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Realtors name February’s fastest housing markets

This spring home-buying season seemed to start early this year as 42% of homes sold in February were listed for less than a month, according to the National Association of Realtors’ blog, Daily Real Estate News.

Homes stayed on the market an average of 45 days in February, compared to the previous year when homes stayed on the market about 59 days, according to the blog.

And in fact, this increased speed looks to grow even faster as CoreLogic predicts this spring home buying season will be the strongest in recent memory.

Pending home sales already increased in February, and Ten-X predicted existing home sales will see an uptick in March.

However, home prices also continue to increase, causing Freddie Mac to predict affordability will hold back home sales this year.

But in Feburary, the fastest market saw homes flying off the market after an average of just 23 days. This infographic from NAR shows the top five fastest selling metros in the U.S. in February.

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Metro time

(Source: NAR)

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An inside look at Ben Carson’s listening tour

After being confirmed as Secretary of the U.S. Department of Housing and Urban Development, Ben Carson announced he would go on a listening tour across the nation.

Carson spent this week in the Dallas/Ft. Worth area. Thursday, the HUD secretary spent his afternoon at the Texas Rangers Youth Academy, where our own Ben Lane covered Carson’s speech explaining HUD’s mission is about more than housing.

Friday morning, Carson continued his Dallas stop, this time in downtown Dallas at Jubilee Park and Community Center Corp. Here, he stressed that education is key to improving housing conditions. Carson explained the demographic with the highest income per capita is Nigerians, who, he explained, are known for putting a strong emphasis on education.

However, the secretary’s comments stopped there. Friday, he spent his time listening to the community to hear what they had to say about the housing programs they use.

In the picture below, Carson, with Dallas Mayor Mike Rawlings on his right and House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas on his left, listened to different members of Dallas community groups as they explained their programs to him.

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Carson listening tour

At one point, Carson walked over to speak to one of the residents of the community. This resident, the “self-appointed, unofficial mayor” as one member of staff put it, smiled excitedly, and invited the secretary into her home.

The first picture shows Carson emerging from the home and the second photo shows the resident’s response after Carson left.

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Carson listening tourCarson listening tour

After the resident proudly showed Carson her home, the secretary explained that citizens who are proud of their home and the community they live in define the success of the program.

“That’s what shows they’re [housing programs] successful is when they have pride about it; and the other second part of success would be if they [housing programs] do it in an affordable manner,” Carson said.

After speaking with Carson, Rawlings explained his concerns for possible cuts that could come to the committee, saying Dallas will need to get the metrics in place to show what programs are working.

Dallas Mayor speaks to future of local housing programs from HousingWire on Vimeo.

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Here are the 25 markets with the highest returns for single-family homes

RentRange, a provider of market data and analytics for the housing industry, released its latest ranking of the 25 U.S. metropolitan statistical areas by highest average gross yield for single-family homes during the fourth quarter of 2016.

“Looking at average gross yield rates, Cleveland, Detroit and Dayton top our list of markets with the highest returns for single-family homes,” said Dennis Cisterna, chief revenue officer with RentRange Data Services. “These three markets fall within the Rust Belt region, which was once dominated by an industrial-powered economy and is now experiencing population loss and economic decline.”

There are variables for investor to keep in mind though, as Cisterna points out.

“For investors, whether you are an everyday investor or an institutional investor, it is vital to analyze each property to determine whether it will produce the returns you expect prior to purchasing a single-family residential investment property,” he said.

For example, look at Detroit, which is second on the list. While Detroit is ranked at No. 2, the report stated that yields have declined from a year ago, perhaps due to recent economic improvements. 

As a result, if economic conditions continue to improve, yields may continue to fall as a result of a potential rise in home prices. This would mean investors would obtain less of a profit.

Keeping this in mind, here is the full list from RentRange of the top 25 markets.

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list

(Source: RentRange)

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NAR: Trouble ahead as National Flood Insurance Program expiration date nears

The National Flood Insurance Program is set to expire six months from Thursday on Sept. 30, 2017, prompting the National Association of Realtors to try to bring awareness to the expiration and its consequences: a disruption in closing loans.

NAR noted that while the NFIP isn’t perfect and reforms are needed, it will continue working closely with everyone involved to achieve those reforms.

“Good work has been done in Congress, at FEMA and elsewhere to clear the way for those efforts. We thank leaders on both sides of the aisle for all they’ve done up to this point. Now, it’s time for action. Congress has six months to do the right thing and pass a long-term reauthorization of the program. We’re hoping they do just that,” said NAR President William Brown, founder of Investment Properties.

If nothing is done, NAR stressed that the expiration would “deal significant damage to current policy-holding property owners, as well as threaten property sales and the broader housing market.”

Putting the impact into perspective, NAR pointed out that when the NFIP expired in 2010, more than 1,300 home sales were disrupted every day as a result.

“That’s over 40,000 every month. Flood insurance is required for a mortgage in the 100-year floodplain, but without access to the NFIP, buyers simply couldn’t get a mortgage or vital protection from the No. 1 cause of loss of property and life: flooding,” said Brown.

