Chinese buying spree for U.S. homes
Chinese buyers are now the biggest international players in the U.S. housing market and some states are seeing billions of dollars in real estate deals as a result.
More than half of the $22 billion Chinese buyers spent on U.S. homes during the 12 months ended in March was spent in California, Washington and New York, according to the National Association of Realtors.
The hottest markets: Los Angeles, San Francisco, San Diego, New York and Seattle, according to Juwai.com, a Hong Kong-based website that connects Chinese buyers with U.S. properties.
California is particularly attractive because it's so close to the homeland, and its major cities have large Chinese-American populations and attractive climates and lifestyles, said Andrew Taylor, Juwai's co-CEO.
Related: Mansions for under $1 million
"Plus, it has a thriving tech industry that employs many Chinese," he said.
Leslie Appleton-Young, the chief economist for the California Association of Realtors, said there had always been a small cadre of real estate agents in California who work with international buyers, but the number has exploded over the past two or three years.
"The global real estate market is a reality," she said.
The influx of Chinese buyers has helped push home prices higher in places like San Francisco. That has forced less wealthy Chinese buyers to turn to nearby cities like Oakland and other less expensive areas, buoying those markets as well, said Appleton-Young.
In Seattle, tech jobs and universities are a big draw. Many Chinese parents are buying condos for their kids who are attending school there.
"They come to Washington State for work, for education or simply to invest," said Taylor.
Related: Best places for vacation home deals
In New York, Chinese buyers are spending millions on properties in Manhattan that they will never live in, according to Weimin Tan, a real estate agent who caters to Chinese real estate investors.
His clients spend between $1 million and $4 million and many treat the purchases solely as investments. "They use it as a hedge to diversify their holdings," said Tan.
Chinese buyers are also searching for homes for sale in Florida's resort areas, according to Juwai's Taylor.
In Miami, Chinese buyers go for newly built, high-end waterfront buildings, where they can easily find renters at attractive yields.
And growing in popularity among Chinese house hunters is Texas, particularly the cities of Austin and Houston, said Taylor. The state of Texas engages in nearly $10 billion worth of trade a year with China.
Surprisingly, the city of Plano, outside Dallas, has one of the highest percentage of Chinese residents in the nation, at 5.2%.
NEW YORK (CNNMoney)
Home prices remain on the rise
U.S. home prices remain on the upswing at the start of 2014, as a slow recovery from the bust that led to the financial crisis continues.
In the first three months, prices rose 10.3% on an annual basis, according to the S&P/Case-Shiller report. In March, an index of 20 large housing markets gained 12.4% year-over-year.
The year-over-year gains are likely to moderate, according to Stan Humphries, chief economist for Zillow, because current prices are being compared with months when many markets were at or near their post-bust bottoms. Coming comparisons will be against less depressed prices.
There are several other factors that continue to boost prices, however, including unusually low mortgage rates and the diminishing number of foreclosures and short sales on the market, which tend to sell for less. Those factors will take time to disappear.
"We're still several years away from a housing market driven purely by fundamentals like income growth and rising household formations," said Humphries.
Prices remain about 18% below their peak, which was reached in the summer of 2006.
Trends in the housing market have been mixed, with a bounce back for housing starts in April and better new home sales. Buyers have been able to take advantage of very low mortgage interest rates, but tight loan underwriting still keeps many potential homebuyers out of the market.
Even though price gains have moderated, all the cities in the 20-city index recorded gains year over year, led by Las Vegas at 21.2%. Prices in San Francisco, San Diego and Los Angeles also rose faster than average.
NEW YORK (CNNMoney)
Home prices rose 11.3% in 2013
U.S. home prices rebounded strongly in 2013, up 11.3% compared with a year earlier, according to a closely watched index.
The jump in prices came even as the housing market softened in the last quarter of the year.
"The S&P/Case-Shiller Home Price Index ended its best year since 2005," says David M. Blitzer, an S&P spokesman. "However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over."
Prices were up 11.7% in the first nine months of 2013, but fell 0.3% in the fourth quarter.
Prices are still down nearly 21% from their peak set in the second quarter of 2006. And the latest housing news has been bad.
January existing-home sales fell to an 18-month low. And home construction in January recorded the biggest month-over-month drop in seven years, sending builder confidence down to its lowest level since May.
