More markets returning to normal levels

By: Jim Woodard//January 30, 2014//

More markets returning to normal levels

By: Jim Woodard//January 30, 2014//

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Many housing markets nationwide have returned to normal levels of activity.

Markets in 56 out of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in January, according to the National Association of Home Builders. This represents a net gain of two from the previous month.

The nationwide average is running at 86 percent of normal economic and housing activity.

“More markets are slowly returning to normal levels, and we expect this upward trend to continue as an improving economy and pent-up demand brings more homebuyers back into the marketplace,” said NAHB Chairman Rick Judson, a Charlotte homebuilder.

“Forty-five percent of metro areas are recovering at a faster pace than the nation as a whole, with smaller markets leading the way,” said NAHB Chief Economist David Crowe. “Of the 56 markets that are at or above normal levels, 48 of them have populations that are less than 500,000, and many of these local metros are fueled by a strong energy sector, which is producing solid job and economic growth.”

“More than 35 percent of all the markets in the study this month are operating at a capacity of 90 percent or better of previous norms, which is a good sign that the housing recovery will continue to pick up steam in 2014,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsored the report.

Q: Has the mortgage tax exemption been extended?

    A: Not at this point, but a congressman introduced legislation that would extend the mortgage debt tax exemption that’s been in place since 2007 for another two years.

The Mortgage Debt Relief Act of 2007 gives tax-exempt status to debt that is reduced or canceled through a loan modification, or forgiven through a foreclosure or short sale. This tax relief, however, expired on Dec. 31.

Q: Are celebrities’ homes particularly easy to sell?

    A: Selling homes belonging to celebrities should be a snap – or so you might think. But, in fact, these properties are among the most difficult to market.

To preserve their privacy, celebrities often desire listings to be out of the public eye; these homes also tend to be larger and may include upscale amenities like movie theaters and bowling alleys. Both of these factors make the resale process more difficult.

“The ability to afford all that satisfies your wants and needs leads celebrities to do things unique to their own interests and values,” says Mark Stapp of Arizona State University’s Carey School of Business.

“But the design, style, finish, decor and amenities can be so specific to the individual that the property has limited value to most others,” Stapp was quoted as saying in an article carried by the National Association of Realtors.

It’s important for celebrities to price their homes appropriately. Those seeking the most privacy should put the home in a blind trust. This applies to many other luxury homes and those featuring unique amenities.

Q: What do leading economists say about the recovery of the real estate market this year?

    A: Fannie Mae’s forecast for the coming year shows a mostly optimistic view. Fannie expects the housing sector to double its contribution to overall gross domestic product growth in 2014, which is predicted to come in at 2.9 percent.

The 2014 forecast accounts for three key drivers: an acceleration in spending activity from the private sector, waning fiscal drag from the government and the housing market’s ongoing recovery.

Q: Why has there been such a downturn in homebuilding?

    A: We can blame the weather for the slowdown. New-home construction posted its largest percentage decrease since April, a big fall after last month’s surge, the Commerce Department reports. Housing starts dropped 9.8 percent in December to a seasonally adjusted annual rate of just under 1 million units.

The drop follows a sharp rise in November, in which new-housing starts had accelerated to the fastest pace since February 2008.

Single-family home construction, which makes up the largest segment of starts, dropped 7 percent in December to a seasonally adjusted annual rate of 667,000 units. However, total single-family housing starts still mark the highest monthly total in 2013, except for November. Multifamily starts fell 14.9 percent for the month.

Regionally, housing starts dropped the most in the Midwest, falling 33.5 percent; most economists say recent frigid weather likely was to blame.

WOODARD has been writing about real estate news and trends since 1971 and is the resident storyteller at the Ronald Regan Presidential Library in Simi Valley, Calif.

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