This Week in Real Estate: July 30, 2018

While the Census Bureau believes the national homeownership rate seems to be on a sustainable upward trend, homeowners who sold in Q2 2018 sold their home for the highest average price gain since Q3 2007. According to ATTOM Data Solutions’ Q2 2018 Home Sales Report released This Week in Real Estate, sellers in Seattle and Portland ranked third and fifth, respectively, with the highest average percentage gain. Below are a few highlights from the last full week of July that influence our business:

* Strong Owner Household Formations in the Second Quarter. According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate was 64.3% in the second quarter 2018. After dropping to a cycle low of 62.9% in the second quarter 2016, the national homeownership rate seems to be on a sustainable upward trend. Compared to the peak of 69.2% in 2004, the homeownership rate is lower by five percentage points. The count of total households, however, increased to 121 million in the second quarter 2018 from 119 million at the same period in 2017. The gains were predominantly driven by owner households, while renter households only increased 146,000. The homeownership rates among all age groups under 54 increased over the last year. Household ages 45-54 registered the largest gains among all households, a 1.3 percentage points increase from a year ago. The homeownership rates of millennials, mostly first-time homebuyers, continued the upward growing trend, from 35.3% to 36.5%. It suggests that millennials are gradually returning to the for-sale housing market. However, current homeownership rates for adults ages under 35 are still 5.4 percentage points lower than before the Great Recession. Households ages 35-44 experienced a 1.2 percentage points increase on an annual basis. The number of homeowner households has been rising since the third quarter 2016, while the number of renter households has been on the downward trend. In the second quarter 2018, the number of homeowners increased by 2.2 million, while the number of renter households rose by 146,000.
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* U.S. Median Home Price Appreciation Decelerates in Q2 2018 to Slowest Pace in Two YearsATTOM Data Solutions released its Q2 2018 U.S. Home Sales Report on Thursday, which shows that U.S. single family homes and condos sold for a median price of $255,000 in the second quarter, up 6.3 percent from a year ago to a new all-time high but the slowest annual appreciation since Q2 2016. “Annual home price appreciation nationwide has now slowed for five consecutive quarters following a post-election spike to double-digit appreciation in the first quarter of 2017,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Although home sellers are still in the driver’s seat of this housing market, moderating home price appreciation is good news for prospective homebuyers and signals that rising mortgage rates and other housing headwinds are cooling red-hot home price appreciation in some areas.” Annual home price appreciation in Q2 2018 decelerated from the previous quarter in 80 of the 122 metros (66 percent) analyzed for median home prices, including Los Angeles, Chicago, Dallas-Fort Worth, Houston and Philadelphia. Counter to the national trend, annual home price appreciation accelerated from the previous quarter in 42 of the 122 metros analyzed (34 percent), including New York, Washington, D.C., Boston, San Francisco and Detroit. Among 122 metropolitan statistical areas analyzed in the report, those with the biggest year-over-year increase in median prices were San Jose, California (up 25.0 percent); Flint, Michigan (up 23.7 percent); Seattle, Washington (up 14.3 percent); Boise, Idaho (up 14.3 percent); and San Francisco, California (up 14.2 percent). Homeowners who sold in Q2 2018 sold for an average of $58,000 more than their original purchase price, the highest average home seller price gain since Q3 2007. Among 147 metropolitan statistical areas analyzed for average home seller gains, those with the highest average percentage gain were San Jose, California (116.6 percent); San Francisco, California (85.0 percent); Seattle, Washington (76.5 percent); Boston, Massachusetts (64.3 percent); and Portland, Oregon (62.1 percent).
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* Foreign Buyers Lessen Their Investments in U.S. Real Estate. Ongoing housing shortages and rising home prices are prompting international buyers to pause in their recent home buying sprees in the United States. International sales in the U.S. totaled $121 billion from April 2017 to March 2018, a 20 percent decline from a year ago, the National Association of REALTORS® reports. Foreign buyers and recent immigrants accounted for 8 percent of existing home sales, a decrease from 10 percent during the 12-month period that ended March 2017, according to NAR’s 2018 Profile of International Transactions in U.S. Residential Real Estate.  “After a surge in 2017, we saw a decrease in foreign activity in the housing market in the latest year, bringing us closer to the levels seen in 2016,” says Lawrence Yun, NAR’s chief economist. “Inventory shortages continue to drive up prices, and sustained job creation and historically low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes.” Foreign buyers usually purchase properties that are pricier than the average existing home. The median price for a foreign buyer was $292,400 compared to a median price of $249,300 for all existing homes. Chinese buyers tend to purchase the most expensive properties in the U.S. at a median price of $439,100. Five countries comprised nearly half—49 percent—of the dollar volume of purchases by foreign buyers: China, Canada, India, Mexico, and the United Kingdom. China—for the sixth consecutive year—continued to have the largest dollar volume of purchases. Still, Chinese buyers’ involvement in the market decreased; they purchased an estimated $30.4 billion in residential property in the U.S., a drop of 4 percent from last year.
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Have a productive week.



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