Monthly Archives: November 2016

Fair Economic Forecast as Trump Policies Come into Focus

Source: RISMedia

The U.S. economy will continue to grow—though at a “modest” rate—through the end of this year and into 2017, with President-Elect Trump’s proposed policies prompting Fannie Mae to issue a fair forecast in its recently released November 2016 Economic and Housing Outlook. Notably, the Outlook predicts shrinking housing affordability, especially if mortgage rates follow their post-election surge.

“The lack of homes for sale, particularly at the lower end of the market, continues to be a significant challenge for housing,” said Doug Duncan, Fannie Mae chief economist, in a statement on the Outlook. “Demand from first-time buyers has increased with household formation and is outpacing supply, leading to significant price increases and affordability challenges for entry-level buyers. Home purchase affordability will be constrained further if the recent pickup in mortgage rates persists, which would present a downside risk to our forecast of housing and mortgage activity.”

The Outlook anticipates economic growth overall to average 2.4 percent in the second half of 2016, up from 1.1 percent rate in the first half, with the full-year 2016 and 2017 expectations remaining at 1.8 percent—even as Trump’s policies come into focus.

“We haven’t changed the general tone of our forecast at this time, but we will incorporate new policy assumptions as they become more concrete,” said Duncan. “Depending on the incoming President’s policy priorities, our forecast for 2017 is subject to both upside and downside risks—for example, we expect near-term growth would get a boost from any tax cuts and spending increases that are made, but if new policies result in sharply higher tariffs on China and Mexico, re-thinking the Trans-Pacific Partnership, and renegotiating the North American Free Trade Agreement, it would likely drag on growth.”

Single-family construction, in addition, will not be as major of a factor as it has been in terms of GDP growth due to its more solid footing late this year and into 2017, the Outlook indicates.

Business investment and employment prospects, however, have begun to wane—a “late-cycle phase in which growth tends to moderate,” according to the Outlook.

Source: Fannie Mae

Why Chinese Homebuyers Are Coming to the U.S.

Source: RISMedia

According to the National Association of REALTORS® (NAR) 2016 Profile of International Home Buying Activity, Chinese homebuyers make up over 27 percent of all international home sales in the U.S Not only are Chinese buyers purchasing more U.S. property than any other group of international buyers, but they are also purchasing at a much higher price point. While the average purchase price for other foreign buyers during 2016 was $477,462, the average purchase price for Chinese buyers was $936,615—plus, approximately 71 percent of those purchases were all-cash. This is an opportunity that U.S. real estate professionals simply can’t afford to miss.

So, why are Chinese buyers searching for homes in the U.S.? One of the biggest reasons is how expensive local assets currently are in the Chinese property market. Tax regulations and various laws make purchasing local property more difficult and Chinese buyers are looking for a safe place to invest their money, with the U.S. offering a wide range of investment choices in real estate. Another major reason to look in the U.S. is education, which is of deep-rooted importance in Chinese culture. While education is extremely competitive in China, the U.S. offers competitive options for top universities and K-12, since many Chinese parents are looking for a more well-rounded curriculum for their children than is offered in China, where they are often focused more on high-stakes testing. To learn more about this immense opportunity, check out this on-demand webinar from ListHub Global, and read the 5 tips below to attract Chinese buyers to your listings.

