Midyear Report: The Housing Market Is on Track for Its Best Year Since 2006 (and It Ain’t a Bubble)

housing-rising

Realtor.com| Jonathan Smoke| June 10, 2015| Link

As we approach the midpoint of 2015, the residential real estate market is on track for its best year since 2006, the peak of the housing bubble. (This time, though, it’s no bubble.)

Job growth is powering the surge in demand for homes. More than 3 million jobs have been created in the past 12 months. And more than 1 million jobs have been created for 25- to 34-year-olds, the age range in which most Americans buy their first home.

We’re seeing record traffic at realtor.com®Real estate websites across the board are experiencing 15% year-over-year growth in unique users, but our site has seen more than twice that (perhaps thanks to Elizabeth Banks?). The vast majority of our visitors report that they intend to purchase a home.

With rising demand, homes are selling more quickly, too. In May the median age of inventory (homes on the market) nationwide was 66 days—that’s 8 days faster than for last year. The hottest markets are seeing inventory move 18 to 45 days faster.

A rapidly declining age of inventory signals that demand is growing more rapidly than supply. Indeed, we’ve had 32 months in a row of existing-home inventory at less than a six months’ supply. That’s why we’re also seeing above-normal price appreciation.

Year-over-year median home price appreciation reached 9% in April, which has helped existing homeowners see strong gains in equity.

That level of price appreciation would be problematic if it continued, but we don’t think it will. Median list prices, which often predict the direction of actual price changes, moderated in each of the past two months as the number of listings grew.

Meanwhile, rents are increasing at a similar or even stronger pace than home prices. Record numbers of renting households have driven down apartment vacancies, and low vacancies led to higher rents. As a result, it is cheaper to buy rather than rent in 80% of the counties in the U.S.

And now the clock is ticking as mortgage rates are on the rise. With strong employment data in April and May, the average 30-year fixed conforming mortgage rate broke through the 4% level, and in the past week moved above 4.10%.

Is that slowing down demand? No, just the opposite. Consumers can clearly see that affordability is going down for real, so those who are ready and able to buy are searching for homes, looking at listings, visiting open houses, applying for mortgages, and signing contracts.

In April, new-home sales were up 26% over last year. Pending home sales, which are new contracts on existing homes, were up 14%.

At this level of growth, total home sales in 2015 could come close to 6 million, which is a level comparable to 2007 (if not quite at the level of peak 2006). But 2007 was a year of decline for the housing market, whereas in 2015, we’re expecting more good things to come.

The 20 Hottest U.S. Real Estate Markets in May 2015

california-beach-skateboard

Realtor.com | Cicely Wedgeworth| June 1. 2015| Link

The housing market is chugging ahead, with even higher home prices and more buyer activity—and in May, we’re seeing more than the ordinary seasonal uptick.

“On the demand side, we are seeing traffic and searches on realtor.com® continue to set new highs,” said our chief economist, Jonathan Smoke, who did a preliminary analysis of our site’s data in May. Visits and searches are expected to be up more than 50% and 35%, respectively, year over year.

Helping create more opportunities for buyers, the listings inventory is now growing faster, at 4% over April—but it’s still down compared with last year, so buyers will need to keep on their toes. In part because of the limited inventory, the median list price increased nationally to $228,000, up 7% over the previous year and 1% over April. At the same time, homes are moving more quickly: Median days on market, now at 66, continued a sharp decline, down 11% year over year and 10% month over month.

Smoke’s team also ranked the nation’s 20 hottest real estate markets for buyers and sellers. Looking at the nation’s 300 largest markets, the team used the number of views per listing on realtor.com to gauge demand, and the median age of inventory to assess supply.

California dominated the list, with half of the country’s 20 hottest real estate markets, because of its tight supply of homes and economic-powered growth in demand. San Francisco and San Jose maintain the second and third spots from the April rankings, while the state capital, Sacramento, leaped from No. 21 in April to No. 12 in May.

“Sacramento typically follows strong growth in Silicon Valley and the San Francisco Bay Area, as it is a relatively more affordable alternative,” Smoke said. “But this market has had strong employment growth above the national average and is seeing strong household growth as a result.”

