Housing Market Looking Brighter

Real estate indicators are starting to shift in favor of home buyers as the housing market sets its sights on spring. Mortgages are getting cheaper, housing inventories are growing, and home prices are rising at a slower pace.

The 30-year fixed-rate mortgage averaged 4.45 percent last week, Freddie Mac reports.  Late last year, mortgage rates were nearing the 5 percent threshold, but several weeks of decreases have offered some relief to home shoppers.

For home sellers, lower prices may not sound ideal. But housing analysts say sellers need to set a realistic price up front to find a buyer as the market shifts.

Source: “Housing Market’s Fundamentals Actually Turning Brighter,” The Washington Post (Jan. 23, 2019)

3 Challenges Still Facing the Housing Market

Existing-home sales gained momentum in June, reaching an annual pace of 5 million sales for the first time since October 2013, according to the National Association of REALTORS®’ latest housing report. Rising inventories also are pushing the overall supply of homes for sale toward a more balanced market, with unsold inventories 6.5 percent higher than a year ago, NAR notes.

“Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country,” says Lawrence Yun, NAR’s chief economist. “This bodes well for rising home sales in the upcoming months as consumers are provided with more choices.”

Still, the market is facing several headwinds that continue to subdue a more robust recovery. NAR noted three in its most recent housing report:

1. Sluggish new-home construction: While overall housing inventories showed improvement in June, inventory problems continue to weigh on the market and could become more problematic if new-home construction doesn’t increase in more markets, NAR notes. “New-home construction needs to rise by at least 50 percent for a complete return to a balanced market because supply shortages — particularly in the West — are still putting upward pressure on prices,” Yun notes.

2. Stagnant wage growth: Yun also noted that stagnant wage growth is holding back what should be a stronger pace of sales. “Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” Yun notes. “However, the lack of wage increases is leaving a large pool of potential home buyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability.”

3. Dwindling first-time home buyers: The percentage of first-time buyers continues to be low by historical standards. First-time home buyers made up 28 percent of the market in June, down from a typical 40 percent of the market historically.

Source: National Association of REALTORS®

 

Where Home Asking Prices are “Rising the Most”

Median list prices in May edged up 2.10 percent month-over-month, as housing inventories also were on the rise, creating a greater balance between supply and demand, according to realtor.com’s latest Real Estate Health Report.

Nationwide median list price was $199,000 for May,  up 4.79 percent year-over-year!

“We are seeing large regional markets across the country leading the way to national recovery. These regions are acting as a microcosm for what’s slowly happening in the larger real estate market,” says Steve Berkowitz, chief executive officer of Move. “Overall, we’re seeing seller confidence beginning to respond to consumer demand. Nationally, there are more homes going on the market for a shorter amount of time.  And this is happening in our hot markets on a much larger scale.”

California housing markets are seeing some of the highest median price gains.
Some of the highest year-over-year list price gains:

Sacramento, Calif.: up 42.45%   Median list price: $284,900

Oakland, Calif.: up 38.27%   Median list price: $495,000

San Jose, Calif.: up 30.58%   Median list price: $679,000

Los Angeles-Long Beach, Calif.: up 27.80%  Median list price: $428,000

Source: realtor.com®

‘Turning Point’ for Home Owners in 2013

Falling housing inventories and an increase in demand bode well for the market’s recovery next year, according to Barclays 2013 housing outlook report.

Real estate wealth is expected to give a boost to consumer spending in 2013.

“This would mark an important turning point for household balance sheets, where net-wealth effects from falling financial prices and the collapse of the housing market have been significant impediments to the strength of consumer spending and, in turn, the pace of the broader recovery,” Barclays reports.

Meanwhile, housing starts are projected to reach 944,000 in the first quarter of the new year and then rise to 973,000 by the second quarter, according to the report. Also, housing inventories are expected to increase modestly through the year.

“New-home inventories have fallen to their lowest levels ever, as home builders have held housing starts below even the depressed pace of new-home sales in recent years,” according to the report. “Now that new- and existing-home sales are on sustained upward trends, new-home inventories have fallen enough that builders need to raise housing starts to prevent inventories from falling further.”

Source: “Barclays: Housing market to remain resilient,” HousingWire (Dec. 17, 2012)

5 New ‘Rules’ to Home Buying

With signs of a housing turnaround getting stronger, we’re seeing buyers are finding several recent changes when they go to put in an offer on a home. A recent article at U.S. News & World Report highlights some of these changing “rules” for home buyerclients:

1. Lowball offers won’t likely stick:  Buyers may be better off asking for seller concessions, such as closing cost assistance or making home repairs, rather than making offers way below the asking price. “Keep in mind that a lowball number may turn off the seller and close down any chance at negotiation,” the U.S. News & World Report article cautions potential buyers.

2. Get pre-approved: Getting a loan isn’t easy nowadays as lenders have tightened their credit standards in recent years. Serious buyers should check their credit and get pre-appoved for a loan to determine how much of a home they can even afford even before they start their home search.

3. Get realistic about the market: Real estate agents can show buyers comparable nearby sales to help educate them about local market conditions. Transactions from the last few months are the most important.

4. Expect some competition. Housing inventories are dropping in many of our areas and spurring an increase in demand. Home buyers may face increased competition for the home they want, particularly among short sales and foreclosed properties, in which they may be up against investors who are making all-cash offers.

5. Conduct property research: Real estate agents will help guide clients on what all they need to do when they find a property they like.  Other important efforts nowadays: we recommend hiring a home inspector, verifying the accuracy of the property line (by asking seller for the survey or having your own conducted), and make sure all necessary disclosures about the property, required by various sources, have been made.

Source: “Traditional ‘Rules’ of Home Buying Return,” US News & World Report (5/1/12)