U.S. Residential Sales Up 8 Percent From Year Ago, Median Prices Up 5 Percent
  Bank-Owned Sales and Short Sales Account for 23 Percent of All Residential Sales

IRVINE, Calif. – July 25, 2013 — RealtyTrac® (www.realtytrac.com), the leading online marketplace for real estate data, today released its first-ever U.S. Residential Sales Report, which shows that U.S. residential property sales reached an estimated annualized pace of 5.3 million in June 2013, up 2 percent from the previous month and up 8 percent from a year ago.

The report also shows a national median sales price of $168,000 for the month, up 3 percent from the previous month and up 5 percent from a year ago. The median price of a distressed sale — in foreclosure or bank owned — was $120,000, 34 percent below the median price of a non-distressed sale ($181,500).

Other high-level findings from the report:

• All-cash purchases accounted for 30 percent of all sales in June, down from 31 percent of all sales in the previous month and a year ago. Metro areas with higher percentages of cash sales included Cape Coral-Fort Myers, Fla. (70 percent), Miami (64 percent), Las Vegas (62 percent), Sarasota, Fla. (59 percent), Tampa, Fla. (58 percent), and Detroit (56 percent). 
  

• Institutional investor purchases (sales to non-lending entities that purchased at least 10 properties in the last 12 months) accounted for 9 percent of all residential sales in June, up from 8 percent of all sales in May but down from 10 percent of all sales in June 2012. States with the highest percentage of institutional investor sales included Georgia (23 percent), Nevada (16 percent), Arizona (15 percent), Oklahoma (13 percent), North Carolina (12 percent), and Florida (12 percent).

• Sales of bank-owned properties (REO) accounted for 9 percent of all residential sales in June, down from 10 percent in May 2013 and on par with a year ago. Metro areas where REO sales accounted for higher percentages of total sales included Detroit (24 percent), Modesto, Calif. (24 percent), Stockton, Calif. (24 percent), Las Vegas (22 percent), and Akron, Ohio (21 percent). 
  

• Short sales (where the sale price is below the combined total of outstanding mortgages secured by the property) accounted for 14 percent of all residential sales in June, down from 15 percent in May but up from 8 percent a year ago. States with the highest percentage of short sales in June included Nevada (30 percent), Florida (29 percent), Maryland (21 percent), Tennessee (19 percent), and Arizona (19 percent).

• Metro areas with annual increases in median prices of 20 percent or more included Sacramento, Calif. (35 percent), San Francisco (30 percent), Los Angeles (27 percent), Las Vegas (26 percent), and Phoenix (25 percent). 
  

• States with the biggest distressed sale discount included Ohio (58 percent), Michigan (48 percent), Illinois (47 percent), Massachusetts (46 percent), and Wisconsin (45 percent). 
  

“The U.S. housing market is slowly but surely moving toward a more normalized and sustainable pattern after a flurry of institutional and cash buyers flocked to residential real estate last year, pushing up prices and picking clean the best inventory available in many areas,” said Daren Blomquist, vice president at RealtyTrac. “Rising home values should continue to unlock more non-distressed inventory while also pricing institutional investors out of more markets, which, combined with rising interest rates, will cool off the pace of price appreciation.

“Still, lingering distressed inventory in many markets will continue to provide fodder for institutional investors and cash buyers in those markets,” Blomquist continued. “Markets where sales increased in June tend to be in states with that lingering distressed inventory, whereas markets where sales decreased tend to be in states that more quickly absorbed distressed inventory thanks to a relatively fast foreclosure process and strong demand.”

Local broker perspectives
 “I have an increasing number of home buyers in the Oklahoma City and Tulsa markets compared to a year ago but half of the inventory.  This is causing a feeding frenzy that’s driving up the price of homes,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty in Oklahoma City and Tulsa.  “Home values have increased so much that fewer people are upside-down on their homes. Last month’s increase in short sales is the tail end as short sales are becoming rarer. I guarantee there will not be any new short sales in the future.”

