This Week in Real Estate: May 29, 2018

The National Association of Realtors 2018 midyear forecast was released This Week in Real Estate, predicting a moderate and multi-year increase in home sales despite some headwinds. Below are a few highlights from the fourth week of May that influence our business:

* Home Sales, Prices to Rise Despite Inventory, Affordability Challenges. A stronger economy, wage growth and an improving job market are expected to march home sales and prices higher in 2018, but low supply and weakening affordability will tamper the rate of increases, according to speakers at a residential real estate forum during the 2018 Realtors Legislative Meetings & Trade Expo. Lawrence Yun, chief economist of the National Association of Realtors®, presented his 2018 midyear forecast and said despite headwinds a moderate and multiyear increase in home sales is likely ahead. After accelerating 3.8 percent in 2016, existing home sales rose only 1.1 percent to 5.5 million in 2017 and are forecast to finish 2018 at a pace of around 5.6 million (up 1.8 percent). He projects 5.7 million sales for 2019. Home price growth, up 48 percent from 2011 to 2017 and likely to rise an additional 4 percent in 2018.

* Who Is Tomorrow’s Borrower? What We’re Learning Might Surprise YouThe borrower of the future is affected, and in many ways shaped, by current and emerging demographic and generational trends. For example: The digital age has allowed for work to be done from anywhere. And more Americans today work two or three different jobs, versus being full-time, salaried employees. By the year 2020, it’s estimated that 43% of all workers will be freelancers, either by choice or because of new business models. With more millennials now living with their parents than with a spouse, they represent a reservoir of pent-up demand for housing. And although some boomers are downsizing for economic reasons or moving to be closer to family, many are choosing to “age in place.” America is on track to become a “majority-minority” country. This demographic shift will result in Hispanic Americans making up 50% of first-time homebuyers by 2020. And multi-generational household trends are increasing, with children, parents and grandparents living under one roof.

* Single-Family Home Size Increases at the Start of 2018. Counter to the recent prevailing trend, new single-family home size increased at start of 2018. New home size had been falling over the last two years due to an incremental move to additional entry-level home construction. According to first quarter 2018 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area increased to 2,436 square feet. Average (mean) square footage for new single-family homes increased to 2,641 square feet. Since cycle lows (and on a one-year moving average basis), the average size of new single-family homes is 10% higher at 2,602 square feet, while the median size is 14% higher at 2,392 square feet. The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.

This Week in Real Estate: May 29, 2018

The National Association of Realtors 2018 midyear forecast was released This Week in Real Estate, predicting a moderate and multi-year increase in home sales despite some headwinds. Below are a few highlights from the fourth week of May that influence our business:

* Home Sales, Prices to Rise Despite Inventory, Affordability Challenges. A stronger economy, wage growth and an improving job market are expected to march home sales and prices higher in 2018, but low supply and weakening affordability will tamper the rate of increases, according to speakers at a residential real estate forum during the 2018 Realtors Legislative Meetings & Trade Expo. Lawrence Yun, chief economist of the National Association of Realtors®, presented his 2018 midyear forecast and said despite headwinds a moderate and multiyear increase in home sales is likely ahead. After accelerating 3.8 percent in 2016, existing home sales rose only 1.1 percent to 5.5 million in 2017 and are forecast to finish 2018 at a pace of around 5.6 million (up 1.8 percent). He projects 5.7 million sales for 2019. Home price growth, up 48 percent from 2011 to 2017 and likely to rise an additional 4 percent in 2018.

* Who Is Tomorrow’s Borrower? What We’re Learning Might Surprise YouThe borrower of the future is affected, and in many ways shaped, by current and emerging demographic and generational trends. For example: The digital age has allowed for work to be done from anywhere. And more Americans today work two or three different jobs, versus being full-time, salaried employees. By the year 2020, it’s estimated that 43% of all workers will be freelancers, either by choice or because of new business models. With more millennials now living with their parents than with a spouse, they represent a reservoir of pent-up demand for housing. And although some boomers are downsizing for economic reasons or moving to be closer to family, many are choosing to “age in place.” America is on track to become a “majority-minority” country. This demographic shift will result in Hispanic Americans making up 50% of first-time homebuyers by 2020. And multi-generational household trends are increasing, with children, parents and grandparents living under one roof.

