Markets Poised for Biggest Price Gains

Markets Poised for Biggest Price Gains. Image courtesy of cuteimage / FreeDigitalPhotos.net

Veros Real Estate Solutions is softening its housing price forecast for this year to 3.4 percent appreciation for the 12-month period ending March 31, 2015 for the top 100 metro areas. Last quarter, Veros had forecasted a 5.1 percent for the following 12 months.

“The wave of appreciation may have crested, but it has been an impressive recovery in many respects,” says Eric Fox, Veros’ vice president of statistical and economic modeling. “The market is stabilizing and the overall outlook is very positive. However, we won’t see the rapid gains we have experienced in prior quarters. Those days appear to be behind us for the foreseeable future.”

Still, Veros sees five markets—mostly centered in California—seeing home price appreciation well above national averages. The five markets Veros is betting on for the highest home appreciation over the next 12 months are:

1. San Jose-Sunnyvale-Santa Clara, Calif.: +9.7% forecasted price appreciation
2. Los Angeles-Long Beach-Santa Ana, Calif.: +9.3%
3. Midland, Texas: +9.3%
4. Bismarck, N.D.: +9.1%
5. San Francisco-Oakland-Fremont, Calif.: +8.8%

Source: “These Cities Will Be the Strongest & Weakest Housing Markets in 2014,” HousingWire (May 1, 2014)

Biggest Regrets About the Purchase of a new home

Biggest Regrets About the Purchase of a new home. Image courtesy of Grant Cochrane / FreeDigitalPhotos.net

Though buyer’s remorse is never fun, there’s usually something we’d change if we could go back and make a big purchasing decision again. In a new survey, Chase Bank found out what some of the most common things are that recent home buyers would change about their real estate purchase if given a second chance.

Chase’s survey, “What I Wish I Knew About the Homebuying Process,” asked 807 recent home buyers about their attitudes following the purchase of a home, taking the temperature of how people are living with their real estate decision. Here’s what home buyers say they would do differently if they could make the decision over again.

Get Smarter About Financing

While nine out of 10 buyers surveyed say they felt prepared at the time they bought their home, 56 percent say that in hindsight, they should have known more about financing. Specifically:

• 22 percent say they weren’t as educated about the ins and outs of closings as they should have been.
• 19 percent say they weren’t as well-versed on making an offer and negotiating.
• 15 percent say they needed more guidance on the overall financing of a home.

Pick a Different-Size House/Area

Sometimes you don’t know whether a house suits your needs until you start living in it. That would seem to be the case for 39 percent of respondents, who say they would choose a house of a different size or a different price — or even in a different neighborhood — if they could redo their purchase.

Adjust Expectations

A good chunk of buyers weren’t expecting the home-buying process to take as long as it did, with 40 percent saying it took longer than they thought it would. Sixteen percent say they got a “pleasant surprise on timing,” according to the survey.

Be More Prepared to Spend on Maintenance

Eventually, we all have to face the cold, hard facts of home ownership: It can be expensive. Thirty-four percent of respondents say that home-maintenance costs ended up being more than they expected. Among first-time home buyers, 51 percent say they “got that sinking feeling” when faced with maintenance costs. What’s more, 80 percent of survey respondents say they considered their home move-in ready when they bought it, but 76 percent have since completed or planned renovations.

Source: Chase

Marriage Delays Behind Falling Home Ownership Rates

Marriage Delays Behind Falling Home Ownership Rates. Image courtesy of Ambro / FreeDigitalPhotos.net

More Americans are choosing to postpone marriage and families, and that’s one of the main culprits behind the falling home ownership rate, suggests Sam Zell, chairman of landlord Equity Residential, the largest U.S. apartment landlord.

“The deferral of marriage has such a staggering impact on real estate, and I just don’t think people focus on it,” says Zell. “I don’t think the multifamily market has ever had a better set of future demographics.”

In 2010, about 54 percent of adults were married, a drop from 57 percent a decade earlier, according to U.S. Census Bureau data. The median age of marriage has risen to 28.2 for men and 26.1 for women, according to the 2010 data.

The U.S. Census Bureau reported this week that the home ownership rate dropped to the lowest level in nearly 19 years, falling to 64.8 percent in the first quarter. The previous three months the home ownership rate had stood at 65.2 percent.

The home ownership rate peaked at 69.2 percent in 2004.

