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Buying A Home Is Now 38% Cheaper Than Renting

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Buying A Home Is Now 38% Cheaper Than Renting
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Is renting or buying a better financial bet? Every six months, Trulia?s chief economist Jed Kolko runs the numbers to answer that question and help you stay on top of the trends. So what does Trulia?s Winter 2014 Rent vs. Buy Report tell us? Although the gap between renting and buying is narrowing across the U.S., homeownership is still 38% cheaper than renting.

Homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas according to Trulia TRLA -5.5%?s latest Winter Rent vs. Buy report. Rising mortgage rates and home prices have narrowed the gap over the past year, though rates have recently dropped and price gains are slowing. Now, at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally, versus being 44% cheaper one year ago.

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The rent versus buy math is different in each local market. Buying ranges from being just 5% cheaper than renting in Honolulu to being 66% cheaper than renting in Detroit. But even for a specific market, the cost of buying versus renting depends on how much home prices rise (or fall) after you buy. Our model assumes conservative home price appreciation, but ? as we all know after the last decade ? home prices can unexpectedly rocket or plummet.

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Buying Beats Renting Until Mortgage Rates Hit 10.6%

Even though prices increased sharply in many markets over the past year, low mortgage rates have kept homeownership from becoming more expensive than renting. Also, in some markets, like San Francisco and Seattle, rents have risen sharply; rising rents hurt affordability relative to incomes, but rising rents make buying look cheaper in comparison.

Will renting become cheaper than buying soon? Some markets might tip in favor of renting this year as prices continue to rise faster than rents and if ? as most economists expect ? mortgage rates rise, due both to the strengthening economy and Fed tapering. For each metro, we identified the mortgage rate ?tipping point? at which renting becomes cheaper than buying, given current prices and rents. If rates rise, Honolulu would become the first metro to tip, at a mortgage rate of 5.0%. San Jose and San Francisco would also tip before rates reach 6%. But those are the extreme markets. Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying ? and rates haven?t been that high since 1989.

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Bad Staging Decisions (And What to Do About Them)

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Original Posting by Trulia Pro Blog
WRITTEN BY
Tara-Nicholle Nelson
More about Tara-Nicholle Nelson

8 Shockingly Bad Staging Decisions (And What to Do About Them)
Real estate is an intensely personal experience for many buyers and sellers. After all, a home, at its core, is a personal expression of a homeowner?s entire life wrapped inside four small (okay, sometimes not so small) walls.

And while, ultimately, buyers should be more focused on the bones of the home?the things that will stay after the current owner has vacated?staging can often be the difference between a buyer bonanza and a dearth of hot offers. Don?t let your sellers suffer at the hands of poor staging.

It may be challenging, but a little tough love now, will make for a love fest post-sale?after the big offers come flying in. Here are 8 of the biggest staging sins sellers make and how agents can help their sellers avoid these pitfalls before it costs them a sweet deal.

1. Collection Overload.
It is very difficult for almost any collection to look orderly and neutral, two high-level aims of home staging. Unless the homeowner has attractive, high-end built-in cases to house the collections and the target buyers share a similar affinity for the objects, even the coolest collection can come off as a pile of space-consuming clutter.

When it comes to shockingly bad staging decisions, the choice to give a taxidermy or gun collection a starring role in a home?s staging is high in the oh-so-bad rankings. For some buyers, these collections can trigger ethical and sanitation and can distract from the strengths and features the property has to offer.

What to Tell Your Seller:

Remember that uber-personal thing we talked about earlier? Collections are often a source of pride or hold sentimental value. Tread lightly. Let your seller know that while you appreciate the collection, their home sale will benefit from a more neutral, less-personal aesthetic. You may also want to mention that open houses mean many people in and out of the seller?s home. All prized possessions should be stored ahead of time.

2. Echo-Chamber Staging.
In an echo chamber, sounds are amplified because they simply bounce around in that closed space. When left alone, the same thing can happen to sellers if they do not have outside input. And unfortunately, it seems to be the bad staging ideas that get amplified, more than the good ones. Echo chamber staging happens when the sum total of a staging team, well, one person. That bold wallpaper in the bathroom may seem like a good idea, but a little perspective?and another opinion?may prove otherwise.

