The results of their latest survey:Home values will appreciate by 5.0% over the course of 2017, 4.0% in 2018, 3.2% in 2019, 3.0% in 2020, and 3.0% in 2021. That means the average annual home price appreciation will be 3.64% over the next 5 years.The prediction for cumulative appreciation increased from 17.8% to 18.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative home price appreciation of 6.7%.
Bottom LineIndividual opinions make headlines. We believe this survey is a fairer depiction of future home prices. If you are thinking of buying a home, stop thinking and start acting! Call me today.
Bottom LineIf you are even thinking of listing your home and moving up to a luxury home, let’s get together to evaluate your ability to do so. Homeowners across the country are upgrading their homes, why can’t you? Your dream home is waiting! Call me today!
How would this “send a flood of more homebuyers into the housing market”?As the article mentioned, in 2010 the number of chapter 7 bankruptcies increased to nearly 1.14 million. Now, 7 years later, they will begin to fade from credit histories, enabling prospective buyers to become homeowners again once their credit scores improve.As we can see from both reports, the homeownership rate has the opportunity to increase drastically over the next few years with all of these boomerang buyers returning to the market.
Bottom LineIf your family was negatively impacted by the housing bust, here is the light at the end of the tunnel! You may be able to purchase your dream home faster than you think! Give me a call... You may be pleasantly surprised by what you learn.
The two major causes of the housing crash were:
- A vast oversupply of housing inventory caused by home builders building at a pace that far exceeded historical norms.
- Lending standards that were so relaxed that unqualified buyers could easily obtain financing thus enabling them to purchase a home.
Bottom LineIf you currently own a home and are thinking of moving-up to the home your family dreams about, don’t let the fear of another housing bubble get in the way as this housing market in no way resembles the market of a decade ago.
Homes Selling Quickly!The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report, which revealed that homes were on the market for an average of 28 days in June. This is a slight increase from the 27 days reported in May, but down from 34 days reported a year ago.
54% of homes across the country were on the market for less than a month in June!Among the 27 states with homes selling in 30 days or less are Washington, Utah, California, and Colorado. The map below was created using results from NAR’s Monthly Realtors Confidence Index Survey.
Bottom LineBuyer demand is increasing as the inventory of homes available for sale remains low. If you are thinking about listing your home for sale this year, let’s meet up so I can help you take advantage of current market conditions!
“The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory. As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.”CoreLogic’s President & CEO, Frank Martell added,
“Home prices are marching ever higher, up almost 50 percent since the trough in March 2011. While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”Overall inventory across the United States is down for the 25th consecutive month according to the latest report from the National Association of Realtors and now stands at a 4.3-month supply.
Real estate is local.Market conditions in the starter and trade-up home markets are in line with the median US figures, but conditions in the luxury and premium markets are following an opposite path. Premium homes are staying on the market longer with ample inventory to suggest a buyer’s market.
Bottom LineBuyers are out in force, and there has never been a better time to move-up to a premium or luxury home. If you are considering selling your starter or trade-up home and moving up this year, let’s get together to discuss the exact conditions in our area.
Why the dramatic increase?The reasons for this change are plentiful!The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move.With home prices rising dramatically over the last several years, 93.9% of homes with a mortgage are now in a positive equity situation with 78.8% of them having at least 20% equity, according to CoreLogic.With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago.One other reason for the increase was brought to light by NAR in their 2017 Home Buyer and Seller Generational Trends Report. According to the report,
“Sellers 36 years and younger stayed in their home for six years…”These homeowners who are either looking for more space to accommodate their growing families or for better school districts are more likely to move more often (compared to 10 years for typical sellers in 2016). The homeownership rate among young families, however, has still not caught up to previous generations, resulting in the jump we have seen in median tenure!
What does this mean for housing?Many believe that a large portion of homeowners are not in a house that is best for their current family circumstance; They could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple living in a one-bedroom condo planning to start a family.These homeowners are ready to make a move, and since a lack of housing inventory is still a major challenge in the current housing market, this could be great news.
