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Property Management – Tarzana – Latest Home Building and Housing Affordability Numbers

TARZANA PROPERTY MANAGEMENT

Latest Home Building and Housing Affordability Numbers Look Good for Rentals

Good News for property owners and property management alike!

The most recent housing market index is beginning to show some cracks in the mortar. Confidence in the home building sector has deteriorated lately, according to the results of an industry survey released on Tuesday Feb. 18th.

The National Association of Home Builders (NAHB) said its housing market index (HMI) slipped to 46 in February compared to a reading of 56 in the previous month. This wasn’t what economists were anticipating.

What economists hoped for was that the number wouldn’t fall at all. Instead it tumbled by a disturbing 18%. It was the lowest level since March of 2013.

“Significant weather conditions across most of the country led to a decline in buyer traffic last month,” said NAHB Chairman Kevin Kelly about the disappointing index number. “Builders also have additional concerns about meeting ongoing and future demand due to a shortage of lots and labor.”

A picture paints a thousand words, so here’s the official chart on this important housing market index.

The HMI is a weighted, seasonally adjusted statistic derived from ratings for present single-family sales, single-family sales in the next six months and buyers’ traffic.

A rating of 50 indicates responses received from builders are neither positive nor good. A rating number higher than 50 indicate more positive conditions, while one below 50 indicates a deterioration of housing sales and the numbers of potential buyers looking.

The NAHB also reports on housing affordability, which remained the same in the fourth quarter of 2013. It stated that 64.7 percent of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $64,400.

This is nearly identical to the 64.5 percent of homes sold that were affordable to median-income earners in the third quarter. Yet this number isn’t relevant to many regions of the nation.

Meanwhile, the national median home price dipped from $211,000 in the third quarter to $205,000 in the fourth quarter while average mortgage interest rates rose from 4.45 percent to 4.54 percent in the same period. Higher mortgage rates often lead to more difficulties in qualifying for a mortgage.

“Housing affordability is stabilizing at a time when pent-up demand and ongoing job growth are helping housing markets across the nation to gradually strengthen,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.

“While this bodes well for housing in 2014, builders continue to face challenges, including tight credit for home buyers, inaccurate appraisals, and a shortage of workers and buildable lots.”

Youngstown-Warren-Boardman, Ohio-Pa was the nation’s most affordable major housing market, as 89.4 percent of all new and existing homes sold in this year’s fourth quarter were affordable to families earning the areas’ median incomes of $53,900.

Meanwhile, Kokomo, Ind., claimed the title of most affordable smaller market, with 96.3 percent of homes sold in the fourth quarter being affordable to those earning the median income of $60,100.

For property managers and residential rental property owners these numbers reflect the ongoing demand and need for rentals, especially in areas of the country where housing affordability is higher.

As an example for a fifth consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. held the lowest spot among major markets on the affordability chart. There, just 14.1 percent of homes sold in the fourth quarter were affordable to families earning the area’s median income of $101,200.

Other major metros at the bottom of the affordability chart included Santa Ana-Anaheim-Irvine, Calif.; Los Angeles-Long Beach-Glendale, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and San Jose-Sunnyvale-Santa Clara, Calif.; in descending order.

All of the five least affordable small housing markets were in California. At the very bottom of the affordability chart was Santa Cruz-Watsonville, where 18.6 percent of all new and existing homes sold were affordable to families earning the area’s median income of $73,800. Other small markets at the lowest end of the affordability scale included Salinas, San Luis Obispo-Paso Robles, Napa, and Santa Rosa-Petaluma, respectively.

posted by Marc Courtenay

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