Category: Real Estate

NAR: Home Prices Accelerate in Third Quarter | Realtor Magazine

Constrained inventories are pushing up home prices at a rapid pace in nearly all major metro areas in the third quarter, the National Association of REALTORS® reported Thursday. 

The national median existing single-family home price in the third quarter was $254,000, up 5.3 percent from the median a year ago of $241,300. 

5 Priciest Housing Markets

The following housing markets were the most expensive in the third quarter, based on the median price of an existing single-family home:

1. San Jose, Calif.: $1.7 million
2. San Francisco: $900,000
3. Anaheim-Santa Ana, Calif.: $790,000
4. Honolulu: $760,200
5. San Diego: $607,000

Single-family home prices rose in 92 percent of the 177 measured markets last quarter, NAR reported. Nineteen metros saw double-digit increases in the third quarter. Only 15 metros—8 percent—recorded lower median prices than a year earlier. 

“The stock market’s climb to new record highs, the continued stretch of outstanding job growth, and mortgage rates under 4 percent kept home buyer demand at a very robust level throughout the summer,” Yun said about the results of NAR’s latest quarterly report. “Unfortunately, the pace of new listings were unable to replace what was quickly sold. Home shoppers had little to choose from, and many had outbid others in order to close on a home. The end result was a slowdown in sales from earlier in the year, steadfast price growth, and weakening affordability conditions.” 

Home prices are still far exceeding incomes in several parts of the country, particularly in the largest markets in the South and West, where new-home construction remains constrained compared to the job growth. 

To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $55,142, a 10 percent down payment would require an income of $52,240, and $46,435 would be required for a 20 percent down payment, according to NAR. 

At the end of the third quarter, there were 1.9 million existing homes available for sale, 6.4 percent below a year ago. 

Regional Breakdown

The following is how existing-home sales fared across the country in the third quarter:

• Northeast: existing-home sales dropped 7.9 percent and are 0.5 percent below a year ago. Median price: $283,800, up 4.1 percent from a year ago
• Midwest: existing-home sales decreased 3.3 percent and are 0.8 percent below a year ago. Median price: $202,400, up 5.6 percent from a year ago
• South: existing-home sales dropped 4.4 percent in the third quarter but remain 0.2 percent higher than a year ago. Median price: $226,100, up 5.5 percent from a year ago
• West: existing-home sales increased 2.8 percent and are 1.9 percent higher than a year ago. Median price: $373,700, up 7 percent from a year ago

Mortgage Rates Mostly Flat This Week | Realtor Magazine

 

 

Mortgage rates mostly held steady this week after posting a sizable jump last week. 

“Following a strong surge last week, rates held relatively flat this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate remained unchanged at 3.94 percent, while the 10-year Treasury yield dipped roughly 4 basis points. The markets’ reaction to the upcoming announcement of the next Fed chair may impact the movement of rates in next week’s survey.” 

Freddie mac reports the following national averages with mortgage rates for the week ending Nov. 2:

• 30-year fixed-rate mortgages; averaged 3.94 percent, with an average 0.5 point, the same average as last week. Last year at this time, 30-year rates averaged 3.54 percent.
• 15-year fixed-rate mortgages: averaged 3.27 percent this week, with an average 0.5 point, rising from last week’s 3.25 percent average. A year ago, 15-year rates averaged 2.84 percent. 
• 5-year hybrid adjustable-rate mortgages: averaged 3.23 percent, with an average 0.5 point, rising from last week’s 3.21 percent average. A year ago, 5-year ARMs averaged 2.87 percent. 

Despite Odds, Ownership Rate Moves Higher | Realtor Magazine

Despite tight housing inventories and rising home prices, the homeownership rate rose slightly in the third quarter and reaching the highest level since 2014, the U.S. Census Bureau reported Tuesday. 

The homeownership rate rose to 63.9 percent in the third quarter, up slightly from 63.5 percent a year ago, the Census Bureau reported. 

While the uptick isn’t considered statistically significantly, economists were still somewhat upbeat that the homeownership rate has now moved up for a second consecutive quarter. Also, more Americans are showing a preference for owning: The number of owner households increased by 755,000 from a year ago, while the number of renter households fell 348,000, according to the Census Bureau report. 

Still, finding a home remains a challenge for many Americans. The inventory levels for both new and existing single-family homes is about 20 percent below the long-term average. 

The homeownership rate sank to a 50-year low in the second quarter of 2016. It still remains below its historic norm of around 65 percent. In the years leading up to the housing bubble, the homeownership rate set a high of more than 69 percent. 