What to Tell Your Sellers:

The truth can hurt?but backing into your argument can take some of the sting out of the professional staging talk. Sellers who stage with zero external or professional input, are often the sellers who are unable to see:

that their homes are still significantly cluttered or over-full,
that their furniture is too plentiful and too large to show how spacious the home truly is, or
that their sweet feline companions are also rather malodorous to strangers.
Take a little staging field trip with your sellers. Take them to one home with tasteful bring-in-the-buyers staging and another to a home with cover-your-eyes-bad d?cor. It can be tough to self assess, but once you show your sellers what a big difference a little staging makes, they may be more open to the suggestion. If your clients have a bare-bones budget, see if they?ll hire a pro stager for just an hour?s worth of advice.

3. Failure to edit.
You?ve heard thirty-somethings who still live at home diagnosed with failure to launch? Well, failure to edit is a close cousin of this syndrome. As the New York Times recently put it, ?the job of stagers is to reverse the accumulated creep of hundreds of small and misguided design decisions, and to erase any hints of the messiness of daily life.? Your client might have a fantastic rug, a beautiful sofa, amazing tchotchkes and the highest-end personal effects, but chances are good that their cumulative first impression to a buyer viewing the home will still fall short of the ?one broad stroke of gorgeousness? the Times piece correctly says home sellers should aim for, with their staging.

The failure to edit is a generalized syndrome which can manifest in all sorts of specific staging woes, from garden variety clutter to disastrous decor style mash-ups.

What to Tell Your Sellers:

Edit, edit, edit. Then go back and edit again. Sellers should think of de-cluttering as pre-packing. If your client is a DIY stager, tell them to ask their friends to come in and help decide what still needs to go, once they think they?re done removing furniture and personal effects. A sassy best friend or a nit-picky sister-in-law can sometimes be an agent?s best friend.

4. Silly scenarios.
The difference between staging and interior design is simple: staging is cost-and-time efficient design undertaken with the specific objective of showing a home off to its best advantage, playing up its features and helping prospective buyers visualize the best lives they could possibly live in the home, should they choose it. Unfortunately, this has led some well-intentioned sellers and stagers to believe they should stage one bedroom as a Parisian boulevard (Eiffel tower mural included), another with a full-blown butterfly theme and the third as the beach?complete with umbrella, towels on the wall and sunscreen bottles on the nightstand. I saw this house, folks. With my own two eyes.

What to Tell Your Sellers:

Be firm. Let sellers know that they should stage their home to show off its space, light and conveniences, and the best, basic purposes that unusually small or large spaces could be used for. If the backyard is a huge selling point, stage it with outdoor dining or living room furnishings. Similarly, if the home is a two-bedroom with a bonus room in an area of four-bedroom homes, staging the bonus room as a bedroom or home office helps buyers understand the solutions that can minimize the brunt of your home?s challenges.

Staging your home to create ?cute? scenarios with no relationship to the selling points or solutions buyers care about is of no value and can create a low-budget feel.

5. The ?lived-in? look.
When a home is being shown for sale, it must be immaculate, every single time it?s being shown. It should look like no one lives there: no toothbrushes, curling irons, protein shake mixes or paperwork allowed.

Is this difficult to keep up? Absolutely. But you?d be surprised at how bad an impression just a few personal toiletries or dishes can make.

What to Tell Your Sellers:

Work closely with your sellers so that they understand the importance of a flawless showing. Encourage your clients to set up a system for putting everything away and wiping down all kitchens, bathrooms and other daily mess hot spots every single time the home is going to be shown.

6. Closet cramming.
Out of sight is not out of mind. Home buyers today are desperate for storage space and will undoubtedly open those same, crammed-tight doors in an effort to evaluate how the home ranks for storage. Beautifully organized closets with ample room create an impression in the buyer?s mind that they, too, can have an orderly life in the home.

What to Tell Your Sellers

Encourage sellers to see the exercise of staging as an opportunity to sell, donate or throw out things they no longer need. Remind them that even huge closets, if crammed to the gills, make buyers wonder how they?ll ever get by with so little closet space.

7. Failing to stage for all the senses.
A house that smells like pet mayhem or smoke or has a noisily defective heater is a tough house to sell, no matter how beautifully it is staged. Unfortunately, smells and sounds are very easy to get acclimated to, when you live with them. Buyers, though, will detect them the second they walk in?and the moment they do is the moment we in the business call ?turn-off time.?

