To Figure Out Where Real Estate Is Headed, Start Driving

Metrostudy, a real estate consulting firm based in Houston, analyzes the health of the residential market in metropolitan areas across the U.S. and issued prescient warnings about the coming housing bust as early as 2004. One of its main analytical tools is what makes Metrostudy interesting: drive-bys.

Employees drive through newly built—or still being built—home developments and start observing. Are there toys on a house’s lawn? Good sign: A family has moved in. Families mean stability. Is there a garden hose attached to the side of the house? Another good sign. The house is not only occupied, it has an owner who cares about his or her property. A welcome mat is always, well, welcome.

A bad sign: no curtains in the windows. That means the house could be unoccupied—and unsold. Two others that trigger alarms are a high number of empty lots and newly completed but clearly empty houses, both indicators a developer may have badly overestimated demand and could soon be choking on inventory.

Analyzing all this data streaming in from Boston to Miami is Brad Hunter, chief economist of Metrostudy. He was one of the first to observe signs of life in the residential market in 2009, saying home sales would show staying power even after the end of President Obama’s tax break on residential sales.

Now, Hunter is forecasting double-digit increases in new home prices for the rest of the year; the latest number released on July 30 shows a jump of 12 percent. “People are buying homes to live in them,” says Hunter. That wasn’t always the case at the height of the frenzy last decade, when speculators financed by ultracheap mortgages and zero down payments bought newly built, unoccupied homes—and sometimes empty lots—to flip to the next buyer.

Hunter sees the speculative excess gone from the market—well, mostly gone. Developers are buying lots again in desirable central locations, driving up prices. The once-hot exurbs still have unsold homes and empty lots aplenty, but developers are shunning them for now.

Next year, says Hunter, will be different: He predicts new home prices will grow only 6 percent in 2014 as interest rates keep rising. “Mortgage rates could pose a challenge to affordability,” he says.

By Christopher Power
Power is the Global Economics editor at Bloomberg Businessweek.

Home prices rise most since 2006, pace cools: S&P/Case-Shiller

U.S. single-family home prices rose in May, though the pace of gains cooled compared to the month before, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 1 percent on a seasonally adjusted basis, shy of economists' forecast for a 1.5 percent increase. That marked a slower pace from April's 1.7 percent rise.

On a non-adjusted basis, prices rose 2.4 percent.

Case-Shiller Index shows best gains in 7 years Robert Shiller, co-founder of the Case-Shiller Index, breaks down the latest numbers on housing and which cities are "bubbling up."

Compared to last May, prices also fell short of expectations, rising 12.2 percent from a year earlier. Still, it was the biggest annual gain since March 2006, matching a record set in April.

The report was unlikely to alter economists' views that the housing sector continues to recover, making it a bright spot for the economy.

"The cities that bubbled in the past are bubbling again," Robert Shiller, economist and co-founder of the S&P/Case-Shiller Home Price Index, told "Squawk on the Street" Tuesday.

"To me, it seems to be at least partly psychological. They've seen it before and they're ready for it again … It seems like California has historically been the most bubbly state in the country and it continues."

Shiller said that the new factor emerging in the numbers is the effect of institutional investors on home prices. "They've learned about momentum and they're saying 'hey, this is it.' The housing market is showing a lot of upward momentum. And you know, I think they're probably right, at least for the short term."

"For a flipper who can get out in about a year, it seems to be a fairly safe bet," he added.

All 20 cities rose on a yearly basis, led by a 24.5 percent surge in San Francisco.

New home sales surge to five-year high despite higher rates

Sales of new U.S. single-family homes vaulted to a five-year high in June, showing little signs of slowing in the face of higher mortgage rates.

The Commerce Department said on Wednesday sales increased 8.3 percent to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008.

Sales increased 1.3 percent in May.

Economists polled by Reuters had expected new home sales to rise to a 482,000-unit rate last month.

Compared with June last year, sales were up 38.1 percent, the largest increase since January 1992.

The third straight month of gains in new home sales, which are measured when contracts are signed, suggested the housing market was gaining more muscle and should allay concerns that higher mortgage rates could slow down momentum.

Mortgage rates have spiked in anticipation of the U.S. Federal Reserve starting to taper its generous monetary stimulus later this year. Rates still remain low and Fed Chairman Ben Bernanke last week expressed optimism the housing market recovery would continue.

Last month, the inventory of new homes on the market increased 1.3 percent to 161,000, the highest since August 2011, as builders continue to ramp up production to meet the growing demand.

Still, supply remains tight, putting upward pressure on prices. The median new home price increased 7.4 percent from a year ago.

At June's sales pace it would take 3.9 months to clear the houses on the market, down from 4.2 months in May. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.

Sales last month rose in three regions, but fell in the Midwest.

US Home Prices Jump in April, Setting Record

U.S. home prices took a major leap in April, setting a monthly record for gains.

From March to April, home prices gained 2.6 percent and 2.5 percent for the top 10 and top 20 markets respectively, according to the latest S&P/Case-Shiller Home Price Indices. Average prices rose 11.6 percent and 12.1 percent in April from a year ago.

"The recovery is definitely broad based," said David Blitzer of S&P Dow Jones in the report. "The two composites showed the largest year-over-year gains in seven years."

Atlanta, Las Vegas, Phoenix and San Francisco posted year-over-year gains of more than 20 percent in April, with San Francisco leading the way at 23.9 percent. Phoenix posted 12 consecutive months of double-digit growth, as investors there continue to compete for what few distressed properties are for sale. Inventories did rise in Phoenix in May slightly, but demand is still outstripping supply, and pushing prices higher.