The homeownership rate is showing the largest rebound in the Midwest, where the ownership rate climbed to 69.1 percent from 68 percent in the second quarter. The Midwest is also considered a place where home prices remain relatively affordable compared with other regions of the U.S., The Wall Street Journal reports. The homeownership rate mostly remained flat in other parts of the country that have seen home prices rise more quickly. 

“The American dream of homeownership remains elusive, as the third-quarter figure shows little change in the overall  rate,” says Lawrence Yun, chief economist at the National Association of REALTORS®. “The reason is simple. There is just not enough supply of homes to fully satisfy the desire to own. The lack of inventory has pushed up home prices by 48 percent from the low point in 2011, while wage growth over the same period has been only 15 percent.”

Report: Average Owner Stays Put for 10 Years | Realtor Magazine

Homeowners continue to delay moving, as the typical seller in 2017 had stayed in his or her home for 10 years before selling—a tie for the record tenure set in 2014, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers. Homeowner tenure has steadily increased since 2009, when sellers typically lived in their home for a median of six years before selling.

Economists speculate that low inventory and soaring home prices are forcing homeowners to stay put longer. Instead, they are choosing to renovate their current homes rather than trade up. But the good news is that homeowners are accruing more equity: The typical seller saw a gain of $47,500 this year, according to NAR’s report.

Not surprisingly, the longer the homeowner was in the home, the more equity they tended to have. Homes sold after 21 years of ownership saw the largest equity gain, at 104 percent, while homes sold after six or seven years of ownership saw a 27 percent return, according to the report.

When buyers do move, they tend to trade up to something bigger. Fifty-two percent of sellers say they planned on purchasing a bigger home, an increase from 46 percent in 2016, according to NAR’s report. “The uptick in repeat buyers trading up to a larger home reflects the more favorable conditions for home shoppers at the upper end of the market, where listings are more plentiful and sales have been consistently higher over the past year,” says NAR Chief Economist Lawrence Yun

California home prices on track to hit a record high in 2018, Realtor forecast says – Orange County Register

California’s five-year run of rising home prices is expected to last another three to five years, with median house prices on track to beat the record highs set during the housing bubble, a Realtor economist said Thursday, Oct. 12.

The California Association of Realtors forecast home prices will increase an additional 4.2 percent in 2018, rising to $561,020. If the forecast proves accurate, that existing single-family home price will exceed the record high of $560,270 set in 2007. Prices, however, will remain well below pre-recession records when taking inflation into account.

Single-family home sales also are projected to increase in the state next year, but at a much more modest pace, the Realtor forecast said. CAR projected 426,200 houses will change hands, up 1 percent from this year’s level.

Overall, the gains in both house prices and sales are lower than in past years, perhaps signaling the California housing market’s “rate of acceleration has been slowing,” said CAR Chief Economist Leslie Appleton-Young.

Southern California home prices are expected to rise at roughly the same pace in 2018 and to match the statewide median, Appleton Young said.

The big mystery in the housing market, however, is why the pace of sales and price growth isn’t higher given that jobs and incomes have been rising. The answer lies in twin ills that have plagued the housing market for the past four years: Too few homes for sale and too few buyers able to afford those that are on the market at today’s prices.

“It’s so odd to look at this in an environment where you’ve seen such rapid job growth and income growth and low (mortgage interest) rates,” Appleton-Young said. “A lack of inventory and affordability … are really keeping a lid on the California housing market. We have fewer transactions … today than when we had 10 million fewer people living in California.”

Pulling out an old economics lesson, Appleton-Young noted that high home-price appreciation usually leads to “a supply response” — that is, more homeowners taking advantage of higher prices.

“We just haven’t seen that happening,” Appleton-Young said.

The reason, she said, is home sellers face possible consequences after big price gains. Not only do they lose their Prop. 13 tax advantages when they move, they also can face a capital gains tax on profits that exceed $250,000 for individuals and $500,000 for married couples.

Meanwhile, buyers are constrained as well, the economist noted. Rents have been rising so fast that few millennials can save up for a down payment to buy a home.

While half of Californians could afford the median-priced house when the market recovery started in 2012, only 26 percent will be able to afford a detached, single-family home next year, the forecast said.

A lack of homes for sale — due in part to underbuilding — has become the new norm, Appleton-Young said. But the scarcity is most pronounced for lower-priced, entry-level homes for first-time buyers.

“The low end is kind of disappearing,” she said. “It pushes people inland. It pushes people out of state.”

CAR also expects mortgage interest rates to rise slightly next year, but not enough to deter homebuyers. Rates for traditional 30-year, fixed mortgages are forecast to rise to 4.3 percent in 2018. That’s still low compared with historical averages but up from 4 percent this year and 3.6 percent in 2016.

If rates were to go much higher, “housing will be hit hard,” Appleton-Young said. She doesn’t expect that to occur, however. Instead, Appleton-Young expects home prices to continue rising for the next few years.

