Home Sales Should Be Higher—But They’re Not

Following population trends, the U.S. should be adding more than a million households each year for the next few years, economists note in Freddie Mac’s April Outlook report. But higher housing costs and a delay in younger adults’ buying are prompting an uptick in shared living arrangements, multigenerational households, and delayed household formation.

A shortage of homes for sale continues to press on many markets across the country. The number of single-family homes available for sale in the U.S. in February was 1.41 million units, less than half of the inventory peak in 2007, according to data from the National Association of REALTORS®.

Researchers predict that home sales will rise from 6.12 million in 2017 to 6.3 million in 2018, and to 6.44 million in 2019. They are forecasting that new home sales will be a significant driver in home sales over the next few months.

Source: “Nothing Draws a Crowd Like a Crowd: The Outlook for Home Sales,” Freddie Mac Outlook (April 2018)

Luxury Home Market ‘Not What It Was’

The power may have shifted in the luxury housing market from sellers to buyers, who now appear to have the upper hand in negotiations, MarketWatch reports.

Jed Garfield, president of Leslie J. Garfield & Co. in New York, says the luxury sector started swinging toward a buyer’s market in late 2015, when properties listed at fair market prices were lingering. But now the power shift has become more pronounced, he says.

“It all comes down to this being a supply-and-demand story,” Dolly Lenz, broker-owner of Dolly Lenz Real Estate in Manhattan, told MarketWatch. “If you have a prime property in a great location — something that’s irreplaceable or a trophy property — it is still a very strong market.”

Source: “Top-End Real Estate Is at a Tipping Point From Seller’s Market to Buyer’s Market,” MarketWatch (July 30, 2016)

High Rents, Low Rates = ‘Top Draws to Owning’

Sixty-two percent of potential home buyers say that now is a better time to purchase a home than it was a year ago, according to Chase’s new national survey, “Insights From the Mind of the Homebuyer.” The top reasons that are motivating more Americans to get off the fence are rising rental costs and historically low interest rates, the survey found.

Thirty-two percent of more than 1,000 consumers surveyed say they want to buy soon in order to take advantage of low rates. What’s more, 35 percent say that the 30-year fixed-rate mortgage rising above 4 percent would delay their decision to buy.

Twenty percent of consumers surveyed say that the rising cost of rent is making home ownership look like a better value and is the top reason why they want to buy. Also, 20 percent of those surveyed say that their desire to make an upgrade from their current home was their top motivation for buying.

Nearly 70 percent say they are worried they may have already missed the best time to buy because of rising home prices. Three out of four home buyers say they’re concerned their offer will be outbid by others, and three in five say they think they’ll need to buy a smaller home or consider other neighborhoods outside of their top choices because of rising prices, the survey finds.

Source: Chase

Market Is Healthiest in Years, New Index Says

A newly unveiled forward-looking housing index by Nationwide says the U.S. housing market is at its healthiest level since 2001. The Health of Housing Markets Report will analyze the housing health outlook on a quarterly basis throughout 373 metro areas.

The index’s current leading indicator score for the fourth quarter of 2014, was 109.8, the highest level in the 15 years of data already examined by the study’s authors. A reading of more than 100 suggests the national housing market is healthy and shows few signs of a housing downturn over the next year. The report considers employment, demographics, the mortgage market, and house prices to determine the health of each market.

“The HoHM Report provides a look into the future instead of the rear view mirror,” says David Berson, Nationwide’s chief economist and senior vice president. “The quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”

More details at: Nationwide Health of Housing Markets Report

 

2014 Expected to Have ‘Strong Finish’

Despite hitting a soft spot in the first quarter, home sales are expected to make a strong showing in the second half of 2014, NAR’s Chief Economist Lawrence Yun told brokers at the Broker Summit in Atlanta Thursday.

Yun called the past few years of economic recovery “difficult but meaningful.” Unit sales are currently down 5 percent year-over-year, but he expects 2014 to end up close to last year’s totals at a little more than 5 million units sold.

Looking at the economy is a good way to see what will happen in housing, Yun says. Gross domestic product (GDP) was negative in the first quarter, but bounced back in the second. Although Yun would like to see consistent economic growth above 3 percent – it’s currently around 2 percent. “It’s moving in the right direction,” he says. “We’ve recovered all the jobs lost in downturn and new jobs are being created.”

Declining unemployment is a good sign for housing. However,more people are claiming disability, and rarely do they return to the workforce, Yun says. What’s more, the unemployment statistics are not considering Americans who aren’t collecting unemployment and who have essentially dropped out of the labor force.

Another piece of good news for real estate is that inventory is heading up nationwide, Yun says. Thetotal housing inventory at the end of June rose 2.2 percent to 2.30 million existing homes for sale. Research shows that consumers feel more confortable visiting 10 to 15 homes before making a purchase decision, Yun says, and as inventories come back, so will buyer confidence and sales.

Source: Erica Christoffer, REALTOR® Magazine

Aging Homes may present Big Bargains

More than 70 percent of the U.S. housing stock was built prior to 1990, and an aging housing stock may present more opportunities for buyers searching for a bargain, according to RealtyTrac’s Aging Homes Analysis.

