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Real Estate Big Data

NAR Report: How home sellers are shifting in COVID-19

(REAL ESTATE BIG DATA) Why, where, and how people are selling their homes in the pandemic is shifting. Take a look at NAR’s new report on what’s trending for home sellers.

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Home sales: House sellers prepping home with For Sale sign out front

As the era of COVID-19 dawned earlier this year, everything in the real estate business seemed to change almost overnight, including the business of being home sellers.

To identify how the pandemic is affecting residential real estate, the National Association of Realtors added a section to their “2020 Profile of Home Buyers and Sellers” that looks at how the data is shifting. NAR pulled out data on primary home sellers who closed from July, 2019, through March, 2020, compared with those who closed from April through June, 2020.

That means the pandemic dataset is based on just 3 months – likely not long enough to call something a major trend but long enough to get an idea of where things are likely to go.

Here are some trend takeaways based on up and down swings in percentages.

More sellers want more space.

People who sold primarily because they wanted bigger houses climbed 5 points to 18%, tying with the former top category of people who sold to move closer to family/friends. The quest for more space tracks with NAR’s survey of home buyers, more of whom wanted homes suitable for multiple generations to spend time with or take care of older parents or relatives.

Not evident in the buyers report is a desire for home offices as more people are able to work remotely, but that’s likely a factor for both buyers and sellers. In fact, work-related reasons for selling – job relocation and shortening commutes – declined by a combined 5 points.

On the flip side of space, people selling because their home was too large moved up a point to tie with family changes like birth of a child or marriage/divorce, which moved down by 3 points. Both are in the second spot at 11%.

Life changes were also reflected in health and financial reasons. There was a 3-point climb in people selling because their health had made the home too difficult to keep up or it had become too expensive. It’s worth noting that 3 months into the pandemic would cover the beginning of the economic impact, and this reason is likely to grow.

Primary Reason to Sell Home before and during COVID-19

Sellers are feeling a growing sense of urgency.

By the end of June, concern over money hadn’t resulted in a wave of people needing to sell quickly. However, sellers who said they felt some urgency, but not the need to sell right away, climbed by 7 points. Those who felt they could wait for the right offer answered that with a 7-point drop.

Seller Urgency before and during COVID-19

The suburbs are hot. Small towns are not.

Suburban sellers were up 8 points, to 56%. Sales in urban areas/city centers increased slightly, but sales in small towns dropped 4 points. Rural areas showed an even greater decline of 6 points.

Numbers on buyers track that breakdown, with 57 percent of buyers reporting purchasing in suburbs/subdivisions, a 7-point climb. Urban areas/central cities were up by 2. Small towns were down 7, with a 2-point drop off for rural areas.

We’ve been reading for months now that pandemic-era buyers, especially those who can work remotely, are fleeing cities for suburbs and small, rural towns in the quest for more space, lower costs, and fewer people. NAR’s numbers may bear that out for suburbs, but not so much for small towns and rural areas – yet.

Location of Home Sold, before and during COVID-19

MLS listings and virtual tours got a boost. Open houses took a dive.

When it comes to how agents market properties, the big story is the rise of technology. While open houses fell by 12 points as concerns about exposure to the virus grew, virtual tours and video climbed by a combined 16 points. They still took a spot toward the bottom of marketing tools, however. Buyers are touring fewer houses, and virtual tours and videos will only gain in importance as marketing tools – suggesting agents and brokerages may have some catching up to do. (NAR has some ideas for that, too.)

MLS still reigns supreme, however. It even gained a little power as the percentage of sellers who listed their home on MLS grew by 6 points.

Methods real estate agents used to market homes before and after COVID-19

More incentives are on the table.

The percentage of sellers who offered no incentives to buyers declined 8 points, from 69% to 62%, suggesting more pandemic-era sellers are doing more to attract buyers. The percentage of sellers who sweetened the deal went from 31% to 38%, a 7-point hike. Home warranty policies and credit toward remodeling or repairs showed the most gains, at 5 points each. Sellers who offered no incentives were down 7 points.

Sellers tended to make more money as prices and equity increased.

