ROGER W. WEBB

Providing Honesty, Integrity & Professionalism
Welcome to ROGER W. WEBB Sign in | Help

Keeping Current

  • Freddie Mac: How Will the Housing Market Perform?

    The decline in mortgage rates, that fell at the start of 2019 after peaking last fall, is likely to provide some welcome relief to the housing market, according to Freddie Mac's latest monthly forecast.

    The forecast projected a slight deceleration in the overall economic growth predicting the U.S. GDP growth at 2.5 percent in 2019 and 1.8 percent in 2020. Despite uncertainties in other areas of the economy, the forecast said that the labor market would hold strong. It expected unemployment to drop slightly to 3.6 percent by the end of 2019, "before returning to a more sustainable long-term rate of 3.9 percent in 2020."

    The forecast also revised its projections for mortgage originations as well as the refinance share of originations in 2019. "We expect single-family mortgage originations to increase 2.6 percent to $1.69 trillion in 2019 and remain around that level in 2020," said Sam Khater, Chief Economist, Freddie Mac. "With mortgage rates easing up since the end of 2018, we revised up our forecast of the refinance share of originations to 27 percent and 24 percent in 2019 and 2020, respectively."

    The forecast predicted the 30-year fixed-rate mortgage rate to remain unchanged from 2018 averaging 4.6 percent in 2019 before increasing to 4.9 percent in 2020. The low mortgage rates and increase in originations are also expected to drive home sales, Freddie Mac said in its forecast. It projected sales to "slowly regain momentum" and increase to 6.10 million by the end of 2019 and 6.12 million in 2020. The growth will be mostly driven by existing home sales, while new home sales are expected to remain at their current levels, Freddie Mac said.

    However, total housing starts are expected to remain below the long-run demand, increasing to 1.29 million units in 2019 and 1.36 million units in 2020, the forecast predicted. Freddie Mac said that this was due to a lack of labor and other factors that will keep the recovery in housing construction constrained. Home price growth is also expected to decelerate with prices expected to increase 4.1 percent in 2019 before decelerating further to 2.8 percent growth in 2020, the forecast said.

    About Author: Radhika Ojha of DSNEWS

  • The Housing Market in the Year Ahead

    Zillow’s 2019 predictions indicated that rising mortgage rates and an increasing demand for rentals set the stage for the 2019 housing market, as even current homeowners start to feel locked into their mortgage rates.

    Despite steady rise during the past two years, mortgage rates remained lower than they were during the recession and below average, given the current level of economic growth. The report stated this trend will change in 2019 as the 30-year fixed rate mortgage reaches 5.8 percent. It also noted that affordability will take a hit, making homeownership difficult for many. Currently, rising mortgage payments outpace the home-value gains—a phenomenon that may encourage homeowners to stay put as they hold on to low mortgage rates and discourage first-time homebuyers— according to Zillow.

    As higher rates hinder affordability, aspiring homeowners will continue renting, as a result of which the slight drops in rent, in the recent past, will reverse and turn positive again, the report revealed. However, the continued steady investment in apartment construction will prevent rents from drastically surging above income growth. The report also noted that in the third quarter of 2018, the U.S. median rent cost 28.2 percent of the U.S. median income – considerably higher than the 25.8 percent renters paid historically.

    Zillow expects an increase in the disconnect between urban jobs and suburban residents to continue in 2019, and contribute to longer, more crowded commutes. This will affect those who have long commutes to live within their means as most jobs are confined to urban areas, and affording a home in urban markets. For example, a home in Boston is valued 303 percent more per square foot than a typical outlying home, while the premium for homes in central Washington, D.C., compared to outlying areas is 218 percent per square foot, the report noted.

    Pointing out the areas that lost Amazon’s headquarters bids to suburban New York and Washington, D.C., the report said that Atlanta, a former Amazon HQ2 contender, has seen some action despite it being passed over by the prime vendor. A smaller Seattle-based company named Convoy is expected to open its East Coast office in the metro. There is also a possibility that Norfolk Southern may relocate its headquarters there.

