Realtors see sales dip but dollars soar in ’19

By Mark Huffman | Jackson Hole News & Guide | May 15, 2019

There’s a lot of action at the high end of the market, and condos and townhomes are moving quickly.

The number of real estate sales was off slightly in the first part of 2019, but dollar volume took a big jump, according to local agents.

The cause? More high-end sales and a continuing rise in prices at the lower end, where locals are finding themselves struggling in their search for a place to buy, the experts said.

At the rich end “we’re seeing a lot of sales in the $3-million-plus range,” said David Viehman, an Engel and Volkers agent who publishes the Jackson Hole Report. “We are also getting much more action in larger properties, $10 million, $15 million properties … we’ve doubled our sales over $10 million last year.”

Viehman put the total number of sales in the first quarter at down 3%, with overall dollar volume up 45%. He calculated that 61% of sales were for more than $1 million. He said there were 27 sales at prices topping $3 million, up 50%.

Katie Brady, an associate broker at Jackson Hole Real Estate Associates, the local Christie’s affiliate, generally agreed: She calculated that dollar volume in the first quarter was up about 40 percent, riding a strong 2018.

“2018 was super explosive, not just an uptick,” Brady said. “It was a very strong year, mostly thanks to the high end.”

Besides the healthy performance in the $1 million to $5 million segment, Viehman recorded 12 sales topping $5 million, with the highest at $17 million.

Viehman said that in Jackson proper even the “small stuff” is seeing “8 to 10% appreciation right now.”

He pointed to the old Virginian Apartments, 56 units previously filled mostly by workers that are being remodeled and sold, some with restrictions designed to keep them in the local housing market and eligible for Federal Housing Administration financing and others now being sold on the open market.

Though small, the units are selling fast and seeing a run-up in prices. Viehman said open-market units have seen prices rise up to 20% in the past few months.

Recent records show a one-bedroom, 476-square-foot unit at the Virginian on the market at $308,000. A pending sale of a two-bedroom unit of 762 square feet was listed at $420,000.

The Virginian units prove that, despite price increases, there’s strong demand in the part of the market where people with jobs are looking for places to live. Though small, the Virginian units are in town, sit next to the library and are being refurbished. Brady said she has sold two of them.

“It’s a great location; they’re nice, remodeled, have new appliances,” she said. “They’re the nicest thing on the market at that price point.”

Anything in that price range — these days almost entirely condos and townhouses rather than single-family houses — moves quickly.

Viehman said there are “multiple offers … on anything under a million.”

“I’ve had clients looking for two years,” he said. “There are hundreds of people looking for condos under $500,000 or $600,000 … the locals who still want to get in, who don’t want to drive to Idaho or to Star Valley.”

Brady sees the same. “Multiple-offer situations,” she said, are common in “a very competitive market.”

The strong market and continuing confidence is widespread. At the local Berkshire Hathaway HomeServices affiliate, Brokers of Jackson Hole Real Estate, majority owner Kurt Harland said a strong first quarter came on top of a good 2018. Harland said his office came close to doubling its business in the first quarter this year compared with the same period last year.

“Numbers are up; the dollars were up,” he said. “It would be a dream year if we continued like the first quarter.”

At Jackson Hole Sotheby’s International Realty, Chief Operating Officer and responsible broker Donna Clinton agreed. She said that Sotheby’s “had a record year last year” and that the surge continued in the first quarter, with dollar volume up nearly 53 percent. Sotheby’s put the number of sales at down about 10%.

Though Sotheby’s saw a slight slowing in the start of the second quarter, Clinton expects a big year.

“The third and fourth quarters are usually very strong,” she said.

Clinton also has seen some more midprice housing coming on the market, a factor she thinks will push sales and see “people finding something they can move into.”

