Existing home sales down, prices up
According to the National Association of Realtors (NAR), existing-home prices (prices on homes sold) in June fell 5.4 percent from May, while rising 4.5 percent from June 2011. The association points to tight supplies of affordable homes, limiting first time buyers.
The national median existing-home price for all housing types hit $189,400 in June, up 7.9 percent from a year ago, marking the fourth consecutive month of price increases, which has not happened since February to May of 2006, before the housing crash.
Dr. Lawrence Yun, NAR chief economist, said the bigger story is lower inventory and the recovery in home prices. “Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets,” he said. “The price improvement also results from fewer distressed homes in the sales mix.”
Lowering mortgage rates
According to the Freddie Mac Primary Mortgage Market Survey (PMMS), the national average commitment rate on a 30-year fixed rate mortgage (FRM) fell this week to 3.53 percent from 3.56 percent the week prior, down all the way from 4.51 percent in June 2011 which was still considered low at the time. While fees and points remained the same as the week prior, the average rate on a 15-year FRM fell to 2.83 percent (from 2.86 the week prior), and a 5/1 adjustable rate mortgage fell to 2.69 percent (from 2.74 percent), revealing a continued slide in rates.
Regardless of attractive rates, lending conditions remain tight, and the NAR reports that the barrier to entry is high given the lowered inventory levels.
Distressed home sales
The signals coming from economists can be confusing because many point to the pending shadow inventory of foreclosure homes that are not yet for sale that could flood the market, but at this moment, while distressed home sales are much more common than in the past, the shadow inventory (real or not) has not hit the market, so inventory is said to be quite tight.
Distressed homes accounted for one in every four home sales in June (13 percent were foreclosures and 12 percent were short sales), which is the same as the month prior, but 5.0 percent less than a year ago. Foreclosures sold for an average discount of 18 percent below market value in June, while short sales were discounted 15 percent.
“The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling,” said Dr. Yun.
Housing inventory and buyer stats
At the end of June, total housing inventory fell 3.2 percent, hitting a 6.6-month supply at the current sales pace, up from a 6.4-month supply in May, while listed inventory is 24.2 percent below June 2011 when inventory levels were at a 9.1-month supply.
First-time buyers accounted for 32 percent of purchasers in June, compared with 34 percent in May and 31 percent in June 2011. “A healthy market share of first-time buyers would be about 40 percent, so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity,” Dr. Yun said.
Cash sales rose 1.0 percent to 29 percent of transactions in June, the exact same levels as seen a year ago. Investors, who account for the bulk of cash sales, purchased 19 percent of homes in June (the exact same as a year ago), rising from 17 percent in May.
Sales of different types of construction
According to NAR, single-family home sales declined 5.1 percent to a seasonally adjusted annual rate of 3.90 million in June from 4.11 million in May, but are 4.8 percent above the 3.72 million-unit pace in June 2011. The median existing single-family home price was $190,100 in June, up 8.0 percent from a year ago.
Existing condominium and co-op sales fell 7.8 percent to a seasonally adjusted annual rate of 470,000 in June from 510,000 in May, but are 2.2 percent higher than the 460,000-unit level a year ago. The median existing condo price was $183,200 in June, which is 6.9 percent above June 2011.
Regional performance varied widely
The NAR reports that:
- In the Northeast, existing home sales fell 11.5 percent, but are 1.9 percent above June 2011. The median price fell 1.8 percent over the year to $253,700.
- In the Midwest, existing home sales fell 1.9 percent, but are 14.6 percent above June 2011. The median price rose 8.4 percent over the year to $157,600.
- In the South, existing home sales fell 4.4 percent, but are 5.5 percent above June 2011. The median price rose 6.6 percent over the year to $165,000.
- In the West, existing home sales fell 6.9 percent, and are 3.6 percent below June 2011. The median price rose 13.3 percent over the year to $233,300.
Regarding the Western region, the NAR says, “Given tight supply in both the low and middle price ranges in this region, sales in the West are stronger in the higher price ranges.”
Buyer interest and buyer traffic
NAR President Moe Veissi said that there’s been a steady growth in buyer interest. “Buyer traffic has virtually doubled from last fall, while seller traffic has risen only modestly,” he said.
Veissi added, “The very favorable market conditions are helping to unleash a pent-up demand, which is why housing supplies have tightened and are supporting growth in home prices. Nonetheless, incorrectly priced homes will not attract buyers.”
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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