    In the wake of deadly fires that tore into California, builders and developers will focus on preventative and/or protected building materials and designs, according to Zillow. Building costs are surging, and insurers are apprehensive offering policies in danger zones leading to slower and costlier rebuilding. Zillow’s projections for homes inundated by rising sea levels and storm surges over the course of a typical 30-year mortgage begun in 2020 are not encouraging.

    In October, home values were up 7.7 percent from a year earlier, to a U.S. median of $221,500. One mitigating effect to rising mortgage rates will be slower home value growth, Zillow indicated. Forecasting a growth of 6.4 percent from October 2018 to October 2019; a Zillow survey of housing experts and economists anticipates a 3.79 percent increase in home values for 2019. Both forecasts indicate cooling from red-hot growth of 8 percent in March of this year.

    About Author: Donna Joseph of DSNEWS

  • The Ripple Effect of Rising Home Prices

    Rising home prices and elevated home prices have been making headlines for some time, but for those not in the market for a home in the near future, does it really matter? Researchers from the Urban Institute say it does. Home prices affect the economy at large, and thus everyone in it.

    Today’s elevated home prices are driven by “inadequate supply, not easy credit” as in the years leading up to the housing crisis in 2008, explained the researchers from the Urban Institute in a blog post on the Urban Wire. They asserted that “today’s high prices don’t make the market vulnerable to a similarly severe downturn.”

    Nonetheless, elevated home prices do have a broader impact on the economy.

    Between 1980 and 2000, housing contributed between 4.5 and 5.3 percent of gross domestic product. In 2005, housing’s GDP contribution peaked at 5.9 percent. In 2010, it reached its trough of 2.5 percent.

    Housing has rebounded somewhat and has varied between 3.3 and 3.4 percent of GDP since 2016, but it remains “significantly below the historical average,” the researchers stated.

    The researchers zeroed in on the impact of high home prices, laying out four major ways the economy and consumers are impacted: First, high home prices drive up rental prices increasing the amount of rent-burdened households. Second, high home prices drive down demand for consumer goods. Third, a misallocation of labor results when employees cannot afford to move for jobs. Fourth, wealth disparities widen when home prices climb.

    In the current housing market, home prices have climbed steadily with significant growth at the lower end of the market, precluding many low- and middle-income earners from homeownership. Thus, rents become more competitive. In fact, the Urban Institute found that the percentage of rent-burdened households—those paying more than 30 percent of their incomes on their rent—rose from 39.8 percent in 2000 to 49.7 percent in 2016.

    This issue is highly magnified among lower income earners. When observing specifically those earning between $20,000 and $50,000, the researchers found the share of rent-burdened households rose from 27.3 percent in 2007 to 62.3 percent in 2016.

    The second impact, lower demand for consumer goods, is a direct and obvious impact. When housing takes up more of one’s income, one has less to spend on other goods and services. Thus, other areas of the economy suffer. Were the current home price trend to be reversed, the researchers suggest there could be “greater consumption of other goods and services that stimulate growth and employment gains in other sectors, which could have a multiplier effect.”

    The third impact, misallocation of labor, occurs as it becomes too expensive for people to live in some areas, even if there are job opportunities there.

    Lastly, researchers point out that wealth disparities grow with rising home prices. Lower income earners end up paying a higher percentage of their incomes on housing as rents and lower priced homes are especially inflated. Meanwhile, those who already own a home experience rising wealth.

    “This widens the wealth gap between owners, who already have higher-than-average income and wealth, and renters, whose income and wealth are lower than average,” the researchers stated.

    The answer to today’s problem of high home prices, which is easier to identify than to overcome, is insufficient supply. Increase the supply of homes, and rent burden, lower consumer goods demand, misallocated labor, and growing wealth disparities may begin to diminish.

    Author: Krista Franks Brock of DSNEWS

  • Chasing the American Dream

    The fixer-upper culture is gaining traction among millennial homebuyers given the affordability of these homes as an initial purchase. However, it is interesting to note that many young Americans rely heavily on online platforms for inspiration.

    “Pins & Properties: Chasing Your Dream Home” a report put together by Chase Home Lending and  Pinterest, reveals that millennials are the largest group of homebuyers today. Nearly two-thirds of millennials consider homebuying a goal they are determined to reach in their lives and 70 percent consider it the best long-term investment. Nearly 95 percent of the millennials said they planned some kind of renovation in the next three years.