Millennials are the most educated generation in the U.S.Why does that matter? First American explains:
“Our model shows that, all other factors being equal, the likelihood of homeownership increases by 3 percent for those that earn a bachelor’s degree over those with a high school degree. The likelihood of homeownership jumps another 3 percent for those that earn a graduate degree.”The more educated, the better the likelihood for homeownership. And, as we mentioned: Millennials are the most educated generation in the U.S.
Homes & marriage go togetherMarriage is a key determinate in homeownership. According to an analysis by First American, the homeownership rate is 30% higher among married couples compared to non-married households.Millennials have put off marriage in the pursuit of higher education. As this group ages, more and more will marry and purchase a home.
Parents buy housesAccording to the study:
“The homeownership rate is 1.7% higher for households with one or two children compared to households with no children, and it is 5.4 percent higher for households with three or more children.”The report goes on to say that as Millennials grow older there may be an increase in not just marriage but also in married couples with children. That will probably also create a “corresponding” increase in homeownership demand.
Wages and the economyThe study goes on to explain that recent gains in income growth and a strengthening economy will also help all generations (including Millennials) be more willing and able to purchase a new home.
Bottom LineWe guess the time has come to announce – Here come the Millennials!!
Regarding Existing Home Inventory:
“For the fourth year in a row, the inventory of homes for sale across the US not only failed to recover, but dropped yet again. At the end of 2016 there were historically low 1.65 million homes for sale nationwide, which at the current sales rate was just 3.6 months of supply – almost half of the 6.0 months level that is considered a balanced market.”
Regarding New Home Inventory:
“Markets nationwide are still feeling the effects of the deep and extended decline in housing construction. Over the past 10 years, just 9 million new housing units were completed and added to the housing stock. This was the lowest 10-year period on records dating back to the 1970s, and far below the 14 and 15 million units averaged over the 1980s and 1990s.”
Bottom LineA severe housing shortage exists in many towns in Nassau and Suffolk counties. Towns like North Babylon, Islandia, Lake Ronkonkoma, West Sayville, Bethpage, Levittown, Lynbrook, Holbrook, Selden, Deer Park and West Babylon all are experiencing less than 3 months supply of inventory making these towns very strong seller's markets with severe housing shortages. But that's not the case everywhere! There is no housing shortage in Dix Hills, Miller Place, Center Moriches, Port Jefferson, Huntington Bay, Great Neck, Setauket and Bellport Village all with more than 7.5 months of inventory making these towns buyer's markets. Setauket and Bellport Village have more than 10 months of inventory.[caption id="attachment_5492" align="alignnone" width="1024"] Suffolk County Absorption Rates[/caption]
Click here for absorption rates of various Nassau County and Suffolk County towns as of June 2017. Give me a call or send an email if your town isn't listed and you're hungry to know how it stacks up against the others.The biggest challenge facing us Realtors in today’s market in many towns is getting current homeowners and builders to realize the opportunity they have to maximize profit by selling and/or building NOW!!
Now Is A Great Time To Sell!We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. Two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now is a great time to sell your house.Let’s look at the data covered in the latest REALTORS® Confidence Index and Existing Home Sales Report.
REALTORS® CONFIDENCE INDEXEvery month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that home-buying demand continued to outpace supply in May.The map below illustrates buyer demand broken down by state (the darker your state, the stronger the demand is there).In addition to revealing high demand, the index also mentioned that “compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 24 states, ‘stable’ in 25 states, and ‘strong’ in D.C and West Virginia.” Takeaway: Demand for housing continues to be strong throughout 2017, but supply is struggling to keep up, and this trend is likely to continue into 2018.
THE EXISTING HOME SALES REPORTThe most important data revealed in the report was not sales, but was instead the inventory of homes for sale (supply). The report explained:
- Total housing inventory rose 2.1% to 1.96 million homes available for sale
- That represents a 4.2-month supply at the current sales pace
- Unsold inventory is 8.4% lower than a year ago, marking the 24th consecutive month with year-over-year declines
“Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values. See below:As we mentioned before, there is currently a 4.2- month supply, and houses are going under contract fast. The Confidence Index shows that 55% of properties were on the market for less than a month when sold.In May, properties sold nationally were typically on the market for 27 days. As Yun notes, this will continue, unless more listings come to the market.
“With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month.”Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market. And the supply will continue to ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the market.