The experts at RealtyTrac told 7 On Your Side that home prices have increased 28 percent in the Bay Area from the time the housing market hit bottom in February 2012. In San Francisco, the prices have risen even more dramatically.

Brian Miller saw first hand how frantic the housing market in San Francisco can be right now.

“I found myself being constantly outbid, putting in offers of 20 percent over asking, getting outbid at 50 percent over asking in cash,” Miller said.

That type of activity didn’t surprise Serena Kokjer Greening of Guarantee Mortgage. She says the small number of homes for sale combined with the improved employment picture is leading to bidding wars.

“You’ll see properties getting six, eight, even 20 offers which, you know, hadn’t happened in four to five years here,” Kokjer Greening said.

All those offers mean rising prices taking us closer to the bubble, the point when homes are considered overpriced.

The Vice President of RealtyTrac Daren Blomquist says we’re still 21 percentage points below the peak of the housing bubble in the Bay Area.

“But then if you focus in on the city, that’s where we’re very close actually to the peak of the housing bubble in San Francisco,” he said.

Blomquist says San Francisco is just 6 percentage points from reaching that bubble stage.

“I think it’s pretty dangerous,” he said.

“Today I received probably my eighth denial of a modification,” San Francisco resident Gale Rosboro said.

Rosboro wrote President Barack Obama and the White House forwarded her case to the Treasury Department to assist her in getting a modification from Wells Fargo. So far, even that hasn’t helped.

“They’ve made no move towards working with me to get a modification,” Rosboro said.

In an email, Wells Fargo told 7 On Your Side, “We have worked with Ms. Rosboro for nearly three years and will continue to try to identify options that are appropriate for her individual financial circumstances. Our foreclosure rate is less than 1 percent.”

Ironically, rising home values could make it even more difficult for struggling homeowners to get modifications.

“I think that people are barely hanging on. There have been a lot of cuts and its been very difficult for families,” Alliance of Californians for Community Empowerment spokesperson Grace Martinez said.

Blomquist predicts another round of foreclosures in San Francisco in the coming months.

“Four of the last five months in San Francisco foreclosure starts have increased from the previous month,” he said.

Blomquist advises home buyers to be patient and not feel you have to buy right now.

Miller waited and found something he could afford. “It feels great, I mean I’m very excited, he said.

RealtyTrac says the next wave of foreclosures in San Francisco won’t be an overwhelming flood, but it does expect an uptick.

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Article source: http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=9196447

“Buyers buy based upon payment, and those payments are still highly affordable relative to their incomes,” he said. “Even with 100 basis point swing, there’s still plenty of room in that [affordability] index.”

The concern, however, has been that as mortgage rates rise, home prices would necessarily fall, as buyers lose purchasing power. That may not be the case, according to a new analysis.

(Read more: Map: Tracking the US real estate recovery)

“History shows that a rapid rise in interest rates tends to have little correlation with home prices. Rather, rising rates are more likely to contribute to a decrease in home purchase volume and an increase in the market share of adjustable-rate mortgages,” wrote Mark Palim in a Fannie Mae commentary.

Article source: http://www.cnbc.com/id/100890224

To give a sense of just how quickly this has happened, its important to note that the current median price is a 32 percent jump from where its sat last year.

The phenomenon isn’t solely confined to San Francisco proper. Other Bay Area cities are experiencing similar surges in housing prices, leading the whole region to see a 22 percent increase in prices over the past twelve months.

This is great news for current homeowners thinking about cashing out and moving to the Bahamas. But for everyone else it raises two questions: 1. Where can I get one of those internet millionaire jobs I keep hearing so much about, and 2. Are we in the midst of the housing bubble?

According to a recent study by real estate brokerage house Redfin, San Francisco is one of the cities in the United States most likely to be experiencing a real estate bubble based on a host of factors ranging from the ratio of home prices to median household income, the speed at which prices are growing and the speed at which houses are sold after being listed on the market.

“The normal laws of economics don’t apply to the Bay Area,” Redfin CEO Glenn Kelman told HuffPost in April. “You could have huge unemployment numbers here and home prices would still go up because [the supply is so constrained and] there are enough people with limitless amounts of money who want to live there.”

