Bidding Wars Return

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WASHINGTON – March 26, 2015 – The number of home sales that included a bidding war is trending upward. Thirty-three percent of all sales were at or above the asking price, which often indicates more than one bidder was involved in the transaction, according to data from the National Association of Realtors^® (NAR).
That's the highest rate since 2006.
A lack of houses for sale largely led to the current upswing in bidding wars. The for-sale housing inventory has been at about 1.8 million properties for the past three years. Prior to that, inventories were roughly double, reaching a peak of about 3.5 million properties in 2007.
Housing inventories are down by some of the largest amounts year-over-year in Las Vegas; Key West, Fla.; Colorado Springs, Colo.; Palm Bay, Fla.; and Columbus, Ohio, according to realtor.com's January National Housing Trend Report.
Why such a low inventory? Some homeowners delay putting their homes on the market and opt instead to stay put until they recover more equity, which has been showing signs of improvement lately.
And while inventories remain tight, buyer demand is on the rise. An improving economy causes more potential homebuyers to enter the market.
"The result is higher prices and buyers jousting with one another to make the winning offer," Bloomberg reports.
Source: "The Bidding Wars Are Back," Bloomberg (March 18, 2015)

New - Home sales surge in February

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WASHINGTON (AP) – March 24, 2015 – Sales of new U.S. homes in February climbed to their fastest pace in seven years, as an otherwise dormant housing market showed fresh signs of life.
The Commerce Department said Tuesday that new-home sales shot up 7.8 percent last month to a seasonally adjusted annual rate of 539,000, the strongest performance since February 2008. January sales were revised up nearly 4 percent to a rate of 500,000.
Other parts of the housing market have struggled since 2015 got off to a frigid start, despite historically low mortgage rates and a sharp, yearlong upswing in hiring. The shift upward in purchases of newly built homes may suggest that the job growth is spilling over to other parts of the economy.
"The housing market remains in recovery mode and that activity for the rest of the year is likely to improve at a modest, albeit choppy, pace," said Blerina Uruçi, an analyst at the bank Barclays.
The strong increase came from the South and, surprisingly, the Northeast, which was hammered by snowstorms last month. Buying fell in the Midwest and West last month. The median sales price rose 2.6 percent since February 2014 to $275,500.
Still, fierce winter weather has led builders to pull back on the pace of single-family housing starts and shutter construction sites. And sales of existing homes in the first two months of 2015 are running behind the already weak pace set last year, according to the National Association of Realtors.
Housing starts plummeted a seasonally adjusted 17 percent last month from January, with the biggest drops coming in the snowbound Northeast and Midwest, the Commerce Department reported last week.
Builders have also been more focused on the rental market, as high prices have cut into the pool of potential buyers. Approved permits in February to start construction on single-family houses fell to their lowest annual rate in eight months, while permits for apartments surged to a 10-month high.
But the increase in sales of newly built homes indicates that construction may need to ramp up. Just 4.7 months' supply of new homes are on the market, a sign that inventories are unusually tight before the start of the spring buying season when open houses become more crowded and sales increase.
The supply of existing homes is also tight, with an available supply of just 4.6 months compared to a historic average of around 6 months, the Realtors said Monday. The shortage of listings has caused prices of existing homes to climb 7.5 percent over the past year to a median of $202,600, pricing out many would-be buyers who lack the income needed to save for a downpayment.
Because of limited supply and rising prices, existing homes sold at an annual pace of 4.88 million homes in February, slightly below the (overall 2014 rate) of 4.93 million.
Still, historically low mortgage rates and rock solid job growth has raised expectations among many economists of home sales continuing to improve with the weather.
Over the past 12 months, employers have been adding an average of about 275,000 new jobs each month, as the unemployment rate has fallen to 5.5 percent from 6.7 percent, according to the Labor Department. The hiring has increased the total number of paychecks in the economy and the potential number of homebuyers.
Average 30-year fixed rates were 3.78 percent last week, according to the mortgage giant Freddie Mac. That average has plunged from a 52-week high of 4.41 percent, which should help to make housing more affordable.

