School or Pool?

Existing Home Sales Report from NAR

Thinking of Selling?

For the last several years, home sellers had to compete with huge inventories of distressed properties (foreclosures and short sales). The great news is that the supply of these properties is falling like a rock in the vast majority of housing markets. Many homeowners are now thinking of selling as the impact of this substantially discounted competition has disappeared.

However, every seller of an existing residential property must realize that there is a new form of competition about to hit the market: newly constructed homes.

As the economy improves, builders will again be bringing their housing developments to the market. Trulia recently reported that the purchaser, given a choice, actually prefers new construction. Here are two charts showing the results of the Trulia survey:

Bottom Line

If you are thinking of selling, perhaps you should do it now to avoid the additional competition that will come to the market later this year.

Housing inventory jumps 11.8% but first-time buyers still locked out Affordable home inventory shrinking further

After plunging throughout 2012 and for much of 2013, and rising only modestly through the beginning of this year, the inventory of all for-sale homes nationwide spiked in May, jumping 11.8% year-over-year according to Zillow (Z).

But most of those gains in inventory were made among homes priced in the middle and top one-third of home values, according to Zillow Real Estate Market Reports.

The number of homes available for sale in the most affordable price bracket, those homes most sought by first-time homebuyers, fell year-over-year in 28 of the nation’s largest metro areas analyzed by Zillow.

“It’s good to see overall inventory rising. It’s likely that many would-be sellers have decided to capitalize on recent home value gains, particularly as the pace slows, and list their home for sale now in order to move into a new home while mortgage interest rates remain low,” said Zillow chief economist Stan Humphries. “But persistent inventory constraints at the low end of the market continue to make it a tough environment for first-time and lower-income homebuyers. Low inventory and high demand can lead to rapid price spikes, which make homes even more difficult to afford for many buyers. Hopefully the inventory gains we’re seeing in the middle and upper tiers of the market will begin trickling down to the most affordable homes soon.”

The total number of homes listed for sale on Zillow in May was up 4.3% over April, and has risen month-over-month in each of the past three months on a seasonally adjusted basis.

Here's a look at the breakdown by city. Click the image below to see the chart.



Overall inventory of for-sale homes was up year-over-year in 506 (78%) of the more than 600 metro areas analyzed by Zillow. Large metros where inventory has increased the most include Las Vegas (up 51.5% year-over-year), Washington, DC (up 45.7% year-over-year) and Riverside, Calif. (up 42.7% year-over-year).

 In addition to low numbers of affordable homes for sale, first-time and lower-income homebuyers armed with traditional financing are also competing with all-cash buyers at the lower end of the market. Zillow reported last week that in 27 of the top 30 metros analyzed by Zillow, more than one third of all sales of the lowest-priced homes were made with cash. In three of the top 30 metros – Tampa, Detroit and Miami – more than 80% of all sales in the lowest price bracket were cash deals.

National home values in May were up 0.1% from April to a Zillow Home Value Index of $172,300, and have now risen for 28 consecutive months.

Year-over-year, U.S. home values rose 5.4% in May, the slowest annual pace of appreciation in more than a year. For the 12-month period from May 2014 to May 2015, national home values are expected to rise another 2.9% to approximately $177,321, according to the Zillow Home Value Forecast.

Happy Independence Day!

Happy Independence Day!

 

"Our greatest happiness does not depend on the condition of life in which chance has placed us, but is always the result of a good conscience, good health, occupation, and freedom in all just pursuits."  

~Thomas Jefferson

 

Wishing you a Happy and Safe Fourth of July from your patriotic friends  

NAR Reports Reveal Two Reasons to Sell Now

NAR Reports Reveal Two Reasons to Sell Now

Posted: 03 Jul 2014 04:00 AM PDT

We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now may be the best time to sell your house. Let’s look at the data covered by the latest Pending Home Sales Reportand Existing Home Sales Report.

THE PENDING HOME SALES REPORT

The report announced that pending home sales (homes going into contract) “surged” by 6.1%. The increase was “the largest month-over-month gain since April 2010, when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended”. Lawrence Yun, NAR’s chief economist, expects improving home sales throughout the rest of the year: “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation.” Takeaway: Demand is beginning to increase dramatically compared to earlier in the year.

THE EXISTING HOME SALES REPORT

The most important data point revealed in the report was not sales but instead the inventory of homes on the market (supply). The report explained:

• Total housing inventory climbed 2.2% to 2.28 million homes available for sale
• That represents a 5.6-month supply at the current sales pace
• Unsold inventory is 6.0% higher than a year ago

There were two more interesting comments made by Yun in the report:

1. “Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market.” In real estate, there is a guideline that often applies. When there is less than 6 months inventory available, we are in a sellers’ market and we will see appreciation. Between 6-7 months is a neutral market where prices will increase at the rate of inflation. More than 7 months inventory means we are in a buyers’ market and should expect depreciation in home values. As Yun notes, we are currently in a sellers’ market (prices still increasing) but are headed to a neutral market.
2. "New home construction is still needed to keep prices and housing supply healthy in the long run.” As new construction begins to be built, there will be increased downward pressure on the prices of existing homes on the market.

Takeaway: Supply is about to increase significantly. The supply of existing homes is already increasing and the number of newly constructed homes is about to increase.

Bottom Line

If you are going to sell, now may be the time.