Unlike the real estate bubble that triggered the Great Recession, the Bay Area’s newfound growth in home prices isn’t fueled by sketchy financing (“Do you have a heartbeat and signature? Here are the keys to this 12 bedroom estate!”). Instead, what’s going on is directly tied to the strength of the Bay Area’s largely tech-fueled job market, which is drawing an influx of wealthy people into areas where there isn’t enough supply to go around.

The reason for the Bay Area’s lack of supply is largely due to the aftershocks of the last bubble, which devastated the construction industry and led to far fewer houses being built to accommodate the region’s swelling population.

Some of that is starting to change–especially in San Francisco, where a construction boom is simultaneously creating new housing units after years of virtually nothing coming onto the market–but the new construction isn’t happening fast enough to stabilize demand.

While the Fed is helping to keep interest rates low, which makes buying a house considerably cheaper, the money coming into some pockets of the Bay Area is so great that it’s common for properties to stay on the market for less than a week and the majority of buyers are paying entirely with cash.

However, it’s not only internet millionaires acquiring scores of Bay Area real estate with mountains of cold, hard cash. The practice of house flipping–where an investor buys a property (often with cash), fixes it up and then sells it almost immediately to make a profit both on the renovation and the rising tide of the housing market–is back with a vengeance.

A recent analysis by RealtyTrac found the average gross profit for flipping a house in San Francisco last year was 23 percent over the original purchase price, making it one of the best markets in the country for flipping.

In February, 28 percent of all the homes sold in Santa Clara, San Mateo, Alameda and Contra Costa counties went to absentee buyers not intending on actually living on the property and nearly one third sold for cash.

“In terms of the added frustration to Mr. and Mrs. Typical Homebuyer, the investor coming in with cash is going to trump,” Coldwell Banker’s Rick Turley told the San Jose Mercury News. “Even at the next price tier, you’ve got these young wealthy millionaires buying their first home at $1.5 million, and they’re paying cash. That’s edging out the move-up buyer.”

Even so, there are many housing experts who believe what’s happening is healthy growth that’s sustainable over the long term.

“This is not a bubble,” economist Diane Swonk told ABC News. “We are regaining lost ground which is a game-changer for most households since their home is what they rely on for wealth.”

Also on HuffPost:

Loading Slideshow

• Sacramento, Calif.

  Year Over Year Increase: 42.57 percent

  Median Home Listing Price: $285,000

  Total # Of Listings: 2,962

• Santa Barbara/Santa Maria/Lompoc, Calif.

  Year Over Year Increase: 35.72 percent

  Median Home Listing Price: $699,000

  Total # Of Listings: 1,195

• San Francisco, Calif.

  Year Over Year Increase: 25.04 percent

  Median Home Listing Price: $749,000

  Total # Of Listings: 2,292

• San Jose, Calif.

  Year Over Year Increase: 23.53 percent

  Median Home Listing Price: $562,000

  Total # Of Listings: 2,035

• Phoenix, Ariz.

  Year Over Year Increase: 21.21 percent

  Median Home Listing Price: $200,000

  Total # Of Listings: 15,114

• Atlanta, Ga.

  Year Over Year Increase: 19.93 percent

  Median Home Listing Price: $179,000

  Total # Of Listings: 32,530

• Oakland, Calif.

  Year Over Year Increase: 17.22 percent

  Median Home Listing Price: $375,000

  Total # Of Listings: 1,911

• Seattle/Bellevue/Everett, Wash.

  Year Over Year Increase: 16.66 percent

  Median Home Listing Price: $349,950

  Total # Of Listings: 4,381

• Fresno, Calif.

  Year Over Year Increase: 16.28 percent

  Median Home Listing Price: $184,900

  Total # Of Listings: 1,949

• Riverside, Calif.

  Year Over Year Increase: 15.65 percent

  Median Home Listing Price: $229,000

  Total # Of Listings: 14,909

Article source: http://www.huffingtonpost.com/2013/05/29/san-francisco-median-home-price_n_3356238.html?ir=San+Francisco

In “Bay Area housing recovery spreads from Silicon Valley to East Bay“, Argus reporter Pete Carey describes these housing micro-climates with fascinating data and dramatic anecdotes, starting with the following stark graphic:

(click to enlarge)

The housing micro-climates of the greater San Francisco Bay Area show a dramatic schism between recovery and despair

Source: Bay Area housing recovery spreads from Silicon Valley to East Bay (linked above)

