Low Inventory Causes Home Prices to Maintain Fast Growth

Low Inventory Causes Home Prices to Maintain Fast Growth

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price Report last week. The report revealed that severely lacking inventory across the country drained sales growth and kept home prices rising at a steady clip in nearly all metro areas. Home prices rose 5.3% over the last quarter across all metros.

Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

“Unfortunately, the pace of new listings were unable to replace what was quickly sold. Home shoppers had  little to choose from, and many had to outbid others in order to close on a home. The end result was a slowdown in sales from earlier in the year, steadfast price growth and weakening affordability conditions.”

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by the Washington Post in a recent article post:

“The rise in median sales prices has made current homeowners much more willing to sell their home, and that

willingness is one of the main drivers behind the inventory that does make it on to the market. While it hasn’t been

enough to meet demand, it has made the situation much better, compared with even three or four years ago.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year or next year. However, as Construction Dive reported, the amount of cash needed to purchase that home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

Bottom Line 

If you’re thinking of selling and moving down, waiting might make sense. If you are a first-time buyer or a seller thinking of moving up, waiting probably doesn’t make sense. Contact me today and let's get moving. 

MN Licensed REALTOR with Coldwell Banker Burnet - Liz Sandwick-

www.MovewithLiz.com  www.LizSandwick.com   www.MNHomeswithLiz.com

Suprising Real Estate Trends that Will Shape the Way You Buy and Sell a Home

Surprising Real Estate Trends that Will Shape the Way You Buy and Sell a Home

When buying or selling a house, one of the first questions that come to mind is either “What do I want in a house?” or “What do buyers want in my house?” Though it can be hard to differentiate between wants and needs in real estate, the answer to either question may have a surprising link to generational real estate trends.

The Data

According to data on home buyer and seller generational trends released by the National Association of Realtors, Millennials (those born between 1982 and 2000) continue to comprise the largest contingent of homebuyers, holding 35 percent of the market. Although Millennials are the largest contingent of homebuyers, they spend less time saving for a down payment and have the largest level of educational debt than their home-buying counterparts. The next largest contingent, at 26 percent of the market, is made up of Generation X (those born between 1965 and 1981). These buyers have had a bit more time to pay down student debt, save for a down payment, or gain some equity in their current home — which can provide clues about home buying trends based on age.

Millennials

Millennials are more likely to look for a bargain, with affordability trumping almost every other housing need, and it is one of the major reasons Millennials are flocking to the suburbs, as opposed to urban areas. When selling, that means appealing to the Millennial set that will be looking for walkability, transport links, and neutral spaces to put their stamp on. If buying, especially for the first time, Millennials are more likely to compromise on the size and age of a home before they compromise on price, which provides ample opportunity to build equity through a renovation before moving on to a larger home in the future.

Generation X

Gen Xers, on the other hand, are more likely to move to obtain a larger home for their growing families. When selling, this means playing up livable space in a home and demonstrating how it can support a growing family. Items to focus on are the main living spaces such as the kitchen, living areas, and bathrooms. Proximity to good schools and transportation routes are also good qualities to play up. Gen Xers are also more likely to stay in their homes for a longer period than the Millennial set — meaning Xers are more likely to compromise on price to get the right neighborhood or location.

Baby Boomers

If you’re wondering where the Baby Boomers fit in, it may surprise you to know that the Millennials have recently surpassed Baby Boomers as America’s largest generation, and this demographic shift is reflected in their share of the real estate market. With many Boomers still in the workforce, the real estate trends for this group have been split in two: younger Boomers (born between 1956 and 1964) and older Boomers (born between 1946 and 1955). They have a market share of 16 percent and 15 percent of the market respectively. What makes this generation unique is that they are the ones most likely to move the furthest, obtaining a smaller home and relocating closer to family and friends, and they are willing to pay for the location they want.

The Bottom Line

Across all buying groups, environmentally friendly features ranked as incredibly important, and nearly all generational groups from 30 to 90 began their real estate search online — something potential home sellers should be aware of when preparing their home for sale. No matter who your target market is when selling your home, presenting a neutral space, playing up the local amenities, and including lots of pictures in an online listing will remain critical in a successful sale.

For more information about the market in your neighborhood, contact Liz Sandwick,  REALTOR® from Apple Valley, MN Coldwell Banker Burnet. Call/Text: 952-491-3685

Five Reasons to Sell This Fall

Five Reasons to Sell This Fall

School is back in session, the holidays are right around the corner, you might not think that now is the best time to sell your house. But with inventory below historic numbers and demand still strong, you could be missing out on a great opportunity for your family.

