More Renters Express Doubt About Owning

Daily Real Estate News | Wednesday, July 13, 2016

Renters are taking a dimmer view of home ownership as concerns over housing affordability and student debt have a larger influence on their attitudes, according to the National Association of REALTORS®.

NAR’s latest Housing Opportunities and Market Experience (HOME) survey found a growing disconnect in the morale among home owners versus renters about home ownership. The share of renters who think now is a good time to buy a home dropped to 62 percent in the second quarter of this year — down from 68 percent in December 2015 — with those under the age of 35 expressing the least amount of confidence in buying. Eighty percent of home owners, on the other hand, believe now is a great time to purchase a home.

“Existing-home prices surpassed their all-time peak this spring and have climbed, on average, over 5 percent nationally through the first five months of the year — and even faster in areas with severe supply shortages,” says NAR Chief Economist Lawrence Yun. “Most home owners appear to realize that if they’re ready to sell, they’ll likely find a buyer rather quickly and be able to use the sizeable equity they’ve accumulated in recent years towards their next home purchase. Meanwhile, renters interested in buying continue to face minimal choices, strong competition, and home prices growing faster than their incomes. … Given these affordability pressures, it’s no surprise respondents earning over $100,000 and those living in the Midwest — the most affordable region of the country — are the most optimistic about buying right now.”

Student debt is making many people uneasy about taking on additional debt to purchase a home. Two-thirds of non-home owners and half of those under 35 with student debt say they aren’t comfortable adding a mortgage on to their debt load, according to the HOME survey. They also were less likely to believe they’d even qualify for a mortgage.

“It’s becoming very evident from this survey and our research released last month that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers,” Yun says. “At a time of quickly rising rents, mortgage rates at all-time lows, and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market and are ultimately missing out on the stability and wealth accumulation that owning a home can provide.”

Economists are predicting that strong home-price appreciation will continue in the coming months throughout most of the country. As such, a growing number of current home owners — 61 percent — say they believe it’s a good time to sell compared to 56 percent who said so in the first quarter of this year. Survey respondents who live in the West were most likely to say now is a good time to sell but were also least likely to say now is a good time to buy, according to the survey.

“More home owners acknowledging this pent-up demand may perhaps mean we begin to see more supply come online in the near future,” Yun says.

Source: National Association of REALTORS®

Mortgage Rates Near All-Time Lows

Daily Real Estate News | Friday, July 08, 2016

Mortgage rates hit a new 2016 low this week, and they’re also nearing the lowest averages ever recorded. Freddie Mac reports the 30-year mortgage rate is close to the November 2012 record low of 3.31 percent.

“Continuing fallout from the Brexit vote drove Treasury yields lower again this week,” says Sean Becketti, Freddie Mac’s chief economist. “ The 30-year fixed-rate mortgage followed Treasury yields, falling 7 basis points to 3.41 percent in this week’s survey. Mortgage rates have now dropped 15 basis points over the past two weeks, leaving them only 10 basis points above the all-time low.”

Freddie Mac reports the following national averages with mortgage rates for the week ending July 7:

30-year fixed-rate mortgage: averaged 3.41 percent, with an average 0.5 point, dropping from last week’s 3.48 percent average. Last year at this time, 30-year rates averaged 4.04 percent.
15-year fixed-rate mortgages: averaged 2.74 percent, with an average 0.4 point, falling from last week’s 2.78 percent average. A year ago, 15-year rates averaged 3.20 percent.
5-year hybrid adjustable-rate mortgages: averaged 2.68 percent, with an average 0.5 point, falling from last week’s 2.70 percent average. A year ago, 5-year ARMs averaged 2.93 percent.

Source: Freddie Mac

Buyers Gaining Upper Hand in Luxury Market

Daily Real Estate News | Thursday, June 16, 2016

The number of luxury homes for sale is growing, and that is unlocking some deals for potential buyers, The Wall Street Journal reports.

