TheMReport

TH E M REP O RT | 55 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST As Home Prices Grow, Wages Stagnate And rent isn't getting any cheaper. H ome price increases have started to pla- teau, but with wages remaining stagnant, cash-strapped shoppers are still feeling put-out. According to Trulia, asking prices on listed homes rose 1.2 percent month-to-month in June, the highest monthly increase in more than a year. The increase was the same both with and without foreclosures. Quarter-over-quarter, Q2 ask- ing prices came up 2.6 percent, while annual gains came to 8.1 percent. Both increases paled in comparison to the respective 3.1 percent and 9.5 percent improve- ments recorded a year ago. Despite the national slow- down, "price increases continue to be widespread, with 97 of 100 metros posting year-over-year price gains—the most since the recovery began," said Trulia chief economist Jed Kolko. Unfortunately, consumer incomes have failed to keep pace. Out of the top 10 markets for annual price gains in June—most of which were in the South or Midwest—Kolko found that wages per worker rose less than 1 percent last year in all but one. Nationally, asking prices rose faster year-over-year than wages per worker in 95 of the 100 larg- est metros. Home rental prices have also outpaced wage growth in all of the 25 largest markets, according to Trulia. Nationally, rents were up 5.5 percent year-on-year in June, with some of the country's already more expensive mar- kets—like Miami, Oakland, San Francisco, and San Diego—seeing gains of more than 10 percent. "The median rent for a 2-bed- room unit costs more than 40 percent of the average local wage in these markets," Kolko said. Foreign Interest in U.S. Housing Grows Low home prices in the U.S. are drawing seasonal vacationers from Asia and Europe. A s analysts, industry participants, and poli- cymakers struggle to boost homeownership among Americans, foreign activ- ity in the U.S. housing market remains strong. According to a profile of international homebuying activity released by the National Association of Realtors (NAR), to- tal international home sales were estimated at $92.2 billion from April 2013 through March 2013, up from the previous period's level of $68.2 billion. "Foreign buyers are being en- ticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for invest- ment in their future," said NAR President Steve Brown. Approximately 65 percent of purchases by foreign buyers throughout the year involved a single-family home, with 42 per- cent used as a primary residence. Because non-residents are limited to six-month stays in the country, most buyers use their properties for vacation or rental purposes or as an investment, NAR says. While interest in U.S. housing spans the globe, NAR reports the greatest amount of activity came from buyers in Canada, China, Mexico, India, and the United Kingdom, which together accounted for nearly 54 percent of all reported international transac- tions last year. Canada held on to the largest share of purchases at 19 percent, while China took the lead in dollar volume, purchasing an estimated $22 billion. Four states—Florida, California, Arizona, and Texas—comprised 55 percent of total reported purchas- es, with Florida staying on top at 23 percent. California followed at 14 percent, followed by Texas and Arizona at 12 percent and 6 percent, respectively. According to the group, among foreign buyers, Europeans last year tended to flock toward the warmer climates of Florida and Arizona, while Asian buyers were drawn to the West Coast. Buyers from all countries showed greater preference toward areas where there were already concentra- tions of people sharing their own nationality. The NAR also found that nearly 60 percent of reported international sales were all-cash, nearly double that of domestic purchases. "Mortgage financing tends to be a major problem for international clients due to a lack of a U.S.-based credit history, lack of a Social Security number, dif- ficulties in documenting mort- gage requirements, and financial profiles that differ from those nor- mally received by financial institu- tions from domestic residents," the association explained. "Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future." — Steve Brown, NAR

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