NAR Data Shows Now Is a Great Time to Sell!

NAR Data Shows Now Is a Great Time to Sell! | Simplifying The Market

We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. Two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now continues to be a great time to sell your house.

Let’s look at the data covered in the latest REALTORS® Confidence Index and Existing Home Sales Report.

REALTORS® CONFIDENCE INDEX

Every month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that home-buying demand continued to outpace supply in May.

The map below illustrates buyer demand broken down by state (the darker your state, the stronger the demand is there).

NAR Data Shows Now Is a Great Time to Sell! | Simplifying The Market

In addition to revealing high demand, the index also mentioned that “compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 24 states, ‘stable’ in 25 states, and ‘strong’ in D.C and West Virginia. 

Takeaway: Demand for housing continues to be strong throughout 2017, but supply is struggling to keep up, and this trend is likely to continue into 2018.

THE EXISTING HOME SALES REPORT

The most important data revealed in the report was not sales, but was instead the inventory of homes for sale (supply). The report explained:

  • Total housing inventory rose 2.1% to 1.96 million homes available for sale
  • That represents a 4.2-month supply at the current sales pace
  • Unsold inventory is 8.4% lower than a year ago, marking the 24th consecutive month with year-over-year declines

According to Lawrence Yun, Chief Economist at NAR:

“Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”

In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values.

As we mentioned before, there is currently a 4.2- month supply, and houses are going under contract fast. The Confidence Index shows that 55% of properties were on the market for less than a month when sold.

In May, properties sold nationally were typically on the market for 27 days. As Yun notes, this will continue, unless more listings come to the market.

“With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month.”

Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market. And the supply will continue to ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the market.

Bottom Line

If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out searching for your house.

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Existing Home Sales Surge into Summer [INFOGRAPHIC]

Existing Home Sales Surge into Summer [INFOGRAPHIC] | Simplifying The Market

Existing Home Sales Surge into Summer [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Existing Home Sales reached their third highest mark this year in May.
  • Inventory of homes for sale has dropped 8.4% since last year, marking the 24th consecutive month of year-over-year declines.
  • NAR’s Chief Economist, Lawrence Yun had this to say: “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”

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75% of Homeowners Think Now is a Good Time to Sell!

75% of Homeowners Think Now is a Good Time to Sell! | Simplifying The Market

The National Association of Realtors (NAR) recently released the findings of their Q2 Homeownership Opportunities and Market Experience (HOME) Survey. The report covers core topics like, “if now is a good time to buy or sell a home, the perception of home price changes, perceived ability to qualify for a mortgage, and [an] outlook on the U.S. economy.”

The survey revealed that 75% of homeowners think now is a good time to sell, compared to 70% last quarter. This is a considerable increase from more than a year ago when 66% agreed.

Even though homeowners believe that now is a good time to sell, many have not taken the step to list their homes, as inventory shortages still exist across the country. Lawrence Yun, NAR’s Chief Economist, had this to say:

“There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy…

As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.”

Bottom Line

If you are wondering if now is a good time to sell your house, let’s get together to discuss the opportunities available in our market.

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Buyer’s Market Helps Premium Home Sales Soar

Buyer's Market Helps Premium Home Sales Soar | Simplifying The Market

We previously reported how a shortage of inventory in the starter and trade-up home markets is driving prices up and causing bidding wars, creating a true seller’s market. At the same time, in the premium home market, an over-abundance of inventory has started to see prices come down and put buyers in the driver’s seat, creating the beginning of a buyer’s market.

Last week, the National Association of Realtors released their Existing Home Sales Report which shed some additional light on the impact of inventory levels on sales in each price range.

The chart below shows the year-over-year difference in sales at each price range.

Buyer's Market Helps Premium Home Sales Soar | Simplifying The Market

The under $100K range has shown declines in recent years due to the shortage of distressed homes available for sale (just 5% of sales this past month, compared to 35% in January 2012). Sales in the next two price ranges are no doubt being hindered by low inventory as buyers compete for the same home.

NAR’s Chief Economist, Lawrence Yun, explained:

“Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”

The biggest surprise? This is the first time in years where the $1M and up price range had the highest jump in sales when compared to last year and to all other price ranges (29.1%)! The two price ranges right underneath the $1M range were a close second and third. As the price went up, so did the sales!

With additional inventory available in the higher price ranges, and the economy improving, many luxury buyers are finding it easier to find their dream homes. Yun commented,

“The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level.”

Bottom Line

If you are one of the many homeowners who is looking to sell your starter or trade up home and move up to a luxury home, now is the time!

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The Importance of Home Equity in Retirement Planning

The Importance of Home Equity in Retirement Planning | Simplifying The Market

We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning.

Craig Copeland, Senior Research Associate at EBRI, recently authored a report, Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth, in which he reveals:

“Individual account retirement plan assets, plus home equity, represent almost all of what families have to use for retirement expenses outside of Social Security and traditional pensions. Those families without individual account assets typically have very low overall assets, so they have almost nothing to draw from for retirement expenses.”

The report echoed the findings of a working paper, Home Equity Patterns among Older American Households, authored by Barbara Butrica and Stipica Mudrazija of Urban Institute. Fannie Mae highlighted these findings for their blog The Home Story this past winter, quoting Butrica and Mudrazija:

 “For most adults near traditional retirement age, a home is their most valuable asset — dwarfing retirement accounts, other financial assets, and other nonfinancial assets. Although relatively few retirees tap into their home equity, having it provides financial security… In fact, many retirement security experts argue that the conventional three-legged stool of retirement resources — Social Security, pensions, and savings — is incomplete because it ignores the home.”

USAToday interviewed two area experts to comment on the EBRI report. Randy Bruns, a private wealth adviser with HighPoint Planning Partners, agreed with the findings:

“Social Security and home equity are major pieces of the retirement puzzle.”