What to Tell Your Sellers:

It may be uncomfortable?but honest is the best policy. Be gentle and sensitive (?musky? comes across softer than ?moldy, dank, and gross?). Offer to work with them to fix it or refer them to a trusted vendor who can.

8. Not to.
Ultimately, the most shockingly bad of all staging decisions is the surprisingly frequent decision not to bother staging the home at all. This explains homes like the one I once viewed which had residents still sound asleep in their beds, in the dining room, as the listing agent walked myself and my mortified buyer clients through the property. On the less bizarre end of the non-staged spectrum, this is how lovely homes with vast potential end up selling at a discount, as cosmetic fixers at a discount. This is a particular tragedy in cases where the owners could have painted, spruced, moved loads of things out and a few newer things in and made much, much more money on their homes

What to Tell Your Sellers:

Ask them what about staging feels off-putting. If it?s a budgetary concern, focus on de-cluttering and small accents or paint, which can make a big difference on a dime. If the issue is?you guessed it?a little more personal, remember that showing can sometimes be more effective than telling.

NEW LOAN REQUIREMENTS FOR GETTING A MORTGAGE

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Written by Phoebe Chongchua on Monday, 06 January 2014 8:44 am

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The number of homes purchased with a home loan has been dropping steadily since May, according to RealtyTrac. Instead, cash is king for many reasons. As mortgage rates began creeping up, some homebuyers started opting to purchase with all cash. And that trend may continue as new loan requirements become more strict.

However, for those buyers who do need to purchase a home with a loan, expect to see some changes in the loan requirements as the new year rings in. Here are a just a few of the changes that are going into effect in January 2014. Some of these requirements are already in place by lenders.

The new guidelines are being implemented under The Consumer Financial Protection Bureau’s Qualified Mortgage (QM) and are designed to help avoid the borrowing catastrophes that caused the housing crisis. The guidelines are what the lenders use to prove borrowers’ ability to repay a loan.

One of the guidelines? requirements is that borrowers must have a maximum debt-to-income ratio of 43 percent. Debt-to-income ratios have already been in place but the new rules won’t allow for any compensating circumstances. That means that not even a significant downpayment or a large cash reserve will be allowed to offset a higher debt ratio.

The incentive to follow these guidelines is huge for the lender. If the mortgages don’t meet the QM guidelines, the lender will be required to hold the loan as opposed to selling it to Fannie Mae and Freddie Mac.

The QM requirements potentially may have lower loan limits for conventional conforming loans. The agency that regulates Fannie Mae and Freddie Mac, The Federal Housing Finance Agency, will delay its normal adjustment of loan limits from January 1, 2014 to sometime later in the year. The agency is trying to see what kind of impact the new QM guidelines will have on the housing industry. For most housing markets, the current limits are $417,000 and up to $625,000 in high-cost areas. How these figures will change remains to be seen in 2014.

Origination fees will be limited under the QM requirements, which could make getting a smaller loan more difficult. Origination loan fees will be limited to no more than 3 percent of the loan amount. This could make mortgage lenders less likely to offer smaller loan amounts because they may not always be able to recoup their costs and make a profit.

Self-employed borrowers already face tough standards and they’ll likely be even more strict in 2014. In the QM guidelines, all borrowers must prove there is sufficient cash flow to make payments on their loan but self-employed borrowers’ incomes typically fluctuate. These borrowers frequently have cash reserves that they rely on to pay bills when their income is off in a particular month. However, even if there is a large amount of money in reserve, it may still be difficult for the self-employed borrower to get a loan approved due to this new “ability-to-repay” QM guideline.

Expect to see changes in the loan approval process as the new year begins. However, some of the specific requirements may not be determined until later in 2014.

Read Original Post – RealtyTimes.com

Real Estate Red Alert: The Flippers Are Back

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Wisconsin Startup Program
inwisconsin.com

“I think 2014 will be the year when we see that home price appreciation pulls back to more normal, sustainable levels,” says Daren Blomquist, vice-president of RealtyTrac.com, a site that aggregates real estate data. Markets that boomed in 2013 will likely scale back to more modest growth in the low double digits, while nationwide growth should average about 4.5 percent, according to Blomquist.

Even with recent gains factored in, most markets are not at risk right now for another housing bubble. Nationally, home prices remained 4 percent undervalued in the third quarter, according to Trulia?s Bubble Watch. Only Orange County, Calif., and Los Angeles are more than 10 percent overvalued, the report finds.