Viehman noted that inventory remains tight, as it has been for the past four years, with only about 280 listings of all kinds last week. But Brady said some new properties are coming on the market as potential sellers decide recent good prices and demand are a reason to stop waiting and sell. She said “sellers are feeling very bold, understandably,” and she tells people looking to buy that they should be ready to move quickly.

“Demand remains high, not just with people here but people who want to move here,” she said.

When Brady hears people say they’re waiting for a break in the market and a chance to get in cheap, she says, “I don’t think that’s good advice, I don’t think that’s happening.

“Part of me says the current trend is not sustainable,” she said, “but the other part says, ‘What’s going to stop it?’”

Inventory Drought Pushes New-Home Sales to 9-Month Low

August 24, 2018
The shortage of homes for-sale continues to depress sales. Sales of newly built, single-family homes dropped last month and are now at the lowest level since last October, the Commerce Department reported Thursday. This follows on the heels of the National Association of REALTORS®’ report earlier this week that showed existing-home sales also dipped in July, reaching their sluggish pace in more than two years.

“A lack of overall housing inventory is pushing up home prices, which is hurting affordability and causing prospective buyers to delay making a home purchase,” says Randy Noel, chairman of the National Association of Home Builders.

New-homes sales were at a 627,000 rate in July, about 1.7 percent lower than June sales. However, sales are now 7.2 percent higher than a year ago.

“Although this month marks the lowest sales pace since last October, we continue to see solid housing demand due to economic strengthening and positive demographic tailwinds,” says Danushka Nanayakkara-Skillington, NAHB’s senior economist. “Builders need to manage rising construction costs to keep their homes competitively priced for the newcomers to the housing market.”

The median price of new homes was $328,700 in July, which is 1.8 percent higher than a year ago.

Regionally, new-homes sales were up in the West (10.9 percent month-over-month) and the Midwest (up 9.9 percent month-over-month). However, those gains could not offset a 52.3 percent decline in the Northeast and a 3.3 percent drop in the South last month. “Year-to-date, sales in the Northeast are down 14.5 percent as the region deals with the impact from tax reform and persistent affordability issues,” NAHB notes in its release.

The slowdown in housing is getting the Federal Reserve’s attention, as reflected in the minutes of the central bank’s last meeting, which was released this week. Ward McCarthy, Jefferies LLC economist, noted:

“Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters—hurricanes and wildfires—that forced displaced households to seek alternative housing. The housing sector is also undergoing an adjustment to affordability that is less attractive than it was for most of the cycle, as well as changes in the treatment of SALT deductions in the federal tax code. That is the bad news. The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates. We also note this is not the first temporary slowdown in housing activity this cycle.”

May 2018 Pending Home Sales – Content reflects article text.
© National Association of REALTORS®

Source: “New-Home Sales Sink to a 9-Month Low as Housing Market Wobbles,” MarketWatch (Aug. 23, 2018) and National Association of Home Builders

Drop in Rates Still Doesn’t Budge Loan Demand

Mortgage rates eased last week following recent increases, but would-be home buyers or refinancers didn’t bite. Total mortgage application volume, which reflects for refinancings and home buying, dropped 2.9 percent last week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. This marked the sixth consecutive week of losses in applications.

Mortgage application volume is now 10 percent lower than a year ago, the MBA reports.

Refinance volume made up most of the drop last week, falling 5 percent week over week and reaching the lowest level since December 2000. Refinance volume was nearly 27 percent lower than a year ago, when mortgage rates were much lower.

Mortgage applications for home purchases dropped 2 percent last week but remain 2 percent higher compared to a year ago, the MBA reports.

The 30-year mortgage rate averaged 4.84 percent last week, down from 4.86 percent the previous week.

“Rates slipped slightly over the week as concerns over U.S. trade policy and global growth sent some investors back to safer U.S. Treasurys,” says Joel Kan, a spokesman for the Mortgage Bankers Association. “Minutes from the most recent FOMC meeting also yielded a more dovish tone, which added to the downward pressure in rates.”