    “For the second year in a row, millennials make up the largest group of homebuyers, seeing the value of this smart investment,” said Amy Bonitatibus, Chief Marketing and Communications Officer for Chase Home Lending.

    As most first time homebuyers do not have the income to afford their dream home right away, they purchase starter homes and make substantial upgrades eventually. Eighty-seven percent millennials are planning some kind of renovation and 68 percent intend to spend at least $20,000 on renovation projects. Seventy-five percent plan to finance home renovation projects by tapping the equity in their homes, the report found.

    Millennials are paying close attention to smaller and affordable renovation and ideas. Logistics and affordability are key factors for many who are preparing for a growing family.

    Jon Kaplan, Global Head of Partnerships, Pinterest, said, “Chase and Pinterest have similar missions in helping people make their dreams a reality. The partnership between our companies on the Chase Dream Boards visual interactive experience demonstrates the way in which we're able to offer personalized recommendations that deliver unique value and guidance to potential home renovators.

    The report noted that pinners continue to prioritize DIY projects at home for decor and personalization, setting up a gym or laying bathroom countertops. Millennial homeowners also ranked ‘new landscaping’ as their top choice for renovation space. Projects like a closet overhaul are increasing over 7,000 percent in year-over-year search results.

    Pinterest said that it has experienced an increase in searches for ‘gold bar carts’ by 300 percent since 2017. Those looking to remodel outdoor areas were found 1.7times as likely to search for backyard party ideas. Interestingly, these Pinterest users are more than 1.5 times as likely to search for topics on budgeting as financial planning assumes great significance among first-time homebuyers.

    Author: DSNEWS -  Donna Joseph

  • Existing-Home Sales Struggle Despite a Strong Economy

    The growth of existing home sales fell to its lowest level in September, declining 4.1 percent from a year ago, according to the National Association of Realtors' (NAR's) Existing-home Sales Report released on Friday.

    On a month-over-month basis, sales declined 3.4 percent from August to a seasonally adjusted rate of 5.15 million homes, NAR reported.

    While sales fell, the report indicated that median home prices during the month rose 4.2 percent to $258,100 compared with $247,600 in September 2017.

    Attributing the decline in sales to rising interest rates, Lawrence Yun, Chief Economist at NAR said that this was the lowest existing home sales level since November 2015. “A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country,” he said.

    Joseph Kirchner, Senior Economist for Realtor.com said that apart from weak pending home sales some of the effects of the damage from the recent Hurricane Florence was felt on existing-home sales too. “The majority of the decline was in the South with some declines in the North and West, while the Midwest remained steady,” Kirchner said. “While we’ve seen a 49-year low in unemployment and robust job growth over the last 12 months, existing home sales have struggled.”

    The NAR report also indicated a rise in housing inventory from a year ago, but a decline month over month. In September, housing inventory stood at 1.88 million, decreasing from 1.91 million in August, but increasing from 1.86 million during the same period a year ago.

    “There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory,” Yun said. “Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year.”

    Looking ahead at the housing market, Kirchner said that one potential tailwind could help shift the balance in favor of the housing market. “For the last few years, shoppers have struggled with low inventory and fast-rising prices,” he said. “There are signs that the tide could be changing in favor of buyers with more new listings coming up for sale, causing overall inventory to pick-up in some markets and listing price cuts to become more common. While it’s not yet a buyer’s market in most areas of the country, these changing conditions mean that sellers may need to be mindful of their competition, as buyers have been for years.”

    To read the detailed NAR report click here.

    Author: DSNEWS -  Radhika Ojha

  • Preventing the Next Housing Crisis

    What caused the housing crisis, and what can we learn from it to prevent another? In her paper titled“Failure to learn from failure: The 2008 mortgage crisis as a déjà vu of the mortgage meltdown of 1994” Natalya Vinokurova, Assistant Professor of Management at the Wharton School, cites several key factors as instrumental in the Great Recession of 2008, including the introduction of mortgage-backed securities and the development of tranching.