Baby Boomer housing a hot market over next decade

ScottSorensonRealEstate.Com

 

NEW YORK– March 2, 2015 – Sixty-five percent of retirees say they're living in the best homes of their lives, according to a new Merrill Lynch study conducted in partnership with Age Wave.
But many retirees – free from work and family restrictions – will choose to move. The study, "Home in Retirement: More Freedom, New Choices," found that 64 percent of retirees are likely to move at least once during retirement, with 37 percent having already done so and 27 percent planning to relocate.
"How and where our nation's aging population chooses to live will have widespread implications on the way homes are designed, the resources people will need, and how communities and businesses nationwide should prepare," says Andy Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch.
During the next decade, the number of age 65+ households in the U.S. will increase by nearly 11 million, while growth in the number of households across all other age groups will be less than 2 million. Powerful demographic forces, including the massive baby boomer generation now moving into their retirement years and increasing longevity leading to longer retirements, is driving the growth among older households.
The new research explores priorities and concerns of retirees and pre-retirees when choosing the type of homes and communities they hope to live in during retirement.
Home free in retirement
Through most people's lives, where they reside is determined in large part by work and family. However, as people enter their late-50s and 60s, they approach and begin to cross what the study calls the "Freedom Threshold," with retirement representing a gateway to unprecedented freedom to choose where to live:

• By age 61, most people feel free to choose where they most want to live.
• Retirees (67 percent) are more than twice as likely to say they're free to choose where they want to live compared to pre-retirees (30 percent).
• Four out of five (81 percent) Americans age 65+ are homeowners, and among them, 72 percent have fully paid off their mortgage.

Retirees on the move: The "downsize surprise"
Retirees' top motivations for moving include being closer to family (29 percent), reducing home expenses (26 percent), and changes in health (17 percent) or marital status (12 percent):

• Many people assume they'll downsize once retired. However, the study found that half (49 percent) of retirees didn't downsize in their last move – and, in fact, 30 percent moved into larger homes.
• Retirees' top reasons for upsizing were to have a home large and comfortable enough for family members to visit (33 percent) or even live with them (20 percent). According to the study, one out of six retirees (16 percent) today has a "boomerang" child who moved back in with them.
• Retirees who did downsize (51 percent) cite greater freedom from the financial (64 percent) and maintenance (44 percent) burdens of a larger home among their top reasons.

Among retirees who do not plan to move during retirement, the top reasons include a deep emotional connection to their home (54 percent), close proximity to family (48 percent) and friends (31 percent), a desire to remain independent (44 percent), or because they simply can't afford to move (28 percent).
Prior to age 55, more homeowners say the financial value of their home outweighs its emotional value. As people age, however, they become far more likely to say their home's emotional value is more important – a reason cited by nearly two out of three people (63 percent) age 75 and older.
Retirement hotspots
Among people age 65+ who moved last year, most (83 percent) chose to remain in the same state; however, roughly one out of six (17 percent) relocated to a different state:

• Sixty percent of pre-retirees anticipate staying in the same state or region, while the remaining 40 percent see retirement as a chance to try living in a new part of the country.
• To a large degree, where pre-retirees say they want to stay or move to in retirement mirrors where today's retirees say they are the happiest. For instance, roughly four out of five pre-retirees living in both the South Atlantic (80 percent) and Pacific (77 percent) regions say they want to continue living there in retirement – two of the top three regions where current retirees give the highest marks among ideal places to live.
• Among pre-retirees who want to move to a different region once retired, the South Atlantic is the clear winner – with 39 percent saying they would most want to move to that region, followed by the Mountain (25 percent) and Pacific (16 percent) regions.

Fla. consumer confidence surges higher in Jan.

