Contracts on Pending Homes Declined in December
Looks like Santa wasn’t very generous toward the housing market. Sales agreement on existing homes took a sharper hit than expected in December. This, after those numbers touched a 19 month high in the previous month. According to the National Association of Realtor’s index, pending home sales fell 3.5 percent to 96.6 percent in December from 100.1 percent in November. Economists consider a reading of 100 as a sign of a healthy market, according to the Los Angeles Times, and they were expecting pending sales to fall 1.0 percent.
The numbers don’t reflect sales. The Pending Home Sales Index is a forward-looking measure that can be used as a prediction tool for the housing market. Not all signed contracts result in a sale. There’s a lag of anywhere from one to two months between a contract and a closing, and buyers can pull out in that interim.
American Homes Most Affordable
A new survey found that among comparable nations, the U.S. has the most affordable housing market.
The eighth Annual Demographia International Housing Affordability Survey measured affordability by dividing the median home price by gross annual median household income across 325 metro markets, according to thestreet.com. Countries taken into consideration were Australia, Canada, Ireland, New Zealand, the U.K., the U.S. and Hong Kong in China. Among all, the U.S. emerged the most affordable.
Thus, no surprises that foreign investors have started pouring their money into American homes.
The median multiple for U.S. was 3 in 2011. Thestreet.com says a median multiple of 3 or below indicates an affordable market. The markets with home price to income multiple of 5.1 and more are considered “severely unaffordable.” Some of the unaffordable markets with a median multiple of 12.6 are Hong Kong, Australia, New Zealand and the United Kingdom.
There were 81 major metro markets around the world, with a population more than 1 million, measured for affordable housing. Only 24 made the cut and all of them are American cities. Detroit and Atlanta led as the most affordable major markets.
The 5 Best Housing Markets
Unlike investors, most homeowners buy a house with a long-term plan. In the past, people hardly paid attention to the future value of the homes they bought. But with a fragile economy and an equally shaky housing market with plummeting home values, homeowners are examining market potential very closely. A couple of factors to consider are employment opportunities, population growth and housing inventory.
Here are the top five markets according to Local Market Monitor, a market analysis firm for banks. The ones featured are among the 100 largest markets the firm covers, according to MarketWatch.
- McAllen-Edinburg-Mission, Texas: Population growth, strong job recovery and rising home prices have helped this border market secure the top spot, according to MarketWatch.
- San Jose-Sunnyvale-Santa Clara, Calif.: Technology services and high tech manufacturing are driving the local economy despite a steep drop in prices during the recession. High-paying jobs are a significant contributor to the health of the local economy.
- Akron, Ohio: Despite a dip in home prices, a strong recovery in jobs is aiding an upswing in the Akron market. This market didn’t experience skyrocketing prices during the boom, so the bust wasn’t as dramatic.
- Houston-Sugar Land-Baytown, Texas: High population growth and a robust oil drilling and services sector has helped the local economy here. The population growth is almost triple the national average, according to Market Watch.
- Pittsburgh, Pa: A large health and education sector has helped maintain a stable economy in this Pennsylvania city. Home prices, despite a 16 percent rise during the boom, haven’t fallen much, and there’s a good prospect for job growth in the future.