2724 HIGHWORTH LANE, CHARLOTTE, NC 28214-5438
Home sales are all the news. By now just about every would-be buyer out there knows there simply aren’t enough homes for sale these days to appease the hordes of competition. But despite the shortages, rising prices, and bidding wars, more homes are expected to be sold this year than in more than a decade.
In 2017, the number of sales of existing homes (which have previously been lived in) is expected to rise about 3.5%, to 5.64 million, according to the midyear forecast from the National Association of Realtors®. The group predicts that existing-home purchases will rise an additional 2.8% in 2018, to 5.8 million.
“The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation, and rising consumer confidence are giving more households the assurance and ability to purchase a home,” NAR Chief Economist Lawrence Yun said in a statement. “However, prices are still rising too fast in many areas and are outpacing incomes.”
Sales of brand-new homes, which builders can’t seem to put up fast enough, are expected to jump 10.7%, from 560,000 in 2016 to 620,000 this year, according to NAR. They’re expected to rise an additional 8% in 2018, to 670,000 sales.
New homes are typically more expensive than existing homes, as builders must contend with shortages of land and labor, plus rising costs of materials and difficulty obtaining financing.
The price tags of all homes are expected to keep rising. NAR predicts prices will jump 5% in 2017 and an additional 3.5% in 2018.
“As a result, buyers are compromising on the number of rooms, length of a commute, or other home qualities,” says Senior Economist Joseph Kirchner of realtor.com®. “Meanwhile, builders are mostly building for the mid- to upper-price range. This mismatch in supply and demand is making affordability more acute for those with modest incomes.”
In some white-hot markets along the coasts, prices are rising by double digits because of the dearth of homes. That’s led many current homeowners who might be interested in trading up to a larger, nicer home in their area to hold off—because those homes are simply out of their price range.
Bidding wars have gotten so bad in Seattle that buyers are driving up prices 30% over asking in some cases, says local real estate broker Chris Bajuk, of HomeSmart Real Estate Associates. (Seattle prices were up 12.2% year over year in February, according to the latest S&P CoreLogic Case-Schiller report.)
“It is crazy,” Bajuk says. “There’s strong demand and lack of supply.”
Buyers are coping by putting ever-higher percentages of their incomes toward homeownership—even when it means eating at home every night and doing without new clothes or annual beach vacations. Sometimes they’re spending half of their take-home pay on housing, he says.
Others are purchasing homes farther from the city center where they work, settling for smaller homes or even purchasing residences in need of some work.
“They may need to spend more of their disposable income,” Bajuk says. “Or they may need to lower their expectations on what kind of home they get.”
At Dupont Real Estate, we know our community and we know our market. We are your Real Estate Resource. If you are looking to buy or sell a home in Lake Norman, Charlotte, or surrounding areas anywhere in NC, SC, or VA. We are here to assist you! Contact Us.
Best time to buy a house is NOW
17:02 EDT, July 11th, 2013
WSJ – now is the best time to buy a house
The Wall Street Journal’s third-quarter survey of housing-market conditions in 28 of the nation’s largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc. Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4%, are the lowest in six decades. As a result, monthly mortgage payments on the median priced home—including taxes and insurance—are lower than the average rent levels in 12 metro areas, according to data compiled for The Wall Street Journal by Marcus & Millichap, a real-estate brokerage that tracked 27 metro areas. It remains less expensive to rent than to buy in 15 cities. In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840, according to the Marcus & Millichap data.
Other cities where owning is now cheaper than renting include Detroit, Minneapolis, Orlando, Las Vegas, Miami, St. Louis, Chicago and Phoenix. Home ownership is also looking more affordable because after several years of declines, apartment rents will rise by around 4% this year, says Mr. Nadji. He says rents are poised “to pick up even more momentum across the country next year.” Even cities where it is still cheaper to rent than own have seen big boosts in affordability. In San Diego, the monthly cost of owning a home has averaged around 83% more than renting over the past two decades. During the third quarter, owning was 22% more expensive than renting, according to John Burns Real Estate Consulting.
Mortgage rates are a big reason why affordability continues to improve. In 1991, a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage. Today, it gets that homeowner a $350,000 loan, a 77% increase in borrowing power, says Dan Green, a loan officer with Waterstone Mortgage, in Cincinnati.
Affordability could continue to improve as prices slide even lower in coming months. Price declines are likely because the share of “distressed” sales, including bank-owned foreclosures, tend to rise in the winter, when traditional sales activity cools. Banks are often much quicker to cut prices to unload properties quickly, which means that the greater the share of “distressed” sales, the more prices tend to fall.
One hopeful sign that it’s time to buy a house is that inventories have fallen from their bloated levels of one year ago. All 28 cities in The Wall Street Journal’s latest survey saw homes listed for sale fall from one year ago, when markets were reeling with a substantial overhang of properties amid a big drop in demand. Visible inventory was down sharply in several markets, including by almost half in Miami and 40% in Phoenix. Low inventories have spurred more bidding wars at the low end of the market as investors compete for homes that they can convert into rentals. In Sacramento, it would take just 2.5 months to sell the listed inventory at the current sales pace. Las Vegas has a 4.3 month supply of inventory, according to John Burns Real Estate Consulting. But the potential supply of homes is much bigger because banks have yet to process hundreds of thousands of potential foreclosures.
