Wobbling pending home sales
After nine months of pending home sales inching up, November’s stats released today by the National Association of Realtors reveals that the pending home sales index fell 16% in November as seen by the recent nosedive in the chart above, putting us back roughly to the level we were at in November of 2008 (which won’t exactly go down in history as a good month for the real estate industry).
Just last month, NAR Chief Economist Yun said about the ninth month of rising pending home sales, “still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families.”
Just one month later, Yun said, “it will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit.” Yun noted, “We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.”
After a great deal of money was poured into the loud campaign urging buyers to rush to beat the November 1st tax credit deadline, the credit was extended, leaving many agents to feel as if they cried wolf and lost ground in consumer trust. The 16% dip is easily pointed to as a result of the perceived November 1st tax credit deadline, yet many consumers we’ve spoken with didn’t know the credit has been extended.
Now we’re left to wonder if a stable market will come in mid 2010 as stated by Yun in December or will stabilization occur much later as many consumers are not aware the tax credit was extended and no longer have an impending emergency reason to buy and are sitting still waiting for a reason?
Some parts of the nation are doing much better this year- the West declined 2.7% but is up 21.4% over November 2009 while the Northeast dropped a heartbreaking 25.7%, dipping much lower than the national 16% drop.
How do we get out of this mess?
We got excited at the chart above climbing and climbing, just to experience yet another slap in the face to the real estate industry. Today, it was announced that the U.S. dollar fell and the 16% drop in pending home sales didn’t help and if any hint of job growth comes around, the Federal Reserve will likely raise interest rates sooner than later to help the value of the dollar.
The weaker housing data backed comments by Federal Reserve Governor Elizabeth Duke on Monday that there were still strong headwinds in the housing market and the Fed needs to keep interest rates “exceptionally low” for an “extended period.”
With telling news of pending home sales down as well as news of construction spending dipping, The Fed will have to get involved to change the course of this mammoth ship and the Government may have to continue backing the market with tax incentives.
“Sales should rebound going forward. Nevertheless, this report suggests that the recent strength of housing demand is still far from becoming self-sustaining and that the housing market remains overly dependent on government support,” Anna Piretti, an economist at BNP Paribas in New York told Reuters.
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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