Here are five reasons why you should consider selling your house this fall: 

1. Demand Is Strong

The latest Realtors’ Confidence Index from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now!

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

According to NAR’s latest Existing Home Sales Report, the supply of homes for sale is still under the 6-month supply that is needed for a normal housing market at 4.7-months.  This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market this fall.

Also, as builders regain confidence in the market, new construction of single-family homes is projected to continue to increase over the next two years, reaching historic levels by 2017. Last month’s new home sales numbers show that many buyers who have not been able to find their dream home within the existing inventory have turned to new construction to fulfill their needs.

The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

Fannie Mae announced that they anticipate an acceleration in home sales that will surpass 2007's pace. As the market heats up, banks will be inundated with loan inquiries causing closing-time lines to lengthen. Selling now will make the process quicker & simpler. 

4. There Will Never Be a Better Time to Move Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 5.3% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

According to Freddie Mac’s latest report, you can also lock-in your 30-year housing expense with an interest rate around 3.46% right now. Interest rates are projected to increase moderately over the next 12 months. Even a small increase in rate will have a big impact on your housing cost.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire. 

Contact Liz Sandwick, your Coldwell Banker Burnet Real Estate Professional to analyze all of the options and opportunities available to you for selling your property in today’s marketplace. 

That is what is truly important.

MoveWithLiz.com

Inventory Impacting August Existing Home Sales

It should be full steam ahead for the housing market right now with most economic indicators trending vigorously upwards.

Not only are more Americans going back to work — net monthly job gains averaged more than 200,000 this year, according to the Bureau of Labor Statistics — but pay checks are finally expanding again. Median household income grew by more than 5% in 2015, according to the Census Bureau, and gains have continued in 2016. The national unemployment rate stands below 5%.

Plus, mortgage financing costs continue to scrape bottom: In August, the average borrower of a 30-year, fixed-rate loan received an interest rate of about 3.45%.

“Healthy labor markets in most the country should be creating a sustained demand for home purchases,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR).

However, Yun said that a lack of supply has caused sales to inch backward after peaking in June.

Many local real estate brokers simply do not have the inventory to satisfy demand. That not only makes it harder to find a home to buy, it drives up the prices of houses that do come on the market.

Still, even though sales have declined month-over-month to an annual rate of 5.33 million, down 0.9% from July, year-over-year sales rose by 0.8%.

Home builders expect conditions to improve

Home builders have noted the shortage of available listings and the burgeoning demand for them, and they have grown optimistic about their prospects for selling more new homes going forward. The builder’s confidence index compiled by their national association spiked to 65 this month, up from 59 in August. That means more builders expect conditions to improve this year than those who do not.

They too face, however, difficulties in acquiring plots of land to build on, especially in some of the most expensive metro areas in the country. Many of these places have few large plots left suitable for development and increasingly complex regulations add another layer of hassle and expense for builders, making it more difficult for them to respond quickly to inventory shortages.

Home prices reflect the inventory problems with the national median for homes sold in August coming in at $240,200, up 5.1% compared with 12 months earlier. The market has recorded 54 consecutive year-over-year price gains.

The biggest shortfalls tend to be with affordable starter homes in many markets, which are reflected in the share of homes sold to first-time buyers. They accounted for just 31% of sales in August, well below historical norms of about 40%. The lack of inventory for families just starting out is a big problem.

Affordable homes going fast

Once listings hit the market, they do not linger long. The median time on market dropped to 36 days in August, down from 47 in August 2015.

“New listings at affordable prices are receiving multiple offers and going under contract almost immediately upon becoming available,” said Tom Salomone, NAR’s president and a real estate broker in Coral Springs, Fla.

In the hottest markets, such as the Bay Area in California, listings were sold in a median of 33 days, despite some of the highest home prices in the nation.

Regionally, the South recorded the weakest month, with sales off 2.7% compared with July. The Northeast reported strong month-over-month gains, up 6.1%. Midwest sales fell slightly and in the West, 1.7% fewer homes got sold.

Here are the year-over-year sales changes by region:

Region	Home sales	% Sales change year-over-year	Median home price	% Price change year-over-year
Northeast	660,000	-5.7%	$284,000	3.3%
Midwest	1.28 million	0%	$194,000	5.0%
South	2.22 million	-1.8%	$214,500	6.6%
West	1.23 million	-0.8%	$346,100	6.4%

Source: National Association of Realtors

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