Commercial Agents See Higher Incomes, Sales

Commercial Agents See Higher Incomes, Sales. Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net

As the commercial market shows signs of improving, commercial real estate professionals are reporting an uptick in annual gross income as well as the number of sales transactions and their sales volume, according to the 2015 National Association of REALTORS® Commercial Member Profile, which is based on a survey of nearly 2,000 members.

The incomes of commercial REALTORS® has risen over the past five years. The median gross annual income was $126,900 in 2014, a rise from $96,200 in 2013.  Appraisers and brokers reported the highest annual gross income while sales agents – often those who are newest to the field – had the lowest, according to the report.

Commercial REALTORS® completed a median of 11 sales transactions in 2014, up from eight last year. The median sales transaction volume among members was $2,916,700 – an increase from $2,554,700 in 2013.

“After years of slow recovery, the commercial real estate market has shown meaningful growth and our members are seeing significant improvements in their business activity,” says NAR President Chris Polychron. “REALTORS® who practice commercial real estate help build and revitalize communities by facilitating investment in commercial properties that support millions of jobs nationwide. There is every indication that continued improvement to commercial markets will help stimulate economic growth for the rest of the country.”

Thirty-two percent of commercial members said they were involved in international transactions in 2014, with 18 percent saying they saw an increase in international clients.

Also, 83 percent of commercial members reported having a leasing transaction, according to the report. The median transaction leasing volume for members who reported at least one transaction was $500,000 in 2014 – a more than 15 percent increase from 2013.

“When it comes to leasing transactions, the report tells us that the more years of experience an agent or broker has the more high value transactions in which they are involved,” says Lawrence Yun, NAR’s chief economist. “The broad improving leasing trend will continue this year and next because of rising occupancy rates across all commercial property types.”

Source: National Association of REALTORS®

Higher Home Prices Push Affordability Down

Higher Home Prices Push Affordability Down. Image courtesy of hywards / FreeDigitalPhotos.net

Housing affordability is down from a year ago as higher prices continue to outpace incomes, according to the National Association of REALTORS® Economists’ Outlook blog.

Nationally, the median single-family home price is $221,000, up 10 percent from April 2014, NAR reports. The Midwest has seen some of the largest increases in home prices – climbing 11.6 percent in the past year alone. The Northeast, on the other hand, is seeing the slowest price growth regionally at 4.9 percent in the past year.

Housing affordability is down in all major regions of the U.S. from a year ago, except in the Northeast, where home price growth is moderating.

“In other regions, the decline from a year ago was relatively small as mortgage rates lower than a year ago helped but could not completely offset increases in home prices,” NAR finds.

But mortgage rates are on their way up. Freddie Mac reported last week that the 30-year fixed-rate mortgage set a new high for 2015, averaging above 4 percent for the first time in nearly a year.

“This may be a good time for return and first-time home buyers to surge back into the housing market before rates climb higher, further reducing affordability,” NAR notes.

View NAR’s latest Housing Affordability Index for a full breakdown of affordability across the U.S.

Source: “Housing Affordability Index,” National Association of REALTORS® Economists’ Outlook Blog (June 12, 2015)

Renter Growth to Explode by 2030

Renter Growth to Explode by 2030. Image courtesy of hywards / FreeDigitalPhotos.net

The renter population is expected to only get bigger in the next 15 years and will likely exceed new home owners by millions, according to a newly released report by the Urban Institute, “Headship and Home ownership: What Does the Future Hold?”

Between 2010 and 2030 – the year millennials are to reach peak home buying age – new renters will exceed new home owners by 4 million, according to the report. Broken out, the report estimates 13 million renters to 9 million home owners by 2030.

“The rapid growth of the renter population will create significant demand for new rental housing construction and encourage a shift of owner-occupied dwellings to rentals,” according to the report. “In the next 15 years, many more rental households will form because of the size and ethnic composition of the millennial generation. Rental housing vacancy rates are already low, and rents are rising. Single-family homes are shifting to renter occupancy throughout the nation, and this trend is likely to continue.”

Still, the total number of home owners are expected to see growth in the next 15 years due to net household formation, the report notes. In particular, the rate of Hispanics in home ownership is expected to make gains, from 47.3 percent in 2010 to 48.2 percent by 2030.

Household formations are mostly expected to be driven among nonwhite populations from 2010 to 2020 with 77 percent of new households expected to be nonwhite, according to the report. In the following 10 years, that growth is expected to be at 88 percent. Also, household formation growth also is expected to be driven by a growth among senior households, those who are 65 or older.

Source: “Headship and Home Ownership: What Does the Future Hold?,” The Urban Institute (June 2015)

The Most Common Delays Toward Closing

The Most Common Delays Toward Closing. Image courtesy of stockimages / FreeDigitalPhotos.net

The majority of contracts – 64 percent — are settled on time with no delays to closing, but some REALTORS® acknowledge facing delays or even having contracts terminated for numerous reasons, according to the latest REALTORS® Confidence Index Survey, a survey of more than 1,500 REALTORS®. Twenty-six percent of REALTORS® surveyed identified a delay to settlement, while 10 percent said they have even had a contract terminated prior to closing.

