Monthly Archives: September 2016

Existing-Home Sales Ease in August

Source: RISMedia

Existing-home sales eased up in August for the second consecutive month despite mortgage rates near record lows as higher home prices and not enough inventory for sale kept some would-be buyers at bay, according to the National Association of REALTORS®. Only the Northeast region saw a monthly increase in closings in August, where inventory is currently more adequate.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August from a downwardly revised 5.38 million in July. After last month’s decline, sales are at their second-lowest pace of 2016, but are still slightly higher (0.8 percent) than a year ago (5.29 million).

Lawrence Yun, NAR chief economist, says recent job growth is not yielding higher home sales. “Healthy labor markets in most the country should be creating a sustained demand for home purchases,” he says. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”

“Tight inventory, rising prices and tepid economic conditions continue to hold back existing home sales, and housing progress overall,” says Quicken Loans Vice President Bill Banfield. “As interest rates are poised to rise in the near future, supply will need to increase to sustain significant growth in the market.”
Adds Yun, “Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.”

The median existing-home price for all housing types in August was $240,200, up 5.1 percent from August 2015 ($228,500). August’s price increase marks the 54th consecutive month of year-over-year gains.

Total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than a year ago (2.27 million) and has declined year-over-year for 15 straight months. Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in July.

The share of first-time buyers was 31 percent in August, which is down from 32 percent both in July and a year ago. First-time buyers represented 30 percent of sales in all of 2015.

“It’s very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago,” adds Yun. “While recent data from the U.S. Census Bureau shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale. Without more supply, the U.S. homeownership rate will remain near 50-year lows.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.44 percent in August for the second consecutive month and remained at its lowest rate since January 2013 (3.41 percent). The average commitment rate for all of 2015 was 3.85 percent.

Properties typically stayed on the market for 36 days in August, unchanged from July and down considerably from a year ago (47 days). Short sales were on the market the longest at a median of 144 days in August, while foreclosures sold in 42 days and non-distressed homes took 35 days. Forty-six percent of homes sold in August were on the market for less than a month.

NAR President Tom Salomon says in today’s fast-moving market, a Realtor® who knows about down payment options and their target area is essential to a successful buying experience. “Given the inventory shortages in most markets, new listings at affordable prices are receiving multiple offers and going under contract almost immediately upon becoming available,” he says. “Home shoppers serious about buying need to be ready with a pre-approval. This allows a Realtor® to hone in only on homes within the buyer’s price range and ensures any offer presented to the seller is taken seriously.”

Inventory data from Realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in August were San Francisco-Oakland-Hayward, Calif., San Jose-Sunnyvale-Santa Clara, Calif., and Seattle-Tacoma-Bellevue, Wash., all at a median of 33 days; Denver-Aurora-Lakewood, Colo., 36 days; and Vallejo-Fairfield, Calif., at a median of 37 days.

All-cash sales were 22 percent of transactions in August, up from 21 percent in July and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in August, up from 11 percent in July and 12 percent a year ago. Sixty-two percent of investors paid in cash in August.

Distressed sales – foreclosures and short sales – were 5 percent of sales in August (lowest since NAR began tracking in October 2008), unchanged from last month and down from 7 percent a year ago. Four percent of August sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 12 percent below market value in August (18 percent in July), while short sales were discounted 14 percent (16 percent in July).

Single-family and Condo/Co-op Sales

Single-family home sales declined 2.3 percent to a seasonally adjusted annual rate of 4.70 million in August from 4.81 million in July, but are still 0.6 percent above the 4.67 million pace a year ago. The median existing single-family home price was $242,200 in August, up 5.3 percent from August 2015.

Existing condominium and co-op sales leaped 10.5 percent to a seasonally adjusted annual rate of 630,000 units in August from 570,000 in July, and are now 1.6 percent above August 2015 (620,000 units). The median existing condo price was $225,100 in August, which is 3.7 percent above a year ago.

Regional Breakdown

August existing-home sales in the Northeast jumped 6.1 percent to an annual rate of 700,000, which is unchanged from a year ago. The median price in the Northeast was $274,100, which is 0.8 percent above August 2015.

In the Midwest, existing-home sales decreased 0.8 percent to an annual rate of 1.27 million in August, but are still 0.8 percent above a year ago. The median price in the Midwest was $190,700, up 5.5 percent from a year ago.

