Weather Chills New Home Sales to 5-Month Low

Weather Chills New Home Sales to 5-Month Low. Image courtesy of Victor Habbick / FreeDigitalPhotos.net

Sales of new single-family homes dropped 3.3 percent to a seasonally adjusted annual rate of 440,000 in February, the lowest level since last September, the U.S. Department of Housing and Urban Development and U.S. Census Bureau report.

“There is no doubt that the persistently bad weather took a toll on sales in February,” says Kevin Kelly, chairman of the National Association of Home Builders. “However, builders continued to increase their inventory of for-sale homes, indicating they still anticipate a relatively strong spring buying season.”

NAHB Chief Economist David Crowe says that the builder trade group is still optimistic that 2014 will be a strong year for housing, despite the recent slowdown over the winter months.

“The first-two-month average of 2014 is exactly in line with where 2013 left off,” Crowe says. “If not for the unusual weather, we would easily be ahead of last year’s pace. We also continue to see household formations and pent-up demand driving sales forward.”

The inventory of new homes increased to 189,000 units in February — a 5.2-month supply at the current sales pace. It’s the highest supply of new homes on the market since December 2010, but inventories still remain tight across the nation.

Regional Breakdown

In the Northeast, new-home sales plunged 32.4 percent in February, posting the largest decline since October 2012. New-home sales also dropped 15.9 percent in the West and by 1.5 percent in the South. The Midwest was the only region to gain, soaring 36.7 percent in February, which experts say results from an increase after an unusually low January figure.

Source: National Association of Home Builders and “New Home Sales Fall to 5-Month Low,” Reuters (March 25, 2014)

Chinese Buyers See Big Opportunity in U.S.

Chinese Buyers See Big Opportunity in U.S. Image courtesy of arztsamui / FreeDigitalPhotos.net

More Chinese home buyers are shifting their focus, which traditionally has been on real estate in Malaysia, Singapore, Canada, and Australia, to snatching up property in the U.S., Yahoo! Finance reports.

Chinese buyers were second to Canadians for the largest number of U.S. homes purchased last year by international buyers, according to the National Association of REALTORS®. Twelve percent of all U.S. real estate transactions made by international buyers last year were Chinese buyers, up from 5 percent in 2007, according to the 2013 NAR report. The median price of real estate purchases made by Chinese buyers was $425,000. Also, nearly 70 percent of those transactions were all-cash purchases.

Why are Chinese buyers suddenly more interested in U.S. real estate? Experts say it’s due to several factors, including the yuan’s strength against the U.S. dollar and the depreciation in U.S. housing in recent years that has made high-end properties a more attractive deal for Chinese buyers.

More than half of U.S. real estate purchases made by Chinese buyers last year were in California. These are the five markets that Chinese buyers are targeting the most, according to the NAR survey:

• Detroit
• Las Vegas
• Orlando
• Los Angeles
• Irvine, Calif.

Source: “Chinese Buyers Enthusiastic About U.S. Real Estate,” Yahoo! Finance (March 24, 2014)

Use Specialized Scents to Entice Buyers

Use Specialized Scents to Entice Buyers. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Some condo developers are trying to lure buyers by creating customized scents that are aimed at creating positive impressions of a building.

Borrowing from the hotel industry, real estate developers are creating memorable signature scents to sprinkle throughout their buildings, from the reception areas to the fitness center to model units.

For example, developers with the condominium One Thousand Museum, a construction project in Miami, are developing fragrances for the building’s reception area that is meant to “evoke the feeling of a beach breeze on a warm day,” despite the fact that the building isn’t on a beach.

The developers have created a total of four customized scents for the 62-story skyscraper, including a citrus scent with a hint of dark wood for the fitness center and a creamy coconut with a hint of orange flower for the rooftop aquatic center. It has also developed a tea and spice scent for the spa area.

“The sense of smell is something that’s most memorable to people,” Louis Birdman, one of the developers, told The Wall Street Journal. The building’s units range from $5 million to more than $15 million.

In Dallas, a new luxury-rental building, StreetLights Residential, is using a light floral scent in the sales center and lobby and a woodsier smell for its fitness center.

The idea is to “try to touch on all five senses,” says Tom Bakewell, chief financial officer of StreetLights Residential in Dallas, who says the signature scent helps with the branding. He says that when clients view and touch sample finishes such as granite countertops, they also listen to music played in the background, and drink soft drinks, beer, or wine. The fragrance is an additional subtle marketing tool, he says.

Key International’s new building in Miami is also using scents to enhance its woodsy, earthy-feeling lobby, combining sandalwood, vanilla bean, oak, and clove scent. Also, to get buyers to remember that smell, they’re using the scent on their sales materials and invitations to events too.

“When you smell something beautiful, it’s part of your whole first impression,” says Liliana Paez, director of sales.

Source: “A Whiff of ‘Welcome Home,’” The Wall Street Journal (March 20, 2014)

Mortgage Rates Fall, But Rises Likely Next Week

Mortgage Rates Fall, But Rises Likely Next Week. Image courtesy of ddpavumba / FreeDigitalPhotos.net

Freddie Mac says that the drop in mortgage rates this week may be temporary, due to the Fed’s recent announcement that it would begin winding down its bond-purchasing stimulus program sooner than originally thought.