The infographic below from NAR shows why America needs the National Flood Insurance Program.

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infographic

(Source: NAR) 

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Trulia: Housing inventory tumbles to all-new low

Housing inventory plummeted in the first quarter of 2017, but that drop is even more pronounced in the starter home and trade-up markets, according to a new report from Trulia.

Comparing the national housing stock in the 100 largest metros from the first quarter of 2012 to the first quarter of 2017 shows starter homes witnessed the largest drop in inventory. During that period, the number of starter and trade-up homes fell 8.7% and 7.9%, respectively. Contrarily, inventory of premium homes fell only 1.7% from 2012 levels.

This chart shows the path of starter, trade-up and premium homes since 2012. While all types of housing inventory dropped from 2012 to 2013, starter and trade-up homes continued to pull inventory levels down in the coming years.

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(Source: Trulia)

And as inventory becomes more scarce, median home prices continue to rise. Starter and trade-up homebuyers need to spend 2.9% and 1.6%, respectively, more of their income than last year to buy a home.

Looking at the past year, starter homes fell from 26.9% of the market to just 25.9%, while trade-up homes fell from 24.1% in the first quarter of 2016 to 23.03% in 2017. Premium homes, on the other hand, saw an increase from last year’s 49% to 51%.

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(Source: Trulia)

Inventory is falling several reasons, and Trulia points out three of those in its report.

1. Investors – who bought up many foreclosure units during to housing crisis and now use them as rental units.

2. Price spread – when prices of homes in different segments of the housing market diverge from each other, it makes it difficult for homeowners to trade-up to the next segment.

3. Slow home value recovery – the slow recovery made it difficult for some homeowners to break even on their home and gain enough equity to sell.

However, Trulia pointed out that the increasing home prices bring with them a whole new problem. The report explained too little recovery might make it difficult for homeowners to sell their home but cheap to buy one, while too much recovery might make it easy for them to sell but difficult to buy.

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Value of housing market hits 10-year high

The value of the housing market hit a 10-year high in 2016 as equity reached new levels, according to the Urban Institute’s latest report.

Home prices for existing single-family homes came screeching to a halt in January, the Federal Housing Finance Agency’s report showed. And a new release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development shows the median home prices for new home sales dropped in February.

Despite this, home prices remain high historically and the housing market is valued higher than it has been in years.

The Federal Reserve’s Flow of Funds report has consistently indicated an increasing total value of the housing market driven by growing household equity since 2012, and 2016 was no different.

Total debt and mortgages held steady at $10.3 trillion, but household equity reached a new high of $14 trillion. The total value of the housing market increased to $24.3 trillion, surpassing even the pre-crisis peak of $23.9 trillion in 2006.

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(Source: Federal Reserve Flow of Funds, Urban Institute)

Within the U.S. residential mortgage market, agency mortgage-backed securities make up 59.2% of the total mortgage market, private-label securities make up 5.1% and unsecuritized first liens at the GSEs, commercial banks, savings institutions and credit unions make up 29.9%. Second liens comprise the remaining 5.8% of the total.

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(Source: Federal Reserve Flow of Funds, Urban Institute)

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These 4 charts break down the details behind Millennials living at home

Student debt, housing affordability and income are commonly tossed out as the culprits behind Millennials needing to move back in with their parents. The details, however, expand a lot farther than there, as a new report from ABODO, an apartment hunting website, unravels after analyzing data from the U.S. Census Bureau.

Starting with the basics, ABODO points out that Millennials are the largest generation in the U.S., making up about one-third of the population. Plus, they are now the most diverse generation and most educated generation.

Yet, on the other hand, this same generation is more often found living with their parents than on their own. 

According to the data, approximately 34.1% of all Millennials in the U.S. have yet to move out.  

ABODO decided to break down the cities with the highest percentage of Millennials living at home, along with why this is happening.

Here are the four charts they came up with as a result.

This first chart looks at the MSAs with the most Millennials staying home, with Miami-Fort Lauderdale-West Palm Beach, Florida jumping out in the No. 1 spot. In this area, there are a whopping 44.8% of 18- to 34-year-olds live who with their parents.

And a quick glance of the chart also shows there are some state represented twice, such as California and Texas.

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chart

(Source: ABODO)

This next chart is handy since it breaks down the average age and gender of Millennials living at home. After all, technically 18-year-olds and 19-year-olds are Millennials, and it’s not too alarming to see them living at home.

However, what is noteworthy is that 30% of Millennials at home are 26 or older.

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chart

(Source: ABODO)

From here, ABODO factors in the impact of a college education, which is a little complicated.

The report joked that the popular narrative of Millennials moving back in with their parents after majoring in English might be also slightly overstated since only 12% of Millennials living at home listed a bachelor’s degree as the pinnacle of their education, though 18% of Millennials as a whole stopped after their four-year degree.

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chart

(Source: ABODO)

This final chart breaks down the 16 MSAs ABODO examined even further, spotlighting the average rent in each area versus the average income.

The reported noted that the U.S. government defines a cost-burdened renter as someone who spends more than 30% of his or her income on rent.

