Has Housing Reached a ‘Recovery Path’?
Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.
“We’re clearly on a recovery path,” says Lawrence Yun, NAR chief economist.
Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).
“At this point, we’re likely to see a steady improvement in sales,” says economist Joel Naroff of Naroff Economic Advisors.
So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:
Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.
Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. “The confidence is back in the market,” says Neil Palmer, CEO at Christie’s International Real Estate.
Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.
Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. “This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten,” Newport says.
The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that’s encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.
“It’s the new financial psychology,” says Jarvis Slade Jr., Christie’s managing director for the Americas. “We’ve had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better.”
Source: “Rising home sales point to a recovery; Prices expected to keep falling 5% to 7% this year,” USA Today
10 States Losing the Most Residents
Using data from Moody’s Economy.com, Forbes identified the top-10 states where more residents are leaving than arriving.
The factors that encourage outbound migration from these states are mostly economic — high employment and high cost of living — although both Louisiana and Mississippi have been affected by natural disasters.
The 10 states that have said goodbye to the most residents are:
1. New York
2. Illinois
3. Ohio
4. Nebraska
5. Kansas
6. Iowa
7. Louisiana
8. North Dakota
9. South Dakota
10. Mississippi
Source: Forbes, Jenna Goudreau (12/08/2010)
7 Trends That Will Drive the Future of Housing
1. Big builders are wringing the extras out of construction costs and dropping the national average cost-to-build 36 percent to $52 per square foot.
2. Starting in 2011, Energy Star will ramp up its efficient design and quality installation standards. To get Energy Star certification, builders will have to install the right insulation, HVAC systems, and other features related to energy efficiency correctly every time.
3. Sheds are the next evolution. As homes get smaller, a separate shed will become a popular home addition.
4. There are 81 million “Echo Boomers” who were born from 1981 to 1999, compared to just 78 million Baby Boomers born from 1946 to 1964. These children and grandchildren of Boomers will drive home-building for years.
5. By 2015, demographers say, more than two out of every five households occupied by Generation Y people born between 1981 and 1999 will be WINKs (women with incomes and no kids).
6. Make room for the “Sandwich Generation” – Baby Boomers living with both their kids and their parents. These families like having two master suites, a second cooking area, and lots of storage.
7. Baby Boomers want to keep working and continue to live where they have always lived. They want a first-floor master bedroom near the washer and dryer and lots of convenient storage.
Source: ProSalesOnline.com (October 2010)
Single Buyers Choosing Suburbia Over Cities
Some 52 percent of single home buyers in April chose suburban locations over urban and rural areas, according to a survey by Coldwell Banker of 1,000 single buyers.
· More than 53 percent of single home owners reported that they purchased a home because it was more cost effective than renting in their area, while 68 percent of single home owners purchased a home that was less expensive than they believed they could have afforded to pay.
· Some 55 percent have less than a 30-minute commute to their office or work from home.
· Singles don’t shy away from foreclosures – especially single men. Thirty-eight percent would currently consider purchasing a foreclosed/short sale home, compared to 29 percent of single women.
· Of the 13 percent of single home owners who own their home jointly with another person, 49 percent made the purchase with their parents. Forty percent live less than 30 minutes or even in the same neighborhood as their parents or extended family. An additional 12 percent live with at least one family member.
· Number of bedrooms is important to 27 percent of single women, while only 18 percent of men were concerned.
What to Do If the Oil Spill Affects Your Market
Anyone trying to rent or sell a property on the Gulf Coast should keep these issues in mind.
• Don’t panic. The next few months could be difficult, but this too shall pass.
• Be forthright. Address the issues on your Web site and on the Web site for your client’s property. Say something like, “We know you’re concerned about the oil spill; we are too.” Add links to reliable news stories and blogs.
• Take pictures. Date-stamped photos of clean water may reassure would-be buyers and renters.
• Focus on non-beach attractions. Golf courses, shopping, and theaters are important and unaffected assets.
• Be prepared to negotiate. Bad news brings out bargain hunters.
• Document losses. Help sellers by providing a broker’s price opinion to serve as a baseline should property values decline, and pursue compensation from the government or BP.