The hottest markets for 2014 won?t be in the big cities. A joint study of more than 1,000 real estate industry experts done by PwC and the Urban Land Institute ranks real estate prospects in smaller secondary markets including Houston, San Jose, Dallas/Fort Worth and Austin above those in larger cities like Chicago, Atlanta and Washington, D.C., where ?there’s a lot of money chasing a few assets,? says R. Byron Carlock, Jr., PwC national real estate practice leader.

It?s still 35 percent cheaper nationally to buy a home than to rent one, but that doesn?t mean millennials are rushing out to get a mortgage. Just 18 percent of consumers surveyed in September by Credit.com said that buying a house was still their definition of ?the American Dream.?

– See more at: www.thefiscaltimes.com/Articles/2014/01/03/Real-Estate-2014-Need-Know-Guide#sthash.lbcPIoIl.dpuf

Time for Buyers to Jump In Before Rates Go Up

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U.S. Government programs are expected to wind down in 2014 according to various information posted recently, and will likely lead to higher mortgage interest rates due to the improving Real Estate Market. The Real Estate Market isn’t all a rosey picture though, and some speculate and still on the fence. Read up for yourself.

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Click to read RIS Media article “Home Values Expected To Rise Through 2018”

New Homeowners Need To Be Leery of Scam

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PUBLIC INVESTIGATOR
Deed scam tricks new homeowners into buying useless documents
Article By Gitte Laasby of the Journal Sentinel

The letter says to send money to Record Transfer Services ? or one of its aliases, Property Transfer Services, Conveyance Transfer Services, Record Retrieval Department and National Deed Service ? at an address in South Dakota, Delaware, California or Michigan.

Many first-time home buyers are unfamiliar with the real estate transaction process, said Cori Lamont, director of regulatory affairs with the Wisconsin Realtors Association.

“For people who don’t understand the real estate process or that a deed exists, they think they have to pay this,” Lamont said.

Read more from Journal Sentinel: http://www.jsonline.com/watchdog/pi/scam-tricks-new-homeowners-into-buying-useless-documents-b99200536z1-245195821.html#ixzz2tEAkJtFa
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Milwaukee Metropolitan Area October Home Sales Up 3.5%

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Sales of homes in the 4-county Metropolitan Milwaukee real estate market increased 3.5% compared to the same period in 2012. There were a total of 1,434 homes sold, compared to 1,386 last October.
October Sales

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The 3.5% increase in regional sales may be a sign that the marketplace is settling into a more gradual sales pace. Rather than seeing large, double-digit increases ? fueled by discounts and low prices ? steady sales increases would point to a market with competitive pricing and neither buyers nor sellers dominating a transaction.

Cumulative sales through October totaled 15,351, putting the market on track to end the year with just under 18,000 sales.

Milwaukee and Waukesha Counties saw a moderate increase in sales in October, whereas Washington and Ozaukee Counties saw insignificant decreases in the number of units sold (both counties had one less sale than the previous year).

All are following a ?normal? pattern of sales for the year, characterized by low sales in the first few months of the year (as listings are added to the market, increasing inventory). In spring, sales take off, consuming inventory through the summer, ending about Labor Day. The fall sees a gradual trailing off of sales to the end of the year (and a rise in inventory).

Homes placed on the market increased for the seventh month in a row in October, going up 8.6% ? the first time the market has seen a sustained period of increased listings since before the recession.
October Listings

gmar october 2014 listings 420

Despite the increase in listing activity, the market?s inventory level was 7.5-months, down slightly from September?s 7.6 level. A year ago, the inventory level was at 11.4-months. If the 1,177 listings with an active offer are subtracted from current listings, the inventory level drops to 5.3-months.

The 8.6% increase in listings is a sign of a healthy real estate market, as sellers trust they will receive a competitive price for their house, but the number of current listings without an active offer indicates the market has room for more.

The market is proving to be very ?balanced,? in contrast to the wild swings we saw over the last decade. Sellers should not assume they will get whatever they ask for, and buyers should know the days of deep discounts are gone; a REALTORS? guidance will help both parties purchase or sell a property for a fair price.