Three states pulled off a two-fer on the list: Texas, with No. 4 Dallas–Fort Worth and No. 16 Austin; Colorado, with No. 1 Denver and No. 13 Boulder; and Michigan, with No. 9 Ann Arbor and No. 10 Detroit. These markets’ success also reflects economic-powered gains, but the Texas and Colorado story is more of a continuing saga that shows the resilience and diversified nature of the states’ economies despite the declines in oil. Michigan’s performance is related to economic recovery and very strong affordability.

Denver resoundingly maintained the top ranking as inventory there shaved six days off the median age while listing views grew 7% over April. Like Dallas, Denver is experiencing substantial economic growth, and the tight supply of housing is resulting in the fastest-moving inventory in the country.

The 20 Hottest Real Estate Markets in May 2015

Market May Rank April Rank
Denver-Aurora-Lakewood, CO 1
San Francisco-Oakland-Hayward, CA 2
San Jose-Sunnyvale-Santa Clara, CA 3
Dallas-Fort Worth-Arlington, TX 4
Vallejo-Fairfield, CA 5
Boston-Cambridge-Newton, MA-NH 6
Santa Cruz-Watsonville, CA 8
Santa Rosa, CA 7
Ann Arbor, MI 9
Detroit-Warren-Dearborn, MI 10  11
San Diego-Carlsbad, CA 11  10
Sacramento-Roseville-Arden-Arcade, CA 12  21
Boulder, CO 13  17
Fargo, ND-MN 14  12
Los Angeles-Long Beach-Anaheim, CA 15  15
Austin-Round Rock, TX 16  14
Oxnard-Thousand Oaks-Ventura, CA 17  13
Manchester-Nashua, NH 18 31
Columbus, OH 19 22
Stockton-Lodi, CA 20 38

A Home Buyer’s Guide to a Seller’s Market

Realtor.com| May 26, 2015| Annamaria Androitis|Link

In many parts of the country, this is a good time to sell a home. That could make it a risky time to buy one.

Houses are selling fast and prices are going up. Sales of existing homes nationwide are expected to reach the highest volume since 2006, according to the National Association of Realtors.

In the first quarter, median sales prices of single-family homes were at least 10% higher than a year prior in 51 metropolitan areas, according to the trade group. That included Charlotte, N.C., up 18%, and Denver, up 17%. Nationwide, median prices rose 7.4%, to $205,200.

A shortage of homes for sale is helping to drive the market higher, experts say, along with a gradually improving economy and a growing concern that a period of historically low interest rates may not last much longer.

wsj-graphic-snapped-up-homes

Competition among buyers can be fierce, and some are aggressively wooing sellers in an attempt to stand out.

Amanda Corona bid more than the asking price on a 2,100-square-foot townhouse in Atlanta, and she agreed to see the deal through even if the home was appraised for less than the purchase price.

“I guess I’m a risk taker,” says Ms. Corona, an insurance executive who is 38 years old. The appraisal came in above the purchase price of $365,000 and she closed on the house this month.

Buyers should consider what could go wrong in this kind of market. A bidding war could entice you to spend more than you can afford. An inflated price could leave you owing more than you can sell the house for down the road, if prices fall.

Some strategies could limit the danger. Study whether prices in your city are being driven by low inventory, which could be a warning sign, or a solid economy, which could sustain prices.

Set a budget and stick to it. And see if new homes may hit your local market soon, which could cool things down. On Tuesday, the Commerce Department said that in April construction on new homes rose to the highest level since before the recession.

Keep in mind that it could still be a good time to buy. Mortgage rates remain near historic lows and home prices could keep rising. Buyers should also factor in how long they plan to keep a home, because short-term volatility may not matter for a long-term owner.

Here is a buyer’s guide to navigating a seller’s market.

Supply and demand

House-hunting can be difficult when homes for sale are hard to find.

In a market balanced between buyers and sellers, there are enough existing homes available to satisfy demand for six to seven months, according to the Realtors association. But in the first quarter, the association says, there was only 4.6 months’ worth of inventory available nationwide on average, down from 4.9 months in the same period of 2014.

Listings have grown scarcer in many big cities. In Seattle, there were 8,465 homes listed for sale in April, down 23% from a year earlier, according to Redfin, a national brokerage based in Seattle. In Portland, Ore., there were 8,941 listings, down 27%. In Omaha, Neb., there were 4,158 listings, down 20%.

