Suburban Century Is Over

At a recent meeting of the Urban Land Institute of Minnesota, Senior Fellow John McIlwain said "a new normal" will be created in the housing market over the next 10 years, and he marked the end of "the suburban century."

He noted that markets offering "a vibrant 24/7 lifestyle" will see the most robust activity, "net-zero-energy" units will become the norm, and the rental market will expand as homeownership rates fall to more historic levels.

Suburban town centers will gain popularity among those wanting an urban lifestyle without living in a big city.

Over the next decade, McIlwain said four demographic groups will fuel the housing market. He said older baby boomers increasingly are moving back to the central city, while younger baby boomers are finding it more difficult to relocate for jobs because they cannot sell their suburban houses. Meanwhile, millennials are more environmentally aware and will seek urban lifestyles, and immigrants who cannot afford large suburban houses to shelter multiple generations will increase demand for rentals.

With 1.5 million housing units per year needed to accommodate the shift to normal levels of household formation, McIlwain said zoning, financing, and regulations need to be rethought to meet housing demand.

Mixed Market Messages

Local housing markets home prices appears to be growing. For instance, 13 metropolitan areas in the S&P/Case-Shiller 20-city index experienced price appreciation over the 12-months ending in May, compared to 11 in April and 10 in March.

“However, existing home sales in June slowed to an annualized pace of 4.37 million units, the fewest since March. Moreover, although new home sales jumped by almost 24 percent to 330,000 dwellings, it represented the second slowest rate since 1963.”

Mortgage Rates - fall to all-time record lows

Freddie Mac released the results of its Primary Mortgage Market Survey, with the 30-year and 15-year fixed-rate mortgages reaching record lows. (The 30-year fixed-rate survey began in 1971, and the 15-year began in 1991.) 30-year fixed-rate mortgage averaged 4.54 percent. Last year at this time, the 30-year FRM averaged 5.25 percent. 15-year FRM this week averaged a record low of 4.00 percent. A year ago at this time, the 15-year FRM averaged 4.69 percent.

Rents Rise as Apartment Vacancies Fall

Apartment vacancies were down and rents were up last month as people got tired of living in their parents’ basements and rented a place of their own.  Nationally, the apartment vacancy rate was 7.8 percent at the end of June, down from 8 percent in the first quarter.  Rents rose 0.7 percent from April to June, the largest quarterly gain in two years.

Mortgage Rates New Low

Mortgage rates fell for the second straight week to the lowest point in five decades, but they may not be enough to jump-start the housing market.

Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans dropped to 4.57 percent. That's down from the previous record of 4.58 percent set last week and the lowest since Freddie Mac began tracking rates in 1971. The last time rates were lower was in the 1950s, when most long-term home loans lasted just 20 or 25 years.

Rates have fallen over the past two months. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on long-term Treasurys.

However, low rates have yet to fuel home sales. The housing market has slowed since federal tax credits for homebuyers expired at the end of April.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on 15-year fixed-rate mortgages increased to an average of 4.07 percent, up from 4.04 percent last week. That was the lowest on records dating to September 1991.

Rates on five-year adjustable-rate mortgages averaged 3.75 percent, down from 3.79 percent a week earlier. That was also the lowest on Freddie Mac's records, which date back only to January 2005.  Average rates on one-year adjustable-rate mortgages fell to 3.75 percent from 3.80 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac's survey averaged 0.7 a point.

Job Market Still Holding Back Housing

The one factor that would certainly push up demand for homes is increased employment, but many analysts are now predicting that employment won’t revive significantly until 2011. This doesn’t bode well for the immediate recovery of the housing market. "If you're looking for a silver lining in housing, you aren't going to find it here," Mike Larson of Weiss Research said in a report.

"The overall economy is rolling over, consumer confidence is slumping, and, most importantly, we just aren't creating jobs," Larson added. "With so many Americans unemployed or underemployed, the housing market is going to keep hurting."

Key West Single Family Sales Stats for June 2010

Listings Sold % Change From June 2009 -32.1%

Average Selling Price $529,684

Sold Price % Change From June 2009 -19.5%