The big jump in home prices in the past year is finally bringing more sellers to the housing market, but inventories remain lean.

The number of existing homes for sale ticked up to 2.2 million in May, up 3.3% from April, the National Association of Realtors said Thursday.

When adjusted for seasonal factors, inventory has risen for four months in a row, suggesting the supply bottom came in January, says Jed Kolko, economist for real estate website Trulia.

The new sellers are making moves they’ve put off for years as home prices tanked. They’re taking jobs in other locations, enjoying fast sales of existing homes. And some are pricing properties at levels higher than Realtors think prudent — and getting their price anyway.

The new sellers hardly constitute a flood, more like a trickle from a huge lake. They still are far too few for the balance of power in many markets to shift from sellers to buyers, says Budge Huskey, CEO of Coldwell Banker. But with home prices up 12% in April from a year ago, more are expected if prices continue to rise.

“There is huge pent-up seller demand,” Huskey says. “Every Realtor knows a seller who’d like to move to the next chapter in their life.”

Martha Gove and Josh Cohen are doing just that.

They’re moving just three blocks from their current home in Ann Arbor, Mich., to a bigger home they just bought.

The couple were “waiting and watching” for three years to find a suitable home for sale. In recent months, “things finally started to loosen up,” says Gove, 40, a lawyer.

In May, Ann Arbor posted an 11% jump in homes listed for sale from April, Realtor.com says — almost twice as much as the national average. And its May asking prices tracked by Realtor.com were up 17% from a year earlier.

Ann Arbor’s market is so strong that the couple are attempting to sell their home themselves. That’s not something they would have attempted even six months ago, Gove says.

In the first week after listing their home, they had six showings. “People are suddenly on the move,” Gove says.

In May, existing home sales nationwide were up a robust 4.2% from April and almost 13% from a year ago, NAR says.

SUPPLY IMPROVING BUT STILL TIGHT

The shift in supply is broad-based.

Earlier this month, the number of homes listed for sale on real estate website Zillow was down 12.2% year-over-year. That’s still better than in January, when listings were down almost 18% year-over-year.

Realtor.com, which tracks listings in 146 markets nationwide, shows listings up 5.8% in May from April.

But in 18 of the markets, including Los Angeles, Orlando and Seattle, inventory was up 10% or more in May from April.

In the California cities of Stockton and Sacramento, May listings were up more than 35% from April. Both cities posted 22% price gains in April from a year earlier, market researcher CoreLogic says.

Rising home prices are likely driving the increase, Kolko says.

“Every day as prices rise, more people get back above water,” Kolko says. That makes selling easier.

Nationwide, 9.7 million, or almost 20% of homeowners with a mortgage, owed more on their homes than they were worth as of March, CoreLogic says. That’s down from 12.1 million at the end of 2011, just as home price gains were kicking off in many markets after a roughly 30% national drop.

“Sellers have finally noticed that they have some equity,” says Coldwell Banker agent Ramon Macias in San Diego. Prices there were up 17% in April year-over-year, CoreLogic says.

Gonzalo and Grace Hernandez never worried about whether they’d get back what they paid for their San Diego home.

That’s because they bought it just 11 months ago when prices were starting to move off their bottom. They’re now selling it to relocate to Nashville for a job change.

They paid $355,000 for the home and now have it under contract to sell for $420,000. It took a week to sell.

Nationwide, the median time on market for all homes that sold in May was just 41 days. That’s down from 72 days a year ago, NAR says.

Knowing that they’d turn a solid profit was a “big part of the decision” to accept a job transfer with his hotel chain employer, says Gonzalo Hernandez, 40.

Some sellers are getting prices that surprise even their Realtors, given tight supplies for sale in some markets and frequent multiple-offer situations.

Redfin agent Bree Al-Rashid recently handled the sale of a home in a popular Seattle neighborhood that sold for 10% more than she thought it was worth, based on comparable sales. The sellers were adamant that the listing price be higher than what she recommended, Al-Rashid says.

“I’ve been humbled in this market. We cannot predict what can happen,” Al-Rashid says. Seattle prices were up 16% in April from a year ago.

The supply of existing homes for sale in May was at 5.1 months, down from 5.2 months in April. But the supply was just 4.3 months in January, NAR data show.

That means that all homes would sell in that time frame if no more supply came on the market and sales continued at May’s pace. Generally, Realtors consider a six-month supply to be a balanced market between buyers and sellers.

It will be next year before the supply of existing homes for sale climbs to a six- or seven-month level, says Lawrence Yun, NAR chief economist.

One big factor is how fast home builders ramp up construction, which will increase the overall supply of homes for sale.

In the meantime, sellers still have big advantages in many markets, especially in the West where inventory tends to be tighter.

In California, May’s data show just a 2.6-month supply of single-family homes for sale — leaving that market firmly in the sellers’ camp after years of rampant foreclosures and big price drops.

“It’s amazing how quickly the dynamics have changed from a buyer’s market to a seller’s market,” Huskey says.

 

Courtesy of your Arcadia Real Estate Agent

By Jeff Brown

The “American Dream” means owning a home rather than renting. And despite the huge losses millions of homeowners suffered in the past decade, the dream is still alive and well. But what, exactly, do people value the most in owning over renting? A study by Fannie Mae shows that most renters aspire to own someday, though they feel it may be more difficult to buy than in the past. The strong appeal to owning is rooted in the sense of control.

A full 90% of renters said they expected to own at some point in the future. Of those renters surveyed, 84% cited “having control over what you do with your living space” as a reason owning is better than renting. “Having a sense of privacy and security” was cited by 80%, “having a good place for your family or to raise your children” by 78% and “living in a nicer home” by 71%. Many also cited the presumed financial benefits of owning over renting, with 78% citing “having the best investment plan,” 70% saying “building up wealth” and 69% saying “saving for retirement.”