Some homeowners who bought at the top of the market are reluctant to sell because the value of their home plummeted in the financial crisis and still hasn’t fully recovered. Others are holding out for higher prices, experts say.

Whatever the cause, a shortage of listings can have a significant impact on prices even in an otherwise listless market.

In a March report, Fitch Ratings, a credit-rating firm, said that prices in many metropolitan areas are being driven up more by limited inventory than by a strong economy.

“With supply limited, small increases in demand can have outsized impacts on prices,” the report said.

Under construction

That puts a premium on taking the pulse of your local market.

Try to determine if the local economy is strong. If jobs are growing, incomes are rising and people are moving into town, that could be a sign that price increases are sustainable or that more houses will soon come onto the market.

Look for signs of new construction in the neighborhood. The number of lots that have been prepared for home building increased more than 21% over the 12 months through March, says Brad Hunter, chief economist at Metrostudy, a research and consulting firm that tracks the home-building industry.

The Commerce Department says the seasonally adjusted annual rate of housing starts increased 9.2% nationwide in April from a year earlier, and the rate of housing units authorized by building permits rose 6.4%.

Growth varies by region. In the Northeast, for example, housing starts increased 52% from a year ago and building permits increased 57%. In the South, the increases were 3.5% and 1.3%, respectively. In the Midwest, starts declined 10.5% and building permits declined 7.5%. In the West, starts rose 15% and permits rose 3.4%.

The Commerce Department provides data on building permits for many metropolitan areas. Other sources track local data on housing starts. According to Metrostudy. housing starts of single-family detached homes were up about 15% in Denver and Atlanta in the first quarter, compared with the same period last year, for example. In Las Vegas, they are up more than 36%, says Metrostudy.

Ask experts in your market what they are seeing. If construction activity is strong, you should be able to find evidence without too much trouble.

If new homes are going up, patience could pay off. Chris Langan and his partner put their five-month house search in Atlanta on hold in April after the couple grew tired of looking at houses that cost more than they wanted to spend and more than they thought the homes were worth, he says.

“When I see a lot of people going toward one thing—this mass frenzy—I like to step back and evaluate it,” says Mr. Langan, 31, a sales consultant for a food distributor. He says they plan to rent for two years, by which point he expects the market to be calmer.

Winning and losing

Buyers who push ahead could get lured into bidding wars, where winning in the short term can later feel like losing if you pay too much.

Bidding wars were more common in the first quarter than they were a year earlier in several markets, including Denver; Fort Lauderdale, Fla.; Oakland, Calif.; Philadelphia, Pa.; Portland, Ore.; and Seattle, Wash., according to Redfin, which bases its figures on the number of bids submitted by its agents that face at least one competing offer.

Other markets saw fewer bidding wars over the same period, including Atlanta; Baltimore; Chicago; Orange County, Calif.; and Washington, D.C., according to Redfin.

Buyers often need to move quickly, which can add to the frenzy. In Denver, Houston, Oakland and Seattle, more than 40% of the homes for sale in the first quarter were in contract within two weeks, according to Redfin.

As a result, buyers should figure out how much they can afford to spend ahead of time. Consider getting a preapproval from the mortgage lender you select.

That doesn’t mean you should borrow the full amount for which you are preapproved. Be sure the monthly mortgage payments will leave enough left over for living expenses and emergency funds. Think about how you would cover the cost if you were temporarily unemployed.

Once you set a budget, stick to it. Be prepared to walk away if prices get too high.

Consider looking at houses that aren’t selling as quickly. The owners may be more willing to lower the asking price. But get a thorough inspection to make sure you aren’t buying a house with serious flaws.

In Denver these days, a house that hasn’t been snapped up within two to four weeks is likely either to be overpriced or to need fixing up, says Tim Davis, owner and managing broker at Weichert Realtors Professionals in Denver.

Self-defense

Buyers who are eager to purchase a home are also waiving rights that are standard in sales contracts, experts say.

In addition to promising to plow ahead even if an appraisal values the house below the purchase price, buyers are agreeing to forgo the option of dropping out if an inspection shows the need for costly repairs or if they are unable to get a mortgage.

“We’re seeing strategies and situations that have never been experienced here, and I’ve been in the real-estate business since 1987,” says Mr. Davis, the Denver broker.

