REAL ESTATE NEWS...Which Region Is Poised to See the Most Home Sales?

By Clare Trapasso

Home buyer dreams deferred: Aspiring owners put the brakes (mildly, at least) on the torrid pace of buying in January, according to the latest report on pending home sales. But one area in the U.S. still seems to be going stronger than ever: the South.

The number of houses across the nation under contract  for sale (which hadn’t closed yet) dipped 2.5%, in January from December, but was still up 1.4% year over year, according to Monday’s report by the National Association of Realtors®. The report counted only existing homes, and not newly constructed residences.

“There’s several factors that have caused the slowdown, including the stock market decline and even the weather,” says Jonathan Smoke, chief economist of realtor.com®, alluding to Winter Storm Jonas. But “the biggest issue is the limited [number of] homes for sale. [Buyers] haven’t been able to find homes that meet their needs or their budgets.”

But he’s optimistic that the pace of homes going into contract will soon pick up again.

“The mortgage rate decline will more than offset the declines in the stock market,” Smoke says, noting that low rates yield more buying power for consumers. “We should see another year of growth, but not as much as last year because the [inadequate] supply of homes will limit that.”

NAR predicts that about 5.38 million existing homes will be sold in 2016, up 2.5% from last year. Meanwhile, the median price of those homes is expected to jump 4% to 5%. (Not such good news for home buyers, although it’s smaller than the 6.8% median price hike of 2015.)

And then there’s the Southeast—the only area in the country to actually see monthlygains, with pending home sales rising 0.3% from December to January. Why did it outperform the rest of the U.S.?

Jonas may be one factor, says Smoke. The blizzard brought much of the East Coast to a standstill (pending home sales in the Northeast dropped 3.2% from December), and had little or no impact south of Virginia.

In addition, “the South is still relatively affordable and has new job growth,” says Susan Wachter, a real estate and finance professor at the Wharton School of the University of Pennsylvania. “Both are positives for greater home sales.”

However, looking back to a year ago—which also saw epic storms—the Northeast recorded the largest gains of any region this January. The percentage of homes going into contract jumped 10.9% compared with January 2015, NAR reported.

The year-over-year jump proves that the Northeast is finally beginning to catch up to the rest of the country in terms of its housing recovery, Smoke says.

In the Midwest, pending sales were down 4.9% from December, but were up 1.4% year over year, according to the report. In the West, they dropped 4.5% from December, but rose 0.4% from the previous January.

Despite the monthly drops, real estate experts believe 2016 will be a strong year for home buyers entering into contracts.

“Wages are going up, employment is going up, which should position households better for buying,” predicts Wharton’s Wachter.

REAL ESTATE NEWS...U.S. housing prices are likely to rise 5 percent in 2016: Poll

Workers install siding on a home at a large subdivision in Damascus, Maryland September 15, 2015.

REUTERS/GARY CAMERON

BY AARADHANA RAMESH

Despite expectations of Federal Reserve interest rate hikes, U.S. home prices are likely to rise 5 percent this year, followed by nearly as solid gains in 2017, a Reuters poll found.

The Fed hiked interest rates for the first time in a decade in December but the housing market remained robust, with home resales reaching a six-month high in January.

In 2015, home prices also gained 5 percent, despite widespread expectations of a Fed interest rate rise, according to the S&P/Case Shiller composite index of prices in 20 metropolitan areas.

For 2016, the S&P/Case Shiller index was seen rising 5.0 percent, according to the median expectation in a poll of 24 analysts. That compared with the 4.0 percent forecast in December's poll.

Nine of the 14 common contributors between the two polls upgraded their forecasts, two left them unchanged while the rest downgraded.

    In 2017, home prices will rise 4.0 percent, followed by 3.5 percent in 2018, the poll suggested.

    "The housing recovery is quite sustainable in the U.S. and should continue at a moderate rate through this year and next," said Sal Guatieri, a senior economist at BMO Capital Markets.

    "We just don't see interest rates rising meaningfully to slow the markets that much. Mortgage rates are likely to remain low in even if the Fed raises interest rates slowly," he added.

    Guatieri expects the Fed to raise rates by 50 basis points this year.

