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NAR Reports

Home sellers averaged $40,000 in equity gains this year

Diving deeper into NAR’s 2015 Profile of Home Buyers & Sellers, we learn that home sellers are seeing healthy gains, spending less time in their homes before moving.

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The 2015 National Association of Realtors Profile of Home Buyers and Sellers has just been released, and it is filled with mixed news. The share of first time buyers is slipping from historic averages which is concerning, but home values are increasing and sellers are walking away with more cash.

But what of home sellers? Let’s dig deeper into who they are and what they want.

Average age and income

This year, the typical home seller was 54 years old, the same as 2013, but up from 46 in 2009. The majority (91 percent) identified as white with English as their primary language.

The median household income for a home seller is $104,100 which is a substantial jump from last year’s $96,700.

The report notes that incomes in the Northeast and South were higher this year than in the West and Midwest.

Why home sellers sold this year

The desire to move into a larger home was the most commonly cited reason for selling this year at 16 percent, followed closely by a job relocation (14 percent), and the desire to move closer to friends and family (13 percent).

42 percent of sellers traded up and purchased a home that was larger in size than what they previously owned, 29 percent bought a home that was similar in size and 31 percent traded down and purchased a home that was smaller in size.

Buyers over 65 typically downsized by 200 square feet, while Millennials (34 and younger) purchased a home 600 square feet larger.

According to the report, “Buyers age 35 to 44 traded up the most, purchasing homes that were 700 feet larger in square feet.”

Sellers are moving out faster today

Sellers typically lived in their home for nine years before selling, declining from 10 years in last year’s report. That number is still higher than reported in 2001 to 2008 where the tenure in the home was only six years.

Millennial sellers had the shortest tenure in their homes – sellers aged 18-34 sold their home within five years, compared to those over 75 years of age who sold their home typically after 18 years.

FSBOs wane in popularity

Most home sellers (89 percent) worked with a real estate agent, with FSBOs falling to only 8.0 percent, which is below the historical norm.

As a point of reference, from 2001 to 2008 the share of FSBO sales ranged from 12 percent to 14 percent.

Working with an agent was highest in the West at 93 percent and lowest in the Northeast at 86 percent, which stayed the same from last year. Conversely, FSBO sales were highest in the Northeast at 11 percent and lowest in the West at just six percent.

Fetching higher sales prices

For recently sold homes, the final sales price was a median 98 percent of the final listing price and were on the market for a median of four weeks.

“Tightened inventory continues to cause prices to increase in many areas of the country,” notes the report. “While housing inventory is reduced in many areas, sellers see a favorable market where they receive a median of 98 percent of their asking price and sell their home typically within four weeks.”

Fully 37 percent of all sellers offered incentives to attract buyers, with home warranty policies and closing cost assistance as the top two listed incentives.

Why did some delay selling?

Real estate professionals do well to understand buyer and seller objections. This year, the biggest stumbling block to selling was being underwater in their mortgage. That share of sellers dropped from 17 percent in the 2014 report to 14 percent in the 2015 report.

According to NAR, “Sellers who purchased their home eight to 10 years ago continue to report stalling their home sale at higher rates – 29 percent of seller reported delaying their home sale.”

Those who sold saw big gains

Home sellers cited that they sold their homes for a median of $40,000 more than they purchased it, up from $30,100 the year prior.

This accounts for a 23 percent price gain up from 17 percent the year before. While underwater homeowners account for a delay in some sales, of those that put their homes on the market, the average return spiked this year.

Sellers who owner their homes for one to seven years, all reported selling their homes from roughly $30-35,000 more than they purchased it. That number drops drastically to only $3,000 between eight and 10 years, and then appreciates steadily. Homes sold after 21 years reported a price gain of $138,000.

#NARprofile

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

NAR Reports

Home sales on the rise – don’t call it a comeback (okay, do)

(REAL ESTATE) Inventory levels continue to fall as prices rise, making for a competitive market. After a tough winter, February saw considerable gains in home sales.

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home sales

For years, inventory levels have been sinking, and prices have been growing, making the home buying process increasingly complex and sometimes discouraging. But after two consecutive months of declining sales, existing-home sales made a comeback in February, rising 3.0 percent, according to the National Association of Realtors (NAR). Sales are now 1.1 percent higher than February of last year. #GoodNews

Although home sales in the Midwest and Northeast saw a dip in this period, the South and West regions skyrocketed, boosting the national numbers.

