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Real Estate Big Data

April home sales shows how confusing we are as people

(REAL ESTATE BIG DATA) April home sales have shown some interesting figures, and could be indicative of humans or COVID-19, we’re still not sure which.

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April home sales

If humans have a couple of giant, recognizable traits, one would be adaptability, and the other would be being confusing. Regardless of the circumstances surrounding COVID-19 April home sales defied conventional logic, and our understanding of sales history.

Having 2 months of solid lock down, and not a predictable end in sight, one would expect all industries, especially housing, to start crumbling and possibly collapse. Who would want to risk going outside, and looking at someone else’s home when there’s a virus running rampant? Also keeping in mind that at any moment you could be told you no longer have a job, so couldn’t get a new home anyway. Why take that risk?

The turn of many realtors and associations towards tech, and virtual showings must have made a major impact because April home sales actually increased .6%. That may not seem like much, but we need silver linings where we can find them. This small increase could be the result of a few different things that maybe we can capitalize on.

Home sales

First for the sake of safety, some people such as chief investment officer at Bleakley Advisory Group, Peter Bookvar think people are trying to get out of the large city centers, and head to rural areas. Not only for better social distancing to steer clear of the Coronavirus, but homes and land are cheaper.

Speaking of cheaper homes, the overall median home price dropped from $339,000 in April of last year to $309,000 this year. Knowing you have to pay a whole car less this year might incentivize you into that new home. Plus with inventory dropping from 331,000 in March to 325,000 in April, homes are running out pretty fast.

Even as the inventory quickly dissipates, newly constructed homes are still out there making up 1 in 5 sales which is up from 1 in 6 last year. Sure the number of homes being constructed and listed have slowed 13%, but not as drastically as existing home listings dropping 36.3%

As far as locations of the homes being sold, the South dominates with an increase of 4.7% in sales, while the others dropped 26.5% in the Northeast and Midwest, and 33.5% for the West.

We see a ton of ups and downs in all different sectors of the housing industry, without a lot of correlation between any of it. But home sales are up this month, and that’s something to be happy about.

Basically COVID-19, instead of throwing a wrench into the gears, added a couple of new ones we’re still trying to figure out. I guess keep your head up, and be as positive as possible; regardless of how confusing the markets, and we as people are, we can also adapt and be stronger in the end.

Colin is a Web Producer at The American Genius that spends more time with reptiles than a normal person would expect. Care for animals is one of his many passions alongside writing, drawing, gaming, and thinking of things to add to bios.

Real Estate Big Data

NAR Chief Economist predicts housing market uncertainty

(BIG DATA) Warning bells on the housing market have been ringing for over a year. While this prediction isn’t a surprise, it’s disappointing news.

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Multitude of colorful homes representing housing market.

The housing market is booming. Many experts are concerned about another bust like we experienced in 2008, but the conditions are much different today. Homeowners aren’t extended like they were when the market crashed in 2008. National Association of Realtors® Chief Economist Lawrence Yun suggests that the housing market is still uncertain, even though he says, “housing kept the economy afloat” during the pandemic.

What is impacting the housing market? 

Yun cites record-low inventory and inflation as “curveballs” to the housing market. Many economists, including Yun, have been concerned about low inventory for many years, especially in certain markets. Even though builders are working hard to construct new residences, supply chain and labor issues are not accelerating the process.

Yun is more concerned about inflation impacting the housing market. He says,

“wages have risen by 6% from one year ago…but inflation is 8.5%.”

Rising mortgage rates have made mortgages cost $300 to $400 a month more, according to Yun. Many working families can’t afford that. Yun predicts inflation is going to be high for several months. The market will slow as the Federal Reserve raises rates.

Yun also cites the Russia-Ukraine war as another contribution to the uncertainty of the market. The war is also driving inflation, not just overseas, but in the United States. With gas prices climbing higher each week, this is impacting the housing market.

Is real estate a good investment in this market?

Last year, when Yun opened the Residential Economic Issues & Trends Forum at NAR’s annual REALTOR® Conference & Expo in San Diego, he expected the “housing sector’s success to continue,” but he did suggest that 2022’s performance wouldn’t exceed 2021s.

“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”

There’s a lot we don’t know about the future. It’s disappointing to think that the housing market may be uncertain, but real estate is still a good investment.

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Real Estate Big Data

Housing starts stagnate, market conditions are rapidly shifting

Housing starts for April stagnated, marking the second consecutive months of declines, and more renters being left out of this shifting market.

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construction home growth housing starts

Housing starts stagnated in April, down 0.2% from the prior month, according to the U.S. Commerce Department.

The sentiment appears to be that although this marks the second straight month of dips, most are seeing today’s news as a positive, especially as construction of new homes was expected to fall 2.4% in April.

Further, housing starts are up 14.6% from April of last year, driven primarily by multifamily construction.

But it’s worth not getting overly excited, given that permits dipped 3.2% in April which is a forward-looking indicator, so expect starts to continue cooling in a time where we quite need the inventory.

Demand for housing inventory remains high, but the National Association of Home Builders reports today that confidence in the single-family housing market fell dramatically in May, marking the lowest level in two years.

Dr. Lawrence Yun, Chief Economist at the National Association of Realtors said in a statement, “The worst of the housing shortage is ending, but market equilibrium between supply and demand is still some ways off.”

He notes that as mortgage rates increase, builders “are chasing rising rents, with fewer homebuyers and more renters being forced to renew their leases,” noting that even prior to the interest rate increases, rents were rapidly rising and vacancy rates rapidly declining.

Pointing to another market shift, Dr. Yun notes that “Some degree of a return to the office is also fueling back-to-city living where high rises are concentrated.”

That’s a problem.

“Even as home sales look to trend back to pre-pandemic levels after the big surge of the past two years,” concludes Dr. Yun, “inventory will not return to pre-pandemic conditions. That means home prices will get pushed even higher in the upcoming months, albeit modestly, given the supply-demand imbalance.”

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Real Estate Big Data

Home prices jump double digits in majority of American metros [report]

(REAL ESTATE) Housing affordability was already a widespread challenge before current economic pressures were applied, but now home prices are skyrocketing.

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homeownership home prices

As home sales slide and mortgage rates rise, home prices in 70% of 185 measured metros saw a double digit annual increase in Q1, according to the newest data from the National Association of Realtors (NAR), up from 66% in the previous quarter.

The Southern region accounted for 45% of home sales in Q1, and experienced a 20.1% increase in annual home prices (compared to 14.3% just the quarter prior). Home prices in the Midwest jumped 8.5% annually in Q1, while The Northeast rose 6.7%, and the West increased 5.9%.

The median sales price of a single family existing home has now hit an astonishing $368,200.

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” said NAR Chief Economist, Dr. Lawrence Yun. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”

Yun expects supply levels to improve, and for “more pullback in housing demand as mortgage rates take a heavier toll on affordability,” given that “there are no indications that rates will ease anytime soon.”

At first blush, price appreciation sounds lovely to anyone that owns a home, given that it is the largest investment most Americans will ever make.

But regarding today’s report, several homeowners told us that they now feel trapped, and that if they sold their current home, even if they purchased a new house at that same price, they would likely have to downgrade.

Affordability is an ongoing problem weighing down the housing sector. NAR reports that the monthly mortgage payment on a typical existing single-family home with a 20% down payment rose to $1,383 (up $319, or 30%, from one year ago). Families now typically spend 18.7% of their income on mortgage payments (but only spent 14.2% one year ago).

“Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well,” Dr. Yun observed.

Map of how home prices are behaving nationally

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