California Housing Market Forecast

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C.A.R. releases 2013 California housing market forecast
California’s housing market will continue to recover in 2013, as home sales are forecast to increase for the third consecutive year and the median price to rise for the second straight year, according to C.A.R.’s “2013 California Housing Market Forecast,” released Tuesday.

The C.A.R. forecast sees sales gaining 1.3 percent next year to reach 530,000 units, up from the projected 2012 sales figure of 523,300 homes sold.  Sales in 2012 will be up 5.1 percent from the 497,900 existing, single-family homes sold in 2011.

C.A.R.’s forecasts the average for 30-year fixed mortgage interest rates will edge up to 4 percent after six consecutive years of declines, but will still remain historically low.

The statewide median home price is forecast to increase a moderate 5.7 percent to $335,000 in 2013.  Following a decrease in 2011, the California median home price will climb a projected 10.9 percent in 2012 to $317,000.

“The housing market momentum which began earlier this year will continue into 2013,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes.”

“The actions of underwater homeowners will play an important role in housing inventory next year, with rising home prices inducing some to stay put and others to list and move forward,” she said.

 

Mortgage prepayment rate reaches highest level since 2005

Mortgage prepayment rates have soared to the highest in seven years as homeowners take advantage of the lowest borrowing costs on record to refinance.

Home loans were repaid in August at a pace that would erase 25 percent of the debt in a year, according to Lender Processing Services Inc. (LPS).

The cost of 30-year loans dropped to 3.4 percent last week, helping push refinancing applications to a three-year high, after the Federal Reserve said it will buy $40 billion of mortgage securities per month to stimulate the economy. That followed government efforts to increase refinancing with new rules designed to expand eligibility and reduce costs.

Prepayment speeds also reflect borrower defaults and debt retired in home sales, which increased in August to a two-year high as the housing market showed signs of recovery.

Refinancing applications climbed almost 20 percent last week to the highest since April 2009, leaving this year’s average pace 56 percent greater than in 2011, according to a Mortgage Bankers Association index released today.

Borrowing costs for typical 30-year fixed-rate loans have declined from last year’s high of 5.05 percent, according to Freddie Mac surveys. That’s spurred a wave of repeat refinancing activity. Prepayment speeds in August rose the most among loans made last year, climbing 23 percent, LPS data show.

 

Home prices rise 4.6 percent in August

CoreLogic released its August Home Price Index (HPI®) report this week. Home prices nationwide, including distressed sales, increased on a year-over-year basis by 4.6 percent in August 2012 compared with August 2011. This change represents the biggest year-over-year increase since July 2006. On a month-over-month basis, including distressed sales, home prices increased by 0.3 percent in August 2012 compared with July 2012. The August 2012 figures mark the sixth consecutive increase in home prices nationally on both a year-over-year and month-over-month basis.  The HPI analysis from CoreLogic shows that all but six states are experiencing price gains.

Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 4.9 percent in August 2012 compared to August 2011. On a month-over-month basis excluding distressed sales, home prices increased 1 percent in August 2012 compared to July 2012, also the sixth consecutive month-over-month increase. Distressed sales include short sales and real estate owned (REO) transactions.

Highlights as of August 2012:

  • Including distressed sales, the five states with the highest home price appreciation were:  Arizona, 18.2 percent; Idaho, 10.4 percent; Nevada, 9 percent; Utah, 8.9 percent; and Hawaii, 8.0 percent.
  • Including distressed sales, the five states with the greatest home price depreciation were: Rhode Island, 2.6 percent; Illinois, 2.3 percent; New Jersey, 1.4 percent; Alabama, 0.7 percent; and Connecticut, 0.5 percent.
  • Excluding distressed sales, the five states with the highest home price appreciation were: Arizona, 13 percent; Utah, 10 percent; Montana, 8.8 percent; Idaho, 8.6 percent; and North Dakota, 7.7 percent.
  • Excluding distressed sales, this month only three states posted home price depreciation: Rhode Island, 1.7 percent; New Jersey, 1.4 percent; and Alabama, 0.2 percent.

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