Though rent is up about 3 percent from last year, it isn’t increasing quite as rapidly as it was before. There may be evidence that the slowdown is helping aspiring first time home buyers to save money for a house – especially millennials, who make up half of all renters. For one, the number of renters is falling. In fact, there were 43.2 million renter households across the country in 2018, which is about 100,000 fewer than in 2017. Combine that with the fact that millennials are currently buying more homes than any other generation, and it appears that slower rent appreciation may be helping more renters make the leap to homeownership. However, the renter’s market isn’t the same across all locations. For example, the New York metro area has seen rent rise just one percent over the past year, while in Las Vegas rent is up almost seven percent year-over-year. Still, if the overall trend holds, conditions may be getting easier for renters who hope to buy a home in the near future. https://www.prnewswire.com/news-releases/us-renters-spent-504-billion-on-housing-in-2018-300770096.html?utm_source=AKZO+Media+Subscribers&utm_campaign=0d06134231-EMAIL_CAMPAIGN_2018_12_21_07_27&utm_medium=email&utm_term=0_134f701abc-0d06134231-276542805
New numbers from the National Association of Realtors show that sales of previously owned homes fell 1.2 percent in January from the month before. It was the third consecutive monthly decline. Among the country’s four major regions, only the Northeast saw an increase in sales activity. In addition to rising inventory, home price increases were the slowest in six years and homes were on the market for an average of 49 days. This is longer than it was at the same time last year, when most listed homes were selling in just 42 days. Essentially, spring home buyers may find buying conditions to be more favorable than expected. NAR President, John Smaby, said that slower sales is good news for home buyers. Decelerated sales and increases in inventory will work in favor of potential home buyers, putting them in a better negotiating position heading into the spring months.
A recent survey by Zillow asked 100 real estate economists and experts for their housing market predictions. Though they had varied views on topics like mortgage rates and home values, they almost unanimously agreed on one thing: homeownership A full 88 percent of responding panelists said that they expect the homeownership rate will be higher in five years than it is now and an almost equal amount said it will be improved in just two years. Why is this important? Following the foreclosure crisis and housing crash, the homeownership rate – which had peaked in 2006 – began to fall. And while it fell just 6 percent from its high, and only 2 percent from its historical average, it was a reflection of growing uncertainty among Americans. Buying a house, which had traditionally been seen as part of achieving the American dream, had lost some of its appeal. Since then, however, both the homeownership rate and housing market confidence have begun to rebound. According to the survey, an influx of first-time home buyers over the next five years will help further improvement. More here.
For many years following the housing crash, home buying conditions were excellent. Home prices had plummeted and mortgage rates were at historic lows. It was a home buyer’s market and a good deal for anyone who could take advantage. However, since prices had fallen so far, many homeowners who wanted to make a move would have to sell their house for less than they paid for it. But these days, those same homeowners have seen their home’s value rebound and maybe even exceed what it was before the crash. That means, though buying conditions aren’t what they were then, conditions have improved significantly for homeowners who are looking to sell. According to Fannie Mae’s monthly Home Purchase Sentiment Index – which measures Americans’ feelings about the housing market, economy, and their personal financial situation – survey respondents have noticed. The most recent results show an increase in the number of respondents who said it was a good time to sell. The flip side, of course, is that a decreasing number said it was a good time to buy. More here.
There are many reasons someone might want to shop for a home outside of their immediate neighborhood, including a new job opportunity or retirement. But where are the most popular destination for out-of-state movers? According to United Van Lines 42ndAnnual National Movers Study, Vermont is the state with the highest percentage of inbound moves. Though the Northeastern state leads the list, most of the states seeing a high percentage of out-of-state migration are in the South and West. States like Oregon, North Carolina, Nevada, Washington, South Dakota, and Arizona are attracting more Americans than locations in the Midwest and Northeast. Michael Stoll, an economist and professor in the Department of Public Policy at the University of California, Los Angeles, says there are reasons these places are more popular. “The data collected by United Van Lines aligns with longer-term migration patterns to southern and western states, trends driven by factors like job growth, lower costs of living, state budgetary challenges, and more temperate climates.” More here.