The sale of new homes has also declined, falling 7% in December, the most recent month for which data is available.
In another blow to the housing market, mortgage rates jumped after Fed chairman Ben Bernanke hinted in June that the central bank would reduce its economic stimulus.
3 reasons to ignore the bad housing news
Rates for a 30-year mortgage are currently at 4.33%, after averaging 3.55% earlier last year.
"That took the air out of the market," said economist Dean Baker, a co-founder of the Center for Economic and Policy Research.
For Baker, this breather is not entirely unwelcome.
"Prices were rising so rapidly in the first half of 2013 that it had me worried," he said. "Some markets were up 30% or more, although they were mostly ones that had been badly beaten down in the bust."
Related: 10 hottest housing markets for 2014
Economist Robert Shiller, who co-founded the index and won a 2013 Nobel Prize, said that he expects to see gains in 2014, "but not like last year."
The slowdown could help house hunters.
"We should see buyers gaining a bit more leverage this year, with more choice and less competition," said Stan Humphries, chief economist for Zillow. "This slightly more balanced market is another step on the road back to normal."
All 20 cities in the index recorded year-over-year gains. Las Vegas posted the strongest comeback, with a 25% jump in prices for 2013. But Sin City still has a long way to go; prices are still 45% below their high.
San Francisco and Los Angeles also posted gains of more than 20% in 2013, but prices in both cities also remain more than 20% below their peaks.
High unemployment continues to hurt housing, according to Lawrence Yun, chief economist for the National Association of Realtors.
"The desire to own a home is still there," he said. "But the capacity to own has not been there."
Obama takes questions on housing in Zillow chat
Fresh off a speech in Phoenix in which he outlined his vision for the housing market, President Obama took to the web Wednesday to answer questions from Americans wondering what the government can do to help.
Taking questions submitted online in an event live-streamed in cooperation with real estate site Zillow (Z), Obama reiterated in broad terms his support for scaling down government-backed housing finance firms Fannie Mae and Freddie Mac, a key theme of his speech in Phoenix on Tuesday.
"We're actually confident that the private market can step in, do a good job, and the government can be a backstop so that we still have affordability and 30-year mortgages," he said.
Obama said the Consumer Financial Protection Bureau will release new guidelines "as soon as the fall" in an attempt to simplify the mortgage-application process.
Related: Top 10 consumer complaints
While he touted home ownership as a key aspect of the "American Dream," Obama also expressed support for an expansion of affordable rental housing, praising moves by institutional investors to buy and rent out residential properties. These investors, he added, can help stabilize home values in neighborhoods that have been blighted by foreclosures.
Obama touted immigration reform as another way to strengthen the housing market.
"We know that if we get immigration reform done, suddenly you've got all kinds of families coming out the shadows, paying taxes, paying penalties," he said. "They're also going to be really likely to buy homes, often times in some of the neighborhoods where you had the most foreclosures."
Throughout the discussion, Obama emphasized the importance of the housing market to the broader economy.
"This is where most Americans have their wealth," he said. "If we get that right, it makes a big difference everywhere else"
NEW YORK (CNNMoney)
Surging home sales raise new housing bubble fears
Home sales and prices continued to climb in May, raising the prospect of a new housing bubble unless there is a significant increase in home building.
"The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth," said Lawrence Yun, the chief economist for the National Association of Realtors. He said there needs to be a 50% increase in home building.
The median home price jumped 8% from the previous month to $208,000, according to NAR. While month-to-month price swings are not unusual, the year-over-year rise is now 15%, and prices are at levels last seen in the summer of 2008, just before the bursting of the housing bubble.
May marked the 15th straight month of annual price increases, the first time that happened since May 2006.
Home prices have been driven higher partly by a drop in foreclosures. Only 18% of home sales in the month were so-called distressed sales, which typically sell at a discount to market prices. A year ago 25% of sales were distressed sales.
Overall sales rose 4% from April and 13% from a year earlier to an annual rate of 5.18 million homes in the month.
There are differences between this run-up in prices and the housing bubble that preceded the financial crisis, said Gary Thomas, the Realtors' president.
"The boom period was marked by easy credit and overbuilding, but today we have tight mortgage credit and widespread shortages of homes for sale," he said. The improved housing market and mortgage rates still near record lows, despite a recent rise in rates, is pulling buyers back in the market faster than it's prompting sellers to put homes on the market. Buyer traffic 29% above a year ago, but the supply of homes for sale is actually down 10%.
