More Homes for Buyers?

more homes for buyers
Strength of the housing market

If you’ve been following the housing market, you know that housing experts have been declaring a home sale inventory shortage since 2013.  In NAR’s November 27th Pending Home Sales Index release, NAR chief economist Lawrence Yun partly blamed October’s 1.7 percent decline to “inadequate levels of inventory across the country.”  He stated “There is no shortage of buyers seeking homes, but a lack of available units continues to drag down the nation’s housing market and overall economy.” Essentially, there needs to be more homes for buyers.

However, if reporting holds true, the home sale shortage may be ending soon.  The most recent housing permits report indicates that more new homes will be built, while media attention to a “silver tsunami” suggest more homes for buyers will hit the market.

October’s increased housing permits suggest an increase in new homes to be built next year.  According to a recent report, housing permits reached a post-recession high (Housing Permits Surge to Postrecession High; magazine.realtor; November 20, 2019).  Although permits are just an estimate for future construction, it is nonetheless relevant because, like pending home sales, it gives a hint of the potential for future home sales.  Single family permits reached 1.46 million units during October, which is an increase of about 5 percent.  October was the second-best month for housing starts this year.

Lawrence Yun, NAR chief economist, stated, “At 1.46 million units on an annualized basis, housing permits are nearly to the level needed for the country over the long haul.  Since new-home construction kicks off the chain reaction of people trading up and trading down by buying new and selling their existing homes, more housing inventory will surely show up in the market next year.” 

Robert Dietz, the National Association of Homebuilders chief economist, commented about demand for new homes, “The increase in buyer demand is also being driven by lower mortgage rates, which has been helping to lift the pace of single-family permits since April. Solid wage growth, healthy employment gains, and an increase in household formations are also contributing to the steady rise in home production.”

What about existing homes?  According to Zillow Research, there will be about twenty million additional existing homes that will be for sale through the mid-2030’s (The Silver Tsunami: Which Areas will be Flooded with Homes once Boomers Start Leaving Them; Zillow.com; Nov. 22, 2019).  These home owners are 60 years-old or older, and will eventually sell their home because of health, retirement, relocation, and death.  There will be regional differences depending on the number of senior home owners.  Zillow indicates that the Tampa and Tucson markets are likely to be affected most.

The “silver tsunami” is not a new concept.  It was postulated in a 2012 NAR article The Boomer Effect.  The article surmised that since Baby Boomers began turning 65 on January 1, 2011, there would more homes for buyers and that the inventory would overwhelm the market.  However, we are still waiting for the tsunami. As it turned out, the post-recession economy significantly changed, as did attitudes toward housing.  Multi-generational households increased, and seniors are aging in place.

Will the anticipated increased number of new and existing homes to be sold provide the boost to home sales numbers?  Maybe, if the added inventory is attractive to home buyers.  It has been clear that home buyers will opt for value in a turn-key home.  Home sellers need to keep in mind that home buyers are looking for affordable quality homes.

Original article is published at https://dankrell.com/blog/2019/12/20/more-homes-for-buyers/

By Dan Krell
Copyright© 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Housing Market 2020

housing market 2020
Real estate market (infographic from keepingcurrentmatters.com)

After the unexpected slowdown of existing home sales last fall, most real estate agents had optimism for the 2019 spring market.  However, many were surprised by the early spring reporting of mixed housing data (when all indicators should have been positive).  Although national stats for spring seemed to be pushing upward, some regional markets didn’t perform as expected (Mid-Atlantic home sales declined at the beginning of the spring).  What’s in store for housing market 2020?

Many experts cited a number of factors were to blame for the decrease in sales.  Industry experts agreed that the lack of quality homes for sale was a top concern.  In hindsight, last fall’s home sale slowdown into spring may just have been an aberration.  But it may also have been an indicator that correctly predicting the housing market is increasingly difficult and subject to local factors.  Nonetheless, economists have predictions for housing market 2020 .