“I know that this cycle will not last forever,” Appleton-Young said. “I would guess we’ve got maybe three to five more years where things can eke out the kind of increases that we’ve seen over the past couple of years.”

6 Tips on How to Get Your Home Ready for Sale | RealtyBizNews

Here is how:

1. Un-personalize the house

This is what other people call disassociating yourself with the house. To do this, you will need to learn how to let go. This is because un-personalizing your home means removing pictures and other items of sentimental value to your home. Packing away your family heirlooms and will be difficult but essential.

If there are built-in items you want to take with you, remove or replace them.

2. De-cluttering

Every home has loads of junk. For example if you are a tutor, you will have to get rid of the notes you no longer need. Consider this, if you haven’t used it in the past year, you don’t need it; so, you can donate it or even throw them away.

Pack away your knick-knacks, remove books from the bookcases, pack essentials in a small box and clean out everything from the kitchen counters.

3. Reorganize storage cabinets and bedroom closets

Buyers will snoop in your house, and you want everything to appeal to them. The organization of the storage cabinet and the bedroom closets say a lot about your neatness and the care your home received.

For spice jars, arrange it in alphabetical order and stack dishes away neatly. The cups’ handles should all face the same direction, shoes lined and shirts hanged together.

4. Rent a Temporary Storage

You probably have loads of extra and unnecessary furniture. Since you want your home to sell fast, you’ll have to keep it as neat as possible. Spaces look better with less furniture so, you should stow away the extra furniture in storage. You can put away the bookcases too leaving the house with just what you need. Less furniture also makes the purpose of the room clear.

You should also keep away some clothes – all homes have extra clothes that aren’t worn, and they will only make your closet look disorganized.

5. Light up the house

Lighting is one of the biggest selling points for homes. So, you should let in more light by pulling down the drapes, changing the lampshades and clean the windows. You can also increase the wattage of your bulbs. If there are bushes outside the house, cut or prune them to let in more light. A sellable house is a cheery house.

6. Conceal all critters

Though dogs and cats are adorable, they aren’t a favorite to everyone. That means that not everyone will appreciate the wagging tails, smelling litter boxes or bowls of dog food. In most cases, these make your home appear dirty, and it won’t sell. So, you should send critters to the pet hotel for a day.

Final Thoughts

You’ll need to be ready to show the house and the how should be show-ready as long as it is on the market. Stripping the home-feel from the house is critical. Finally, first impressions, especially in the kitchen matters.

What Home Insurance Doesn’t Cover | Realtor Magazine

A home insurance policy won’t cover every thing that could possibly go wrong with a home. The details are all in the fine print within the policy.

“Insurance policies are like snowflakes; no two are exactly the same,” Ashleigh Cloud Trent, an insurance adviser with Swingle Collins and Associates in Dallas, told realtor.com®.

Many standard policies do not include a few things that homeowners may assume they cover. Homeowners may need to investigate supplemental coverage. Here are a few common things that aren’t covered by homeowners insurance:

Home renovations

Homeowners will need to take out a specific renovation policy if they’re doing major work to their home. A renovation policy will cover potential liability issues, such as if someone gets hurt on your property during the remodel. “It’s OK if you’re just doing cosmetic updates; but if you’re taking the roof off, that’s more than a standard homeowners policy is designed to protect,” says Trent.

Earthquakes and floods

Homeowners will need to get earthquake insurance if they want to be protected. Standard homeowner coverage isn’t usually protective from damage in earthquakes, leaving you paying for repairs. Floods aren’t often covered in standard insurance policies either and require supplemental insurance.

Slow water leaks

Damage from “seepage and leakage” can also be denied for coverage. Water damage usually has to be “sudden and accidental” to be covered, Trent says. Trent offers up one example: “A client whose contractor nicked a pipe behind a wall. The pipe was connected to a seldom-used guest bathroom, so nobody noticed the leak. When they rented out the home years later, the tenants called a few months later to report that the floorboards were warping.” The damage was $25,000, and the homeowners insurance wouldn’t pay any of it.

Smell damage

Most policies won’t cover smells that linger around your home and possessions. “We had a client in the process of renovating a home who put all of their belongings in a storage unit that happened to be right next to a restaurant,” says Trent. “When he went to get his things back, all his possessions, including his mattress, permanently smelled like curry.”

Sewer and drain backups

Homeowners may also be stuck with the bill if their sewer backs up into their home. “In a lot of places, when there’s serious rain, the sewers and drains can back up into people’s homes,” says Trent. “Not all policies will cover that.”