That's caused homes to sell much more quickly -- only 41 days on the market on average in May, about a month faster than a year ago, with nearly half the homes being sold in less than a month.
The warnings about prices rising too fast were a stark change from the Realtors' position during the heyday of the housing bubble, when the statement from officials generally cheered the steady rise in prices.
NEW YORK (CNNMoney)
Home price rise continues to pick up speed
The pace of home price increases continued to accelerate in February, according to a reading Tuesday that showed the biggest gain since near the height of the housing bubble.
The S&P Case-Shiller index of home prices in 20 major markets posted a 9.3% rise over the last 12 months. That's up from the 8.1% rise in January. It was the biggest 12-month gain in the index since May 2006, which was just one month after the index showed record-high home prices.
The index showed a 12-month decline in prices almost every month over a five-year period through May 2012. But every month since then has shown a gain in home prices, and each month's gain has been stronger than the one that came before.
10 most polluted cities
"Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
Stan Humphries, chief economist for home price tracker Zillow, said there are signs in the market that the pace of increase started to slow in March.
"Regardless what data you look at, home values are clearly rising at an unsustainable pace," he said. He said the increases in the index need to be taken with a grain of salt, being distorted by the shift in transactions to private home sales rather than the foreclosure sales that had been dominating the market.
The housing recovery has been driven by a number of factors, including near record-low mortgage rates, a drop in foreclosures and reduced unemployment, all of which have helped lift both new-home sales as well as sales of previously owned homes. The rising home prices has helped bring back some buyers who had been reluctant to buy while prices were falling.
Mike Larson, real estate analyst at Weiss Research, said he's concerned that much of the increase is being driven by investors flooding into some markets to buy homes in order to rent them out, outbidding the potential homeowners who want to live in a home.
"Prices are not at bubblicious levels, but you're talking about a trend that can be destabilizing," he said.
Mark Vitner, senior economist with Wells Fargo Securities, said part of the reason for the sharp rise in prices is the comparison to depressed prices a year earlier. He said comparisons will become more difficult later this year. and the pace of increase should slow.
Home price increases boost the overall economy. Besides the jobs created by a pick-up in construction and home sales, rising prices mean fewer homeowners are underwater on their mortgages, owing more than the home is worth. That allows more homeowners to refinance, saving money they can spend on other things.
Related: Builders hold lotteries for eager new homebuyers
The Case-Shiller index showed the improvement in home prices is broad based, as every market posted an increase for the second straight month. The biggest increases came in Phoenix, a market hit hard by the bursting of the housing bubble, where prices were 23% higher than a year earlier.
But prices were up more than 10% in half of the markets -- San Francisco, Las Vegas, Atlanta, Detroit, Los Angeles, Minneapolis, Miami, San Diego and Tampa all posted double-digit percentage gains, and Denver just missed that mark. New York posted the smallest gain, with only a 1.9% rise in prices.
Dean Baker, co-director of the Center for Economic and Policy Research, said some neighborhoods in Phoenix are actually seeing a 40% increase in prices over the last year, driven once again by property speculators. He said in many markets that were most hurt by the bursting of the housing bubble, there is a danger of new bubbles forming.
"The end of this round of speculation is not likely to be much prettier for the areas affected than the end of the last round," he said.
Even with the strong improvement in prices over the last 12 months, the index is still down 28% from the 2006 peak.
By Chris Isidore
NEW YORK (CNNMoney)
Broward home prices rise 23 percent in February
Home prices and sales rose in February from a year ago as the hot streak for South Floridaâ€™s housing market continues.
Broward Countyâ€™s median price for existing homes last month was $227,000, a 23 percent increase from a year earlier, the Greater Fort Lauderdale Realtors said Thursday. There were 969 sales, up 7 percent from February 2012.
In Palm Beach County, the median was $235,000, 27 percent higher than a year ago, according to the Realtors Association of the Palm Beaches. Sales hit 1,012, up 10 percent.
The market for existing condominiums also is strong in both counties. Palm Beach County's median condo price is closing in on $100,000, rising 28 percent in February.
For sellers, at least, the regionâ€™s housing climate has improved dramatically in the past year. Still, some analysts worry that prices may be rising too fast, forcing buyers to overextend themselves and potentially creating another housing bubble.