Some analysts cited the possibility of a U.S. economic slowdown affecting the course of U.S. home prices

    "I am getting more concerned about the economy. If the economy turns lower, the housing market is going to turn lower. Housing is not in such great shape that it's going to continue to push ahead," said Robert Brusca at FAO Economics.

    Brusca said there was a growing and palpable risk of a recession and a slowdown in the jobs market was the last piece needed to complete the picture for a weakening economy.

    There is currently a one-in-five chance of a U.S. recession in the next 12 months, according to a separate Reuters poll. That probability has steadily increased over the last two months.

    One possible prod for prices is the comparative afford ability of homes, the average cost of which crashed around 30 percent in the aftermath of the financial crisis and have still not completely recovered.

    When asked to rate average house prices on a scale of one to 10 - extremely cheap to extremely expensive - the median answer was 5, indicating prices are just about right.

    Thirty-year U.S. mortgage rates, currently around 3.65 percent, are also seen as unlikely to be a hindrance in the near future.

    Respondents said they need to rise to around 6.0 percent before starting to seriously restrain housing activity. The poll showed 30-year mortgage rates will average 4.0 percent this year, 4.4 percent next, and 5.0 percent in 2018.

    "Any rise in (mortgage) rates will be accompanied by an acceleration in earnings growth, so mortgage payments as a share of income will remain historically low." said Matthew Point, a property economist with Capital Economics.

    Analysts also expect sales on existing homes to continue at a fairly steady pace of 5.36 million units in the first quarter of this year and 5.40 million units in the second quarter.

    While that is far from the all-time high of 7.2 million units sold just before the financial crisis, it would signal over six successive quarters of sales above 5.0 million units.

REAL ESTATE NEWS...New home sales hit 494,000 in January, versus 520,000 estimate

New U.S. single-family home sales tumbled in January from a 10-month high as sales in the West region plunged, but the overall housing market recovery remains intact.

The Commerce Department said on Wednesday sales dropped 9.2 percent to a seasonally adjusted annual rate of 494,000 units, almost unwinding December's sharp increase. December's sales pace was unrevised at 544,000 units.

Economists polled by Reuters had forecast new home sales, which account for about 8.3 percent of the housing market, slipping to a 520,000 unit-rate last month.

Sales in the West, which has seen a sharp increase in home prices amid tight inventories, plummeted 32.1 percent to a 110,000 unit-rate, the lowest level since July 2014. The percent decline was the largest since May 2010.

Sales rose 3.4 percent in the Northeast, despite a blizzard in late January. They fell 5.9 percent in the Midwest and rose 1.8 percent in the populous South.

Though the new homes market appears to have cooled, with construction activity falling in January and homebuilder sentiment softening in February, housing in general remains supported by a tightening labor market, which is lifting wage growth and bolstering household formation.

Reports on Tuesday showed sales of previously owned homes hitting a six-month high in January and house prices rising 5.7 percent in the year to December.

A firmer housing market should help to prop up the economy as it navigates rough seas caused by a robust dollar, spending cuts by energy firms hurt by lower oil prices and sluggish global demand. Efforts by businesses to sell off inventory are holding back growth.

The economy grew at a 0.7 percent annual rate in the fourth quarter. Growth estimates for the first quarter are currently above a 2 percent rate.

Last month, the inventory of new homes on the market increased 2.1 percent to 238,000 units, the highest since October 2009. Still, housing stock remains tight.

At January's sales pace it would take 5.8 months to clear the supply of houses on the market, up from 5.1 months in December. The median price of a new home fell 4.5 percent from a year ago to $278,800.

REAL ESTATE TOPICS...These 2 things will pop the housing bubbles in San Francisco and Silicon Valley

• By Wolf Richter, Wolf Street

In the city of San Francisco, the median condo price is $1.11 million and the median house price is $1.25 million, up 72% and 88% respectively from the first quarter 2012. Median means, 50% of the units cost more, and 50% cost less.

ShutterstockHomes in San Francisco.