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GAINESVILLE, Fla. – Jan. 30, 2015 – Consumer sentiment among Floridians rose sharply to 93.3 in January – almost 6 points higher than December's reading, according to a new University of Florida (UF) monthly survey.
However, much of that increase occurred because of recent changes in how UF economists collect survey data, says Chris McCarty, director of UF's Survey Research Center in the Bureau of Economic and Business Research.
In the past, UF researchers used landline telephones to contact survey respondents since the first survey in 1985. "During those years, we minimized the changes to our methodology to maintain an index that reflects changes in consumer attitudes, rather than changes in method," McCarty says.
Today, however, only 53 percent of American households still have a landline, while 89 percent now own cell phones, according to the Center for Disease Control and Prevention. To keep up with this shift, many survey organizations have switched to a cell-phone-only policy to contact respondents. Among them is the University of Michigan, which measures consumer sentiment nationally. It made the change this month.
UF's survey methods align more closely with the Michigan index than with the Conference Board's Consumer Confidence Index that comes out on the last Tuesday of each month.
"Given the University of Michigan's shift in methodology and the start of a new year, we decided now is the time to implement it, too," McCarty says. "It is also a good time because of the relatively stable economic environment both in Florida and nationally."
A move to cell phones means "the sample of respondents more closely matches the demographics of the state," McCarty said. "In addition, we weight the results of our cell phone survey by county, age, sex and minority status, so that the results match the distribution of these same variables in the state."
The overall effect, he said, is an increase in consumer sentiment, as younger respondents are more represented.
That rise occurred in all five indexes that are used to compile a single number in UF's January survey. Respondents' overall perception that their personal finances are better now than a year ago was 78.5, while their expectations of enjoying better personal finances a year from now was 100.7.
Their confidence in U.S. economic conditions over the next year registered 95.5, while their trust in its performance over the next five years was 92.1. Survey takers' perception that now is a good time to buy major household items was 99.5.
The bureau made other changes in how it reports consumer confidence.
"To match the University of Michigan national release, we will now post our results the last Friday of the month rather than the last Tuesday, which the Conference Board – an independent, business-member and research association – uses for its consumer confidence release," McCarty says. "We are also reporting the first decimal rather than rounding the result up or down."
UF economists will also now break the index down by households making more or less than $50,000 a year, rather than using the previous figure of $30,000. The revised number more nearly matches the median income for Florida households, McCarty says.
However, a change in methodology changes only partly explains the dramatic increase in confidence this month.
"Overall, the economy has improved for most consumers and lifted consumer sentiment," McCarty says. Retail sales for the holiday season, for instance, rose 4.7 percent from 2013. Job gains and a declining labor force caused Florida's unemployment rate to dip to 5.6 percent in December, matching the U.S. unemployment figure. The median price for an existing single family home rose to $185,000 in December after a two-month decline, while interest rates remain at historically low levels. The stock market is near record highs.
Gas prices, which plummeted in January, now average just over $2 a gallon and provide a big windfall for consumers. "The last time gas prices were this low was at the end of the Great Recession in 2009 when demand for gas sank," McCarty says. UF economists anticipate gas prices will stay low, and housing prices will remain stable for the near future. They also expect the Federal Reserve to raise short-term interest rates by June, a move that will ultimately translate into higher mortgage and loan rates.
"Until then, we expect consumer sentiment to continue to rise," McCarty predicts.