Provided by the Greater Milwaukee Association of Realtors

Behind the 2013 Land Report 100: America’s Largest Landowners Double Down

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Investing in rural, undeveloped land continues to be a popular strategy among the affluent, according to the 2013 Land Report 100, the latest annual survey and ranking of the largest private landowners in the United States. Increasingly seen as a “safe deposit box with a view,” acreages continue to be purchased by leading landowners at solid rates. In 2012, the country’s top 100 landowners cumulatively increased their private holdings by 700,000 acres to a total of 33 million acres, nearly 2 percent of U.S. land mass.

Liberty Media Chairman John Malone and his 2.2 million acres under ownership topped the Land Report 100 list, which focuses exclusively on deeded acreage owned by individuals, families, family-owned companies and family-controlled foundations – excluding leased and public lands. Malone edged out Ted Turner, who currently possesses more than 2 million land acres. Rounding out the top five in order were: the Emmerson family, Brad Kelley and the Irving family.

“It’s refreshing to continue seeing large landowners find value in aggregating their land for conservation and agriculture purposes versus parceling it out and developing it,” said land broker Greg Fay, founder of Fay Ranches. “Everyone at Fay Ranches congratulates leading landowners for their commitments to the land, to conserving our wild places and preserving our agricultural heritage.”

This year saw a shake-up in the top ten as Stan Kroenke elevated his position from No. 10 to No. 8 after his recent purchase of the historic Broken O Ranch, described nationally as “one of the largest agricultural operations in the Rocky Mountain West.” Kroenke also owns the 540,000-acre Q Creek Ranch, the largest contiguous ranch in the Rocky Mountains.

There are several landowners new to this year’s 100 list, including No. 28, Dan and Farris Wilks, billionaire brothers who recently purchased more than 400 square miles of land, mostly in the eastern half of Montana. Oil field services entrepreneurs, the Wilks brothers own the prized N Bar Ranch in Montana, which is known for its wildlife and fishery resources. Another new addition to the Land Report 100 presented by Fay Ranches is No. 96, Arthur Nicholas. The co-founder of Nicholas Investment Properties owns Wyoming’s historic Wagonhound Land and Livestock, an AQHA Ranching Heritage Breeder.

“America’s largest landowners continue to recognize land as a compelling asset, one whose numerous attributes go well beyond ROI,” said Eric O’Keefe, editor-in-chief of The Land Report. “It’s a story you’ll see again and again in the Land Report 100, one that features familiar faces and some new ones I’m sure readers will instantly identify.”

Copyright? 2013 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Read Original Post @ Agent-Edition.net

October 2014 Market Report from MLS

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Milwaukee
Report from Multiple Listing Service, Inc.

Now that the baton is in grasp of the final quarter of our annual relay, it’s a good time to look back and reflect. This year has been spectacular for residential real estate. Robust gains in sales and prices were felt in many markets. More homes sold in less time for closer to asking price. While consumers have felt empowered by low prices and interest rates, sellers are starting to regain their footing. Seller confidence is crucial to refilled inventory bins ? which are still relatively sparse.
New Listings in the Milwaukee region increased 5.6 percent to 1,824. Pending Sales were down 23.1 percent to 913. Inventory levels shrank 4.4 percent to 7,886 units.
Prices got a lift. The Median Sales Price increased 6.1 percent to $174,000. Days on Market was down 17.7 percent to 82 days. Absorption rates improved as Months Supply of Inventory was down 11.1 percent to 5.9 months.
The economy continues to snail forward. The government shutdown had a modest impact on borrowing ? mostly centered on USDA and VA borrowers. Consumer confidence is central to ongoing recovery, and confidence was hindered by the shutdown. Consumer spending accounts for roughly 70 percent of U.S. economic activity and impacts the likelihood for big-ticket purchases like homes and cars. Future shutdowns are unwelcome.
All data for the market reports comes from the Multiple Listing Service, Inc. and is powered by 10K Research and Marketing. You can follow this link: http://www.metromls.com/support/Market_Updates/index.html or visit www.metromls.com.

View Original Post from Multiple LIsting Service, Inc.

Lower Limits Could Affect Markets

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By Ken Fears Director, Regional Economics & Housing Finance National Association of REALTORS?

In early September, the Federal Housing Finance Agency (FHFA), the entity that oversees Freddie Mac and Fannie Mae, gave notice that it would revise the conforming loan limits in an attempt to stimulate the private sector, specifically the private mortgage securitization (PLS) market. Though the reduction in the loan limits is expected to be modest, it could have more far reaching impacts at the local level and for affected borrowers.

