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County Median Home Prices

Thu, 03/09/2017 - 10:35

A week after the release of the Housing Price Index for the last quarter of 2016,  the median home price per county[1] has been updated. Applying the price change in the related metropolitan areas, it seems that, compared to a year earlier, home prices continue to rise in 97 percent of the counties. Counties in the following metro areas experienced price gains higher than 11%:

  • Palm Bay-Melbourne-Titusville, FL
  • Lewiston-Auburn, ME
  • Seattle-Bellevue-Everett, WA
  • Portland-Vancouver-Hillsboro, OR-WA
  • Crestview-Fort Walton Beach-Destin, FL
  • Tampa-St. Petersburg-Clearwater, FL
  • Jacksonville, FL
  • Salem, OR

At the same time, mortgage rates continue to rise. Based on Freddie Mac data, the average rate for a 30-year fixed mortgage was 4.17 percent in February. Since the 2016 elections, the typical mortgage rate has risen from 3.5 percent to 4.2 percent. Mortgage rates are still historically low, but crossing over from the 3 percent range to 4 percent range raises worries to potential home buyers.

The monthly payment was calculated by county based on the mortgage rate in October (3.5 percent), the rate as of early January (4.2 percent) and a higher rate likely to be seen within the next two years (5.0 percent).

Nationwide, it is estimated that the rise of mortgage rates from 3.5 to 4.2 percent increased the monthly payment by $75 to the amount of $921 while a rise from 4.2 to 5.0 percent will increase the monthly payments by $90[2] ($1,011 per month).

But the effect depends on the location. At the high end, San Francisco homebuyers have seen a nearly $377 increase in monthly payments so far, and if rates were even higher now, financing the same-priced home would cost an extra $451 per month.  At the low end, in Cochran County, TX, home buyers are paying an extra $13 per month on account of the mortgage rate rise since November, and they could see an extra $16 per month as rates rise to 5 percent. At this end of the spectrum, the change in monthly payments seems much more manageable.

However, these examples only use the current price of homes to see the difference.  In the years ahead, NAR expects that the 30 year fixed-rate will increase to 4.4 percent in 2017 and 5.0 percent in 2018 while home prices are expected to rise 4.2 and 3.1 percent, accordingly. Rising prices in addition to rising mortgage rates will push the monthly cost of housing up even higher for new homebuyers. Existing homeowners who took out fixed rate mortgages will have the same monthly principal and interest payment.

Select a County from the dropdown and see how much monthly payments change over the different mortgage rates:

Lastly, please take look at which counties will be affect mostly from the increase of mortgages rates:

 

For more information on data by name or price, and the methodology, please visit the data page. 

 

[1] There is data available for 3,119 counties.

[2] The U.S. median home value matches the county prices calculations. For comparisons purposes, the calculated median home value reflects all homes while NAR’s U.S. median price represents home sales. Thus, the calculated price ($209,227) is expected to be lower than NAR’s home value ($233,900 in Q4 2016). Please see Methodology for more details.

International Women’s Day 2017

Wed, 03/08/2017 - 11:09

International Women’s Day is celebrated internationally on March 8th each year. It is a day to acknowledge the economic, political, and social achievements of women. In recognition of this day we can examine the profile of women REALTORS® using the 2016 Member Profile.

Women in Real Estate:

  • Women make up 62% of all Realtors®, with women making up 56% of licensed brokers/broker associates, and 66% of licensed sales agents.
  • Thirty-three percent of women members are between the ages of 50 and 59.
  • Women members were most likely to be married, at 68%, 18% were divorced, 7% were single/never been married.

Education:

  • Thirty-two percent of women members have completed some college.
  • Fourteen percent of women members hold an Associate’s degree, 29% hold a Bachelor’s degree, and 10% hold a Master’s degree/MBA/law degree.

Real Estate Career:

  • For 76% of women members, real estate is currently their only occupation.
  • Fifty-eight percent of members who have been active as a real estate professional for 16 or more years are female.
  • In a typical work week 54% of women members work 40 hours or more.
  • Only 4% of female members have cited real estate as their first career.
  • Some of the previous occupations help by women members include:
    • Management/Business/Financial: 15%
    • Sales/Retail: 14%
    • Office Admin Support: 13%
    • Education: 8%
    • Healthcare: 7%
    • Homemaker: 7%

For more information on International Women’s Day check the out the United Nation’s events page.

More information on REALTORS® is available in the International Women’s Day Infographic and 2016 Member Profile.

Social Network and Housing Markets: A REALTOR® University Speaker Series Presentation

Mon, 03/06/2017 - 11:47

Becoming a homeowner or investing in a real estate property is one of the most important personal and financial decisions a person will make in his lifetime. In a world when social media and the increasing access to the internet are affecting every aspect of life, how does one’s social network affect the decision to purchase a property? 

