The Mortgage Corner
The most important housing statistic in 2014 will be whether inventories continue to increase. Low inventories are hurting sales, and Goleta, California is helping local supplies with several new housing projects in the works.
This is because interest rates and housing prices are rising and the most affordable housing sold off quickly, which has slowed existing-home sales, in particular. New-home construction and sales are doing well, however, because of what is becoming a housing shortage as the economy and jobs continue to recover.
Existing-home inventories have declined in 2013 as most of the 2 million plus foreclosed and abandoned housing lost during the Great Recession have been gobbled up by investors and are being rented back. For sale inventories increase if housing prices continue to rise, of course, and the various housing price indexes show just that going into 2014.
Calculated Risk reports that Ben at Housing Tracker (Department of Numbers) has provided some weekly inventory data for the last several years. This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.
“In 2011 and 2012, inventory only increased slightly early in the year,” says Calculated Risk, “and then declined significantly through the end of each year. Inventory in 2014 is now 2.0 percent above the same week in 2013 (red dot is 2014, blue is 2013). Inventory is still very low – and barely up year-over-year – but this increase in inventory should slow house price increases.”
The S&P Case Shiller Home Price Index, a 3-month average of same-home prices, continued to climb. So in part due to limited supply, home price momentum was “solid and steady” going into year-end. The Case-Shiller adjusted home price index for October showed a gain of 1.0 percent for the 20-city index. This matched September’s gain and compares with gains of 0.9 and 0.6 percent in the two prior months. The year-on-year gain of 13.6 percent was up 3 tenths for the best rate of the recovery.
Gains were in all 20 cities for a 3rd month in a row, said the report, led in October by Miami at plus 1.9 percent and followed by Atlanta and Detroit, both at 1.8 percent. Year-on-year rates were strongest out West with several above 20 percent, including Las Vegas and San Francisco.
Lastly, new-home construction is booming, which should increase the housing supply somewhat. Private residential construction in particular posted a 1.9 percent rebound in November after a 0.4 percent dip the month before. Both the new single-family and new multifamily subcomponents rose notably.
New single-family home outlays increased 1.8 percent, following a decline of 0.4 percent in October. New multifamily spending advanced 0.9 percent after a 3.4 percent jump the month before. Residential outlays excluding new home outlays rebounded 2.2 percent, following a dip of 1.3 percent the month before.
We are seeing a surge in the Santa Barbara South Coast with several new housing developments in the City of Goleta. A total of 177 units are now under construction or completed, including Haskell’s Landing (102 units), The Bluffs (62 units), and Willow Springs (100 condo units).
Harlan Green © 2013
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