    First, Vinokurova notes that when they were introduced, mortgage-backed securities (MBS) were not believed to be bonds. MBS were originally introduced to, according to Vinokurova’s research, find funding for the baby boomers as they began to buy houses in the 1970’s.

    According to Vinokurova, MBS and bonds are different “on a number of levels.” Investors would have the risk of a mortgage-backed security being payed off earlier than expected.

    “The dimension that bond investors were most concerned about in the 1970s and early 1980s was prepayment risk, with the idea being that mortgage-backed securities are bundles of mortgages,” said Vinokurova. “Your average borrower can repay his or her mortgage at any time. Most of the time, these borrowers would not incur a penalty. As an investor, this meant that if you were buying a security backed by 30-year mortgages, there was a very small chance that the security would still be around 30 years out.”

    “As a bond investor, somebody’s trying to sell you something and they can’t even tell you how long this thing is going to be around. Obviously, bond investors pushed back,” Vinokurova added.

    Tranching was an important development in getting investors to accept MBS as bonds, as it divided the investors into different levels of risk.

    “You had the junior tranches, which were supposed to absorb the risk,” said Vinokurova. “The senior tranches were protected by the fact that you had the junior tranches as part of the security.”

    The first security only had three tranches, but by the 1990’s there were securities with up to 68 tranches. When Freddie Mac issued the collateralized mortgage obligation in 1983, bond investors in each tranch were finally given a ballpark range of repayment. After a while, though, the junior tranch disappeared, leaving the senior tranches vulnerable. Vinokurova’s paper discusses how the faith in tranching, followed by increased bond investor capital into the mortgage market “is exactly predictive of the events of 2008.”

    According to Vinokurova, the solution is to force people who work in the industry to remember the previous cycle and its mistakes.

    “Once the securities were introduced, you don’t see any of these actors making specific appeals to these prior experiences. As they don’t remember the history, they literally repeat it,” said Vinokurova.

    “The question is, are we now back at the end of the cycle, heading toward another recession?

    I think that house price inflation is an incredibly potent signal of us being in a bubble, of us being on the verge of a crisis,” she said. “I think the quantitative easing, which is effectively creating liquidity by printing money, has been shown by folks like Markus Brunnermeier at Princeton to bring about crises.”

    “When you have too much money chasing too few attractive options, you end up in the bubble. And the bubble will have to burst,” Vinokurova added.

    The best solution, according to Vinokurova, is to just learn from the past.

    “I feel like one of the challenges reformers often face is that they think they are the first people who tried to reform the system, and I feel like learning from the people who came before them would actually be helpful.”

    Find the Wharton School interview on Vinokurova's paper here.

     About Author: Seth Welborn

  • Freddie Weighs in on Housing Market

    The growth of home sales slowed down this summer and is likely to remain that way for the rest of the year, according to Freddie Mac's latest housing forecast. The August forecast by the GSE revealed that while the U.S. economy grew at its fastest pace in four years in Q2 2018, the housing market played a limited role in this growth.

    The report indicated that slower home sales growth, as well as decreased refinance activity due to higher mortgage rates, were likely to cause single-family first-lien mortgage loans to slide around 8 percent this year to $1.66 trillion.

    "Limited inventory continues to affect home sales and prices," the report said. It noted that total home sales were likely to increase only "modestly" to 6.14 million. While prices were expected to moderate, they would still remain above inflation rates, the report stated.

    The region most affected by the sluggish pace of home sales was the West, according to Sam Khater, Chief Economist at Freddie Mac.

    “The housing market hit some speed bumps this summer, with many prospective homebuyers slowed by not enough moderately-priced homes for sale and higher home prices and mortgage rates,” Khater said. “These challenges were predominantly seen in expensive markets out West, where demand and sales are beginning to dampen because of weakening affordability.”

    Along with sales, some of the other factors that affected the housing market during the summer included declines in new home construction as homebuilder challenges, limited inventory, and steady gains in prices created headwinds for the housing market.

    Looking at the rest of the year, Freddie Mac said that it expects market conditions to remain the same mostly, with a slight rise in housing starts to ease the current inventory constraints.

    “The good news is that the economy and labor market are very healthy right now, and mortgage rates, after surging earlier this year, have stabilized in recent months. These factors should continue to create solid buyer demand, and ultimately an uptick in sales, in most parts of the country in the months ahead."