Existing-home sales in the South in August fell 2.7 percent to an annual rate of 2.16 million, but are still 0.9 percent above August 2015. The median price in the South was $209,700, up 6.7 percent from a year ago.

Existing-home sales in the West lessened 1.6 percent to an annual rate of 1.20 million in August, but are still 0.8 percent higher than a year ago. The median price in the West was $347,400, which is 9.2 percent above August 2015.

For more information, visit www.realtor.org. 

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NWMLS: Housing Market Still Active, With Overall Direction “Positive”

Source: NWMLS

KIRKLAND, Washington (Sept. 7, 2016) – Home sales in Western Washington continued to outpace
year-ago activity, but member-brokers at Northwest Multiple Listing Service say persistent inventory
shortages are constraining activity.

Despite a sparse selection in many areas, an expected summer slowdown, and “appraisal conundrums,”
Northwest MLS members notched 11,898 pending sales during August, eclipsing the same month a year
ago by 1,295 transactions for a 12.2 percent gain. There were 8,628 pending sales in the four-county
Puget Sound region — the best August for mutually accepted offers since 2005 when members tallied
8,874 sales.

Brokers added 11,411 new listings to the Northwest MLS database during August, but they presented
offers for even more buyers (11,898) to keep inventory below two months of supply. At month-end, there
were 18,336 active listings in the MLS system, a decrease of 11.6 percent from a year ago, resulting in
only 1.9 months of supply. (Four to six months is generally considered to be a “neutral” or balanced
market for buyers and sellers.)

“The market remains just as intense as July,” observed J. Lennox Scott, chairman and CEO at John L. Scott,
Inc. “The best opportunity for homebuyers to find a home will be in the next 60 days,” he suggested,
explaining the number of new listings coming on the market is likely to drop by 50 percent each month
between November and February. “We expect a repeat of conditions from last winter when every available
home that came on the market in areas with a shortage of inventory received quick action.”

“Buyers in the Seattle area are plentiful in all price ranges, but the entry-level housing demand continues
to be the highest,” reported John Deely, principal managing broker at Coldwell Banker Bain. As an
example, he said a recent open house for a condo listing in the South Lake Union area drew more than
100 visitors in a single day. Tech workers continue to dominate the primary buyer demographic, he said,
adding that a significant number of their parents are relocating here to purchase properties close to their
children.

Buyers in most of the 23 counties served by Northwest MLS can expect to pay more than they would
have twelve months ago, with most areas showing double-digit year-over-year price increases. System-
wide, the median price for last month’s 9,767 closed sales of single family homes and condominiums was
$350,000, up more than 11 percent from the year-ago figure of $315,000.

Women, with Weaker Credit, Outdo Men When It Comes to Paying a Mortgage

Source: RISMedia

Female single mortgage borrowers default less on their loans than male single borrowers, despite having weaker credit, a recently released report by the Urban Institute reveals. The results of the report’s analysis show the percentage of female single borrowers who are 90 or more days delinquent is lower than that of male single borrowers—evidence that lesser credit profiles do not predicate lesser loan performance.

“Single women with mortgages are doing a better job of paying their mortgages than their credit characteristics predict,” the report’s authors state. “Because the higher price they pay for their mortgages is based on their credit characteristics when they take out the loan, this means single women borrowers are paying too much for their mortgages  .”

Related: How Single Women Are Changing the Home-Buying Market

Their conclusion is drawn from a number of findings, derived from data obtained through CoreLogic and the Home Mortgage Disclosure Act (HMDA):

Single borrowers, female and male, have lower credit scores than borrowers/co-borrowers.Between 2011 and 2014, the average FICO for a male single borrower was 739; for a female single borrower, 741. This compares to 744 for female/male borrowers and 748 for male/female borrowers. (It is important to note the analysis included data for female/female and male/male borrowers, though these were not explored in depth due to their relatively small representation.)

Single borrowers have lower incomes overall, but those of females register below those of males. From 2011 to 2014, the average income of a female single borrower was $70,200, compared to the average income of a male single borrower, $97,700. (The average incomes in that same period of a female borrower/male co-borrower and male borrower/female co-borrower were $121,300 and $129,800, respectively.)

Female single borrowers are subject to higher interest rates: 4.01 percent on loans originated in 2011 to 2014, more than the 3.99 percent for a male single borrower, the 3.97 percent for female/male borrowers, and the 3.94 percent for male/female borrowers.

