Tag Archives: first-time buyers

The State of the Union: Real Estate Edition

state of the unionYesterday, the National Association of Realtors released their quarterly report regarding the statistical news of existing-home sales. It has shown that while we have been on a gradual upswing as of the past three months, our summer season ended with a definite decline come August. Now, this news is not to be taken as bad news; there has not been anything terrible happening in the market. We are seeing definite improvement from last year across the board. However, there has been a stall in the constant increases we’ve been experiencing nationwide.

If we break it down by region, the only one that hasn’t had a change in existing-home sales at all from July is the Northeast. The mid-west declined 1.5 percent, the South was down 6.6 percent and the West down 7.8 percent. These numbers may seem to be cause for concern but all of these regions have an average of a 6 percent increase from last year.

Now these statistics aren’t real estate sales across the board. To be clear, existing-home sales according to the NAR consists of completed transactions that include single-family homes, townhomes, condominiums and co-ops. These sales have fallen 4.8 percent from July, but as a yearly average, they are 6.2 percent above a year ago. I know, it’s a lot of numbers.

Experts are saying that the reason for this stall is a lack of inventory in areas like the South and the West. This has caused the prices for said homes to spike drastically to capitalize on the lack of supply to demand. NAR chief economist Lawrence Yun states, “With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors.” Basically, the lack of new home construction isn’t reflecting the needs of those in various areas. This increases prices, which has been the issue for the stall. Thankfully, the price appreciation for the limited supply of homes have begun to come out of the unhealthy growth rate and started to even out, which is good for the overall sales.

But rather than end this post on a bad note, here’s something to keep in mind as we head into the next quarter: As our job market continues to improve, it will trickle down to wage increases. This will increase homebuilding and improve home inventory, which will continue to slow down price increases. So in the end, it will all even out. Guess we’ll just have to see what the next quarter has in store…

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Rent-to-Own Isn’t as Easy as You May Think

_tma_Rent-to-own

Today I ran across a fact about current housing market that made me stop in my tracks. Homeownership is at its lowest in 25 years. Wait, excuse me? You must have your facts wrong, sir. We can’t seem to slow down this incredible surge in today’s market! Unfortunately, I was mistaken. And the reason behind it is not what you think.

According to the U.S. Census, the rate of homeownership fell to 63.7%, a rate that hasn’t been matched since 1990. But if housing demand is rising and pricing is rising, why isn’t homeownership? The upswing in the economy is actually having a reverse effect on the housing market. Hold on. Let me explain…

Because there is a rise in the economy, there are more millennials moving out of their parents’ homes and into a rental property. This increases the demand of rental properties. In fact, rental vacancies are at an all-time low. The more demand there is for these soon-to-be rental properties, the price for said properties begins to rise, which is what we can see from the latest market reports. Unfortunately, the rise in pricing for these rental properties doesn’t allow first-time buyers to buy. Instead, these single-family homes are bought by investors and rented.

And therein lies the homeownership hit. It really comes down to inventory and these days there isn’t enough of it. And sadly, this leaves a lot of lower and middle-class families unable to join the ranks of homeowners. The more prices rise and expectations are met and/or exceeded, the more homeownership will drop. David Blitzer of S&P Dow Jones Indices states, “Home prices continue to rise and outpace both inflation and wage gains. If a complete recovery means new highs all around, we aren’t there yet.”

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There’s Just Something About That New House Smell…

new-home-construction

As the current upswing in real estate sales continues to rise & the down payment percentages have begun to fall, thanks to Freddie Mac’s 3% deals, another new development has begun to take form. New home sales have reached a seven-year high, rising 7.8% in February. And it’s been a long time coming…

The U.S. Department of Housing and Urban Development recently released the great news as new home sales hit an adjusted annual rate of 539,000 units in February. They say that it isn’t the first-time buyers casing the growth, but the existing home owners, trying to capitalize on the new construction and low mortgage rates. The sales increase has dampened inventory levels, but we are currently on a 4.7 month supply, which is close to the 6 month supply seen as a healthy pace for the sector.

The main areas causing this incredible surge, you ask? The Northwest with a whopping 152.9% increase in sales! I guess the cold weather was no match for chilly home owners…or maybe they were just freezing and ready to get warm and toasty in some new digs. Either way, kudos to you Northeasterners! Continue to do us proud.

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