    About Author: Radhika Ojha

  • ‘A Strong Shift In Housing Demand’

    New home sales slipped 5.3 percent to 631,000 in June 2018, compared with the previous month. Yet they remained 2.4 percent above the same period last year, according to the latest data on the sales of new single-family houses released by the U.S. Census Bureau and the Department of Housing and Urban Development.

    According to the data, the median sales price of new houses sold in June was $302,100, whereas the average home sold for $363,300.

    The data also indicated a rise in the inventory of new homes. Around 301,000 new homes were available for sale at the end of June representing a supply of 5.7 months at the current sales rate.

    "Affordable homes have become severely depleted and any boost in inventory would provide some much-needed relief for weary first-time buyers," said Danielle Hale, Chief Economist at Realtor.com

    Tian Liu, Chief Economist at Genworth Mortgage Insurance agreed, saying that new home sales were driven by a "strong shift in housing demand toward owner-occupied housing, a lack of available alternatives in the previous-owned market, and historically-low construction for the past decade."

    "The inventory of homes for sale also rose to the highest since May 2009 and months’ supply of 5.7 was the highest since August 2017," said Tendayi Kapfidze, Chief Economist at LendingTree. However, he pointed out that the 3-month average of 646,000 home sales was at the weakest level since February and coupled with weakness in existing home sales "may be signaling a peak in home sales."

    "After disappointing news earlier on existing home sales and new construction, which raised concerns of a housing slowdown, new home sales were mixed," said Hale.  "Strong employment and moderate income growth are driving sales. If employment levels continue their current trajectory we expect to see new home sales growth continue for the rest of the year."

    Kapfidze also pointed out to the margin pressure on homebuilders that likely affected the sale of new homes. "We had previously expected the tax cuts to improve builder margins by 10-15 percent, which we anticipated may have led builders to consider increasing activity at the lower end of the market where inventory challenges are particularly acute," Kapfidze said. "The tariffs may negate this benefit."

    On the brighter side though, home prices have also fallen. "Although two months is hardly a trend if new home prices continue to fall it may indicate a shift towards what we have all been waiting for; new construction in entry-level price points," Hale said.

     

    Author: Radhika Ojha of DSNEWS

  • What’s the Price? More Than We Ask, Say Homesellers

    Homesellers have had a windfall in 2017 with buyers paying more than the list price on 24.1 percent of home sales during the year according to a report by real estate website Zillow. The report said that approximately one in four U.S. homes sold above the asking price as a combination of factors led to sellers netting an average of additional $7,000 over their initial price over.

    The report indicated that the share of homes selling above list price has grown considerably since the beginning of the housing recovery in 2012 when slightly more than one in six home sales closed above asking price. This share of homes selling above their asking price has risen every year in the past three years. The typical price increase for homes that sold above the listed price was 3.1 percent in 2017.

    Low mortgage rates, limited supply and high demand, demographic shifts, and a strong economy were some of the factors that have led to this surge in prices, the report said. Additionally, a shortage of home inventory, especially at the entry level and a growing demographic of young first-time buyers looking to start families have also been responsible for this kind of a market.

    Cities where the lucrative tech market is booming were more likely than others to see this trend, according to the report. More than half the sellers in San Jose, San Francisco, Salt Lake City, Seattle, and Provo sold their homes for more than their asking price.

    The report indicated that in each of these markets, on an average, sellers made at least an additional of $20,000 over their initial asking price. The largest difference in asking price and what a house sold for was found in  San Jose, where the average home sold above list netted sellers an additional $62,000.

    Author:  http://www.dsnews.com/author/radhika-ojha - Radhika Ojha

  • Housing Market to Remain Bullish in 2018

    Tight inventory continued to boost home prices as housing activity remained upbeat towards the end of 2017, according to the Economic and Housing outlook released by Fannie Mae’s Economic & Strategic Research (ESR) Group on Monday.

    The monthly forecast, which details interest rate movements, the housing market, mortgage market, and the overall economic climate, noted that total housing starts rose in October to the highest level in a year, even as new home sales approached a decade high. ESR said that existing home sales posted the first back-to-back gains this year, and contract signings to close on existing homes increased for the first time in four months, as sales rebounded from hurricane disruptions.

