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Homebuilders Say Major Uptick Coming

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 29, 2016

Steady job growth, low mortgage rates, and pent-up demand is prompting an increase in the demand for new single-family homes, and homebuilders say they're ready to build them.

That said, builders say they’re being met with plenty of headwinds that could subdue some construction, such as a shortage of lots and labor and tight access to construction and development loans.

Read more: Starter Homes May Be Coming Back, After All

"Builders remain cautiously optimistic about market conditions," says Robert Dietz, chief economist of the National Association of Home Builders, in a Spring Construction Forecast Webinar on Thursday. "2016 should be the first year since the Great Recession in which the growth rate for single-family production exceeds that of multifamily. And we see single-family growth accelerating in 2017 as the supply side chain mends and we can expand production."

NAHB forecasters predict that single-family production will see a 14 percent uptick this year to 812,000 units, and then rise another 19 percent to 964,000 units in 2017.

Single-family starts will reach 64 percent of historically normal levels by the fourth quarter of this year and rise to 77 percent of normal by the end of 2017, NAHB reports. By the end of 2017, the top 20 percent of the largest states will reach at least 102 percent of normal single-family production levels, compared to the bottom 20 percent, which likely will still remain below 65 percent, NAHB reports.

"Consumer surveys suggest the ultimate goal of millennials is to purchase a single-family home in the suburbs," says Dietz. "We see growth for single-family looking ahead. The recovery continues and is dictated by demand side conditions and supply side headwinds." 

Source: National Association of Home Builders

Home Ownership Rate Nears Record Lows

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 29, 2016

The home ownership rate made gains in the second half of 2015, but that progress was muted in the latest report from the U.S. Census Bureau. The first quarter of this year saw the home ownership rate back on the decline, plummeting to 63.6 percent, the third lowest on record.

Read more: A Troubling Shortage of Homes

For comparison, in 2004, home ownership soared to a high of 69.4 percent.

The nation continues to wait on younger Americans to make a move. Home ownership among those aged 25 to 34 years old is nearly 10 percentage points lower than it was a decade ago.

One factor in the drop in home ownership is the burden of student loan debt.

"The rising student loan debt is holding back first-time buyers, still hovering around 30 percent of all home buyers rather than the typical 40 percent," says NAR's Chief Economist Lawrence Yun in hismost recent column for Forbes. "That is why the home ownership rate still remains at near 50-year lows at 63.6 percent in the first quarter. Among those aged under-35 the ownership rate fell even more markedly and was 34.2 percent in the latest quarter."

Many would-be home owners are also faced with rental stress due to a four year streak of rents outpacing wage growth.

"Rental affordability remains a big problem in many places, and that makes it harder to save for a down payment," Jed Kolko, an independent economist and senior fellow at the Terner Center for Housing Innovation at University of California, Berkeley, told CNBC. "We're still seeing relatively few first-time home buyers because young people are buying homes later than they used to. Some of this is a long-term shift toward marrying and having children later in life. Some of this is that the recovery has been slow among young adults."

However, home ownership rates among older Americans is on the rise, the data shows.

Household formation is also increasing. But two-thirds of the uptick is due to renters while one-third is from new households in owner-occupied homes, according to the Census data.

The data showed that the home ownership rate is highest in the Midwest, where homes tend to sell at the lowest prices. The home ownership rate is then lowest in the West, where homes tend to be sold at some of the highest prices in the country.

Source: "First Quarter Housing Market Trends," Forbes (April 29, 2016), “Homeownership Rate Falls to Third Lowest on Record,” MarketWatch (April 28, 2016) and "Home Ownership Near Its Lowest in History," CNBC (April 28, 2016)

Can Social Media Find the Next Hot 'Hood?

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 29, 2016

There are many ways to keep abreast of changes in neighborhoods as you're hoping to find the next hidden gem, and researchers in Britain say they have found a new one: activity on social media.

Instead of driving around looking for activity or eavesdropping at Starbucks, according to a team at the University of Cambridge, monitoring posts on Twitter and check-ins on Foursquare offers a reliable way to see where "social diversity" is pointing to an increase in a neighborhood's popularity.

Read more: The 30 Hottest Neighborhoods in the Nation

The researchers took data from about 37,000 users and 42,000 venues in London, totaling more than half a million check-ins over a 10-month period. Gathered first in 2010, the data was sufficient to predict that London's Hackney district would gentrify. Four other districts, also predicted by the change in data between 2010 and 2015, are now seeing what the research team calls "house prices rising far above the London average, fast-decreasing crime rate and a highly diverse population."

An Engadget article explained, "If many people start visiting unfamiliar locations in materially-deprived neighborhoods (say, trendy new restaurants) with their friends, that's usually a good sign that these areas will be gentrified before long. Accordingly, places that are dominated by locals and regulars tend to resist that shift, no matter the income levels."

The research team points to multiple benefits of its study: Tourists could enjoy a very local experience or prefer an area where people meet and mingle, while cities could plan growth in a way that improves real estate values across the neighborhoods while keeping longtime locals in place.

Source: "You can predict city gentrification through check-ins and tweets," Engadget.com (April 16, 2016)

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Mortgage Rates Inch Slightly Higher

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 29, 2016

Fixed-rate mortgages were on the rise this week, but the 30-year fixed-rate remains well below 4 percent.

