Mar212015
Riverside County Housing Market Report: March 2015
Historically, properties in this market sell at a 18.5% discount. Today’s discount is 24.8%. This market is 6.2% undervalued.
Median home price is $290,500 with a rental parity value of $384,800. This market’s discount is $94,300.
Monthly payment affordability has been improving over the last 10 month(s). Momentum suggests improving affordability.
Resale prices on a $/SF basis declined from $165/SF to $164/SF. Resale prices have been falling for 1 month(s).
Over the last 12 months, resale prices rose 5.4% indicating a longer term upward price trend.
Median rental rates increased $0 last month from $1,691 to $1,691. The current capitalization rate (rent/price) is 5.6%.
Rents have been rising for 9 month(s). Price momentum signals rising rents over the next three months.
Market rating = 8
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Zillow: Existing home sales rebound for spring homebuying?
Existing home sales should hopefully perform better in the upcoming February release after plummeting to the lowest rate in nine months, painting a dimmer forecast for the upcoming spring homebuying season.
According to the National Association of Realtors’ January numbers, existing home sales collapsed 4.9% to 4.82 million, well below analyst expectations, led by a massive drop in western regions.
“January’s drop in existing home sales is a bit concerning,” said Bill Banfield, vice president at Quicken Loans, at the time of the release. “Economic indicators and stubbornly-low interest rates would lead most to expect improvement, yet recent housing reports have indicated the opposite. Inventory is a number I’ll be watching in the coming months as it has the power to help existing sales bounce back.”
Lib Dems propose ‘rent-to-own’ properties
The Liberal Democrats have announced plans that will see people buying houses without the need for a mortgage.
Under the “rent-to-own” proposal, homebuyers would buy chunks of equity in a house through monthly payments and would not need to put up a deposit.
The policy would mean homeowners could gradually build up a share in their house until they owned it outright after 30 years.
It forms part of wider Lib-Dem plans to build 300,000 homes a year, with 30,000 rent-to-own properties
Nick Clegg, the party’s leader and deputy Prime Minister, said: “For working young people the dream of home ownership is increasingly out of reach.
“Prices are so high renters cannot afford to save for a deposit, which means they can never take that first step onto the housing ladder.
“Young people deserve better. Rent-to-own will mean, regardless of their background and family circumstance, they will be able to make this dream a reality.”
Figures from the Council of Mortgage Lenders showed the average first-time buyer in London put down a deposit of 24 per cent while the UK average was 17 per cent.
Adviser view
Calvin Oram, a mortgage broker with Solihull-based Oak Tree Mortgages, said: “It will help people get onto the property ladder without a deposit, but everything seems to be geared towards new-build houses.
“A lot of these things seem to be geared around the building company rather than the purchaser.”
Goldman: “The Path to Exit”
A few excerpts from a research piece by Goldman Sachs economist Kris Dawsey: The Path to the Exit
The March FOMC statement and “dot plot” were more dovish than the market expected. The probability of a September hike looks much higher than a June hike, with a risk that the first hike could be pushed even later. Despite this week’s events, the Fed is busily planning how it will lift off from the zero lower bound when the time comes …
We think that the most likely outcome for the first hike is an increase in the target range to 25 to 50 basis points (from 0 to 25 basis points currently). Although not likely, there is an outside chance that the Fed could decide to start with a “mini” hike. Once the first hike occurs, the Fed probably has sufficient tools to ensure that the effective fed funds rate trades within—but likely in the bottom half of—the target range most of the time.
Despite the Fed’s guidance that interest paid on excess reserves (IOER) will be the primary tool for firming rates, we think that the Committee will significantly increase the cap on the overnight RRP (O/N RRP) facility around the time of the first hike as an insurance policy. … In our view, flexibility with regard to tactics and a process of “learning by doing” will probably be key features of the early part of the exit.
Sometime after the first hike the Fed will allow its balance sheet to begin shrinking, resulting in a gradual increase in the term premium. … Our forecast for the start of portfolio runoff is 2016 Q1, with risk skewed toward a later date, and we think that the initial step will probably be a switch to a policy of partial reinvestment. Although the Fed has stated that asset sales are not part of its normalization plan at this time, it is possible to imagine scenarios which could push the Fed in this direction.