These kinds of contingency clauses, as they are known, are meant to protect buyers. If you agree to drop them, you could end up forfeiting your deposit if you back out anyway. The seller could also sue the buyer, though that is uncommon in a seller’s market, says Bob Lattas, a real-estate attorney in Chicago.

There are other risks, too. If an appraisal comes in low, buyers could have to put up fresh cash in a hurry in order to go through with the deal. That’s because lenders typically reduce the loan amount if a house is appraised at less than the purchase price.

If, for example, a buyer agrees to pay $400,000 for a house, but the appraised value is $380,000, the buyer could have to pay the seller an additional $20,000 out of pocket.

In such situations, buyers essentially acknowledge that they’re overpaying. They believe “the house will increase in value so much that even if something is wrong with it [they] will still be fine,” says Doug Miller, a real-estate attorney and executive director of Consumer Advocates in American Real Estate, a nonprofit based in Navarre, Minn.

The risk is that prices don’t continue to go up—or, even worse, drop.

Unless buyers are certain they can assume the risks, they may be better off avoiding situations where they have to drop contingency clauses in order to strike a deal, says Richard Vetstein, a real-estate attorney in Framingham, Mass.

If you do decide to waive contingency clauses, try to determine how nasty the financial surprise might be.

Keep in mind that price and value aren’t the same thing. Carole Short, a real-estate agent with Coldwell Banker Residential Brokerage in Atlanta, says some agents are agreeing to list homes at high prices in order to win the business.

She says, “We are starting to see some greedy-seller overpriced listings at numbers where you go, ‘Oh my God, are you kidding? That house isn’t worth that.’ ”

2015: Buy Now, Before the Fed’s Patience Ends

buyinghome

Realtor.com|January 30, 2015| Jonathan Smoke

By now you’ve probably heard that 2015 is expected to be a pretty good year for real estate. It’s a prediction that we chief economists are all fairly aligned on.

But what I can’t emphasize enough is why I’m so confident this is a defining year for the housing industry.

It comes down to three simple factors:

  1. Home sales will increase.
  2. Prices will increase.
  3. Mortgage rates will increase.

When combined, those three indicators point to an extremely strong real estate market. And potential home buyers should move fast if they want to spend less.

Buy before it’s too late

Buyers should act now––delayed purchases will only result in higher monthly mortgage payments as prices and rates rise. In fact, our forecast data show affordability may decline as much as 10% over the course of the year.

Plus, we won’t get another head fake on mortgage rates like we did in 2014. The economy is much stronger now, and the Federal Reserve continues to communicate loudly to the financial markets that it will raise the target for the federal funds rate this year.

Right now, the Fed is using the word “patient” to describe its approach to picking the time to raise the target rate.

However, when the Fed “loses patience,” rates will go up at least 20 to 40 basis points in anticipation of the target rate officially going up.

The last time the word “patient” disappeared from the Fed’s language, it raised the target two months later. And when “patient” disappeared from the Fed’s language, mortgage rates went up in anticipation of the official move.

So, buyers beware: The clock on these low mortgage rates may be ticking.

Job growth, global economy will boost housing

From a macro level, the economy and the housing market are in far better shape now than a year ago. We are creating jobs at a pace now that we haven’t seen in 15 years.

Friday’s initial report on fourth-quarter GDP came in at 2.6% growth. Underneath the number was mounting evidence that consumer spending is indeed strong and wage growth is finally accelerating.

Low prices at U.S. gas pumps have turbocharged consumer confidence and are enabling households to spend more and save more for big purchases—say, buying a home.

Besides global factors that bode well for buyers, the U.S. housing market is also in much healthier shape. Foreclosure inventories have fallen to nearly normal levels everywhere except for a few slow markets. As a result, distressed sales are no longer weighing on the market.

We’re back to a normal and upward trajectory for housing prices, and there’s little risk of prices declining because inventories are very low. I’m actually more worried about listings and new home construction not keeping up with the demand.

Market is primed for first-time buyers, sellers

I’ve said it before and I’ll say it again: 2015 is the year of the millennial when it comes to real estate. Millennials are at a critical demographic tipping point where their sheer numbers will naturally drive demand for more home sales. Most first-time buyers move into their first home when they’re between the ages of 25 to 34.