At a REALTOR® University Speaker Series held recently[1], Dr. Johannes Stroebel presented research[2] that found that one’s social network of friends has an impact on a person’s decision to purchase property. The process works this way: price changes occurring within the geographical area of an individual’s social network impact his/her perception of the attractiveness of property investments as well as actual decisions to purchase real estate.

To listen to the presentation[3], click Video). To download the study, click here.

The research looked at Facebook users who lived in Los Angeles and analyzed how the home price experience of their social network of friends who lived in other geographic areas affected their home purchase decisions. The research found that housing investment is regularly a topic of discussion with the social network.[4] According to the study, about half of the respondents discussed (sometimes or often) whether buying a house is a good investment.

The study found that an increase in the home price experience[5] of an individual’s social network (“friends”) who reside in other geographic areas:

- increased the chances of the individual becoming a homeowner;

- increased the size of the property the individual purchased; and

- increased the individual’s purchase price;

An implication of the study is that an individual whose social network (friends) live in geographic areas where prices are increasing is more likely to purchase a home than an individual whose social network is experiencing greater price variability (some increasing, some decreasing). The effect is larger for individuals who regularly talk to their friends about investing in property. In this regard, social networks can amplify housing upturns and downturns, if home prices are moving in the same direction in many geographic areas.

 

What This Means to REALTORS®: REALTORS® are increasingly using social media, and this active social media presence can potentially create more business opportunities, as individuals become more aware of housing trends in their areas and discuss  these trends with their social network friends. According to the 2016 Member Profile, 70 percent use social media, 54 percent reported having a website for five years, and 11 percent have a real estate blog.

 

About the Speaker

Dr. Johannes Stroebel is Associate Professor of Finance, New York University Stern School of Business. He is also affiliated with the National Bureau of Economic Research, CESifo (Germany-based), and the Center for Economic Policy Research (U.K.-based). His research on asymmetric information in the housing market, housing bubbles, the regulation of consumer financial products, and the impact of climate change on housing has been published in journals such as the Journal of Finance, the Quarterly Journal of Economics, and Econometrica, among others.

To contact the speaker, please email jcstroebel@googlemail.com.

 

About REALTOR® University Speaker Series

REALTOR® University provides on-line education on real estate and other topics at the MBA and undergraduate levels. The REALTOR® University Speaker Series provides a venue to learn about and stimulate discussion of economic and real estate issues in support of NAR’s mission as the Voice of Real Estate. The Speaker Series presentations can be accessed on this webpage.

[1] Held on January 27, 2017 at the NAR Washington D.C. Office

[2] The research is a collaboration of economists Michael C. Bailey (Facebook), Ruiqing Cao (Harvard University), Theresa Kuchler (NYU), and Johannes Stroebel (NYU, NBER, CPER).

[3] Thanks to Meredith Dunn, Communications Manager, for creating the webinar material.

[4] The survey data had 1,242 survey responses, 55% male. The respondents’ age ranges between 19 and 75 years, with an average of 46 years, Respondents are spread over 113 Los Angeles zip codes, but 24% (40%) of them live in the 10 (20) most represented zip codes. On average, the Facebook users in the sample data had 420+ friendship links, and even those in the 25th percentile had 117 links.

[5] The authors measure home price experience of an individual’s social network as the sum of the share of the individual’s network N who live in county c multiplied by the price changes in county c between December 2008 and December 2010.

All-Cash Sales: 23 Percent of Residential Sales in January 2017

Thu, 03/02/2017 - 15:58

In January 2017, 23 percent of sales were cash sales (21 percent in December 2016; 26 percent in January 2016), according to the January 2017 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1] Buyers of homes for investment purposes, distressed sales, second homes, and foreign clients are more likely to pay cash than first-time home buyers. As the shares of investment and distressed sales have declined, so has the share of cash sales.

Distressed sales accounted for seven percent of sales in January 2017 (seven percent in December 2016; nine percent in January 2016). Foreclosed properties were five percent of residential sales, while short sales were only two percent of residential sales.[2] With rising home values, improved economic conditions, and fewer foreclosures, the share of sales of distressed properties has generally continued to decline. Distressed sales accounted for about a third to half of sales until 2012 when they began to fall below this level.

Investment sales made up 15 percent of sales in January 2017 (15 percent in December 2016; 17 percent in January 2016). Purchases for investment purposes have generally been on the decline since 2011–2012 when investment sales accounted for 20 percent of sales. Purchasing for investment has become less attractive with fewer distressed sales on the market and with home prices rising.

[1]The author thanks Danielle Hale, Managing Director, Housing Research; Meredith Dunn, Research Communications Manager; and Amanda Riggs, Research Survey Analyst for their comments. Any errors are attributable to the author.