Wade Pfau, Professor of Retirement Income at The American College of Financial Services and author of Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement, said having the equity without a plan to use it won’t help:

“Home equity is a very important asset for American retirees, and so it is important to think about how to make best use of home equity in retirement planning.”

Bottom Line

Whether you use the equity in your home through a reverse mortgage or by selling and downsizing to a less expensive home, it should be a crucial piece of your retirement planning.

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Do You Know How Much Equity You Have in Your Home?

Do You Know How Much Equity You Have in Your Home? | Simplifying The Market

CoreLogic’s latest Equity Report revealed that 91,000 properties regained equity in the first quarter of 2017. This is great news for the country, as 48.2 million of all mortgaged properties are now in a positive equity situation.

Price Appreciation = Good News for Homeowners

Frank Nothaft, CoreLogic’s Chief Economist, explains:

One million borrowers achieved positive equity over the last year, which means risk continues to steadily decline as a result of increasing home prices.”

Frank Martell, President and CEO of CoreLogic, believes this is a great sign for the market in 2017 as well, as he had this to say:

Homeowner equity increased by $766 billion over the last year, the largest increase since Q2 2014. The rising cushion of home equity is one of the main drivers of improved mortgage performance. Since home equity is the largest source of homeowner wealth, the increase in home equity also supports consumer balance sheets, spending and the broader economy.”

This is great news for homeowners! But, do they realize that their equity position has changed?

According to the Fannie Mae’s Home Purchase Sentiment Index (HPSI), more homeowners are beginning to realize that they may have more equity than they first thought.

This is only the second time in the survey’s history that the net share of those saying it’s a good time to sell surpassed the net share of those saying it’s a good time to buy.

78.8% of homeowners have significant equity (more than 20%) in their homes today!

This means that many Americans with a mortgage have an opportunity to take advantage of today’s seller’s market. With a sizeable equity position, many homeowners could easily move into a housing situation that better meets their current needs (moving to a larger home or downsizing).

Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae spoke out on this issue:

“High home prices have led many consumers to give us the first clear indication we’ve seen in the National Housing Survey’s seven-year history that they think it’s now a seller’s market. However, we continue to see a lack of housing supply as many potential sellers are unwilling or unable to put their homes on the market…” 

Bottom Line

If you are one of the many Americans who is unsure of how much equity you have built in your home, don’t let that be the reason you fail to move on to your dream home in 2017! Let’s get together to evaluate your situation!

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Top Home Renovations for Maximum ROI [INFOGRAPHIC]

Top Home Renovations for Maximum ROI [INFOGRAPHIC] | Simplifying The Market

Top Home Renovations for Maximum ROI [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Whether you are selling your home, just purchased your first home, or are a homeowner planning to stay put for a while, there is value in knowing which home improvement projects will net you the most Return On Investment (ROI).
  • While big projects like adding a bathroom or a complete kitchen remodel are popular ways to increase a home’s value, something as simple as updating landscaping and curb appeal can have a quick impact on a home’s value.
  • For more information about top renovation projects that net you the most ROI, you can check out the complete list here.

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Are Home Prices Approaching Bubble Territory?

Are Home Prices Approaching Bubble Territory? | Simplifying The Market

As home values continue to rise, some are questioning whether we are approaching another housing bubble. Zillow just reported that:

“National home values have surpassed the peak hit during the housing bubble and are at their highest value in more than a decade.”

Though that statement is correct, we must realize that just catching prices of a decade ago does not mean we are at bubble numbers. Here is a graph of median prices as reported by the National Association of Realtors (NAR).

Are Home Prices Approaching Bubble Territory? | Simplifying The Market

We can see that prices rose during the early 2000s, fell during the crash and have risen since 2013.

However, let’s assume there was no housing bubble and crash and that home prices appreciated at normal historic levels (3.6% annually) over the last ten years.

Here is a graph comparing actual price appreciation (tan bars) with what prices would have been with normal appreciation (blue bars).

Are Home Prices Approaching Bubble Territory? | Simplifying The Market

Bottom Line

As we can see, had there not been a boom and bust, home values would essentially be where they are right now.

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The Impact Your Interest Rate Makes [INFOGRAPHIC]

The Impact Your Interest Rate Makes [INFOGRAPHIC] | Simplifying The Market

The Impact Your Interest Rate Makes [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Interest rates have come a long way in the last 30 years.
  • The interest rate you secure directly impacts your monthly payment and the amount of house that you can afford if you plan to stay within a certain budget.
  • Interest rates are at their lowest in years… RIGHT NOW!
  • If buying your first home, or moving up to the home of your dreams is in your future, now may be the time to act!

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Mortgage Interest Rates Reverse Course in 2017

Mortgage Interest Rates Reverse Course in 2017 | Simplifying The Market

To start the year, housing experts all agreed on one thing: 2017 was going to be the year we would see mortgage interest rates begin to rise. After years of historically low rates, and an improving economy, the question wasn’t if they would increase but instead how much they would increase. Some thought we could see rates hit 5-5.5% by the end of the year.

However, the exact opposite has happened. Instead of higher rates as we head into the middle of 2017, we now have the lowest rates of the year (as reported by Freddie Mac). Here is a graph of mortgage rate movement since the beginning of the year:

Mortgage Interest Rates Reverse Course in 2017 | Simplifying The Market

Projections still call for an increase…

Four major entities (Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors) are still projecting that rates will increase by the fourth quarter of the year.

Mortgage Interest Rates Reverse Course in 2017 | Simplifying The Market

Bottom Line

No one knows for sure where interest rates will be in six months. However, if you are thinking about buying your first house or trading up to the home of your dreams, you can still get a mortgage at historically low rates RIGHT NOW.

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