The median number of years sellers had been in their home – 11 – stayed the same, but sellers who had lived there 21 years or more were up 6 points. Sale prices vs. purchase prices typically climbed 2 points: from $64,000, or 35%, to $80,000, or 37%. Homes in general got more expensive, with the median price moving from $270,700 to $300,000, but it was the $500,000+ homes that saw the most growth, with a 10 point rise. Not changing much: Sellers are still getting 99% to 98% of asking price.

Price of Home Sold before and during COVID-19

It’s looking like residential real estate is trending toward growth rather than taking a hit from the pandemic, at least in most markets. For real estate pros, monitoring pandemic-era trends will be key to refining marketing strategies, identifying underserved niches and, especially, finding likely sellers.

Real Estate Big Data

Home values are on the rise – What will homes be worth in 2023?

(BIG DATA) The housing market is on fire. Will we continue to see home values increasing over the next 2 years? This prediction poll has the answers.

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Houses representing increasing home values.

Ask 12 experts in real estate about the future of home values and you’ll probably get 20 or more different opinions. With mortgage rates rising, the housing market is expected to slow down, but that doesn’t mean that home values are going to decline. Here’s one prediction from GOBankingRates about home values in 2023.

Predictions for Home Values

GOBankingRates used the median home value rate to predict what home valuations will do over the next year. The median home value is the property’s actual valuation, not the list price or home price. It’s interesting to note that there were no predictions in which home values would decline. In most states, home values should increase by 10% or more. Only three states, Louisiana, North Dakota, and Alaska, had predictions of less than 10%. Some states, Utah, Florida, and Arizona had a prediction of over 20% gain.
Here are some of the predictions:

  • Texas – the median home value in 2022 is $290,527. The projected home growth is 15.29%.
  • West Virginia, the state with the lowest median home value of $129,518 has a projected one-year growth rate of 10.39%.
  • Tennessee – with a median home value of $276,250 in 2022, the projected growth rate is 18.19%.
  • Florida – the 2022 median home value is $373,735. By 2023, the projected home value change is 22.04%.
  • Hawaii – the state with the highest median home value of $972,147 has a projected growth rate of 16.65%.

This information is valuable for both homeowners and home buyers. Read the report and find your state here.

The real estate market is promising

Although there were concerns that the pandemic would cause a housing crash, what we’re seeing is much different. It’s not even the housing bubble of 2008. Housing prices are rising because of a lack of supply and increased demand. There’s less likelihood of foreclosure today than 15 years ago, due to more stringent requirements. The housing market looks good, not just into next year, but hopefully over the next decade and more.

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Real Estate Big Data

Median home prices hit $407K, home sales fall 3.4%

(REAL ESTATE NEWS) Home sales dip for a fourth consecutive month in May – what does this mean for the housing market going forward?

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home sales

For the fourth consecutive month, existing home sales (real estate contracts signed) fell 3.4% in May from April, and slumped 8.6% from a year ago, according to the National Association of Realtors (NAR). The average days on market fell from 17 days in April (and May 2021) to 16 days in May, and 81% of all homes listed sold in under a month.

The median home price rose 14.8% over the last year to $407,6000, the first time it has ever exceeded $400K. May marks the 123rd consecutive month of annual increases, the longest-running streak in history.

Inventory remains tight, but did rise 12.6% from April to 1.16 million by the end of May, marking a 2.6 month sales pace. Inventory is down 4.1% from May of 2021.

“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” said NAR Chief Economist, Dr. Lawrence Yun.

“Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions,” Dr. Yun added.

He notes that it is expected that home sales in coming months will continue to decline in light of rising mortgage rates, yet appropriately priced homes will continue to sell quickly.

First time buyers made up 27% of sales in May, down from 28% in April. This diminishing number remains troubling, as the average hovered around 33% for years, and was at 31% in May 2021.

All-cash sales rising to 25% (up from 23% in May 2021), and individual investors or second-home buyers accounted for 16% of sales in May.

“Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties – placing additional financial strain on prospective first-time homebuyers,” said NAR President Leslie Rouda Smith.

“To counter this trend,” Rouda notes, “policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers.”

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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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