[2] The survey asks respondents who had a sale in the month to report on the characteristics of the most recent sale closed.

Housing Demand over the Next Decade

Thu, 03/02/2017 - 11:13

Housing data in January gave mixed signals on the direction for the year. Closing activity for existing home sales shot up to a decade-high of 5.69 million units at an annualized pace, but pending contracts fell to their lowest level in 12 months. For the whole of 2017, I expect existing home sales to reach 5.6 million, which would be a gain of 2.2% from the prior year, but below the annualized pace set in January. In short, expect sideway movements for the rest of the year.

 

View, NAR Chief Economist, Lawrence Yun’s full Forbes article here.

Solid Demand Drives Office Vacancies Lower in the Fourth Quarter of 2016

Wed, 03/01/2017 - 15:31

Economic activity continued on an upward trend in the last quarter of 2016, but at a slower pace, as the first estimate of real gross domestic product (GDP) from the Bureau of Economic Analysis documented. Preliminary figures indicated that GDP rose at an annual rate of 1.9 percent, on par with the average 1.9 percent typical of fourth-quarter GDP growth over the 2000-15 period.

The pace of employment growth remained positive, but softened slightly in the fourth quarter. Payroll employment advanced by 495,000 net new jobs during the fourth quarter, closing 2016 with a net total of 2.2 million new employees, according to the Bureau of Labor Statistics. Private service-providing industries continued as the growth engine during the quarter, with 455,000 net new jobs.

 

Within the service industries, education and health services added 163,000 net new payroll positions, the largest industry sector advance. Professional and business services posted the second-highest number of net new employees—122,000—while financial services added 29,000 new positions, indicating continuing demand for office space.

Office net absorption picked up speed in the last quarter of 2016, totaling 13.0 million square feet, almost double the amount from the third quarter, based on data from CBRE. Office construction added 9.7 million square feet to the supply pipeline during the quarter. With the robust demand, office vacancies declined to 12.9 percent, the lowest level in eight years. The decline was driven by solid improvement in suburban office occupancy. Rents for office properties rose 0.9 percent during the fourth quarter, to an average of $31.61 per square foot. Yearly rent growth for office properties advanced by 6.0 percent in 2016.

Commercial fundamentals in smaller markets strengthened during the fourth quarter of 2016. Leasing volume advanced 2.5 percent from the prior quarter, as leasing rates rose by 3.1 percent.

 

NAR members’ average gross lease volume for the quarter was $953,700. New construction echoed the broader economic landscape, posting a 6.6 percent gain from the third quarter of 2016. Tenant demand remained strongest in the 5,000 square feet and below segment, accounting for 87.0 percent of leased properties. Demand for space in the Under 2,500 square feet segment increased in the last quarter, capturing 46.0 percent of responses. Demand also rose for properties in the 50,000 – 100,000 square feet segment and for those in the Over 100,000 square feet.

To access the Commercial Real Estate Outlook: 2017.Q1 report visit http://www.realtor.org/reports/commercial-real-estate-outlook.

Properties Typically Sold Faster in January 2017 as Demand Outpaces Supply

Wed, 03/01/2017 - 11:14

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “For the last house that you closed in the past month, how long was it on the market from listing time to the time the seller accepted the buyer’s offer?”

Properties stayed on the market for fewer days in January 2017 compared to one year ago, amid strong demand and tight supply, according to the January 2017 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1] Properties that sold in November 2016, December 2016, and January 2017 were typically on the market for less than 31 days in Washington, Oregon, Utah, Alaska, Kansas, Texas, Tennessee, and the District of Columbia.

Looking at the values over the last few years, in most states the median length of time that properties stay on the market has trended downwards, though the graphs also show that days on market in some states fluctuate seasonally.[2] Local conditions vary, and the data is provided for REALTORS® who want to compare local markets against other states and the national summary.

Nationally, properties sold in January 2017 were typically on the market for 50 days (52 days in December 2016; 64 days in January 2016).[3] The length of time properties are on the market has fallen as demand has outpaced the inventory of homes for sale. In 2011, properties were typically on the market for 97 days.

Properties that are on the market for a shorter time tend to sell at the original list price or at a premium. Among transactions that closed in January 2017, 50 percent of properties that were on the market for less than one month sold at the original list price or at premium, while only 14 percent of properties that were on the market for 12 months or longer sold at the original list price or at a premium.

[1]The author thanks Danielle Hale, Managing Director, Housing Research; Meredith Dunn, Research Communications Manager; and Amanda Riggs, Research Survey Analyst for their comments. Any errors are attributable to the author.

