NAHREP said home-buying activity among Latinos will be even greater as the market stabilizes. Reyes and Acosta have tracked the progress of Hispanic home ownership over the past 10 years.
“Latinos do not believe in renting. “They believe in owning,” says Reyes. “If our community was given half the opportunity it deserves, this volume would grow by leaps and bounds.”
Foreclosures related to the subprime crisis delivered a highly disproportionate blow to Latinos, however.
Blacks and Hispanics with credit scores higher than 660 received subprime and option adjustable-rate mortgages three times as often as white borrowers in similar financial standing between 2004 and 2008, according to a new study from the Center for Responsible Lending.
"Hispanics are now helping struggling local economies across our nation through population growth and purchase power. We believe these same dynamics will be a driving force in the resurgence of the housing market in the near term," said NAHREP President Carmen Mercado.
NAHREP is a 20,000-member real estate trade association with 50 affiliate chapters in 48 states.
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