  • Focus on location. In addition to highlighting the neighborhood where your property is located, associate the property with well-known landmarks and focus on school zones, transportation options, and other attractions.
  • Win over the youth vote. When making a decision about where to purchase property in the U.S., parents are often heavily influenced by their children, especially those who are moving to the U.S. for school. Make sure your property highlights features that cater to the younger generation: amenities, proximity to shopping malls and parks, and any nearby universities.
  • Think Hollywood. Many Chinese buyers have gained their knowledge of the U.S. through Hollywood movies and don’t necessarily have a thorough geographic knowledge of the country. Take advantage of this! Chinese buyers may know about Seattle from watching Meg Ryan and Tom Hanks fall in love on the big screen, but may have no idea that Seattle is located in Washington state. Make sure to put emphasis on the city name and, if possible, relate your property’s location to movies or media that are popular in American culture.
  • Get acquainted with Chinese social media. With strict internet regulations, Chinese do not have access to Facebook, YouTube and other social media channels that we use every day in the U.S. One of the most widely used social channels in China, WeChat, is described as a “super app” that combines tools similar to Facebook, Twitter, Instagram, WhatsApp, Uber and Amazon, all rolled into one application. With 700 million active users, the app has become an integral part of doing business in China—in fact, over 80 percent of Chinese buyers prefer to be contacted via WeChat when requesting property information. Having a presence on this widely-used site can be a game-changer for connecting with Chinese buyers.
  • Most importantly…get your listings in front of Chinese buyers. Reaching Chinese buyers can be challenging. With language barriers and strict internet regulations, real estate professionals often have a hard time getting their listings in front of Chinese consumers searching for their next investment opportunity. ListHub can help! With several Chinese publisher websites available in the network, you can get your listings on the sites where Chinese buyers are actually searching.

Access an on-demand version of ListHub’s recent webinar on Chinese migration to the U.S. and how you can better attract Chinese buyers to your listings here—plus, learn more about how ListHub Global can help you get effortless international exposure for your listings.

For more information, please visit www.listhub.com.

For the latest real estate news and trends, bookmark RISMedia.com.

Top 10 Most Expensive Mistakes You’re Making on Your Home

Source: RISMedia

Top 10 Most Expensive Mistakes You’re Making on Your Home

By Cary Teller

Homes cost a lot of money to maintain. But are you spending extra money unnecessarily on the upkeep of your home? Here are 10 of the most expensive mistakes you could be making in your home.

1. Using Traditional Light bulbs

If you still have incandescent light bulbs in your home, you could be throwing a lot of money away every month on inflated electric bills. Over its life span, an incandescent bulb can use $180 worth of electricity. A CFL will only use $41 worth of electricity over the same time period. Even better is the LED bulb, which only uses $30 per bulb. Think what replacing every light bulb in your home could do to your home’s bottom line.

2. Ignoring a Leaky Faucet

A leaky faucet that drips one drop per second can waste more than 3,000 gallons per year, which is enough water to take more than 180 showers. Some of us live in areas where water is plentiful, but for those of us in areas plagued with drought, this could be costing you a fortune. Fix or replace your leaky faucet and save a ton on your water bill.

3. Using the Wrong Air Filter Size

We all sometimes forget to change out the air filters for our HVAC systems or accidentally buy the wrong size. But using the wrong filter or a dirty filter can increase your power bill and cause expensive problems for your furnace down the road. Use the correct filters for your system, and set a reminder to change them after the recommended amount of time. You won’t regret it.

4. Not Customizing Temperature

Invest in a customizable thermostat. If you’re away at the office all day, you can program your heater to shift down a few degrees while you’re gone and then shift back up shortly before you return home. Heating or cooling an empty home wastes a lot of money in energy costs.

5. Not Adjusting Air Vents Properly

Is one room in your home hot, while the others are cold? Oftentimes homeowners will crank up the air conditioning in the whole house to combat hot temperatures in one area. Instead, adjust air vents to direct the flow of air more evenly throughout your entire home. Professionals will come regulate this to ensure that your entire home is receiving the same amount of air conditioning or heating.

6.Over Watering Lawn

Many homeowners have their sprinkler systems programmed to come on in the early morning hours for optimum lawn health. This can become a problem, however, if you’re never around to see what you’re actually watering. A broken sprinkler head could be causing a fountain, or the trajectory of your sprinkler may be directed at a fence instead of your lawn. Periodically run your sprinklers during the day so you can see how they are performing when you’re not around.

7. Water Heater Temperature Set Too High

Unless you have a tankless water heater, your water heater is keeping the water in its tank hot 24/7. If you don’t keep an eye on the temperature as each season changes, you may be paying too much to heat your water. Decrease the temperature in the summer, and bump it back up when winter comes.

8. Leaky Windows and Doors

Leaky windows and doors are great places for cold, winter winds to enter your home. Many homeowners simply ignore them and crank up their heaters. Caulk leaky windows and put rubber seal around doors to keep winter winds out and warmth in.

