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Displaying blog entries 1-10 of 16

Clients Value Walkable Neighborhoods

by Melissa Dierks

Walkable mixed-use neighborhoods across the country are growing in popularity, with buyers valuing close access to entertainment areas, public transit, and job centers, all without having to rely on a car. A home's walkability is not only increasingly important to buyers, it's shown to be a factor in raising home values.

Read moreWalkability Adds Value in Commercial Market

"One of the best sources of evidence of the value of walkability is home values," MarketWatch reports, "and some new evidence confirms that walkability adds to home values, and also shows that walkable homes have held and increased their value more even in turbulent real estate markets."

A neighborhood's walkability is a big draw for potential buyers. In NAR's Community Preference Survey, 60 percent of respondents said they preferred to live in a neighborhood with a mix of houses and businesses that are within walking distance.

"While different places appeal to different people, there’s a growing awareness that walkable neighborhoods with a wide mix of uses provide communities a trump card as they strive to compete in a 21st century economy," says Brad Broberg in the latest issue of On Common Ground. "Neighborhoods where people can live close to work, get their groceries and grab a beer — all without needing a car — are the magnets that attract many of today's young professionals. Where they go, jobs follow."

Indeed, City Observatory recently reported that between 2007-11, the city centers of the largest metro areas, traditionally places with high walkability and mixed-use neighborhoods, experienced stronger job growth than remote areas for the first time in decades.

Recent data shows that mixed-use transit oriented neighborhoods improve property values. A 2009 study by CEOs for Cities found that in 13 of the 15 markets analyzed, increased walkability in a neighborhood was directly linked to higher home values.

Developers across the country are changing their projects to reflect this growing shift towards walkability and the changing lifestyle preferences of buyers.

Source: "What Homebuyers Want Now: Walkable Neighborhoods," MoneyWatch (July 16, 2015), "Creating Walkable Towns," On Common Ground, (June 10, 2015), "No Parking, No Problem" REALTOR® Magazine, (March, 2015)

More Buyers Take Advantage of FHA Loans

by Melissa Dierks

Sales to buyers using Federal Housing Administration loans rose to a two-year high in the second quarter, according to RealtyTrac's June and Midyear 2015 U.S. Home Sales Report.

Buyers using FHA loans — which are typically low down payment loans that are used by first time home buyers -- made up 23 percent of all single family home and condo sales with financing in the second quarter of 2015. That's up from 19 percent in the second quarter of 2014 and the highest share since the first quarter of 2013.

Big moveFHA Lowers Its Mortgage Costs

"As the investor-driven housing recovery faded in the first half of 2015, first-time home buyers, boomerang buyers and other traditional owner-occupant buyers started to step into the gap and pick up the slack," says Daren Blomquist, vice president at RealtyTrac. "This is good news for sellers in many markets, providing them with strong demand from a larger pool of buyers, and U.S. sellers so far in 2015 are realizing the biggest gains in home price appreciation since 2007."

The following markets, with a population of 1 million or more, had the highest share of buyers using FHA loans in the first six months of 2015:

  • Riverside-San Bernardino-Ontario in inland Southern California: 35%
  • Las Vegas: 32%
  • Oklahoma City: 31%
  • Salt Lake City: 30%
  • Phoenix: 29%

On the other hand, these major markets had the lowest share of buyers using FHA loans in the first six months of 2015:

  • San Jose, Calif.: 7%
  • Hartford, Conn.: 10%
  • San Francisco: 12%
  • Boston: 12%
  • Milwaukee: 13%

Source: RealtyTrac

Home Prices Reach an All-Time High

by Melissa Dierks

The rise in buyer demand combined with a limited number of homes for sale pushed the national median sales price above its 2006 peak and to a record high, according to the National Association of REALTORS®.

Market Snapshot for June Sales

  • Median existing-home price: $236,400
  • Days on the market: 34 days (the median properties stayed on the market)
  • All-cash sales: 22 percent of transactions, down from 32 percent a year ago
  • Distressed sales (foreclosures and short sales): 8 percent of sales, down from 11 percent a year ago

Source: National Association of REALTORS®

The median existing-home price for all housing types reached $236,400 in June – 6.5 percent above year ago levels and surpassing the peak median sales price set in July 2006 at $230,400.