When shopping for something, having more to choose from is generally a good thing. This is especially true for homes. Not only do home buyers have more options, but prices stay at a reasonable level. When there are enough homes to meet demand from interested home buyers, prices moderate. However, over the past few years, available housing inventory has been lower than normal in most markets. At this time last year, inventory was down 9.1 percent on an annual basis, according to new data by Zillow. Because of this, home values have been increasing. That may be starting to change, however. The number of homes for sale has now increased year-over-year for three consecutive months. Although the most recent improvement was only 0.4 percent, it’s still a good sign for home buyers. If inventory continues to gain, even small increases could lead to more favorable affordability conditions. More here.
Real estate is about location. From neighborhood to neighborhood, conditions may differ. Pricier neighborhoods will have different dynamics than more affordable areas. Hot spots that offer home buyers features and amenities will have different conditions than less popular areas farther from the action. That’s why most people work with real estate professionals when buying or selling a home. It’s advantageous to work with someone who has expertise in the specific parts of town you’re interested in. But that’s not to say you can’t have a general sense of where the market is headed. Take the most recent forecast from Freddie Mac, for example. The outlook says, though the housing market will slow down this fall and winter, high demand for homes will mean more sales and competition next year. It also says home price growth will begin to slow next year. Overall, according to Freddie Mac’s outlook, home buyers and sellers should expect next year’s market to look relatively similar to this year’s. More here.
How much money you spend is dependent on how much money you have. This is a simple equation and one that explains the current housing market. Though home prices have gone up recently, home buyer demand remains high. The explanation for this is that the economy is stronger and people feel more secure financially. In short, they have more money so they’re able to afford more. Fannie Mae’s most recent Home Purchase Sentiment Index sheds light on this. The survey asks Americans for their perception of the current housing market, prices, rates, the economy, etc. According to the most recent results, 30 percent of Americans who say it’s a good time to buy a house cited favorable economic conditions as the reason they felt like the time was right. This is a good indication that financial confidence is helping to fuel interest in buying a home. However, though the economy may be helping keep buyers interested, affordability conditions are having an effect. In fact, the overall index fell 2 points from the month before with five of the six components seeing declines. More here.
Typically, spring and summer are thought of as the prime times to buy or sell a home. There are a number of reasons for this, including the good weather and the end of the school year which makes moving easier for home buyers. There are more homes for sale and more active home buyers during the busiest sales season. Fall and winter, on the other hand, are the time of the year when the housing market slows down. The approaching holidays and colder temperatures across much of the country mean fewer Americans are in the mood for a move. However, that can provide opportunities for home buyers who are ready to move. A recent analysis looked at the country’s largest metro areas and compared typical affordability levels, projected rent increases, and price cuts to determine where home buyers might have the best chances in the coming months. The results showed conditions in hot markets like Orlando, Boston, Seattle, and Las Vegas are becoming more favorable as the end of the year approaches. That means, interested home buyers may be in a better position this fall and winter than they will be next spring when things begin to heat back up. […]
When an offer on a home has been accepted, that home’s sale is considered pending. It isn’t final until closing, which typically takes place a few weeks later. But, because most accepted offers result in completed sales, the National Association of Realtors tracks contract signings as an indicator of what sales should look like in the near future. In September, the NAR’s Pending Home Sales Index showed a slight increase from the month before, though it’s still below where it was at the same time last year. Lawrence Yun, NAR’s chief economist, says the month-over-month increase is a good sign. “This shows that home buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” Yun said. In other words, though tight housing inventory and the end of the summer season may lead to slower sales in the near term, home buyer demand remains elevated. Additionally, Yun points out that compared to data going back to the year 2000, affordability levels are favorable and should help keep housing demand steady in the coming months. More here.