What You Have to Be Thankful for in Housing
What fall slowdown? In many markets across the country, the housing market is showing anything but the typical seasonal slowdown. In fact, a new report released this week by the National Association of REALTORS® shows just the opposite.
Existing-home sales eclipsed June’s cyclical sales and, in October, zoomed to the highest annualized pace in nearly a decade, according to NAR’s latest report. All major regions saw an increase in sales last month as well.
It’s a good time to be in the real estate business. And, this Thanksgiving season, you have plenty to be thankful for.
The economy is improving: The economy is largely expected to continue growing, at least at a moderate pace, next year. Growth will lead to slightly lower unemployment, which can help boost consumer confidence. What’s more, a growth in jobs often translates into more households looking for homes, writes Jonathan Smoke, realtor.com®’s chief economist, in a recent column at that site.
Powerful buying forces emerge: Two major demographic shifts are at play in the current housing market that could profoundly drive sales in the coming years: millennials and retiring baby boomers. “We are now in the midst of two massive demographic waves that will power above-average demand for homes for at least the next 10 years,” Smoke says. The median age of a first-time buyer this year was 32, according to the National Association of REALTORS®’ 2016 Home Buyer and Seller Report. Next year, 4.4 million people in the U.S. will turn age 32. Further, the second-largest generation is now moving into retirement. Americans ages 65 to 74 are in a key age range where housing decisions are being made, which typically involve a home sale and a purchase. Over the next five years, the number of people in the U.S. over the age of 65 is expected to increase 18 percent, while the population overall grows only 4 percent.
Foreclosures are plummeting: Foreclosure inventory plunged 31 percent in September and completed foreclosures dropped 7 percent year over year, according to data from CoreLogic. What’s more, the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) dropped by 25 percent in September year over year and are at the lowest level since August 2007. “Completed foreclosures have fallen by a total of more than 100,000 homes during the 12 months prior to September 2016,” said Anand Nallathambi, president and CEO of CoreLogic. “The decline in foreclosures is one of the drivers in the drop in vacancies, which is positive for homeowners and communities. Heading into 2017 we see that prices, performance and production – the three most important drivers of the real estate market – are all improving.”
More new-homes entering the pipeline: Housing starts rose 25.5 percent in October, reaching a seasonally adjusted annual rate of 1.3 million, the Commerce Department reported last week. It is the highest pace since August 2007. Single-family housing starts reached a nine-year high in October, reaching a rate of 869,000.
“These robust figures correlate with strong builder optimism in the housing market,” says Ed Brady, chairman of the National Association of Home Builders. “A firming job market, a growing economy, and rising household formations will keep the housing recovery on track into next year.”
Drones are flying: Long-awaited guidelines were released in June that have allowed more real estate professionals to incorporate drones into their marketing. They’re capturing aerial pictures and videos of properties to lure buyers. The Federal Aviation Administration released its final rule on commercial drone use in June. You still have to abide by guidelines. Operators are required to now obtain a Part 107 certificate, which replaced the previous Section 333 waiver. Operators also no longer are required to hold a pilot’s license. Still, operators must take a test before flying, and they must retake that test every 24 months in order to operate drones. Also, there are restrictions on the number of activities you can do with a drone (such as FAA prohibitions against flying a drone over a person or flying at night).
“Businesses are more and more finding opportunities to utilize drones as a way of cutting costs and better serving customers,” says Tom Salomone, NAR’s immediate past president. “That’s true in real estate and other industries as well. As application of this technology picks up, the regulatory landscape will likely continue to evolve.”
What You Have to Be Thankful for in Housingrce
, REALTOR® Magazine’s Daily News