[2]To increase the number of observations for each state, the analysis is based on a 3-month rolling period. The states shown in these charts are those with approximately 150 observations.

[3] Respondents are asked, “For the last house that you closed in the past month, how long was it on the market from listing time to the time the seller accepted the buyer’s offer?” The median is the number of days at which half of the properties stayed on the market. In generating the median days on market at the state level, we use data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations.

Attention Sellers: Remodeling Projects to Increase Your Sales Price – Part 3

Tue, 02/28/2017 - 15:19

The results are in! NAR surveyed thousands of consumers, real estate agents, and industry professionals on interior, exterior, and outdoor remodeling projects. The projects listed below are the best outdoor features that can get you the biggest bang for your buck when it comes time to list on the market.

Outdoor Remodeling Features

Curb appeal is one of the strongest factors that influence buyers. Ninety-nine percent of REALTORS® believe that curb appeal is important to attracting buyers and strongly advise sellers to spruce up the exteriors of their homes before listing them for sale.

According to NAR’s 2016 Remodeling Impact Report: Outdoor Features, we recommend several outdoor projects that will increase the curb appeal for potential buyers and put money back in your pocket.

The three most profitable outdoor projects are:

(1) Implementing a landscape upgrade with seed lawn came in first. Industry professionals at the National Association of Landscape Professionals (NALP) estimate that the project will cost $120 to seed 1,000 square feet of lawn. NAR REALTORS® estimate that the increased value for sellers is $500. A seed lawn upgrade thus has a cost recovery of 417 percent.

(2) Undertaking a standard lawn care program is also time and money well spent. Landscape Professionals estimate that the project will cost $330 to perform a standard lawn care program on 5,000 square feet of lawn. NAR REALTORS® estimate that the increased value for sellers is $1,000 and thus can recovery 303 percent of the costs.

(3) Completing a sod lawn upgrade to the landscape is the third most profitable outdoor project. Landscape Professionals estimate the cost to be $700 to sod a lawn at 1,000 square feet. NAR REALTORS® estimate that the increased value for sellers is $1,000 and has a cost recovery of 143 percent.

Additional outdoor projects that render 100 percent cost recovery include an overall landscape upgrade, new patio, new deck, and softscape upgrade. According to the report, you can’t go wrong with any of these remodeling outdoor features.

*Disclaimer: The report provides a cost recovery estimate for representative remodeling projects. The actual cost of each remodeling projects and cost recovery are influenced by many factors including project design, quality of materials, location, age and condition of the home and homeowner preferences.

Instant Reaction: December Owners’ Gains Forecast

Tue, 02/28/2017 - 10:00

The S&P CoreLogic Case-Shiller National Index shows that U.S. prices of single-family homes continue to rise. The national index level in December reached a new high and is up 5.8 percent from a year earlier.  But what does this mean for homeowners?

Home prices affect the wealth of homeowners. As the price of housing increases, the wealth of homeowners increases as well. Based on the above increase of home prices, it is estimated that value of owners’ household real estate was increased by 1.3 trillion in the last year and 105 billion came from home price increases in December. That means that 75 million homeowners each gained $16,800 on average in December 2016 from a year earlier.

 

REALTORS®’ Expected Home Price Change in 2017 By State

Mon, 02/27/2017 - 15:09

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “In the neighborhood or area where you make most of your sales, what are your expectations for residential property prices over the next year?”

Among REALTORS® who responded to the January 2017 survey, the median expected home price change in the next 12 months was 3.5 percent, according to the January 2016 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1] This means that half of respondents expect home prices to increase by less than 3.5 percent over the next 12 months while half of respondents expect home prices to increase by more than 3.5 percent in that time.[2]

The map below shows the median expected price change of the respondents in the next 12 months at the state level.[3] The states of Washington, Oregon, and Colorado have the highest median expected price growth at above four to five percent. The oil-producing states of Alaska, North Dakota, and West Virginia have the lowest median expected price change; respondents expect a slight decline in Alaska home prices and growth of less than two percent in North Dakota and West Virginia home prices in the next 12 months.

Looking at the values over time in selected states, the median expected price change appears to be increasing again from what was expected in the middle of 2016, indicating that respondents expect demand to remain strong. In more than half of states, expected price change exceeds the price growth that was expected at the end of January 2016, even as home prices continue to rise.

[1] The author thanks Danielle Hale, Managing Director, Housing Research; Meredith Dunn, Research Communications Manager; and Amanda Riggs, Research Survey Analyst for their comments. Any errors are attributable to the author.

[2] The median expected price change is a measure that represents the middle value of the distribution of responses. The median, as a measure of central tendency, is less susceptible to extreme values than the mean ( average).

[3] To increase the number of observations for each state, the analysis is based on a 3-month rolling period. The states shown in these charts are those with approximately 150 observations.

