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Wall Street Analysts Predict 7% Increase In Home Prices

Wall Street analysts expect home prices to appreciate in 2014 despite weak home sales during the 1st quarter.

Barclay’s analysts projection of a 7% increase in home prices remains unchanged and actually raised its projection for Arizona from 6.8% to 8% and Florida from 7.7% to 8.3%.

Morgan Stanley acknowledged the sluggish spring start to the home-selling season across the nation but remain optimistic about the housing recovery.  “We continue to expect home-price appreciation to moderate from the torrid pace of mid-2012 to 2013, supported by improving employment and growth prospects,” according to analysts from Morgan Stanley.

Source: “Wall Street Home Price Appreciation Still Expected to Hit 7%,” HousingWire (April 28, 2014)

Mortgage Credit Availability at 3-Year High

Based on the Mortgage Bankers Association (MBA) index which tracks the availability of mortgage-credit, the availability hit a 3 year high in March.  While the availability of mortgages is no where near the levels of 2005-2006, there is a measured increase in borrowers access to mortgage credit.  The buyers most positively impacted by the credit easement are those seeking jumbo loans and prime purchase mortgages.


Source:  “Mortgage Credit Most Available in at Least Three Years, Gauge Says,” The Wall Street Journal (April 9, 2014)


Sale of Million Dollar Homes Up 15%

The top end of the luxury market in Greater Phoenix continues to outperform last year by a huge margin.

The first quarter of 2014 dollar volumes for high end sales through ARMLS were as follows:

  • List price over $3 million = $100 million versus $58 million last year – up 72% and by far the highest dollar volume since Q1 2008
  • List price from $2 million to $3 million = $87 million versus $61 million last year
  • List price $1.5 million to $2 million = $91 million versus $119 million last year – a weak spot
  • List price $1 million to $2 million = $181 million versus $161 million last year

The total spent in Q1 2014 for homes over $1 million was $459 million, an increase of 15% over last year. This was entirely due to the performance of the top priced segments. If we look only at homes over $2 million the increase was 57%, but between $1 and $2 million the dollar volume was actually down slightly by 3%. Dollar volume for homes priced between $500,000 and $1 million was flat at $574 million in both Q1 2013 and Q1 2014.

Meanwhile the rest of the market priced at $500,000 and below declined by 10% in dollar volume.

The top end is off to another flying start in April with $21 million closed in the first 4 days for homes listed over $2 million. Q2 2013 was a very strong period for luxury home sales and $209 million was spent on homes over $2 million, the highest quarterly total since Q2 2008. With the current momentum it looks like Q2 2014 has a real chance of breaking through that number.

Source: Cromford Daily Observation