The green areas are localities where housing prices are at or above their pre-crash peaks. In the most favorable areas with good school districts and plentiful jobs, the housing market is back to the good old bad days. Limited inventories, low interest rates, pent-up demand, and buyers flush with cash are scrambling to outbid each other and driving prices ever higher. In some of these areas, prices are already 15-24% ABOVE their pre-crash peak. Far away from the Bay Area’s job centers, housing inventory is plentiful, rampant sub-prime lending has transformed affordability into foreclosures and short sales, and prices are only just now climbing off their post-crash bottoms. The recoveries here may depend upon how fast residents’ tolerances for horrific commutes rebuild relative to the decline in tolerance for sky-high housing prices closer to jobs and good public schools. In between these extremes is a variety of local conditions generating pockets of housing prosperity and despair.

Further to the east is Stockton, now the country’s largest bankrupt city, gateway and ground zero for the state’s housing bubble and crash that rippled hardest throughout the central valley where houses multiplied much faster than jobs. Not shown on this map are the counties northward from San Francisco — Marin, Napa, Sonoma, and Solano. Contrasts exist here as well from the highly sought estates in Marin county, the plush vineyards of Napa, and bucolic surroundings of Sonoma to Vallejo in Solano County that declared bankruptcy at the height of the financial crisis.

This is quite a panorama that highlights the old real estate maxim of location, location, location. Here are some ZIP code related stats from the Argus article:

“Thirty-four of 185 ZIP codes in five counties have regained or surpassed their bubble-era peak home value or are less than 1 percent from it, according to this newspaper’s analysis of February median values for all homes from online real estate site Zillow.

Another 49 ZIPs are within 15 percent of their previous highs, including 18 in the East Bay. A year ago, only part of leafy Palo Alto had regained the value it lost after Bay Area home values crested in 2006-07…

…Fifteen ZIP codes in Contra Costa County and three in Alameda County are more than 50 percent below their peak median home value, according to Zillow’s data. In one Antioch ZIP, the median value of a home was $177,700, only 18 percent up from an October 2009 bottom of $149,800 and 62 percent below its peak of $473,400 in January 2006.”

An extreme example of the recovery comes from Burlingame, a city with some of the most expensive ZIP codes in the Bay Area.

“Up the Peninsula in a Burlingame ZIP code that surpassed its bubble-era peak in August, Dianna Herrmann decided it was time to downsize and put her historic, 6,000-square-foot home on the market for $3.98 million… Fifteen days later, the house was sold in an all-cash deal for over the asking price.”

The anecdotes I hear from friends and family confirm the heat in the Bay Area housing market. One friend offered $50K above asking price for a Sunnyvale home, only to find out that a buyer with all-cash outbid him by another $50K. He has since given up house hunting after seeing a Sunnyvale home in less-than-desirable surroundings sell for a cool million. Another friend has also slowed down her house hunt after realizing that her desired home close to work in Silicon Valley could not be found for less than $1.1M. Some homes in desirable markets are sold within a week of listing, creating an added sense of urgency with buyers:

“The market is so hot that sales in a week are not unusual. According to the real estate company Redfin, 24 percent of Alameda County listings in March were pending in a week; the numbers were 32 percent in Contra Costa County, 19 percent in San Mateo County and 26 percent in Santa Clara County.”

A classic quote I found in a flyer for a home in Fremont — an important traffic hub/gateway between the East Bay and Silicon Valley — offered a modest 3-bedroom house for about $600K that needed updates. It was marketed as an opportunity to turn this residence into “the home of your dreams!”

So why spend time studying and tracking this madness?

First and foremost, this drama provides the backdrop for the great results homebuilders are reporting in their California-based communities. Homebuilders like Tri Pointe Homes (TPH), KB Home (KBH), and Meritage (MTH) are benefiting from the premium markets in the Bay Area (for more on TPH see “A Concentrated Way To Play Rapid Price Appreciation In The California Housing Market“). Similar stories can be found in Southern California. The homebuilders learned many important lessons from the housing crash. One lesson has trained them to focus their building in areas with strong job growth and growing economies. Places like the Bay Area are providing blueprints for the country’s recovery, and we can find homebuilders converging on these locales.