January 2017 Pending Home Sales

Mon, 02/27/2017 - 11:32
  • NAR released a summary of pending home sales data showing that January’s pending home sales dipped 2.8 percent from last month but are modestly up 0.4 percent from a year ago. As prices continue to rise, affordability is becoming an issue for some potential homebuyers and fewer housing options have contributed to fewer contracts signed this month.
  • Pending sales are homes that have a signed contract to purchase on them but have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
  • Two of the four regions showed inclines from a year ago. The Northeast lead with an increase of 3.6 percent followed by the South 2.0 percent. The West had a decline of 0.4 percent. The Midwest had the biggest decline of 3.8 percent.
  • From last month, the South and the Northeast were the only regions to have an increase. The Northeast has the biggest increase of 2.3 percent followed by the South with 0.4 percent. The Midwest had a decline of 5.0 percent and the West had the biggest decline 9.8 percent.
  • The pending home sales index level for the month was 106.4 for the US. December’s data was revised to 109.5.
  • The 100 level is based on a 2001 benchmark and is consistent with a healthy market and existing home sales above the 5 million mark.

Highlights of the January 2017 REALTORS® Confidence Index Survey Report

Fri, 02/24/2017 - 15:11

While local conditions vary, the REALTORS® Buyer Traffic Index and the REALTORS® Confidence IndexCurrent Conditions for single-family homes remained above 50 in January 2017, indicating that more respondents reported “strong” than “weak” conditions, according to the January 2017 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions. Both indices were higher than their levels one year ago and in the previous month.[1] The REALTORS® Seller Traffic Index also increased slightly from its levels one year ago and in the previous month, but it has remained below 50 since December 2008, indicating that seller activity is still “weak.”

In January 2017, first-time homebuyers accounted for 33 percent of sales.[2] Amid solid job creation, the share of first-time homebuyers has been on a modest rise, up from 29 percent in 2014. With fewer new foreclosures, distressed properties accounted for seven percent of sales, purchases for investment purposes made up 15 percent of sales, and cash sales accounted for 23 percent of sales. Amid tight supply, half of properties that sold in January 2017 were on the market for 50 days or less compared to 64 days in January 2016.

Lack of supply and appraisal-related problems were the main issues reported by REALTORS®. Respondents also expressed concern about the impact of rising mortgage rates and economic policy changes under the Trump administration on the recovery of the housing market. Overall, respondents remained confident about the outlook over the next six months for the single-family homes, townhomes, and condominiums markets, with the six-month outlook confidence indices for each of these markets registering above 50.

[1] An index greater than 50 indicates the number of respondents who reported “strong” (index=100) outnumbered those who reported “weak” (index=0). An index equal to 50 indicates an equal number of respondents reporting “strong” and “weak” market conditions. The index is not adjusted for seasonality effects.

[2] NAR’s 2016 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 35 percent were first-time homebuyers, up from 32 percent in 2015. The HBS surveys primary residence homebuyers, while the monthly RCI Survey surveys REALTORS® and also captures purchases for investment purposes and vacation/second homes.

Attention Sellers: Remodeling Projects to Increase Your Sales Price – Part 2

Fri, 02/24/2017 - 11:01

The results are in! NAR surveyed thousands of consumers, real estate agents, and industry professionals on interior and exterior home remodeling projects. The projects listed below are the best exterior remodeling projects that can get you the biggest bang for your buck when it comes time to list on the market.

Exterior Remodeling Projects

If you are looking to remodel your home with the intent of selling at a higher price, you should consider these projects for their overall cost to the owner and their potential boost in selling price. We’ve ranked these exterior projects based on the most value and cost recovery a homeowner can receive based on NAR’s 2015 Remodeling Impact Report.

The following four projects received the best overall value for sellers:

(1) Installing new roofing received the highest money-back value. A new roof provides durable and long-lasting protection to the home with energy efficient benefits. Remodelers from the National Association of the Remodeling Industry (NARI) estimate that new roofing costs $7,600. NAR REALTORS® estimate that the increased value for sellers is $8,000 and a homeowner can recovery 105 percent of the costs.

(2) Fitting a new garage door adds to the curb appeal as well as upgrades worn-out features on the exterior of the home. NARI Remodelers estimate that a new garage door will cost $2,300. NAR REALTORS® estimate that sellers can increase the value of their home by $2,000 and recover 87 percent of the remodeling investment.

(3) Putting up new vinyl siding upgrades the home and improves its energy efficiency. NARI Remodelers estimate that new vinyl siding will cost $12,000. NAR REALTORS® estimate that sellers will gain $10,000 and recover 83 percent of the costs.