Which creates an absurd situation: only 11% of the households in San Francisco can afford to buy a median home, according to Paragon Real Estate’s report on “affordability.” In other Bay Area counties, it’s similar. In the Silicon Valley counties of San Mateo and Santa Clara, 14% and 20% of the households can afford a median home; in Marin (just north of the Golden Gate), 17%; in Napa 21%, Alameda (East Bay) 22%, Sonoma 26%. In the US overall, 58% can.

But the calculations assume that buyers are able to make a 20% down-payment, which on a median home in SF amounts to $240,000. And it also assumes the persistence of super-low interest rates and points for a 30-year mortgage.

Under these assumptions, households in SF wanting to buy that median home must have a minimum qualifying annual household income of $254,000, on top of the $240k in cash for the down-payment. And this is where the absurdity re-surfaces: the Census Bureau estimates that the median household income in San Francisco is $75,600 (it has gone up a little since that estimate).

The monthly costs – principal, interest, taxes, and insurance, but not including the benefits of income tax deductions – for this median home amount to $6,350. And this causes a little bit of a problem with “affordability”: If only 11% of the households can afford to buy a median home, who is going to buy the other homes?

Renting a median one-bedroom apartment will set you back $3,400 a month, parking not necessarily included. And a median two-bedroom will set you back $4,650 a month.

But kinks are already appearing. According to Zillow data, those rents are down 5.4% from the respective peaks in June and August last year. And just then, with impeccable timing, this housing market is now facing by two powerful forces.

Alan Levine / FlickrUnicorns.

1. The startup boom has run aground.

Startup valuations are plunging, sometimes by as much as 50% overnight when new money needs to be raised. And the exit doors for investors are closing or getting very awkward to wriggle through. It’s easy during the boom for a few people behind closed doors to decide that a company with no revenues has a $1 billion “valuation.” Turns out, it’s much harder – or impossible – to turn that “valuation” into money via an IPO or a sale to a big corporation.

Those startups that did make it through the IPO window over the past year or two are getting punished. While the S&P 500 is down only 5.6% so far this year, the Renaissance US IPO index is down 13.7% despite the rally over the past few days. It has plunged 29% from June last year. The 87 tech IPOs over the past two years have gotten hit hard: 80% are trading below their IPO price, and many of the stocks have essentially collapsed from their peaks.

Venture capital is getting nervous. And the flood of new money has become a trickle. As money dries up, startups have to tighten their belts and lower their burn rates in order to live another day. In the process, big hiring plans are shelved.

The formerly rosy scenario has turned grim. Companies like Twitter fell all over each other to lure tech gurus with blue-sky compensation packages that then allowed these folks to rent or buy whatever they wanted to, and drive up prices in the process. Now Twitter is laying off people.

Yahoo is laying off. Numerous other old and new companies in the area have started the same process. This makes laid-off tech workers available to companies that are still hiring. Those companies no longer have to bring as many new people into the area; they can hire more locally.

So the stream of new arrivals with big compensation packages slows down. As more companies are laying off, fewer of the tech workers can be absorbed locally. Down the road, given the expense of living in the area, some of these unemployed tech workers may well go back where they came from. That’s how it happened every time before.

Reuters/Robert GalbraithA worker labors at a housing construction project in San Francisco, California.

2. Just then, a flood of new housing units hits the market.

San Francisco finds itself in one of its most phenomenal construction booms in history. High prices have lured the Big Money from all over the world. For example, Shenzhen-listed real estate company Oceanwide Holdings is planning to build a mega project with two million square feet of residential and commercial space in the center of the City. This project, its third in California, includes two towers, one of which will be the second tallest in the City.

The SF Planning Department’s new Pipeline Report lists 62,500 units at various stages in the pipeline, from “building permit filed” to “under construction.” Many will come on the market this year, on top of the thousands of units that hit the market in 2014 and 2015. Once they’re complete – if they ever get completed – they’ll increase the city’s existing housing stock of 382,000 units by over 16%.

Most of them are expensive units – because that’s where the money is. They need buyers and renters who can afford them. Homes in San Francisco are occupied on average by 2.2 people. At this ratio, the new supply would create expensive housing for 137,500 people, in a city with a population of 852,000!

