UNITED STATES PROPERTY - Cartus · from a 6.0-month supply in August. Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply. • The median time on

P A G E 1 O F 1 3C A R T U S | M A R K E T W A T C H : U N I T E D S T A T E S P R O P E R T Y / O C T O B E R 2 0 1 2 |

A Conference Board report showed that consumer confidence in the United States rose to a seven-month high in September, citing the emerging housing recovery and rising stock prices as influencing factors. The Conference Board’s survey also revealed that the number of consumers who expect their incomes to rise in the next six months reached the highest level of the year. Add in the fact that mortgage rates are at an all-time low, and there is a growing sentiment that the housing market is finally rebounding.

Home BuyersCompanies with relocating employees are advised to keep in mind that although more people may be looking to take advantage of low interest rates and purchase a home, buyers face tougher lending requirements. Jamie Dimon, chief executive of JPMorgan Chase, said in October that mortgage underwriting was “too tight.”

The following chart from Cartus Home Loans shows how mortgage requirements have become much stricter in the last five years. Standards may vary by lender.

2007 2012

0% down; 100% financing available Minimum 20% down; 80% or less financed

620 minimum credit score Typically a 680-720 minimum credit score. Credit score may dictate the

available interest rate.

Maximum debt/income ratio of 55% Maximum debt/income ratio of 45%

IRS Form 4506 Optional Copies of tax forms required

One year of W2s Two years of W2s

Transferees working for the Fortune 500 automatically qualified

Everyone must qualify

Lenders must verify applicant’s employment within 30 days of the

closing date

Lenders must verify applicant’s employment within 10 days of the

closing date

Companies moving personnel around the country are advised that these stricter lending standards may result in employees requesting extensions to the time allotted to complete their moves. In order for certain relocation expenses to be considered

excludable, one of the standards the move has to meet is “closely related in time to the start of work.” The IRS uses the one-year timeline as a standard of reasonableness and most companies require that moves be completed within one year of the effective date of transfer/hire. Because lenders are reluctant to underwrite new mortgages for transferees who have not sold the departure home, companies may need to extend an employee’s relocation benefits beyond the year. In addition, lenders’ lengthened approval timeframes may also delay the completion of a relocation.

Home SellersEven though the housing markets are showing signs of a rebound, employees selling their homes are still facing challenges. Some are related to the lending restrictions that their buyers face, but many are related to price and marketing time. As a result of the challenging real estate markets, many companies are faced with increasing temporary living time and budgeting for this benefit’s expenses. Current policy parameters may not be sufficient and so employers may need to extend temporary living benefits to home sellers. This can be accomplished on a case-by-case basis, through a temporary policy addendum, or a change in policy.

Cartus urges sellers to take the necessary steps to get their homes in optimal selling condition. Correct pricing is crucial, and any repairs and improvements should be completed prior to listing the home. By consulting with a real estate expert, home sellers can determine marketing strategies, discuss which repairs and improvements are cost efficient, and most importantly, optimize their chances of attracting qualified buyers.

M A R K E T W A T C HInformation from Cartus on Relocation and International Assignment Trends and Practices.

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Those watching the U.S. real estate market closely are pleased to see continual improvement. As housing recovers, there are lingering issues companies should consider including lending restrictions and the need to adjust policies.

This is a periodic communication from Cartus intended to keep you informed about the current property market trends and conditions in the United States.

U N I T E D S TAT E S P R O P E R T Y


Below are several leading-indicator charts from industry sources that give a bird’s-eye view of the national market.

Four-Quarter Price Change by State: Purchase-Only Index (Seasonally Adjusted)

U.S. Four-Quarter Appreciation = 3.0 (2011Q2-2012Q2)

Source: Federal Housing Finance Agency

• U.S. house prices rose 1.8 percent from the first quarter to the second quarter of 2012 according to the Federal Housing Finance Agency’s seasonally adjusted purchase-only house price index (HPI).

• Seasonally adjusted house prices rose 3.0 percent from the second quarter of 2011 to the second quarter of 2012.

• “Although some housing markets are still facing significant challenges, house prices were quite strong in most areas in the second quarter,” said FHFA Principal Economist Andrew Leventis. “The strong appreciation may partially reflect fewer homes sold in

distress, but declining mortgage rates and a modest supply of homes available for sale likely account for most of the price increase.”



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Pending Home Sales Inventory by Months’ Supply

0

20

40

60

80

100

120



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0

2

4

6

8

10

12

0.00.20.40.60.81.0

12

10

8

6

4

2

0

Mon

ths

20062007

20082009

20102012

Thru Septe

mber

0

Pend

ing

Hom

e Sa

le In

dex

(Bas

elin

e fro

m y

ear 2

001

is 10

0)

2011

120

100

80

60

Source: National Association of Realtors®

• The Pending Home Sales Index edged up 0.3 percent to 99.5 in September from 99.2 in August and is 14.5 percent above September 2011 when it was 86.9.

• Pending home sales have risen for 17 consecutive months on a year-over-year basis, leading to the solid recovery seen in closed existing-home sales this year.

