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For the month of November, the two Composites declined 0.1%. After nine consecutive months of gains, this marks the first decrease since November 2012. Nine out of 20 cities recorded positive monthly returns; of these nine, Boston and Cleveland were the only cities not in the Sun Belt. Minneapolis and San Diego remained relatively flat. After declining last month, Dallas edged up to set a new index high. Denveris 0.6% off of its highest level due to two consecutive months of declines.

In November 2013, the 10- and 20-City Composites posted annual increases of 13.8% and 13.7%.

“November was a good month for home prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Despite the slight decline, the 10-City and 20-City Composites showed their best November performance since 2005. Prices typically weaken as we move closer to the winter. Las Vegas, Los Angeles and Phoenix stand out as they have posted 20 or more consecutive monthly gains.

“Beginning June 2012, we saw a steady rise in year-over-year increases. November continued that trend with another strong month although the rate of increase slowed. Looking at the year-over-year returns, the Sun Belt continues to push ahead with Atlanta, Las Vegas, Los Angeles, Miami, Phoenix, San Diego,San Francisco and Tampa taking eight of the top nine spots. Detroit continues to recover but remains the only city with prices below its 2000 level.

“Home prices continue to rise despite last May’s jump in mortgage interest rates. Mortgage applications for purchase were up in recent weeks confirming home builders’ optimism shown by the NAHB survey. Combined with low inflation — 1.5% in 2013 – home owners are enjoying real appreciation and rising equity values. While housing will make further contributions to the economy in 2014, the pace of price gains is likely to slow during the year.”

As of November 2013, average home prices across the United States are back to their mid-2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 20%. The recovery from the March 2012 lows is 23.0% and 23.7% for the 10-City and 20-City Composites.

Nine cities showed price increases from October to November. Miami took the lead with a gain of 1.4% and Las Vegas, the previous leader, followed at +0.6%. Chicago experienced the largest decline of 1.2%. Nine MSAs showed acceleration as measured by their monthly returns – Boston, Cleveland and San Francisco showed returns that were over 50 basis points higher in November compared to October. Last month after experiencing its first decline in 19 months, San Francisco rebounded to positive territory with a 0.4% gain in November. Las Vegas, Los Angeles, Miami, Phoenix and Tampa are the only cities that recorded positive gains for 12 or more consecutive months.

Boston, Chicago, Cleveland, Dallas, Las Vegas, Miami, New York, Tampa and Washington were the nine cities to accelerate on an annual basis. Boston showed an annual rate of 9.8%, an improvement of 1.2 percentage points from last month. Cleveland and New York followed with November year-over-year returns of 6.0% compared to 4.9% for October. Despite the improvement, Cleveland and New York remain the two lowest ranked cities.

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The updated estimates from PwC US are based on a quarterly econometric analysis of the lodging sector, using an updated forecast released by Macroeconomic Advisers, LLC in January and historical statistics supplied by Smith Travel Research and other data providers. Macroeconomic Advisers expects real gross domestic product (“GDP”) to increase 2.6 percent in 2013, and accelerate to 3.1 percent growth in 2014, measured on a fourth-quarter-over-fourth-quarter basis.

Our updated lodging outlook incorporates clearer macroeconomic context and recent hotel performance – strong demand growth in the fourth quarter, albeit with somewhat lower ADR. Based on this analysis, PwC US expects lodging demand in 2014 to increase 2.4 percent, which combined with still-restrained supply growth of 1.0 percent by year-end, is anticipated to boost occupancy levels to 63.2 percent, the highest since 2006. Hotel construction activity is rebounding from a low base, but with fourth quarter room starts up solidly (44.1 percent ahead of prior year), the pipeline for 2015 openings is expanding. Hotels in the luxury, upper upscale and upscale chain scales have recovered occupancy levels more quickly and are now experiencing greater gains in ADR. In particular, luxury hotels are on track to reach 75.0 percent occupancy in 2014, and upper upscale hotels are anticipated to benefit from a gradual recovery in group activity and reach 72.7 percent.

“With the economic environment improving, US lodging recovery is now on solid footing,” said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC. “While the demand-supply balance remains favorable this year, the next phase of the cycle will be marked by a gradual return of new lodging supply, as investors and developers look to deploy capital in this sector.”

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“The value of county building permits issued in 2013 increased by $40 million over the value of permits issued during 2012, “ said Phil Cox, chairman of the Tulare County Board of Supervisors. “This is one sign the economy is improving in the area.”

