Discussing home prices, a promising outlook for real estate, why there is a shortage of homes for sale. online mortgages getting popular, and construction employment rises!
US Home Prices Increase 6.7% YoY
From Clear Capital:
Nationally, quarter-over-quarter (QoQ) home price growth experienced no change from March, maintaining one percent growth for April. All data reported uses Clear Capital’s patent-pending QoQ measurement. This measurement uses the newest data to create timely indices in rolling quarter intervals, which significantly reduces multi-month lag time that may be experienced with other indices.
This is good news for 2 reasons: home prices are still increasing but they are increasing at a slower pace. The slowdown in home price appreciation will help people saving to buy a home.
Remember this is talking about home prices across the entire US. For example, if we look at the same rolling quarters that Clear Capital does for Anderson County, we see that home prices increased 3.97%.
But of course, this is for ALL of the homes sold during a rolling 3 month period for the entire county. You must look closer to determine the value of a specific property.
Outlook for Real Estate is Promising
Interesting stuff in the latest ULI Real Estate Economic Forecast:
They are projecting continued economic expansion over the three forecast years, with GDP growth averaging 2.4 percent a year.
Single-family housing starts are projected to increase from their 2017 level of 848,300 units to 923,000 in ‘18, and 987,500 in ’19. This brings annual starts to just below their long-term average and completes eight-straight years of growth. Starts are then projected to moderate back to 925,000 in ‘20.
Survey respondents expect home prices to rise an average of 5.3 percent in 2018 and 4.3 percent in 2019, both above the 20-year average annual growth rate of 4.0 percent.
The economists/analysts expect continued healthy economic expansion over the 3 forecast years as well as slightly lower unemployment rates, though they expect employment growth to slow as the economy approaches full employment.
The ULI Real Estate Economic Forecast is based on a semi-annual survey of 48 of the nation’s leading economists and industry analysts. Pretty encouraging stuff and they cover much more so follow the link and check it out.
Why Aren’t There More Homes for Sale?
With the strong demand for homes, you would think we would see more people wanting to sell. But Mark Fleming at First American explains why we are not seeing more homes for sale:
In March, the housing market continued to underperform its potential. Actual existing home sales are 4.5 percent below the market potential for home sales, according to our Potential Home Sales model. The lack of supply is the primary culprit. The inventory of homes for sale in most markets remains historically tight, yet demand continues to rise as millennials further age into homeownership. Limited supply and rising demand means house prices are surging, so why aren’t more existing homeowners selling their homes?
There are two reasons why existing homeowners have become prisoners in their own castles – the rate lock-in effect and the seller’s prisoner’s dilemma.
So what does this mean? Well many home owners have a super low mortgage rate on their current home. Many home owners think if they sell their current home and buy another home, they will have a higher mortgage rate.
The seller’s prisoner’s dilemma refers to how many home owners are not selling because of the limited inventory. They are scared their home may sell before they can find a home to buy.
I would also say there is a third reason and that is the low number of affordable new homes being built. There are several reasons for this including the high regulatory burden that home builders must pay and the shortage of qualified construction workers.
Both of these are compelling reasons but it is a seller’s market. If you wanted to move up to a more expensive home or downsize, now is a great time to sell!
The key thing is that there is a BIG difference in the real estate market if you compare more expensive homes to starter and mid-level homes. Check out the differences between the luxury/premium home market and the starter/trade-up market:
The supply of premium or luxury homes is increasing and this will cause home prices to cool. But with starter and trade-up homes, the limited inventory is causing home prices to increase!
We are seeing extremely strong demand in the Anderson area for starter or mid level homes. But if we look at higher priced homes, the demand is not as strong and the prices are not growing as quickly.
Still, home prices in Anderson County are still growing, no matter which price range or type of home we look at.
Online Mortgages Getting More Popular
Interesting findings about home buyers in BofA’s Homebuyer Insights Report:
More consumers would be comfortable applying for a mortgage digitally (32 percent) than dating online (20 percent)
52 percent of respondents would apply or have already applied for a mortgage via mobile or online
Nearly all first-time buyers feel technology will play a role during every stage of homebuying, including researching (98 percent), getting a mortgage (94 percent), and negotiating and buying (92 percent)
Consumers are most likely to seek a homebuying experience that is efficient (64 percent), simple (59 percent) and personalized (51 percent)
One thing that sticks out to me is that home buyers mentioned personalized experience. A machine is not going to be able to compete with a human when it comes to dealing with people, their emotions and last minute hiccups.
Technology is great but as of today, you need to work with real live people when buying or selling a house. You may want to read Why Using a Real Live Mortgage Professional Is Best
Construction Employment Rises in 38 States YoY
Thirty-eight states and the District of Columbia added construction jobs between March 2017 and March 2018, while 29 states added construction jobs between February and March, according to an analysis by the Associated General Contractors of America of Labor Department data released today. Association officials said the job gains are coming amid strong private-sector demand and new public-sector investments in school and airport construction.
AGC chief economist Ken Simonson said:
Construction employment continues to expand in most parts of the country as private-sector demand remains strong and limited, new public investments in infrastructure are beginning to have an impact. The two greatest risks to future construction job growth are a lack of available, qualified workers and the potential impacts of new tariffs being imposed by and on the United States.
Good news but once again we heard about tariffs causing problems. With the shortage of affordable homes, we do not need anything, whether it is tariffs or a shortage of qualified workers, hurting new home construction.
That is it for today! If you have any questions about buying or selling a home in the Anderson area, please Contact Me!