Concerns about rising mortgage rates, which spiked in to the mid-4 percent range in just the past week, have dampened expectations for home price gains this summer. Analysts also worry that prices are rising too fast, far faster than income growth, and will soon price too many potential buyers out of the housing market.

"Today's Case-Shiller numbers may reflect where the housing market has been in some of the frothier metros, but they are not indicative of where it's headed," said Zillow's chief economist, Stan Humphries. "The housing market worm has turned over the past few weeks—inventory levels are beginning to show signs of easing, and mortgage interest rates are creeping up. Going forward, both of these factors will help mitigate extreme price spikes caused by very strong housing demand and very low housing supply."

This latest report only tracks prices on a three-month moving average through the end of April, well before mortgage rates began their climb. Still, Blitzer contends that rising rates will not slow price gains.rates in the past, often by shifting from fixed rate to adjustable rate loans. In the housing boom, bust and recovery, banks' credit quality standards were more important than the level of mortgage rates.The most recent Fed Senior Loan Officer Opinion Survey shows that some banks are easing credit restrictions. Given this, the recovery should continue," he said.

As of the end of April, average home prices across the nation were back to levels of early 2004. Prices are still down between 26 and 27 percent from their peaks in the summer of 2006.

Boom Is Back: US Home Prices Jump Most in Seven Years

U.S. single-family home prices rose in March, racking up their best annual gain in nearly seven years as the housing recovery continues to provide a source of strength for the economy, a closely watched survey showed on Tuesday.

The S&P/Case-Shiller composite index of 20 metropolitan areas gained 1.1 percent in March on a seasonally adjusted basis, topping economists' forecasts for 1 percent.

Prices in the 20 cities jumped 10.9 percent year over year, beating expectations for 10.2 percent and the biggest increase since April 2006.

All 20 cities covered by the index saw yearly gains for the third month in a row. Average prices in March were back at their late-2003 levels.

For the first quarter of this year, the seasonally adjusted national index rose 3.9 percent, stronger than the 2.4 percent gain that was seen in the final quarter of last year.

S&P/Case-Shiller Home Price Indices show strong gains for February 2013

Data through February 2013, released today by S&P Dow Jones Indices for its
S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed average home prices increased 8.6% and 9.3% for the 10- and 20-City Composites in the 12 months ending in February 2013. The 10- and 20-City Composites rose 0.4% and 0.3% from January to February.

All 20 cities covered by the indices posted year-over-year increases for at least two consecutive months. In 16 of the 20 cities annual growth rates rose from the last month; Detroit, Miami, Minneapolis and Phoenix saw slight annual deceleration ranging from -0.1 to -0.4 percentage points. Phoenix continued to stand out with an impressive year-over-year return of +23.0% while Atlanta and Dallas had the highest annual growth rates in the history of these indices since 1992 and 2001, respectively.

“Home prices continue to show solid increases across all 20 cities,” says David M. Blitzer, Chairman of the
Index Committee at S&P Dow Jones Indices. “The 10- and 20-City Composites recorded their highest annual growth rates since May 2006; seasonally adjusted monthly data show all 20 cities saw higher prices for two months in a row – the last time that happened was in early 2005.

“Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price
increases. Atlanta recovered from a wave of foreclosures in 2012 while the other three were among the hardest hit in the housing collapse. At the other end of the rankings, three older cities – New York, Boston and Chicago – saw the smallest year-over-year price improvements.

“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy. The 2013 first quarter GDP report shows that residential investment accelerated from the 2012 fourth quarter and made a positive contribution to growth. One open question is the mix of single family and apartments; housing starts data show a larger than usual share is apartments.”

2012 Builders Top 100 Ranking - West Region

Region: West
Type of home: All types
Status: Public and Private
What they build: All for sale products
Note: (p) indicates a public company.
N/A indicates information not available
* Declined to share revenue numbers
† Home building revenue only
‡ Estimated revenue
				(in millions)
2012 Rank	2011 Rank	Company	Total Closings	Total Revenue
1	1	D.R. Horton (p)	19,954	$4,722
2	2	PulteGroup (p)	16,505	$4,820
3	3	Lennar Corp. (p)	13,802	$4,105
5	5	KB Home (p)	6,282	$1,560
6	7	Hovnanian Enterprises (p)	5,356	$1,806
7	8	The Ryland Group (p)	4,809	$1,308
8	9	Beazer Homes USA (p)	4,428	$1,006
9	10	Meritage Homes Corp. (p)	4,238	$1,194
10	6	Habitat for Humanity International	3,766	$1,500
11	11	M.D.C. Holdings (p)	3,740	$1,203
12	13	Standard Pacific Corp. (p)	3,329	$1,275
13	12	Toll Brothers (p)	3,286	$1,883
14	14	Taylor Morrison	2,933	$1,400
18	18	Weyerhaeuser Real Estate Co. (p)	2,314	$1,070
19	21	Shea Homes	1,921	$814
26	29	Woodside Homes	1,300	$329
33	39	William Lyon Homes	950	$373
40	42	Polygon Northwest Co.	832	$232
42	40	Hayden Homes	785	N/A
49	46	NeighborWorks America	608	N/A
50	106	Saint Aubyn Homes	605	$147
53	80	CBH Homes	548	$85
55	74	Brookfield Residential Properties (p)	533	$1,340
56	54	Corky McMillin Cos.	529	$122
56	47	Discovery Builders/A.D. Seeno Construction	529	$269
67	N/A	Harmony Homes	466	$106
98	N/A	Edge Homes	335	$70