The Best Year for Sales Since the Housing Boom

DAILY REAL ESTATE NEWS | MONDAY, JANUARY 25, 2016

The end of the year brought a sizable boost to existing-home sales, as delayed closings fromnew mortgage rulespushed some would-be November transactions to December, according to the National Association of REALTORS®. Existing-home sales — which are completed transactions for single-family homes, townhomes, condos, and co-ops — rose 14.7 percent month-over-month to a seasonally adjusted annual rate of 5.46 million in December. Sales are now 7.7 percent above a year ago.

That marks the best year of existing-home sales since 2006, though it's still well below the record for that year, which was a whopping 6.48 million.

Regional Breakdown

All four major regions of the U.S. saw significant increases in existing-home sales in December, led by the South and West.

• Northeast: Existing-home sales rose 8.7 percent to an annual rate of 750,000 -- 11.9 percent higher than a year ago. Median price: $255,700, which is 5.3 percent above December 2014.
• Midwest: Existing-home sales increased 10.9 percent to an annual rate of 1.22 million in December -- now 9.9 percent above a year ago. Median price: $171,000, up 7.5 percent from a year ago.
• South: Existing-home sales rose 14.6 percent to an annual rate of 2.27 million in December, and are now 4.6 percent above a year ago. Median price: $196,100, up 6.8 percent from a year ago.
• West: Existing-home sales increased 23.2 percent to an annual rate of 1.22 million in December, and are now 8.9 percent higher than a year ago. Median price: $321,100, which is 8.2 percent higher than a year ago.

Source: National Association of REALTORS®

“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” says Lawrence Yun, NAR’s chief economist. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”

The Know Before You Owe initiative, which took effect Oct. 3, 2015, prompted some delays in closings as lenders adjusted to new rules and the rollout of a new mortgage form to consumers.

“December’s rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off,” says NAR President Tom Salomone. “However, our data is still showing longer closing timeframes, which is a reminder that the near-term challenges we anticipated are still prevalent. NAR advised members to extend the time horizon on their purchase contracts to address this concern.”

5 Stats to Judge the Market

1. Home prices: The median existing-home price for all housing types was $224,100 in December, up 7.6 percent year-over-year ($208,200).

2. Days on the market: Thirty-two percent of homes sold last month were on the market for less than a month. Properties, on average, stayed on the market for 58 days in December, which is below the 66 days in December 2014. Broken out, the properties on the market the longest amount of time in December were short sales, which had a median of 86 days. Foreclosures sold in 68 days, on average, while non-distressed homes took 57 days.

3. All-cash sales: All-cash transactions comprised 24 percent of transactions in December, down from 26 percent a year ago. Individual investors, who account for the bulk of cash sales, purchased 15 percent of homes in December, down from 17 percent a year ago.

4. Distressed sales: Foreclosures and short sales dropped to 8 percent in December, down from 11 percent a year ago. Of that, foreclosures made up 6 percent of December sales and short sales comprised 2 percent. Foreclosures sold for an average discount of 16 percent below market value last month, while short sales were discounted 15 percent, on average.

5. Inventory: By the end of December, total housing inventory fell 12.3 percent to 1.79 million existing homes available for sale, reaching a 3.9-month supply at the current sales pace. That is 3.8 percent lower than a year ago (1.86 million).

“Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s 7 percent increase in sales,” says Yun. “In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas.”

Source: National Association of REALTORS®

Portland - Market Action Report - January 4, 2016 - Median List Price in Portland is $438,950 !

Freddie Mac Chief: Little to Fear in Rate Hikes

Daily Real Estate News | Wednesday, January 06, 2016 

 

Freddie Mac Chief Economist Sean Becketti is dismissing concerns that the Federal Reserve’s latest change in monetary policy could spell trouble for the real estate market. The Fed’s decision to raise its benchmark short-term rates will not cause mortgage rates to skyrocket, reduce housing affordability, or reverse recent improvements in the housing market, he writes on Freddie Mac’s Executive Perspectives blog.

In fact, Becketti predicts that the Fed’s move won’t take much of a toll on mortgage rates at all. As an example, he cites a time during the mid-2000s when the 17 consecutive monthly rate hikes issued by the Fed basically had no effect on mortgage rates, which remained at about 6 percent.

That said, Becketti does suggest long-term rates will begin to nudge upward this year, but only marginally compared to short-term rates. Regardless, even a slight increase in mortgage rates could hamper home affordability, particularly for first-time home buyers or low-to-moderate income buyers. He says that could dampen home price increases at the lower tier of the market.
Becketti predicts that mortgage rates will increase gradually from 2015’s 4.1 percent to an average of 4.4 percent by the end of 2016. He expects home prices to moderate more in the new year too, increasing about 4.4 percent this year.

“While we believe the housing sector will remain strong in 2016, there is some uncertainty about the strength of the broader economy,” Becketti says.

Source: “Strong Housing Sector Trumps Tighter Monetary Policy in 2016,” Freddie Mac Executive Perspectives Blog (Jan. 4, 2016).

What's Hot, Not in Home Decor in 2016

Daily Real Estate News | Monday, January 04, 2016 

 

The Wall Street Journal recently had interior designers weigh in on the top design trends likely to make a big splash in 2016 as well as what’s likely to fall out of style. Here are some design trends to keep in mind when staging your listings.