Where are those people with big incomes going to come from? No one knows. Hence a vague sense of panic. Twitter and other companies better start re-hiring and offer big-fat compensation packages to lure tens of thousand of highly-paid workers to SF, and they better make sure their shares or “valuations” start re-skyrocketing for years to come, because that sort of miracle is required to make this math work. If not, that phenomenal boom, as it has always done before, will turn into a bust royale.

The US economy, at the worst possible time, is now facing a “significant risk” of “falling into contraction” with “worse to come.” Read…   Is This the Beginning of the Next Recession?

REAL ESTATE NEWS...The housing market's one problem could be a doozy

WASHINGTON - U.S. home sales are climbing. Prices are rising, too. So the outlook for the housing market is golden, right?

Not entirely.

A series of reports released Tuesday pointed to potential cracks in the foundations of America's residential real estate market.

On the one hand, job growth and low mortgage rates have fueled demand and boosted sales to levels that were last glimpsed in the waning months of the housing bubble nine years ago. Those gains could spur more construction and additional spending on furniture and renovations that could help lift the economy.

Yet the number of homes for sale has fallen. With demand for homes up and supply down, prices have risen faster than incomes. Because many homes have become unaffordable for would-be buyers, further gains may be unsustainable.

"The real takeaway from the numbers is that despite demand being high, the future is looking somewhat muted for homebuyers," said Ralph McLaughlin, chief economist at the real estate firm Trulia.

This mismatch between supply and demand arrives at a delicate moment. Global pressures have roiled the stock market and hurt exports. That has meant that the economy must lean more heavily on consumers -- including homebuying -- to extend its 6½-year-old recovery from the Great Recession.

A snapshot of the housing market points to some concerns:

- Sales of existing homes rose 0.4 percent last month to a seasonally adjusted annual rate of 5.47 million, the National Association of Realtors said Tuesday. Those gains build on a strong 2015. Sales last year reached a nine-year peak, evidence of healthy demand that has led some economists to predict that the real estate sector will keep improving.

But the report also shows a shortage of available homes. The number of home listings in January fell 2.2 percent from a year ago. The result is that buyers shopping for homes have fewer options and must pay elevated prices. The median home sales price was $213,800 in January, an 8.2 percent annual increase from a year ago.

- Price increases are concentrated in some of the hottest job markets, according to Standard & Poor's/Case-Shiller 20-city home price index. Home values are up 11.4 percent in Portland, 10.3 percent in San Francisco and 10.2 percent in Denver. Yet even Detroit, which has been emerging from municipal bankruptcy, notched a year-over-year gain of 7.1 percent in December.

- Strong demand showed some hints of weakening ahead of the spring sales season. The share of Americans looking to buy a home within six months reached a six-month low, according to the Conference Board's consumer confidence index. That percentage sank to 5.3 percent for February from 7.4 percent in January.

Solid demand for housing has failed to coax more homeowners to list their properties. Many are reluctant to sell. They're enjoying savings from low mortgage rates, and many lack enough equity to comfortably upgrade to another house. The consequence is that would-be buyers now face both rising prices and more competition from others looking to buy.

"So far, sales have been bulletproof to price increases, but this is unsustainable in a slowly growing economy unless inventory improves," said Nela Richardson, chief economist at real estate brokerage Redfin.

Sales have been buttressed so far by a stable job market. Employers have added a healthy 2.67 million jobs over the past year, and the unemployment rate has fallen to a low 4.9 percent. Pay growth has been less robust, though it has accelerated somewhat, with a 2.5 percent increase from a year ago.

But it remains unclear whether the pace of job gains will endure amid signs that U.S. economic growth has dwindled. China's slowdown and troubles in such other emerging economies as Brazil and Russia have triggered a sharp decline in commodity prices such as oil. Those price drops, in turn, have driven a downturn in U.S. stock prices and a rise in the dollar's value to levels that have hurt exports.

Still, for now, the global chaos may have helped boost home sales. As many investors have shifted money into the safety of 10-year U.S. Treasury notes, the cost of borrowing has dropped for both the government and homebuyers. Mortgage rates tend to track the yields on long-term Treasurys.

