Is “Traditional” Avoided Like the Plague?

I was out for a stroll this morning and noticed an interesting catch phrase on a real estate sign, “anything but traditional.” Sure it could refer to operations and attitude, but my guess is they wouldn’t have chosen the phrase if traditional was a hot feature in homes.

If you’ve been out looking for homes you may have noticed finding a traditional-looking home with lots of walls doors and square symmetrical spaces can be difficult. More often there are big, open spaces, multi-purpose rooms, built ins and large windows.

This all makes it difficult to find places to put stuff. A traditional home can accomodate lots of things because there are lots of walls and spaces in corners, between windows, in hallways and atop stairways. There just isn’t a lot of room for stuff in many of the homes being built now.

I don’t think its necessarily that home buyers want to be minimalists, the open spaces don’t offer places for too many things even though there may be more space over-all. It would be nice to see a traditional form come back to home building.

Luxury Home Sales Outperform Others

Gloomy news that July sales of existing homes dropped 25.5 percent year-over-year has overshadowed new statistics showing summer sales of million dollar plus homes significantly outperformed other price ranges.

“Luxury homebuyers have been buying this summer,” said Laurie Moore-Moore, CEO of The Institute for Luxury Home Marketing (ILHM). “After waiting in the wings, many affluent buyers spent the summer shopping for value and snapping up trophy properties.”

Statistics would indicate that she’s right. According to The National Association of Realtors (NAR), for 2009 million-dollar and above home sales were just 1.2 percent of total sales or about 61,500 sales nationally. In July 2010, million dollar plus market share was up to 1.9 percent. While sales of homes in the $500,000 and above range rose dramatically in June, the million-dollar-plus market segment was the only price range in July showing positive growth compared to last year. “The mix of what is selling has shifted in favor of homes priced at $750 and above,” added Moore-Moore.

NAR’s report that July’s median sales price increased 0.7 percent  year-over-year may be more a function of increasing sales of expensive properties relative to other price ranges than an indicator of across-the-board home price appreciation.

According to the ILHM National Luxury Market Report -- which does a weekly analysis of luxury homes for sale in more than 30 major markets -- after a dramatic rise in upper-tier inventory, which started in January of this year, the numbers of luxury homes for sale has declined about 5 percent  since the beginning of July. Along with a decrease in inventory, there has been a decline in asking prices. Forty three percent of luxury homes currently on the market have had at least one reduction in asking price over the last 90 days. An additional 19 percent  have been pulled off the market and subsequently re-listed.

“While I wouldn’t say the luxury market is in recovery,” said Moore-Moore, “ the growing market share of luxury sales relative to total sales, a slight downward trend in inventory, and sellers who are more realistic about price are factors shifting the affluent into a buying mode.”

S&P: Dallas Home Prices Bottomed in 2009

Data through June 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index increased by 3.6 percent in the second quarter of 2011, after having fallen 4.1 percent in the first quarter of 2011. With the second quarter’s data, the National Index recovered from its first quarter low, but still posted an annual decline of 5.9 percent versus the second quarter of 2010. 

Nationally, home prices are back to their early 2003 levels. 

As of June 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up versus May – Portland was flat. However, they were all down compared to June 2010. Twelve of the 20 MSAs and both Composites have now increased for three consecutive months, a  sign of the seasonal strength in the housing market. None of the markets posted new lows with June’s report. 

Minneapolis posted a double-digit 10.8 percent annual decline; Portland is not far behind at -9.6 percent. Thirteen of the cities and both composites saw improvements in their annual rates; however; they all are in negative territory and have been so for three consecutive months.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.9 percent decline in the second quarter of 2011 over the second quarter of 2010. In June, the 10- and 20-City Composites posted annual rates of decline of 3.8 percent and 4.5 percent, respectively. Thirteen of the 20 MSAs and both monthly Composites saw their annual growth rates improve, although remaining in negative territory in June.

“This month’s report showed mixed signals for recovery in home prices. No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates. The National Index was up 3.6%

from the 2011 first quarter, but down 5.9 percent compared to a year-ago,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 

“Looking across the cities, eight bottomed in 2009 and have remained above their lows. These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit.

These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.

“As with May’s report, June showed unusually large revisions across the same MSAs – Detroit, New York, Tampa and Washington DC. Our sales pairs data indicate that, once again, these markets reported a lot more sales closing in prior months, which caused the revisions. Since deed recording is usually county based, if the price trends across counties are very different, then delays from a subset of counties can lead to larger revisions. And data lag lengths tend to vary across the counties within a metro area. If counties with relatively stronger/weaker markets report sales with longer/shorter lags, this will result in larger revisions as we receive the lagged data. Revisions are also likely to be larger when sales volumes are low or the proportions of distressed/non-distressed sales are changing rapidly. Any and all of these factors are likely contributing to the revisions we have seen over the past few reports.

Trader Joe's Eying Knox-Henderson

Pegasus News reports that following a May announcement that it's moving into Dallas, Trader Joe's is eying locations in the Knox-Henderson neighborhood. According to the article, the chain will also open a store on Camp Bowie in Fort Worth. 

Pending Home Sales Slip in July but Up Strongly From One Year Ago

Pending home sales declined in July but remain well above year-ago levels, according to the National Association of Realtors. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.

The Pending Home Sales Index,  a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he said. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”

The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.

“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” Yun said. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”