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Real Estate Big Data

Are you selling real estate in a high-cancer-risk area?

(BIG DATA) If you own a brokerage knowing your local ecosystem can be beneficial. Whether it’s a humble brag on your blog, or a letter to a local rep, knowing your environment is always a good idea.

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As a realtor or brokerage owner, you know the importance of understanding your community’s ecosystem in order to shape your business strategy.

However, have you considered how environmental and quality may play a role in those decisions?

A recent study published in Cancer suggests that you should. According to the study, “of every 100,000 Americans, 451 of us will get cancer in a given year.” The study “found a difference of 39 cases (per 100,000) people, between areas with the highest and the lowest environmental quality.

This establishes a significant link between environmental qualities and cancer risks.

The study also showcases a map of the US and the air quality of various regions. Red and orange areas have the worst air quality, while blue and green areas have the best air quality. As you might expect, large metropolitan areas have the worst air quality, and things improve as you move into more rural areas. You do find the most exceptions throughout the southeastern region and a vertical stretch that runs from the tip of Texas to the Dakotas up north.

These kinds of signs can either be a major benefit or a major obstacle to attracting buyers to your real estate market.

According to the most recent Gallup polls, 47 percent of Americans worry a great deal about the quality of the environment. So, how do you adjust?

If you’re in a blue or green area, make sure to get the word out! People now consider environmental quality as part of the quality of life factor. Don’t let that benefit go unnoticed. Blog about it on your own website. Use your social media to share data like this from other sources, or other information praising the environmental quality and protections of your market.

Integrate it into your marketing materials where possible.

If you’re in a red or orange area, you’ve got a bit more work to do here, and it’s going to get a bit political. There is already plenty of concern about attempts at the federal level to handicap agencies dedicated to protecting the environment. Be wary of such measures at the state and city level, and be a voice for the real estate economy in shaping this policy.

Does going to places of legislative businesses give you the heebie-jeebies? Find local organizations dedicated to improving environmental quality. Sponsor a river or park clean up event. Show your support for events like Earth Day. Don’t have those kinds of events? Harness your entrepreneurial spirit and bring these events to your community. Taking action as a community leader will be massively beneficial for your brand.

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.

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Real Estate Big Data

The good and bad news of home prices rising in almost all cities

(REAL ESTATE BIG DATA) It looks like now is a good time for selling a house, because home prices are high. Also the buyers have lower mortgage rates, so buying is easier on them.

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In the fourth quarter of 2019, 94% of measured markets experienced home value gains when compared to the same time in 2018, according to the National Association of Realtors (NAR).

While inventory levels loosened slightly in the final quarter of the year, home prices jumped from $258,000 in Q4 of 2018 to $274,900 in Q4 of 2019.

Homeowners are in a great position, with a national average increase of 6.6% in their home’s value, representing their largest financial investment. We all want those kind of returns, but when future buyers are squeezed out of the market, there is no one to buy said financial investment.

Dr. Lawrence Yun, NAR Chief Economist said, “It is challenging – especially for those potential buyers – where we have a good economy, low interest rates and a soaring stock market, yet are finding very few homes available for sale. We saw prices increase during every quarter of 2019 above wage growth.”

Combine tight inventory levels and rising prices, and buyer conditions are restricted. The ray of hope in the market, however, is shrinking mortgage rates, making it more affordable to buy – the 30-year fixed rate averaged 3.76% in the fourth quarter, down from 4.95% one year ago.

NAR reports that with lower mortgage rates, the income needed for a family to afford a mortgage fell to $48,960 from $52,896 one year ago. When looking at a share of the estimated national median family income of $79,740, a family spent 15.3% of their income on mortgage (versus 17.2% in Q4 2018).

Dr. Yun observed that rising home prices create wealth gains for homeowners, but warned that “areas that are deemed ‘too expensive’ will obviously have trouble attracting residents and companies looking to do business there.”

The fix, says Dr. Yun, is “a good balance that benefits both current and future homeowners, but right now, the balance is still in favor of home sellers.”

In recent years, NAR has pointed to home builders as the primary driver of market alleviation, as housing starts could improve restricted inventory levels and allow more interested buyers into the market, particularly first time buyers.

Other alleviative factors include whether or not Federal Reserve Chairman Jerome Powell holds steady and doesn’t change rates (as he has indicated he doesn’t intend to if the economy remains on it’s present path), as well as strong international trade deals, and an improving stock market driving investments across the board.

None of today’s news is a surprise, as Dr. Yun already indicated the 2020 market would likely include rising home prices and low interest rates.

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Real Estate Big Data

Volume of contracts signed on homes dips 4.9% (but it’s okay…)

(REAL ESTATE BIG DATA) Contracts signed are down, but compared to years past that’s not unusual. To know the market health many other factors must be taken into account.