Mortgage buyer Freddie Mac said the average rate on a 30-year fixed-rate mortgage remained near record lows last week -- 3.65 percent, significantly less than the historic average of roughly 6 percent.

But even that won't help sell houses unless the supply of homes available to buy starts rising.

REAL ESTATE NEWS...Toll Brothers just painted a clear picture of the US economy — and it's bullish

A home site is listed as sold in a Toll Brothers housing development on December 4, 2012 in South Barrington, Illinois.
BY Bob Bryan

Luxury home builder Toll Brothers announced earnings Tuesday morning and had a solid outlook on the economy.

For Toll Brothers, the issue isn't that the economy is worsening, but that in pockets it's too strong.

"We are experiencing modest lengthening of our production timelines associated with increasing complexity in our homes and a tighter labor market," said CFO Martin Connor.

There are two things going on here.

On the one hand, Connor is saying that because there is less and less slack in the labor market, it is hard for builders to find enough workers to deliver the homes quickly. (Something other homebuilders have noted.)

Secondly, the homes they are building are more expensive, getting at the affordability issue we noted late last year would become an increasing problem for the housing market. In its release, Toll Brothers said it would increase the low-end of its average price range for houses it built by $10,000. It now says its average delivered price will be between $810,000 and $850,000.  

For its fiscal first quarter, Toll Brothers met analyst expectations for earnings per share at $0.40 and beat revenue expectations, generating $928.6 million versus a forecast of $910 million. The stock was roughly unchanged in pre-market trading. 

Executive Chairman Robert Toll added that right now the way the company is viewing the economy is in stark contrast to what the stock market is thinking. 

Here's Toll's outlook:

"The stock market seems to be pricing in a steep decline in the economy and, along with it, our sector. We, on the other hand, are seeing signs that reflect strength and positive momentum in our business based on six consecutive quarters of year-over-year contract growth in both dollars and units... Industry-wide housing starts remain far below normal, and new home supply remains constrained.Interest rates are very attractive, unemployment is the lowest since 2008, and home values are rising."

Now, CEO Douglas Yearley did somewhat temper this view, saying we won't necessarily see explosive growth but there should be a steady upward trend in the housing market.

Additionally, Yearley said the stock market has been weighing on the most recent activity the company has seen, saying:

Deposits and contracts signed in the first three weeks of February, the start of our second quarter, were basically flat compared to the prior year. This is understandable given the recent stock market decline and global economic uncertainty. Positively, traffic was up 13% over the same three weeks and appears to be improving in quality, which gives us reason for optimism for the balance of the spring selling season.

Yearly added that, "We continue to believe that the industry remains on a trajectory of slow but steady growth with pent-up demand that will release over time."

REAL ESTATE NEWS...Existing home sales rose more than expected in January

BY Akin Oyedele
Existing home sales rose in January, beating the forecast for a decline, according to the National Association of Realtors. 

Sales of existing condos, co-ops and single-family houses rose 0.4% at an annual rate of 5.47 million. It was the fastest rate in six months.

Compared to the prior year, sales increased 11%, the biggest gain since July 2013.

Economists had estimated that sales fell 2.5% at an annualized pace of 5.32 million, according to Bloomberg.

In the release, NAR chief economist Lawrence Yun said, "The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints. Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession."

Prices continued to rise as inventories remained tight. 

In December, existing home sales rose from a 19-month low with the biggest gain ever recorded in the history of the series. But this was revised lower to a 12.1% gain at an annual rate of 5.45 million. 

REAL ESTATE TOPICS...13 Smart Ways to Invest up to $20,000 in Your House

By Janna Herron

Not all home improvements are created equal. Even though conventional wisdom says that updated kitchens and baths sell homes, they don’t necessarily recoup the cash you put into the makeover. 

In fact, there’s only one upgrade that gets back every dollar you put in plus some, according to the 2016 Remodeling Cost vs. Value Report from Remodeling magazine, and it’s about as unglamorous as home improvements get. Overall, payback from remodeling projects increased 6.7 percent from 2015 due to bigger and costlier projects, increasing new-home prices and the popularity of energy efficiency. 