“There continues to be an increase in institutional investors in the Reno area based on the level of distress the market encountered during the economic downturn. Their purchases vary widely on a monthly basis depending on availability,” said Craig King, COO at Chase Internationalbrokerage serving the Reno and Lake Tahoe markets.  “As the market continues to improve, the amount of REO and short sales have dramatically declined, and the market as a whole has made a return to equity sales.”

Report methodology
 The RealtyTrac U.S. Residential Sales Report provides counts and median prices for sales of residential properties nationwide, by state and metropolitan statistical areas with a population of 500,000 or more. Data is also available at the county level upon request. The report also provides a breakdown of cash sales, institutional investor sales, short sales and bank-owned sales. The data is derived from recorded sales deeds and loan data, which is used to determine cash sales and short sales. Sales counts for recent months are projected based on seasonality and expected number of sales records for those months that are not yet available from public record sources but will be in the future given historical patterns.

Definitions
  Residential property sales: sales of single family homes, condominiums/townhomes, and co-ops, not including multi-family properties.

Annualized sales: an annualized estimate of the number of residential property sales based on the actual number of sales deeds received for the month, accounting for expected sales records for that month that will be received in future months as well as seasonality.

Distressed sales: sale of a residential property that is actively in the foreclosure process or bank-owned when the sale is recorded.

Distressed discount: percentage difference between the median price of distressed sales and a non-distressed sales in a given geographic area.

Bank-Owned sales: sales of residential properties that have been foreclosed on and are owned by the foreclosing lender (bank).

Short sales: sales of residential properties where the sale price is below the combined total of outstanding mortgages secured by the property.

All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.

Institutional investor purchases: residential property sales to non-lending entities that purchased at least 10 properties in the last 12 months.

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About RealtyTrac Inc. 
RealtyTrac (www.realtytrac.com) is the leading supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac’s wholly-owned subsidiary, Homefacts®. RealtyTrac’s foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

Remember the 10 percent down payment on a house? After virtually disappearing for years, it's back.

Around the country, some lenders are offering 90 percent financing again on all loan types. For example, San Francisco-based RPM Mortgage resumed offering "piggyback" loans in the first quarter of 2013 after discontinuing them during the height of the credit crisis in late 2007, according to Vice President Julian Hebron. (A piggyback loan enables a home buyer to put only 10 percent down without having to buy mortgage insurance. This is done by getting two loans totaling 90 percent.)

In Monroe, NY, Rosalie Cook of Weichert Realtors says she is seeing buyer down payments range from all cash to as little as 5 percent. Mortgage lender Tom Gildea of Prospect Lending in Rockland County, NY agrees, saying that he's doing loans with as little as 5 percent down "all day long." Those 5 percent down deals are with private mortgage insurance, are only for conforming loans (less than $417,000) and are reserved for borrowers with excellent credit, verifiable income and little debt.

Mortgages used to be easyBefore the credit crisis of the mid-2000s, getting a home loan was simple. Your down payment was small — if you even had to make one. To qualify, all you had to do was "state" your income and sign on the dotted line.

Of course, that was the kind of lending that got us into the credit crisis. After the bust, many lenders started requiring a minimum of 20 percent down. Coming up with that much money was a stumbling block for many would-be home buyers. In addition, buyers were already worried about the economy or were uncertain about their jobs, making buying a home not only difficult but also downright scary.

The result: Even though home prices had plummeted and mortgage rates were at historic lows, many potential buyers were forced to sit on the sidelines for years.

Today, many real estate markets around the country are heating up again. While the economic recovery still has its fits and starts, people are feeling confident about their jobs. They're watching their 401(k) and stock portfolios climb back to pre-2008 levels. And so, they're out looking for homes to buy again.

Lenders have loosened up but are still cautiousMortgage lenders are seeing these trends, too, which is why they're starting to ease down payment restrictions. This time around, though, lenders are much more discerning about who gets to put 10 percent down. As RPM Mortgage's Hebron puts it: To qualify, your monthly housing, car, student loan, and credit card debt can't be higher than 45 percent of your monthly income. And you must have a credit score above 700.

