What’s Behind Falling Housing Inventories?

Home prices are increasing across the country as the number of homes for-sale continues to fall. But at a time when buyer demand is picking up, why is inventory still so low?

Inventories fell to 1.82 million at the end of last year, a 21.6 percent drop from one year earlier, the National Association of REALTORS® reports.

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Connecticut New Home Permits End Year With Huge Gains

New data from the state's Department of Economic and Community Development (DECD) show that new home permits surged up 45 percent in 2012 after hitting their worst year ever in 2011.

December data released by the DECD show permits rising to 524 for the month, compared with 253 in December 2011, an increase of 107 percent. For the full year, permits rose from 2,837 to 4,104. That's the highest number since 2008, when 4,910 were issued, but still far less than during the housing boom. In 2004, more than 10,000 new home permits were issued in Connecticut.

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10 states with the most homes in foreclosure

Foreclosures in the U.S. are falling, data released by foreclosure tracking firm RealtyTrac shows. Last year, 1.8 million properties were foreclosed, down 2.7% from 2011, and down 36% from 2010. 

While the national rate is falling, many of the states hardest-hit by the housing crisis and recession continue to be weighed down by a higher rate of homes in the foreclosure process. Foreclosure activity actually increased in 25 states. In Florida, foreclosure filings increased by more than 50%. Based on RealtyTrac’s 2012 data, 24/7 Wall St. reviewed the 10 states with the highest rate of homes in foreclosure. 

Take a look.

Home Prices See Best Yearly Gain Since 2006

Home prices rose in November to rack up their best yearly gain since the housing crisis began, a further sign that the sector is on the mend.  The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.6 percent in November on a seasonally adjusted basis, in line with economists' forecasts.  Prices in the 20 cities rose 5.5 percent year over year, making for the strongest yearly price increase since August 2006 when prices were on their way down.

"This is continuing a trend in place for the better part of a year," said Omair Sharif, U.S. economist at RBS Securities in New York. "This is another indication that the housing rebound is fairly entrenched at this point."

The housing market became a bright spot for the economy last year as prices rose and inventory tightened. The sector is expected to contribute to economic growth in 2013, though a number of challenges remain, including tight access to mortgages and on-going foreclosures.

It was the 10th month in a row that prices have increased, the longest string of gains since before 2006. Last year's rise in prices beat a nine-month consecutive run in 2009 and 2010, when the market was boosted by a homebuyer tax credit.
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2012 home sales: Best in 5 years

Steady December home sales capped the best year for the U.S. real estate market in five years, according to an industry trade group report Tuesday.

The National Association of Realtors said that December sales of previously-owned homes came in just slightly below November's sales pace, but up 12.8% from a year ago. That brought full-year sales to 4.65 million, up 9% from 2011 and the best year for home sales since 2007, when there were 5 million homes sold just before the start of the recession.

Sales are being helped by a combination of strong market fundamentals -- near record low mortgage rates, lower unemployment and a rebound in home prices, all of which are bringing in buyers into the market who had been waiting for it to hit bottom. The mortgage rates and years of depressed home prices have also combined to create the most affordable housing market on record, according to the Realtors group.

And the Realtors are predicting strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.
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Zillow: National Home Values Rose 5.9 Percent In 2012

U.S. home values ended 2012 up 5.9 percent over the end of 2011, marking four consecutive quarters of national home value appreciation, according to national real estate analytics provider Zillow.  The Zillow home value index rose to $157,400 in the fourth quarter, up 2.5 percent over the third quarter, according to the company.  The 5.9 percent annual appreciation rate far exceeded yearly rates of appreciation typically associated with healthy markets and represents the largest annual gain since August of 2006, near the peak of the housing bubble. Historically, housing markets can expect annual home value appreciation of roughly 3 percent on average, according to Zillow research.  Looking ahead, the Zillow home value forecast shows home values increasing by 3.3 percent in 2013, a yearly appreciation rate more in line with historic norms.
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Fabulous 1 Bedroom and 1 Bath Condo On 1st Floor with Gleaming Hardwood Floors and Freshly Painted.  Walk Out To Private Garden Area. Reserved Parking.  Large Closets.  Walk To Shopping Centers.  On Site Pool and Club House.  Low Monthly Maintenance.  Separate Storage Unit.  Must See!  City sewer & water.  Immaculate and Ready To Move.   Priced To Sell. 
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Ten Consecutive Months With Rise In Greater Hartford Single-Family Homes

Closed sales of single-family homes in the Greater Hartford area increased for the 10th consecutive month in December, up 27.24 percent to 696 from 547 at the same time last year.  According to the Greater Hartford Association of Realtors (GHAR), pending sales rose 14.52 percent, to 560 from 489, and the median sale price decreased 1.17 percent, to $207,450 from $209,900.  New listings decreased 12.36 percent, to 645 from 736, and inventory dropped 9.77 percent. The average number of days on-market decreased 6.74 percent during this same period.  In year to date statistics, closed sales increased 20.07 percent, to 8,711 from 7,255, and pending sales also increased 20.63 percent.  "Although the closed sales numbers are encouraging, I would feel even better about the housing market recovery when prices stabilize or increase," said GHAR President and CEO Jeff Arakelian in a statement.
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Surprise shortage boosts new-home prices

Analysts say uptick is about more than just buyer demand.

New data released by the Department of Commerce this morning shows that the number of properties that builders began construction on increased in December to a seasonally adjusted annual rate of 954,000, up 37% from a year prior.  In a normal market, more supply would help keep prices in check, but the opposite trend is currently underway: New home prices are rising. And this time, experts say, it’s not just buyer demand or fancy finishes on new homes that are driving prices up—it’s the result of a bidding war among builders. “In the last 12 months, [it’s] been ramping up,” says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.  For buyers, these rising costs can translate to higher asking prices for new homes, says Brad Hunter, chief economist at Metrostudy. Some housing analysts say it’s already having an effect. Nationally, median new home sales prices hit $246,200 in November, up 4% from a month prior and 15% from a year prior, according to the Census Bureau.

Read more at Market Watch.

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Why Buffett's Real Estate CEO is High on Housing

Please take a moment to watch Ron Peltier, CEO of Berkshire Hathaway HomeServices, who was on CNBC yesterday.   He has some great insight into the market and speaks to the strength of the new global brand, Berkshire Hathaway HomeServices.