Remodeling can bring increased happiness as well for homeowners, according to a report from the National Association of Realtors looking at the impact of home improvements. Nearly two-thirds of homeowners enjoy their home more after completing a remodeling project, while three-quarters said they felt a big sense of accomplishment. 

Here are the best ways, value-wise, to invest up to $20,000 in your home based on how much you will get back from the remodeling project.

13. Backup power generatorCost: $12,712
Resale value: $7,556
Percentage of cost recouped: 59.4%

12. Deck addition (composite)Cost: $16,798
Resale value: $10,819
Percentage of cost recouped: 64.4%

11. Bathroom remodelCost: $17,908
Resale value: $11,769
Percentage of cost recouped: 65.7%

10. Roofing replacementCost: $20,142
Resale value: $14,446
Percentage of cost recouped: 71.7%

9. Siding replacement (vinyl)Cost: $12,341
Resale value: $9,032
Percentage of cost recouped: 73.2%

8. Deck addition (wood)Cost: $10,471
Resale value: $7,850
Percentage of cost recouped: 75%

7. Siding replacement (engineered)Cost: $13,832
Resale value: $10,866
Percentage of cost recouped: 78.6%

6. Entry door replacement (fiberglass)Cost: $3,126
Resale value: $2,574
Percentage of cost recouped: 82.3%

5. Minor kitchen remodelCost: $20,122
Resale value: $16,716
Percentage of cost recouped: 83.1%

4. Entry door replacement (steel)Cost: $1,335
Resale value: $1,217
Percentage of cost recouped: 91.1%

3. Garage door replacementCost: $1,652
Resale value: $1,512
Percentage of cost recouped: 91.5%

2. Manufactured stone veneerCost: $7,519
Resale value: $6,988
Percentage of cost recouped: 92.9%

1. Attic insulation (fiberglass)Cost: $1,268
Resale value: $1,482
Percentage of cost recouped: 116.9%

REAL ESTATE TRENDS...House flipping is back in Florida and Las Vegas

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REUTERS/Ilya NaymushinA man passes a house built upside-down in Russia's Siberian city of Krasnoyarsk, December 14, 2014. The house was constructed as an attraction for local residents and tourists.

Nationally, there has been little change in house flipping in the past year, but Las Vegas is approaching historical highs, and flipping is making a comeback in several Florida markets.

House flipping is a practice that some believe is an indicator of an over-heated housing market. Nationally, it made up a stable of all home sales during the past year, mirroring a steady increase in home prices.

The good news: that flip rate is roughly in line with the non-housing bubble years and well below the 8.6% flip rate of all home sales in 2006. The concern: there are some hot spots. While stable nationally, we’re having déjà vu: flipping is making a comeback in places such as Las Vegas and Miami, which saw high levels of flipping activity during the previous boom.

Moreover, there’s evidence that house flippers may be sitting out in some markets. That’s because rapid price growth in some expensive markets may be making that initial buy too costly for house flippers.

House flipping is a unique housing market metric for two reasons. First, it is a speculative undertaking where investors are betting on turning a profit, and has historically occurred at high rates just before a market peaks. Second, flipping usually entails removing a home from a particular price point in the market and moving it to a higher price point through improvement. That movement creates competition for homebuyers who may be looking to build sweat-equity on their own. But flipping activity also provides improvements to the housing stock for buyers who don’t have time or cash to improve a home themselves.

Flipping reached a peak in 2006, but is it actually on the rise again? We set out to answer that question by looking at all the home sales in the last year from, and found that:

• Nationally, flipping activity has held steady over the past year at around 5% of all home sales, and is down from the peak of 8.6% in the first quarter of 2006;

• Flipping is highest is Las Vegas, where 10.4% of home sales are flips, and is about 80% of its 15-year peak. Flipping is lowest in Detroit at just 1.1%;
  
• Over the past year, flipping activity has increased most in Miami, growing from 4.7% to 6.4% of all home sales. Other Florida markets have also seen relatively large increases.

Trulia

Flipping Most Common in Las Vegas, Least Common in DetroitThough flipping has remained relatively stable nationally, flipping activity varies significantly across individual markets. Las Vegas, Nev. leads the pack with 10.4% flips, followed by Fresno, Calif. and Daytona Beach, Fla., with 7.6% and 7.3%, respectively. Detroit and Louisville, Ky., have the lowest share of flips at less than 2.5%.

