Median home prices in Illinois snapped a 20-month streak of price
declines in March, a turnaround coinciding with the start of the
spring selling season. The statewide median price in March came
in at $130,000, even with March 2011, according to the Illinois
Association of Realtors. It’s the first time the state’s
median price hasn’t decreased since June 2010. “There’s no
doubt that these are strong numbers to open the spring selling
season,” said IAR President Loretta Alonzo. “To see such good
sales numbers, coupled with a measure of price stability is
encouraging news no matter what side of a real estate transaction
you happen to be on.” Illinois home sales posted the best
March sales numbers since 2007. Home sales (including
single-family homes and condominiums) in the month totaled 9,575,
expanding 21.1% from 7,904 home sales a year earlier. In the
nine-county Chicago Primary Metropolitan Statistical Area, 6,590
homes were sold in March, up 23.8% from March 2011 sales of 5,323
homes. The median price in March was $151,850 in the Chicago
PMSA, down 3.9% compared to a year earlier when it was $158,000.
“Sales volumes are up, time-on-the-market levels are down
significantly from a year ago and prices appear to be stabilizing
in Illinois although continuing to fall in Chicago,” said
Geoffrey Hewings, director of the Regional Economics Applications
Laboratory at the University of Illinois. “Further, in the
last month there was a more even spread of sales prices compared
to previous months where homes sold for less than $200,000
dominated the market,” Hewings added.
Hiring going up?
The National Association of Business Economics' (NABE) industry
survey found that 39 percent of respondents expect hiring will
pick up in their companies and industries during the next six
months, up from 27 percent in January. Some 48 percent of
respondents expect hiring will hold steady. While that is down
from 64 percent in January, it still underscores the slow pace of
recovery in the labor market following the 2007-2009 recession.
The survey was conducted between March 20 and April 10. The NABE
surveyed 55 members from companies and trade organizations. Not
all responded to every question. The uptick in demand for labor
could be leading companies to offer bigger paychecks. Some 44
percent of respondents said wages and salaries were rising, up
from 26 percent in January. The poll also showed 63 percent of
respondents expected U.S. gross domestic product to grow between
2.1 and 3 percent in the fourth quarter from a year earlier. In
the NABE's previous poll released in January, 60 percent of
respondents expected growth in that range.
Olick - Phoenix turns around
"Mike Ripson hasn't built a home in three years, but he is about
to. He has been sitting on one hundred sixty acres of land just
outside Phoenix, Arizona, which he intends to divide into 121
one-acre lots. 'Now's the time because we've been studying the
marketplace, and we noticed beginning late last summer, early
fall, that for homes priced less than $100,000, the market was
becoming very tight,' says Ripson, whose company is celebrating
its ten year anniversary this week. 'Over the last several
months that price point has increased such that today, homes
priced less than 300,000 dollars, there's less than a thirty-day
supply in the marketplace,' Ripson adds. The supply of homes for
sale in the Phoenix area is down 42 percent from a year ago, and
foreclosures are down 52 percent, according to Michael Orr, of
the Real Estate Center at ASU. That is bringing demand back to
the builders. Ripson is building about 40 miles outside of
Phoenix in Wittmann, where there is less competition from
foreclosures. 'To give you an example, within a five mile radius
of where we sit here at Sonoran Acres, two months ago there were
18 homes on the market. Today there's only one,' says Ripson.
That's why he re-opened his model home two weeks ago, and
immediately saw high buyer traffic. He filed permits for two new
homes, which he expects to sell in the next few weeks, thanks to
his low, $200,000 price point.
Closer in to Phoenix, prices are a bit lower, thanks to a higher
supply of distressed properties, but those properties are selling
fast as well, as large scale and institutional investors flood
the market. 'I really think we're at the top of the first inning
in terms of this opportunity, and there will be ebbs and flows,
ups and downs, people will come in and come out,' says Justin
Chang, principal at Colony Capital, which intends to invest over
a billion dollars in distressed properties this year. 'But if
you're looking to build a business over the next five to seven
years, this is the first inning, and we're pretty excited about
it,' Chang goes on to say. Colony has a history of investing in
commercial real estate, but about a year ago they saw the
potential as well in the single family rental market. They began
building an infrastructure, and started buying homes last month
from banks, the government and at auction. They own 170 homes in
three states so far and intend to close on fifty more this week.
They spend $3,000 to $5,000 rehabbing each home and readying it
to rent. Their team is entirely internal, which they say saves
them extra costs. 'We've got our internal team doing
acquisitions, we've got our internal team doing the rehab and
we've got an internal team doing the property management. These
are employees,' explains Jay McKee, COO of Colony American Homes.