9. Paying a Handyman

Don’t pay a handyman for a job that is simple enough to do yourself. If you’re unsure of how to do something, look up video tutorials online. Doing simple tasks yourself can save you a lot of money.

10. Ignoring Curled Shingles

It may be easy to ignore problems on your roof, but it will only lead to bigger problems later. If you see any possible issues with your roof, repair them as soon as possible, as this will save you significant costs later.

Use these 10 tips to cut maintenance costs on your home today.

Thurston County Home Prices Rise 6.8 Percent in Past Year

Source: NWMLS

KIRKLAND, Washington (Nov. 4, 2016) – Home sales around Western Washington outgained new
listings again in October, fueling competition for scarce inventory and pushing prices higher. Some
seasonal slowdown is still expected – and the Nov. 8 elections may be in play as well, according to
brokers at Northwest Multiple Listing Service who commented on last month’s activity.

MLS members reported 9,950 pending sales during October, but they added only 7,591 new listings, the
lowest number since January. A year-over-year comparison of pending sales shows there were 633 more
mutually accepted offers last month than twelve months ago for a gain of 6.8 percent.

Closed sales improved even more, rising from the year-ago total of 7,769 completed transactions to last
month’s volume of 8,554 (up 10.1 percent).

“While the stock market remains somewhat skittish regarding the upcoming presidential election, this
feeling clearly has not transferred to the housing market,” remarked OB Jacobi, president of Windermere
Real Estate. “Unfortunately for buyers who were hoping to have more homes to choose from this fall,
listings in October fell to levels we haven’t seen since the 1990s – and at this point, we probably won’t
see any sizable increase in inventory until the spring at the earliest,” he added.

Active listings dropped more than 13 percent compared to a year ago, with further shrinkage expected. At
month end there were 15,690 single family homes and condominiums offered for sale in the MLS system,
which encompasses 23 counties. That’s 2,378 fewer than the year-ago total of 18,068, and 2,446 fewer
than September. All but two counties (Clallam and Ferry) reported year-over-year decreases in inventory.
Overall, there was only 1.8 months of supply. King County had slightly more than one month (1.1), with
several areas within that county reporting less than a month’s supply. In Snohomish County, where
inventory plunged more than 20 percent from a year ago, there was with 1.3 months.

“The further we move into November, the more we’ll start feeling the typical seasonal drop when new
listings coming on the market decline by 50 percent on a monthly basis compared to spring and summer
months,” suggested J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Buyers are still out
there, he emphasized. “We’re heading into winter with a repeat of last year’s conditions: low inventory, a
backlog of buyers, and historically low interest rates.” On the heels of the “best October on record” Scott
predicts “a strong winter market where the inventory remains tight throughout the season.”

Not surprisingly given the large MLS territory, which includes both rural and urban areas, activity is
stronger in some sub-markets than others. Prices also reflect a wide spectrum. Of the four counties
comprising the Puget Sound region (King, Kitsap, Pierce and Snohomish), only Kitsap had an uptick in
new listings compared to a year ago, but that county’s robust pending sales (up 20.7 percent) helped
deplete its total inventory versus twelve months ago (down about 7 percent).

“The market in Kitsap is still very active,” according to Frank Wilson, the branch managing broker and
Kitsap district manager for John L. Scott Real Estate in Poulsbo. He noted Kitsap typically lags the
Seattle market by 6-to-9 months.

In South Sound, prices rose at a more moderate rate, around 9.6 percent in Pierce County and just over
6.8 percent in Thurston County. “Homes priced under $400,000 are looked at hard by buyers on ‘day one’
and often draw multiple offers,” said Northwest MLS director Dick Beeson, the principal managing
broker at RE/MAX Professionals in Tacoma. Above that figure, things slow down markedly, he noted,
adding that’s true in other areas, but the starting numbers and wait times might vary.

Limited Supply Spurs Higher Prices in Third Quarter

Source: RISMedia

Persistent supply shortages throughout the country led to slightly faster home price appreciation during the third quarter, according to the latest quarterly report by the National Association of REALTORS®. The report also revealed that seven of the 10 most expensive housing markets in the U.S. are in the West, including San Jose, Calif., which had a median single-family home price of $1 million for the second straight quarter.