* Single-Family Home Size Increases at the Start of 2018. Counter to the recent prevailing trend, new single-family home size increased at start of 2018. New home size had been falling over the last two years due to an incremental move to additional entry-level home construction. According to first quarter 2018 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area increased to 2,436 square feet. Average (mean) square footage for new single-family homes increased to 2,641 square feet. Since cycle lows (and on a one-year moving average basis), the average size of new single-family homes is 10% higher at 2,602 square feet, while the median size is 14% higher at 2,392 square feet. The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.

This Week in Real Estate: May 14, 2018

According to Fannie Mae’s most recent Home Purchase Sentiment Index released This Week in Real Estate, housing confidence hits a new all-time high. Below are a few highlights from the second week of May that influence our business:

* Housing Confidence Hits New All-Time High. The Fannie Mae Home Purchase Sentiment Index (HPSI) rose 3.4 points in April to 91.7, marking a new all-time survey high. The increase can be attributed to increases in five of the six HPSI components. The net share of respondents who said now is a good time to buy a home was the only component that decreased, falling 3 percentage points compared to March. However, the net share who reported that now is a good time to sell a home increased 6 percentage points month over month. Additionally, the net share who said home prices will go up in the next 12 months increased 7 percentage points in April, while the net share of consumers who said mortgage rates will go down over the next 12 months increased 4 percentage points. Americans expressed an increased sense of job security, with the net share who say they are not concerned about losing their job increasing 5 percentage points this month. Finally, the net share reporting that their income is significantly higher than it was 12 months ago increased 1 percentage point in April. “The latest HPSI reading edged up to a new survey high, showing that consumer attitudes remain resilient going into the spring/summer home buying season,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “High home prices and good economic conditions helped push the share of Americans who think it’s a good time to sell to a fresh record high.
* House Search Takes Many Months, But Buyers Do Not Intend to Give Up. The Housing Trends Report (HTR) is a new research product created by NAHB’s Economics team to track prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. 17% of adults responding to our poll in the first quarter of 2018 reported to be planning the purchase of a home in the next 12 months. A follow-up question asked that group if they were already actively trying to find a house or still just in the planning stage: 42% said their house search was in full throttle, down from the 67% of prospective buyers who said to be actively searching in the last quarter of 2017. A breakdown of first quarter 2018 results by generation shows that, of the 19% of Millennials who said to be planning a home purchase within the next year, about half (49%) are already actively engaged in the search for a home, making them the most likely generation to be currently involved in trying to find a house (and not just planning it). The poll also revealed that prospective buyers actively looking for a home are spending considerable amounts of time house hunting. In fact, more than half have been trying to find the right home for three months or longer: 51% in the first quarter of 2018 and 62% in the last quarter of 2017.

* Conventional Loan Share Reaches Decade High. NAHB analysis of the most recent Quarterly Sales by Price and Financing published by the U.S. Census Bureau reveals that conventional loans accounted for 73.8% of new home sales in the first quarter of 2018, the highest share in a decade. Conventional loans financed over three-quarters of new home sales in the second quarter of 2008 before steadily falling and bottoming out at 57.3% in the third quarter of 2010. The share has steadily risen since then and has been above 71% each of the last seven quarters. FHA-loans financed 11.6% of new home sales during the first quarter of 2018, down from 12.5% in the prior quarter and from 14.8% in Q3 2017. Since its most recent peak in Q1 2016, the share of sales financed with FHA-backed mortgages has fallen 5.5 percentage points. Cash purchases accounted for 9,000 new home purchases, 5.2% of total new home sales. The aggregate 1.6% decline in the share of sales financed by FHA loans and cash was mostly due to the 1.6% rise in conventional mortgage market share.
Have a productive week.