Source: “Zell Says Home Ownership Rate to Fall as Marriages Delayed,” Bloomberg (April 29, 2014)

Survey: Real Estate Is Fastest-Growing Industry

Survey: Real Estate Is Fastest-Growing Industry. Image courtesy of cooldesign / FreeDigitalPhotos.net

Twelve of the 20 fastest-growing industries in the U.S. over the past year are related to real estate and construction, according to data from Sageworks, a financial information company. What’s more, all of the industries on the list that are related to construction saw sales growth at 2 percentage points to 15 percentage points above the average sales growth of all other privately held companies in Sageworks’ database.

Topping the list of fastest-growing U.S. industries: Offices of real estate agents and brokers. Also, among the top six on the list were residential builders, foundation contractors, and lumber wholesalers. In the commercial sector, nonresidential builders, engineering firms, and heavy-construction firms ranked within the top 11.

“The economy is just improving in general, and these industries are indicators that things are moving in the right direction,” says Sageworks analyst Chuck Nwokocha.

Source: “The Fastest-Growing Industries Over the Last Year,” Forbes.com (April 28, 2014)

Job Growth in 2014

Job Growth in 2014. Image courtesy of Suat Eman / FreeDigitalPhotos.net

Booming employment centers usually lead to booming housing markets. Forbes recently ranked the 66 largest metros that have more than 450,000 jobs to find out which cities are likely to have the largest growth in employment this year. Forbes crunched employment data from the Bureau of Labor Statistics from November 2002 through January 2014 for these rankings, which are based on recent growth trends and each region’s employment momentum.

The following big cities topped Forbes’ list for projected job growth in 2014:

1. San Jose-Sunnyvale-Santa Clara, Calif. (Job growth in 2013: 4.3%)
2. San Francisco-San Mateo-Redwood City, Calif. metro (Job growth in 2013: 3.6%)
3. Austin-Round Rock-San Marcos, Texas (Job growth in 2013: 4.1%)
4. Raleigh-Cary, N.C. (Job growth in 2013: 3.9%)
5. Houston-Sugar Land-Baytown, Texas (Job growth in 2013: 3%)
6. Nashville-Davidson-Murfreesboro-Franklin, Tenn. (Job growth in 2013: 3%)
7. New York City, N.Y. (Job growth in 2013: 2.2%)
8. Orlando-Kissimmee-Sanford, Fla. (Job growth in 2013: 3.3%)
9. Dallas-Plano-Irving, Texas (Job growth in 2013: 2.8%)
10. Denver-Aurora-Broomfield, Colo. (Job growth in 2013: 3%)

Source: “The Best Big Cities for Jobs 2014,” Forbes.com (April 2014)

Homes That Won’t Sell

Homes That Won’t Sell. Image courtesy of Witthaya Phonsawat / FreeDigitalPhotos.net

Low inventories continue to plague housing markets across the country, as buyers face limited options and more bidding wars. But with home prices rising, more sellers are starting to put their homes on the market.

However, more than half of all existing homes are unlikely to be put up for sale anytime soon, unless there are significant changes in the housing market, according to a new analysis by Redfin. The real estate brokerage looked at transactions across 29 metro areas for single-family homes, condos, and townhomes, as well as mortgages and refinances, since 1999.

Researchers identified the following four categories of homes that are unlikely to reach the market anytime soon:

1. Low equity: Estimated 19 percent of homes. These are homes where the home owner owes more than 80 percent of the value on the home. Many of these low-equity homes were purchased or refinanced during the housing bubble between 2004 and 2009, according to the Redfin analysis. Redfin estimates that nearly all low-equity home owners will be in the black for the next five years.

2. Low mortgage rate: Estimated 16 percent of homes. Homes that were purchased or refinanced when mortgage interest rates were at record lows aren’t likely to sell anytime soon. Redfin considers low mortgage interest rates to be below 4.25 percent. These homes were purchased or refinanced between 2011 and 2013.

3. Purchased or refinanced in the past seven years: Estimated 14 percent of homes. A home that has been owned by the current owner for less than seven years isn’t likely to hit the market soon, according to the Redfin analysis. Redfin says that buyers are more likely to buy a home that has been occupied by the current owner for more than seven years.

4. Company or investor owned: Estimated 3 percent of homes. These are homes that are owned by a company or investor who bought five or more homes in a metro area during the past 10 years. “These investors are likely holding on to their investment for the capital appreciation and rental income,” according to the Redfin study.

Source: “Why Aren’t There More Homes for Sale?” Redfin (April 22, 2014)