Indeed, inventory of homes priced between $500,000 to $750,000 increased nearly 16 percent in March compared to a year ago, according to data from NAR. What’s more, inventory for real estate priced more than $1 million increased 12.6 percent year-over-year.

As more expensive homes linger on the market, buyers are finding more bargaining power.

For sellers, this may be a tough realization that the power is shifting. Shannon Baird, a broker with Living Room Realty in Portland, Ore., says that a major challenge is changing the mindset of home sellers who are hearing news of quick sales and bidding wars. But that’s not the case in the upper price bracket in many markets.

Stock market volatility has made some wealthy buyers more cautious to jump into a big home purchase at the moment. Also, fewer foreign buyers are on the market as the dollar strengthens, says Lawrence Yun, NAR’s chief economist.

“The stock market has come back up, but we don’t know yet if that means the upper-end home buying market will begin to return,” Yun says.

Source: “Lagging Demand for Luxury Homes May Mean Deals for Buyers,” The Wall Street Journal (June 15, 2016)

Where Properties Are Selling the Fastest

Daily Real Estate News | Wednesday, June 08, 2016


Properties are selling faster. Nationwide, properties were on the market for an average of 39 days in April.

Short sales were on the market for the longest amount of time, at 120 days. Foreclosed properties stayed on the market for just 51 days, while nondistressed properties had the fastest sales at 37 days, according to the April 2016 REALTORS® Confidence Index Survey Report.

About 45 percent of properties across the country were on the market for less than a month when sold. Only 13 percent were on the market for longer than six months.

The markets seeing sales at some of the fastest rates – within a month or less – were the District of Columbia, Washington, Oregon, California, Alaska, Minnesota, Nebraska, Colorado and Texas.

Take a look at the chart below to see how quickly homes are selling in your state.

A map displaying each state’s median days on market for home sales.

A map displaying each state's median days on market for home sales.

Source: “In What States Did Properties Sell Quickly in February-April 2016?” National Association of REALTORS® Economists’ Outlook blog (May 31, 2016)

Investors Upbeat, Yet Cautious About 2016

Daily Real Estate News | Monday, March 07, 2016

Investors are bullish for real estate, but they still have some hesitations, a new study says.

Ninety-one percent of recently surveyed senior commercial real estate executives say they expect real estate fundamentals to be about the same or better this year, according to KPMG’s 2016 Real Estate Industry Outlook Survey. That said, investors say they are growing more cautious about the ability to expand their portfolios and are taking steps to “de-risk” their portfolios, the survey found.

Only 8 percent of investors surveyed by KPMG say they will enter new markets. That is down from 28 percent last year.

“Investors are becoming more cautious in their decision-making as we near the end of the economic cycle, leading to changes in operations, portfolio management decisions, and the timing of their investments,” says Greg Williams, national sector leader, building, construction and real estate. “They need to be prepared for the coming change in momentum.”

Seventy-four percent of survey respondents say they expect foreign investment in U.S. real estate to increase over the next 12 months. They attribute the main reasons behind that expected surge as low interest rates, tax incentives in the U.S., and favorable risk versus return in U.S. real estate markets.

“Strong economic fundamentals, a reliable legal system, and other structural advantages in the U.S. have continued to fuel foreign interest in the U.S. real estate market,” says Williams. “The continued inflow of foreign capital has led to a significant increase in competition for the best investments, leaving many investors with a major challenge in their hunt for yield across a variety of assets and markets.”

Investors continue to be the most bullish about multifamily properties. Also, the senior executives surveyed say they are growing more upbeat about healthcare investment prospects in development, likely due to a rise in healthcare demand from aging baby boomers.

Senior execs surveyed say they are looking for opportunities to add to their portfolios without adding greater risks, however.

“This ‘de-risking’ seeks to balance the sustained interest in U.S. real estate with a growing conviction that the market’s growth trajectory may be turning soon,” says Williams.