In addition, three of the top flipping markets are within at least 70% of their 15-year peak. For example, Las Vegas is now 79% of its peak flipping point of 13%, which occurred back in the second quarter of 2005. Baltimore is at 75% of it’s peak flipping point of 9% of home sales in the fourth quarter of 2006, and Richmond, Va., is at 70% of peak flipping, which occurred in the second quarter of 2006.

Trulia

We’ve also found an interesting exception between prices and flipping. While there is a strong correlation between price changes and flipping activity over the past year, the relationship doesn’t necessarily hold for those with the smallest change in flipping activity. When grouping our markets by flipping rates, not only do fast-flip markets have the largest average price increase, but the low-flip markets also had large price increases. In other words, places with the biggest increase and biggest decrease in flipping activity over the past year experienced higher than normal price gains.

Trulia

Why is this? Flipping requires three things: (1) a market where home prices are appreciating, (2) a cheap supply of homes to buy and flip, and (3) ready buyers to purchase the flip.

Flipping a house in appreciating, but expensive markets may be more difficult because:

• Homes suitable to purchase for a flip may be more costly and have higher carrying costs, such as taxes and insurance.
  
• The completed flip may take longer to sell because it could end up in a high price tier. Several of the top places with the largest decrease in flipping activity fall into this group, including Los Angeles, San Diego, and Denver.

In conclusion, the U.S. housing market isn’t flipping out just yet, but there are signs that some areas are approaching their previous flipping points. While this isn’t of concern in places where flipping activity is low relative to the national average, such as Birmingham there are signs that markets such as Las Vegas may soon reach an historical high level of flipping.

REAL ESTATE NEWS...HUD’s 2017 Budget Focuses on Ending Homelessness, Housing Discrimination

The U.S. Department of Housing and Urban Development (HUD) recently unveiled President Obama’s proposed HUD Budget for Fiscal Year 2017 which is focused on helping Americans to secure and maintain affordable housing, ending homelessness, making our communities more resilient from natural disasters and protecting people from housing discrimination.

HUD’s work is critical to the Administration’s efforts to strengthen communities, bolster the economy, and improve the quality of life of the American people.

HUD’s 2017 Budget includes $48.9 billion in gross discretionary funding and $11.3 billion in new mandatory spending over ten years, with an emphasis on supporting 4.5 million households through rental assistance; increasing homeless assistance; supporting tribal communities and providing opportunities to Native American youth; and making targeted investments in communities to help revitalize high-poverty neighborhoods and improve housing affordability.

“HUD’s proposed budget was built on the values that we uphold as Americans. That our entire nation benefits when our children grow up in a community that’s full of promise, not problems,” says HUD Secretary Julián Castro.  “When a hard-working family is able to responsibly buy their first-home, put down roots, and build wealth.  When homeless veterans are able to get the housing they need to succeed in the very nation they risked so much to protect.  When every person gets a fair shot and a fair shake to achieve their dreams.”

Helping Families Secure Quality Housing

HUD’s 2017 budget maintains a core commitment to provide opportunity for residents of low-income neighborhoods.  The Budget provides funding for rental housing assistance to support 4.5 million low-income families, including $20.9 billion for the Housing Choice Voucher program to help approximately 2.2 million low-income families afford decent housing in neighborhoods of their choice.

The Budget also includes $10.8 billion for the Project-Based Rental Assistance program, which supports 12 months of funding for rental assistance contracts with public and private owners who maintain affordable rental housing for 1.2 million families, and $6.45 billion in operating and capital subsidies to preserve affordable public housing for 1.1 million families.

Housing Choice Voucher Program

The Budget provides $2.1 billion in Public Housing Authority (PHAs) administrative fees using a new evidence-based formula that not only more accurately reflects the actual cost of running the program, but ensures that PHAs have sufficient resources to provide low-income families greater access to opportunity areas.  In addition, the Budget requests $15 million for a new mobility counseling demonstration that is designed to help HUD-assisted families move and stay in higher-opportunity neighborhoods.  A portion of the funding will also support an evaluation to measure the impact of the counseling pilot to further inform the policy process and design.