Along with a boost in home prices last month, existing-home sales also reached the highest pace in more than eight years. Lawrence Yun, NAR's chief economist, calls this year's spring buying season the strongest since the downturn.

"Buyers have come back in force, leading to the strongest past two months in sales since early 2007," Yun says. "This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy."

Yun says that June's sales also likely got a boost by the spring's initial phase of rising mortgage rates. That "usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher," Yun says.

Total sales of completed single-family, townhome, condo, and co-op transactions ticked up 3.2 percent last month to a seasonally adjusted annual rate of 5.49 million and are nearly 10 percent above year ago levels. Sales also are the highest pace since February 2007. All major regions of the U.S. saw sales move higher in June.

The number of homes for-sale across the country remains low, as housing inventories only saw a 0.9 percent increase in June to 2.30 million existing homes for-sale. Inventories are 0.4 percent higher than a year ago. Unsold inventory is at a 5-month supply at the current sales pace.

"Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers," says Yun. "Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes."

But with inventories still low, properties are selling faster. Forty-seven percent of homes sold in less than a month in June, according to NAR. Properties typically stayed on the market for 34 days in June, the shortest number of days since NAR began tracking in May 2011. Short sales had the longest days on the market with a median of 129 days, while foreclosures sold in 39 days. Non-distressed homes were on the market for 33 days.

Chris Polychron, NAR's president, says that real estate professionals are reporting drastic imbalances of supply compared to buyer demand in several metro areas, most notably in the West.

"The demand for buying has really heated up this summer, leading to multiple bidders and homes selling at or above the asking price," Polychron says. "Furthermore, tight inventory conditions are being exacerbated by the fact that some home owners are hesitant to sell because they’re not optimistic they'll have adequate time to find an affordable property to move into."

Source: National Association of REALTORS®

Real Estate Ranks Tops Among Investments

by Melissa Dierks

Real estate is Americans' top investment choice, according to a new Bankrate survey. The survey asks Americans what kind of investments made the most sense and 27 percent said they'd invest in property if they had a pool of spare cash.

Read moreInvestment Allure: Get Buyers on the Gravy Train

CDs and other cash investments – previously the top answer in Bankrate's 2013 and 2014 surveys – came in second at 23 percent. Only 17 percent of survey respondents said they’d purchase stocks; 14 percent said gold and other precious metals; and 5 percent said bonds.

"We're not seeing the bunker mentality from individual investors to the same extent of the past few years," says Greg McBride, CFA, Bankrate's chief financial analyst. "But the preference for real estate over, say, the stock market, does beg the question of whether or not Americans are again viewing residential housing as a golden ticket."

Geographically, Americans living in the West or in urban areas showed the biggest preference toward real estate investments at 35 percent and 31 percent, respectively. Americans living in the South also showed a strong preference for real estate and cash investments, while those living in the Midwest said they preferred cash and stocks over real estate.

Source: "Survey Reveals Americans’ Top Investment Choice: Real Estate," Bankrate.com (July 2015) 


3 Reasons Why It's a Great Time for Sellers

by Melissa Dierks

Rising home prices, demand from home buyers, and less competition is making 2015 a stellar year to sell for many U.S. home owners across the country, says Daren Blomquist, RealtyTrac's vice president.

Read moreHome Prices Reach an All-Time High

Blomquist points to these three factors behind why this year is shaping up more favorably for sellers:

1. Stronger demand coming from buyers: Sellers in many markets are seeing stronger demand from a larger pool of buyers, including first-time buyers, boomerang buyers (previous owners who lost their home to foreclosure), as well as traditional owner-occupant buyers. Particularly of note lately, the number of buyers using Federal Housing Administration – typically low down payment loans often used by first-time home buyers – is on the rise, accounting for 23 percent of all single-family home and condo sales with financing in the second half of 2015. That marks the highest share since the first quarter of 2013, according to RealtyTrac's Midyear 2015 U.S. Home Sales report.

Read moreMore Buyers Take Advantage of FHA Loans

2. Home prices are skyrocketing: Single-family home and condo sellers in the first half of this year sold for an average of 13 percent above their original purchase price. "So far in 2015, [sellers] are realizing the biggest gains in home price appreciation since 2007," Blomquist says. "In June, sellers sold for above estimated market value on average for the first time in nearly two years." Median sales prices of existing-homes pushed above the previous 2006 peak to a record high in June, the National Association of REALTORS® reported this week. The median existing-home price for all housing types was $236,400 in June – surpassing the peak median sales price set in July 2006 at $230,400.

