Discussing possible relief for the low number of homes for sale may be around the corner, something new for buyers to worry about, homes may be getting smaller but that isn’t always a bad thing plus more!
Is Relief for the Housing Supply Shortage on the Way?
From First American:
As we analyze yesterday’s housing starts data, it’s important to also consider the impact of construction labor on the velocity of new home construction. The employment situation report, released earlier this month, reported an increase of 5,000 residential construction jobs between December 2017 and January 2018. The number of residential construction jobs is now 1.3 percent higher than a year ago. The growth in residential construction jobs supports further improvement in the pace of home building because building a home does not readily lend itself to outsourcing and automation.
Builders broke ground on more homes in January 2018 compared with January 2017. Housing completions, the number of net new homes added to the housing stock, also increased dramatically compared with a year ago. This signals some relief for the supply shortage. The rise in permits, the leading indicator of housing starts, in conjunction with the rise in construction employment this month, signals an upward trajectory for housing starts in 2018. Based on the data this month, construction employment has eased as a headwind to housing starts. Now that’s a great (housing) start to 2018!
Yes it is a great start for 2018! However, we still are not building enough homes to keep up with demand or population growth.
Besides, it isn’t just a lack of inventory that home buyers need to be concerned about…
Home Buyers Have Something Else To Worry About
From Business Insider:
The recently passed Tax Cuts and Jobs Act created anxiety about housing, since it reduced some of the benefits that homeowners enjoyed. However, the impact from the new tax law is most severe for high-priced homes, which make up just a minority of the market.
A bigger issue for most homebuyers is that interest rates are on the rise. Or, at least, there’s a growing consensus the era of being able to count on interest rates to stay low is nearing its end. For prospective homeowners, that means financing a mortgage could become more expensive over time.
While it is very true that mortgage rates have been increasing, I would not freak out yet. Mortgage rates are STILL low if you look way back to how high rates were in the not too distant past.
New Homes Getting Smaller
After increasing and leveling off in recent years, new single-family home size continued to decline during the final quarter of 2017. This pivot marks a reversal of the trend that had been in place as builders focused on the higher end of the market during the start of the recovery. As the entry-level market expands, NAHB expects typical new home size to decline further.
According to fourth quarter 2017 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area was slightly lower at 2,371 square feet. Average (mean) square footage for new single-family homes declined to 2,571 square feet.
I think it is a good sign that the entry level market is growing. If you look back in time, Americans were happy living in much smaller homes in the past.
There are advantages to having a smaller home but you will have to decide how much room you need versus how much you want.
Why Doesn’t Somebody Ask for Directions?
Forty percent (40%) of Likely U.S. Voters now think the country is heading in the right direction, according to a new Rasmussen Reports national telephone and online survey for the week ending February 15.
This is down three points from last week, which marked the highest level of optimism in almost a year. This finding ran in the mid- to upper 20s for much of 2016, and rose to the mid-to upper 40s for the first month of the Trump presidency.
I scanned through the data back to 2010 and it appears that the majority has thought America is headed in the wrong direction. So again I must ask, why don’t the politicians stop and ask for directions?
Are they oblivious to how most Americans feel or think? Or do they simply not care?
Or is it possible that Americans have become overly pessimistic about how things are and where things are headed?
Experts More Pessimistic about U.S. Housing Market Following New Tax Laws
From Zillow / Pulsenomics:
New changes to U.S. tax laws led 41 percent of survey respondents to lower their long-term expectations for the U.S. housing market, according to the 2018 Q1 Zillow® Home Price Expectations Survey.
The quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts and economists about their expectations for home price growth, and whether tax reform affected these predictions.
When asked how the new tax law impacted their five-year forecast for home values in the U.S., 41 percent of respondents said their overall housing outlook is now more pessimistic, while 31 percent of the panelists had a more optimistic view as a result of the tax reform. The remaining 28 percent of respondents said that tax reform did not change their outlook.
While I didn’t take part in this survey, the tax reform does not change my outlook for the housing market. But something that is much more important than what the experts or I think is what do consumers think?
Home Depot’s Earnings Powered by Strong U.S. Housing Market
Home Depot’s profit and revenue topped Wall street estimates for the sixth straight quarter as more shoppers visited the No.1 U.S. home improvement chain and, on average, spent more in an improving housing market.
The U.S. housing market has been on a winning streak, helped by rising employment and higher wages. That has encouraged homeowners to buy new homes or remodel existing ones, benefiting Home Depot and smaller rival Lowe’s.
This is a very good sign UNLESS Home Depot is kicking butt because lots of home owners are scared to sell their home. With the low level of inventory, it is a possibility that a home will go under contract before the sellers have found their next home.
This has always been a possibility but it an be overcome. I suggest reading
Well that is all I have time for today! Be sure to like or subscribe!