Staging and design trends: Visit the Styled, Staged & Sold blog

What’s In
Black metals: This metal was once reserved for outdoor furniture or bed frames, but not anymore. This unflashy metal is appearing as simple hardware, bathroom fixtures, and even flatware, British interior designer Martyn Lawrence Bullard told The Wall Street Journal. Black metal is also being blended into wood and glass.
Curvy home décor: Rounded tables and curvy aesthetics will likely appear in more furnishings. Radial and bullnose edges soften hard materials like marble, says Glenn Lawson of Lawson Flenning in Los Angeles.
Old-world style: “People want the traditional and dressy, with a shot of nostalgia, to feel like everything is going to be OK,” Tobi Fairley, an interior designer in Little Rock, Ark., told The Wall Street Journal. Expect to see more brocades, tapestries, Georgian and Empire antiques, as well as fringe, cording and tassels.
Scandinavian flat weaves: “With elegantly balanced geometric compositions, these rugs are a sophisticated answer to the omnipresent neutrals and sisals,” said Los Angeles designer Madeline Stuart. The Scandinavian designs are being weaved into both contemporary and traditional spaces.
What’s Out
Rosy metallic: Copper and rose-gold metals were big in 2015, but, alas, the rosy-gold hues may have a look of being “cheap” in 2016, warns Barclay Butera, a designer with offices in Los Angeles and Park City, Utah.
The industrial look: “Enough of looking like we are living in the garage,” says Joe Lucas of Lucas Studio in Los Angeles. The millennial-coffeehouse design is finally showing signs of fading, co-signs Timothy Brown, an interior designer based in New York.
Sisal and jute: These two types of fiber rugs may have overstayed their welcome in home décor, designers say. “They don’t feel soft or cushy on bare feet and are not very child- or pet-friendly,” says Timothy Corrigon, a Los Angeles designer. “It wears quickly, stains easily and is virtually un-cleanable,” adds Philip Gorrivan, a designer in New York.
View more of what’s in and what’s out in 2016 in interior design at The Wall Street Journal.
Source: “Top 5 Interior Design Trends for 2016,” The Wall Street Journal (Dec. 29, 2015)

Is it an End to Mortgage Rates Under 4%?

Daily Real Estate News | Monday, January 04, 2016 

 

The 30-year fixed-rate mortgage finished out 2015 breaking above the 4 percent mark. It was the first time in five months the rate edged above 4 percent.
“In the final week of 2015, Treasury yields jumped reacting in part to strong consumer confidence in December,” says Sean Becketti, Freddie Mac’s chief economist. “In response, the 30-year mortgage rate rose 5 basis points to 4.01 percent, ending a five-month span below 4 percent. After averaging 3.9 percent in the fourth quarter of 2015, we expect the 30-year mortgage rate to average 4.7 percent for the fourth quarter of 2016.”
Freddie Mac reported the following national averages with mortgage rates for the week ending Dec. 31, 2015:

• 30-year fixed-rate mortgages: averaged 4.01 percent, with an average 0.6 point, rising from the previous week’s 3.96 percent average. A year ago, 30-year rates averaged 3.87 percent.
• 15-year fixed-rate mortgages: averaged 3.24 percent, with an average 0.6 point, increasing from 3.22 percent the previous week. A year ago at this time, 15-year rates averaged 3.15 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgages: averaged 3.08 percent, with an average 0.4 point, up from 3.06 percent the previous week. Last year at this time, 5-year ARMs averaged 3.01 percent.
• 1-year ARMs: averaged 2.68 percent, with an average 0.2 point, holding the same as last week. A year ago, 1-year ARMs averaged 2.40 percent.

Source: Freddie Mac

Study: Americans Like to Live Near Mom

Daily Real Estate News | Monday, January 04, 2016 

 

Moms may have a big place in real estate decisions. The average American lives only 18 miles away from their mother, according to the 2008 Health and Retirement Study.
What’s more, the trend is likely to continue as baby boomers age and require more care from their adult children and two-income families require more help with child care, suggests a new report by New York Times staffers Quoctrung Bui and Claire Cain Miller.
“Over the last few decades, Americans have become less mobile, and most adults – especially those with less education or lower incomes – do not venture far from their hometowns,” according to The New York Times article.
America is filled with close-knit families, the data shows. Only 20 percent of Americans live more than a couple of hours from their parents.

Read more: 3 Reasons Why People Move

Families live closest in the Northeast and the South, and the farthest apart on the West Coast and in the Mountain States, the study found. Also, married people tend to live farther from their parents than singles. And, women are slightly more likely than men to leave their hometowns, the study finds.
Source: “The Typical American Lives Only 18 Miles From Mom,” The New York Times (Dec. 23, 2015)

The 30 Hottest Neighborhoods in the Nation

Daily Real Estate News | Monday, January 04, 2016

Booming tech sectors in pockets across the country are driving up home prices. Places like Portland, Ore., Seattle, San Francisco, Denver, and Boston in particular are seeing an influx of tech workers with money to spend, and they're prompting some fierce bidding wars.

Read more: Where Americans Are Moving To

Redfin recently highlighted the 30 most competitive neighborhoods of 2015. The rankings below are based on factors like the percentage of homes that sold above asking price, how quickly homes went under contract, and the percentage of offers that saw bidding wars.
For example, landing top on its list was Inman Square – located just outside of Boston in Cambridge – where homes stayed on the market a median of just seven days; 38 percent of homes sold to cash buyers; and 96 percent of the offers written by Redfin real estate agents saw bidding wars.
"It’s incredibly rare for a home in Cambridge not to get multiple offers,” says Katie Gustafson, a Boston real estate professional. “Offering over list price, waiving contingencies – buyers are doing everything they can to compete. My clients recently won a bidding war in Washington Square by agreeing to let the sellers rent their home back for free for two months after closing, giving them a nice cushion to move out of the home and get settled into their new place.”
Below are the 30 most competitive neighborhoods of 2015.

Source: “Homebuyer Competition Was Crazy in 2015. These Four Cities Had it Especially Bad,” Redfin (Dec. 29, 2015)