Each year, the FHFA adjusts the national conforming loan limit, which defines the space within which Fannie Mae and Freddie Mac can finance mortgages. The national limit is $417,000, but that varies by county and can increase to $625,500 in high-cost markets. The FHA?s limits, which range from $261,050 to $725,750, are based off of the conforming limit, so the FHFA?s actions would impact FHA borrowers as well.

NAR research estimates that if the national conforming limit were lowered to $400,000, roughly 170,000 total mortgages and 60,000 purchase mortgages would have been impacted in 2012 (based on data from the FFEIC?s HMDA dataset). The total number was inflated due to the refinance boom in 2012. However, stronger price growth in 2013 has likely pushed more homebuyers toward the conforming limit. Most estimates have the impacted volume at roughly 3-5 percent nationally.

While the national figure may appear relatively small, the change could have a significant impact at the local level. The impact goes beyond the high priced markets on the coasts and would affect some smaller communities in the Midwest and South. Furthermore, several of the markets in the top 25 most impacted are in formerly distressed areas (e.g. Atlanta, Sacramento, Riverside-San Bernardino, Oakland and Phoenix). These are areas where FICO scores declined in recent years as a result of the economic and housing downturn and where investors have played an important role in their recovery. As prices rise, investors will pull back and it?s not clear that the PLS industry is currently ready to provide financing for the nascent homebuyers needed to fill the void. Some private mortgage insurers recently announced willingness to underwrite mortgages with FICOs between 620 and 680. It will be particularly interesting and instructive to see how lenders respond to this change. Fannie Mae and Freddie Mac?as well as the FHA?have new programs to help in these distressed areas, but they are less potent if reduced limits disqualify borrowers.

Beyond the distressed areas, borrowers pushed into the non-conforming, or from FHA to conventional-conforming market, may not have the same access to credit due to higher FICO and down payment requirements. Since rates are already at parity or better in the jumbo space and part of the conforming-conventional, if a borrower had sufficient credit quality or the down payment, they likely would have already migrated to the private sector. Similarly, the FHA has been underpriced by the private MIs at the middle and upper price echelons since the fall of 2012. Lowering the limits could create a binding equity or credit constraint for the remaining borrowers in this space.

Finally, it isn?t clear that lowering the limits will stimulate the PLS market. There are still a number of issues hindering the PLS market, including representation and warrants risk, the unfinished QRM rule, concerns about the QM rule, secondary market reform and lingering negative investor sentiment. Nor is it clear that bank portfolios will expand to sustain these borrowers.

Though well intended, a reduction in loan limits could crowd out many otherwise qualified borrowers. There may be a time when the PLS sector is ready, but it isn?t clear that PLS issuers are ready to take up those borrowers impacted by lowering the limits.

Ken Fears is the Director of Regional Economics & Housing Finance for the National Association of REALTORS?.

RIS Media Broker Report Article

Big investors buy up homes in key markets

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Julie Schmit, USA TODAY 6:46 p.m. EDT October 28, 2013
Experts disagree on how much investor buyers have to do with the home price recovery. But investors remain very active in key markets as they pull back in others.

Home prices
(Photo: Danny Johnston, AP)
STORY HIGHLIGHTS
Big investors buy 1 in 4 homes in some cities in September
Other markets see slowing investor interest
Big investors account for small part of housing market

Big investors continue to expand into more cities for single-family homes as they pull back in others.

Last month, institutional investors, who largely buy single-family homes to turn into rentals, accounted for about one in four home sales in Atlanta, Las Vegas, St. Louis and Jacksonville, data from RealtyTrac show.

They also accounted for a big chunk of sales in Charlotte and Memphis.

Price gains will likely follow the investor buyers, says John Burns, CEO of John Burns Real Estate Consulting, as they did in earlier hot investor markets such as Phoenix and Sacramento.

HOUSING MARKET: Pending home sales slip: Flat sales next year?

He speculates that investor buyers ? including institutional Wall Street buyers, individuals who flip homes for quick profits and mom and pop investors ? have driven much of this year’s home price appreciation.

CoreLogic data show prices up 12.4% in August year over year, but faster in areas favored by investors, like Phoenix and Sacramento, which were up 18% and 26% respectively.