Jason


This Week in Real Estate: May 7, 2018

Home values and employment continue their favorable trajectory as reported by CoreLogic and the Bureau of Labor Statistics. All 50 states realized year-over-year price appreciation in March while unemployment fell to the lowest rate since 2001 in April. Below are a few highlights from the first week of May that influence our business:

* Remodeling in 2017: Baths Reclaim Top Spot from Kitchens. May is National Home Remodeling Month.  Following the tradition established in recent years, the month’s first related post covers the most common types of remodeling projects performed by NAHB Remodelers during the previous calendar year.  Results come from a special question on NAHB’s Remodeling Market Index (RMI) survey for the first quarter of 2018. The results show kitchen and bathroom remodeling continuing to duel for the top spot.  In the latest survey, 81 percent of NAHB’s remodelers cited bathrooms as one of their most common projects in 2017, slightly higher than the 78 who cited kitchen remodeling.  Previously, bathrooms had edged out kitchens in 2014 and 2015.  Kitchens then slid to the top in 2016 before the two switched positions again in the most recent numbers.  As in previous years, other remodeling jobs on the list in 2017 trailed baths and kitchens by a substantial margin.  The second tier included whole house remodeling (cited as a common project by 49 percent of remodelers), room additions (37 percent), and window or door replacement (30 percent). Although the whole house remodeling and room addition percentages were down year-over-year, they remain relatively strong compared to the rest of their post-downturn history.
* CoreLogic Reports Home Prices Up Again in March, This Time by 7 PercentCoreLogic released its Home Price Index (HPI) and HPI Forecast for March 2018 Tuesday, which shows home prices rose both year over year and month over month. Home prices increased nationally by 7 percent year over year from March 2017 to March 2018, while on a month-over-month basis, prices increased by 1.4 percent in March 2018 – compared with February 2018 – according to the CoreLogic HPI. All 50 states gained value year over year in March; with Nevada joining Washington at 12.6 percent. Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 5.2 percent on a year-over-year basis from March 2018 to March 2019. “Home prices grew briskly in the first quarter of 2018,” said Dr. Frank Nothaft, chief economist for CoreLogic. “High demand and limited supply have pushed home prices above where they were in early 2006. New construction still lags historically normal levels, keeping upward pressure on prices.”

* Modest Job Gains in April. In April, job gains increased by 164,000 and the unemployment rate fell to 3.9%, the lowest rate since 2001. The average job growth was 200,000 for the first four months in 2018, higher than last year’s average of 182,000. Meanwhile, the unemployment rate edged down to 3.9% in April, after six consecutive months at 4.1%. Monthly employment data released by the BLS Establishment Survey indicates that construction rose by 17,000 jobs in April, after the 10,000 decline in March. Residential construction employment is now 2.80 million, broken down as 785,000 builders and 2 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 14,717 a month. Over the last 12 months, home builders and remodelers have added 125,500 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 818,300 positions. After reaching a peak rate of 22% in February 2010, the unemployment rate for the construction sector has been trending downwards and remains historically low.
Have a productive week.

Jason


This Week in Real Estate: April 30, 2018

According to the Census Bureau’s Housing Vacancy Survey released This Week in Real Estate, the U.S. homeownership rate is on a “sustainable upward trend” at 64.2%, just 2.1% below the 25-year average rate of 66.3%. Below are a few highlights from the fourth week of April that influence our business:

* Homeownership Rate Stable at 64%. According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate was 64.2% in the first quarter 2018, which is statistically no different from its last quarter reading. The rate of homeownership appears to be on a sustainable upward trend after reaching a cycle low of 62.9% in the second quarter of 2016. Compared to the peak of 69.2% in 2004, the homeownership rate is still down 5%, and remains below the 25-year average rate of 66.3%. On an annual basis, homeownership increased among all age groups under 55. The share of millennial who own a home increased from 34.3% a year ago to 35.3% in the first quarter 2018. However, it slipped 0.7% from a three-year high of 36% in the last quarter 2017.The homeownership rates of households ages 35-44 experienced a 0.8% increase, followed by the 0.6% gains registered by households ages 45-54. The non-seasonally adjusted homeowner vacancy rate remained low at 1.5% in the first quarter 2018, down by 0.1% from last quarter 2017. At the same time, the national rental vacancy rate held at 7%.