Officials say the value of all building permits issued in 2013 increased approximately 32% – to an estimated overall valuation of $166.3 million.  Permits issued for houses increased by 23% while commercial building permits increased by 20%.

What’s changed? Two years ago the board of supervisors established an in house economic development program to foster value growth. Challenged to make the county easier to do business with, planning administrators developed a team-based approach toward business development. For example, if someone wanted to fast-track construction of a medical clinic, or expand a large ag processing facility on an aggressive timeline, the county developed a “new” team-based process to accommodate that developer’s needs.

“We have streamlined the process to improve service to our customers,” said Mike Spata, associate director of the Tulare County Resource Management Agency.

The planning team works with the business owner or project applicant to determine several important details, such as project timeline and how much should the process cost?

“Then we can have the real conversation – how fast the business owner wants to move forward,” Spata said.

Officials say the increase in business activity and total number of projects permitted during the last two years indicates that in addition to signs the overall economy is finally improving, the county’s new economic development approach appears to be working nicely. In 2013 alone: Setton Farms pulled more than $2 million-worth of permits for plant expansions; Paramount Citrus expanded greenhouse facilities – $2 million in permits; Family Health Care Network’s new rural medical clinic in Terra Bella – $750,000 permit value; Ventura Coastal $1.6 million – installation of new silos to store citrus juice in Tipton.

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Redfin real estate agents:

• Indicate that it is still a good time to sell, but less so: In the fourth quarter, 65% of agents said that now is a good time to sell, compared to 72% in the third quarter and 86% in the second quarter. At the same time, agent perspectives on buying remained steady, with 56% of agents saying it’s a good time to buy compared to 55% last quarter.
• Say that buyers are ready to make concessions for the right home: In the fourth quarter, 35% of agents said that buyers are “willing to pay more” to find a home compared to this summer. At the same time, about 30% said buyers were “flexible on features,” held “lower expectations” for how far their money will stretch, were “looking to new construction” because of limited inventory, and were “prepared to waive contingencies” to win a bid.
• Say that buyers continue to be frustrated by inventory: In the fourth quarter, agents cited “limited inventory” (87%) as the biggest challenge for buyers. Competition from bidding wars was buyers’ second largest concern, but notably this response dropped to 65% from 79% in the third quarter.
• Report that sellers believe their home is worth more than market value: In the fourth quarter, 63% of agents said that sellers have “unrealistic expectations” about the value of their home, nearly flat from the third quarter. At the same time, 31% say that sellers are frustrated with the number of homes available that they would be interested in buying.
• Believe that if mortgage rates top 5.5%, it would significantly limit home sales and price gains: With the expectation of higher mortgage rates in 2014 as the Federal Reserve reduces its stimulus program, 39% of agents believe that rates exceeding 5.5% would harm home sales and price growth. At the same time, one-third of agents surveyed believe that mortgage rates would have to reach 6% to have that effect.

“These days, finding the right home is more difficult than ever,” said Redfin Phoenix agent Marcus Fleming. “With such limited home inventory available, buyers who need to move now often have to compromise on upgrades or location to find a home that meets their budget and basic needs.”

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JLL’s 2014 global viewpoints point out the surprising upsides in investment sales volume in 2013,  largely attributed to the weight of money flowing into the asset class, an improving lending environment, the heightened appetite for risk and investors’ movement into secondary markets. These factors are expected to continue to move the sector forward in the coming year with global investment volume growth of 10 percent year-over-year to $550 billion in 2014. The firm expects particularly strong gains on the U.S. horizon with further gains in more diversified investment across primary and secondary markets and sectors.

“We’re seeing a tremendous weight of capital from a growing and diverse set of capital sources interested in a much wider range of U.S. real estate,” noted Ben Breslau, Jones Lang LaSalle’s Americas Research Managing Director.  He describes the dynamics of today’s investment and leasing markets around the world in this short video, “Investors feel more comfortable with the economic outlook, and they’ve shown a greater appetite for risk that has led to a 21 percent global increase in year over year investment volumes.”

JLL is less exuberant on the global leasing market forefront.  “Global leasing volumes for the full-year are expected to be flat, and in most markets and countries, 2013 is likely to turn out to be a weak year for rental growth,” added John Sikaitis, Managing Director of Office Research for Jones Lang LaSalle.

Corporate profitability is high and occupier sentiment has improved markedly over the last quarter, however, and leasing markets will move from flat globally in 2013, to slightly improving growth of leasing volumes of 5 to 10 percent in the year ahead.  There remains a wide variation in leasing momentum across geographies around the world.