Source: KPMG 2016 Real Estate Industry Outlook Survey (February 2016)

A 10-Year Housing Surge on the Horizon?

Daily Real Estate News | Wednesday, August 26, 2015

The housing market is poised for one of its largest expansions in history. By 2024, demographic and economic changes are forecasted to bring 15.9 million additional households on board, according to a new study released by the Mortgage Bankers Association.

That means an average of 1.6 million additional households per year, sparking “housing market growth over the next decade that would be among the strongest the U.S. has ever seen,” according to the report.

The MBA report says the bulk of that growth will be from increases in the number of households who are headed by those age 60 and older and households headed by age 45 and younger. Those age group increases are expected to mitigate the decline among households age 45 to 60.

Why you shouldn’t be alarmed by dips in home ownership rates

“An aging population should gradually increase demand for home ownership, partially offsetting the influence of a more racially and ethnically diverse population on home ownership rates,” the MBA report notes.

The Census Bureau projects the following breakdown in ages emerging in 2024, as compared to 2014:

20 million more people age 60 and over than there are today (as Baby Boomers age),
4 million fewer people age 45 to 59 (as the large Baby Boomer cohorts are replaced by smaller Generation X cohorts) and
18 million more people age 18 to 44 (as smaller Generation X cohorts are replaced by larger Millennial cohorts)

Household growth is also expected to be driven by 5.5 million additional Hispanic households. For other races, 3.4 million additional non-Hispanic White households are expected to form by 2024, 2.4 million additional black households, 1.8 million more Asian households, and 730,000 additional other households.

Source: “Housing Demand,” Mortgage Bankers Association (2015)

Property Taxes Are Highest in the U.S.

In an international comparison of property taxes, the United States has the highest amount in taxes collected on properties.

Read more: Foreign Buyers Spend More on US Real Estate

The average share of total government tax collections due to real estate property taxes (recurrent taxes on immovable property) was 3.347 percent worldwide. But in the U.S., that percentage bloomed to an 11.35 percent share, according to the Organisation for Economic Cooperation and Development.

For just residential properties, the OECD found the average reporting nations worldwide was just 1.035 percent for 2011. In the U.S., that percentage was 4.64 percent of U.S. tax receipts in 2011 and property taxes for owner-occupied housing totaled just under $200 billion.

“These estimates make clear the degree to which the U.S. relies on property tax collections more than other nations,” according to the National Association of Home Builders’ Eye on Housing blog. “There are many reasons for this, including the fact that U.S. property taxes are collected by state/local governments. The U.S. also has an overall lower tax burden than other nations. According to the same OECD data, taxes from all sources made up 24.4% of GDP in the U.S., compared to 33.7% average for all OECD nations.”

Source: “An International Comparison of Real Estate Property Taxes,” National Association of Home Builders’ Eye on Housing blog (July 21, 2015)

47% of Homes Are Selling in Less Than a Month

In some cities across the country, homes are selling faster than ever.

Nationally, properties typically stayed on the market for 34 days in June, the shortest number of days since the National Association of REALTORS® began tracking in May 2011. Short sales spent the most time on the market with a median of 129 days, foreclosures sold in 39 days, and non-distressed homes were on the market for 33 days. NAR reports that 47 percent of homes sold in less than a month in June.

Read more: Home Prices Reach an All-Time High

The real estate brokerage Redfin’s barometer is showing the median time on the market dropped to just 26 days in June, the shortest time on record. In some hot housing markets, homes were falling under contract in 11 days or less.

Denver homes sold in six days or fewer in June; Seattle’s median was nine days; Portland was 10 days; and Boston was 11 days, according to Redfin.

But some cities are seeing longer selling times. For example, the median time on the market for homes in Brownsville, Texas was 122 days; Myrtle Beach, S.C., was 105 days; Miami was 75 days; and metro New York 68 days, according to June data from®, which is based off of information from local MLSs nationwide.

