Friday, April 21, 2017

WHAT YOU SHOULD KNOW

• California’s spring housing market posted a strong start to the year as existing home sales and median price registered healthy gains in March on both a monthly and annual basis, as did every major region in the state, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said. 

• Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for a full year and totaled a seasonally adjusted annualized rate of 416,580 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The March figure was up 4 percent from the 400,720 level in February and up 6.9 percent compared with home sales in March 2016 of a revised 389,770.


• “March’s solid sales performance was likely influenced by the specter of higher interest rates, which may have pushed buyers off the sidelines and close escrow before rates moved higher,” said C.A.R. President Geoff McIntosh. “The strong housing demand, coupled with a shortage of available homes for sale, is pushing prices higher as would-be buyers try to purchase before affordability gets worse.”


• Following back-to-back monthly price declines, the median price of an existing, single-family detached California home climbed back above $500,000 in March. The median price was up 8 percent from $478,570 in February to reach $517,020 in March, and was 6.8 percent higher than the $484,120 recorded in March 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

• “The spring homebuying season is off to a good start, as the economic and market fundamentals remain solid for the most part,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “However, higher interest rates, a dearth of housing inventory, and slow wage growth will continue to have an adverse effect on housing affordability that is putting upward pressure on home prices, and is sure to hamper the market throughout the year.”

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MILLENNIAL HOMEBUYERS FORGE AHEAD

As interest rates creep higher and housing markets across the country report lower inventory, the spring house-hunting season looks set to be intense – and perhaps even more so because of a rising number of young buyers testing home ownership for the first time. 

Economists and real estate agents alike are carefully watching Millennials – one of the largest demographics to reshape the American economy since baby boomers – to see not only what kind of effect this debt-laden, tech-savvy generation could have on the housing market but also when it may peak.

Full story
http://www.csmonitor.com/Business/2017/0412/Millennial-homebuyers-faced-with-a-tight-market-and- heavy-debt-still-forge-ahead

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IMMIGRANTS KEY TO HOMEOWNERSHIP GROWTH

Source: Urban Land Institute 
The housing and neighborhood location choices of immigrants will have a significant impact on urban growth in the U.S. for decades to come, particularly as more foreign-born residents seek to own homes in suburban communities, according to new research from the Urban Land Institute’s Terwilliger Center for Housing. Homebuilders and developers who can deliver the housing options immigrants want and need stand to benefit in the years to come.

Immigrants in general have strong aspirations for single-family homeownership. They're also increasingly targeting the suburbs in search of greater employment opportunities and lower-cost housing, the study notes.

Making sense of the story
• Nationally, the homeownership gap between all households and black and Latino households has changed little since 1970.

• Without growth of the foreign-population, regions with strong housing markets such as San Francisco would not have recovered as quickly following the recession; and markets that continue to struggle in the recession’s aftermath such as Buffalo would have experienced even weaker growth.

• Immigrants have strong aspirations for single-family homeownership, and homeownership rates for immigrants rise with their length of time in the U.S. This suggests that immigrants will be a key driver for owner-occupied housing for years to come.

• Immigrants seeking to own homes as well as those renting homes are increasingly drawn to the suburbs in search of employment opportunities, lower-cost housing and a higher quality of life. Suburbs are home to high-income, high-skilled immigrants as well as lower-income, lesser-skilled immigrants.

• While immigrants represent a key source of demand for new housing, a substantial share of immigrant housing demand will be met through purchases of existing homes. Sellers of these homes – many of whom will be baby boomers seeking to downsize – will create a strong market for smaller units.

Full story
https://uli.org/press-release/immigrants-housing-demand-report/

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Friday, April 7, 2017

RENTERS NOW RULE HALF OF U.S. CITIES

Detroit was once known as a city where a working-class family could afford to own a home. Now it’s a city of renters.

Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years. Detroit isn’t alone, of course: The rate of U.S. home ownership fell steadily for a decade as the foreclosure crisis turned millions of owners into renters and tight housing markets made it hard for renters to buy homes. Demographic shifts—millennials (finally) moving out of their parents basements, for instance, or a rising Hispanic population—further fed the renter pool.

Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.

While U.S. home ownership ticked up in the second half of 2016, there are reasons to think the trend toward renting will continue. A 2015 report from the Urban Institute predicted that rentership would keep rising through 2030, thanks to demographic trends that include aging baby boomers who downsize into rentals.

In the shorter term, housing market dynamics will also play a role. Fewer than 1 million homes were on the market in the first quarter of 2017, the lowest number since Trulia began recording inventory data in 2012. The shortage makes it harder for renters to buy. Meanwhile, rental landlords, including large Wall Street players and mom-and-pop investors, continue to plow cash into single-family homes.

Those shifts are likely to present new challenges for cities unequipped to handle high rental populations. Detroit Future City, a nonprofit that highlighted Detroit’s shift in a report earlier this month, argues that the city needs an intentional strategy for dealing with the rising population of such households.

That could include providing new protections for renters or creating resources to help landlords keep properties in good repair. On a grander scale, the Center for Budget Policy & Priorities, a Washington-based research institute, published a proposal this month calling for a new tax credit for low-wage workers, seniors, and people for disabilities.

Most low-income families don’t rent by choice, said Nela Richardson, chief economist at Redfin. And plenty of higher-income households rent because they can’t afford to buy. “We don’t have enough affordable supply in either rental or for-sale markets,” said Richardson, adding that cities interested in promoting renter-friendly policies can rethink their zoning policies to encourage more construction.

At an even more basic level, city leaders should check old assumptions about the role renter households play in their communities, said Andrew Jakabovics, vice president for policy development at Enterprise Community Partners, an affordable housing nonprofit.

Homeowners have traditionally been regarded as more engaged, with more at stake in the long-term prospects of their neighborhood, Jakabovics said. That view can unfairly shortchange renters.

“It goes a long way just to make sure you’re valuing renters and making sure voices are heard when it’s time to allocate resources to schools or parks or transit lines,” he said.

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HERE'S THE REAL REASON WHY HOMEBUYERS JUST DON'T FULLY UNDERSTAND MORTGAGES

A new study by Fannie Mae examines homebuyer education, and explains why many buyers aren’t being educated.
Most consumers interviewed in the study had little or no awareness of pre-purchase homeownership education classes unless they were required to take one.
For this study, Fannie Mae conducted 54 individual in-depth interviews and eight two-hour mini-group discussions across four markets, among lower-income first-time homebuyers as well as professionals, real estate agents and loan officers, who have experience working with lower-income first-time homebuyers and homeownership education or counseling.
Despite the low amount of participation in educational programs, the study showed all participants agreed homeownership education gives borrowers knowledge, confidence and employment to be financially and emotionally prepared for homeownership.
However, homeowners rarely participate in these programs unless they are required to take educational courses and were referred to by loan officers for loan qualification requirements or benefits such as down payment assistance programs, the study showed. In fact, very few even knew the range of programs offered.
“There is considerable fragmentation in the HE landscape,” the study states. “Virtually no consumers and only a few professionals understand the range of HE providers and HE offerings.”
So why is there such a lack of education in the market? Fannie Mae’s study explains that as well. Here are the results for homebuyers, lenders and real estate agents:
  • Homebuyers: HE involves time and inconvenience. It's “another hoop to jump through” during an already stressful time. It sounds like school and involves coming up with more money if a fee is involved.
  • Lenders: HE is one more thing on the long list of paperwork to make the deal happen. Loan officers have a deal-centered, transactional mindset. Some are concerned that borrowers will learn something that could kill the deal or lead them to other lenders.
  • Real estate agents: There is an overall “not my job” mindset. Real estate agents have no concrete incentive or motivation to refer their clients to HE. They view lenders as experts on loan-related steps and process and want to guide or control their clients themselves. Like loan officers, they are concerned that borrowers might connect to another real estate agent or deal.
However, while there may or may not be an incentive to educate homebuyers on an individual deal, there is certainly incentive to having an overall higher-educated industry.
United Wholesale Mortgage recently called out lenders for not educating consumers more after a study from the National Association of Realtors showed 87% of non-homeowners think they need at least 10% down in order to purchase a home.
But the study shows lenders and consumers alike don’t see the personal incentives to educating homebuyers.
“There is almost no voluntary participation by consumers or professionals,” the study states. “Consumers see the value in these programs only after the fact and will not be motivated to participate without concrete incentives.”

