Economy Watch: Multifamily Rent Growth Slows
Trulia reported that as newly constructed multifamily buildings are completed, the pace of rent gains fell at the national level for the first time since the price recovery began last spring.
By Dees Stribling, Contributing Editor
Trulia reported that as newly constructed multifamily buildings are completed, the pace of rent gains fell at the national level for the first time since the price recovery began last spring. In January, rents rose 4.1 percent year-over-year nationally, slowing down from 4.7 percent in July 2012. Regionally, rent gains cooled the most in San Francisco, where construction activity was well above normal last year, almost all of it multifamily housing.
All-Cash buyers seek California homes in droves
It’s only one state, but California is a bellwether in many ways, so it’s of note that the number of California residential properties bought with cash set a record in 2012, according to DataQuick on Wednesday. Buyers snapped up a total of 145,797 single-family houses and condo units without mortgage financing in 2012, up from 125,812 in 2011, the previous high. In 2007, as the housing market crashed, all-cash sales in the Golden State totaled only 39,731.
In terms of percentage, cash purchases accounted for a record 32.4 percent of California’s overall home sales last year, up from 30.4 percent in 2011. The 2012 percentage is more than double the annual average of 15.6 percent since 1991, when DataQuick started keeping track of cash sales statewide. Investors and vacation-home buyers bought roughly 55 percent of all homes purchased with cash last year.
“It’s clear that a lot of today’s housing market recovery is being fueled by people putting their own money into homes,” DataQuick president John Walsh noted in a press statement. “Some cash buying is part of a normal housing market, but we’re at twice that normal rate. A lot of buyers are chasing what they view as the deal of a lifetime.”
Residential asking prices up in winter
In another optimistic note about housing this week, Trulia also reported in its Trulia Price Monitor that asking prices for U.S. for-sale housing rose 0.3 percent quarter-over-quarter in January. That’s a bigger deal than it might seem at first, because the numbers aren’t seasonally adjusted, and occurred at a time (November-to-January) when asking prices generally go down, even in healthy markets. Not only that, prices rose month-over-month in January by 0.9 percent, the strongest monthly gain since the price recovery began.
Naturally, some markets have more pricing mojo than others. Trulia, a real estate information specialist, characterizes a healthy market as one with strong job growth, low vacancy rates, and low foreclosure activity. Markets with this kind of health include San Francisco, Seattle and Denver. Other markets, such as Phoenix and Las Vegas, are certainly rebounding, but because investors are fueling price increases, the markets are still at risk from a slowdown in job growth or a spike in foreclosures.
“In many local markets, dramatic price gains can mask serious red flags,” Jed Kolko, Trulia’s chief economist, noted in a press statement. “Strong job growth, low vacancy rate, and low foreclosure inventory–not huge price gains–are signs of a healthy housing market. Without strong underlying market fundamentals, price rebounds might be here today, but gone tomorrow.”
Wall Street wobbled around on Wednesday and ended the day mixed. The Dow Jones Industrial Average gained 7.22 points, up 0.05 percent, not enough to put it over 14,000. The S&P 500 was also up 0.05 percent, but the Nasdaq declined 0.1 percent.