Forecast: 2015 Fla. economy, housing market strong

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ORLANDO, Fla. – Jan. 22, 2015 – "Has Florida found the secret to saving the economy?" That May 2014 headline in The Wall Street Journal shows how far the state has come since 2007 and points to a bright future in 2015, according to Florida Department of Economic Opportunity Executive Director Jesse Panuccio.
Panuccio was one of the business and economic leaders who spoke to Realtors^® from across Florida Wednesday at Florida Realtors 2015 Economic Summit, which kicked off the association's Mid-Winter Business Meetings at the Renaissance Orlando Resort at SeaWorld. Other featured speakers included Ted Jones, chief economist and senior vice president for Stewart Title Guaranty Company; and Dr. Brad O'Connor, economist and director of economic research for Florida Realtors.
"Things have changed quite remarkably for this state," Panuccio said. "The U.S. Census recently announced that Florida has officially become the third most populous state … about 800 people move to the state each day now. Why are they moving here? We're a destination state again – people feel they can make a future here, and that's good for Florida, the economy and the real estate industry."
Over the past year, Florida's private sector growth rate was 3.4 percent, second only to Texas among the largest states, Panuccio noted. The economic recovery has been broad-based across all industries, and job growth has been consistent across every region.
"Our labor force is growing over four times faster than the national labor force (over the past year)," he said. "Of the 10 largest states, we are the fastest-growing labor force in the country." In November 2014, Florida's unemployment rate was 5.8 percent.
Looking at the national economy as well as Florida's economic future, Ted Jones said he is "bullish on what's ahead for 2015." Why? He pointed to several current positive factors: more jobs than anytime in the history of the U.S.; 58 percent of new jobs pay more; mortgage interest rates, while rising, remain highly affordable; significant demographic demand – think millennials; and continued strong population growth.
Jobs remain key, Jones said. "There were 2.95 million total jobs added in the U.S. over the last 12 months. To beat that growth period, you'd have to go back to 1999. We created 246,000 jobs in each month of the last 12 months. Here in Florida, we expect between 2.2 to 2.4 percent total job growth in the next year. I'm trying to tell y'all you're setting yourself up for a great year next year."
Jones added that a major plus for Florida's future is that the state has the 5th best business climate in the nation, according to a recent tax comparison study conducted by the Tax Foundation.
Florida's housing sector
Florida Realtors' statewide housing data indicates that the market is now growing along "normal" trend lines, according to Dr. Brad O'Connor, meaning that the pace of sales, median sales price increases and other statistics show moderate, sustainable growth.
"For the first time in a couple of years, we're seeing new listings outpace sales," he said. "Months supply has returned to hover between 5 to 6 months, which historically we say is a 'balanced' market. In 2013, we saw rapid price increases; in 2014, we saw a return to more historic levels of 4 to 5 percent price increases. Investor participation has started to decline again, slightly. However, as house prices have gone down, rents have gone up, so some of these investment properties remain attractive to rent out."
According to O'Connor, Florida's Realtors should keep these considerations in mind for 2015:

• Sales growth has slowed but remains positive (expect to see about 10 percent growth)
• New listings outpaced sales enough to bring inventories back into balance
• Growth in home values has returned to historical rates
• Investor participation is starting to decline (slightly)
• New construction is back, but only in some areas
• International sales remain robust
• Shadow inventory continues to decline

NAHB 2015 forecast: A more robust year for housing

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LAS VEGAS – Jan. 21, 2015 – A strengthening labor market, low interest rates, improving mortgage availability and growing pent-up demand will help to significantly boost single-family housing production in the year ahead and move the housing recovery to higher ground, according to economists speaking at the International Builders' Show in Las Vegas today.
Economic growth was near 4 percent for the last half of 2014 and employment gains averaged more than 250,000 per month last year, NAHB Chief Economist David Crowe said – primary factors that have helped consumer confidence jump back to pre-recession levels.
"The signs point to a more robust year for housing," Crowe said. "Household balance sheets are returning to normal levels, homeowners' equity is increasing and significant pent-up demand is rising. More than 7 million existing home sales were postponed or lost during the downturn; and while some are lost forever, we should see some catch-up."
The 2015 forecast

• NAHB projects 993,000 total housing starts in 2014, up 6.7 percent from last year's total of 930,000 units.
• Single-family production is expected to rise 26 percent in 2015 to 804,000 units; but "while a good beginning, this is still well below a normal level of 1.3 to 1.4 million single-family starts," Crowe said.
• On the multifamily front, NAHB anticipates 358,000 starts in 2015 – a 2 percent increase.
• The sale of new single-family homes is expected to hit 564,000 this year, a 29.3 percent increase above last year's 436,000 in sales.
• Residential remodeling activity is expected to register a 3 percent gain.
• The ongoing housing recovery will see single-family starts steadily climb from 49 percent of normal production at the end of the third quarter of 2014 to 90 percent of normal by the end of 2016, Crowe said.
• Examining the recovery on a state level, the top 40 percent of states will be back to near normal production levels by the end of 2016, compared to the bottom 20 percent, which will still be below 75 percent.