    “The housing market continues its upward grind, as it struggles to balance strong demand and house price appreciation with inventory shortages and affordability concerns,” Doug Duncan, Chief Economist at Fannie Mae, said.

    As a percent of real estate value, homeowner equity rose to 58.6 percent, only 1.2 percentage points below the most recent peak at the end of 2005, ESR noted, adding that the yield on 30-year fixed-rate mortgages is expected to average 4 percent this year.

    ESR said that, while they had expected shortages of skilled labor and land as factors restraining building activity in their January 2017 forecast, the problem was more severe than anticipated. Compared with the January forecast, ESR overestimated mortgage rates for 2017 by two-tenths. However, their forecast for total home sales came very close to the January prediction, as year-to-date sales showed a 2 percent gain in 2017 over 2016, compared with a forecasted 2.2 percent increase at the beginning of the year.

    Considering 2018, ESR expects mortgage rates to rise gradually, averaging 4.2 percent in the fourth quarter of 2018 from 3.9 percent in the current quarter. Total housing starts and total home sales should rise about 5 percent and 3 percent, respectively, in 2018.

    Author Radhika Ojha of DSNEWS

  • Home Sales Prices Remain Strong on East Coast

    Bright MLS shined a spotlight on the Washington D.C. and Baltimore, Maryland metro areas this week, releasing November housing market updates for both regions. The data was provided by MarketStats by ShowingTime based on listing activity from Bright MLS.

    Median sales prices in Washington, D.C., came in at $425,000 for the month of November 2017, up  up 4.4 percent since November 2016 and 2.9 percent over October 2017. That amounts to a change of $18,000 year-over-year and $11,875 since October, respectively. November marked the highest November price of the decade, and the 14th consecutive month of year-over-year price increases. Sales volume for the D.C. metro was also up, increasing 11.5 percent year-over-year—an increase of more than $2.15 billion.

    Inventory shortages have been a problem nationwide, a trend that will hopefully see some relief in 2018. According to Bright MLS, the problem remains rampant in the D.C. area, with D.C. seeing declines in inventory levels year-over-year for the 19th consecutive month. At 4,308 listings, new listings were up 1.0 percent year-over-year compared to last year but down 25.3 percent below October 2017. Active listings also dropped to 8,629, down 5.7 percent compared to last year and 14.6 percent compared to October 2017.

    Baltimore median sales prices were up in November 2017 as well, hitting $254,000. That put November’s numbers up 5.8 percent over November 2016 (a difference of $14,000) but down 2.3 percent ($6,000) compared to October 2017. Baltimore sales volume was up 8.4 percent over the same month in 2016, a difference of 8.4 percent.

    Inventory issues were even more pronounced in Baltimore than in D.C. The 3,592 new listings were up 2.2 percent over November 2016, but down a seasonal 23.2 percent from last month. According to Bright MLS, “Active listings declined by 11.0 percent to 9,712, the 27th consecutive month of declining year-over-year inventory levels and the lowest November level in a decade.”

    In D.C., the median days-on-market for November 2017 was 21 days, two days lower than in November 2016. In Baltimore, the median days-on-market was 32 days, down eight days compared to November 2016 and holding steady since October 2017.

    Author: David Wharton of DSNEWS 

  • Poll: Consumers Say 2018 Is the Time to Sell

    If a recent survey from Trulia is any indication, there could be some relief for today’s inventory woes on the horizon. According to an online poll commissioned by the site, American consumers are more enthusiastic about selling a home than buying one in 2018.

    Just over 31 percent of those surveyed said 2018 would be a better time to sell than 2017. Only 14 percent said it would be worse.

    “At a 17-percentage point differential, the home-selling sentiment (net belief that the upcoming year will be better for selling a home than the current year versus those who believe it will be worse) is the second highest gap we’ve seen since we first started asking this question back in 2014,” Trulia reported.

    Still, that sentiment won’t immediately translate into more inventory. In fact, only 6 percent of homeowners surveyed said they have plans to sell in the next 12 months.

