The market is changing... have you felt it?

I have more than felt it! It is crazy in my area!!!

Thanks for sharing Simon!

I can definitely say I've felt it. In my area there are few houses on the market and the bidding war is crazy! Just went to look at a property on Sat. that was listed for $70K. Looks like an investor started the job and couldn't finish. It was an REO and needed quite a bit of work. Already had a wall knocked out to open up the kitchen, but not finished, needed a new kitchen, flooring, paint, had a questionable roof, etc. Good values in the neighborhood and I thought I could bid as high as $76,500 and still do well.

This particular property was listed with an online bid service. By the time I got back home (leaving the other 5 groups of investors that also came), I checked the online bid and it was already $86,000. $15K over list???

SO DIFFICULT to get a property here where I am. That is just one story on one day.

Within the last 2 weeks,I was watching a program on HGTV that featured investors bidding on houses going to auction. After the bidding, the winning bidder told another investor that he would turn over the property for an additional $10K and the other investor agreed. Does this ever happen or was this just for the cameras? Anyone ever heard of this happening?

I am less than a hour away from Valerie. I have seen houses go for 30k-50k over asking, which I thought was nuts. Then I happened to catch a local reporter with a buyer who said she had to pay 100k over asking to get a house because she kept getting outbid.

As we understand what is going on in the market on a regular basis, we are able to stay competitive and to put forth an effort that puts dollars in our pocket. We have hit the bottom and are now trending upward. This will allow us to make money if we understand what is going to happen.

Keep close to Dean and what he is teaching and promoting. He has been around a long time because he understands these cycles. Keep on top of the market and you will succeed.

“When you lay out all possible pathways, no matter how ridiculous or counter intuitive they may seem, and sort the multitude of data, events, and actions upon their appropriate piles, a new reality may emerge to compete against your own bias. It is your ability to believe and amend your belief system, which separates you from the masses.

“The task is not so much to see what no one yet has seen, but to think what no body yet has thought about that which everyone sees.” —Arthur Schopenhauer, 1818 —”

So it seems that many markets are seeing rapid price appreciation. The challenge here is that appraisers are having trouble keeping up with these values. Since appraisals are based on past sales (and lenders hate price appreciation adjustments), we are now seeing some funding issues caused by values increasing before evidence is available to support them.

We're seeing bulk sales of REOs and bidding wars on MLS properties here in FL
Semper Fi D-LO

As a general contractor and home builder, the last four years have been devastating. Most builders withdrew from the market and many subcontractors went out of business because they didn't have enough work to make ends meet. Not anymore. Subcontractors are busy once again and the reason being general contractors and developers have started building again. In the last four months I have seen twenty five new home starts within a two mile radius of my house. I have also seen new home starts all over the county and new commercial buildings going up also. The price range for most new homes is $300K and less, so the high end hasn't quite caugh up, but it is only a matter of time before people will start building million dollar homes again. It always starts from the lower end and works it way up after each recession and I have experienced three of them, this one being the worse. Builders/developers like myself can't build when the market value of homes is less than the developmen cost, which has been the case for several years. But as market prices rise, and the cost of land stays reasonable, it makes sense once again to build new. So if you are a wholesaler, think about finding raw land for builders. There is plenty of interest now that the market is changing and getting stronger.

Yes, the market is definitely changing in many states across the nation. Here in Utah the number of real estate sells has increase by 29% since a year ago for the same time of year. There were no new housing starts for nearly three years and starting the first of this year new homes have been popping up everywhere. In my neighbor alone, which is a large planned development, there are houses being built on every corner and they are selling as fast as they can build them. I have noticed that the typical price range is $400,000 and less, with most of them being under $300,000. I do not much more expensive homes being built yet. But the trend has started and will continue to climb over time.

New housing starts is a great local indicator of a recovering or even recovered real estate market. A lack of existing home inventory is spurring contractors to get back into the game. If they are willing to take on the risk, then that indicates that buyers and sellers can step back into the market. This is a good time to pull sellers back into the game.

There is no overlooking the recent increases in home prices. There are many people that have benefitted from the increase. However, in the last quarter of 2013 house prices fell somewhat flat in certain areas. The increase during this time was still there but much more meager.

The outlook for 2014 is still positive but not perfect. The National Association of Realtors sees home prices to continue to rise but not as the same rate. Therefore, it looks like the “recovery” is there but not like we would hope. However, some say the subtle increase will be more stable over the long run.