In the United States, the office leasing forecast is brighter based on the market seeing demand diversifying and supply dwindling: U.S. Cross Sector Report. CBD locations have shifted to landlord-favorable conditions in the vast majority of markets driven by the highest quality and most efficient buildings with potential rent spikes ahead in these segments of the market in the next 24 months due to limited construction. While new office development is steadily increasing, especially in tech-rich and energy-heavy geographies, overall construction levels will be below trend until at least 2015. With limited new supply delivering ahead, mid-sized and large tenants, especially in America’s CBDs, will face challenges in 2014.

• Demographic dynamics: Demographics will play a stronger role in the U.S. office market in 2014, as the millennial generation demands a sense of place and increasingly urban or quasi-urban environments. The suburbs are not dead, but will increasingly diverge further into two markets; choice locations on amenities, transit and with a sense of place will heavily outperform suburban locations lacking those characteristics.
• The pace of recovery expected to appear slower than past cycles: While the recovery is gaining momentum geographically and across industries, the pace of the recovery will appear slower than past cycles as a result of aggressive space utilization measures adopted by most industry sectors. Traditional office users like banks and law firms are doing more with less and high-growth innovation-based industries are leading the trend in efficient and modern workplace standards and utilization; this will place a ceiling on heightened absorption levels in any given quarter for the foreseeable future.

JLL also expects office rent growth to pick-up modestly into 2014. Tech and energy markets will not be the only markets to see rent growth. Overall, Jones Lang LaSalle is forecasting office rents to grow at a 5.5 percent clip in 2014 with net effective rents climbing even higher due to shrinking concessions.

“The big takeaway that we are starting to see is that after two to three years of a very siloed recovery in the energy and technology market, demand is starting to diversify,” said Sikaitis. “Now, we are seeing a lot of markets contribute to higher leasing volumes, giving viability to the recovery we haven’t seen in the past.” Sikaitis shares his perspective on the accelerating recovery and factors that will impact 2014 in this short video.

It all comes down to jobs

Many industries are now recouping job losses from the recession and this – after occupier downsizes and space considerations in prior years – will create additional demand for commercial real estate. Every new job in a given sector and region produces or typically correlates highly, with other jobs being created in other sectors in that region. These jobs are known collectively as indirect jobs. These jobs in turn have a multiplier effect and thus create additional demand for real estate.

“Housing is also a bright spot for our recovery and is impacting multiple factors of our economy,’ noted Marisha Clinton, Director of Capital Markets Research. “Accelerated housing flows through to commercial property, as construction, real estate, lending, retail and manufacturing jobs are created boosting local economies. However, the Millennials are the ones to watch, creating broad-reaching implications for our culture and economy that will have significant impact for years to come.”

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In order to achieve this goal, the homebuilder has partnered with PG&E to incorporate a number of features in the home, located in De Young’s CountryCourt community.  It is a 2,064 square foot home with three bedrooms, two bathrooms, a two-car garage, dining room and den.

SolarCity has provided the home with a 5.88 kilowatt solar photovoltaic system, which produces renewable energy.  A 20-year prepaid lease is being offered through SolarCity on the system.

“The lease is a big game changer, because now you’re able to get solar for $5,000 versus $20,000,” said Brandon De Young, vice president of De Young Properties.

LED lighting is found throughout the home, as well as Energy Star qualified windows.  Cool roof tiles cover the building, and a 19 SEER, 14 EER air conditioner and a 95 percent AFUE rated furnace from Lennox helps keep the home pleasant even during extreme temperatures.  Ducts are installed in conditioned space, and not in the attic, where they are normally placed.  Vents were put into the walls, rather than the ceiling, and motion-activated LED lighting is in the hallways, kitchen and bathroom.

Inside the garage is the most advanced energy-efficient Hybrid Heat Pump Water Heater Rheem offers.  Instant hot water can be accessed anywhere in the home through a motion-activated hot water recirculation system.  Also in the garage is an electric vehicle charging station, as well as an eMonitor, a Home Energy Management System that shows the homeowner in real time home much energy is being used and introduced.

De Young Properties has been offering Zero Net Electric Homes for a while, and this concept home is the next step.  De Young says he doesn’t know of any other Zero Net Energy Homes that are being offered by other homebuilders in the central California region.  De Young Properties could begin building more of the houses by the end of 2014.

De Young said occupants in Zero Net Energy Homes will always have to pay PG&E to use service, but energy bills will be greatly reduced.  Exactly how much will depend on the residents.

“The dollars and cents of the bill are going to be really low, if not at zero,” De Young said.

De Young said that because of the California Long Term Energy Efficiency Strategic Plan, all new residential homes will be required to be Zero Net Energy by 2020.