Native American Housing and Community Development

The Budget invests $700 million for Native American Housing Block Grants, $50 million above the 2016 enacted level, to address severe overcrowding and substandard housing conditions in Indian Country.  An additional $20 million is provided for projects to improve outcomes for Native youth, such as the construction or renovation of community centers, health clinics, transitional housing, pre-school/Head Start facilities and teacher housing, and up to $5 million for Jobs-Plus will be used to implement a demonstration of the Jobs-Plus model in Indian Country to boost employment and earnings.

Ending Homelessness

To support the Opening Doors Initiative, the Budget provides $11 billion in mandatory spending and $112 million in discretionary spending in housing vouchers and rapid rehousing to reach and maintain the goal of ending homelessness among families with children by 2020.  In addition, the Budget maintains programs dedicated to ending veterans homelessness, and within the $2.7 billion provided for Homeless Assistance Grants, the Budget maintains existing projects, creates 25,500 new units of permanent supportive housing to end chronic homelessness, and invests $25 million in new projects targeted to youth experiencing homelessness.

Strengthening All Communities in this Century of Cities

To empower local communities, the 2017 Budget invests $200 million to transform neighborhoods with distressed HUD-assisted housing and concentrated poverty into opportunity-rich, mixed-income neighborhoods through the Choice Neighborhoods program.

Consistent with the Administration’s place-based approach to helping communities address their self-identified priorities, Choice Neighborhoods grantees develop a comprehensive neighborhood plan that addresses the broader needs of the community, including public safety, local schools, economic development, and other critical community improvements.

Choice Neighborhoods grantees have leveraged over $3.69 billion, including new and refocused funds from private investors, banks, cities, universities, foundations, and a range of local partners.

HUD is proposing to provide $50 million to the Rental Assistance Demonstration (RAD) program to help local public housing agencies to finance the recapitalization of more than 180,000 units of public housing and a targeted expansion to include certain properties that provide housing for the elderly.

The Budget also reflects HUD’s commitment to providing communities with new flexibilities to help families achieve self-sufficiency.  The Budget provides $35 million for Jobs-Plus to help public housing residents secure employment and increase their earnings through job training and financial incentives.  The Budget also provides $75 million for the Family Self-Sufficiency program to link HUD-assisted households with job training, child care, transportation, financial literacy and other supportive services, and help them build assets through interest-bearing escrow accounts.

REAL ESTATE TIPS...3 Staging Tricks for the Room Buyers Secretly Love

Did you know the living room is the room that most positively impacts buyers when staged? Staging this room is key to a speedy sale because it detracts buyers from perceived flaws of the home. Living room design is much less complex than that of a kitchen or bathroom, so you don’t have to spend big on staging to see results.

One inexpensive way to stage is to switch up the color scheme of the room. To better suit buyer preferences, use neutral-toned items you already own to create a cohesive palette throughout the room—décor magazines employ this visual effect to please reader eyes. Shelve books with similarly-colored spines in a bookcase, place decorative pillows in coordinating (not matching) shades on sofas and side chairs, and tuck children’s toys into ornamental boxes that reflect the overall color theme.

Another cost-effective way to stage the living room is to update the window treatments. Steer clear of high-end materials, which are not only expensive, but also may not suit your tastes once you move into your new home. One budget-friendly trick is to hang shower curtains (that’s right!) in place of standard drapery, which are durable and come in an array of patterns and colors. Ones with large, pre-cut holes in upscale finishes (think wood) can be threaded through your existing curtain rods, saving you even more money.

Glass accents are another more-for-your-dollar feature that buyers often respond to. Instead of shelling out for glass furniture, pepper smaller glass accents sparingly throughout the space, on coffee or end tables, bookcases or mantels. These touches of sparkle will draw the eye and add a hint of luxury, which could boost perceived value on the part of the buyer.

Bear in mind these staging tricks can be applied in other rooms of your home, as well.

Remember: Whenever you plan to list, focus some attention on the living room—it could be the ticket to sealing the deal!