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53 » VISIT US ONLINE @ DSNEWS.COM TEN-X FORECASTS HOUSING MARKET FOR 2016 AND BEYOND e housing market for the remainder of 2016 will look very much like 2015 as far as both existing-home sales and home price appreciation—and that foreclosure activity could return to "normal" levels as soon as the middle of next year, according to Ten-X Chief Marketing Officer Rick Sharga in a webinar. Sharga predicted that by the end of the year, there will be an estimated 5.3 and 5.5 million existing-home sales as well as 550,000 to 600,000 new home sales. He also predicted home prices should rise between 5 and 6 percent, which he says is higher than normal but down from the double-digit growth seen in previous years. In regards to inventory, Sharga says Ten-X attributes weakness across the board to lackluster construction, underwater borrowers, and declining distressed inventory. Ten-X also states affordability for homebuyers may become a problem as prices continue to outpace wage growth, causing buying activity to slow down. Household formation, according to Ten-X research, is slower than expected. Analysts believe a lack of starter homes, generational tendencies (such as millennials purchasing homes later in life than anticipated), and credit availability may skew numbers toward rentals. e good news, according to Ten-X, is the foreclosure crisis is almost over and they don't foresee another wave of foreclosures in the near future. Ten-X analysts do predict, however, that another recession could be coming as soon as 2019. ey don't feel, though, the potential recession would be nearly as severe as the previous one in 2008 because there is less risk built into the lending practices now. Ten-X anticipates that foreclosure activity should return to normal levels by 2017 and could even dip below historical norms. Note sales by GSEs and the other major lenders are diminishing the number of distressed properties entering the market and these major lenders are accelerating that recovery. Finally, Ten-X states that it unlikely the housing market will hit a "full recovery" until 2018 at the earliest. FED REPORTS STRENGTHENING HOUSING ACTIVITY e Federal Reserve's 12 districts general reported modest economic growth from mid- May until the end of June—and they expect it to continue at that same modest pace, according to the Fed's Beige Book. Residential real estate activity, however, continued to strengthen since the previous Beige Book reporting period (early April to mid-May), according to the Fed—despite supply issues. "Single-family home sales increased at a moderate pace overall, with Boston, Cleveland, and St. Louis reporting strong growth," the Fed reported. "Many districts indicated that inventories continue to be low. Despite this persistent inventory issue, Boston, Atlanta, Kansas City, and Dallas all report that contacts have a positive outlook for the market in the next few months." e Fed's districts generally reported house price increases, with modest residential construction activity across districts. Strong growth in housing starts was reported in Cleveland and Kansas City; Chicago reported little change in residential construction activity; and New York reported a decline. A lack of available lots on which to build was reported in Philadelphia, Richmond, St. Louis, and San Francisco. Banks in the Fed districts reported overall increases in loan demand, while overall economic activity continued to expand at a modest pace across most regions, according to the Fed. Activity was steady in the Cleveland district, but the increase was moderate in Minneapolis. e Fed reported that labor market conditions remained stable as employment continued modest growth since the previous Beige Book was issued six weeks earlier. Wage pressures remained modest to moderate, according to the Fed; consumer spending across districts was generally positive but did show signs of softening. "e outlook was generally positive across broad segments of the economy including retail sales, manufacturing, and real estate," the Fed stated. "Districts reporting on overall growth expect it to remain modest." FORECLOSED HOME VALUES SKYROCKETING SINCE CRISIS Foreclosed homes that met their fate during the housing crisis have now recovered to the point where they are gaining value nearly twice as much as other homes—but with no benefit to the original owners of the homes, according to a new analysis from Zillow. e housing crisis actually worsened the gap between the country's rich and the poor, since low-end homes were more likely to be foreclosed on, according to Zillow. High- income households made an average of about six times more income than the lowest third of households; by 2015, that number had grown to seven times. "Income inequality is an important topic in the U.S. right now, because the gap between the richest and poorest Americans is growing," said Zillow Chief Economist Dr. Svenja Gudell. "Many lower-income Americans lost their homes during the foreclosure crisis, forcing them to pay ever-increasing rents and locking them out of the benefits of the housing market recovery." Many low-income earners bought homes during the run-up to the crisis; as a result, the homeownership rate rose from about 65 percent in the mid-1990s to nearly 70 percent in 2006. But many of those homeowners had to walk away and abandon their initial investment when home values crashed in 2007—and they missed the opportunity to gain equity as home values recovered, Zillow reported. Nearly half of all foreclosed homes (46.7 percent) were among the least expensive third of homes, while only 16.6 percent of foreclosed homes were among the most expensive third, according to Zillow. Foreclosed homes have gained about 39 percent in value since the lowest point in the bust, compared to just 22 percent for non-foreclosed homes. Zillow reported that many investors have benefited from the recovery in home values, as evidenced by the increase in the percentage of single-family homes being rented out in the past decade from 13 percent up to 19 percent.

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