Secondly and in related fashion, the frenzy going on in the housing market is likely a leading (or confirming) indicator of an improving economy, albeit an unevenly recovering one (after all, California has a poverty rate of 16% using traditional measures. When using the Census Bureau’s new supplemental approach that adjusts for the cost of living, California’s poverty rate goes to tops in the nation at 23%). The notion that deflation is a risk in this economy should be quickly dispelled after understanding what is going on in markets like California. The buying will slowly but surely spread out as it always does to the lower-priced regions of the Bay Area as the economy continues to grow. This will have plenty of cascading and multiplying impacts.

Finally, the California housing micro-climates are a great reminder of why both housing bulls and bears can make convincing arguments. Depending on the lens applied, debaters can conjure up plenty of skewed arguments about the health or weakness of the housing market. The biggest mistake I continue to see is the interpretation of low sales numbers (better yet, lower than expectations) as an indicator of a slowing housing market. When inventories are tight and sellers are anxiously waiting for today’s soaring prices to make them whole on their homes, it is no surprise that sales are constrained. Bulls can also overstate the case if they do not recognize that tight credit conditions continue to lock out many entry-level and first-time buyers. The housing market cannot continue its recovery if the buying remains dominated by well-heeled cash buyers. I am still looking for hard data on how many of these cash buyers are Canadians taking advantage of the enviable combination of a strong currency and relatively low prices for American housing; and/or wealthy Chinese nationals looking for lucrative foreign investments.

Overall, the housing market recovery is still just getting started. Markets like the San Francisco Bay Area are leading the way. Pent-up demand is getting released and running into low inventory levels. Homebuilders are scrambling to ramp up to meet some of this demand by buying land and securing scarce construction resources. The cost and price pressures are part of the early growing pains from a decimated industry where supply is not yet recovered enough to handle demand where it is most robust. It is hard to determine when prosperity will be more widely shared, but I am expecting that once unemployment begins a new trajectory downward, scenes like the ones in the Bay Area will spread like wildfire across the country… especially since interest rates are likely to remain extremely low as employment data only slowly improve.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More…)

Article source: http://seekingalpha.com/article/1380051-the-san-francisco-bay-area-s-housing-micro-climates-a-microcosm-of-a-2-speed-recovery?source=google_news

Real estate returns are not rocket science.  Because they’re such a huge portion of the consumer balance sheet they tend to be tied very closely to wage growth.  Wage growth, by definition, is very closely tied to the rate of inflation.  That explains why the long-term historical return of real estate is roughly in-line with the rate of inflation.  But this survey from Zillow shows that real estate “investors” are probably still too optimistic.

I can see why these assumptions are attractive, but they are not quite what drops out of macroeconomic analysis.

Fundamental Upward Pressure of Prices

Wage growth, per se, shouldn’t drive housing prices. What we might expect is that wage growth drives rents and rents drive housing prices.

The wage-rent relationship, however, is not an iron law.

Matt Yglesias and Ryan Avent are famous for pointing out that rents – and hence housing prices – could be much lower in coastal cities if residents would abandon restrictive zoning laws. For example, Dallas and Philadelphia have roughly the same median household income, but home prices in Philly are much higher than in Dallas.

In general, if a fundamental driver – regulation, technology, preference – causes rents to eat up a higher portion of folks pay checks then rents and home prices will be higher.

To some extent the national rise in home prices is due to both technology and preferences driving more people to want to live in high rent areas like the Northeast Corridor.

Those same forces are leading some people to want to live in Houston, Austin and Raleigh-Durham, but because of looser regulation that simply translates into booming housing supply and a booming population rather than higher prices.

In addition, the relationship between rent and housing prices depends on interest rates – both the real portion and expected inflation. A house is like a utility company. Instead of providing power services, it provides shelter services and keeps you from having to pay rent.

Many finance folks are familiar with the rule-of-thumb that utilities tend to trade like bonds. Higher interest rates lead to lower bond and utility stock prices. Lower interest rates lead to higher bond and utility stock prices.

This is because – like a house – you are receiving a fixed stream of services over a long period of time.

Though this framing is kinda technical, most of these factors can be summed up in a really straightforward comparison: monthly rent vs. monthly mortgage payment for similar homes.

When the market is balanced the monthly mortgage payment should be slightly higher than the rental payment because 1) Mortgages get a tax break and 2) Traditional rate mortgages offer you the stability of a fixed payment.

Adjustable rate mortgages  (ARM) need to produce a payment close to or even below rent to be a good buy. That’s because you lose the security of a fixed payment and depending on the terms of the ARM you may actually be facing more payment volatility than with renting.