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Pending home sales (the volume of contracts signed on homes) had ticked up in November, but took a meaningful stumble in December, sliding 4.9%, with all four regions declining. According to the National Association of Realtors (NAR), the Southern region had the biggest dip, falling 5.5%, closely followed by the West which was down 5.4%, and the Northeast down 4.0%, with the Midwest outperforming them all while still sliding down 3.6%.

While that all sounds awful, it’s not exactly unexpected and no reason for panic.

The volume of contracts signed always falls in December as the holidays and weather tend to derail business for the latter half of the month. In fact, contracts are actually up 7.4% in the South compared to December 2018, up 7.0% in the West, and 1.3% higher in the Midwest compared to last year. The only region experiencing contraction annually is the Northeast, down a scant 0.1% for the time period.

Nationally, the index rose 4.6% from the previous year.

Dr. Lawrence Yun, NAR’s Chief Economist cites several factors challenging the industry. Although he points to low mortgage rates (which are forecast to remain under 4% for most of this year) and job growth, tight inventory continues to hold the market back. Still.

If you’ve read The American Genius for more than 30 seconds, you know that this alarm bell has been rung repeatedly in recent years.

“Due to the shortage of affordable homes, home sales growth will only rise by around 3%,” Dr. Yun notes. “Still, national median home price growth is in no danger of falling due to inventory shortages and will rise by 4%. The new home construction market also looks brighter, with housing starts and new home sales set to rise 6% and 10%, respectively.”

But what of that restricted inventory? Dr. Yun points to home builders as the determining factor in the performance of real estate this year.

“The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” Dr. Yun stated. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”

So will builders increase their activity. It remains uncertain, but according to the National Association of Home Builders, builder confidence closed the year out at its highest rate since 1999, and market conditions have improved substantially (for example, lending standards are not quite choking builders out as they had previously done, making land and material purchases difficult).

Look for housing starts to tick up in 2020 and (fingers crossed) for inventory levels to loosen to a less dramatic level and allow in more buyers that have continued to be pushed out of the market.

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Real Estate Big Data

Home sales improve in December and should pick up meaningfully in 2020

(REAL ESTATE BIG DATA) This past year has brought a lot of underlying trends to light about how the market is going, so using these factors how does 2020 look for home sales.

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2020 home sales

After a small dip in November, existing home sales improved 3.6% in December with all regions but the Midwest experiencing growth, according to the National Association of Realtors (NAR). Sales were up a whopping 10.8% compared to December 2018.

The median sales price in December was up 7.8%, hitting $274,500, growing in all regions and marking the 94th consecutive month of year-over-year increases. Good news for homeowners, but bad news for buyers, particularly first time buyers priced out of the market.

NAR’s Chief Economist, Dr. Lawrence Yun noted that price appreciation has accelerated and in areas of declining affordability, job growth is not keeping up with rising housing costs. “The hope is for price appreciation to slow in line with wage growth, which is about 3%,” Dr. Yun noted.

Further, as he has reiterated many times over the years, Dr. Yun notes that low inventory continues to plague the housing market. Total housing inventory at the end of December was 1.4 million units, down 8.5% for the year and 14.6% for the month as unsold inventory is at a three month supply at the current pace. This indicator is also problematic as unsold inventory totals have now fallen for the past seven months.

In December, first time buyers accounted for 31% of sales while individual investors were 17% of all sales. First time buyer levels are down slightly for the month and investors are a slightly larger share of the market.

In short, the market is showing some positive signs (sales levels, home values), but also negative signs (affordability rates, inventory levels). So what is in store for 2020?

Dr. Yun said buying conditions are actually favorable and will continue to be throughout the year. “We saw the year come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4% and housing starts ramp up to 1.6 million on an annual basis,” he said.

“If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020,” Dr. Yun concluded.

“NAR is expecting 2020 to be a great year for housing,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, California. “Our leadership team is hard at work to secure policies that will keep our housing market moving in the right direction, like promoting infrastructure reform, strengthening fair housing protections and ensuring mortgage capital remains available to responsible, mortgage-ready Americans.”

Mortgage Bankers Association SVP and Chief Economist, Dr. Mike Fratantoni observed, “We expect that home sales will rise in 2020, as additional new housing construction has come onto the market, and the job market remains strong and mortgage rates are low.”

“Typically, the inventory of homes on the market drops at the end of the year,” noted Dr. Fratantoni. “However, the supply of existing homes is now at a record low, and this will constrain the pace of sales this spring from being even stronger. However, the recent gains in new home construction is a positive, as the total inventory on the market will allow prospective buyers to find properties.

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