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Real Estate Big Data

Is now the time for home-buying? Survey says…

(REAL ESTATE DATA) With new home ownership on the decline, there is still some hope worth examining.

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Home-buying sound like a good idea?

We’ve written extensively about the difficulty of first time home-buying in 2017. It appears that these issues haven’t gotten better in the last three months, but there is hope on the horizon for homeowners.

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According to the National Association of Realtor’s (NAR’s) Housing Opportunities and Market Experience survey, “71 percent of homeowners think now is a good time to sell a home,” up from 61 percent this time from last year and 69 percent last quarter.

Furthermore, the Midwest is leading the charge, with 76 percent feeling like now is a good time to sell their home.

Hopeful guessing

While the data is a good sign, it’s not perfectly reflective of intent.

In the press release for the survey, NAR Chief Economist, Dr. Lawrence Yun said, “there are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable house to buy.”

The hope is that this uptick will lead to an increase in the number of houses on the market, which should offset supply issues in the current real estate market.

That’s also a welcome sign to potential buyers, who don’t have a lot of optimism about buying a home.

Renters on the fence

According to the same survey, only 52 percent of renters believe that now is a good time to buy a home. That number has gone down from last quarter (54 percent) and last year (62 percent).

In fact, that confidence number is the lowest it’s been since March 2015, when the survey began asking this question.

In short, potential customers are wary of the process.

There are a few reasons for this lack of confidence. For starters, a lack of inventory continues to impact affordability.

According to the press release, “under half of respondents (42 percent) believe homes are affordable for most buyers.”

Furthermore, one in five buyers would consider moving to a more affordable real estate market, and this is especially true for younger folks earning less than $50,000 annually.

Finally, this whole issue is exacerbated by rising rent prices, especially in East Coast and West Coast metro areas.

Financial insecurity kind of a deal breaker

There’s also a less-than-positive outlook among folks about their financial futures. Only 54 percent of those surveyed feel like the economy as a whole is improving.

That’s down from 62 percent last quarter, a rather drastic drop.

So, as you court potential buyers, especially younger, first-time buyers, they’ll need a lot of coaching and optimism to go through this process. Also, be looking out for an increase in inventory as the right time to court these types of buyers.

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Born in Boston and raised in California, Connor arrived in Texas for college and was (lovingly) ensnared by southern hospitality and copious helpings of queso. As an SEO professional, he lives and breathes online marketing and its impact on businesses. His loves include disc-related sports, a pint of a top-notch craft beer, historical non-fiction novels, and Austin's live music scene.

Real Estate Big Data

With housing demand so high, why are sales stagnant?

(REAL ESTATE NEWS) The housing market is on fire, yet some serious constraints are holding back sales levels – let’s discuss.

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If you have a pulse and are on the internet, you already know that the housing market is white hot, with bidding wars in more cities than ever. So why in the world are home sales stagnating?

Pending home sales rose only 0.4 percent in March, according to the National Association of Realtors’ (NAR’s) Pending Home Sales Index (PHSI), decreasing 3.0 percent on an annualized basis – the third consecutive month of annual dips.

Despite a strong economy, NAR points yet again to “unrelenting inventory constraints” which they recently said would only be relieved by builders stepping up production, more homeowners putting their home on the market, and/or investors releasing inventory.

NAR’s Chief Economist, Dr. Lawrence Yun says contract activity is moving sideways and not breaking higher despite the strong job-creating economy.

“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” said Dr. Yun.

He continued, “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”

Dr. Yun forecasts that existing home sales will hit 5.61 million this year (up slightly from 5.51 million last year), also forecasting the national median home price will rise 4.4 percent.

He notes that affordability and availability are holding back home sales, combined with price appreciation outpacing incomes, and mortgage rates rising, sales will soon peak.

“Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive,” said Yun. “That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers – especially first-time buyers – will be left on the sidelines.”

This story originally published on April 30, 2018.

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Real Estate Big Data

Home sales surge in half of the nation, slump in the other half

(REAL ESTATE NEWS) Home sales rose last month, despite challenging inventory and affordability conditions – but not in all markets.

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Talk about mixed signals. We ended last week with alarm bells that affordability is restricting the housing market, yet home sales in March actually surged in the Northeast (up 6.3 percent) and Midwest (up 5.7 percent) compared to just one month prior.

Meanwhile, home sales slipped 0.4 percent in the South, and a whopping 3.1 percent in the West. Sales levels in all four regions are lower than they were at this time last year, reinforcing the supply and demand challenges, putting homeownership out of reach for a growing pool of potential buyers.

NAR Chief Economist, Dr. Lawrence Yun has indicated that the only way to loosen the noose is a combination of more current homeowners opting to sell, builders increasing new home production, and investors releasing inventory.

In the last year, the median existing home price rose 5.8 percent to $250,4000 with March as the 73rd consecutive month of annual gains.

The average number of days on market decreased to 30 days from 37 in February and 34 in March of 2017. Half of all home sold were on the market for less than a month, and in some cities, bidding wars and immediate sales are common.

“Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets – especially those out West,” said Dr. Yun.

That said, there is a silver lining.

NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty notes, “First-time buyers continue to make up an underperforming share of the market because there are simply not enough homes for sale in their price range.”

Supply conditions improve in higher up price brackets,” concluded Mendenhall, “which means those trading up should see considerable interest in their home, as well as more listings to choose from during their own search.”

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Real Estate Big Data

Housing prices rise, outpacing wage increases

(REAL ESTATE NEWS) A new joint report from NAR and realtor.com reveal that affordability conditions are eroding and there are very few cures to this problem.

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Good ol’ economics – housing demand continues to outpace supply, and bidding wars are now common in many cities. On a national scale, affordability is increasingly threatening many peoples’ ability to buy, based on their income.

The realtor.com and National Association of Realtors joint report, the Realtors Affordability Distribution Curve and Score, examines affordability conditions compared to income levels for active inventory in local markets. Higher scores suggest a particular market has more affordable homes in proportion to local income levels.

It’s no surprise that in March, the report indicates the least affordable (in proportion to income) is Hawaii, California, Oregon, the District of Columbia, Montana, and Rhode Island. In these states, households at the median income level can only afford 19 to 23 percent of the active housing inventory.

In contrast, the most affordable states are Ohio, Indiana, Kansas, Iowa, and West Virginia, where a a typical household can afford 54 to 62 percent of all active inventory.

The report also indicates that more local markets are seeing worse affordability conditions compared to last year, with L.A., San Diego, San Jose, Ventura, and San Francisco leading the pack. In these markets, the typical household can only afford 3.0 to 11 percent of homes available for sale in their markets.

The typical household can afford nearly 75 percent of homes for sale in Dayton, OH, Toledo, OH, and Scranton, PA.

NAR’s Chief Economist, Dr. Lawrence Yun stated, “The survey confirms that the lack of entry-level supply is putting affordability pressures on too many buyers – especially those at the lower end of the market, where demand is the strongest.”

The report makes even more apparent why first-time buyers “struggle finding affordable properties to buy and are making up less than a third of home sales so far this year,” said Dr. Yun.

Although wages are on the rise, housing prices are outpacing these increases, and Dr. Yun points to the solution being “more homeowners selling, investors releasing their portfolio of single-family homes back onto the market and more single-family housing construction.”

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