At this year’s NAR’s 2019 Realtors Conference & Expo (Housing Experts Discuss 2020 Outlook, Housing Innovation at Realtors’ Expo; nar.realtor; November 9, 2019), we heard opposing views about the economic outlook and the housing market 2020 .  First, it’s not unusual to hear NAR’s chief economist Lawrence Yun to speak of the housing market optimistically.  Although he doesn’t expect a recession next year, he does caution that global economics could impact the US such that it could hamper growth.  Yun stated a common assessment by economists, which is that home sale inventory is low.  He stated “The U.S. is in need of more new housing…This is an incentive for builders to start more construction. If they do, I think we will have at least 12 consecutive years of economic expansion.

Contrasting Yun’s economic assessment, Kenneth T. Rosen, chairman of the Rosen Consulting Group, expressed a risk of a recession due to economic trade and politics.  However, Rosen conceded that as long as the job market continues to remain strong, the US economy will likely remain robust. 

Speaking of jobs and home sale inventory, a recent market assessment by Ralph McLaughlin of CoreLogic (Homeownership Rate Jumps on the Tail of Low Mortgage Rates; corelogic.com; October 29, 2019) indicated that the recent jump in the homeownership rate is an indicator that there is an “upward” trend in home buyer demand.  The 1.4 million new home owners in 2019 is a taken as a positive sign that buyer demand remains high, and is expected to drive the housing market in 2020.  However, just like earlier this year, low home sale inventory and “underbuilding” could damper next year’s home sales stats.   

So, demand for housing will be strong next year, but what about home prices…

Molly Boesel of CoreLogic reported on home sale price growth and expectations for the housing market 2020 (Home Price Growth Regains Momentum; corelogic.com; November 5, 2019).  September’s 3.5 percent CoreLogic’s Home Price Index (HPI) increased slightly from August, which continues the six-month increase of home price growth.  The steady increase in national home prices indicate a “regained momentum.”  CoreLogic forecasts national home prices to increase 5.6 percent for September 2020.

The S&P Case Shiller Home price Index (spindices.com) corresponds with current national home price growth with a 3.2 percent September index, which is higher than August’s 3.1 percent index.  However, future home price growth may depend on regional shifts in home sales and job opportunities.  Seattle and Las Vegas dropped out of the top four cities, as it was noted the “hot housing markets” are now in the southeast markets of Charlotte, Tampa, and Atlanta. 

Original article is published at https://dankrell.com/blog/2019/12/05/housing-market-2020/

By Dan Krell
Copyright© 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Holiday Home Selling

holiday home selling
Home staging during the holidays (infgraphic from nar.realtor).

Conventional real estate wisdom used to be that timing the market was the key to listing your home for sale.  Most home sellers tried to aim for the spring and early summer months to sell their homes.  In fact, June continues to be when most settlements occur.  However, selling strategies have changed over the last few years such that home sellers are confidently listing in the fall.  Many also hold nothing back to sell during the winter months.  But how about holiday home selling?

The holiday season is typically when the real estate industry slows to a crawl.  But it doesn’t mean that the housing market is closed!  Consider that there were 658 Montgomery County MLS listed homes that went under contract since the beginning of November.  This confirms that active home buyers are constantly searching for homes, and will certainly visit houses that are available during the holiday season.  The only obstacle for home buyers (and your home sale) is severe weather.  

Holiday home selling is not for everyone. If you have not yet listed your home for sale, you may consider waiting to list after Thanksgiving.  Or you may just decide to wait until the new year.  Your listing strategy should be based on your lifestyle.  Although the holiday season is often synonymous with joy and good cheer, many experience increased stress during this time.  If the holidays are a hectic time for you, the thought of the additional stress of selling your home may sway you to waiting the holidays out.  Keep in mind that, like any other time of the year, you still have to prepare your home for sale (which includes decluttering, repairs and staging).