Trulia crunches the numbers and it looks like under their baseline assumptions its cheaper to buy than to rent in every one of the top 100 metropolitan areas in the United States.

In traditional hotspots like the San Francisco Bay area, New York City and Orange County, CA, the discount is low. Still this is a recipe for fundamentals house price appreciation.

Bubble Territory

If housing prices merely stabilized into a sustainable equilibrium with rents then the future probably wouldn’t be too dramatic. We would see a rapid shoot-up in home prices now, followed by a long period of little to no price growth as the Fed raised interest rates.

Rents would still be going up and monthly mortgage payments would rise with them to maintain equilbrium. However, mortgages payments would be rising because interest rates were rising, not because home prices were rising.

Eventually, the Fed would stop raising rates and home prices would start to drift higher and eventually home price growth would converge to rent growth.

Article source: http://www.forbes.com/sites/modeledbehavior/2013/03/25/the-housing-bubble-is-back/

Does this mean a return to the reckless equity withdrawals of the housing bubble? Likely not.

“I would guess that most of the current home equity line borrowing is quite prudent. We know that it is being very conservatively underwritten with plenty of equity,” said Guy Cecala, editor of Inside Mortgage Finance.

(Read More: Housing Already Shows Signs of a New Bubble.)

While it is too early to say exactly what borrowers are spending this new cash on, anecdotal evidence shows borrowers are largely sinking the money back into their homes.

“We are seeing more responsible uses today, like home improvements, education expenses or other major expenses that would be a more responsible use of a customer’s home equity,” Blackwell said.

The average home equity line in October of 2012 was just below $90,000 compared to October 2006, when lines averaged just over $100,000, according to Equifax.

Article source: http://www.cnbc.com/id/100446233

January 2013 Trulia Price Monitor Summary

% change in
asking prices

# of 100 largest
metros with asking-
price increases

% change in asking
prices, excluding
foreclosures

Month-over-month,
seasonally adjusted

0.9%

Not reported

1.2%

Quarter-over-quarter,
seasonally adjusted

2.2%

79

2.9%

Year-over-year

5.9%

86

6.5%

Booming Housing Markets Have Both Price Gains and Healthy Fundamentals

Healthy housing markets are defined by strong job growth, low vacancy rates, and low foreclosure inventory. In “booming” markets such as San Francisco and Seattle, rising asking prices are supported by strong job growth and are unthreatened by future foreclosures. However, investor-fueled price increases in “rebounding” markets like Phoenix and Las Vegas are at risk from slow job growth, high vacancies, or future foreclosures. At the other end of the spectrum, healthy markets without dramatic price gains, such as Houston, will continue to hum along after avoiding the worst of the housing bubble and bust. Meanwhile, markets like Chicago continue to struggle without strong market fundamentals or big price gains.

BOOMING

Big price increases and healthier
market
fundamentals.

• San
  Francisco
• Seattle
• Denver
• San
  Jose
• Salt
  Lake City

HUMMING

Stronger market fundamentals
without dramatic price
gains.

• Houston
• Boston
• Raleigh
• Dallas

REBOUNDING

Big price increases, but weaker
market fundamentals.

• Phoenix
• Las
  Vegas
• Riverside-San
  Bernardino
• Detroit

STRUGGLING

Neither strong market
fundamentals nor big price
gains.

• Newark
• Chicago
• Albuquerque

New Construction Eases Rent Gains Nationally

With more newly-constructed multi-unit buildings coming to completion, rent gains fell behind asking price increases at the national level for the first time since the price recovery began last spring. In January, rents rose 4.1 percent Y-o-Y nationally, slowing down from 4.7 percent in July 2012. Regionally, rent gains cooled the most in San Francisco, where rents rose only 2.4 percent versus 11.5 percent in July 2012. According to the Census, construction activity in San Francisco has been well above normal for the last year, and it’s nearly all in multi-unit buildings.