* Existing-Home Sales Climb 1.1 Percent in MarchExisting-home sales grew for the second consecutive month in March, but lagging inventory levels and affordability constraints kept sales activity below year ago levels, according to the National Association of Realtors. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.1 percent to a seasonally adjusted annual rate of 5.60 million in March from 5.54 million in February. Despite last month’s increase, sales are still 1.2 percent below a year ago. Lawrence Yun, NAR Chief Economist, says closings in March eked forward despite challenging market conditions in most of the country. “Robust gains last month in the Northeast and Midwest – a reversal from the weather-impacted declines seen in February – helped overall sales activity rise to its strongest pace since last November at 5.72 million,” said Yun. The median existing-home price for all housing types in March was $250,400, up 5.8 percent from March 2017 ($236,600). March’s price increase marks the 73rd straight month of year-over-year gains. Existing-home sales in the West declined 3.1 percent to an annual rate of 1.23 million in March, but are still 0.8 percent above a year ago. The median price in the West was $377,100, up 7.9 percent from March 2017.

* Mortgage Rates Climb to Highest Level in Over Four Years. Freddie Mac released the results of its Primary Mortgage Market Survey on Thursday, showing average mortgage rates continuing the upward trajectory seen in most of early 2018. Sam Khater, Freddie Mac chief economist, says mortgage rates increased for the third consecutive week, climbing 11 basis points to 4.58 percent. “Mortgage rates are now at their highest level since the week of August 22, 2013,” he said. “Higher Treasury yields, driven by rising commodity prices, more Treasury issuances and the steady stream of solid economic news, are behind the uptick in rates over the past week.” Added Khater, “Despite the increase in borrowing costs, demand for home purchase credit remains solid. The Mortgage Bankers Association reported in their latest mortgage applications survey that activity was up 11 percent from a year ago.”
Have a productive week.

Jason


This Week in Real Estate: April 23, 2018

Homeowners continue to realize significant returns as a percentage of their original purchase price as reported This Week in Real Estate in ATTOM Data Solutions Q1 2018 Home Sales Report. The average home seller in the first quarter of this year realized a 29.5% return as a percentage of original purchase price. Below are a few highlights from the third week of April that influence our business:

* Small Gain for Housing Starts in March. Total housing starts increased slightly in March, led by multifamily construction strength. Starts increased 1.9% to a 1.32 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD. However, the pace of single-family starts declined in March, falling 3.7% to an 867,000 seasonally adjusted annual rate, due to lingering weather effects in some parts of the nation. The three-month moving average for single-family starts remained near a post-recession high rate of construction (889,000). These recent trends for single-family starts match ongoing healthy levels of the NAHB/Wells Fargo Housing Market Index, now registering a score of 69.  For the first quarter of 2018, single-family starts are 7% higher than this time in 2017, in-line with forecast for modest gains. Single-family permits were down 5.5% in March, although are recording a 5.3% improvement thus far in 2018 relative to this time in 2017.

* Most States Record YTD Single Family Permits Growth in February 2018. Over the first two months of 2018, the total number of single-family permits issued nationwide reached 123,871. On a year-over-year basis, this is an 11.2% increase over the February 2017 level of 111,356. The results from theSOC are similar, single-family permits over the second month of 2018 was, 122,800 which is 10.2% ahead of its level over the same period of 2017, 111,400. Between February 2017 to February 2018, 34 states saw growth in single-family permits issued while there was no change in New Hampshire. Seventeen states, including California, recorded a growth above 11.2% but 15 states, including New Jersey, Connecticut and Illinois, as well as the District of Columbia registered a decline. Idaho had the highest growth rate during this time at 53.9% while single-family permits in the District of Columbia declined by 51.0%. In the single-family sector, Texas led with 19,893 permits issued year-to-date in February 2018 and Florida was second with 13,964 during this time. Meanwhile the lowest number came from the District of Columbia with 24 permits.  The 10 states issuing the highest number of single-family permits combined accounted for 64.0% of the single-family permits issued.