The median existing single-family home price increased in 87 percent of measured markets, with 155 out of 178 metropolitan statistical areas (MSAs) showing gains based on closed sales in the third quarter compared with the third quarter of 2015. Twenty-two areas (12 percent) recorded lower median prices from a year earlier.

There were a growing number of rising markets in the third quarter compared to the second quarter of this year, when price gains were recorded in 83 percent of metro areas. Twenty-five metro areas in the third quarter (14 percent) experienced double-digit increases—unchanged from the second quarter of this year. A year ago, 21 metro areas (12 percent) saw double-digit price appreciation.

Lawrence Yun, NAR chief economist, says prospective buyers faced a very challenging market during the third quarter. “Mortgage rates around historical lows and solid local job creation created a winning formula for sustained home-buying demand all summer long,” he says. “Unfortunately, for house hunters in several of the top job producing metro areas around the country, deficient supply levels limited their options and drove prices higher—especially in markets in the West and South.”

The national median existing single-family home price in the third quarter was $240,900, which is up 5.2 percent from the third quarter of 2015 ($228,900), surpassing this year’s second quarter ($240,700) as the current peak quarterly median sales price. The median price during the second quarter increased 4.9 percent from the second quarter of 2015.

Total existing-home sales, including single-family and condos, slid 2.2 percent to a seasonally adjusted annual rate of 5.38 million in the third quarter from 5.50 million in the second quarter of 2016, and are 0.4 percent lower than the 5.40 million pace during the third quarter of 2015.

“After climbing to their highest annual pace in over nine years in June, sales sputtered in the third quarter because inventory could not catch up with what was being quickly sold,” says Yun. “Only a decent rebound in September kept the monthly and annual sales declines from being even larger.”

At the end of the third quarter, there were 2.04 million existing homes available for sale, which was 6.8 percent below the 2.19 million homes for sale at the end of the third quarter in 2015. The average supply during the third quarter was 4.6 months, down from 4.9 months a year ago.

Despite faster price growth last quarter, the decline in mortgage rates and an uptick in the national family median income ($70,306) slightly improved affordability compared to a year ago. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $51,661; a 10 percent down payment would require an income of $48,942; and $43,504 would be needed for a 20 percent down payment.

“If mortgage rates start to rise heading into next year, prospective buyers could face weakening affordability conditions in their market, unless supply dramatically improves,” adds Yun. “That’s why it’s absolutely imperative that homebuilders ramp up the production of more single-family homes to meet demand and slow price growth.”

The five most expensive housing markets in the third quarter were the San Jose, Calif., metro area, where the median existing single-family price was $1,000,000; San Francisco at $835,400; urban Honolulu at $745,300; Anaheim-Santa Ana, Calif., at $740,100; and San Diego at $589,300.

The five lowest-cost metro areas in the third quarter were Youngstown-Warren-Boardman, Ohio, at $90,300; Cumberland, Md., at $94,400; Decatur, Ill. at $99,400; Elmira, N.Y., at $109,400; and Rockford, Ill., at $111,900.

Metro area condominium and cooperative prices—covering changes in 59 metro areas— showed the national median existing-condo price was $225,100 in the third quarter, up 4.6 percent from the third quarter of 2015 ($215,200). Forty-one metro areas (69 percent) showed gains in their median condo price from a year ago; 17 areas had declines.

NAR President Tom Salomone says the Federal Housing Administration’s recently-announced rule change to lower the owner-occupancy requirement for approved condominium buildings from 50 percent to 35 percent under certain conditions is a step forward for prospective buyers considering a condo.

“Condos have typically been an attractive and viable option for first-time buyers, and recent NAR data are showing that they’re having a little more success,” he says. “With this lower owner-occupancy requirement, Realtors® will have more options for their clients looking to purchase a condo with an FHA mortgage. While we believe all condo buildings should have the rules applied to them equally, we also believe FHA has heard the concerns of Realtors® and is moving in the right direction.”