"Treasury yields marched higher this week. As a result, the 30-year mortgage rate jumped 7 basis points to 3.66 percent,” says Sean Becketti, Freddie Mac’s chief economist. “The Federal Reserve's decision to leave the Federal funds rate unchanged triggered a 9 basis point drop in the 10-year Treasury yield on Wednesday, however the drop occurred too late to impact this week's survey."

Freddie Mac reports the following national averages with mortgage rates for the week ending April 28:

• 30-year fixed-rate mortgages: averaged 3.66 percent, with an average 0.6 point, rising from last week’s 3.59 percent average. Last year at this time, 30-year rates averaged 3.68 percent.
• 15-year fixed-rate mortgages: averaged 2.89 percent, with an average 0.6 point, increasing from last week’s 2.85 percent average. A year ago, 15-year rates averaged 2.94 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.86 percent, with an average 0.5 point, up from last week’s 2.81 percent average. A year ago, 5-year ARMs averaged 2.85 percent.

Source: Freddie Mac

12 Markets Where Investor Activity Is High

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 29, 2016

Investors have set their sights on Birmingham, Ala. The metro has the highest share of institutional investors in the country, and has seen a whopping 582 percent year-over-year increase in activity.

That said, the share of institutional investors – entities who purchase at least 10 single-family homes and condos in one calendar year – is shrinking nationwide. Still, a few pockets across the country are seeing elevated numbers persist.

Read more: Investors Upbeat, Yet Cautious About 2016

Overall, institutional investors accounted for 2.6 percent of all single-family and condo sales nationwide in the first quarter, down 3.4 percent from a year ago, according to RealtyTrac.

However, among 110 metro areas with at least 1,000 single family and condo sales in the first quarter, the following had the highest share of institutional investor purchases, according to RealtyTrac’s First Quarter 2016 U.S. Cash & Institutional Investor Housing Market Report:

1. Birmingham-Hoover, Ala: 9.9%
2. Augusta-Richmond County, Ga.-S.C.: 7.4%
3. Memphis, Tenn.-Miss.-Ark.: 7%
4. York-Hanover, Pa.: 6.9%
5. Atlanta-Sandy Springs-Roswell, Ga.: 6.7%
6. Mobile, Ala.: 5.9%
7. Flint, Mich.: 5.9%
8. Cleveland-Elyria, Ohio: 5.9%
9. Akron, Ohio: 5.6%
10. Indianapolis-Carmel-Anderson, Ind.: 5.5%
11. Albuquerque, N.M.: 5.5%
12. Little Rock-North Little Rock-Conway, Ark.: 5.5%

Source: RealtyTrac

Keller Williams Sees Increase in Agent Count

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 29, 2016

Keller Williams is expanding its workforce in big numbers. The franchise surpassed 139,000 associates in the first quarter of this year. What’s more, its net agent count rose a whopping 36 percent compared to the first quarter of 2015.

In fact, Keller Williams reports that the franchise added more net agents in March than in any month in the company’s history.

Read more: 2015 Residential Franchise Report

“By focusing on the activities that generate results, our associates are expanding their market share and building momentum during months when real estate traditionally goes backward,” John Davis, Keller Williams’ president, said in a statement about the first quarter’s results. “They’re turning winter into summer and creating new opportunities for themselves and their families.”

The company posted a net gain of 4,989 agents in the first quarter. Keller Williams’ officials tout that it is the world’s largest real estate franchise by agent count.

In the first quarter, Keller Williams agents closed 182,676 transactions, a 19 percent increase compared to a year ago. Agents closed $49.1 billion in sales volume, up 24 percent from the first quarter of 2015.

“With record listings taken and contracts written, we’re confident our best days are to come,” says Chris Heller, CEO of Keller Williams.

Source: Keller Williams

3 Ways Sellers Can Show Off Outdoor Space

DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 13, 2016

Take a close look at your listing from the eye of a home buyer. Are the bushes overgrown around the front windows? Has the mulch all washed away? Is the paint on the shutters fading?

These are the questions Jon Coile, chairman of the multiple listing service MRIS in Rockville, Md., asks in a recent column at The Washington Post that aims to help sellers examine the exterior of their homes. Here are some simple ways to solve common curb appeal issues:

Check out some more sources for amping up your listings’ curb appeal:

• Boost Curb Appeal with $100 in 4 Easy Steps
• 5 Ways to Add Condo Curb Appeal
• 5 Ways to Upgrade a Landscape for Less Than $1,000
• 10 Easy Staging Tips for Curb Appeal
• Welcome Back the Front Porch
• Make Sellers’ Landscaping Stand Out

Stick to similar plant groupings. Aim for a continuous flow with a landscape. “It can often make small spaces feel much larger,” Coile says. To do this, select only few different types of plants for the landscaping, instead of selecting a wide variety. The majority of the landscaping should consist of similar plants so the landscape doesn’t look look broken up into too many different sections, Coile notes. Then, feel free to use a small number of accent pieces to add color and visual interest.

Use visual markers. Visual markers help draw buyers’ eyes from one end of the yard to another. “The easiest way to do this is to lay a path that subtly transitions in the same places the yard does, at slight changes in elevation or where shaded areas transition to open sun,” Colie notes. “If that isn’t possible, then a few strategically placed taller plants, subtle decorations, or lighting fixtures can create the same impression.”

Show off the entertainment value. Show grassy areas where kids can play safely as well as places where adults can socialize, Coile writes. Consider these features for an added touch to show the possibilities of a space: Fire pits and outdoor gas flames, outdoor speakers, or a wet bar near a grill.

Source: “How to Enhance Your Home’s Curb Appeal,” The Washington Post (April 11, 2016)