Each month, the analysts at John Burns Real Estate Consulting
(JBRC) get out their red
pens and score various aspects of the industry using the grade school scale.
Looking at the firm's latest report card, housing overall is very near the
bottom of the class, with a D+.Let's start with the good marks. Housing affordability got a grade of C-.
Affordability, the California-based market research firm said, "continues to
be excellent this month," with mortgage rates and median home prices
throughout the country still extremely low. JBRC's housing-cost-to-income
ratio dropped to 25.2 percent."Affordability is so good that owning the median-price home is now less
expensive than renting the average apartment," the company said in its
report. According to JBRC's assessment, the average 30-year fixed mortgage rate
remained flat at 4.99 percent by March month-end, while adjustable mortgage
rates fell to 4.20 percent. The share of adjustable-rate mortgage (ARM)
applications increased to 5.2 percent by the end of March, but is still
significantly less than the peak level of 35 percent of total applications
in early 2005.The existing home market, which took home a grade of D+, worsened this month
as sales volume fell and themonths of supply increased, JBRC said in commentary. The same was true for
the new home market, but the decline was "slight" compared to that of
previously-occupied properties, leading the company to assign a C- to the
new home sector.Home sales boomed last fall as the expiration of the original tax credit
approached in November. JBRC says with the new deadline of April 30
approaching, sales have improved this spring, but not nearly as much. The
pending home sales index through February is nowhere near as robust as last
fall, further dampening expectations for sales numbers in the months to
come."Not only do sales remain low, but also the traffic of interested shoppers
is not improving," JBRC said.Housing supply received a failing grade of F. Although vacancy rates in the
U.S. have improved in recent quarters, the majority of the country remains
oversupplied compared to history, JBRC said. Just six states in the are
currently considered undersupplied - Oklahoma, Wyoming, New Mexico, North
Dakota, South Dakota, and Alaska. Several factors played a role in housing's overall sub-par grade. JBRC said, "The Fed has declared that they are done buying mortgages from
the GSEs, elected officials have declared that there will be no more tax
credit extension, and recent loan modification clarifications have cleared
the way for the mortgage servicers to increase their foreclosure activity,
which will result in more distressed sales." With all these dynamics in play, the firm concluded, "Despite the tremendous
affordability that exists, we remain very cautious about the back half of
2010 because consumers just aren't showing much interest in homebuying right
now."
(JBRC) get out their red
pens and score various aspects of the industry using the grade school scale.
Looking at the firm's latest report card, housing overall is very near the
bottom of the class, with a D+.Let's start with the good marks. Housing affordability got a grade of C-.
Affordability, the California-based market research firm said, "continues to
be excellent this month," with mortgage rates and median home prices
throughout the country still extremely low. JBRC's housing-cost-to-income
ratio dropped to 25.2 percent."Affordability is so good that owning the median-price home is now less
expensive than renting the average apartment," the company said in its
report. According to JBRC's assessment, the average 30-year fixed mortgage rate
remained flat at 4.99 percent by March month-end, while adjustable mortgage
rates fell to 4.20 percent. The share of adjustable-rate mortgage (ARM)
applications increased to 5.2 percent by the end of March, but is still
significantly less than the peak level of 35 percent of total applications
in early 2005.The existing home market, which took home a grade of D+, worsened this month
as sales volume fell and themonths of supply increased, JBRC said in commentary. The same was true for
the new home market, but the decline was "slight" compared to that of
previously-occupied properties, leading the company to assign a C- to the
new home sector.Home sales boomed last fall as the expiration of the original tax credit
approached in November. JBRC says with the new deadline of April 30
approaching, sales have improved this spring, but not nearly as much. The
pending home sales index through February is nowhere near as robust as last
fall, further dampening expectations for sales numbers in the months to
come."Not only do sales remain low, but also the traffic of interested shoppers
is not improving," JBRC said.Housing supply received a failing grade of F. Although vacancy rates in the
U.S. have improved in recent quarters, the majority of the country remains
oversupplied compared to history, JBRC said. Just six states in the are
currently considered undersupplied - Oklahoma, Wyoming, New Mexico, North
Dakota, South Dakota, and Alaska. Several factors played a role in housing's overall sub-par grade. JBRC said, "The Fed has declared that they are done buying mortgages from
the GSEs, elected officials have declared that there will be no more tax
credit extension, and recent loan modification clarifications have cleared
the way for the mortgage servicers to increase their foreclosure activity,
which will result in more distressed sales." With all these dynamics in play, the firm concluded, "Despite the tremendous
affordability that exists, we remain very cautious about the back half of
2010 because consumers just aren't showing much interest in homebuying right
now."
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