Loan amounts skew lower for female single borrowers—an average $171,200 for loans originated between 2011 and 2014. The average loan amount for a male single borrower in that same period was $204,900; the average loan amount for female/male borrowers was $218,200; the average loan amount for male/female borrowers was $234,200.

Female single borrowers fall behind when weighing loan amount against income. From 2011 to 2014, a female single borrower had a 2.9 percent loan size-to-income ratio, compared to 2.6 percent for a male single borrower, 2.2 percent for male/female borrowers and 2.1 percent for female/male borrowers.

In short, female single borrowers have less substantial mortgages taking up more of their budget  . According to the results of the report, 15.6 percent of female single borrowers have higher-priced mortgages—15 percent of male single borrowers, 12.6 percent of female/male borrowers, and 7.6 percent of male/female borrowers, by contrast.

The report emphasizes female single borrowers are also denied mortgages more than their counterparts, and are more likely to be minorities living in low-income areas where more than half of residents are minorities.

All of these findings bring to stark relief the need for alternative credit risk assessment methods. The current lending landscape, according to the report’s authors, shuts single women—particularly low-income, minority women—out of means to homeownership, though they have demonstrated otherwise.

“This omission has real consequences,” the report’s authors state. “Women are generally denied for mortgages more often despite their superior payment performance…we need to develop more robust and accurate measures of risk to ensure that we aren’t denying mortgages to women who are fully able to make good on their payments.”

To view the full report, visit Urban.org

Home Price Gains Strong in South and West

Source: RISMedia

Data released for June 2016 shows that home prices continued their rise across the country over the last 12 months.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.1 percent annual gain in June, unchanged from last month. The 10-City Composite posted a 4.3 percent annual increase, down from 4.4 percent the previous month. The 20-City Composite reported a year-over-year gain of 5.1 percent, down from 5.3 percent in May.

Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities over each of the last five months. In June, Portland led the way with a 12.6 percent year-over-year price increase, followed by Seattle at 11.0 percent, and Denver with a 9.2 percent increase. Six cities reported greater price increases in the year ending June 2016 versus the year ending May 2016.

Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0 percent while both the 10-City Composite and the 20-City Composite posted a 0.8 percent increase in June. After seasonal adjustment, the National Index recorded a 0.2 percent month-over-month increase, and both the 10-City Composite and 20-City Composite posted 0.1 percent month-over-month decreases. After seasonal adjustment, nine cities saw prices rise, two cities were unchanged, and nine cities experienced negative monthly prices changes.

“Home prices continued to rise across the country led by the west and the south,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “In the strongest region, the Pacific Northwest, prices are rising at more than 10 percent; in the slower Northeast, prices are climbing a bit faster than inflation. Nationally, home prices have risen at a consistent 4.8 percent annual pace over the last two years without showing any signs of slowing.

“Overall, residential real estate and housing is in good shape,” he continued. “Sales of existing homes are running at about 5.5 million units annually with inventory levels under five months, indicating a fairly tight market. Sales of new single family homes were at a 654,000 seasonally adjusted annual rate in July, the highest rate since November 2007. Housing starts in July topped an annual rate of 1.2 million units. While the real estate sector and consumer spending are contributing to economic growth, business capital spending continues to show weakness.”

Quicken Loans vice president Bill Banfield offered the following comments on the report:

“The strong home price growth in much of the country, and meteoric rise in the West, is led by a continued lack of homes available for sale. While homeowners welcome rising prices, it could begin to hinder new buyers if affordability comes into question – especially with home prices rising twice the speed of inflation in much of the country.”

For more information, visit www.spglobal.com.

2016 Home Sales Increasing Twice as Fast in Counties with Low Hazard Risk

Source: RISMedia

The recently released ATTOM Data Solutions 2016 U.S. Natural Hazard Housing Risk Index found that home sales in the first six months of 2016 increased 4.2 percent from the same time period a year ago in the bottom fifth of U.S. counties with the lowest level of natural hazard risk — more than twice the 1.9 percent increase in the top fifth of U.S. counties with the highest level of natural hazard risk.