“The high percentage of homes that are at least 20 years old and likely in need of some major repairs is eye-opening,” says Jake Adger, chief economist at RealtyTrac. “However, given the low inventory of homes available for sale in today’s market, this challenge of aging U.S. housing supply can also be an opportunity for buyers looking for a bargain and home owners looking to update their living space and improve the value of their homes.”

On average, homes built prior to 1990 sold for $233,211 this year, compared to $256,292 for newer homes.

“The lower price point on older homes is not surprising given many are in need of some rehab and are more likely to have maintenance issues,” Adger says. “But this also presents an opportunity for buyers willing to take on that older inventory. Those buyers can purchase at lower price points and face less competition from institutional investors,” who tend to buy newer homes.

Source: “Aging Housing Inventory Presents Bargain-Hunting Opportunities,” Mortgage News Daily (Oct. 31, 2013)

 

Inventory Crunch Over? More Homes are ‘For Sale’

Inventory levels are on the rise nationwide, which could soon mean the severe inventory shortages plaguing many markets the last few months may soon be nearing an end, according to the latest report from realtor.com®. As home prices rise, more sellers may be testing the market, helping to increase the options for home buyers.

Realtor.com® reported that 1.96 million homes were listed for sale in June — the highest number since last September.

The two California markets that posted the largest rises in the number of homes for sale compared to one year earlier were:

  • Sacramento, Calif.: +16.7%
  • Los Angeles: +6.8%Orlando: +2.8%

“At the current pace of sales, the supply of homes for sale is still very low, suggesting price gains are likely to continue,” The Wall Street Journal reports. “But the months supply is up slightly in a growing number of markets. This could actually boost sales — a major complaint of home shoppers and their real estate agents is that there’s a shortage of attractive homes being offered for sale.”

Source: “Housing Inventory Rose in July,” The Wall Street Journal (Aug. 13, 2013)

Housing Inventory Shortages “Start to Ease”

The percentage of homes for sale has risen 25 percent this year and housing inventories have started to outpace typical seasonal upticks, realtor.com® reports.

Rising home prices likely are encouraging more home sellers to test out the market. The inventory crunch may be showing signs of easing with listings rising 5.8 percent in May. Still, the number of homes for sale is low by historical standards. Listings in May are still 10 percent below year-ago levels.

The places where the number of homes for sale rose the most were Atlanta (rising 3.4 percent in May), Miami (2.8 percent), and Tuscon, Ariz. (1.8 percent).

“Even with the increases, inventories in many markets remain tight, but any easing in the extreme shortages of the past year could ultimately cool the pace at which home prices have been rising,” The Wall Street Journal reports.

Meanwhile, median asking prices rose 4.8 percent nationally over year-ago levels, according to the report. Sacramento posted the highest increase in asking prices (rising 42.3 percent from April 2012) and Oakland (a 38 percent increase).

Source: “Housing-Inventory Crunch Could Be Easing,” The Wall Street Journal (June 13, 2013)

For-Sale Home Inventories ‘Remain Tight’

Inventory levels in 2012 reached an 11-year low and fell yet again last month, further limiting the number of homes for sale nationwide. Inventories of for-sale homes were down by 16.5 percent in January year-over-year, and fell 5.6 percent from December, according to the latest data compiled from Realtor.com. 

“The shortage of homes for sale in a growing number of U.S. markets is maddening for would-be buyers who frequently complain that there aren’t enough good choices,” The Wall Street Journal reports. “Bidding wars are becoming more common.” 

Now buyer demand is strong, but inventories remain constrained as banks slow their pace of foreclosures and home owners delay selling to regain equity in their homes. 

Metro areas posting some of the largest monthly declines in inventory levels are San Francisco (where inventory levels are down by 21 percent in January compared to December and down 47 percent year-over-year) as well as Seattle (where levels dropped 9 percent from December). The two have also seen some of the largest price increases in the nation. Median asking prices have risen by 16.4 percent and 23.7 percent in those places, respectively. 

Source: “Housing Inventory, Already Low, Dropped Further in January,” The Wall Street Journal (Feb. 14, 2013)

Housing Inventory Drops!

Total housing inventory at the end of November fell 4.0 percent to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

National Association of Realtors President Ron Phipps said good buying opportunities will continue. “Traditionally there are far fewer buyers competing for properties at this time of the year, so serious buyers have a lot of opportunities during the winter months,” he said. “Buyers will enjoy favorable affordability conditions into the new year, although mortgage rates are expected to gradually rise as 2011 progresses.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.30 percent in November from a record low 4.23 percent in October; the rate was 4.88 percent in November 2009.

“In the short term, mortgage interest rates should hover just above recent record lows, while home prices have generally stabilized following declines from 2007 through 2009,” Yun said. “Although mortgage interest rates have ticked up in recent weeks, overall conditions remain extremely favorable for buyers who can obtain credit.”

A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in November, the same as in October, but are below a 51 percent share in November 2009 from the surge to beat the initial deadline for the first-time buyer tax credit.

Investors accounted for 19 percent of transactions in November, also unchanged from October, but are up from 12 percent in November 2009; the balance of sales were to repeat buyers. All-cash sales were at 31 percent in November, up from 29 percent in October and 19 percent a year ago. “The elevated level of all-cash transactions continues to reflect tight credit market conditions,” Yun said.

Form the National Association of Realtors, NAR

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