Sellers should also be encouraged—especially if they’re sitting in affordable homes waiting for a long-overdue upgrade. With recent clarification of mortgage standards, new low-down-payment programs, and lower FHA insurance premiums, access to credit should improve. That means those folks who’ve been sitting on equity in entry-level homes can finally upgrade to bigger homes and retirement homes.

What are the downsides?

There are some risks to keep in mind.

Supply must keep pace with demand, otherwise affordability declines more rapidly and would-be buyers can’t find the home of their dreams.

The U.S. economy could hiccup from global weakness.

Consumers could take the money they’re saving on gas and buy lottery tickets instead.

The probability of those risks completely reversing the recovery is slight, but it is strong enough to limit the potential. On the flip side, if the economy ends up growing more than expected and first-time buyers come roaring back, we could end up in an even stronger market. Here’s to a robust and strong 2015!

Jonathan Smoke is chief economist at realtor.com®.

Housing Inventory Slowly Disappearing

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KeepingCurrentMatters.com| March 26, 2015| Link

The price of any item is determined by the supply of that item, and the market demand. The National Association of Realtors (NAR) released their latest Existing Home Sales Report this week.

Inventory Levels & Demand

Amidst reporting on the fact that sales of existing homes rose 1.2% from January, and outpaced year-over-year figures for the fifth consecutive month, was the news that total unsold housing inventory is at 4.6-month supply.

This is down 0.5% from last February and remains below the 6 months that is needed for a historically normal market.

Consumer confidence is at the highest level in over a decade. Pair that with interest rates still under 4%, new programs available for down payments as low as 3%, and you have an attractive market for buyers.

Buyer demand for housing remains twice as high as this time last year.

Prices Rising

February marked the 36th consecutive month of year-over-year price gains as the median price of existing homes sold rose to $202,600 (up 7.5% from 2014).

So What Does This Mean?

The chart below shows the impact that inventory levels have on home prices.

March2015-16KCM

NAR’s Chief Economist, Lawrence Yun gave some insight into the correlation:

“Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices. Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before (interest) rates rise.”

Bottom Line

If you are debating putting your home on the market this year, now may be the time. The amount of buyers ready and willing to make a purchase is at the highest level in years. Contact a local professional in your area to get the process started.

WHEN IT COMES TO REAL ESTATE, NICE GUYS FINISH LAST

no-more-mr-nice-guy

Realty Times| Jaymi Naciri| June 11, 2014| Link

When it comes to real estate, nice guys finish last. Especially in tough markets. And by tough markets, we mean seller’s markets, buyer’s markets, depressed markets, rebounding markets – and any other type of market we missed.

Buying a home can be a highly charged, emotionally draining time under any circumstances. It’s easy to let the process get the best of you. You have to get tough if you want to meet your real estate goal.

Buying in a hot market

Looking to buy a house in a hot market, where the neighborhood is especially popular or because it caters to first-time buyers requires an extra level of grittiness. Be the “nice guy” and you can overpay for the home you want, or lose out altogether, because you weren’t willing to negotiate.

“In a competitive market, you have to have a strong backbone. It’s going to get tough out there,” said Mark Allen, a California real estate expert. “Many buyers today are facing tough conditions, particularly in entry-level neighborhoods where there is tremendous competition for well-priced homes. They’re having to contend with multiple offers on homes and then deal with the disappointment of being outbid time and again. I have seen buyers who have had to make up to six or eight offers on different homes before they were able to finally buy one. You have to be tough and stay tough, even when you feel like giving up.”

MSN recommends doing a little homework on your neighborhood of choice to increase your chances of getting that house. “Researching who lives in and around the home you’re [considering] buying is of the utmost importance,” said MSN. “By speaking with neighbors, you’ll gain a sense of what life is like in the community and perhaps even pick up some insight into why the sellers are moving.” Every little bit of info can help during negotiations.

Tough Negotiating

Getting tough starts at offer time. No one wants to pay more than they’re comfortable with. But if you’re in a market where homes are selling fast with multiple offers, you may need a real estate market reality check. Go in with an offer that’s too low and you could turn off the seller, who will then reject your offer and move on to the others that were already more in line with what they were hoping to get for their home.

Real estate agents regularly caution clients against making offers that are exceedingly low for that very reason; being in a location and/or a price range where multiple offers are becoming commonplace can add another layer of pressure to an already stressful situation.