Source: “Mortgage Rates Drop, But Borrowers Are Not Impressed,” CNBC (May 30, 2018)

Homeowner Equity Is Hitting a Record High

Homeowners are getting richer, thanks to rising home values. The amount of equity that homeowners can tap into is now at the highest level on record, according to Black Knight Financial Services, a mortgage and finance industry solution provider.

The amount a borrower can take out of a home—while still leaving 20 percent in it—increased by a collective $735 billion during 2017. That is the largest annual increase by dollar value on record, according to Black Knight. The collective amount of tappable equity now stands at $5.4 trillion, 10 percent more than the prerecession peak in 2005.

“There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year.”

Homeowners are being more conservative, and lenders are much stricter when it comes to tapping into home equity. Homeowners took out $262 billion in cash-out refinances or home equity lines of credit last year, which is less than 1.25 percent of all available equity and is at a four-year low.

“While rising rates tend to dampen utilization of equity in general, the market is poised for a strong shift toward HELOCs, as they allow borrowers to take advantage of growing equity while holding on to historically low first-lien interest rates,” says Ben Graboske, executive vice president of Black Knight Data & Analytics. “Over half of all tappable equity—approximately $2.8 trillion—is held by borrowers with credit scores of 760 or higher and first-lien interest rates below today’s prevailing rate, which creates a large pocket of low-risk HELOC candidates.”

The amount of homeowner equity varies depending on location. Thirty-nine percent of the nation’s total tappable equity is in California alone. Seattle and Las Vegas have also seen large increases in home equity, Black Knight notes.

Source: “Homeowners Are Sitting on $5.4 Trillion in Ready Cash, the Most Ever,” CNBC (April 2, 2018)

Banks Help Qualify Self-Employed Buyers

Self-employed borrowers have struggled to qualify for mortgages with tightened lending rules over the last few years. This has made a lot of people unable to qualify. As lenders face an overall decrease in refinancing originations due to higher interest rates, they are looking to make up the shortfall in business through purchase applications. Doing so may motivate more lenders to look for ways to increase their share of borrowers.

The self-employed sector may be one major area of growth. The number of self-employed workers in the U.S. is on the rise, increasing to 40.8 million people in 2017. That equates to 31 percent of the private work force. The number of self-employed workers earning $100,000 or more rose nearly 5 percent last year. But their ability to get a mortgage is still challenged due to their nontraditional income status.

Citadel Servicing Corp. is offering multiple options for income qualifications to help more self-employed workers qualify for a loan. One of their areas of qualification includes a one-month bank statement program aimed at self-employed individuals.

“This program was designed for the self-employed borrower with excellent credit who simply doesn’t have time to gather two years’ worth of business and personal tax returns or 24 months of bank statements,” says Will Fisher, senior vice president, national sales and marketing director at Citadel Servicing Corp. “They are putting down a substantial down payment or have an exceptional equity position. Our historical data shows that this borrower can assess and manage their responsibilities.”

Citadel Servicing Corp., which specializes in non-prime loan products, was the first lender to re-enter the subprime market in 2012, HousingWire reports.

Source: “Citadel Servicing Corp. Offers Multiple Options for Income Qualification,” HousingWire (April 2, 2018)

Home Sales Rebound in Kickoff to Spring

Low inventory levels and accelerating home prices couldn’t put a lid on existing-home sales in February. Following two consecutive months of declines, existing-home sales rebounded 3 percent in February month over month and reached a seasonally adjusted annual rate of 5.54 million, the National Association of REALTORS® reported Wednesday. Sales of existing homes, which include single-family homes, townhomes, condos, and co-ops, are now 1.1 percent higher than a year ago.

“A big jump in existing-home sales in the South and West last month helped the housing market recover from a two-month sales slump,” says Lawrence Yun, NAR’s chief economist. “The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices—especially in the West—shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

5 Housing Indicators to Gauge the Market

Here’s a closer look at findings from NAR’s latest housing report.