The good news is that more potential buyers who otherwise would have been shut out of the market, due to the lack of a 20 percent down payment, can now jump in.

Leveraging cheap moneyEven if you have the 20 percent to put down, you might consider opting for a 10 percent down payment instead. For instance, if you're buying a home that needs a lot of work, you could put 10 percent down and use the other 10 percent to finance improvements. You might even consider investing that 10 percent in stocks or mutual funds, though that comes with obvious risks.

A 10 percent down payment has its disadvantages, too. If you put just 10 percent down and home prices decline later, you could end up underwater — owing more on the mortgage than your home is worth. When that happens, you could be stuck in your home, unable to sell — just as so many homeowners were after the housing crisis kicked in around 2006-2007.

Also, if you have little equity and you go to sell, you could face another problem. The size of your loan, along with the costs of selling your property, could total more than the sale price, a financial hit that can be tough to absorb.

If you qualify for a 10 percent down payment, and it's the only way you can get into a home, it may be worth the potential risks. Bottom line: Talk to your mortgage professional and real estate agent about your options. Think strategically and long-term about what you're doing. Don't just make a 10 percent down payment because you can.

Asking home prices took off in June, soaring 10.7 percent year-over-year, Trulia reported Wednesday.



Month-over-month, asking prices inched up by 1.5 percent and rose 4.1 percent on a quarterly basis.

Trulia also tracked the 100 largest metro areas and revealed 99 markets experienced an increase in asking prices over the last year.

While home prices have been trending upward for more than two years in markets such as San Jose, Phoenix, Denver, and Miami, certain market— especially along the


East Coast and Midwest—finally bottomed out over the past six months.

Among the recently bottomed-out markets, Edison-New Brunswick, New Jersey, saw the biggest jump in asking prices, at 8.6 percent. Chicago was close behind with an 8.4 percent increase, followed by Lake County-Kenosha County, Illinois-Wisconsin (+7.9 percent), Baltimore (+7.1 percent), and St. Louis (+6.4 percent).

According to Trulia’s chief economist Jed Kolko, the increase in home prices and mortgage rates has added a significant cost to homeownership.

“In the past year, buying a home has become at least 20 percent more expensive,” said Kolko. “For young first-time homebuyers who don’t remember life during and before the bubble, these rising costs are a rude awakening.”

Rents rose at a slower pace of 2.8 percent year-over-year, though it was still the biggest increase since January. In Houston, New York, and Philadelphia, rents picked up at a faster pace than asking prices.

Though, the scenario was reversed in Las Vegas; Oakland, California; and Sacramento, where asking prices shot up by at least 30 percent while rents saw a slight decrease over the last year.

The median existing single-family home price posted its biggest annual gain in more than seven years in the first quarter of 2013, as market conditions for home sellers continued to improve and home sales increased, the National Association of Realtors (NAR) reported today.

The median home price leaped 11.3 percent on an annual basis in the first quarter of 2013, rising from $158,600 to $176,600, according to NAR’s latest quarterly report. That represents the largest year-over-year price gain since the fourth quarter of 2005, when the median price jumped 13.6 percent, NAR said.

“The supply/demand balance is clearly tilted toward sellers in a good portion of the country,” said NAR Chief Economist Lawrence Yun. “Inventory conditions are expected to remain fairly constrained this year, so overall price increases should be well above the historic gain of one-to-two percentage points above the rate of inflation.  If home builders can continue to ramp up production, then home price growth is expected to moderate in 2014.”

Existing-home inventory in the first quarter of this year stood 16.8 percent below the previous year’s level, down from 2.32 million homes for sale in 2012 to 1.93 million this year, NAR said.

Amid the price increase, home sales rose 0.8 percent from the previous quarter and 9.8 percent from a year before to a seasonally adjusted rate of 4.94 million, according to NAR. That represents the highest level of sales since the fourth quarter of 2009, when tax incentives were stimulating home sales, the trade group said.