Dr. Lawrence Yun, NAR’s Chief Economist noted that “The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices – especially in the West – shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

Added Yun, “The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month. Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”

Click to enlarge.

In February, the median home price rose to $241,700, a 5.9 percent increase from February 2017, and the 72nd straight month of annual gains. The average days on market fell to 37, down from 41 in January, and 45 last February. That’s what we call a competitive market.

NAR President Elizabeth Mendenhall comments on the difficulty first-time buyers are seeing in this competitive market. “Realtors® in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their underperforming share of overall sales to start the year. Prospective buyers should start conversations with a Realtor® now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”

Regional performance varied, with sales in the West outperforming all other regions. While sales fell in the Northeast by 12.3 percent, and dropped 2.4 percent in the Midwest, they skyrocketed 11.4 percent in the West, and 6.6 percent in the South.

february existing home sales

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NAR Reports

Existing home sales surged in October, what’s next?

(REAL ESTATE NEWS) Existing home sales rose in October despite continually tight inventory levels and rising home values.

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starter homes debt existing home sales

Despite the challenges of ongoing political uncertainty, extremely tight inventory conditions, and home values that continue to rise, existing home sales rose 2.0 percent in October, according to the National Association of Realtors (NAR).

This marks the strongest home sales pace since June, yet are 0.9 percent below October 2016. October’s average days on market was 34, down from 41 days on this month last year.

The median price has risen 5.5 percent in the last year to $247,000 with October marking the 68th consecutive month of annual increases. Nearly half of all homes on the market in October sold in under 30 days.

Dr. Lawrence Yun, NAR Chief Economist said, “While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated.”

Added Yun, “The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida. However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”

Regional performances varied with sales rising in the Northeast by 4.2 percent, in the West by 2.4 percent, the South by 1.9 percent, and 0.8 percent in the Midwest.

Prices also varied depending on region, with the median price in the West rising 7.8 percent above October 2016 (to $375,100), 6.6 percent in the Northeast (to $272,800), 7.1 percent in the Midwest (to $194,700), and 4.6 percent in the South (to $214,900).

Dr. Yun expects conditions to remain competitive through the winter, but housing is experiencing a tremendous hanging chad right now – what will politicians do to the tax deductions that incentivize homeownership in the first place?

NAR President Elizabeth Mendenhall, says the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the U.S.

“Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said Mendenhall. “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.”

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NAR Reports

Sustained lull in signed contracts means pullback in home sales

(REAL ESTATE NEWS) Existing home sales aren’t looking super hot this month, but it’s not the bad news that you’re thinking – let’s discuss!

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Existing home sales slide in June

Low supply has kept home sales muted, with existing home sales dipping 1.8 percent in the month of June, albeit 0.7 percent above June of 2016, according to the National Association of Realtors. The Midwest region is the current bright spot as the only area sales actually rose during this period.

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Dr. Lawrence Yun, NAR Chief Economist, says the previous three-month lull in contract activity translated to a pullback in existing sales in June.

“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” said Yun.

He added, “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

There’s a silver lining

“The good news is,” observes Yun, “that sales are still running slightly above last year’s pace despite these persistent market challenges.”

The median price for an existing home rose 6.5 percent over the last year to $263,800, surpassing May as the new peak, and the 64th consecutive month of year-over-year gains.

Housing inventory declined 0.5 percent from the previous month, and 7.1 percent over the last year. Average days on market rose one day from May to 28 in June, which is down from 34 days in June 2016.

Supply and demand challenges

First time buyers were 32 percent of sales in June, down one percent from both in May and a year ago. Yun says “It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” said Yun.

“Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year,” noted Yun.

Spicy sales in the Midwest

In the Midwest, sales rose 3.1 percent from May but remain unchanged from this time last year. The median price rose 7.7 percent in the last year to $213,000.

In the Northeast, existing home sales actually fell 2.6 percent, but are 1.3 percent above a year ago (the median price was $296,300, up 4.1 percent for the year).

The South saw a 4.7 percent dip in sales ((unchanged from a year ago) and the median price in the South was $231,300, up 6.2 percent from a year ago.

Sales in the West declined 0.8 percent but are 2.5 percent above June 2016. The median price in the West was $378,100, up 7.4 percent from June 2016.

#HomeSales

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