Home prices: The median existing-home price for all housing types was $241,700 in February, up 5.9 percent from a year ago.
Inventories: The number of homes for sale at the end of February increased 4.6 percent to 1.59 million. That is still 8.1 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace.
All-cash sales: All-cash sales comprised 24 percent of transactions in February, the highest since last February (27 percent). Individual investors tend to account for the biggest bulk of all-cash sales. They purchased 15 percent of homes in February, unchanged from a year ago.
Distressed sales: Foreclosures and short sales made up 4 percent of sales in February, down from 7 percent a year ago. Broken out, 3 percent of February sales were foreclosures and 1 percent were short sales.
Days on the market: Forty-six percent of homes sold last month were on the market for less than a month. Overall, properties stayed on the market for an average of 37 days in February, down from 45 days a year ago. “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply,” says Yun. “To fully satisfy demand, most markets right now need a substantial increase in new listings.”

Report: 1 in 4 Homes Now Equity Rich

Homeowners should be feeling richer. At the end of the second quarter, more than 14 million U.S. properties were considered equity rich. (That means the combined loan amount secured by the property was 50 percent or less of the estimated market value of the property.)

Nearly 320,000 properties joined the “equity rich” category during the second quarter over the first quarter. Further, the number of equity rich properties is now up more than 1.6 million properties compared to a year ago, according to ATTOM Data Solutions’ Q2 2017 U.S. Home Equity & Underwater report.

The number of equity rich properties in the U.S. now represents 24.6 percent of all properties with a mortgage in the country.

“An increasing number of U.S. homeowners are amassing impressive stockpiles of home equity wealth, enjoying the benefits of rapidly rising home prices while staying conservative when it comes to cashing out on their equity—homeowners are staying in their homes nearly twice as long before selling as they were prior to the Great Recession, and the volume of home equity lines of credit are running about one-third of the level they were at during the last housing boom,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “However, this home equity wealth is unevenly distributed across different geographies, value ranges, occupancy statuses and lengths of ownership, with a disproportionately high equity rich share among high-end properties, investor-owned properties, and properties owned for more than 20 years.”

The states with the highest share of equity rich properties at the end of the second quarter were Hawaii (38.3 percent), California (36.6 percent), New York (34.2 percent), Vermont (33.5 percent), and Oregon (32.2 percent).

On a metro level, the areas with populations of 500,000 or more with the highest share of equity rich properties were San Jose, Calif. (52 percent); San Francisco (47 percent); Los Angeles (40 percent); Honolulu (40 percent); and Portland, Oregon (35 percent).


Source: “Number of Equity Rich U.S. Properties Increases to 14 Million in Q2 2017 – One in Four U.S. Properties With a Mortgage,” RealtyTrac/ATTOM Data Solutions (Aug. 15, 2017)


Spread the Message: Equity Is Growing

Home owners, on average, saw a gain in equity of $11,000 last year, according to data from CoreLogic. In states like California, Oregon, and Washington, home owners have seen average increases of nearly $30,000 per person.

Read more: 47.2M Homes Nationwide Now Have Equity
Since 2011, the value of the nation’s single-family housing market has gone up 40 percent, with nationwide home equity doubling from $6.1 trillion to $12.7 trillion, CoreLogic’s data shows.

That has helped to rebuild the wealth of America’s home owners, writes Frank Nothaft, CoreLogic’s chief economist in his monthly column.

“Across the U.S., the value of the housing stock and the amount of home-equity wealth held by home owners have risen dramatically during the last five years,” Nothaft notes. The recovery in home equity “has helped support consumption spending and renovation expenditures” too.

Take a look at this chart that shows the breakdown of average equity gain per owner across the U.S.

CoreLogic predicts home equity will continue to make gains in the coming year, reaching $1 trillion, and will add to consumption spending and lead to greater economic growth in 2017.