(4) Adding new vinyl windows will also increase the home’s energy efficiency for potential buyers. NARI Remodelers estimate that new vinyl windows will cost $15,000. NAR REALTORS® estimate that sellers will gain $12,000 and recover 80 percent of the costs.

The most expensive remodeling projects include:

  • Installing new wood windows at a cost estimate of $26,000 (estimated cost recovery at 58 percent),
  • Adding fiber-cement siding at $19,100 (estimated cost recovery at 79 percent),
  • Fixing new vinyl windows at $15,000 (estimated cost recovery at 80 percent), and
  • Mounting vinyl siding at $12,000 (estimated cost recovery at 83 percent).

The least expensive remodeling projects include:

  • Installing a new steel door at a cost of $2,000 (estimated cost recovery at 75 percent),
  • Fitting a new garage door at $2,300 (estimated cost recovery at 87 percent), and
  • Installing a fiberglass front door at $2,500 (estimated cost recovery at 60 percent).

For a complete list of home remodeling projects, the level of homeowner satisfaction, cost estimates and seller value, read more in the 2015 Remodeling Impact Report.

*Disclaimer: The report provides a cost recovery estimate for representative remodeling projects. The actual cost of each remodeling projects and cost recovery are influenced by many factors including project design, quality of materials, location, age and condition of the home and homeowner preferences.

REALTORS® Reported Strong Homebuying Activity in Many States in January 2017

Thu, 02/23/2017 - 15:43

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members How do you rate the past month’s buyer/seller traffic in the neighborhood(s) or area(s) where you make most of your sales?

REALTORS® reported strong home buying demand amid tight supply in January 2017, according to the January 2017 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1]

Local conditions vary in each state, but the REALTORS® Buyer Traffic Index indicates that buyer traffic conditions can be characterized as “moderate” to “very strong” in many states except in North Dakota and Delaware where buyer traffic conditions were “weak.”[2] Buyer traffic conditions were “very strong” only in the state of Washington.

The REALTORS® Seller Traffic Index indicates seller traffic conditions were “weak” in most states, although 12 states and the District of Columbia had “moderate” to “strong” seller traffic conditions. Respondents reported that demand is strong, but there is a severe lack of supply especially of affordable homes. This is consistent with available data on the affordability of active housing inventory.[3]

Employment conditions affect the supply and demand for housing. The chart that follows shows the change in non-farm employment from December 2015 to December 2016 by state. Nationally, employment rose 1.4 percent in December 2016. Employment growth was strongest in Washington, Oregon, California, Nevada, Utah, Missouri, Georgia, Florida, Massachusetts, and the District of Columbia. In these states, buyer traffic was “moderate” to “very strong”. Non-farm employment contracted in the oil-producing states of Alaska, North Dakota, Wyoming, Kansas, Oklahoma, Louisiana, and Mississippi, as well as in Connecticut and Maine.[4] In some of these states, the job cutbacks have led to “moderate” seller traffic conditions, based on the REALTORS® Seller Traffic Index. Texas, which has a more diversified economy, has been more resilient than other oil-producing states, with employment growing slightly above the national average.[5]

 

Nationally, the REALTORS® Buyer Traffic Index registered at 63 in January 2017 (57 in December 2016; 59 in January 2016), indicating that more respondents viewed buyer traffic conditions as “strong” rather than “weak.”[6]

The REALTORS® Seller Traffic Index registered at 41 in January 2017 (39 in December 2016; 40 in January 2016), indicating that more respondents viewed seller traffic conditions as “weak” rather than “strong.” Supply conditions have remained largely tight in many areas, with the index registering below 50 since December 2008.

[1]The author thanks Danielle Hale, Managing Director, Housing Research; Meredith Dunn, Research Communications Manager; and Amanda Riggs, Research Survey Analyst for their comments. Any errors are attributable to the author.

[2] To increase the number of observations for each state, the index is based on data for the last three months. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations. Respondents are asked, “How do you rate the past month’s buyer/seller traffic in the neighborhood(s) or area(s) where you make most of your sales?” Respondents rated conditions or expectations as “Strong (100),” “Moderate (50),” and “Weak (0).” The responses are compiled into a diffusion index. For graphical purposes, index values 25 and lower are labeled “Very Weak,” values greater than 25 to 45 are labeled “Weak,” values greater than 45 to 55 are labeled “Moderate,” values greater than 55 to 75 are labeled “Strong,” and values greater than 75 are labeled “Very Strong.” The range of +/-5 around 50 approximates the historical margins of error at the 95 percent confidence level for small states.

[3] See for example: https://www.nar.realtor/news-releases/2017/02/nar-realtorcom-identify-growing-rift-between-housing-availability-and-affordability and https://www.nar.realtor/topics/realtors-affordability-distribution-curve-and-score

[4] Source: U.S. Department of Energy. See https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm.