* 54% of U.S. Metros Post Median Home Prices Above Pre-Recession Peaks in Q1 2018. On Thursday ATTOM Data Solutions released its Q1 2018 U.S. Home Sales Report, which shows that median home prices in 57 of 105 metropolitan statistical areas analyzed in the report (54 percent) were above their pre-recession home price peaks in the first quarter. Nationwide the median home price of $240,000 in Q1 2018 was less than 1 percent below its pre-recession peak of $241,500 in Q3 2005, but still up 9.1 percent from a year ago. Among the 105 metropolitan statistical areas analyzed in the report, those posting the biggest year-over-year increase in median home prices were San Jose, California (up 33 percent); Flint, Michigan (up 20 percent); Spokane, Washington (up 18 percent); Reno, Nevada (up 17 percent); and Seattle, Washington (up 16 percent). U.S. homeowners who sold in Q1 2018 realized an average home price gain since purchase of $53,369, down from an average gain of $54,000 in Q4 2017 but still up from an average gain of $45,000 in Q1 2017. The average home seller gain of $53,369 in Q1 2018 represented an average 29.5 percent return as a percentage of original purchase price, down from a 29.8 percent return in the previous quarter but still up from a 25.7 percent return in Q1 2017. Among 154 metropolitan statistical areas analyzed in the report, those with the highest average home seller returns in Q1 2018 were San Jose, California (109.1 percent); San Francisco, California (73.6 percent); Seattle, Washington (66.0 percent); Kahului-Wailuku-Lahaina, Hawaii (65.3 percent); and Vallejo-Fairfield, California (58.8 percent).
Have a productive week.

Jason


Spring Home Staging Tips to Sell your Home

SpringHomeStagingTips

 

Spring brings the promise of a fresh start. It provides many opportunities for home staging and is a time when many buyers hone in on a home. Make your home attractive to buyers with these spring staging tips.

Fresh flowers for vibrant color

Flowers are an integral part of spring and should be added both indoors and outdoors. Freshly-cut flowers in reflective glass vases add an instant spring feeling to a home. Botanical prints and colors in yellow or light-green shades also give rooms a spring-like feel. Create bright flowerbeds to brighten landscapes and add curb appeal. Display floral paintings and décor to help spruce up properties for the season.

Natural scents

Scents have a great emotional impact on people, so it is important to integrate them into the home. Choose fragrances that evoke fresh and clean energy with aromatherapy diffusers, natural potpourri or candles. Citrus (orange, lemon, grapefruit), vanilla, lavender, and freshly-cut lilac flowers are good choices. Stay away from strong synthetic smells that might bother those with chemical sensitivities.

Cleaning is essential

Every inch of the home should tell buyers that it is in tip-top shape. Windows should be thoroughly cleaned, cobwebs removed, and musty odors banished. Declutter (inside and outside) to make the property airy, light, and spacious. Avoid putting junk into closets, as prospective buyers will think the property doesn’t have enough storage.

Spruce up the back door

The back door should be as beautiful as the front to give potential buyers the same cheerful feeling they got when they first entered the home. Containers of potted bulbs on the back steps, deck table, or grassy areas near the house can be used to add color to spaces that have not fully grown in. Display a spring-themed welcome sign or door mat for a cheery touch.

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This Week in Real Estate: April 16, 2018

While foreclosure activity continues to decrease year-over-year reaching pre-recession levels, analysis of U.S. Census Bureau data from the Pew Research Center revealed This Week in Real Estate multigenerational households hit an all-time high in 2016. Below are a few highlights from the second week of April that influence our business:

