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Real Estate Big Data

Much needed good news for housing, despite slowed sales

(REAL ESTATE) The data is in, and some truly positive signs for the housing market are slowly surfacing.

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If you put your finger on the pulse of the housing market right now, you’d see some much needed health improvements – inventory levels are finally loosening up for the first time in years, and the rate of price increases abated in the fourth quarter.

The median price of an existing home in Q4 rose 4.0 percent to $257,600 compared to the fourth quarter of last year, according to the National Association of Realtors (NAR).

Dr. Lawrence Yun, NAR Chief Economist, said in a statement that despite hurdles last year, “the close of the fourth quarter was promising.”

“Home prices continued to rise in the vast majority of markets,” said Dr. Yun, “but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace.”

Existing home sales fell 1.8 percent in the fourth quarter compared to the previous quarter, and 7.4 percent over the year.

Why?

Dr. Yun said the West Coast needs more homes built. “The West region, where home prices have nearly doubled in six years, is undergoing the biggest shift with the slowest price gain and large buyer pullback.”

Comparing Q4 of 2017 and 2018 shows some relief when it comes to tight inventory levels which has edged hopeful homebuyers out of the market, increasing 6.2 percent over the year.

Housing affordability is the key ingredient to a healthy real estate sector going forward, which Dr. Yun says will require more homebuilding of moderately priced homes (a drumbeat the economist has been steadily beating for years).

“Housing starts fell far short of historically normal levels, with only 9.6 million new housing units added in the past decade; compared to 15 to 16 million that would have been needed to meet our growing population and 20 million new job additions,” said Dr. Yun.

“Local zoning law changes, expanding construction worker training programs at trade schools and promoting the use of tax breaks for developers in the designated Opportunity Zones will all play an important role in assuring an adequate future supply of housing,” Dr. Yun opined. 

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Real Estate Big Data

Demand for urban vs. suburban housing remains even (unless you’re in SF)

(REAL ESTATE BIG DATA) Most would assume that housing market trends would show people moving out of cities and into the suburbs following COVID restrictions. But the demand for both has stayed surprisingly even.

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Houses part of the housing market against a blue sky.

Despite what most people think, the suburban housing market isn’t completely leaving the urban market behind in the dust. According to a 2020 Zillow Urban-Suburban Market Report, data shows both markets are “hot sellers.” To illustrate this trend, Zillow’s Economic Research team analyzed various points related to for-sale listings.

Data shows homes in both areas are selling quicker than they were at the beginning of the year. The trend of houses selling above their listed prices and home value growth has accelerated at about the same pace for both markets.

With the exception of the Northeast region, national year-over-year (YoY) pending sales trends are almost even across urban classifications since February. Due to a smaller urban inventory pool at the start of the pandemic, this might account for the slower acceleration rates of sales in the Northeastern states.

On Zillow, suburban homes are receiving about the same attention as they did in 2019, and “urban and rural page views each climbed 0.2 percentage points from last year.” Suburb listings do attract more traffic on Zillow, but urban listings are still holding their ground.

Based on home characteristics, there isn’t a higher demand for single-family homes versus condos. Overall, this means the urban market is still attracting an audience.

However, this isn’t true in all cases. The San Francisco metro area falls out of these patterns. A great increase of listings are just sitting on the market. With an inventory up 96% YoY, this is a significant jump compared to the surrounding suburbs. Sellers are flooding the market, but buyers haven’t changed their purchasing pace.

According to Bay Area Market Reports, “With the increase in inventory has come a big jump in the number of listings reducing asking price. In some market segments, sellers are now competing for buyers, instead of buyers competing for listings.”

Although “San Francisco list prices have fallen 4.9% YoY,” there aren’t enough people buying in that housing market. With more tech companies like Google and Facebook allowing employees to work remote, hundreds of employees are leaving the city. And with them, will renters and buyers that aren’t renewing their leases look elsewhere to settle down?

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Real Estate Big Data

Top 30 ‘work from home’ counties in U.S. ranked (Texas beat all y’all, btw)

(REAL ESTATE) NAR examines the shift in purchase decisions based on a rapidly changing workforce to work from home, and of course, Texas dominates the top 30. Maybe not the top 10, but the top 30.