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AMERICANS FEEL MORE CONFIDENT ABOUT THE ECONOMY

A barrage of U.S. economic data was released recently, including statistics on the state of the housing market, consumer-confidence figures, and numbers that show the spending and income of Americans. The data show that, while Americans might be optimistic about the job market, there could be a gap between economic expectations and economic reality.

Making sense of the story

• Hiring numbers have been fairly steady, and Americans are buying houses despite the Fed’s recent interest-rate hike. The S&P/Case-Shiller U.S. national home-price index, which looks at housing prices in 20 cities, saw a 5.9-percent increase. According to a report by the National Association of Realtors, the demand for housing is strong: Its pending home-sales index, which looks at contracts signed in February, jumped 5.5 percent to a 10-month high. Experts believe that the strong housing numbers are because people believe the labor market is strengthening.
• Initial unemployment claims are another reason for optimism: The number of Americans filing new unemployment claims dropped to 258,000 last week. While that decline is less than anticipated, these initial claims have been below 300,000 for over 100 weeks. That’s the longest streak at that level since the 1970s, and the figure is at its lowest level in four decades. The decline in claims suggests a healthy labor market, and is often seen as a proxy for companies avoiding layoffs. But the fact that the indicator isn’t falling as much as expected has experts questioning whether the labor market might be losing momentum.
• Consumer-confidence figures—which measure how Americans feel about their economic future—provided similarly mixed messages: On Tuesday, the Conference Board reported that consumer confidence was at a 16-year high.*However, the University of Michigan’s Consumer Sentiment Index, which measures consumer confidence via phone interviews, showed a lower-than-expected reading.

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Sunday, March 5, 2017

CALIFORNIA PENDING HOME SALES DIP SLIGHTLY IN JANUARY; SOUTHERN CALIFORNIA MARKET CONTINUES TO OUTSHINE OTHER REGIONS


Following relatively strong closed escrow home sales over the past few months, California pending home sales slipped negligibly from a year ago, which suggests a softening in the housing market in the upcoming months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said.

Making sense of the story
• Based on signed contracts, statewide pending home sales decreased in January on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* slipping 0.2 percent from 107.4 from January 2016 to 107.2 in January 2017. On a monthly basis, California pending home sales were down 9.2 percent from the December index of 118.0. 
• Only the Southern California region posted a year-over-year improvement in pending sales last month, rising 8.1 percent from January 2016 and increasing 10.5 percent on a monthly basis. Riverside County led the region in pending sales, posting a 16.2 percent increase from a year ago. Los Angeles, Orange, and San Diego counties also posted modest year-over-year increases of 7.1 percent, 8.0, and 4.0 percent, respectively. San Bernardino County was the only area within Southern California that saw pending sales lower on an annual basis by 2.8 percent.
• For the San Francisco Bay Area as a whole, tight housing supplies and low affordability contributed to a fall in pending sales of 9.7 percent compared to January 2016. Only San Mateo County posted an annual increase, rising 5.3 percent from January 2016 after posting a significant double-digit annual decline (35.3 percent) in December. Pending home sales decreased 21.2 percent in San Francisco County, 7.1 percent in Santa Clara County, 24.9 percent in Monterey, and 4.8 percent in Santa Cruz County. A shortage of homes on the market and poor affordability will likely persist throughout the year, and impact Bay Area home sales.
• Pending sales in the Central Valley fell 7.9 percent from January 2016 and were up 2.2 percent from December. Within Central Valley, pending sales were down 14.6 percent in Kern County and 11.8 percent in Sacramento compared with a year ago.

Full story

http://www.car.org/aboutus/mediacenter/newsreleases/2017releases/jan2017pendingsales

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