Regional Breakdown
Total existing-home sales in the Northeast dropped 7.5 percent in the third quarter and are now 1.9 percent below the third quarter of 2015. The median existing single-family home price in the Northeast was $272,600 in the third quarter, up 1.2 percent from a year ago.

In the Midwest, existing-home sales decreased 4.2 percent in the third quarter, but are 1 percent above a year ago. The median existing single-family home price in the Midwest increased 5.6 percent to $191,200 in the third quarter from the same quarter a year ago.

Existing-home sales in the South declined 2.7 percent in the third quarter and are 0.9 percent lower than the third quarter of 2015. The median existing single-family home price in the South was $213,700 in the third quarter, 6.5 percent above a year earlier.

In the West, existing-home sales increased 4.6 percent in the third quarter and are unchanged from a year ago. The median existing single-family home price in the West increased 7.6 percent to $349,200 in the third quarter from the third quarter of 2015.

For more information, visit www.realtor.org.

First-Time, Single Women Homebuyers Resurface in Real Estate

Source: RISMedia

First-time and single women homebuyers have resurfaced in the real estate market, contributing to a significant share of transactions in a year marked by full-steam-ahead sales, according to the National Association of REALTORS® (NAR) 2016 Profile of Home Buyers and Sellers survey. First-time homebuyer sales rose to a share of 35 percent, the survey found; single women homebuyer sales rose to 17 percent.

“Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession,” says Lawrence Yun, NAR chief economist. “Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise. These factors were why more first-time buyers (67 percent) said a desire to own a home of their own was the primary reason for their purchase (64 percent in 2015; 53 percent in 2014).

“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” Yun adds. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”

Though the growth among new homeowners is encouraging, their overall share of the market is still subpar, according to Yun. The lack of affordable new and existing inventory, the outpacing of home prices to wages, and the difficulty in saving for a down payment is why the homeownership rate for 18- to 35-year-olds is currently hovering near its historical low.

“First-timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,” says Yun.

Notably, 90 percent of respondents to NAR’s survey worked with a real estate agent to buy or sell a home, compared to 8 percent of for-sale-by-owner listings (FSBOs)—an all-time low.

Single Women Buyers on the Mend, Age of First-Time Buyers on the Rise
As in years past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200), according to the survey; however, single women made up more of the buyer pie than in recent years. After falling to 15 percent of buyers a year ago, single women represented 17 percent of total purchases (highest since 2011 at 18 percent).

The median age of first-time buyers in this year’s survey was 32, matching the all-time high last set back in 2006, and up from 31 the past five years. The typical first-time buyer had a higher household income ($72,000) than last year ($69,400) and purchased a slightly larger home (1,650 square feet; 1,620 square feet in 2015) that was more expensive ($182,500; $170,000 in 2015).

The typical repeat buyer was 52 years old (53 in 2015), earned $98,000 ($98,700 in 2015) and purchased a 2,000-square-foot home (2,020 square feet in 2015) costing $250,000 ($246,400 in 2015).

Buyers Carrying More Student Debt; Difficulty Obtaining Mortgage on the Decline
Down payment sizes have roughly stayed the same in recent years—in this year’s survey, it was 6 percent for first-time buyers and 14 percent for repeat buyers. Fifty-nine percent of buyers financed their purchase with a conventional mortgage, and 33 percent of first-time buyers took out a low down payment Federal Housing Administration (FHA)-backed mortgage.

“Fewer first-time buyers (40 percent) compared to a year ago (45 percent) indicated that the mortgage application and approval process was somewhat or much more difficult than they expected,” says NAR President Tom Salomone, broker/owner of Real Estate II Inc. in Coral Springs, Fla. “Those with healthy credit scores and manageable or little debt should talk to a lender to see if they qualify. They’ll likely discover that obtaining a mortgage isn’t quite the confusing and tiring inquisition it was in the years immediately after the downturn.”

Personal savings ranked first for both first-time buyers and repeat buyers as the primary source of their down payment. The second most popular source for first-timers was a gift from a friend or relative (24 percent; 27 percent in 2015), and for repeat buyers it was the sales proceeds from their previous residence.