[5] For a review of states in which oil has an outsized economic impact, see this blog: http://economistsoutlook.blogs.realtor.org/2016/03/21/is-california-an-oil-producing-state/

[6]The REALTORS® Buyer Traffic Index provides information on the level of homebuying demand or interest, which may materialize as a contract to purchase or closed sale after two or three months.

January 2017 Existing-Home Sales

Thu, 02/23/2017 - 11:00
  • NAR released a summary of existing-home sales data showing that housing market activity this January improved 3.3 percent from last year. January’s Existing-Home Sales reached the 5.69 million seasonally adjusted annual rate and existing-home sales are beginning the year with the fastest pace in nearly ten years.
  •  The national median existing-home price for all housing types was $228,900 in January, up 7.1 percent from a year ago. This marks 59 consecutive months of year over year’s gains as prices continue to rise.
  • Regionally, all four regions showed growth in prices from a year ago, with the South leading all regions with an incline of 9.2 percent. The West had a gain of 6.8 while the Midwest followed with a gain of 6.5 percent. The Northeast had the smallest gain of 5.2 percent from January 2016.
  • From December, three of the four regions experienced inclines in sales while the Midwest declined 1.5 percent. The West had the biggest incline of 6.6 percent while the Northeast had a 5.3 percent incline in sales. The South had the smallest incline of 3.6 percent.
  • Three of the four regions showed an increase in sales from a year ago with the Midwest being the only region with a decline of 0.8 percent. The West had the biggest gain of 8.4 percent. The Northeast had a gain of 6.7 percent and the South had the smallest increase of 3.1 percent. The South headed all regions in percentage of national sales at 40.6 percent while the Northeast has the smallest share at 14.1 percent.
  • January’s inventory figures are up 2.4 percent from last month to 1.69 million homes for sale. Inventories are down 7.1 percent from a year ago which is 20 months of year over year declines. It will take 3.6 months to move the current level of inventory at the current sales pace. It takes approximately 50 days for a home to go from listing to a contract in the current housing market, down from 64 days a year ago.
  • Single-family sales inclined 2.6 percent while condominiums also improved 8.3 percent compared to last month. Single-family home sales inclined 3.7 percent and condominium sales were up 4.8 percent compared to a year ago. Both single family and condominiums had an increase in price with single family up 7.3 percent at $230,400 and condominiums up 6.2 percent at $217,400 from January 2016.

Attention Sellers: Remodeling Projects to Increase Your Sales Price – Part 1

Wed, 02/22/2017 - 15:03

The results are in! NAR surveyed thousands of consumers, real estate agents, and industry professionals on interior and exterior home remodeling projects. The projects listed below are the best interior remodeling projects that can get you the biggest bang for your buck when it comes time to list on the market.

Interior Remodeling Projects

If you are looking to remodel your home with the intent of selling at a higher price, you should consider these projects for their overall cost to the owner and their potential boost in selling price. We’ve ranked these interior projects based on the most value and cost recovery a homeowner can receive based on NAR’s 2015 Remodeling Impact Report.

The following five projects received the best overall value for sellers:

(1) Refinishing a home’s hardwood floors received the highest money-back value. Refinishing the floor can boost the home’s beauty and aesthetics and upgrade worn-out features. Remodelers from the National Association of the Remodeling Industry (NARI) estimate that refinishing hardwood floors cost $2,500. NAR REALTORS® estimate that the increased value for sellers is also $2,500 and thus a homeowner can recovery 100 percent of the costs.

(2) Completing an insulation upgrade is the second most cost effective project. NARI Remodelers estimate that upgrading a home’s insulation will cost $2,100. NAR REALTORS® estimate that sellers can increase the value of their home by $2,000 for an insulation upgrade, and thus recover 95 percent of their costs.

(3) If your home does not currently have wood floors to refinish, adding new wood flooring can recover 91 percent of costs at the time of sale. NARI Remodelers estimate the cost of new wood flooring to be $5,500. NAR REALTORS® estimate that the increased value for sellers is $5,000.

(4) Replacing the HVAC system can improve energy efficiency and update worn-out features in the home. NARI Remodelers estimate that the cost of replacing an HVAC system is $7,000. NAR REALTORS® estimate that the increased value for sellers is $5,000. The cost recovery is 71 percent.

(5) Finally, converting a basement into a living area improves livability for potential new buyers. NARI Remodelers estimate that a basement overhaul will cost $36,000. NAR REALTORS® estimate that the increased value for sellers is $25,000. The cost recovery for a new living room in the basement area is 69 percent.

