Discussing the latest Pending Home Sales report, why now is a good time to sell a home, why home ownership matters, zombie foreclosures and more!
Pending Home Sales Decrease YoY
NAR reported today that pending home sales were unchanged in September 2017 from August 2017. But activity declined on an annual basis both nationally and in all major regions. The Pending Home Sales Index was unchanged from a downwardly revised August figure.
The index is now at its lowest reading since January 2015 and is 3.5% below a year ago. The really scary thing is it has fallen on an annual basis in five of the past six months.
The low inventory of homes for sale is the main reason for the decreases. After yesterday’s good news about new home sales, this is a move in a different direction.
2 Reasons to Sell Your Home Now
Recently, we got 2 reports from NAR that might be construed as bad news. Last week, we learned that existing home sales are 15% lower than they were at the same time last year.
Then today, we hear that the number of pending home sales has decreased…
And the cause for both of the annual decreases is the lack of homes for sale! The number of homes for sale has decreased year-over-year for the last 28 consecutive months.
NAR’s Chief Economist Lawrence Yun recently said:
Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country.
Realtors® this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings – especially at the lower end of the market – and fast-rising prices that are straining the budgets of prospective buyers.
We are seeing the same issue in the Anderson area. Homes that are priced correctly and marketed properly are selling quickly.
This does not mean that buyers can be unreasonable or unrealistic. But it does mean that NOW is a good time to sell for many home owners…
If you have any questions about selling a home in the Anderson SC area, please contact me!
Why Home Ownership Matters
As of the second quarter of 2017, the homeownership rate stood at 63.9 percent, essentially at near 50-year lows. The continued low rate of homeownership is disappointing and disheartening because many surveys consistently show that a clear majority of people still aspire for homeownership. To many, owning a home is a major life goal and a milestone in achieving the American dream. It brings financial benefits (“not throwing away money on rent”), is a major source of household wealth (homeowners have 40 times net worth than renters), and brings much personal satisfaction (stability, safety, etc.).
I know I sound like a broken record sometimes talking about the positive benefits of home ownership. Here are some highlights from the latest latest volume of the Journal of the Center for Real Estate Studies:
86% of current renters want to own a home in the future, and for young renters, age 34 and younger, this share was 96%.
In 2015, less than half of African-American and Hispanic households owned their homes. In contrast, 71% of non-Hispanic whites were homeowners.
While homeownership is not limited to those with higher incomes, households with lower incomes face barriers such as too few homes in lower price ranges in locations near their place of employment.
Consistent findings show that homeownership does make a significant positive impact on educational achievement.
Several researchers have found that homeowners tend to be more involved in their communities than renters.
Studies of homeownership and health outcomes found that homeowners and children of homeowners are generally happier and healthier than non-owners, even after controlling for factors such as income and education levels that are also associated with positive health outcomes and positively correlated with homeownership.
Recent studies have found that the wealth building effect of homeownership and the sense of control it provides to homeowners in a stable housing market affect homeowners’ mental and physical health in a positive way.
I am sure some will say this is NOT an unbiased look at home ownership since it comes from NAR. However, they have two and half pages of references to studies from sources other than NAR.
If we really are concerned about inequality issues in America, then we need to look at how to ensure more people can enjoy the social benefits of home ownership. Plus, the wealth building effect of owning a home could help with some of the income inequality issues…
We just need to ensure this is done in a way that is sustainable and does not lead to another housing market meltdown.
Freddie Mac’s Serious Delinquency Rate Increased
From Freddie Mac:
Our single-family seriously delinquent rate increased from 84 basis points in August to 86 basis points in September. Our multifamily delinquency rate decreased from 3 basis point in August to 2 basis points in September.
This increase may be due to the hurricanes. While this isn’t good, we need to remain calm and just keep an eye on this.
More Baby Boomers Are Renting
From Rent Cafe:
National stats revealed that, between 2009 and 2015, the biggest changes in the renting population came from seniors aged 55 or over (up by 28%), compared to only a 3% increase in renters 34 or younger. By education, the highest increases were in renters holding a bachelor degree or higher (up by 23%), and by family type, in families with no minor children (up by 21%).
What do these three categories have in common? They all point to one group: empty-nest Baby-Boomers. Whether driven by a change in lifestyle, a consequence of the housing crash, or an inability to find affordable homes to downsize, senior households are embracing renting in droves.
This is an opportunity for investors to start adding properties that will appeal to Baby Boomers. Something else to consider is if Baby Boomers are moving into rentals, it means they are probably selling their homes.
Which could help with the low inventory problem…
Number of Zombie Foreclosures Decreases
From Attom Data Solutions:
The number of vacant “zombie” pre-foreclosure properties — which have started the foreclosure process but have not yet been repossessed by the foreclosing lender — decreased 22 percent from a year ago to 14,312 as of the end of Q3 2017, 67 percent below the peak of 44,030 in Q3 2013. The number of vacant bank-owned properties decreased 48 percent from a year ago to 24,026 as of the end of Q3 2017.
Daren Blomquist, senior vice president at ATTOM Data Solutions said:
Zombie foreclosures have dwindled dramatically over the last four years as a supply-starved housing has soaked up even some of the most highly distressed properties.
I can remember when we were in the darkest days after the housing market imploded how many zombie foreclosures there were. Even in Anderson County…
The decrease is good since it means fewer people are losing their homes and because zombie foreclosures have a negative effect on the surrounding property values.
FHFA House Price Index Increased
The FHFA just reported that from August 2016 to August 2017, U.S. house prices were up 6.6%! Check out the chart:
Great news for owners! Just remember this is talking about ALL houses across the entire country and may not reflect what has happened to home prices in your area.
Jobless Claims Increased Slightly
From the DOL:
In the week ending October 21, the advance figure for seasonally adjusted initial claims was 233,000, an increase of 10,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 222,000 to 223,000. The 4-week moving average was 239,500, a decrease of 9,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 248,250 to 248,500.
Remember the 4-week average is the number to watch and that we are still seeing the fallout from the hurricanes. Still, this is was a decent report and shows the labor market is tightening.
We still need to see more income growth for ALL Americans since home prices and rents are increasing faster than incomes in most areas. Eventually this will cause problems…
That is it for today. Please check back tomorrow as I will be posting the latest reports on mortgage rates plus much more!