Weekly State of Market

With speed comes control and if you go to fast and lose control then you can have a big problem!

CNNMoney Staff had an article published on March 27, 2014 that made me smile. They listed the 10 fastest
growing cities in the US (based on an analysis of population growth data from the Census Bureau).

I have been following economic grow cycles across the nation in an effort to make me a better investor
and real estate trainer. Six of the ten cities I have been following and doing my own research ended
up on CNNMoney’s list. I’ve watch as Texas has been an increasing hot market over the past few years
and specifically the fourth quarter of 2014. With full disclosure I have a fondness to Texas because I

Although national home prices rose significantly in the past two years, they’re still 5% undervalued compared with long-term fundamentals. Trulia’s Chief Economist Jed Kolko says home prices today look overvalued in 19 of the 100 largest metros, including 8 of the 11 large California metros.

Trulia’s Bubble Watch reveals whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents. The more prices are overvalued relative to fundamentals, the closer we are to a housing bubble – and the bigger the risk of a future price crash.

The housing market is off to a sluggish start as the spring sales season arrives. In Monday’s WSJ, I wrote about an unexpected culprit: rising home prices.

That rising home prices are the latest trial for U.S. housing markets might sound a little odd. After all, policy makers have spent much of the last six years trying to break a vicious downdraft in prices, and few predicted that home prices would rise as rapidly as they have once they hit bottom.

Home prices turned up beginning two years ago as more buyers chased a shrinking supply of homes. Falling mortgage rates initially allowed Americans to swallow rising prices because their monthly ownership cost was mostly unchanged.

Here is a report from the Salt Lake Board of Realtors to all its Brokers which gives a little insight into the state of the real estate market today.
Closed home sales (all housing types) fell to 791 units sold in January, down 3 percent compared to 815 sales in January 2013. January's sales drop followed a 1 percent dip in home sales in last year's fourth quarter.

Inventory on New York City’s residential market is on the rise, but not at a fast enough pace to satisfy buyers’ demand.
Total inventory in the first eight weeks of 2014 is less than half what it was in the post-Lehman Brothers collapse of 2009, at which point the market was bloated with offerings, and is still “chronically low,” Jonathan Miller, president and CEO of appraisal firm Miller Samuel, wrote in his Three Cents Worth column at Curbed. But offerings are showing a noticeable, if small, uptick at the start of 2014.
“Relative to the overall market, the gain is small,” Miller wrote. “But hey, it’s a start.”

This week, the real estate listings website Redfin published a startling statistic. In the entire city of San Francisco, not one home or apartment is available on the market for under $220,000, which the site says is affordable for a typical teacher in the city. Statewide, just 17 percent of homes for sale are affordable for teachers. With the tech industry booming and the Google Bus quickly becoming a cultural icon, it's not a surprise that San Francisco faces an affordability crisis. But how can it have become so dramatic? The answers boil down to two factors: San Francisco's hot real estate market and dwindling income for city teachers.

FORTUNE -- "Investment is most intelligent when it is most businesslike." --Benjamin Graham, The Intelligent Investor
It is fitting to have a Ben Graham quote open this essay because I owe so much of what I know about investing to him. I will talk more about Ben a bit later, and I will even sooner talk about common stocks. But let me first tell you about two small nonstock investments that I made long ago. Though neither changed my net worth by much, they are instructive.

Investment markets have barely missed a beat over the holiday period as the momentum created towards the end of the year continues into the first few weeks of 2014. Final quarter volumes exceeded our expectations at US$198 billion, 41% higher than an already busy third quarter of 2013 and 22% ahead of a strong final quarter of 2012.

The consistent quarter on quarter growth we recorded all the way through 2013 took final year volumes to US$563 billion, 21% higher than 2012 and the first time the market has broken above US$500 billion since 2007. The growth in transactional volumes is broadly based with both large and small markets seeing growth across all three regions, a trend we expect to continue into 2014.

Rent-to-Own Gaining Credibility?
Investors who use rent-to-own or contract-for-deed strategies may get some good press and help from the media. With new and much stricter lending guidelines in place, sites like money.usnews.com are publishing consumer articles about using these methods to purchase property when a mortgage is difficult or impossible. The benefits of having the time to improve credit scores or build up a down payment are being positively presented these days as good for the consumer.

Mortgage Rates Coming Down
This week brings good news for consumers seeking a new mortgage or desiring to refinance. Current rates are:
• 4.23% for 30-year fixed mortgages
• 3.33% for 15-year fixed loans
• 3-year ARMs are down to around 2.85%

In the wake of the housing market crash of 2008, those with a direct interest in the housing industry are bound and determined to to create a housing recovery, even if they have to make it up. I have in front of me at this moment, exhibit “A”: A classic example of manufactured “evidence” that the housing market is in recovery no matter what the fundamentals are.