Respondents reported that debt (all types) delayed saving for a down payment for a median of three years. For first-time buyers, 40 percent indicated they’re carrying student debt, with a typical amount of $26,000 ($25,000 in 2015). Furthermore, of the 26 percent of first-time buyers who said saving for a down payment was the most difficult task in the buying process, 55 percent said student debt delayed saving.

“As NAR survey findings discovered earlier this year, even those financially able to make on-time payments on their student loans are struggling to save for a down payment, and many expect to be delayed from buying a home by over five years,” says Yun. “Repaying student debt could slow the path to homeownership even more for those living in markets with steep rents and home prices.”

Buyers Rely on Internet and Agents; Single-Family Homes Top Choice
This year’s survey proved once again that the two most popular resources for homebuyers remain the internet (95 percent) and real estate agents (92 percent). Despite a record-high 51 percent of buyers saying they found the home they purchased online, most buyers who used the internet still ended up purchasing their home through an agent (90 percent).

Mobile devices and tablets are increasingly becoming a resource for buyers. Their usage lifted to 72 percent in this year’s survey, which is up from 61 percent a year ago. Furthermore, 58 percent of buyers indicated they found the home they purchased on a mobile app.

“Regardless of the plethora of online resources readily available at the click of a mouse or the swipe of a thumb, consumers serious about buying a home continue to seek the expertise and market insights that only a Realtor® can provide,” says Salomone. “Given the numerous competitive markets with minimal supply, it’s no surprise that both first-time and repeat buyers sought an agent for assistance finding the right home and negotiating the terms of the sale.”

The most common housing type continues to be a detached single-family home (83 percent for second straight year) and one in a suburban area (54 percent; 52 percent in 2015). Meanwhile, purchases of townhouses or row houses remained at 7 percent for the third straight year; only 4 percent of buyers purchased a condo.

Overall, the typical home bought was built in 1991 and had three bedrooms and two bathrooms. The share of buyers who purchased new home was at an all-time survey low of 14 percent.

Seller Use of Agent Remains High; Desire for Bigger House Primary Reason for Listing
For the second straight year, 89 percent of sellers sold their home with an agent. This in turn—also for the second year in a row—kept for-sale-by-owner sales to their lowest share (8 percent) since the survey’s 1981 inception and below 10 percent since 2012.

“Although the imbalance of supply in relation to demand in recent years continues to put many sellers in the driver’s seat, they’re still looking for a Realtor® now more than ever to price their home competitively, market their home to the widest number of eyes possible and ultimately help close the deal within a given timeframe,” says Salomone.

The typical seller over the past year was 54 years old (unchanged since 2014), had a household income of $100,700 ($104,100 in 2015), and was in the home for 10 years before selling—a year longer than 2015 and matching the all-time high in 2014. Fewer sellers indicated they wanted to sell earlier but were stalled because their home had been worth less than their mortgage (12 percent versus 14 percent a year ago); the figure was 17 percent in 2014.

Sellers realized a median equity gain of $43,100 ($40,000 in 2015)—a 24 percent increase (23 percent last year) over the original purchase price. Homes sold after 21 years of ownership had the largest equity gain (124 percent or $127,600); underlining the volatility during the downturn, equity gains fell to 3 percent for owners who bought between eight and 10 years ago.

With tight inventory conditions gripping most markets once again over the past year, sellers were considerably more successful finding a buyer in a shorter amount of time, with homes typically on the market for only a month.

A tad more sellers traded up (44 percent) compared to last year (42 percent) and slightly more, at 32 percent, traded down (31 percent in 2015). Sellers moved a median distance of 20 miles—72 percent stayed in the same state—and the most popular reason given for selling their home was it being too small (18 percent).

Feedback from sellers underscored once again that referrals and repeat business remain a large source of new opportunities for real estate agents. Nearly two-thirds of responding sellers either found their real estate agent through a referral by a friend, neighbor or relative, or used their agent from a previous transaction. Additionally, 85 percent of sellers indicated that they would definitely or probably use their agent again or recommend him or her to others.

For more information, please visit www.realtor.org.