That doesn’t mean paying full price no matter what. It means being aware of what’s going on in the area you’re interested in, hiring a trustworthy agent who is a tough negotiator, and listening to your agent’s advice. You will want to choose an agent who is a strong negotiator and who can get tough on your behalf. An experienced agent with a history of successful real estate transactions should be better able to navigate the murky real estate waters, using existing relationships and relationship-building skills to help give you an edge.

Being Tough While In Escrow

It’s not over once you have an accepted offer. Thirty or 45 or 60 days or more can feel like an eternity, and things will undoubtedly come up during escrow. The title company will need proof that the home you owned in another state eight years ago is not still owned by you, and you’ll have to scramble to provide proof of sale. You’ll have to dig up your original divorce decree. The inspection will turn up something you weren’t expecting, and then here comes that negotiation thing again.

“Buyers have the ability to continue negotiating the price after escrow has opened during their buyer investigation period,” said Eller’s Sellers. “The important thing for any buyer to remember is that negotiating for credits and repairs is just that — a negotiation. It is highly unlikely that the seller will agree to everything the buyer has asked for. However, at the same time, sellers need to understand that once a repair issue has been identified, they will be required to disclose it to any subsequent buyer. So it is usually in their best interest to agree to some sort of compromise.”

At the end, if you stay strong, you’ll end up with the keys to your new home. And then you can go back to being the nice guy. Until it’s time to start negotiating with a contractor…

#1 Reason to Sell Now

Keeping Current Matters| January 5, 2015|Link

Clock of  rope

If you are one of the many homeowners out there who are debating putting their home on the market in 2015, don’t miss out on the opportunity that currently exists. There will be significantly less competition in the winter months than in the spring.

According to the National Housing Survey released by Fannie Mae, 45% of homeowners“say mortgage rates will go up in the next 12 months.”

What Does This Mean?

Homeowners are unaware that interest rates are projected to go up by all four major reporting institutions – This is big news for move-up buyers reflecting the overall amount of housing inventory that will be on the market.

If existing homeowners believe that mortgage interest rates are not going to increase, then they won’t be inclined to make a move by putting their home up for sale, meaning less competition for sellers who list now.

Don’t Wait!

The study also revealed that:

“Those who say it is a good time to buy a house rose to 68%” & “the share of respondents who think it would be difficult to get a home mortgage today decreased by 3 percentage points.”

As Doug Duncan, senior vice president and chief economist at Fannie Mae explains:

“We expect consumer attitudes toward housing to improve as the pickup in the overall economy lifts employment and income prospects.“

Bottom Line

There are buyers out there who are ready to make a move. If your goal this year is to move up to your dream home, what are you waiting for?

Winter Is Best Time to Sell, Study Shows

Daily Real Estate News| December 15, 2014| Link

sellinwinter

The housing market doesn’t hibernate in the winter. Sellers who list and buyers who buy often find the winter season the most advantageous time to make a move in real estate, according to a new study by the real estate brokerage Redfin. The winter season officially takes place between Dec. 21 and March 20, and real estate professionals should be ready for a season that often brings in more focused and active sellers and buyers.

In an update to a two-year analysis it completed last year, Redfin researchers studied nationwide home listings, sales prices, and time-on-market data from 2010 through October 2014.

The study found that February is “historically the best month to list, with an average of 66 percent of homes listed then selling within 90 days,” according to Redfin’s research.

Even in cold weather cities – such as Boston and Chicago – researchers found that home sellers were better off listing their homes in the winter than during other seasons.

The winter tends to net sellers’ more than their asking price during the months of December, January, February, and March than listings from June through November. Listing during those four winter months has resulted in higher percentages of above-asking-price sales than listing during any months, other than April and May.

Redfin researchers found that in 2012 December listings were producing the highest percentage of above-asking sales for the entire year at 17 percent.

Researchers say the winter market is less competitive for sellers since many people tend to wait until the spring to list. The smaller inventory of active listings help sellers get more attention from buyers on their properties. Also, many large corporations often transfer employees or hire new ones early in the year, creating opportunities for winter sellers from very motivated purchasers.

Homes that are “priced right and show well can sell any time” of the year, says Nela Richardson, chief economist for Redfin. Winter buyers tend to be “serious buyers… Most people are not window-shopping” in December and January, like they do in the spring months, Richardson adds.