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We typically ignore all of the new, rushed rankings of geographies during the COVID-times, but the National Association of Realtors (NAR) just put out a well thought out argument for their top 30 counties for working from home, taking into account internet connectivity, the percentage of workers in office-related jobs, home affordability, urbanization, and a county’s population growth.

Not to be a conspiracy theorist, but the top 10 looks like a map of the old Big 12 football conference schedule back when it was the Southwest Conference, just saying…

The report analyzes the aforementioned factors that “support the remote work trend,” which we firmly believe will drive real estate purchases for years to come as employers begin implementing more permanent flex work options.

Texas leads all states with 7 counties among the top 30, but for the sake of fairness, here is the top 10, in which we painfully acknowledge Georgia as the top spot stealer:

  1. Forsyth County, Georgia
  2. Douglas County, Colorado
  3. Los Alamos County, New Mexico
  4. Collin County, Texas
  5. Loudoun County, Virginia
  6. Hamilton County, Indiana
  7. Williamson County, Tennessee
  8. Delaware County, Ohio
  9. Broomfield County, Colorado
  10. Dallas County, Iowa

“The coronavirus pandemic greatly accelerated the number of workers who are able to work from home,” notes NAR Chief Economist, Dr. Lawrence Yun. “Possibly a quarter of the labor force may be permitted to work from anywhere outside of the office even after a vaccine is discovered – compared to only 5% prior to the pandemic – and this will greatly change the landscape of where people buy homes.”

NAR President Vince Malta observes that location options are not the only changes for potential homebuyers, but that as remote work becomes more commonplace, “we may see buyers seek larger properties that offer space for a potential home office and other features that have become more valuable as a result of this pandemic.” Aha!

Malta adds, “The growing trend and historically-low mortgage rates are spurring potential homebuyers to consider a broader range of options and rethink what’s important to them in the long term.”

In a statement, NAR indicates, “The growing number of people working remotely also impacts commercial real estate, particularly the office sector, with future office sizes and locations potentially changing as a result.”

Dr. Yun states that the future of commercial real estate “appears uncertain” as companies reorganize “from having a central business district headquarters to several suburban satellite offices.”

The bright spot, however, is retail. “One can reasonably expect to see some growth in the number of smaller stores in the top 30 counties coming at the expense of similar establishments near downtown office buildings,” Dr. Yun concluded.


Below is a breakdown of their methodology:
nar work from home

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Real Estate Big Data

Home purchase contract signings surge 5.9% in July

[REAL ESTATE BIG DATA] Positive NAR reports encourage strong homebuyer return into the housing market following pent-up demand.

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pending home sales contract signings

Like all other housing economic indicators, home purchase contract signings jumped 5.9% in July, according to the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI).

This marks the third consecutive month of growth, and all regions saw rising pending home sales during this time in annual and monthly improvements. Comparing the data to this time last year, contract signings are up 15.5%.

The index is used by the industry as an early indicator of upcoming closings. What do consumers do with this data? Typically not much.

But with all of the positive headlines, homebuyer Alexei F. in Austin, TX tells us that his family is inspired to begin house shopping a year earlier than previously planned.

“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market,” said NAR’s Chief Economist, Dr. Lawrence Yun. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”

The global pandemic restricted the spring buying season, but NAR points out that most states are at least partially reopened, freeing up the pent-up demand.

Dr. Yun said in a statement that there are “no indications that contract activity will wane in the immediate future, particularly in the suburbs.”

Further, he forecasts that existing home sales (closings) will jump to 5.8 million in the second half of this year, creating a rebound and a small (1.1%) gain over 2019. In 2021, he anticipates that with a continuing low interest rate environment, and an economy he expects to expand by 4%, sales could reach 5.86 million.

“Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Dr. Yun said.

“If 20% more homes were on the market, we would have 20% more sales, because demand is that high,” Dr. Yun observed, adding that he expects housing starts to average at 1.35 million in 2020 and to pick up in 2021, to 1.43 million.

July saw small to large surges regionally, and all have substantial growth compared to July of 2019:

  • The Northeast PHSI grew 25.2% to 112.3 in July, a 20.6% jump from a year ago.
  • In the Midwest, the index rose 3.3% to 114.6 last month, up 15.4% from July 2019.
  • Pending home sales in the South increased 0.9% to an index of 142.0 in July, up 14.9% from July 2019.
  • The index in the West rose 6.8% in July to 106.4, up 13.2% from a year ago.

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