3. Sellers have less competition: Inventories of for-sale homes remains tight, which has forced buyers to have to compete for the limited supply. Distressed sales –properties in the foreclosure process or bank-owned – accounted for 8 percent of all single-family and condo sales in June, the lowest monthly share since January 2011. In 2011, the share of distressed sales had reached a monthly peak of nearly 46 percent of all single-family and condo sales.

Source: "2015 Great Year to Sell," RealtyTrac (July 22, 2015)

Renters Face More Cost Increases

by Melissa Dierks

Rents continue to push upwards, as landlords take advantage of the hot rental market.

Read moreWhy Renters May Be in Trouble 

Average effective rents climbed 3.6 percent during the second quarter compared to a year earlier, according to REIS Inc., a real estate research data firm. Rent growth has bloomed at a fast pace since 2012, hovering around a 4 percent annual growth since then. 

Strong technology markets like San Jose, Calif.; San Francisco; and Denver are seeing some of the largest increases in rental costs. In San Jose, rents rose 7.2 percent from the second quarter of 2014 to $1,951 a month. In San Francisco, rents rose 6.8 percent to $2,316. In the country's most expensive rental market, New York City, rents rose 1.7 percent over the prior quarter, reaching $3,294 a month.

Ryan Severino, senior economist at REIS, says that inadequate supplies are pushing up rental costs. "We're waiting for the supply to come on the market but it just hasn’t hit yet," Severino says. 

REIS projects that 230,000 units will be completed this year -- that's nearly double above normal levels. In the second quarter, the apartment vacancy rate was just 4.2 percent. 

As new supplies hit the market, "we'll probably see rent growth begin to decelerate," says Stephanie McCleskey, vice president of research for Axiometrics.

Source: "Rents Continue Their Steep Climb," The Wall Street Journal (July 1, 2015)


Builder Labor Shortage Grows More Severe

by Melissa Dierks

Shortages of labor and subcontractors -- first surfacing last year -- have grown even more widespread this year, according to a survey of single-family builders conducted by the National Association of Home Builders in June. 

The State of Homebuilding

Home Builders are Less Confident

Homebuilder Outlines 5 Themes for Housing

Inventory Shortages Keeping Home Sales Low

The shortages are most evident in basic skills like carpentry. Sixty-nine percent of builders reported a shortage of construction workers willing an able to do rough carpentry. Framing crews and bricklayers or masons are also among the reported shortages. 

A shortage of subcontractors is also alarming, builders noted in the survey. In the construction of a single-family home, three-quarters of the construction work is usually completed by subcontractors, according to NAHB. Seventy-four percent of builders reported a shortage of subcontractors compared to 69 percent for labor directly employed. 

"The incidence of shortages is surprisingly high given the rate of new home construction, which has only partially recovered from its 2008 downturn," NAHB notes in its blog, Eye on Housing. The shortage is substantially higher than it was at the peak of the 2004-2005 boom, when annual starts averaged around 2 million compared to current rates of about 1 million, NAHB notes. 

The most common effects of the shortages have been leading builders to have to pay higher wages/subcontractor bids and forcing them to raise home prices. Also, builders say the shortage has made it difficult for them to complete projects on time. 

Source: "For Builders, Labor/Subcontractor Shortage Intensifies,"National Association of Home Builders’ Eye on Housing Blog (July 3, 2015)


Where Should First-Time Buyers Live?

by Melissa Dierks

Deciding where to buy a home for the first time is one of the biggest decisions consumers will make, and not all states have prime conditions for young buyers looking to enter the market.

The recent recession caused many potential buyers to put off their decision to buy a home, but the improving economic climate is giving them incentives to finally jump into home ownership. In fact, NAR's May existing-home sales report showed the percentage of first-time buyers matched the highest share since September 2012.

Read moreA First-Time Buyer Comeback?