    Optimism toward buying is down, according to Trulia’s poll. Just 25 percent think next year will be a good time to buy—the same share that thinks 2018 will actually present worse buying conditions than this year did.

    “This is the first time in the past four years that Americans’ homebuying sentiment (net belief that the upcoming year will be better for buying a home than the current year versus those who believe it will be worse) for the upcoming year has been a wash,” Trulia reported. “As for what this could mean for homebuying activity in 2018, only 10 percent of Americans said they plan to buy a home in the next 12 months.”

    Those who do plan to buy in 2018 will likely factor in natural disaster risk when scouting potential properties. According to the survey, 39 percent of Americans are more concerned about the threat of a natural disaster in 2018 than they were this year. In the South, that share jumps to 43 percent.

    Trulia’s experts also offered their expectations for 2018, which included a cooling off of home prices on the coasts, a higher demand for homes in the Midwest and South, more millennials joining the market, and a higher homeownership rate overall.

    See the full results of the survey at Trulia.com.

    DSNEWS Author: Ally J. Yale 

  • What’s on the Horizon for Existing Home Sales?

    Though existing home sales are poised for a comeback in 2018, a few hurdles stand in their way. According to Lawrence Yun, an industry-leading economist, continuing inventory shortages and the GOP’s latest tax bill are prime among them.

    Yun, Chief Economist for the National Association of Realtors (NAR), told audiences at the 2017 REALTORS Conference & Expo on Friday that existing home sales should jump about 3.7 percent next year, hitting just under 5.67 million. The median existing home price is forecasted to rise even further–about 5.5 percent, Yun said.

    Still, positive indicators aside, according to Yun a number of things could hold the market back in 2018–namely, the tax bill released by the House Ways and Means Committee on Thursday. According to NAR’s analysis, the bill could drive home values down by as much as 10 percent, while also raising taxes on existing homeowners by more than $800 annually.

    However, according to Mark Calabria, Chief Economist for Vice President Mike Pence aspects of the tax plan will promote, rather than deter, homeownership. "Likely when you do the real analysis, the full analysis, a holistic analysis, the changes on the individual side will be pro-homeownership and pro-housing rather than claims to the contrary," said Calabria at the 5th Annual Housing Finance Symposium hosted by the Urban Institute Housing Finance Policy Center and CoreLogic.

    “The ability to deduct interest is a component that allows you to buy a bigger house, not what drives you to buy a house,” added White House Economic Adviser Gary Cohn on Bloomberg Television.

    Besides tax reform, Yun also cited inventory as an ongoing problem, with lagging new construction offering the biggest challenge. Yun forecasts single-family housing starts to increase by 9.4 percent in 2018, though the 950,000 new homes expected to hit the market will still clock in well below the 50-year average (1.2 million per year).

    Affordability constraints will also hinder buyers, particularly in areas with strong job growth and skyrocketing home prices, like Los Angeles and San Francisco.

    "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," Yun said. "Despite improving confidence this year from renters that now is a good time to buy a home, the inability for them to do so is causing them to miss out on the significant wealth gains that homeowners have benefitted from through rising home values."

    According to Yun though, there’s still hope for renters who dream of homeownership.

    "An overwhelming majority of renters want to own a home in the future and believe it is part of their American Dream," he said. "Assuming there are no changes to the tax code that hurt homeownership, the gradually expanding economy and continued job creation should set the stage for a more meaningful increase in home sales in 2018."

    Author - Aly J. Yale of DSNEWS 

  • Rates, Incomes Inch Housing Affordability Upward

    Housing is more affordable now—but not because of home prices. According to the Real House Price Index (RHPI) released by First American today, it’s low mortgage rates that are driving affordability upward for buyers.

    The RHPI, which takes into account income, interest rates, and home prices across the nation, shows real house prices up 9.6 percent over the year, though they dropped 0.4 percent between July and August. Prices are also down 38.4 percent below their peak, seen in July 2006, and 17.2 percent under January 2000 levels.

    Unadjusted, home prices increased 6.1 percent between August 2016 and August 2017, largely due to supply issues, First American reported.