Prices rose from a year earlier in all 20 cities for the fourth straight month. Twelve cities posted double-digit gains. San Francisco, Las Vegas, Phoenix and Atlanta all had price increases over the past year of more than 20 percent, while Detroit and Los Angeles showed gains of nearly that much. Minneapolis posted a 15 percent gain.

In May, Americans got a lot more optimistic about the housing market.

Both the share of Americans who believe now is a good time to sell and the share of Americans who think now is a good time to buy rose sharply from April to May, with widespread reports of rising home prices, according to Fannie Mae.

The share of respondents who say now is a good time to sell jumped 10 percentage points in May, rising from 30 to 40 percent on a monthly basis, according to the results of Fannie Mae’s May 2013 National Housing Survey.

That indicates that the number of sellers confident in the housing market has more than doubled in the last year. Just 16 percent said “now is a good time to sell” in April 2012.

“Sentiment toward selling a home appears to be catching up with the strengthening housing market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The share of consumers who think it’s a good time to sell a home spiked this month, the largest increase in the survey’s three-year history.”

“This jump may foreshadow a gradual return to more normal levels of housing supply from their lows of recent months. In turn, increased housing supply could serve to temper increasing consumer home price expectations. We will closely watch the potential impact of rising mortgage rates on consumer housing sentiment in the coming months.”

Thank you for reading.

The vast majority of the top 50 metropolitan housing markets in the U.S. will “experience yearly price increases during the second half [of 2013],” reportd Clear Capital in its Home Data Index Market Report this week. 45 of metro areas are projected to experience gains, with Bakersfield, California leading the pack with 5.2 percent price increases through the end of this year and Las Vegas coming in second with projected price growth of five percent[1]. Bakersfield leapt from 29th to first in the past three months. Cleveland, Ohio; Raleigh, North Carolina; Charlotte, North Carolina; and Denver, Colorado, are expected to depreciate in the next six months, although every area but Cleveland can likely expect price decreases of “less than 0.5 percent in each” city. Cleveland’s forecast is dimmer, with Clear Capital predicting a 2.2 percent price decline.

Alex Villacorta, vice president of research and analytics at Clear Capital, warned that although these numbers are extremely encouraging, homeowners and investors should not expect trends in double-digit appreciation to hold over the long term[2]. “Increasing gains are great news for homeowners and to be expected at this time of year,” he said, “[but] over the long run we don’t expect to see the current rates of growth sustained.” He added that “this is not really a bad thing” and that “we consider the current momentum and expected moderation a really healthy move toward a more sustained recovery.”

Do you think that Clear Capital is on the money for the rest of 2013? Will appreciation slow next year?

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Phoenix is probably many investors’ favorite city these days, thanks to a booming real estate business and massive appreciation in the area (up 41.24 percent year-over-year for distressed properties alone). Buying a fixer-upper property in this area could be more difficult than in most because there are only about 763 of them in the area according toRealtyTrac, but if you feel like you are about to miss your window of opportunity to buy in this burgeoning market then a fixer-upper, which has an average value of $62,574 in a city where the inventory is declining and median home prices are coming in around $181,399 (June 2013), then a fixer-upper might literally be your last chance to really dig into this area before what some analysts warn could be a nice real estate bubble drives prices out of reach for investors[3]. Of course, any time you hear the word “bubble” you need to be careful, but unemployment numbers as of April around 6.6 percent seem to indicate that at least for the time-being, Phoenix will continue to be a buying destination for owner-occupants even if the investors start to clear out[4].

Remember, the BEIL “Hot Markets” lists are compiled for educational purposes only and are not intended to be taken as financial or investing advice. As with any real estate investing strategy, you need to do some serious research when you buy fixer-uppers just as you would for any other property purchase. What do you look for when you are buying to renovate? What key factors are mandatory for you when you are in the market for a good discounted property?

Thank you for reading