“We think it’s an awesome goal to try and strive for,” De Young said.

Tours of De Young Properties’ Zero Net Energy Home are available by calling the De Young Welcome Center on Gettysburg and Armstrong in Clovis at (559) 434-2000.

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Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 4.6 million completed foreclosures across the country. As a basis of comparison, prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

As of October 2013, approximately 879,000 homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.3 million in October 2012, a year-over-year decrease of 31 percent. The foreclosure inventory as of October 2013 represented 2.2 percent of all homes with a mortgage compared to 3.1 percent in October 2012. The foreclosure inventory was down 2.9 percent fromSeptember 2013 to October 2013.

“Year over year, the foreclosure inventory, as a percentage of all homes with a mortgage, has declined almost a full percentage point to 2.2 percent,” said Mark Fleming, chief economist for CoreLogic. “This is good news for the housing and mortgage finance markets, but the rate remains elevated relative to the pre-crisis level of about 0.6 percent. There are almost 900,000 properties still in foreclosure, but a normal level would be only a quarter of the current stock.”

“The scourge of an elevated foreclosure inventory is easing. In October, every state posted a year-over-year decline in completed foreclosures, which is positive news,” said Anand Nallathambi, president and CEO of CoreLogic. “Additionally, the rate of serious delinquencies, which fell more than 25 percent year over year, is at the lowest level in nearly five years, which is great news as we head into a new year.”

Highlights as of October 2013:

• The five states with the highest number of completed foreclosures for the 12 months ending in October 2013 were: Florida (115,000), Michigan (50,000), California (46,000), Texas (43,000) and Georgia (39,000). These five states account for almost half of all completed foreclosures nationally.
• The five states with the lowest number of completed foreclosures for the 12 months ending inOctober 2013 were: District of Columbia (57), North Dakota (411), Hawaii (491), West Virginia (514) and Wyoming (694).
• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes wereFlorida (7.1 percent), New Jersey (6.7 percent), New York (4.9 percent), Maine (3.8 percent) andConnecticut (3.7 percent).
• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were:Wyoming (0.4 percent), Alaska (0.6 percent), Nebraska (0.6 percent), North Dakota (0.7 percent) and Colorado (0.7 percent).

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Excluding distressed sales, home prices increased 0.4 percent month over month in October 2013compared to September 2013. On a year-over-year basis, excluding distressed sales, home prices increased by 11 percent in October 2013 compared to October 2012. Distressed sales include short sales and real-estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that November 2013 home prices, including distressed sales, are expected to remain at the same level month over month as October 2013, with a projected increase of 12.2 percent on a year-over-year basis from November 2012. Excluding distressed sales, November 2013home prices are poised to rise just 0.4 percent month over month from October 2013 and 11.3 percent year over year from November 2012. The CoreLogic Pending HPI is a proprietary and exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

“In October, the year-over-year appreciation rate remained strong, but the month-over-month appreciation rate was barely positive, indicating that house price appreciation has slowed as expected for the winter,” said Dr. Mark Fleming, chief economist for CoreLogic. “Based on our pending HPI, the monthly growth rate is expected to moderate even further in November and December. The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks.”

“In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013,” said Anand Nallathambi, president and CEO of CoreLogic. “The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates.”

Highlights as of October 2013:

• Including distressed sales, the five states with the highest home price appreciation were:  Nevada(+25.9 percent), California (+22.4 percent), Georgia (+14.2 percent), Michigan (+14.1 percent) andArizona (+14 percent).
• Including distressed sales, the only state to show depreciation was New Mexico (-0.5 percent).
• Excluding distressed sales, the five states with the highest home price appreciation were: Nevada(+22.5 percent), California (+18.5 percent), Utah (+13.3 percent), Florida (+13 percent) and New York (+12.4 percent).
• Excluding distressed sales, no states posted home price depreciation in October.
• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006to October 2013) was -17.3 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -13.1 percent.
• The five states with the largest peak-to-current declines, including distressed transactions, wereNevada (-40.7 percent), Florida (-37.4 percent), Arizona (-31.5 percent), Rhode Island (-29.3 percent) and West Virginia (-28 percent).
• 96 of the top 100 Core Based Statistical Areas (CBSAs)** measured by population showed year-over-year increases in October 2013.

*September data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.

**The Office of Management and Budget (OMB) issued a bulletin on February 28, 2013, establishing revised Core Based Statistical Area (CBSA) delineations. With today’s release of HPI, these new delineations are now reflected in the data.

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