Where are all the new households?
David Berson, chief economist at Nationwide Insurance, said the number of new household formations was far fewer in the current economic expansion than in previous recoveries.
"Given the job growth we've seen in 2014, there should have been better household formations," he said, adding that the slower pace may be because "the real acceleration in job growth has occurred just recently – in the last six months."
As the economy and job growth continue to strengthen in 2015, Berson said this will be a "significant factor to encourage people who have doubled up to move out on their own."
Moreover, he noted that the real slowdown in household formations has come from the Millennials, who have suffered disproportionately from stagnant wage growth and student debt. However, he added that this key demographic is getting older and ready to set down roots. "The leading edge are now in their young 30s," said Berson. "Homeownership desire is much higher for those who are in their 30s than those in their 20s."
A rising economy lifts housing
Freddie Mac Chief Economist Frank Nothaft also foresees a good year for housing.
"We're projecting 3 percent economic growth in 2015, which would only be the second year in the last decade that we've seen growth at that level," said Nothaft. "A stronger economy supports a rise in household formation and home buying."
Not quite as bullish as NAHB, Nothaft expects that housing starts will rise about 15 percent in 2015, and that home sales will be up 4 percent, which would be the best year for home sales since 2007. He added that nationwide home prices this year should increase about 3.5 percent to 4 percent above last year's level.
With 30-year mortgages currently running at about 3.75 percent, Nothaft called them "dirt cheap" and said he expects rates to rise this year but remain at affordable levels.
"If we see economic growth running at 3 percent at an annualized rate, the Federal Reserve should begin to push up short-term interest rates by the second half of 2015," said Nothaft. "We see mortgage rates going up to 4.5 percent on the high side at the end of this year, going from dirt cheap to cheap. Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth."

U.S. home construction up 4.4% in Dec.

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WASHINGTON (AP) – Jan. 21, 2015 – Construction of new homes rebounded in December, helping to push activity for the entire year to the highest level since the peak of the housing boom nine years ago.
Builders started construction at a seasonally adjusted annual rate of 1.09 million in December, an increase of 4.4 percent from November when unusually severe weather pushed activity down a revised 4.5 percent, the Commerce Department reported Wednesday.
For all of 2014, builders started construction on 1.01 million new homes and apartments, an increase of 8.8 percent from 2013. It was the first time construction has topped 1 million since the height of the housing boom in 2005, when builders started work on 2.07 million homes. Construction activity plunged to 587,000 in 2010 and has been making a slow recovery since then.
For December, construction of single-family homes rose 7.2 percent while the smaller apartment sector, which can be volatile from month to month, fell 0.8 percent.
Applications for building permits dropped 1.9 percent in December to 1.03 million after a 3.7 percent decline in November.
Despite the recent weakness in building permits, economists are forecasting continued gains in home construction in 2015. That optimism stems from rising employment and favorable demographics that are expected to drive future construction as more young people decide to purchase a home.
The National Association of Home Builders/Wells Fargo builder sentiment index slipped in January to a reading of 57, down from a revised reading of 58 in December. Readings above 50 indicate that more builders view sales conditions as good rather than poor.
Broader economic trends point favorably to future sales. The unemployment rate fell to 5.6 percent in December, the lowest point since 2008, as nearly 3 million jobs were created last year in the best performance since 1999.
And mortgage interest rates remain near historic lows. The 30-year fixed rate mortgage just dropped for a third consecutive week, falling to 3.66 percent, its lowest level since May 2013.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data compiled by the home builders.