As appreciation rises, the number is declining of home owners with negative equity, those who owe more on their home than it is currently worth. As of mid-2016, CoreLogic estimated about 3.6 million home owners – or about 7 percent – of home owners with a mortgage were in negative equity.

Source: “U.S. Economic Outlook: October 2016,” CoreLogic (Oct. 6, 2016)

Sales Contracts Surge to Highest Rate in 10 Years

Pending home sales were up in most areas of the country in July, reaching the second highest reading in more than a decade, according to the National Association of REALTORS®’ Pending Home Sales Index. Last month the Midwest was the only region of the U.S. to see a drop in pending sales.

Read moreExisting-Home Sales Lose Momentum in July

The index increased 1.3 percent in July to a reading of 111.3. Pending home sales are now 1.4 percent higher than a year ago.

“Amidst tight inventory conditions that have lingered the entire summer, contract activity last month was able to pick up at least modestly in a majority of areas,” says Lawrence Yun, NAR’s chief economist. “More home shoppers having success is good news for the housing market heading into the fall, but buyers still have few choices and little time before deciding to make an offer on a home available for sale. There’s little doubt there’d be more sales activity right now if there were more affordable listings on the market.”

Notably, the West saw the highest jump in pending home sales, with contract signings up to the highest rate in more than three years. Yun attributed the rise to stronger labor market conditions in the region.

“If home building increases in the region to tame price growth and alleviate the ongoing affordability concerns, the healthy rate of job gains should support more sales,” Yun says.

Builders may be showing signs of focusing more on the middle and lower price tiers. They’ve been mostly focused on building larger, pricier homes for the upper end of the market for the last few years.

“REALTORS® in several high-cost areas have been saying for quite a while there is robust demand for single-family starter homes and townhomes at an affordable price point for young buyers,” Yun says. “The home ownership rate won’t move up from its over 50-year low without a meaningful boost from first-time buyers, whose participating has yet to noticeably increase so far this year despite mortgage rates near all-time lows.”

NAR predicts that existing-home sales will reach about 5.38 million this year, a 2.8 percent increase over 2015. That also would mark the highest annual pace since 2006 (when sales were at 6.48 million). Price growth of existing homes will likely moderate to around 4 percent this year, after a 6.8 percent jump a year ago, NAR forecasts.

Source: National Association of REALTORS®

FHA Condo Relief Coming: President Signs Bill

President Obama has signed H.R. 3700 – the “Housing Opportunity Through Modernization Act” into law. The National Association of REALTORS® hailed the development as a “significant step” in eliminating barriers to safe, affordable mortgage credit for condos.

The bill was approved unanimously by the U.S. House in February and the Senate two weeks ago. NAR has long been an advocate of the bill, testifying before Congress and lobbying for its passage. Additionally, nearly 140,000 REALTORS® across the country voiced their support for the legislation during the NAR call for action.

“REALTORS® have reason to celebrate today as legislation easing restrictions on FHA financing for condominiums is finally signed into law,” says NAR President Tom Salomone. “This is a long-awaited victory for NAR and for home buyers for whom condos are an important and affordable option.”

The bill will make Federal Housing Administration’s recertification process “substantially less burdensome” and will lower FHA’s owner-occupancy requirement from 50 percent to 35 percent, NAR has reported. The bill also requires the FHA to replace an existing policy on transfer fees with a less-restrictive model that has already been in place at the Federal Housing Finance Agency.

This legislation will help offer to relief to well-qualified potential home buyers who have been facing tight housing inventories, rising home prices, and strict mortgage credit underwriting guidelines, Salomone has said.

“Condominiums often represent an affordable option that’s just right for first-time and low-to-moderate income home buyers,” Salomone said in a statement after the Senate approved the bill in July. “Overly burdensome restrictions on condo financing have for too long put that option out of reach for many creditworthy borrowers. This legislation meets those restrictions head on, putting the dream of home ownership back in reach for more Americans.”