Women In Housing-2015

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56 | Th e M Rep o RT 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 Continued from page 55 report Finds Bidding Wars are Pushing Home values Up The market is transitioning from recovery mode to normalcy as income growth and increasing household formation counteract rising rates. t he housing market has experienced some noticeable changes this year as home values move upward. According to the May Zillow Real Estate Mar- ket Reports, bidding wars are pushing home values up in the nation's most popular housing markets, although home values are not anywhere near their peak points during the real es- tate bubble in smaller markets. According to the report, May's economic factors, such as job growth and household forma- tion, varied across metros as the homebuying season began. Local markets are experiencing very diverse effects, with some slowly moving, some not moving at all, and some accelerating as prices and competition rise. "What we're seeing is the passing of the baton—as mort- gage rates begin to rise and incomes and household for- mation rates increase—from a stimulus-driven housing market to one driven by fundamen- tals," said Dr. Stan Humphries, Zillow's chief economist. The Zillow Home Value Index found U.S. home values grew at an annual rate of 3 percent in May, to an index of $179,200, but values in the nation's most popular markets were rising four or more times faster. On the other hand, national home values are still about 9 per- cent below the housing bubble peak of $196,400 in April 2007— before the housing bust pushed the country into a recession. "This transition from housing recovery to a more normal market is a good thing in the long-term, but we can expect some bumps along the way," Humphries said. "In the end, increasing house- hold formation and stronger income growth should be able to overcome the headwind of rising mortgage rates and return markets to health." Denver median home val- ues reached a new high of $300,000, growing 14.7 percent year-over-year in May. San Jose metro median home values reached $883,200, higher than San Francisco's median of $746,600. Both Bay Area markets saw double-digit growth driven by low interest rates, low inventory, and high job growth. "This month's new-home sales report is consistent with other government data and rising builder confidence that indicate a continual recovery of the hous- ing market," said David Crowe, chief economist for the National Association of Home Builders. "The uptick in existing-home sales bodes well for builders, as it shows that the sellers are able to buy a new home." Despite all of the housing market praise, Zillow expects home value growth to slow even further to 2.2 percent annually over the next year, according to its Home Value Forecast. Oregon and Utah, and California is right there as well. Unlike a year ago, when the most improv- ing markets were those hardest hit by the Great Recession, we're now seeing stable markets among the most improving as well. So the strong housing markets are getting stronger, which reflects the better employment picture, rising home values and increased purchase activity in these mar- kets with the spring homebuying season in full swing." The top five MiMi values among states and the District of Columbia in April were District of Columbia (97.8), North Dakota (96.3), Montana (92), Hawaii (91), and Alaska (87.4). The five metros with the highest MiMi values in April were Fresno (94.8), Honolulu (92.3), Austin (92.1), Los Angeles (89.1) and Salt Lake City (88.9). Freddie Mac's report of more stabilization nationwide in the housing market was right in line with the GSE's economic outlook for June 2015, released just one day earlier, which showed that Americans may be ready to take on more mortgage debt due to low debt servicing costs and im- proved household balance sheets. Single-family mortgage debt outstanding (MDO) is expected to accelerate for the rest of 2015 and into 2016 and 2017 as house prices and home sales increase while the cash share of home sales declines, according to Freddie Mac. Also, the increase in aggregate mortgage debt is back to its long-term aver- age of about 30 percent with each new home loan. "Low mortgage rates and years of debt consolidation have led mortgage servicing costs as a share of disposable income to the lowest levels we've seen in de- cades," Kiefer said. "After many fits and starts, the data finally show that not only are more Americans taking out a mortgage to purchase a home, but that total outstanding debt on single- family properties has increased on a year-over-year basis. This is yet another sign the economy, and housing markets, are pivot- ing toward normalcy."

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