The National Association of Realtors (NAR) recently released their latestExisting Home Sales Report revealing that distressed property sales accounted for 4% of sales in September. This is down from 7% in 2015, and is the lowest figure since NAR began tracking distressed sales in October 2008.
Below is a graph that shows just how far the market has come since January 2012 when distressed sales accounted for 35% of all sales.
Existing Home Sales Hit 2nd Highest Figure Since June
Mortgage interest rates remained well below 4% in September at 3.46%, prompting existing home sales to stay at a healthy annual pace of 5.47 million. Month-over-month sales were up 3.2%.
Inventory of homes for sale remains below the 6-month supply that is necessary for a normal market, as it fell 2.2% to a 4.5-month supply. The shortage in inventory has contributed to the median home price rising an additional 5.6% to $234,200.
NAR’s Chief Economist, Lawrence Yun had this to say about the lack of inventory:
“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in.”
There is good news though, as Yun went on to say:
“There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring. The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate.”
If you are debating putting your home on the market this year, now may be the time. Buyers are still out there looking for their dream home. Let’s get together to determine your best plan.
Have you noticed all the senior housing developments springing up across Western New York? Well, it’s a trend that’s in full bloom across the nation, and with good reason.
It was back in 2011 when the U.S. Department of Health and Human Services first predicted a significant boom in our nation’s senior population. How significant? We’re talking more than 72 million people over the age of 65 living in our country by the year 2020. This staggering figure more than doubled the number identified in the 2000 U.S. Census.
It’s seems logical then to also predict that one of the employment trends that will help drive our economy now and well into the future will be jobs related to the healthcare industry. Economists are saying that healthcare will remain a fertile area for hiring for many years to come.
A trend at colleges and universities today is the addition of degrees focused on areas such as senior housing, aging, health policy, therapeutic recreation, dementia care, etc. For those interested in pursuing a career in one of these fields, an online search should produce a number of opportunities available at our institutes of higher learning.
There’s a line from an old movie that says, “If you build it, they will come.” Colleges and universities are building the degree programs to fill an employment gap, and wise students looking for a long-term career are already lining up at their doors!
The National Association of REALTORS® surveyed their members for their Confidence Index
The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.
Homes sold in less than 60 days in 38 out of 50 states and Washington D.C.
Homes sold in less than 30 days in 17 states
The Olear Team at MJ Peterson boasts an even better “days on market” average. In 2016, it takes us an average of only 21 days to sell a house. That compares favorably even within Western New York, where the 2016 average is 56 days.
Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade.
Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape.
1) Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006.
A buyer’s chances of being approved for a mortgage have increased over the last three years; that’s good news for the market. This is not a precursor to another challenge, as many experts maintain that it is still too difficult for many buyers to attain house financing.
As Jonathan Smoke, the Chief Economist of realtor.com, recently explained:
“The havoc during the last cycle was the result … of speculation fueled by loose credit. That’s the exact opposite of what we have today.”
2) The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.
3) Home prices are well within historic norms. Prices have increased substantially over the last several years; however, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels from 1987-1999.
4) Demand for housing, as measured by new household formations, is growing. The Urban Land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market.
5) New home starts are finally beginning to increase. This helps eliminate the number one challenge in the industry – lack of inventory. And it does so in two ways:
Some first time buyers will, in fact, purchase a newly constructed home.
Many current homeowners will move-up (or move-down) to a new construction and then put their current home on the market.
This means that there will be an increase in both new construction and existing home inventories.
Many experts have been calling upon home builders to ramp up construction to help with the lack of existing inventory for sale. For the past two months, new home sales have surged, with July’s total coming in at the highest since October 2007.
The latest estimates from the US Census Bureau and Department of Housing and Urban Development show that sales in July were 31.3% higher than this time last year, and 12.4% higher than last month, at a seasonally adjusted annual rate of 654,000.
Zillow’s Chief Economist, Svenja Gudell, echoed the reaction of some as she commented:
“July(’s) new home sales data was a surprise, but a welcome one. For years, the market has been practically begging builders to both ramp up their efforts overall and to put more focus on serving the less expensive end of the market. Today’s data confirms both are happening in earnest.”
“This rise in new home sales is consistent with our builders’ reports that market conditions have been improving. As existing home inventory remains flat, we should see more consumers turning to new construction.”
NAHB’s Chief Economist, Robert Dietz, believes this is just the start for new home sales if market conditions continue:
“July’s positive report shows there is a need for new single-family homes, buoyed by increased household formation, job gains and attractive mortgage rates. This uptick in demand should translate into increased housing production throughout 2016 and into next year.”
The existing home sales numbers for July will shed more light on the overall health of the housing market.
New home sales hit their highest mark in over 9 years. Buyers are out in force to find a home that fits their needs. Many are turning to new construction, as the inventory of existing homes has not been able to keep up with demand.