• Lawrence Yun, NAR chief economist, said “Home contract activity remains at an elevated level in contrast with recent years, but currently appears to be bouncing around in a narrow range. This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals, they should continue on an uptrend in 2013.”

• Total housing inventory at the end of September fell 3.3 percent to 2.32 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace, down from a 6.0-month supply in August. Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply.

• The median time on market was 70 days in September, unchanged from August, but down 30.7 percent from 101 days in September 2011. Thirty-two percent of homes sold in September were on the market for less than a month, while 19 percent were on the market for six months or longer.

• Lawrence Yun, NAR chief economist, said, “The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production.”

SeptOct

NovDec

Jan

FebMar

AprMay

June

July

Aug

20

‘11

‘12

40

Thru Sept




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Source: Standard & Poor’s & FiServ

• Data through August 2012 showed average home prices increased by 0.9% for both the 10- and 20-City Composites in August versus July 2012.

• “Home prices continued climbing across the country in August,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.

“The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market.

“News on home prices confirms other good news about housing. Single family housing starts are 43% ahead of last year’s pace, existing and new home sales are also up, the inventory of homes for sale continues to drop and consumer mortgage default rates are reaching new lows. Further consumer confidence continues to rise. Even as we end the seasonally strong home buying period, the statistics are positive. For the fifth time in a row, both Composites had monthly gains. Home prices in Seattle fell modestly in August, but other than that the 20 cities have also seen home prices generally improve since April.”


States with the Highest Foreclosure RatesData listed is ratio of foreclosure filings to housing units for third quarter 2012

• One in every 248 U.S. housing units had a foreclosure filing during the third quarter.

• Foreclosure filings were reported on 180,427 U.S. properties in September, a decrease of 7 percent from the previous month and down 16 percent from September 2011. September’s total was the lowest U.S. total since July 2007.

• The decrease in September helped drop the third quarter foreclosure numbers to the lowest level since the fourth quarter of 2007. It was the ninth consecutive quarter with an annual decrease in foreclosure activity.

• “We’ve been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market — at least at a national level,” said Daren Blomquist, vice president at RealtyTrac. “Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year.”


M A R K E T W A T C H

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Information from Cartus on Relocation and International Assignment Trends and Practices.

California1 in 125

Arizona1 in 125

Nevada1 in 158

Colorado1 in 216

Illinois1 in 126

South Carolina1 in 215

Michigan1 in 201

Georgia1 in 151

Florida1 in 117

Source: RealtyTrac

Ohio1 in 197




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Market data courtesy of the Cartus Broker Network.

P ro f i l e s o f Key Market s

Atlanta, Georgia1

Second Quarter 2012 Second Quarter 2011

Total Number of Active Listings 12,741 20,224

Average Days on Market (Listed) 69 78

Average List Price $360,000 $307,692

Total Number of Solds 3,113 2,951

Average Days on Market (Solds) 82 106

Average Sale Price $206,000 $202,956

List Price to Sale Price Ratio 57% 66%

Absorption Rate (Months) 12.4 20.8

Notes • A large percentage of people moving to metro Atlanta are unable to purchase a home due to

poor credit as a result of a recent short sale or foreclosure, and they will need to rent for the next three years.

• Areas with strong public schools such as Alpharetta, East Cobb/Marietta, John’s Creek, and Roswell are seeing multiple offers on properties priced correctly and in good condition. These areas have worked through most of the distressed housing so prices have increased slightly.

• Outlying counties are still working through their short sales and inventory, and continue to see price declines.

• Occupancy rates in apartments remain very high due to a lack of new communities in the last several years and a greater demand from those wanting to hold off on purchasing until the real estate market stabilizes.

• Individually owned single family detached and condo/townhome properties for lease are available throughout metro Atlanta. In many cases, these properties are now rentals because the owner was unable to sell them or was upside down on the mortgage.

• New construction is limited. Where there is new construction, builders are offering an agent bonus, or appliance upgrade packages, or they will cover the buyer’s closing costs to increase activity.




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Boston, Massachusetts2










Notes • There is an overall lack of inventory. Buyers think that there is not much to choose from, and this

is causing multiple offers to be made on homes in the more desirable communities.

• The high-end market—homes worth more than $1 million—is slower than the overall market in which buyers are often able to purchase well below the original list price.

• The occupancy rate for rentals is at 98%, a historically high level, making it difficult for incoming renters to secure housing.

• Foreclosures and short sales make up a significant part of sales in the more affordable areas, yet they are still uncommon in the more desirable communities.

• The closer you get to downtown Boston, the more competitive and expensive the market is. As you get farther away from the city, the buyer has more and more of the advantage in negotiations.

Charlotte, North Carolina3










Notes • The inventory of spec homes with builders is low. Builders continue to offer large incentives.

• The foreclosure market has settled. Banks seem more willing to work with sellers to complete short sales. There are fewer high-end foreclosures.


Chicago, Illinois4






Average Days on Market (Solds) n/a n/a




Notes • Some condo construction is beginning to come back, but it is not a significant influence as of yet.

