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January 8, 2014

by terresteinbeck RODEO REALTY

Economic update for the 2013 year end!

 

It was a very strong year for both housing prices and the stock market. Stock investors saw their best year since the 1990s. The last day of the year ended on a high note boosted partly by the news that  U.S. consumer confidence rose in strongly in December to 78.1 up from 72 in November, according to The Conference Board, better than the 76 figure economists expected. The economy is heading into 2014 with some strong momentum. The U.S. has added an average of nearly 190,000 jobs a month in 2013, the best performance since the recession ended.

 

The Dow managed to set its 52nd record of the year closing at 16,576.60 for an annual rise of more than 26%.The Nasdaq closed at  4,166.66 up more than 38% over the course of 2013 and experiencing its biggest year since 2009. The S&P500 had its best year since 1997 closing out the year at 1,848.36, an annual rise of 29%, compared to a gain of 13.4% in 2012.

 

When stocks are up, investments that are perceived to be safer often take a hit. It wasn’t a good year to invest in gold, it was one the worst-performing investments this year, down 29%  in 2013, its worst year since 1981.

 

Interest rates continued to rise as the year ended. The last Freddie Mac Weekly Primary Mortgage Market Survey for the year showed that the 30-year-fixed rate was up to 4.48% from 4.10% last month.  The 15-year-fixed rose to 3.52% from last month’s 3.30%. A year ago the 30-year fixed was at 3.35% and the 15-year was at 2.65%. In 2014 we will certainly be seeing interest rates over 5% and higher and that rise should begin to happen relatively soon.

 

The 10-year Treasury note yield rate has risen strongly in the wake of the Fed’s announcement of the January taper of the bond-buying program closing out the year at  3.04%  the highest number seen since July 2011.  It was 1.78%  at the end of last year.

 

L.A. County’s unemployment rate dropped to 9.5%  in November, its lowest point in five years, down from 9.7% in October and 10.4%  a year ago.

 

The latest S&P/Case-Shiller index shows that home prices in 20 U.S. cities rose year over year by the most in seven years in October, up 13.6% from October 2012 but up just 0.2% from September 2013. This was the biggest 12-month gain since February 2006. The Los-Angeles-area index was up 0.85% for the month of October compared to September and up 22.1% in year over year data. Overall we are seeing prices start to level off  with more modest gains but i would expect to see another surge beginning February!

 

One of the stories that got a lot of coverage at the end of the year was that Zillow reported that U.S. homes gained $1.9 trillion in value this year, the biggest jump since 2005, as the real estate market rebounded from the recession. The overall housing stock value is said to top $25 trillion. Zillow’s numbers show that Los Angeles housing stock alone is worth $2.2 trillion. Zillow also released their Market Health Index showing the overall market Health on a 1-10 scale by measuring 10 different metrics including changes on home values, time on market, foreclosures, delinquencies, and more. Los Angeles was ranked as the third healthiest market with a score of 8.6.

 

November numbers from DataQuick show that the regional median home price $385,000 has essentially stayed the same since June after a rise in prices at the start of the year. It is predicted that prices will begin to rise again next year at a slower pace. Home sales in November in the six-county Southland area fell -10.4% compared to November 2012 data and were down -14.2%compared to October’s numbers. This is a result of low inventory. November prices were up 0.3% from October and the median home price is  19.9% higher than it was last November (from $321,000 to $385,000).  In just LA County sales were down -11.3% over last year and median prices were up 21.3% to $424,500from $350,000 last November.

 

The California Association of Realtors (C.A.R.) reported lower numbers in November. Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 387,520 units in November, down -3.4%  from a revised 401,000 in October and down -12% from a revised 440,250 in November 2012.  The November 2013 figure was the lowest since July 2010.   The statewide median price of an existing, single-family detached home slipped -1.2% from October’s median price of $427,290 to $422,210 in November.  November’s price was 22.2% higher than the revised $345,560 recorded in November 2012.  The available supply of existing, single-family detached homes for sale edged up in November to 3.6 months, up from October’s Unsold Inventory Index of 3.4 months still far below six- to seven-month supply is considered typical in a normal market. The median number of days it took to sell a single-family home also increased to 36.7 days in November, up from 33.1 days in October, but was down from 37.5 days in November 2012. For Los Angeles County the median sold price was down by -9.4%in November to $405,260 from $447,130 but was up 20.2% from last November’s $337,080. Sales in Los Angeles County were down -22.2% from October and down -15.3% from November 2012.

 

Data from the National Association of Realtors indicated that the number of people who bought U.S. existing homes in November declined for the third straight month falling –4.3% to an annual rate of 4.90 million partially due to higher mortgage rates, depleted inventory, and the lingering effects of October’s government shutdown. Sales in November were -1.2% lower than last November/ NAR predicts that the total sales this year will be 5.1 million, the strongest number since 2007. The median sales price of an existing home was $196,300 in November, 9.4% higher than a year ago. 

 

The Federal Housing Finance Agency (FHFA) reported that U.S. home prices rose in October0.5% from September. The seasonally adjusted gain was in line with the prediction from economists. The FHFA reported that prices rose 8.2% year over year. A report from Bloomberg News stated that the  FHFA index will rise about 8% this year and 4%  next year. The FHFA index measures single-family properties financed with mortgages owned or secured by Fannie Mae and Freddie Mac.

 

The Commerce Department said sales of new homes fell -2.1% in November to a seasonally-adjusted annual rate of 464,000. In October new-home sales were up 17.6%, the biggest monthly gain in over 20 years and the annual sales pace of 474,000 was the highest since July 2008. An annual pace of 700,000 for new-home sales is considered consistent with a healthy market. Economists are predicting that new-home sales will continue to rise next year. The median price of a new home sold in November rose to $270,900, up 10.6% from a year ago and there were a total of 167,000 new homes on the market at the end of November, a drop of 6.7% from the October inventory. 

 

November data released by realtor.com® showed that November’s median list prices remained unusually strong for the season, showing a 6.9% increase year over year to $197,700, while declining-0.7% month over month. The median age of inventory was 101 days, a -10.6% drop year over year and a 7.5% gain month over month. There were a total of 1,846,155 listings up 0.2% year over year and down -3.1% months over month. “With demand in a much stronger position compared to last year, we anticipate these gains to remain steady into 2014, but with increases expected at a more moderate pace than we have seen in 2013,” said Errol Samuelson, president of realtor.com®. For the Los Angeles MSA realtor.com showed a median price of $455,000 up28.17% from last year and down -1.07% from October. There were 19,633 listings, down -9.75% from last November and -2.37% from October. The median age of inventory was 64 days, far below the national average, it declined -12.33% compared to last November but was up 10.34% compared to October.

 

Happy new year!

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