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 continues to be a great time to sell your house.
THE PENDING HOME SALES REPORT
The report announced that pending home sales (homes going into contract) are up 2.4% over last year, and have increased year-over-year now for 22 of the last 25 consecutive months.
Lawrence Yun, NAR’s Chief Economist, had this to say:
“The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country. It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices.”
Takeaway: Demand for housing will continue throughout the end of 2016 and into 2017. The seasonal slowdown often felt in the winter months did not occur last winter and shows no signs of returning this year.
THE EXISTING HOME SALES REPORT
The most important data point revealed in the report was not sales, but was instead the inventory of homes for sale (supply). The report explained:
- Total housing inventory rose 1.5% to 2.04 million homes available for sale
- That represents a 4.5-month supply at the current sales pace
- Unsold inventory is 6.8% lower than a year ago, marking the 16th consecutive month with year-over-year declines
There were two more interesting comments made by Yun in the report:
“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in. Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand.”
In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s 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 a 7-month supply means we are in a buyer’s market and should expect depreciation in home values. As Yun notes, we are, and will remain, in a seller’s market with prices still increasing unless more listings come to the market.
“There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring. The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate.”
Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market. Prices will continue to rise if a ‘sizable’ supply does not enter the market.
If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out looking for your house.
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Every Hour in the US Housing Market:
- 633 Homes Sell
- 253 Homes Regain Positive Equity
- Median Home Values Go Up $1.43
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According to the Census Bureau, millennials have overtaken baby boomers as the largest generation in U.S. History. Millennials, or America’s youth born between 1982-2000, now represent more than one quarter of the nation’s population, totaling 83.1 million.
There has been a lot of talk about how, as a generation, millennials have ‘failed to launch’ into adulthood and have delayed moving out of their family’s home. Some experts have even questioned whether or not millennials want to move out.
The great news is that not only do millennials want to move out… they are moving out! The National Association of Realtors (NAR) recently released their 2016 Profile of Home Buyers and Sellers in which they revealed that 61% of all first-time homebuyers were millennials in 2015!
The median age of all first-time buyers in 2015 was 31 years old.
Here is chart showing the breakdown by age:
Many social factors have contributed to millennials waiting to buy their first home. The latest Census results show that the median age of Americans at the time of their first marriage has increased significantly over the last 60 years, from 23 for men & 20 for women in 1955, to 29 & 27, respectively, in 2015.
Those who went to college and took out student loans are finally paying them off, as the terms on traditional student loans are 10 years. This means that a large portion of the generation is making its last loan payments and is working toward saving for a first home.
As a whole, the first-time homebuyer share increased to 35% of all buyers, up from 32% in 2014. Not all millennials are first-time buyers, they also made up 12% of all repeat buyers!
Millennials will continue to drive the housing market next year, as well as in the years to come. As more and more realize that owning a home is within their grasp, they will flock to own their piece of the American Dream. Are you ready to buy your first or even second home?
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The National Association of Realtors (NAR) keeps historic data on many aspects of homeownership. One of the data points that has changed dramatically is the median tenure of a family in a home. As the graph below shows, for over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%.
Why the dramatic increase?
The reasons for this change are plentiful. The top two reasons are:
- The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property).
- The uncertainty of the economy made some homeowners much more fiscally conservative about making a move.
However, with home prices rising dramatically over the last several years, over 90% of homes with a mortgage are now in a positive equity situation with 70% of them having at least 20% equity.
And, with the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago.
What does this mean for housing?
Many believe that a large portion of homeowners are not in a house that is best for their current family circumstances. They could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple planning to start a family that currently lives in a one-bedroom condo.
These homeowners are ready to make a move. Since the lack of housing inventory is a major challenge in the current housing market, this could be great news.
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Are you thinking of buying a home? Are you dreading having to walk through strangers’ houses? Are you concerned about getting the paperwork correct? Hiring a professional real estate agent can take away most of the challenges of buying. A great agent is always worth more than the commission they charge, just like a great doctor or great accountant.
You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish an average agent from a great one.
Here are the top 4 demands to make of your real estate agent when buying a home:
1. Tell the Truth About the Price
When making an offer on the home you want to buy, make sure that your agent walks you through their plan for getting both the seller – and the bank – to accept that price. Too many agents will just take the offer that you suggest and then try to ‘work’ both you and the seller in the negotiating phase later. In a competitive market, you need an agent who is going to help you make the best ‘initial offer’ so that you stand out from the crowd. Every house in today’s market must be sold twice – first to you and then to your bank.
The second sale may be more difficult than the first. When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the selling price when performing the appraisal for the bank. A red flag should be raised if your agent is not discussing this with you at the time of the original offer.
2. Understand the Timetable with Which Your Family is Dealing
You will be moving your family into a new home. Whether the move revolves around the start of the new school year or a new job, you will be trying to put the move to a plan.
This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. Your agent cannot pick the exact date of your move, but they should exert any influence they can to make it work.
3. Remove as Many of the Challenges as Possible
It is imperative that your agent knows how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.
Remember: If you have an agent who was weak negotiating with you on parts of the purchase offer, don’t expect them to turn into a superhero when they are negotiating with the seller for you and your family.
4. Find the Right HOUSE!
There is a reason you are putting yourself and your family through the process of moving.
You are moving on with your life in some way. The reason is important or you wouldn’t be dealing with the headaches and challenges that come along with buying. Do not allow your agent to forget these motivations. Make sure that they don’t worry about your feelings more than they worry about your family; if they discover something needs to be done in order to attain your goal, insist that they have the courage to inform you.
Good agents know how to deliver good news. Great agents know how to deliver tough news. In today’s market, YOU NEED A GREAT AGENT!
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