If your home is already listed for sale, you have some choices.  It used to be the rule that if your home was still on the market approaching Thanksgiving that the listing would be pulled from the MLS until spring.  And as of the November 1st, 181 county homes have been pulled off the MLS.  You may decide to do the same. 

But keeping your home on the market during the holiday season is no longer taboo.  As I mentioned earlier, conventional wisdom is passé.  Some home sellers see an opportunity to sell during the holiday season as many homes come of the market.  Consider that since November 1st, there were 444 new MLS listings.  There are also another 46 homes currently listed as “coming soon.”

Obviously, if your home is vacant it’s easy to show.  However, you should still visit the home weekly to make sure it is clean and shows well.  But if you’re selling the home where you reside during the holiday season, you may want to think about showings and staging.  Talk to your agent about requiring home buyer appointments to view the home so you don’t have inopportune surprise visitors.  This will give you the flexibility and emotional space to have your home show its best while you enjoy the holidays.

What about holiday decorations and holiday home selling staging?  According to Melissa Dittmann Tracey, writing for the NAR blog (Should You Stage Homes for the Holidays?; nar.realtor; December 19, 2011), most real estate professionals tell their clients to stage with “holiday-spirit and glow.”  Although thirty-seven percent of professionals indicated that they advised holiday staging without religious decorations, twenty-eight percent advised their clients to also include their religious decorations.  Only eight percent of professionals surveyed advised to do generic staging without any holiday decorations.

Original article is published at https://dankrell.com/blog/2019/11/28/holiday-home-selling/

By Dan Krell
Copyright© 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Great time to buy a home

great time to buy a home
Should I Buy Now or Wait? (infographic from keepingcurrentmatters.com)

If you’ve been waiting to buy a home, now may be your time to jump into the market.  Maybe you’ve been wary of home prices, or concerned about mortgage rates.  Maybe you’ve been attempting to “time the market” to get a good deal on a home.  Regardless of your reason for waiting to buy a home, you shouldn’t ignore the current market conditions.  It’s as if a perfect storm of home buying conditions is lining up to a great time to buy a home.

The big news is that mortgage interest rates continue to drop.  National average mortgage rates have been declining since the fall, moving closer to the historic bottom!  The May 30th U.S. weekly average for a thirty-year fixed rate mortgage provided by the Freddie Mac Primary Mortgage Market Survey(freddiemac.com) dropped to 3.99 percent.  Mortgage News Daily’s Matthew Graham reported on June 3rd that mortgage rates dropped further (mortgagenewsdaily.com).  Graham’s title “Mortgage Rates Continue to Plummet” is telling.

Although economists express confidence in the economy, they attribute the movement in mortgage interest rates to the current trade wars and bond market activity.  The mortgage industry may also be anticipating a Fed rate cut at the next week’s meeting of the Open Market Committee.

Lower mortgage rates aren’t always a reason to take the plunge into the housing market.  But what about moderating home sale prices?  The FHFA Home Price Index (fhfa.gov) indicates that nationwide average home prices increased only 1.1 percent during the first quarter of 2019!  Compared to the year-over-year 5.1 percent HPI increase, the modest first quarter gain may indicate a more affordable housing market.   Locally, the Montgomery County year-over-year average home sale price only increased 0.2 percent, according to MarketStats by ShowingTime (getsmartcharts.com).  However, the average price per square foot decreased 14.3 percent!

Another factor making it a great time buy a home is the lackluster spring home sales.  Counter to what is expected, home sales have somewhat cooled during the spring.  A May 30th NAR press release titled “Pending Home Sales Trail Off 1.5% in April” indicates that national home sales have been declining.  In fact, the forward-looking indicator based on contract signings dropped 1.5 percent this past month.  The total pending home sales in Montgomery County dropped about 2.8 percent compared to last spring. 

There are increasingly more housing choices.  Although housing supply remains tight, there were about 2.5 percent more new listings this April compared to the same time last year.  Although many of these new listings go quickly, increasing new listings mean that there are more home sellers that are entering the market this year giving you more homes to consider.

