Inventories are tightest on the low end of the market, where investors came in and bought most of the distressed properties and are now holding them as single-family rentals. There is about a four-month supply of homes priced under $100,000, while there is around a twelve-month supply of homes priced over $500,000. That’s why sales of those low-end homes are down 16 percent from a year ago, and sales of higher-end homes are up 25 percent, according to the Realtors.

(Read More: Housing’s Big Challenge: Student Debt)

“The housing shortage is going to continue,” claimed Yun, who says the builders need to ramp up housing starts by 50 percent. He admits that is unlikely to happen due to land, labor and supply constraints.

Weak supplies are pushing home prices up far faster than wage growth, which is keeping first-time buyers especially on the sidelines. These buyers made up just 30 percent of the market in March, compared to the historical norm of 40-45 percent. They just can’t compete with all cash investors.

(Read More: Why Housing Affordability Is at Risk)

But if prices get too high, investors could leave the market. Their share was already down in March to 19 percent compared to 22 percent just one month ago. The danger is that they will start to unload the homes they own, which would bring much-needed supply back but which could also turn home prices in the other direction.

Article source: http://www.cnbc.com/id/100660999

(Read More: Housing’s Big Challenge: Student Debt)

Back in the mid-eighties and nineties, Americans spent nearly 20 percent of their median monthly incomes on their home loans—compared to just 12.5 percent today, according to Zillow.

The trouble is that wages have either stagnated or dropped at the same time that home values are rising. Pre-bubble, U.S. homebuyers spent 2.6 times their median annual incomes on the purchase price of a typical home, but now they are spending three times their incomes—meaning homes are 14.5 percent more expensive relative to income, according to Zillow. That is all made possible by government-subsidized, record low rates.

(Read More: Betting on the Home Builders as Housing Battles Back)

“The days of historically high levels of housing affordability are numbered,” said Zillow Chief Economist Stan Humphries. “Current affordability is almost entirely dependent on low interest rates, and there’s no doubt that rates will begin to rise in the next few years.”

Rates will rise because the Federal Reserve will inevitably have to get out of the business of buying agency mortgage-backed securities, which currently drives down rates. This won’t happen immediately, but it will in the next two to three years.

Article source: http://www.cnbc.com/id/100631625

For a 10th consecutive month, the median home price in the nine-county region rose year over year to hit $415,000, real estate firm DataQuick reported.

That was a 27.3% increase from the same month last year, though a 6.3% decline from the prior month.

The region posted its strongest January sales pace in six years, popping up 3.2% from the prior month.

A total of 5,501 newly built and previously owned houses and condominiums sold last month.

Foreclosures and short sales made up just over a third of the market last month.

ALSO:

One-third of homeowners have no mortgage

2012 was a banner year for housing affordability

Investors fuel Southland housing gains as foreclosures plummet

Article source: http://www.latimes.com/business/money/la-fi-mo--bay-area-housing-20130214,0,4188583.story

We’ve written numerous times about how crazy expensive buying a home in the Bay Area is for the average folk.  Out comes another survey, this one by the National Association of Home Builders/ Wells Fargo Housing Opportunity Index, that confirms what we already know about Bay Area real estate.  As AOL Real Estate reports, this survey looks at a metropolitan area’s median home price and median income and then determines what percentage of the homes an average homebuyer can afford.

The San Francisco metro area ranks 2nd in the nation in housing affordability

Based on these statistics, the San Francisco metro area was the second least affordable area to buy.  With a median home price of $659,000 and median income of $103,000, only 31.4% of homes are affordable to the average Bay Area resident.  This wasn’t too far off from New York City, which was the least affordable place to buy, where the average New Yorker could afford to buy only 28.5% of homes there.

Heading south along the bay, San Jose was ranked the sixth least affordable place to buy.  The median home price there was $530,000.  Median incomes in the San Jose metro area were $105,000 and based on these two numbers, about 46.2% of homes are affordable to the average homebuyer.  Better, but still not great.

San Jose is 6th in the country in housing affordability

Interestingly, the article also points out that San Francisco and San Jose were two of only a handful of metro areas where the median income was in the six figures – all thanks they say to the once again booming tech industry.

In all, California heads the list as the least affordable state.  In addition to San Francisco and San Jose, the metro areas of Los Angeles, Santa Ana and San Diego made the list.  To look at the other areas that made the list, click here.

Article source: http://blog.sfgate.com/ontheblock/2012/12/07/san-francisco-2nd-san-jose-6th-least-affordable-places-to-buy-in-the-country/

“We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation and rising consumer confidence about home buying now that home prices have clearly turned positive,” wrote Lawrence Yun, chief economist for the NAR in a release. (Read More: Could Housing Be the Antidote to the ‘Fiscal Cliff’?)

Pending home sales are now at the highest level since March of 2007 and have risen, on a year-over-year basis, for 18 consecutive months. The activity, however, varies from region to region, and the Realtors say the Northeast, which saw a 0.1 percent drop in sales month-to-month- did see some impact from Hurricane Sandy.

Signed contracts also declined in the West, 1.1 percent in October month-to-month and are up just 0.9 percent from a year ago. The West is suffering from a lack of supply, as investors have been scouring the landscape for a decreasing inventory of distressed properties. (Read More: Yes, Housing Starts Surge, but Rentals Are the Drivers) 

Pending home sales surged in the Midwest, up 15.6 percent month-to-month and up 20 percent from a year ago. They were also higher in the south by 5.5 percent sequentially and by 17.4 percent from a year ago.

Realtors continue to warn that while this housing recovery seems to be gaining steam, changes to the mortgage interest deduction, as well as other potential hits to the economy from the so-called “fiscal cliff,” could derail the momentum. (Read More: Housing Still Precarious in Obama’s Second Term)

SECTOR WATCH: Construction General Building Materials

• The Home Depot
  [HD 
  Loading... 
   
   
  ()
   
  ]
• Lowe’s Companies
  [LOW 
  Loading... 
   
   
  ()
   
  ]
• The Sherwin-Williams Company
  [SHW 
  Loading... 
   
   
  ()
   
  ]
• E. I. du Pont de Nemours and Company
  [DD 
  Loading... 
   
   
  ()
   
  ]
• Apogee Enterprises
  [APOG 
  Loading... 
   
   
  ()
   
  ]

Questions?  Comments?