* Number of Multigenerational Households Hit All-Time High. The share of Americans living in multigenerational households, homes with two or more adult generations, hit an all-time high in 2016, according to a new analysis of U.S. Census Bureau data from the Pew Research Center. In 2016, the number of multigenerational households increased to 20% of the U.S. population, or 64 million people, an all-time high. In 2009, about 51.5 million Americans, or 17% of the population lived in multigen households, which rose to 60.6 million, or 19% of the population in 2014.
* U.S. Foreclosure Activity Decreases 19 Percent in Q1 2018 to Stay Below Pre-Recession Levels for Sixth Consecutive QuarterATTOM Data Solutions released its Q1 2018 U.S. Foreclosure Market Report on Thursday, which show a total of 189,870 U.S. properties with a foreclosure filing during the first quarter of 2018, up 4 percent from the previous quarter but still down 19 percent from a year ago and 32 percent below the pre-recession average of 278,912 per quarter from Q1 2006 – Q3 2007 – the sixth consecutive quarter where U.S. foreclosure activity has been below its pre-recession quarterly average. The report also shows a total of 74,341 U.S. properties with foreclosure filings in March 2018, up 21 percent from an all-time low in the previous month but still down 11 percent from a year ago – the 30th consecutive month with a year-over-year decrease in U.S. foreclosure activity. 
* Record Commercial/Multifamily Volume in 2017. Multifamily mortgage financing was the big winner overall in what was a record setting year for commercial and multifamily originations. The Mortgage Bankers Association (MBA) said a record $530.1 billion in loans were closed in 2017, an 8 percent gain from 2016. The largest share of lending, more than half of the volume closed, was for multifamily properties at $233.9 billion. Loans for office buildings were second followed by retail, hotel/motel, industrial, and health care properties. Ninety-six percent of the dollar volume went to first mortgage liens. “2017 was a very strong year, driven by solid property fundamentals, rising property values, low interest rates, and a ready supply of mortgage capital all contributing to extraordinarily attractive finance markets,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “We expect another robust year in 2018, even with the slight increase in interest rates, although perhaps not quite as robust as 2017.”
Have a productive week.

Jason


This Week in Real Estate: April 2, 2018

Favorable news with respect to pending home sales activity and jobs This Week in Real Estate as the spring selling season begins in earnest. Below are a few highlights from the last week of March that influence our business:

* Pending Home Sales Rebound. After a slow start to the year, the Pending Home Sales Index increased 3.1% in February, but remains 4.1% below a year ago. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts reported by the National Association of Realtors. The PHSI increased to 107.5 in February from a downwardly 104.3 in January. The PHSI increased by 10.3% in the Northeast and 3.0% in the South, as well as 0.7% in the Midwest and 0.4% in the West. Year-over-year, the PHSI is lower in all four regions by 1.5% in the South, 2.2% in the West, 5.1% in the Northeast and 9.5% in the Midwest. NAR suggested that the expanding economy and healthy job market continue to generate demand, despite the tight inventory, increasing prices, and rising mortgage rates. February existing home sales increased 3% in February, and although flat, February new home sales were up 2% year-over-year. Builder confidence remains on solid footing as growing demand is expected to spur continued growth in new residential construction.
* Millenials Will Spend 45% of Income on Rent Before Age 30. As rent prices continue to rise, a new study shows Millennials are paying about 45% of their total income toward rent, and pay out close to $100,000 toward rent before they turn 30. Analyzing U.S. Census Bureau data going back as far as 1974, a new study from RentCafé found that Millennials have been the hardest generation for those ages 22 to 30. And the future does not look bright for Generation Z. As it turns out, Millennials pay about $92,600 in rent by the time they turn 30. While they may earn more in income compared to previous generations, they also have to spend more on rent, the study showed. While Baby Boomers paid just 36% of their income toward rent while in their 20s, Gen Xers paid 41% and Millennials now pay 45% of their monthly income toward rent.
* U.S. Jobless Claims Drop to More Than 45-Year Low. The number of Americans filing for unemployment benefits fell to more than a 45-year low last week, suggesting the economy remains strong despite signs of a slowdown in the first quarter. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 215,000 for the week ended March 24, the lowest level since January 1973, the Labor Department said on Thursday. Claims have now been below the 300,000 threshold, which is associated with a strong labor market, for 158 straight weeks. That is the longest such stretch since 1970, when the labor market was much smaller. The labor market is considered to be near or at full employment. The jobless rate is at a 17-year low of 4.1 percent, not too far from the Federal Reserve’s forecast of 3.8 percent by the end of this year.
Have a productive week.