Still, renting did seem to offer some advantages over owning, with 57% citing “living within your budget,” 52% “having less stress” and 50% “making the best decision given the current economic climate.” This last figure reflects the especially high hurdles facing would-be homeowners today, including high down payment requirements and tough loan-approval guidelines. A decade ago, loans were easy to come by and buyers had to put little or nothing down.

“Renters who prefer to own perceive potential financial hurdles, and many of them think it would be difficult for them to get a mortgage today,” Fannie Mae reported. “Compared to the owners they aspire to become, renters are more likely to have fewer assets, higher debt stress, and less income.”

Asked their primary reason for renting now, 49% of those aged 18 to 34 cited making themselves “financially ready to own.” Of those aged 35 and older, 26% cited that reason. In the younger group, 15% said they rent because it is more affordable than owning, while 23% of the older renters cited that reason. In comparison, all the other reasons for renting were relatively unimportant. Renting as a protection against a possible decline in home prices, for instance, was cited by just 1% of those 18 to 34, and 3% of those 35 and older.

So do renters’ survey responses reflect a sound understanding of the benefits of owning over renting? For the most part, yes. There’s no doubt owning is preferable for anyone who values control. Not many landlords will let tenants change paint colors, let alone knock down the wall from the kitchen to dining room.

Financially, owning is preferable so long as one will stay put long enough. Generally, it takes four or five years for a home’s price to rise enough to offset the various costs of buying and selling, such as transfer taxes and real estate agent’s commission. Over longer periods, owners build equity from appreciation and the gradual reduction of mortgage debt.

But homes have not proven to be terrific investments. On average, prices grow at about the inflation rate of around 3% a year — while alternatives such as stocks earn much more. So when those renters do look to buy, the best move is to buy the least expensive home that satisfies their needs and to invest the savings in some other way.

 

Courtesy of your Arcadia Real Estate Agent

Julie Schmit, USA TODAY

The pace of home price increases stayed strong in April with prices up 12.1% year-over-year, CoreLogic says.

The annual increase is the biggest in more than seven years. Prices were up 3.2% in April from March.

“Increasing demand … coupled with low inventory, has created a virtuous cycle for price gains, says Mark Fleming, CoreLogic chief economist, noting that home price growth continues to “surprise to the upside.”

The states with the highest year over year home price appreciation were Nevada, up almost 25%; California, 19%; Arizona and Hawaii, 17%; and Oregon, almost 16%.

A rise in the supply of homes for sale should lead to moderating price gains later this year, says Ed Stansfield, an economist with Capital Economics.

In April, the supply of existing homes for sale grew to 5.2 months, up from 4.7 months in March, the National Association of Realtors says. Realtors generally consider a 6-month supply to be balanced between buyers and sellers.

More listings are expected given that more people think it’s now a good time to sell, Stansfield says, and because rising prices enable more people to sell at smaller or no losses.

In April, only two states posted lower home prices year-over-year. Prices were off 1.7% in Mississippi and 1.6% in Alabama, CoreLogic says.

The cities showing the biggest gains year over year for single family homes continue to be Los Angeles and Phoenix, up 19%. They were followed by Atlanta and Riverside, Calif., up almost 17%.

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The majority of Americans now are forecasting home prices to rise, and only about a third are expecting prices to fall, a reversal in attitudes of a year ago.

A monthly survey by mortgage finance firm Fannie Mae found 51% of those questioned in April believe prices will rise in the next 12 months, while only 35% are projecting a drop in prices. It is the first time in the three-year history of the survey that a majority said they expect prices to increase.

A year ago, 49% were expecting further price declines while only 32% said they though prices were on their way up.

The latest data from the housing market back up the this new level of confidence in the housing recovery. The S&P Case-Shiller Home Price Index rose 9.3% over the last 12 months, the biggest annual rise in home prices since the height of the housing bubble in 2006.

“Crossing the 50% threshold marks a significant milestone, as most Americans believe a housing recovery is truly occurring throughout the country,” said Doug Duncan, chief economist for Fannie Mae.

People who were sitting on the sidelines because of concerns that prices were still falling can be drawn back into the market once they believe prices are on their way up again. Home sales are up 10% from a year ago, helped not only by the climbing prices but also record low mortgage rates and falling unemployment.

The survey found that those expecting prices to go up are forecasting a 7.2% rise, on average. It also found 71% think it is a good time to buy a home, relatively unchanged from a year ago, but the percentage who think it’s a good time to sell has doubled over the last year to 30%.

The increase in those thinking positively about selling is also important for the market, as a tight supply of homes for sale has been one of the drags on the market.

The survey is based on the responses of 1,001 respondents, ages 18 and older.

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(Reuters) – Home prices rose in March, marking the biggest annual increase in seven years, in the latest sign of strength for the recovering housing market, a report from CoreLogic showed on Tuesday.

CoreLogic’s (CLGX.N) home price index jumped 1.9 percent from the previous month and accelerated by 10.5 percent compared to March last year.

That was the biggest year-over-year increase since March 2006, CoreLogic said.

Prices were even stronger excluding distressed sales, rising 2.4 percent from February and 10.7 percent from the year before. Distressed sales include homes that are in danger of foreclosure and properties that have already been seized by lenders.

Home prices have been rising since last year, helped by investor demand and tighter inventory. The top five states with the biggest gains in prices were Nevada, California, Arizona, Idaho and Oregon.

Prices likely continued to rise in April, CoreLogic said, though at a slower pace. Prices are seen rising 1.3 percent for the month and 9.6 percent on an annual basis.

(Reporting by Leah Schnurr; Editing by Richard Chang)

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