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Market conditions vary across local markets, but the REALTORS® confidence and traffic indices indicate that overall market activity improved in February 2016 compared to one year ago and to the previous month, according to the February 2016 REALTORS® Confidence Index Survey Report. Sustained job creation and the low cost of obtaining a mortgage continue to support housing demand. However, lack of supply across many states is weighing on sales and driving up prices, making homes less affordable especially for first-time buyers.
First-time home buyers accounted for 30 percent of sales. Purchases for investment purposes made up 18 percent of sales, while distressed properties were ten percent of sales. Respondents from New York, a state which follows a judicial foreclosure process that typically takes longer than a non-judicial process, reported an increase in distressed properties in the market. Cash sales accounted for 25 percent of sales. Nationally, properties typically were on the market 59 days and took 40 days to close the contract. There are reports that TRID has led to longer rate lock and escrow periods, but there are also reports that TRID has been “fairly easy to deal with” and that the new rules “are not a major problem” largely because the industry prepared for the changes in the time between announcement and implementation.[1]
Very low supply, steep price increases, and lender processing delays were reported as the key issues affecting sales, especially to first-time homebuyers. Appraisal backlogs and “below-market” and “inconsistent” appraisals were also reported to be causing transaction delays and cancellations.The collapse in oil prices is also a concern in oil-producing states such as Texas, Wyoming, Montana, and Oklahoma. Still, with the spring and summer months coming, respondents were generally confident about the outlook for the next six months across all property types. Respondents typically expected prices to increase 3.6 percent in the next 12 months.
[1] The TILA‒RESPA Integrated Disclosure (TRID) regulations came into effect on October 3, 2015. The new guidelines are intended to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage for which they are applying.
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