Discussing the latest report on home prices from CoreLogic, why now is a good time to sell a home, how air conditioning helps home values and much more…
US Home Prices Increased 7.1% YoY
Home prices increased nationally by 7.1 percent year over year from May 2017 to May 2018. On a month-over-month basis, prices increased by 1.1 percent in May 2018 – compared with April 2018.
Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 5.1 percent on a year-over-year basis from May 2018 to May 2019.
Dr. Frank Nothaft, chief economist for CoreLogic said:
The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes. During the first quarter, we found that about 50 percent of all existing homeowners had a mortgage rate of 3.75 percent or less. May’s mortgage rates averaged a seven-year high of 4.6 percent, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate.
The shortage of homes for sale does not seem to be affecting the demand from home buyers. In the same article, CoreLogic reported on a recent consumer housing sentiment study they conducted.
- 15% of homeowners want to buy a home in the next 12 months
- 28% of renters to buy a home in the next 12 months
- BUT only 11% of home owners want to sell
Frank Martell, president and CEO of CoreLogic said:
The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and purchase a home. Even in the most expensive markets, we found four times as many renters looking to buy than homeowners willing to sell.
The lack of homes for sell is not going to get better until more people want or need to sell their homes. Which should cause home prices to continue to increase…
Remember that CoreLogic is talking about the entire US and there report does NOT reflect what is happening in every local market. For example, in Anderson County SC:
|May 2017||May 2018|
|Number Homes Sold||234||224|
|Average Sold Price||$182,998||$199,741|
|Median Sold Price||$163,500||$169,750|
I must caution you that even these statistics are misleading since they are for ALL types of homes sold in Anderson County. You cannot compare apples to oranges when it comes to determining the value or list price of a home in ANY market!
If you have questions about real estate or home prices in Anderson County SC, Contact Me!
Why You Should List Your Home Now!
You just read how CoreLogic is reporting that demand from home buyers is very strong and that inventory is low in many areas.
There is currently a 4.1-month supply of homes for sale according to the most recent NAR Existing Home Sales Report. This remains lower than the 6-month supply necessary for a normal market, and 6.1% lower than last year’s inventory level.
Check out this chart showing how the number of homes for sale has decreased year-over-year inventory during the past year according to NAR’s data:
I must again caution you that this chart is based on data for the entire country and not the local market data that you need to know to make an informed decision.
Check out this chart using Western Upstate MLS data that shows the number of active listings in Anderson County from January 2013 to June 11 2018:
This chart is for ALL price ranges and ALL types of residential listings. But it does drive home that the number of homes for sale in our area is much lower than just a few years ago!
This is why NOW is a great time to sell your home. It does not matter what your reason is for wanting to sell, now is a good time to sell!
Home with Central AC Worth More
Nationally, 66.1 percent of homes listed for sale and sold over the past year have central air conditioning, selling for 2.5 percent — or $5,486 — more than comparable homes without central air. Buyers put a higher value on air conditioning than outdoor home features like a patio or deck. Air conditioning was listed as a required feature by 62 percent of buyers.
I cannot imagine living without AC during the summer months in South Carolina. Whether it is my house or my car, AC is a must with the heat we experience.
I can tell you that savvy or experienced home buyers will look at the type of HVAC system and think about the energy efficiency. Speaking of energy efficiency, check out 7 Cost-Effective Ways to Improve Water and Energy Efficiency
Share Buybacks Are Corporate Suicide
From INSEAD Knowledge:
When firms invest too heavily in buying back shares, there is likely to be trouble ahead.
The revival of supply-side economics, exacerbated by the election of U.S. President Donald Trump and his promises of pro-business reforms, is doing little to increase the rate of economic growth and improve returns for long-term investors, such as pension funds. In fact, the current management love affair with share buybacks is having quite the opposite effect.
We found that the more money a firm spends on buybacks, the less likely it is to grow over the long-term.
Something to think about since so many corporations have more money to invest because of the tax reform. Share buybacks don’t really add to economic growth like many of the other ways that corporations could use the money from the tax reform.
Share buybacks is more of a short term plan. Sadly, thinking about the long term is not common practice anymore…
The Value of Your Opinion
We all know someone who is convinced their opinion is better than everyone else’s on a topic – perhaps, even, that it is the only correct opinion to have. Maybe, on some topics, you are that person. No psychologist would be surprised that people who are convinced their beliefs are superior think they are better informed than others, but this fact leads to a follow on question: are people actually better informed on the topics for which they are convinced their opinion is superior?
People who think their opinions are superior to others are most prone to overestimating their relevant knowledge and ignoring chances to learn more.
Overall the research presents a mixed picture. It shows, as others have, that our opinions are often not as justified as we believe – even for the opinions that we are most confident are better than other people’s. On the other hand, it shows that people are responsive to feedback, and aren’t solely driven by confirmation bias when they seek out new information. The final picture is of human rationality that is flawed, but correctable, not doomed.
The ego is often the cause of bad decisions…
People Living in Rural Towns Happier Than City Dwellers
An interesting study found that people living in rural areas are happier than people living in cities. Which may sound strange since people living in cities have higher salaries and unemployment is lower.
But according to the research, city dwellers are 8 times less happy than people in rural areas. The study authors cite several reasons for the difference.
The reason that sticks out is that city dwellers spend more of their income on their housing. But there are drawbacks to living further out in the country.
You may want to read Home Buying: In Town or Out in The Country?
Small Business Optimism Remains High
The Small Business Optimism Index posted its sixth highest reading in survey history for the month of June, at 107.2, down 0.6 from May. Since December 2016, the Index has averaged an unprecedented 105.4, well above the 45-year average of 98 and rivaling the all-time high of 108.0 in July 1983.
NFIB President and CEO Juanita Duggan said:
Small business owners continue to report astounding optimism as they celebrate strong sales, the creation of jobs, and more profits. The first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow.
Excellent news and hopefully the strong level of small business optimism will continue!
Consumer Delinquencies Increase in Q1 2018
From ABA Banking Journal:
Bank card delinquencies began a slow return to normal levels in the first quarter of 2018 after falling across the board in the previous quarter, according to ABA’s Consumer Credit Delinquency Bulletin released today. The composite ratio, which tracks delinquencies in the closed-end installment loan categories (direct and indirect auto, home equity, marine, mobile home, personal, property improvement and RV loans) rose nine basis points to 1.73 percent of all accounts, remaining well below the 15-year average of 2.14 percent.
ABA Chief Economist James Chessen said:
Delinquencies have been so low for so long that it is not surprising to see them ease back toward more normal levels. We are still well below the 15-year average, but consumers should always maintain a cautious approach to credit. More jobs and better wages continue to be the key factors in keeping delinquencies low, and the economic fundamentals remain positive.
Not good but no need to panic at this time. This is only moving back towards a more normal level as Chessen said.
Well that is it for today! Sorry for the lack of posts lately but that just means I have plenty of stuff saved up to rant… I mean write about!