Sellers shouldn’t worry about the holidays hampering their chances either. A 2011 study conducted by realtor.com® found that 60 percent of real estate professionals advise their sellers to list a home during the holidays because they believe it’s an opportune time to sell. Nearly 80 percent of the real estate professionals surveyed said that more serious buyers emerge during the holidays, and 61 percent say less competition from other properties makes it an ideal time to sell.

As for buyers, they may find winter a good time to make a move too. Sellers often are more flexible about negotiations over prices and terms than they would in the spring, real estate professionals say.

“People get more realistic at this time of year,” particularly if their homes hadn’t sold during the summer and fall, says Mary Bayat, a broker in Washington, D.C., and chairwoman-elect of the Northern Virginia Association of REALTORS®.

2015: Year of the First-Time Home Buyer

RealtorMag| December 5, 2014| Link

dec14_realtorcomchart.jpg

First-time home buyers are expected to re-emerge in the new year after mostly staying out of the market in the aftermath of the housing crisis. That’s one of realtor.com®’s five top housing predictions for 2015.

“The residual financial effects of recession-driven job losses and subsequent unemployment have impeded Millennials’ entry into the home-owning market,” says Jonathan Smoke, chief economist for realtor.com®. “In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery. If access to credit improves, we could see substantially larger numbers of young buyers in the market. However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability, such as the Midwest and South.”

Realtor.com®’s top five housing predictions for 2015 are:

  1. Millennials to drive household formation. Households headed by Millennials are expected to see significant growth in 2015, particularly as the economy continues to make gains. Millennials are expected to drive two-thirds of household formations over the next five years, according to realtor.com®’s report. The forecasted addition of 2.5 million jobs next year, as well as an increase in household formation, are the two factors that realtor.com® points to in driving more first-time home buyers to the housing market.
  2. Existing-home sales on the rise. Existing-home sales are projected to rise 8 percent year-over-year in 2015, as more buyers enter the market. Distressed properties will make up a smaller share of that growth, unlike in 2012, when a similar increase in existing-home sales was mostly driven by distressed properties.
  3. Home prices will rise. Home prices are expected to continue to edge up in 2015, with realtor.com® forecasters predicting a 4.5 percent gain. “While first-time home buyers have many economic factors working in their favor, increasing home prices will make it more difficult to get into high-priced markets such as San Francisco and San Jose, Calif.,” realtor.com® notes in its report. “As a result, first-time home buyer activity is expected to concentrate in markets with strong employment and affordability, such as Des Moines, Iowa; Atlanta; and Houston.”
  4. Mortgage rates to inch up to 5 percent. In the middle of 2015, mortgage rates are expected to increase as the Federal Reserve increases its target rate by at least 50 basis points before the end of the year. That will likely bring the 30-year fixed-rate mortgage to an average of 5 percent by the end of 2015. (It’s currently averaging 3.89 percent, according to Freddie Mac.) The 1-year adjustable-rate mortgage, on the other hand, is expected to rise more minimally. “Lower ARM interest rates will influence an uptick in buyer interest for adjustable and hybrid mortgages,” realtor.com® notes. “While still at historic lows, rate increases will affect housing affordability for first-timers trying to break into the housing market and will be another factor pushing them to less-expensive locales.”
  5. Housing affordability will decline. Affordability for homes, based on home-price appreciation and rising mortgage interest rates, will likely fall by 5 to 10 percent in 2015. However, the decline in affordability likely will be offset by an increase in salaries next year for many households. “When considering historical norms, housing affordability will continue to remain strong next year,” realtor.com® notes.

Santa Clara County Inventory Update

Weekly Santa Clara County Inventory Update 8/25/14:

recentstats

Since the beginning of August we have seen both single family home and condo/townhome inventory go down slightly overall, while pending sales of both types of properties have gone up.  It looks like during the month of August, with kids returning to school and the summer ending,  we are experiencing fewer homes coming on the market and an uptick in sales due to a stabilization of prices.

Here are the latest numbers from 8/18 to 8/25:
Active single family homes decreased from 1367 homes to 1363 and pending sales increased from 1199 to 1218 homes.

Active condos and town homes decreased from 483 to 450 units and pending sales increased from 490 to 499 units.