Proof That Buyer Demand Is Strong

Proof That Buyer Demand Is Strong. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

For the fourth consecutive month, pending home sales were on the rise, with contract signings climbing to the highest level since May 2006, according to the National Association of REALTORS®’ Pending Home Sales Index. All four major regions of the U.S. posted increases last month, with the largest gains in the Northeast and the Midwest.

The index, a forward-looking indicator based on contract signings, showed pending home sales up 3.4 percent in April month-over-month and up 14 percent above April 2014 levels, NAR’s index shows. This marks the largest annual increase since September 2012.

The steady gains in contract activity each month of this year is proof that buyer demand is strong, says Lawrence Yun, NAR’s chief economist.

“REALTORS® are saying foot traffic remains elevated this spring despite limited – and in some cases severe – inventory shortages in many metro areas,” Yun says. “Home owners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale. As a result, home prices are up and accelerating in many markets.”

NAR recently reported that existing-home sales cooled in April, falling 3.3 percent month-over-month, but taking into account pending home sales, Yun expects a rebound in home sales heading into the summer. But gains will rely on a boost in inventory levels and evidence of moderating price growth, particularly since interest rates are now starting to rise.

“The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers – especially first-time buyers – are able to obtain a mortgage,” Yun says.

Source: National Association of REALTORS®

The Nation’s Top 10 Seller Markets

The Nation’s Top 10 Seller Markets. Image courtesy of jannoon028 / FreeDigitalPhotos.net

Tight for-sale inventories are bringing out the competition in several markets, as buyers bid up prices above asking prices. Out of 315 counties (with populations of at least 100,000 and at least 100 sales), 85 – or 27 percent – saw homes sell on average for at least 101 percent of their estimated full market value, according to RealtyTrac’s April 2015 U.S. Home Sales Report.

But in some markets, sellers fetched even more. The following were identified as the top seller markets:

• Alameda, Calif.: 108% (sale price percentage of market value)
• San Francisco, Calif.: 108%
• District of Columbia: 107%
• Forsyth, N.C.: 107%
• Yolo, Calif.: 107%
• Marin, Calif.: 107%
• Cass, N.D.: 107%
• Contra Costa, Calif.: 107%
• Alexandria City, Va.: 106%
• Shasta, Calif.: 106%

Source: RealtyTrac

Congress Urges Delay on New Mortgage Rules

Congress Urges Delay on New Mortgage Rules. Image courtesy of atibodyphoto / FreeDigitalPhotos.net

About 300 lawmakers from both the House and Senate have waged a bipartisan effort urging the Consumer Financial Protection Bureau to offer a “grace period” for lenders to comply with a new mortgage disclosure rule that is slated to take effect Aug. 1.

Lawmakers sent letters last week asking the CFPB to grant banks, credit unions, and other lenders an extension of Dec. 31 before the agency enforces the new rule.

The new rule aims to streamline the disclosure process for home buyers during closing by merging the Truth in Lending Act and the Real Estate Settlement Procedures Act into one form. The new form is referred to as TRID.

The real estate industry has largely supported the new form but has also asked for more time as lenders get accustomed to using it. Earlier this month during the 2015 National Association of REALTORS® Legislative Meetings & Trade Expo in Washington, D.C., REALTORS® met with members of Congress to urge a grace period for the enforcement of the new closing process for residential transactions.

“As you know, August is a traditionally busy month in the real estate industry,” according to the May 21 bipartisan letter, which was signed by 41 senators. “Many real estate agents, lenders, and others who help our constituents buy or refinance homes are concerned about implementation of the new TRID disclosure forms, with no grace period, during the peak home buying season.”

The CFPB has declined to comment on the letters.

Source: “Congress Urges CFPB to Delay Enforcement of New Mortgage Disclosures,” American Banker (May 22, 2015)

Home Sales Cooled Off This Spring

Home Sales Cooled Off This Spring. Image courtesy of panuruangjan / FreeDigitalPhotos.net

Existing-home sales slowed in April, with all major regions of the country – except the Midwest – experiencing declines as buyer demand continues to far exceed the number of homes for-sale, according to the National Association of REALTORS® latest housing report.

Total existing-home sales – reflecting completed transactions for single-family homes, townhomes, condos, and co-ops – fell 3.3 percent to a seasonally adjusted annual rate of 5.04 million in April, NAR reports. Despite the dip, sales are about 6 percent above year ago levels.