The strength of the local economy, employment and income growth, and low inventories of homes for sale compared to demand are all factors that lead to faster selling times, according to economists.

Source: “Selling Times Reaching New Lows,” The Seattle Times (July 28, 2015) and “Home Prices Reach an All-Time High,” REALTOR® Magazine Daily News (July 23, 2015)®: ‘This Is No Housing Bubble’

Daily Real Estate News | Wednesday, April 29, 2015

Home prices are rising at a more rapid pace than they were just a few months ago, as demand outpaces supply. Existing-home sales surged 9 percent year-over-year in March and home prices were up 8 percent over last year, according to the National Association of REALTORS®. What’s more, with tight inventories plaguing many markets, the median list price in March climbed 11 percent over last year, reaching $220,000,® reports.

Existing-home sales report: Home Sales Surge to 18-Month High

With home prices heating up again, could the housing market be heading for another bubble?

“During the peak years of the housing bubble, from 2003 to 2005, the data on supply versus price appreciation looked very similar to what we are seeing now,” writes Jonathan Smoke,®’s chief economist, in recent commentary at the site. “But there are key differences, which is why I’m confident that on the national level, this is no bubble.”

Smoke says these home price increases will stick because the market is correcting for severe price declines in the recent past. Prices rose 7 percent and 12 percent in 2012 and 2013, respectively. Median prices have climbed less than 8 percent on a compounded annual basis over the past three years. On the other hand, from 2002 to 2005, median prices rose 10 percent on a compounded annual basis – and had no justification of a bounce from a prior decline, Smoke says.

“On an inflation-adjusted basis, we are 30 percent beneath the peak set in 2005,” Smoke notes. What’s more, “relative to rents or incomes, median home prices are not ‘unhinged’ from long-term averages,” Smoke writes. In 2005, the price-to-rent ratio was 35 percent higher. Currently, the price-to-income ratio is where it was in 2001 and it is about 30 percent below where it was in 2005.

Smoke also notes that during the housing bubble, mortgage financing saw rapid expansion, and flipping activity based on speculative investing soared—neither of which are occurring now.

“Today’s higher prices are only to be expected as the economy improves and first-time buyers gradually return to the market,” Smoke writes. “Eventually, those higher prices should encourage more owners to list their homes and builders to start construction on new housing—which in turn should solve the problem of supply.”

Source: “Home Prices Are Climbing Faster and Faster, but This Is Not a Bubble,”® (April 24, 2015)

The Top 10 Features for New Homes

Daily Real Estate News | Monday, April 06, 2015

The outdoor kitchen and two-story foyers are starting to lose favor among new home shoppers, while energy efficiency and bigger closets are gaining in popularity, according to a new survey from the National Association of Home Builders. NAHB asked builders to rank home features from 1 to 5 on how likely they were to include them this year in single-family homes they build this year.

An increased interest in energy efficiency is decreasing interest in two-story foyers and rooms, Rose Quint, NAHB’s assistant vice president for survey research, told MarketWatch. “Consumers consider those spaces to be energy inefficient,” she says.

Here are some of the least likely features that builders say they will include in new homes this year:

Outdoor kitchen (cooking, refrigeration, and sink)
Laminate countertops in kitchen
Outdoor fireplace
Two-story family room
Media room
Two-story foyer
Walking/jogging trails in community
Whirlpool in master bathroom
Carpeting as flooring on main level

On the other hand, these home features, builders say, are most likely to be included in a new home this year:

Walk-in closet in master bedroom
Laundry room
Low-e windows
Guest room (kitchen-family-room-living room)
Energy-star rated appliances
9-foot ceiling or more on first floor
Energy-star rated windows
Programmable thermostat
Two-car garage
Granite countertop in kitchen

Source: “Whirlpool Bathtubs are Losing Out in New Homes,” MarketWatch (April 2, 2015)