Where Rent Gains Slowed Down Most

#

U.S. Metro

% Change in
Rents, Y-o-Y,
Jan 2013

% Change in
Rents, Y-o-Y,
July 2012

Percentage
Point
Difference

1

San
Francisco, CA

2.4%

11.5%

-9.1%

2

Portland,
OR-WA

4.7%

9.2%

-4.4%

3

Seattle,
WA

6.4%

10.8%

-4.4%

4

Denver,
CO

7.4%

10.3%

-2.9%

5

San
Diego, CA

2.0%

4.4%

-2.4%

PRE-APPROVED QUOTES

• “In many local markets today, dramatic price gains can mask serious
  red flags,” says Jed Kolko, Trulia’s Chief Economist. “Strong job
  growth, low vacancy rate, and low foreclosure inventory–not huge price
  gains–are signs of a healthy housing market. Without strong underlying
  market fundamentals, price rebounds might be here today, but gone
  tomorrow.”
• “Rent gains are slowing down because of more supply, not less demand,”
  explains Jed Kolko, Trulia’s Chief Economist. “Many of the multi-unit
  buildings that have been under construction over the past two years
  are now coming onto the market. Renters in San Francisco, Seattle, and
  Denver are starting to get a touch of relief, even though rising
  prices might put homeownership out of their reach.”

MULTIMEDIA

• To read the full report, see here.
• To download the full list of price and rent changes for the largest
  metro areas, see here.
• To download a graph of price changes from January 2011 to January
  2013, see here.
• To download a scatter plot graph contrasting price trends with the
  market’s health for the 100 largest metros, see here.

METHODOLOGY

To view the full methodology and 2013 release schedule, see here. The next release of the Trulia Price Monitor and the Trulia Rent Monitor will be Tuesday, March 5, at 10 AM ET.

ABOUT TRULIA, INC.

Trulia (NYSE: TRLA) gives home buyers, sellers, owners, and renters the inside scoop on properties, places, and real estate professionals. Trulia has unique info on the areas people want to live that can’t be found anywhere else: users can learn about agents, neighborhoods, schools, crime, commute times, and even ask the local community questions. Real estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyper local advertising services, social recommendations, and top-rated mobile real estate apps. Trulia is headquartered in downtown San Francisco. Trulia is a registered trademark of Trulia, Inc.

Article source: http://www.fortmilltimes.com/2013/02/05/2478046/trulia-classifies-housing-markets.html

“Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year — and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets.”

(Read More: Link Between Credit and Mortgages: Not What You Think)

RealtyTrac ranked the top markets for investors to set their sights in 2013, based on months’ supply of foreclosure inventory, percentage of foreclosure sales, the foreclosure discount and the percentage increase in foreclosure activity in 2012. Five of the top ten are in Florida, including Palm Bay, Tampa, Jacksonville and Orlando. Florida requires a judge in the foreclosure process and therefore has an extremely large backlog.

(Read More: Feds’ ‘Fixer-Upper’ Loan Helps Tidy Up Foreclosures)

New York, another judicial state, fills 4 of the top ten spots, with Rochester, Albany and the New York City area leading. Chicago rounds out the roster.

The worst markets to look for foreclosures are largely out West, where the foreclosure crisis hit first and where investors have already bought so many properties that they are now fighting for what is left. Low supplies have led to bidding wars in cities like Phoenix, Las Vegas, San Jose, CA and even Portland, OR.

(Read More: Best US Housing Markets for Buyers and Sellers)

It is truly a tale of east versus west, just as it was at the start of the foreclosure crisis with the west faring far worse than the rest of the nation. Now it is just the opposite, as demand for distressed properties continues to increase and supply determines the best bargain destinations.

(Read More: Facing Foreclosure? Don’t Just Sit There—Act Now)

Article source: http://www.cnbc.com/id/100423428

Bubbles are swelling in pockets of the U.S. housing sector, especially in those areas that fell the hardest and are soaring back in part due to speculative demand, said Kathy Fettke, founder and CEO of Real Wealth Network, a California real estate services and consulting company.

“When inventory levels are so low, that has everybody kind of in a panic and diving in to buy, and that is driving up prices in some areas that I think personally is creating another bubble,” Fettke told Newsmax TV in an exclusive interview.

As a nation, the housing sector is showing signs of life after the Great Recession.

Watch our exclusive video. Story continues below.

U.S. homebuilding permits touched their highest level in more than four years in November, pointing to strength in the housing market, even though groundbreaking activity dropped 3 percent last month.

Home prices have shown signs of life as well, though some areas of the country in particular may be overheating.

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Areas hit the hardest after the housing bubble burst in 2007 are shooting back the hardest, as many investors have scooped in to buy cheap and distressed properties.