Black Friday sales boom
Sales rose an estimated 6.6% to a record $11.4 billion on Black Friday, typically the busiest shopping day of the year for Americans, while the traffic at stores rose 5.1%, according to ShopperTrak. The day’s sales growth was the strongest percentage gain since 2007, when sales rose 8.3% on the day after Thanksgiving, said Ed Marcheselli, chief marketing officer at ShopperTrak, which monitors retail traffic. As usual on Black Friday, retailers used deep discounts on popular items such as toys and televisions to lure shoppers as the holiday shopping season began. Some started sales as early as Thanksgiving night to get a jump on their rivals. While the Black Friday rise was a “positive indicator for the holiday season,” Marcheselli cautioned it is just one day. ShopperTrak has estimated that sales for all of November and December will rise about 3 to 3.3%.
The National Retail Federation, an industry trade group, expects
152 million people to hit stores this weekend, up 10.1% from last year. But it expects sales for the full November-December holiday season to rise just 2.8%, well below the rise of 5.2% in 2010.
DSNews.com – mortgage rates down
The 30-year fixed-mortgage rate has averaged at or below 4% for four consecutive weeks now. For the week ending November 23, Freddie Mac’s study puts the average 30-year rate at 3.98% (0.7 point). That’s down from 4.00% the week prior. The only time Freddie has recorded a lower 30-year rate average was for the
week of October 6, 2011, when it came in at 3.94%. The 15-year
fixed-rate mortgage posted an average of 3.30% (0.7 point) in Freddie Mac’s latest survey. It was 3.31% last week. The 5-year ARM is averaging 2.91% (0.6 point), down from 2.97% last week. The 1-year ARM slipped from 2.98% to 2.79% (0.6 point) this week. Rates for both ARM terms are the lowest ever recorded by the GSE. “Mortgage rates eased slightly this week with fixed-rate loans hovering above all-time lows and ARMs reaching a new nadir,” commented Frank Nothaft, Freddie Mac’s chief economist. He says the high-degree of home-buyer affordability in recent months translated into a 1.4% pickup in existing home sales during October, as measured by the National Association of Realtors. Nothaft noted, however, that the trade group also reported a sharp increase in contract cancellations in October, with a third of its members seeing at least one contract fall through during the month. This “restrained sales from achieving a stronger rebound,” according to Nothaft.
Morgan Stanley cuts growth forecast
The continuing uncertainty over debt troubles in Europe and the US has increased the downside risks to global growth, according to Morgan Stanley. The bank downgraded its forecast for global growth next year to 3.5% from 3.8%, just three and a half months after it cut its forecast from 4.5%. “Our economics team in Europe now expects a recession in Europe while the US economy is expected to continue growing below its trend,” said Morgan Stanley. It also cut its 2012 growth estimate for Asia ex-Japan to 6.9% from 7.3%. “Since we downgraded our regional growth outlook in August 2011, we have been constantly worried about the increasing downside risks to growth. In addition to further evidence of weakening domestic demand, the external environment in Europe has made us more concerned about the region’s growth outlook,” economists at Morgan Stanley said in a research note today.
Even Asia, which has so far escaped the global slowdown is likely to be dragged down, according to Morgan Stanley. The bank noted that the regions’ deep trade and financial linkages with the rest of the world made it vulnerable to deep shocks in the global economy. “The prospects of further fiscal tightening and weaker domestic demand in Europe will translate into weaker external demand growth for the region,” it said. “The slowdown in final demand in the developed world will likely be amplified on the region’s cross-border production network, leading to a significant slowdown in export growth across the region in 2012.”
Morgan Stanley noted this was already starting to happen. Asian exports, which “have been flat on a sequential basis since Mar 2011, have also begun to decline on a sequential basis in the last two months.” Asia’s domestic indicators, such as auto, retail and property sales as well as manufacturing activity (PMI) were also pointing to a deceleration, the bank said.
Home prices to fall another 6%? Buy a house now
Analysts with JPMorgan claim home prices will fall another 4% by year-end, resulting in a 35% peak-to-trough decline once a bottom is reached. When looking at just non-agency residential mortgage-backed securities, the report says “market volatility, lack of liquidity and stagnant fundamentals” will remain drags on the entire segment in 2012. In non-agency residential mortgage-backed securities, the authors also noted slowing activity on the modification front. “We continue to recommend fixed-rates and select seasoned hybrids,” the report said. The JPMorgan report also is careful when forecasting the performance of commercial mortgage-backed securities in 2012. “Our outlook for 2012 is cautiously optimistic, as market conditions continue to weigh on what we believe remains cheap fundamental credit risk. Private label and agency CMBS supply should reach $35 billion and $32 billion, respectively,” the report said.
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