About 60 percent of REALTORS® reported some type of issue on their contract in April. For example, 12 percent of REALTORS® identified a financing issue; 8 percent had home inspection problems surface; and 7 percent had an appraisal issue. Three percent of REALTORS® also identified issues buying/selling distressed property; titling and deed issues; or with contingencies stated in the contract.

“It is surprising that in a ‘tight’ and ‘difficult’ credit environment, only 12 percent of contracts that were reported to have settled or terminated had financing issues,” economists at the National Association of REALTORS® report. “One explanation may be that potential home buyers are deciding to sit on the sidelines for now, so these buyers were not captured in the data.”

Source:”64 Percent of Contracts Are Settled on Time,” National Association of REALTORS® Economists’ Outlook Blog (June 8, 2015)

Many Retirees Still Struggling with Mortgages

Many Retirees Still Struggling with Mortgages. Image courtesy of hyena reality / FreeDigitalPhotos.net

The number of seniors still making house payments into retirement has grown following the recession.

“It’s a big problem coming off the housing bubble,” says Cary Sternberg, an adviser to seniors on housing issues in a Florida retirement community called The Villages. “A growing number of seniors are struggling with what to do about their home and their mortgage and their retirement.”

Some baby boomers are finding they didn’t save enough for retirement, some may have lost their jobs prior to wanting to retire, some may have overpaid for their homes during the housing boom, some took out home equity lines of credit or dipped into their retirement funds prior to retirement. Whatever the case, a growing number are still stuck with a house payment into retire.

The Consumer Financial Protection Bureau’s Office for Older Americans says 30 percent of home owners 65 and older – or 6.5 million home owners — were paying a mortgage in 2013. That is up from 22 percent in 2001. The number of people 75 and older who still have a mortgage climbed from 8 percent in 2001 to 21 percent in 2011, according to a Federal Reserve study.

The median mortgage held by Americans 65 and older has more than doubled since 2001, blooming from $43,400 to $88,000, according to the CFPB.

In some cases, some older Americans are finding they just can’t keep up with their house payments in retirement, and some have lost their homes to foreclosure. An AARP study in 2012 found that 1.5 million Americans 50 and older lost their homes between 2007 and 2011.

Some older Americans are being forced to sell. For example, Seattle home owner Gayle Richards, 63, has two mortgages on her home that are for more than $150,000. In the Seattle-Tacoma-Everett area alone, 34 percent of home owners 65 and older were holding one or more mortgages in 2013, according to the U.S. Census Bureau. Richards, who is in the midst of divorce proceedings, says she can no longer afford to pay  her health insurance, car insurance, cellphone plan, and house payments on just Social Security disability benefits and a pension.

“I have to sell the house. I have no choice,” Richards told The Associated Press. “It’s just difficult because I don’t know where I’ll go.”

Source: “House Payments Burden More Older Americans,” The Associated Press (June 3, 2015)

What Worries Would-Be Buyers

What Worries Would-Be Buyers. Image courtesy of Ambro / FreeDigitalPhotos.net

With interest rates threatening to rise in the near future and pent-up demand at high levels in many parts of the country, buyers might feel ready to make a move. But a pair of surveys released this week reveal that many of them aren’t.

One survey from TransUnion, a Chicago-based credit information and protection company, reveals a majority of those planning on or considering buying a home in the next 12 to 18 months are unsure about what to do to improve their credit score. Nearly a third believe that closing old accounts—something that could actually harm their score—would help. They also found that a majority of the respondents were unsure about how their credit score affects the home financing process.

The survey, conducted by Toluna Analytics last month, included responses from 1,008 Americans, ages 18 to 64, who are planning or considering a home purchase within 12-18 months. Of these potential home buyers, 74 percent believe it’s important to check the accuracy of their credit report, but less than 45 percent correctly understand what their credit score even means, indicating a knowledge gap that real estate professionals can help to minimize.

You might consider tailoring your educational messages to potential home owners differently, depending upon where you work in the country. A second survey conducted last month concentrated on a specific age group, and found that knowledge gaps vary from region to region.

According to a survey from California-based Carrington Mortgage Services, millennials in the South are not only concerned about low credit scores, but they also worry that they don’t really know where to start when it comes to home ownership. By way of contrast, the survey found that Midwestern millennials are holding out on buying a home due to staggering amounts of student debt. Meanwhile, young adults in the Northeast are most concerned with credit card debt and those in western states are worried about being able to come up with enough money for a down payment.

Still, they found that more than half of the 2,000 millennials surveyed stated that they plan to buy a home within the next two years.

Sources: “Home Buyers Uncertain About How a Credit Score Affects Financing Process,” TransUnion (June 2, 2015) and “Survey by Carrington Mortgage Services Signals Down Payment Still Major Hurdle for Most Millennials,” PR Newswire (May 28, 2015)