4 Social Benefits of Homeownership | Realtor Magazine

Improved educational performance, higher civic participation, lower crime rates, and improved health remain the biggest social benefits linked to homeownership, according to a new research paper by NAR Chief Economist Lawrence Yun and research economist Nadia Evangelou, which appears in The Journal of the Center for Real Estate Studies. Some findings from the latest research cited in the paper include:

Health. Children of homeowners tend to be happier and healthier than children of nonowners, even after factoring in income and education levels. More recently, studies have found the wealth-building effect of homeownership and the sense of control it often brings in a stable housing market can positively affect homeowners’ mental and physical health. On the other hand, some studies suggest that areas where housing distress is high tend to see greater rates of mental health and stress-related health diagnoses among residents.

Crime. Research has confirmed homeowners have a lower instance of involvement in crime than nonowners. Also, neighborhoods with stable housing options—regardless of ownership structure—are more likely to have lower crime rates. Some studies have found, however, that foreclosure levels do influence burglary and violent crime rates.

Education. Researchers have found homeowners tend to accrue more wealth and save more money—such financial practices are associated with lower rates of homeowners’ children dropping out of school.

Civic engagement. Homeownership and residential stability continues to be linked with an increased likelihood of electoral participation. Homeowners remain more likely to participate in local elections and civic groups than renters, the paper states.

“Owning a home embodies the promise of individual autonomy and is the aspiration of most American households,” the researchers note. “Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family, and civic outcomes.”

Upscale Staging Is Key in Luxury Condos | Realtor Magazine

Looking to get your listing noticed on the higher end of the market? Condo developers in this segment say they lure affluent buyers with models that feature brand-name goods and high-end finishes.

“You want customers to daydream a little bit. Everyone always buys what they see,” Alexander Hovnanian, developer of Nine on the Hudson, a 13-story luxury condo under construction in New Jersey, told The Wall Street Journal. The building’s units will range from about $675,000 to $6 million.

Developers are carefully outfitting models with features such as custom-designed closets, one-of-a-kind artwork, designer light fixtures, and top-notch luxury goods that promote a lavish lifestyle.

Designers do have to make some assumptions when staging luxury units. For example, they’ve found that younger buyers tend to prefer smaller units with pared-down modern furnishings and bright colors. On the other hand, larger units often will include more traditional interiors to attract buyers who are downsizing from a larger home, Highlyann Krasnow, principal at the Design High, an interior design firm based in New York, told The Wall Street Journal.

The idea that staging can make a difference is backed up many agents and brokers outside of the design community. Thirty-one percent of buyer’s agents say that staging a home can increase its value by up to 5 percent, according to a recent survey of nearly 2,000 agents by the National Association of REALTORS®. 

Buyers who peruse a staged model unit may be able to make their buying decision faster because it can even evoke feelings of happiness, says Stephen Conroy, an economics professor at the University of San Diego who studies real estate amenities. When buyers can see a unit in person rather than try to visualize it on paper, the experience of seeing and feeling the various finishes offers up “an emotion that’s going to enter into the buying decision,” Conroy told The Wall Street Journal.

New-Home Sales Hit 10-Year High | Realtor Magazine

Sales of newly built single-family homes rose 18.9 percent last month, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This represented the highest sales rate since October 2007, with a seasonally adjusted annual rate of 667,000 units, after an upwardly revised August reading. Compared to last year, new-home sales are 8.6 percent above their level during the same period in 2016.

“New-home sales have bounced back from a few soft months and have returned to the strong growth trend we saw earlier this year,” says National Association of Home Builders Chief Economist Robert Dietz. “As existing home inventory remains tight, we can expect new homes sales to continue to make gains in the months ahead.”

These gains in sales continue alongside tight inventory, providing downward pressure on affordability. In a recent REALTOR® Magazine column, National Association of REALTORS® Chief Economist Lawrence Yun urged the industry to recognize the impact that the “massive housing shortage” has on the overall the economy: “We need more construction. An economic boom, not unlike the one we had almost 70 years ago, could result.”

Looking deeper into the sales data, realtor.com Chief Economist Danielle Hale noted a contrast between pricing and the amount buyers ultimately pay for new homes. “The growth in prices for new homes also shows signs of slowing, though that hasn’t yet appeared in home listing prices, which are up 10 percent from a year ago,” she says. “The discrepancy between list price increases and sales price increases suggests that some buyers may have reached a limit on the price increases they can afford, but sellers have not yet caught on.”

New-home sales increased in all four regions, rising 33.3 percent in the Northeast, 25.8 percent in the South, 10.6 percent in the Midwest, and 2.9 percent in the West. Home sales in the South had been greatly hampered by hurricane-related setbacks. All regions showed an increase in sales from last month, and all regions except the Midwest also show growth when compared to a year ago.