More than 3,000 U.S. counties were indexed based on risk of six natural hazards: earthquakes, floods, hail, hurricane storm surge, tornadoes and wildfires using data collected by ATTOM’s neighborhood research portal www.homefacts.com. ATTOM also analyzed home sales and price trends in more than 800 counties with at least 100 single family home sales in the first six months of 2016. Those 800 counties — which combined have more than 70 million single family homes and condos — were divided into five equal groups (quintiles) based on the natural hazard risk index and assigned to one of five risk categories: Very High, High, Moderate, Low, and Very Low.

“While price and affordability along with access to jobs are the primary drivers in local markets with strong increases in home sales activity in 2016, it’s evident from this data that natural hazard risk does make a difference to homebuyers and investors who are active in this housing market,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Even among the subset of counties where the median price is below the national median as well as among the subset of counties where home prices are still affordable for average wage earners, there is a consistent trend of stronger increases in home sales volume compared to a year ago in the lowest-risk markets for natural hazards compared to the highest-risk markets.”

Counties with highest natural hazard risk
Among the 804 counties analyzed for home sales and price trends, those with a Natural Hazard Housing Risk Index in the Top 5 highest were Oklahoma County, Okla.; Monroe County, Fla. (Key West); Cleveland County, Okla. (Oklahoma City); Nevada County, Calif. (Truckee); and Lake County, Calif. (Clearlake).

Among 78 larger counties with at least 5,000 home sales in the first six months of 2016, those with the highest risk index were Oklahoma County, Okla.; Riverside County, Calif. (Inland Empire of Southern California); Collier County, Fla. (Naples); Miami-Dade County, Fla.; and Santa Clara County, Calif. (San Jose).

Counties with lowest natural hazard risk
Among the 804 counties analyzed for home sales and price trends, those with a Natural Hazard Housing Risk Index in the Top 5 lowest were Milwaukee County, Wisc.; Kewaunee County, Wisc. (Green Bay); Racine County, Wisc. (Racine); Knox County, Maine; and Kenosha County, Wisc. (Chicago metro area).

Among larger counties with at least 5,000 home sales in the first six months of 2016, those with the lowest risk index were Cuyahoga County, Ohio (Cleveland); Lake County, Ill. (Chicago area); Kent County, Mich. (Grand Rapids); Maricopa County, Ariz. (Phoenix); and Montgomery County, Penn. (Philadelphia metro area).

Home values and home prices lower in lowest-risk counties
In the 161 counties in the top quintile for natural hazard risk (Very High Risk), there were a total of 21 million single family homes and condos representing 30 percent of all homes and condos in the 804 counties analyzed. In the 161 counties in the bottom quintile for natural hazard risk (Very Low Risk) there were a total of 10 million single family homes and condos representing 15 percent of all homes in the 804 counties analyzed.

The average estimated market value for homes in the lowest-risk counties was $187,291 — 33 percent below the average estimated market value for homes in the highest-risk counties: $279,570.

The median sales price of single family homes and condos sold between January and June 2016 in the lowest-risk counties was $156,245 on average, 39 percent below the median sales price in the highest-risk counties during the same time period: $255,160.

Price appreciation stronger in highest-risk counties over past five years
Median home prices in the first six months of 2016 have increased an average of 6.5 percent compared to a year ago in the highest-risk counties compared to a 3.2 percent average increase in the lowest-risk markets during the same time period.

Median home prices in the first six months of 2016 are up 42.4 percent compared to the first six months of 2011 (near the bottom of home prices) in the highest-risk counties, while prices are up 23.8 percent during the same time period in the lowest-risk counties

10-year price appreciation, homeowner profits stronger in lowest-risk counties
Median home prices in the first six months of 2016 are up 9.5 percent from the same time period 10 years ago in the lowest-risk counties compared to a 1.9 percent increase compared to 10 years ago in the highest-risk counties.

Furthermore, homeowners in the lowest-risk counties have gained an average of 27.8 percent in home value since purchase while homeowners in the highest-risk counties have gained an average of 20.7 percent since purchase.

Home sales and price trends by type of natural hazard risk
Over the past five years, increases in home sales volume has fallen below the overall national average in counties with the highest risk of earthquakes, hurricane storm surge, wildfires and floods while counties with the lowest risk for those natural hazards have seen home sales volume increase at a faster pace than the national average over the past five years.

Conversely, home sales activity over the past five years has been stronger than the national average in markets with the highest risk of tornadoes and hail while markets with the lowest risk for those natural hazards have seen below-average increases in home sales activity.

View the full report here