Investor demand and a dwindling supply of homes have helped create bidding wars that drive up prices. The selling time for Broward homes dropped to 38 days in February from 51 a year ago. In Palm Beach County, days on market fell to 87 days from 101.
Judy Trudel, an agent for Balistreri Realty in Broward and Palm Beach counties, said she tells prospective buyers to tour homes as soon as they possibly can -- and they should plan to bring their checkbooks and blank sales contracts. In some cases, the buyers fill out the paperwork on the hoods of their cars to beat the competition.
"If you can't get the houses as soon as they come on the market, you're done for," Trudel said.
Some industry observers say the Realtor numbers are skewed as more large investment firms buy foreclosed homes in bulk and turn them into rentals.
Many of those transactions arenâ€™t factored into the Realtor data because the homes were bought directly from lenders and never listed for sale to the general public. The Realtor figures also do not include homes sold by owners without an agent.
As the market continues to recover, some sellers are convinced their homes are worth more than they are, real estate agents say.
Stephen B. McWilliam, of Florida State Realty Group in Fort Lauderdale, said he had a client who made a market rate offer on a Coral Springs home, but the owner wanted $40,000 more.
"There are some irrational sellers out there right now," McWilliam said
Housing starts increase in South Florida as buyer sentiment improves
New homes are rising again across South Florida.
Palm Beach County single-family home starts jumped 37 percent last year compared with 2011, according to the Metro study research firm. Broward County starts are up 14 percent over the same period. Both counties have seen annual increases in each of the past three years.
Home construction is one of the leading indicators of a healthy economy as buyers show renewed faith in the region's housing market.
"Demand is running ahead of production," said Brad Hunter, South Florida director of Metrostudy. "Builders are having trouble finding enough lots."
Home-building plummeted during the housing collapse. Falling prices and a glut of unsold homes devastated the industry.
The bust forced more than 100 builders nationwide out of business. Among the casualties: Levitt and Sons of Fort Lauderdale, which built Levittown on Long Island in 1949.
But the surviving companies say the climate has improved dramatically, especially in the past year. Palm Beach County had 1,827 starts, while Broward posted 1,115. In 2009, the bottom of the downturn, Broward had fewer than 400 housing starts.
Buyers are capitalizing on still-low mortgage rates and looking to new construction because the supply of existing homes is so low. As demand increases, local builders are raising prices.
Builder CC Devco says it's nearly sold out of the 680 single family homes at Monterra, a massive development in Cooper City that also features apartments and townhomes.
CC Devco also has exceeded expectations with 70 contracts since October at the 300-home WaterView project in Miramar, principal Jim Carr said.
"There's been a definite change in the market," Carr said. "Consumers have finally realized that housing prices are probably not going any lower."
In less than a year, Sunrise-based GL Homes has sold nearly half of the 590 homes at The Bridges, a luxury development on Lyons Road near Delray Beach, said Marcie DePlaza, division president. The builder expects big crowds when it opens two more model homes at The Bridges this weekend.
Sales are so strong that GL recently bought 610 acres just south of the development, with plans for another luxury project. "People are taking the chance again," DePlaza said.
Toll Brothers is building high-end homes at Parkland Golf & Country Club and at five communities across Palm Beach County. The Horsham, Pa.-based builder has seen the return of waiting lists for homes.
"I feel like the market is in a pretty good place," said Jim McDade, regional president for Toll. "If the buyers have the means to make a move, they're making the move."
Broward's market isn't as strong as Palm Beach County's because available land is more scarce, but construction should pick up this year as Lennar Corp. and Standard Pacific Homes open developments in Parkland, Metrostudy's Hunter said.
Despite the uptick in construction, builders remain far off the pace they set during the housing boom. In 2005, for example, both Palm Beach and Broward counties had 2,000 to 3,000 housing starts a quarter, Hunter said.
Metrostudy employees count home starts each quarter by driving through all the active subdivisions in a county. The firm says its method provides a more accurate assessment of demand than public records.
Metrostudy and other market followers say they expect the building industry to continue to recover in 2013, despite shortages of land and labor and increasing costs of materials.
"I see more blue skies than anything else in South Florida," said Anthony Trella, a building consultant in Deerfield Beach. "But it's going to take quite awhile for the industry to reboot its labor forces and supply lines."
8:18 p.m. EST, January 25, 2013