“In Phoenix, Las Vegas we are seeing prices rise so rapidly, and we really believe that a lot of it is speculative, with investors all over the world coming in and buying up those properties. That makes me nervous,” she said.

“But other areas that are more stable — let’s say Dallas, Houston, Atlanta — these are the fastest growing population areas in the country, with the fastest job creation. So there really are fundamentals there to support the housing market.”

Metropolitan areas with little land are seeing prices shoot up as well, including the San Francisco bay area.

“We work with a lot of teams there selling real estate and just in the last few months they have bumped up their prices in some areas up 30 percent from last year,” Fettke explained.

“That feels like bubble market to me. Our salaries haven’t increased by 30 percent,” she added.

“So really what that reflects to me is very low interest rates that could cause a bubble in some of these markets where people think they are going to see a rise in prices.”

Turning to fiscal matters, successful aversion to the year-end fiscal cliff could affect the housing sector, whose recovery is tied heavily to improvements taking place in the labor market.

The White House and Congressional Republicans are debating a fiscal framework for 2013, with the Obama administration’s proposal calling for tax hikes on those with incomes over $400,000 a year, with Republican countering with a proposed hike on those with incomes of over $1 million a year.

Should wealthier Americans get hit with tax hikes to the point that they cannot hire, the housing sector could feel the fallout.

“The housing market depends so much on job creation so if employers are going to be facing massive taxes, is that going to create more jobs or not?” Fettke asked.

“What we do know is that places like Texas where taxes are very low for employers — they are high on property taxes, but have low employer taxes and no state taxes — we are seeing a very strong economy there, and I do believe that when you tax companies they can’t hire.”

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

© 2012 Moneynews. All rights reserved.

Article source: http://www.moneynews.com/Markets/Fettke-housing-bubble-swelling/2012/12/28/id/469314

Bubbles are swelling in pockets of the U.S. housing sector, especially in those areas that fell the hardest and are soaring back in part due to speculative demand, said Kathy Fettke, founder and CEO of Real Wealth Network, a California real estate services and consulting company.

“When inventory levels are so low, that has everybody kind of in a panic and diving in to buy, and that is driving up prices in some areas that I think personally is creating another bubble,” Fettke told Newsmax TV in an exclusive interview.

As a nation, the housing sector is showing signs of life after the Great Recession.

Watch our exclusive video. Story continues below.

U.S. homebuilding permits touched their highest level in more than four years in November, pointing to strength in the housing market, even though groundbreaking activity dropped 3 percent last month.

Home prices have shown signs of life as well, though some areas of the country in particular may be overheating.

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Areas hit the hardest after the housing bubble burst in 2007 are shooting back the hardest, as many investors have scooped in to buy cheap and distressed properties.

“In Phoenix, Las Vegas we are seeing prices rise so rapidly, and we really believe that a lot of it is speculative, with investors all over the world coming in and buying up those properties. That makes me nervous,” she said.

“But other areas that are more stable — let’s say Dallas, Houston, Atlanta — these are the fastest growing population areas in the country, with the fastest job creation. So there really are fundamentals there to support the housing market.”

Metropolitan areas with little land are seeing prices shoot up as well, including the San Francisco bay area.

“We work with a lot of teams there selling real estate and just in the last few months they have bumped up their prices in some areas up 30 percent from last year,” Fettke explained.

“That feels like bubble market to me. Our salaries haven’t increased by 30 percent,” she added.

“So really what that reflects to me is very low interest rates that could cause a bubble in some of these markets where people think they are going to see a rise in prices.”

Turning to fiscal matters, successful aversion to the year-end fiscal cliff could affect the housing sector, whose recovery is tied heavily to improvements taking place in the labor market.

The White House and Congressional Republicans are debating a fiscal framework for 2013, with the Obama administration’s proposal calling for tax hikes on those with incomes over $400,000 a year, with Republican countering with a proposed hike on those with incomes of over $1 million a year.

Should wealthier Americans get hit with tax hikes to the point that they cannot hire, the housing sector could feel the fallout.

“The housing market depends so much on job creation so if employers are going to be facing massive taxes, is that going to create more jobs or not?” Fettke asked.

“What we do know is that places like Texas where taxes are very low for employers — they are high on property taxes, but have low employer taxes and no state taxes — we are seeing a very strong economy there, and I do believe that when you tax companies they can’t hire.”

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

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