Though many markets saw a softening in real estate price growth during the last quarter, this is reasonable. Home sales and property listings drop significantly during the winter and especially during the holidays. We should not look to the 4th quarter as an indication of growth. We should focus on the growth in the 2nd and 3rd quarters of each year. This is the main selling season and a best indicator of true growth.

Led by a resurgence in single-family production, housing will continue its climb toward higher ground in 2014, but builders are still confronting several challenges that could hinder the pace of the ongoing recovery, according to economists speaking at the National Association of Home Builders (NAHB) International Builders' Show (IBS) in Las Vegas.

"My single-family forecast for 2014 is pretty aggressiv—822,000 starts which is likely 200,000 more than 2013," said NAHB Chief Economist David Crowe. "There are five key points to the turnaround. Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see it."

Consumer confidence has returned to pre-recession levels and household balance sheets are on the mend. Year-over-year household formations are on the rise and are now averaging 620,000 compared to just 500,000 during the housing downturn. At the height of the housing boom, the U.S. was producing 1.4 million additional households each year.

Meanwhile, new-home sales are averaging just 8.7 percent of total home sales, barely half the historical average of 16.1 percent. In the midst of the Great Recession, the cumulative lost number of existing home sales between 2007 and 2011 totaled more than four million, Crowe said. Moreover, the percentage of mortgages seriously delinquent has fallen and the decline has been larger in markets that had the highest rates.

In a sign that builders are well aware of the trend now under way, the NAHB/Wells Fargo Housing Market Index (HMI), which measures builder sentiment in the single-family housing market, has been above the 50 mark for the past eight months. Any reading above 50 means that more builders view sales conditions as good than poor.

However, Crowe cautioned that builders still face several headwinds, including rising building material prices, persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals and limited availability in labor and developed lots. Moreover, gridlock and uncertainty in Washington threaten to harm consumer confidence and future housing demand.

A Healthy Outlook
NAHB is forecasting 1.15 million total housing starts in 2014, up 24.5 percent from last year's total of 928,000 units.

Single-family production is projected to rise 32 percent in 2014 to 822,000 units and surge an additional 41 percent to 1.16 million units next year.

NAHB is anticipating 333,000 multifamily starts in 2014, up 9 percent from 306,000 last year.
Single-family home sales are projected to hit 584,000 this year, a 35.9 percent increase above last year's 430,000 sales.

Meanwhile, residential remodeling activity is expected to register a modest gain this year over 2013.

The slow and steady housing recovery will bring nationwide housing starts to 71 percent of normal by the fourth quarter of this year and 93 percent of normal by the end of 2015, Crowe said. Viewing the recovery on a state level, by the end of 2015, the top 20 percent of states will be back to normal production levels, compared to the bottom 20 percent, which will still be below 84 percent.

Mortgage Rates Up, but Housing Still Affordable
As the economy strengthens and the Federal Reserve tapers its buy-back of mortgage-backed securities, this should put upward pressure on mortgage rates, but not enough to harm housing affordability, according to Frank Nothaft, vice president and chief economist at Freddie Mac.

"Regarding mortgage rates, we've gone from dirt cheap to cheap, and I think we will see a gradual rise of about a half a percentage point to five percent in 2014," said Nothaft. But even then, he said, "most markets will remain quite affordable."

Nationally, Nothaft expects that home sales and prices will each rise about 5 percent in 2014 and that housing starts will post a 20 percent gain.

This year, he expects a big transition, as home purchase originations overtake the refinancing market.

"As we move into the 2014 home buying season, it will be a market dominated by home buying originations rather than refinance originations," said Nothaft. "This will be the first time since 2000 that purchase originations will dominate the market."

He said the reason for the change is because so many households looking to refinance have already done so, and as mortgage rates gradually rise, fewer home owners will look to refinance. Further, purchase originations are expected to increase as the overall housing market strengthens.

Pent-Up Demand Will Fuel Growth
In the aftermath of the Great Recession, there is a significant pent-up demand to form households and even to build homes, noted David Berson, senior vice president and chief economist at Nationwide Insurance.

"At least 3 million fewer households formed over the past five years than would normally have been expected," he said, noting that during this period many college graduates were forced to double-up or move in with their parents.

Stronger job growth and a strengthening economy in 2014 should lead to a rise in household formations, which will be important to supplement housing demand, he added.

"I think this will be a pretty good year for home construction," said Berson. "There will be a big increase in single-family construction, but not as much for multifamily."nahb