The Federal Reserve hinted Wednesday that interest rates could start to rise in early 2015, and that it is continuing to taper its economic stimulus programs, including its bond-purchase program that had been aimed at holding down long-term interest rates and increasing job growth. The Fed said that rates could remain low for “a considerable time” after its bond purchase program ends, but new Fed Reserve Chair Janet Yellen then later clarified that would be about six months time frame.

“The rate on the 10-year treasury note rose following the Fed’s announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week,” says Frank Nothaft, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages with mortgage rates for the week ending March 20:

• 30-year fixed-rate mortgages: averaged 4.32 percent, with an average 0.6 point, dropping from last week’s 4.37 percent average. Last year at this time, 30-year rates averaged 3.54 percent.
• 15-year fixed-rate mortgages: averaged 3.32 percent, with an average 0.6 point, falling from last week’s 3.38 percent average. A year ago, 15-year rates averaged 2.72 percent at this time.
• 5-year hybrid adjustable-rate mortgages: averaged 3.02 percent, with an average 0.4 point, falling from last week’s 3.09 percent average. A year ago, 5-year ARMs averaged 2.61 percent.
• 1-year ARMs: averaged 2.49 percent, with an average 0.4 point, rising from last week’s 2.48 percent average. Last year at this time, 1-year ARMs averaged 2.63 percent.

Source: Freddie Mac and “Fed Changes Guidance on Raising Rates,” USA Today (March 19, 2014)

Investors Slowing Down on Buying Spree

Investors Slowing Down on Buying Spree. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Big institutional investors are getting away from buying single-family rental homes in bulk and are narrowing their focus to only a few markets for future purchases, CoStar Group reports.

The Blackstone Group, the largest institutional investor in the single-family rental market, announced that its acquisition pace has decreased 70 percent from its peak last year. Blackstone also said that it would be narrowing its future purchases to markets such as Seattle, Atlanta, Miami, Orlando, and Tampa, Fla. Blackstone’s portfolio includes 43,000 homes in 14 cities.

National home-price rises the past year are the main reason for the slowdown in buying, many institutional investors say. Investors are being more choosy about where they continue to buy.

“The housing recovery has been uneven across the nation, and we are no longer able to buy in some of our Western markets, although we remain excited about many others, where we can still acquire homes at a discount to replacement cost and attractive rental yields,” says David Miller, president and CEO of Silver Bay Realty Trust, the first company to convert to single-family REIT. “Florida, for example, leads the nation with the highest foreclosure inventory, which should provide a continuing supply of distressed inventory in 2014.”

Silver Bay, which owns 5,642 single-family properties, says it is narrowing its future purchases to markets in Texas and Atlanta, too.

American Residential Properties Inc., which has 6,073 single-family homes in its portfolio, says it would like to add at least 1,000 homes to its portfolio from four markets: Houston, Dallas, Atlanta, and Phoenix.

Source: “New Year Brings New Strategies for Single-Family Rental Giants,” CoStar Group (March 19, 2014)

More Homes Hit the Market in Time for Spring

More Homes Hit the Market in Time for Spring. Image courtesy of pixtawan / FreeDigitalPhotos.net

Inventories of homes for sale have increased 10 percent year-over-year, signaling growing seller optimism and a strong, early start to the spring home-buying season, according to realtor.com®’s latest National Housing Trend Report, which tracks 146 markets.

The median list price edged up 76 percent higher in February compared to year-ago levels. The nationwide median list price is $199,000, realtor.com® reports. The median age of inventory also rose 6.5 percent year-over-year to 114 days.

“Overall, these figures indicate a continued reinforcement of steady gains and market stabilization that we’ve been watching since late last summer,” says Steve Berkowitz, CEO of Move Inc. “Seller confidence is the factor to watch as we head into the spring home-buying season, and these are very encouraging indicators—not only are more homes coming onto the market, but typically we don’t see a rise in asking prices this early into the year. This is the market these sellers have been waiting for.”

Still, realtor.com® notes that inventories are still low by historical standards.

About 99 of the 146 markets that realtor.com® tracks saw year-over-year gains in inventory levels. Sixty-three of those markets saw levels rise by 10 percent or more.

California markets saw some of the biggest rises to inventories. For example, Stockton, Calif., has twice as many homes listed for sale on realtor.com® than it did a year ago, according to the report. Also, Fresno, Bakersfield, Riverside, and Oakland also reported 40 percent or more year-over-year increases in the number of homes for sale.

Meanwhile, inventories remain tight in Denver and Chicago, particularly. “The inventory deficits in these markets will likely continue to put significant upward pressure on housing prices going into the 2014 home-buying season,” the report notes. Denver’s median list prices are up 19.6 percent year-over-year, and Chicago has seen median list prices rise 14.3 percent in the past year, according to realtor.com®.

Source: realtor.com®