The most expensive remodeling projects include:

  • Completing a new master suite at a cost estimate of $112,500 (estimated cost recovery at 53 percent),
  • Converting an attic into a living area at $65,000 (estimated cost recovery at 61 percent),
  • Complete kitchen renovation at $60,000 (estimated cost recovery at 67 percent), and
  • Adding a new bathroom at $50,000 (estimated cost recovery at 52 percent).

The least expensive remodeling projects include:

  • Upgrading insulation at a cost estimate of $2,100 (estimated cost recovery at 95 percent),
  • Refinishing hardwood floors at $2,500 (estimated cost recovery at 100 percent), and
  • Renovating a closet at $3,500 (estimated cost recovery at 57 percent).

For a complete list of home remodeling projects, the level of homeowner satisfaction, cost estimates and seller value, read more in the 2015 Remodeling Impact Report.

*Disclaimer: The report provides a cost recovery estimate for representative remodeling projects. The actual cost of each remodeling projects and cost recovery are influenced by many factors including project design, quality of materials, location, age and condition of the home and homeowner preferences.

2016 Fourth Quarter Metro Affordability

Tue, 02/21/2017 - 10:27

The National Association of Realtors quarterly home prices increased again this quarter. With inventory, being an issue in certain metro markets affordability may become a challenge for potential homebuyers. Here is a look at the metro areas for the top five most and least affordable of the fourth quarter 2016 as well as a look at the median existing single-family home price year over year percentage change for the top five highest and lowest growth metro areas of the fourth quarter 2016.

These are the most affordable metro areas for the fourth quarter 2016:

These are the least affordable metro areas for the fourth quarter 2016:

These are the top five metro areas that had the highest home price appreciation:

These are the bottom five metro areas that had a decline in home price appreciation:

Home Renovations to Accommodate Family Animals

Fri, 02/17/2017 - 10:45

For homeowners, animals are part of the family according to 99 percent of animal owners that NAR surveyed in its new report Remodeling Impact: Animal House. Nevertheless, finding a rental property or a home owners association that accommodates animals, according to 61 percent of REALTORS®, can be difficult.

Nearly half of all animal owners have undertaken a home renovation project to accommodate their family animals (52 percent), and owners feel a great sense of satisfaction and accomplishment. The overall Joy Score for home renovations for animals was 9.4.

The most popular animal renovation projects were building a fenced yard (23 percent), adding a doggy door (12 percent), and installing laminate flooring (10 percent). All three projects received a Joy Score of 9.2 or higher once completed. Three-fourths of animal owners feel that constructing a fenced yard (78 percent) and adding laminate flooring (76 percent) are important to the home for their animals. Other renovation projects include installing a mudroom or animal washing station, animal pool/water feature, kitty litter closet, and doggy door.

Of the owners that completed a renovation project, 44 percent hired a professional to do their project and 56 percent did a renovation themselves. Those that hired a professional had a greater sense of satisfaction (65 percent) than those that completed one themselves (61 percent). Those that completed a project themselves had a greater sense of accomplishment (58 percent) than those that hired a professional (52 percent).

As income goes up, the percent of animal owners that completed a home renovation for their animal increases. In addition, as income goes up, so does the share that hired a professional to complete their home renovation project compared to those that completed a project themselves.

Single males were more likely to renovate to accommodate an animal than single females. Married and unmarried couples equally renovated at a similar rate. More than two-thirds of single males completed a project themselves compared to only half of single females instead of hiring a professional. Married couples were more likely than unmarried couples to hire a professional.

 

President’s Day 2017: How Does the White House Compare to the Average Home

Fri, 02/17/2017 - 10:25

In the spirit of President’s Day we can use data from the 2016 Profile of Home Buyers and Sellers to see how the typical home differs from the White House.

Typical Home Purchased in the U.S.

  • 86% of buyers purchased a previously owned home, with 83% of buyers choosing a detached single-family home.
  • Looking by first-time and repeat buyers, both also purchased detached single-family homes more often with 82% of first-time buyers and 84% of repeat buyers.
  • 54% of all buyers purchased their home in a suburb/subdivision.
  • The typical detached single-family home purchased was 1,950 square feet.
  • Recent homes purchased also had a median of 3 bedrooms, 2 bathrooms, and were built in 1991.
  • Among all buyers, the expected length of tenure in the home purchased was 12 years.

The White House

  • The White House was built in 1792, and in comparison is located in an urban or central area.
  • The White House contains 6 levels, has 132 rooms, including 35 bathrooms.
  • It also includes features such as: a tennis court, jogging track, swimming pool, billiard room, movie theatre, and bowling alley.
  • While tenure in the median expected tenure in home lasts around 14 years, in the White House the expected tenure is between 4 and 8 years.

 

For more information on this data check out the President’s Day Infographic and the 2016 Profile of Home Buyers and Sellers.

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