• Foreclosures are still an issue, but the impact is lessening.

Cincinnati, Ohio5










Notes • Overall, the inventory of homes on the market is close to that of a balanced market with an

absorption rate of 4-6 months.

• Many sellers who have been in their homes for more than 15 years have realized that they do not want to wait until the market recovers to 2005 levels to sell and are starting their search for homes that will fit their new lifestyles.

• Homes new to the market that are in good condition and priced correctly are selling quickly. Homes that are not have been languishing on the market and are considered undesirable.

• Buyers must be in a position to make an offer on properties they like, as sellers are beginning to receive multiple offers again.

R E A L E S TAT E M A R K E T I N G U P D AT E


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Dallas/Fort Worth, Texas6



Average Days on Market (Listed) n/a n/a







Notes • New construction is beginning to gain momentum again. These homes are typically selling at

higher prices than the traditional resale homes, and builders are offering higher commissions and more incentives to motivate agents to show these homes to their clients.

• The number of REO, foreclosures, and short sales has decreased compared to last year. Most areas in the Metroplex have not been impacted negatively by these properties because they tend to be in certain pockets rather than across the whole area.

• Dallas/Fort Worth did not experience the more drastic effects of the housing bubble, as other markets did.

Denver, Colorado7










Notes • The decreased amount of inventory of single family and condominium homes resulted in strong

selling in May and June.

• The most active segment of the market is the $250,000-$500,000 price range.



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Detroit, Michigan8










Notes • New construction is finally picking up in the Detroit market.

• Foreclosures are still having an impact on appraisals.

• The market is starting a slow shift to a seller’s market—there are not as many move-in condition homes on the market. The good homes are going fast.

• As shown by the data above, sale prices are starting to rise.

Las Vegas, Nevada9










Notes • Larger homes are selling more slowly. These are often not the homes that first-time buyers

or investors are purchasing. Homes that first-time buyers and investors are purchasing are liquidated more quickly.

• New foreclosures entering the market have been slow to arrive.



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Los Angeles, California10










Notes • The pace of new construction has slowed. Prices of newly constructed homes have continued to

drop, providing tough competition for older homes.

• Foreclosures continue to play a significant role in the market, dragging down prices and slowing the process.

Miami, Florida11










Notes • Multiple offers are being made on well-priced, updated homes in most locations.

• Buyers who make cash offers usually get their properties because lender appraisals are still low and do not reflect the current market.

• Lenders have so many requirements that it takes buyers at least 30 days to get approval.



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Phoenix, Arizona12










Notes • The market is suffering from a significant lack of inventory.

• There are 13,000 fewer properties for sale in the second quarter of 2012 compared to the second quarter of 2011.

• It is a very competitive marketplace with multiple offers being made on homes, and properties being sold over list price.

• Appraisals are struggling to keep up with comps and the upward trend in pricing.

• Buyers must have their pre-approvals in place and be working with a strong lender in order to close.

Seattle, Washington13





Total Number of Solds 693 597





Notes • The Seattle Metro market has begun to shift dramatically due to several years of either little or

no construction, improved consumer confidence, and new hiring by local companies.

• In the single family houses segment, it has gone from being a buyer’s market to a seller’s market.

• The condo market continues to struggle due to financing issues.

• The amount of inventory remains low, so the average number of days on market is decreasing and list prices are increasing.

• Multiple offers are being made on homes listed and shown properly.



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Washington, District of Columbia14










Notes • Home prices in Washington, DC reached a record high in July, surpassing the boom of 2005 and

making it the third jurisdiction in the Washington region to hit a record high in the summer. Prices in the region’s core—DC, Arlington, and Alexandria—all topped highs set in the housing boom of the 2000s.

• Inventory of homes for sale in the DC area reached its lowest point since August 2005. The shrinking inventory of homes represents a 35.4% drop compared to this time a year ago. Therefore, many sellers are being presented with multiple contract offers and escalation clauses.

• The median asking price of homes for sale reached $457,000.

• There is a strong condo market which had year-over-year median price gains of 4.4% and a 12.7% increase in condo sales.

• Rent increases continue to accelerate and are directly linked to vacancy rates, which are as low as 2.5% for Class A apartments (which are typically in large buildings built after 1991 and have full amenities.) Class A apartments rent for an average of $2,837 per month.

Footnotes1 Atlanta data represents single family homes.2 Boston data represents single family homes and condominiums.3 Charlotte data represents single family homes.4 Chicago data represents single family homes.5 Cincinnati data represents single family homes.6 Dallas/Fort Worth data represents single family homes.7 Denver data represents single family homes and condominiums.8 Detroit data represents single family homes and condominiums.9 Las Vegas data represents single family homes.10 Los Angeles data represents single family homes, condominiums, and townhouses.11 Miami data represents single family homes.12 Phoenix data represents single family homes, condominiums, and townhouses.13 Seattle data represents single family homes and condominiums.14 Washington data represents single family homes, condominiums, and townhouses.

TouchPoint2011a



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Documents

UNITED STATES PROPERTY - Cartus · from a 6.0-month supply in August. Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply. • The median time on