April sales failed to keep the robust gain seen in March, says Lawrence Yun, NAR’s chief economist

“April’s setback is the result of lagging supply relative to demand and the upward pressure it’s putting on prices,” Yun says. “However, the overall data and feedback we’re hearing from REALTORS® continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes.”

But the limited for-sale inventories may continue to hold back sales.

“Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace,” says Yun. “To put it in perspective, roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012.”

Market Snapshot for April

Inventories: For-sale inventories rose 10 percent at the end of April to 2.21 million existing homes for-sale. Inventories are still 0.9 below year ago levels and are at a 5.3-month supply at the current sales pace.

Home prices: The median existing-home price for all housing types was $219,400 in April – 8.9 percent above last year. This marks the largest percentage gain in home prices since January 2014.

Days on the market: Properties sold faster in April, averaging 39 days. That is the fastest since July 2013 (which was 42 days) and the second shortest time (37 days in June 2013) since NAR began tracking such data in May 2011. What’s more, nearly half of the homes on the market sold for less than a month in April. Broken out, short sales were on the market the longest at a median of 180 days; foreclosures sold in 50 days; and non-distressed homes took 38 days.

Distressed sales: Foreclosures and short sales made up 10 percent of home sales in April, below the 15 percent share a year ago. In April, 7 percent of sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value, while short sales were discounted on average 14 percent.

All-cash sales: The number of transactions that involved all-cash were 24 percent in April, unchanged from March but down significantly from a year ago when all-cash sales comprised 32 percent of transactions. Individual investors who account for the bulk of cash sales purchased 14 percent of homes in April, down from 18 percent a year ago. Seventy-one percent of investors paid cash in April, according to NAR.

Source: National Association of REALTORS®

Single-Person Households Are on the Rise

Single-Person Households Are on the Rise. Image courtesy of stockimages / FreeDigitalPhotos.net

A century ago, fewer than six percent of all households consisted of people who lived alone. By 2013, that percentage has jumped to 28 percent, with single-person households now making up the second most common household type just behind married couples without minor children (at 29 percent), according to U.S. Census Bureau data. What’s more, single households have now surpassed married households with minor children (19 percent).

These single households – once mostly dominated by men – have shifted to a rise in the number of women living alone. Women now head 54 percent of all single-person households.

“In the past, when living alone might have been a short-term condition, for many it is now a long-term situation, the result of a number of broad demographic and economic forces at work over the past half century: greater affluence, longer lives, later ages of marriage, higher divorce, smaller family sizes, greater labor force participation and financial independence of women, and stronger government safety nets across a wide spectrum of social programs,” writes George Masnick, senior research fellow at The Harvard Joint Center of Housing Studies.

In large cities, single person households account for 45 percent of all households. Some neighborhoods in Manhattan and Washington, D.C., in particular, have single-person households that approach two-thirds of its households.

Single-person households aren’t dominated by one generation either. About 28 percent of all single-person households are under the age of 45; another 36 percent are between the ages of 45 and 64; and 36 percent are over the age of 65.

Many of these single-person households are also home owners. Fifty-four percent of single-person households are owner-occupied, according to the 2013 American Housing Survey. Between 2003 and 2013, owners comprised 55 percent of the growth in single person households.

Source: “The Rise of the Single-Person Household,” Harvard Joint Center for Housing Studies’ Housing Perspectives Blog (May 20, 2015)

Owners Place High Value on Good Yards

Owners Place High Value on Good Yards. Image courtesy of Toa55 / FreeDigitalPhotos.net

Don’t underestimate the importance of a beautiful yard to home owners and their neighbors. 84 percent of adults say that the quality of a home’s landscape and yard would affect their decision on whether to purchase a home or not, according to a new survey of more than 2,000 adults conducted by the National Association of Landscape Professionals.

The majority of Americans want to live amid nice landscaping. The survey found that 91 percent of Americans believe it is important to live in close proximity to trees, grass, or nice landscaping. Midwesterners are the most likely to rate the importance of landscaping the highest (at 94%), followed by the West (89%) and Northeast (87%).

“Across the board, the survey reveals that Americans deeply value surrounding natural elements and yards where they can spend time outside their homes,” according to the National Association of Landscape Professionals.

Eighty-four percent of home owners surveyed said that it is important to have their yard well-maintained, and 71 percent also say it’s important for their neighbors to have well-maintained landscapes as well. But the survey finds that only 33 percent of Americans say they believe they have the knowledge and skills to keep their lawn and plants healthy and appealing.

Source: National Association of Landscape Professionals