'We have 120 people on our payroll, W-2 employees, right now
doing this work. A lot of other folks are doing it by outsourcing
to third parties,' says McKee. 'We think by doing it in house, we
can do it without markups.'
At a Colony home in Laveen, AZ, a suburb of Phoenix, workers were
installing new appliances into a former foreclosure, as the old
ones had been stolen. Nearby, a large development from Pulte
Homes advertised new construction starting at $100,000. McKee is
not concerned. 'There are people who cannot buy those homes, and
those are our clients. The people that lost their home to
foreclosure, are repairing their credit, or just decided they
don't want to be owners of properties anymore, they're our
client,' confirms McKee. Colony is considering a program to help
their renters become buyers, much like some rent-to-own programs
being considered by banks and the government. Colony has also
been pre-approved to bid on Fannie Mae foreclosures through a new
pilot program by the Federal Housing Finance Agency (FHFA). 'We
really understand what they want to accomplish, and we think we
can be good partners,' says Chang. 'The pilot programs that are
out there now are very smart, and I hope they are the first of
many. Colony is just one of a growing cadre of investment teams
buying distressed real estate to rent. Chang expects to see
returns of anywhere from 15 to 25 percent on his investment. Cash
flow is almost immediate. He says he can rehab a home in three
days and have it rented in less than a month. 85 percent of
Colony's homes are already rented. As for competition in the
space, which Chang calls a pioneering asset class, he's not
concerned. 'The opportunity is so vast that there's room for a
lot of companies,' Chang says. 'Eight to ten million homes will
be foreclosed over next 3-5 years. That's $800 billion in capital
required. Fifty other firms could do it, and it still would be a
drop in the bucket. We're really just a small part of the game at
this point.'"
Gas prices down
The average retail price of a gallon of gasoline in the United
States declined for the first time since mid-December, dropping
5.44 cents over the past two weeks, the nationwide Lundberg
Survey showed. The national average for a gallon of regular
gasoline fell to $3.9127 on April 20, from $3.9671 on April 6,
according to the survey of gasoline retailers in the continental
United States. Still, drivers are paying 3.27 cents more for a
gallon than they did a year ago. "The decline began in
California about six weeks ago," survey editor Trilby Lundberg
said, adding that prices peaked there on March 9 at $4.3162 and
fell in subsequent surveys by nearly 15 percent to $4.1669.
Drivers in Chicago continued to pay the most at the pump -- $4.26
per gallon -- even though prices fell nearly 19 cents from April
6. Prices in Tulsa, Oklahoma, remained lowest at $3.52 per
gallon. "If crude oil does not shoot back up we may find another
price decline of 5-10 cents in the coming weeks," Lundberg said.
Average diesel prices fell 4.15 cents to $4.1735 compared with
two weeks earlier.
California Bay area sales up
March home sales in California’s Bay Area reached their highest
level for the month in five years, the result of lower prices,
low interest rates and an improving economy. About 7,700 new and
resale houses and condos sold in the nine-county Bay Area in
March, up 34.9% from 5,702 in February, and up 9.1% from 7,051 a
year earlier, according to San Diego-based DataQuick. The
February to March sales jump is normal for the season, but the
latter’s sales count was the highest for the month since 8,317
homes were sold in 2007. Since 1988, March sales have ranged from
4,898 in 2008 to 12,645 in 2004, with an average of 8,812.
“This is the time of year when buying patterns usually start to
normalize,” said DataQuick President John Walsh. “And while
the changes we’re seeing are incremental, they’re incremental
in a positive direction. That said, there’s a long way to
go.” The median price paid for all new and resale houses and
condos sold in the Bay Area in March totaled $358,000, a 10.2%
increase from $325,000 in February, but down 0.6% from $360,000
in March 2011.
To put these figures in perspective, the low point of the current
real estate cycle fell to $290,000 in March 2009, while the peak
rose to $665,000 in June/July 2007. Statewide median home prices
posted their first year-over-year increase in 16 months. The
California Association of Realtors members said tight inventory
(4.1 months) throughout the state and particularly robust sales
in the San Francisco Bay area helped fuel the price increase.
“Two of the big issues to watch closely are how fast distressed
properties are being put on the market, and the availability of,
or lack of availability of, mortgage financing,” DataQuick's
Walsh said. Distressed property sales, according to the firm,
made up 44.3% of the resale market, down from 48.8% in February
and 48.2% a year earlier. Foreclosure resales accounted for
24.9% of resales in March, falling from 26.4% in February, and
down from 31.5% in the year-ago period. Foreclosure resales
averaged about 10% over the past 17 years. Short sales made up
19.4% of Bay Area resales in the month, down from 22.4% in the
previous month and up from 16.7% a year earlier.
No comments:
Post a Comment