"The first-time buyers are scooping up properties with 32 percent of all buyers being as such compared to only 27 percent one year ago. A lower fee on FHA mortgages is helping," says Lawrence Yun, NAR's chief economist, in his June economic and forecast update. "Buyers are coming back in force. One factor for the recent surge could have been due to the rising mortgage rates. As nearly always happens, the initial phase of rising rates nudges people to make decision now rather than wait later when the rates could be higher still."

So where should young buyers look to buy their first home? To rank the states that offer the best conditions for first-time home buyers, GOBankingRates considered which states saw the largest first-time buyer growth from 2003-2013, as well as the lowest levels of foreclosures. They also looked at the local housing market conditions and the state housing assistance programs that are available to help young buyers.

The 10 Best States for First-Time Buyers

  1. West Virginia
  2. New Hampshire
  3. Rhode Island
  4. Vermont
  5. Massachusetts
  6. Hawaii
  7. Washington, D.C
  8. Wyoming
  9. Maine
  10. Arizona

Source: "10 Best States for First-Time Home Buyers," The Huffington Post, (July 6, 2015), "Economic and Forecast Update," Economists' Outlook (July 1, 2015)

What's Chipping Away at Housing Affordability

by Melissa Dierks

Housing affordability has fallen from a year ago due to a limited number of homes for-sale mixed with high buyer demand and growing home prices, according to the National Association of REALTORS® latest reading on its affordability index.

Read moreHousing Affordability Hits 2 Extremes

Home prices continue to rise at an unhealthy pace compared to incomes. What's more, lower mortgage rates are not completely offsetting the increases in home prices, according to NAR's Economists' Outlook blog.

The median single-family home price is $230,300, up 8.6 percent from May last year. Meanwhile, May's mortgage rate averaged 3.9 percent, down 44 basis points from last year (one percentage point equals 100 basis points).

NAR's index shows that housing affordability dropped from 161.2 in May 2014 to 159.7 in May 2015. The lower mortgage rates did not completely offset the rise in home prices.

Affordability is down from one month ago in all regions. The Midwest saw the largest drop of 5.8 percent, while the West dropped only 2.6 percent.

Find out how housing affordability has fared in your market, view the National Association of REALTORS®' Housing Affordability Index at REALTOR.org.

Source: "May 2015 Housing Affordability Index," National Association of REALTORS® Economists' Outlook Blog (July 10, 2015)

Study: Biggest Opportunities in Boomer Market

by Melissa Dierks

Though the real estate industry has made it a mission to bring Millennials into home ownership in recent years, a new study by research firm HouseCanary suggests we not ignore an inconvenient truth: Baby boomers have the buying power.

Battle of the Ages

After Baby Boomers, What's Next for Housing?

Millennials Outnumber Baby Boomers: A Cue for Real Estate?

Despite Predictions, Baby Boomers Aren't Downsizing Yet

The study raises questions about how wise it is to focus on Millennial buyers, given their economic limitations. If interest rates — which are expected to keep ticking up this year — were to increase to 6 percent, more than one in three Millennials would no longer be able to afford a home at their current prices, HouseCanary found. Millennials are carrying high debt with limited savings, and their career growth has been slow.

But baby boomers have fueled the housing market for decades as the biggest drivers of growth in the entry-level market in the 1970s and '80s, as well as the move-up market in the '90s and 2000s. Boomers aren't slowing down: They’re expected to continue to drive household growth over the next 20 years "due to significant wealth and high home ownership rates," according to HouseCanary. Over the past year alone, baby boomers accounted for 244 percent of household growth annually.

"The vast imbalances in wealth and home ownership among baby boomers and Millennials are resulting in wide disparities in the demand for homebuying versus renting," says HouseCanary President JP Ackerman. "Our analysis indicates that rising interest rates and home prices will exacerbate the situation, as the Millennials' ability to purchase homes will be severely jeopardized as monthly payments get further out of reach."

HouseCanary CEO Jeremy Sicklick says his company's research indicates greater opportunity for developers to target the aging population with for-sale inventory while targeting the younger generation with for-rent inventory. 

Source: House Canary

Displaying blog entries 1-10 of 16

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Melissa Dierks
Keller Williams Professional Partners
7025 W Bell Road, Suite 10
Glendale AZ 85308
Direct: (623)229-0154
Office: (623)643-1092
Fax: (623)201-7562

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