Putting all the data points together signify a great time to buy a home.  Housing affordability has increased, partly due in part by increasing family incomes, lower mortgage rates, and moderating home prices.  Home sellers who are listing their homes for sale this spring are adjusting their sale price expectations.  Homes that have been on the market for an extended time may be an opportunity for you to negotiate a lower sale price.  According to mortgage experts, average mortgage rates have “plummeted,” giving you more flexibility and possibly lower housing costs. 

These home buying conditions may not last very long. But before you decide to buy, determine if buying a home is the right choice by consulting a Realtor and other financial professionals.

Original located at https://dankrell.com/blog/2019/06/08/great-time-to-buy-a-home/

By Dan Krell
Copyright © 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Mixed housing stats

mixed housing stats
Mixed housing market stats (infographic from keepingcurrentmatters.com)

This week’s National Association of Realtors press release (nar.realtor) sends mixed signals about the housing market.  Reports of sluggish home sales and slowing home price appreciation is not what you would expect when the spring market should be humming along.  But then again, mixed housing stats may be a vital sign of a healthy market in motion.

First, let’s talk about home sale prices.  The NAR’s report on metro home prices and affordability indicate that the average home sale price for the first quarter of the year was $254,800.  This is a 3.9 percent increase compared to the same time last year.  Average home sale prices in the Baltimore metro area were slightly higher than the rest of nation at $275,300.  Not surprisingly, Washington metro prices were significantly higher at $420,000 (a 6.5 increase from the same time last year).

The latest S&P CoreLogic Case-Shiller U.S. National Home Price Index (spindices.com) is almost spot on with the NAR, indicating a 4 percent increase in home sale prices nationwide.

Affordability is always a concern when mixed housing stats confound the market. So, how much income do you need to qualify for a home?  The National Association of Realtors Qualifying Income report indicates the average qualifying income for a 5 percent down conventional mortgage is $60,143 nationwide.  The average qualifying income in the Baltimore metro area is slightly higher at $64,982.  However, because of significantly higher home sale prices, the average qualifying income in the Washington metro area is $99,137. 

The neighboring Baltimore and Washington metro areas highlight home pricing extremes in competing markets.  Many home buyers who work in the Washington metro area are opting for longer commutes to make homeownership affordable.  Others are opting for alternative work to not only lower their housing cost, but eliminate the commute as well.  Commenting on affordability, NAR’s chief economist Lawrence Yun stated, “There are vast home price differences among metro markets. The condition of extremely high home prices may not be sustainable in light of many alternative metro markets that are much more affordable. Therefore, a shift in job search and residential relocations into more affordable regions of the country is likely in the future.”

Although home sale prices continue to climb, the national home sale picture is another story.  The 1.2 percent increase in spring home sales compared to winter sales should be expected.  However, the 5.4 percent decrease from last spring is a disappointment.  According to MarketStats by ShowingTime (getsmartcharts.com), the number of homes sold in the Mid-Atlantic region decreased 4.77 percent year-to-date.  There was a larger decline in Montgomery County, where there was a 7.25 percent decrease in home sales year-to-date! 

Days-on-market is another fundamental indicator of the housing market.  And, like home prices and units sold, days-on-market can vary depending on the local market.  Homes in the Mid-Atlantic region are taking a bit longer to sell, as days-on-market increased 7.04 percent to 76 days.  However, houses in Montgomery County are selling quicker, where days-on-market decreased about 13 percent to 65 days. 

Mixed housing stats can confound home buyers, sellers, and their agents. But consider the analysis of David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. He stated that that home sale prices gains have been slowing down until recently.  And although mortgage rates are lower, home sales have “drifted down” from their peak during February 2018.  Even new home sales and residential investment have shown weakness since last year.

Original published at https://dankrell.com/blog/2019/05/20/mixed-housing-stats/

By Dan Krell
Copyright © 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.