2016 NAR PROFILE OF HOME BUYERS AND SELLERS
This summer, the National Association of Realtors (NAR) surveyed 5,465 home buyers and sellers for the 2016 National Association of Realtors® Profile of Home Buyers and Sellers. The study shows that in the past five years, affordability has tightened, and the time spent home shopping has fallen.
How much faith do home buyers have in their investment, and is that faith on the decline or improving? Why are people moving, and what factors influence those choices? Let’s dig a little bit deeper.
Are stocks or homes the better investment?
Fully 82 percent of home buyers surveyed opined that buying a home is a good investment, up 2.0 percent in one year. Nearly half (47 percent) believe owning a home is a better investment than buying stocks (up 2.0 percent from 2011).
One in three home buyers cite a desire to own as one of their biggest reasons to purchase a home (31 percent in 2016, up 4.0 percent in five years). The desire among first time buyers as a primary reason to buy is 67 percent (up from 60 percent in 2011).
The attraction to homeownership is the biggest reason to buy, but there are others. Below are the second through sixth place reasons (versus 2011):
- 10 percent move to obtain a larger home (unchanged).
- 8.0 percent move due to a change in family situation (unchanged).
- 8.0 percent move for a job relocation (down 2.0 percent).
- 7.0 percent move to be closer to friends or family (unchanged).
- 3.0 percent cited affordability as a primary driver (down 5.0 percent).
What factors influence home buyers’ choices?
The report indicates that the primary factors influencing choice in 2016 (versus 2011) are:
- 60 percent chose based on neighborhood (down from 67% in 2011).
- 43 percent wanted convenience to their jobs (down from 49 percent).
- 37 percent said convenience to family and friends (down from 39 percent).
- 20 percent were influenced by neighborhood design (down from 32 percent).
- 24 percent said convenience to shopping (down from 28 percent).
- 26 percent focused on the quality of the school districts (down from 25 percent).
- 20 percent wanted convenience to schools (down from 22 percent).
- 20 percent said convenience to entertainment (down from 21 percent).
If you’re marketing to buyers, knowing what makes them tick can help your team to get ahead. While trends locally are still the most relevant to any broker or agent’s career, knowing the national trends can help pinpoint adjustments that should be made locally, or affirm decisions already being made.
The practice of real estate is changing given these rapidly altered circumstances surrounding home buyers and sellers, and it is important to be informed!
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.
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.”
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.
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.
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.”
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!
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.
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.
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