Jason


This Week in Real Estate: March 26, 2018

The Board of Governors of the Federal Reserve System published it’s most recent Survey of Consumer Finances This Week in Real Estate concluding that the primary residence represents the largest asset category on the balance sheets of households. Below are a few highlights from the third week of March that influence our business:

* Homeownership is Key to Household Wealth. According to the 2016 Survey of Consumer Finances (SCF), nationally, the primary residence represents the largest asset category on the balance sheets of households in 2016. At $24.2 trillion, the primary residence accounted for about one quarter of all assets held by households in 2016, surpassing other financial assets (20%), business interests (20%) and retirement accounts (15%). The 2016 Survey of Consumer Finances (SCF) was published by the Board of Governors of the Federal Reserve System. Compared to the quarterly Financial Accounts of the United States (previously known as the Flow of Funds Accounts), which provides aggregate information on household balance sheets, the SCF provides family-level data about U.S. household balance sheets and is available every three years. This post uses the 2016 data from the Survey of Consumer Finances (SCF) to analyze household balance sheets, especially their primary residence, by age categories. Total assets were $3.7 trillion for households under age 35, while they were $35.6 trillion for households aged 65 or older. The aggregate value of assets held by families where the head was aged 65 or older was approximately 10 times larger than those held by families where the head was under the age of 35. The increases in the total assets among age groups indicate that the value of assets grows with age groups. Among homeowners under the age of 45, home equity was the largest category of the household’s net worth (the sum of medians does not equal the median of the total). However, for homeowners above the age of 45, non-primary residence equity eclipses home equity as the larger portion of net worth, reflecting the accumulation of other assets by homeowners in later life stages.
* Permits Rise in January 2018. Over the first month of 2018, the total number of single-family permits issued nationwide reached 61,767. On a year-over-year basis, this is a 15.1% increase over the January 2017 level of 53,648. The results from the SOC are similar, single-family permits over the first month of 2018 was, 61,100 which is 14.0% ahead of its level over the same period of 2017, 53,600. Between January 2017 to January 2018, 32 states and the District of Columbia saw growth in single-family permits issued. Twenty states recorded a growth above 15.1% but 18 states had a decline in growth. Idaho had the highest growth rate during this time at 101.6% while single-family permits New Hampshire declined by 43.1%. In the single-family sector, Texas led with 10,119 permits issued year-to-date in January 2018 and Florida was second with 7,300 during this time. Meanwhile the lowest number came from the District of Columbia with 21 permits. The 10 states issuing the highest number of single-family permits combined accounted for 65.0% of the single-family permits issued. Year-to-date, ending in January 2018, the total number of multifamily permits issued nationwide reached 34,907. This is 3.6% ahead of its level over the first month of 2017, 33,679. The results from the SOC show an increase of 9.8% in multifamily permits over the first month of 2018, 37,000 compared to the same period of 2017, 33,700. Between January 2017 to January 2018, 27 states recorded growth while 23 states and the District of Columbia recorded a decline in multifamily permits.
* Move Over Millenials, Gen Z is Already Buying Homes. Who’s afraid of growing up? Apparently not Generation Z. The post-Millennial crop of kids, those born in 1995 and later, are already moving into homeownership. For Gen Z it is very early in the traditional homebuying cycle, but TransUnion reports they already held 99,000 mortgages in the 4th quarter of 2017. This was dwarfed of course by the 12 million Millennials, but members of the much smaller Generation X had 24 million mortgages, as did nearly 27 million baby boomers and 5.1 million members of the Silent Generation. They might be young, but these buyers seem to take homeownership seriously. Just 1.2 percent are more than 60 days past due on their mortgages while the average for Millennials is 1.6 percent. Mortgages held by Generation Xers are running 2.3 percent non-current and baby boomers have a 60-day delinquency rate of 1.6 percent.
Have a productive week.

Jason


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