“Investors were just smart. They saw that homes were undervalued. They jumped in and pushed prices back up to normal,” Burns says.

Big investors still account for a small part of the overall housing market. As a result, their impact on overall prices isn’t that great, said Richard Smith, CEO of real estate firm Realogy Holdings, at a Zillow housing forum Thursday.

Prices have also risen in areas that have had little investor activity, says Mike Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.

Orr tracks the Phoenix market, which was one of the first targeted by investors.

In mid-2012, investor activity peaked in Phoenix, Orr says. Then, they accounted for almost 40% of home sales. Those investors would include small investors.

LENDERS: Home loans become a little easier to get

For this September, Orr says investors accounted for about 23% of sales. Historically, they’d be 15% to 20% of the market, he says.

While Phoenix home prices in August were up more than the national average, home price gains have been slowing this year, show seasonally adjusted price data from Standard & Poor’s Case-Shiller index.

A “cooling wave” in terms of demand has now settled in after a frantic spring, Orr says. Falling investor interest is playing a role, but lack of enthusiasm from regular buyers is more important because they’re more numerous, Orr says.

USA Today Article

Home Prices Climb in 88% of U.S. Cities

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Home Prices Climb in 88% of U.S. Cities
By Prashant Gopal – Nov 6, 2013 10:14 AM CT

Prices for single-family homes climbed in 88 percent of U.S. cities in the third quarter as buyers competed for limited inventories that included fewer discounted foreclosures.

The median transaction price rose from a year earlier in 144 of 163 metropolitan areas measured, the National Association of Realtors said in a report today. A third of areas had double-digit increases.

Enlarge image Home Prices Climb in 88% of U.S. Cities as Recovery Spreads
A townhouse for sale in the Brooklyn borough of New York. Photographer: Craig Warga/Bloomberg

Enlarge image Potential Home Buyers
Potential buyers view a home under construction in South Barrington, Illinois. Home prices are extending a recovery across the country, fueled by a tight supply of listings and a smaller share of distressed sales, which drag down values. Photographer: Daniel Acker/Bloomberg

Home prices are extending a recovery across the country, fueled by a tight supply of listings and a smaller share of distressed sales, which drag down values. The U.S. housing market had five months of inventory in the third quarter, down from 5.9 months a year earlier, data from the Realtors group show. Completed foreclosures in September plunged 39 percent from a year earlier, according to CoreLogic Inc.

?Most regions of the country are experiencing strong home-price appreciation off a low base,? Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, said yesterday in a telephone interview. ?Cities with the biggest price appreciation are in places that had bigger busts.?

Price gains are at unsustainable levels, with cities such as San Francisco and San Jose, California, approaching records, Fitch Ratings said today in a report. Much of coastal California is more than 20 percent overvalued, the firm said.

Biggest Increases
The nationwide median price for an existing single-family home rose 12.5 percent in the third quarter from a year earlier to $207,300 the Realtors group said.

The best-performing areas were Sacramento, California, and Atlanta, where prices jumped 41.8 percent. They were followed by Las Vegas and Punta Gorda, Florida, which had a 31.9 percent gain. Other cities with large increases were Los Angeles, with 26.2 percent, and Phoenix, with 25 percent.

The areas with the biggest declines were all in Illinois, led by Peoria, where prices fell 13.9 percent from a year earlier. Following were Kankakee, with a 9.9 percent drop, and Rockford, with an 8.4 percent decrease.

Rising home prices and borrowing costs are causing some buyers to hold back. The average rate for 30-year fixed loans was 4.1 percent last week, up from a near-record low of 3.35 percent in early May, according to McLean, Virginia-based Freddie Mac.

Sales Slip
Contracts (USPHTMOM) to buy existing homes dropped the most in more than three years in September, the Realtors association reported last week.

?Rising prices and higher interest rates have taken a bite out of housing affordability,? Lawrence Yun, the group?s chief economist, said in today?s statement. ?However, we have the ongoing situation of more buyers than sellers in the market, so lower sales will help to take the pressure off home-price growth and allow them to rise slowly at a single-digit growth rate in 2014.?

San Jose was the most expensive market in the third quarter, with a median home price of $805,000, the Realtors said. Following were San Francisco, at $705,000, and Honolulu, at $679,800.

The most affordable areas were Toledo, Ohio, with a median price of $87,500; Rockford, at $88,900; and Decatur, Illinois, at $91,000.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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