This Week in Real Estate: September 10, 2018

 

CoreLogic released its most recent Home Price Index Forecast This Week in Real Estate expecting a 5.1 percent price appreciation between July 2018 to July 2019. Below are a few highlights from the first week of September that influence our business:

* Lot Values Climb Higher. According to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC) data, single-family lot prices reached new record high in 2017, with half of the lots priced at or above $47,400. While this constitutes a new nominal record, lot values adjusted for inflation have not reached the housing boom peaks. In the midst of the housing boom – when twice as many single-family homes were started – half of the lots were going for over $43,000, which is over $50,000 when converted in 2017. The rising lot values are most pronounced in the West South Central and West North Central divisions where lot values hit new historical records – not only in nominal terms but also when adjusted for inflation – in 2017. In the West South Central division (that includes Texas, Oklahoma, Arkansas, and Louisiana), lot values had traditionally been below the national median. They caught up with the national median in 2015, surpassed it in 2016, and surged even higher in 2017, with half of the lots selling for more than $56,000. This represents a significant jump in the division lot values since the housing boom years when more than half of lots were priced under $30,000. The West North Central division also established a new record high, with half of the lots priced above $64,000, significantly exceeding the lot values of the boom era. Single-family spec homes started in New England are built on some of the most expensive lots in the nation. Half of all sold single-family homes started in New England in 2017 report lot values in excess of $128,000, by far exceeding the national median lot value for single-family spec homes of $47,400. The Pacific division where densities are high and developed land is scarce has the smallest lots. However, high regulatory costs push the median lot value to $84,000, the second most expensive value in the nation. The Pacific division lots also stand out for being most expensive in the nation in terms of per acre costs.
Full Story… http://eyeonhousing.org/2018/09/lot-values-climb-higher/

* CoreLogic: July Home Prices Increase by 6.2%CoreLogic released on Tuesday the CoreLogic Home Price Index (HPI) and HPI Forecast for July 2018, which shows home prices rose both year-over-year and month-over-month. Home prices increased nationally by 6.2 percent year-over-year from July 2017 to July 2018. On a month-over-month basis, prices increased by 0.3 percent in July 2018 compared with June 2018. Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 5.1 percent on a year-over-year basis from July 2018 to July 2019. On a month-over-month basis, home prices are expected to decrease by 0.2 percent from July to August 2018. “With increased interest rates and home prices, the CoreLogic Home Price Index is rising at a slower rate than it was earlier this year,” said Dr. Frank Nothaft, chief economist for CoreLogic. “While markets in the western part of the country continue to experience rapid home-price growth, many of those metros are overvalued, and will likely experience a slowdown soon.”
Full Story… https://www.corelogic.com/news/corelogic-reports-july-home-prices-increased-by-6.2-percent-homeowners-waiting-to-sell-for-anticipated-increase-return-on-invest.aspx

* U.S. Construction Spending Rises Slightly in July. The Commerce Department said construction spending barely rose in July as increases in homebuilding and investment in public projects were overshadowed by a sharp drop in private nonresidential outlays. Construction spending edged up 0.1 percent. Data for June was revised up to show construction outlays declining 0.8 percent instead of the previously reported 1.1 percent drop. Economists polled by Reuters had forecast construction spending increasing 0.5 percent in July. Construction spending increased 5.8 percent on a year-on-year basis. Spending on private residential projects rebounded 0.6 percent in July following two straight months of declines. While homebuilding rose in July, the overall trend has slowed, with builders continuing to complain about rising material costs as well as persistent land and labor shortages. Residential investment contracted in the first half of the year.
Full Story… https://www.cnbc.com/2018/09/04/us-construction-spending-rises-slightly-in-july.html?__source=mnd%7Cnews%7C&par=mnd

Have a productive week.

Jason

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