    “According to the National Association of Realtors, the number of existing homes listed for sale declined to a 4.2-month supply in September, which marked the 28th consecutive month of year-over-year declines in inventory levels,” according to First Am. “The lack of supply is driving unadjusted house prices higher.”

    Still, despite rising nominal prices, housing is getting more affordable thanks to lower rates and better incomes.

    “Lower mortgage rates in August compared with July, combined with a modest 0.1 percent month-over-month increase in wages, helped offset rising nominal house prices, producing a slight 0.4 percent increase in affordability in August,” First Am reported.

    Overall, consumer house-buying power—or “how much one can buy based on changes in income and interest rates,”—rose 0.8 percent from July to August. Those interested in buying a home shouldn’t be too optimistic, though, according to First Am’s Chief Economist Mark Fleming.

    “Though consumer house-buying power improved in August, affordability is likely to fade as mortgage rates are expected to rise in the months to come, but lower affordability is only significant to potential first-time buyers,” Fleming said. “Existing homeowners with fixed-rate mortgages benefited from the rising prices with increased equity. If you're renting and thinking of buying, then now is the time."

    Over the past year, affordability has declined more than 9 percent, Fleming said.

    Delaware had the greatest increase in real house prices over the last year, with a jump of 16.2 percent. Nevada, Alaska, Massachusetts, and Washington also made the top five.

    The smallest increase in real house prices was seen in Alabama, where they rose just 2.8 percent. North Dakota, Hawaii, New Jersey and Washington D.C. also posted lower year-over-year increases.

    See the full RHPI at FirstAm.com.

    Author: Aly J. Yale of DSNEWS http://www.dsnews.com/author/alyyale

     

     

     

  • Housing Market Squeezing First-Time Buyers

    Tight housing markets across the country squeezed out more first-time buyers over the past year. A new survey by the National Association of Realtorsshows that the share of first-time buyers in the market is at its fourth-lowest point since 1981.

    According to the report, first-timers made up 34 percent of the buying market this year, compared to 35 percent a year ago. Even last year was notably below the generally considered normal figure of 39 percent.

    NAR factored several considerations into the reasons why. For one thing, it’s been a seller’s market for some time. In most markets, homes for sale don’t last long under stiff competition to get them. That’s especially true at the lower end, where first-timers tend to flock in their search for properties, NAR reported.

    “The dreams of many aspiring first-time buyers were unfortunately dimmed over the past year by persistent inventory shortages, which undercut their ability to become homeowners,” said Lawrence Yun, NAR’s chief economist. “With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home. Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked homeownership out of reach for countless would-be buyers.”

    Increasing student debt, the report stated, has also become a key problem for younger buyers. The average first-time buyer’s age has hung steady at 32, but Millennials face now an average of $29,000 in student loan debt. That’s up from $26,000 in 2016; more than half owe at least $25,000. And, of the 25 percent who said saving for a down payment was the most difficult task in the buying process, 55 percent said student debt delayed saving for their home purchase, the report found.

    “Even in markets with a plethora of job opportunities and higher pay,” Yun said, “steep rents and home prices make it extremely difficult to put savings aside for a down payment.”

    Downpayments also dropped among first-time buyers, from 6 percent last year to 5 percent this year.

    One uptick in the otherwise gloomy first-time-buyers world is the increase in single women buying homes for the first time. According to NAR, solid job prospects, higher incomes, and improving credit conditions among single women have them the second-largest buyer type, behind couples. In the past year, single women have become 18 percent of the buying market‒‒matching a 2011 high‒‒and are increasingly buying more expensive homes. Single men and unmarried couples buying remained at 7 and 8 percent, respectively.

    One other bright spot is that fewer people have reported trouble getting a mortgage this year, compared to last. According to NAR, 34 percent of mortgage seekers said they had difficulty getting a mortgage. That compares to 37 percent a year ago.

    Still, the reality for first-time buyers is that they are cash-strapped in a market in which houses go quickly amid heavy competition.

    “Many of those in the market to buy a home this year had little room to negotiate,” said Yun. “Listings in the affordable price range drew immediate interest, and the winning offer often times had to waive some contingencies or come in at or above asking price to close the deal.”

    Author: Scott Morgan of DSNEWS 

More Posts Next page »