This chart puts into perspective exactly how expensive the 16 MSAs are for Millennials.

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chart

(Source: ABODO)

The report concludes that the problem isn’t just high rent, lack of education, unemployment or low pay. Often, it’s a combination. The four charts above help highlight the pain points for why Millennials have to live at home and what those Millennials look like. 

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Here are the top 10 metros for single-family rental investors

The average gross rental yield decreased slightly in 2017 according to the Q1 2017 Single Family Rental Market Report from ATTOM Data Solutions, a fused property database.

The gross rental yield dropped slightly from an average of 9.1% in 2016 to 9% in the first quarter of 2017, according to the report.

The report analyzed single family rental returns in 375 U.S. counties each with a population of at least 100,000 and sufficient rental and home price data, along with more than 6,000 U.S. zip codes with a population of 2,500 more and sufficient rental and home price data. Rental data was from the U.S. Department of Housing and Urban Development, and home price data was from publicly recorded sales deed data collected and licensed by ATTOM.

“While good returns on single family rentals are hard to come by in high-priced coastal markets and in some other housing hot spots such as Denver and parts of Dallas, Austin and Nashville, solid returns on single family rentals will continue to be available in many parts of the Southeast, Rust Belt and Midwest for investors purchasing in 2017,” ATTOM senior vice president Daren Blomquist said.

“And single family rentals should continue to yield strong returns in many parts of the country going forward given the market undercurrents of low rent-ready housing inventory and low homeownership rates,” Blomquist said. “Average fair market rents increased in 2017 in 86% of the markets we analyzed even while average wage growth outpaced rent growth in 67% of markets — a recipe for sustainable growth in the rental market.”

Here are the top 10 metros with the highest annual gross rental yield on single-family rentals.

10. Springfield, Ohio – 13.4%

Three-bedroom fair market rent: $938

Median sales price in first quarter 2017: $84,000

Annual wage growth: 8.7%

9. Sioux City, Iowa-Nebraska-South Dakota – 13.6%

Three-bedroom fair market rent: $1,000

Median sales price in first quarter 2017: $88,500

Annual wage growth: 8.5%

state

8. Dayton, Ohio – 13.8%

Three-bedroom fair market rent: $1,090

Median sales price in first quarter 2017: $95,000

Annual wage growth: 5.6%

7. Pittsburg, Pennsylvania – 14%

Three-bedroom fair market rent: $1,106

Median sales price in first quarter 2017: $95,000

Annual wage growth: 5.4%

6. Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey-Delaware-Maryland – 14.1%

Three-bedroom fair market rent: $1,515

Median sales price in first quarter 2017: $128,700

Annual wage growth: 5.4%

philadelphia map

5. Toledo, Ohio – 14.5%

Three-bedroom fair market rent: $1,066

Median sales price in first quarter 2017: $88,400

Annual wage growth: 7.4%

Ohio

4. Binghamton, New York – 16.4%

Three-bedroom fair market rent: $1,086

Median sales price in first quarter 2017: $79,394

Annual wage growth: 7.3%

3. Augusta-Richmond County, Georgia-South Carolina – 16.6%

Three-bedroom fair market rent: $1,087

Median sales price in first quarter 2017: $78,500

Annual wage growth: 8.3%

2. Odgensburg-Massena, New York – 17.1%

Three-bedroom fair market rent: $1,105

Median sales price in first quarter 2017: $77,500

Annual wage growth: 9.5%

1. Youngstown-Warren-Boardman, Ohio-Pennsylvania – 17.2%

Three-bedroom fair market rent: $905

Median sales price in first quarter 2017: $63,051

Annual wage growth: 5.3%

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Millennials would really prefer to live in these 10 cities

Young home shoppers are set to become the No. 1 home-buying cohort throughout the coming years, but they’re not opting to buy a home just anywhere.

Online real estate website Realtor.com, which is operated by News Corp subsidiary Move, took advantage of the data it gets from its website to create a list of the top 10 markets for Millennials.

Realtor.com took the 60 largest markets in the U.S. and compared the share of Millennial page views in each area to the national average. From here, it ranked the cities based on their comparison to the national average.

Outside of being in a market with a lot of similarly aged people, the report also broke out exactly how affordable these markets are, along with the unemployment rate.

While a chunk of the cities on the list are affordable, it’s not true for all of them.

So why would Millennials look to live in these market? 

“High job growth in markets such as Orlando, Seattle, and Miami, and the power of affordability in places like Albany and Buffalo are making these markets magnets for Millennials,” said Javier Vivas, manager of economic research for realtor.com. “But what really stands out is that all these markets already have large numbers of Millennials, which translates into strong populations of Millennial homebuyers.”

Here’s the final list Realtor.com published, with a range of affordable and expensive markets.  

10. San Jose

Millennials make up 14.2% of the total population in San Jose. Even though the city only has a 3.7% unemployment rate, it’s an extremely pricey market as homes cost 53% of Millennials’ income.

The city, although, is home to some of the most innovative companies in the U.S. as well as the infamous Silicon Valley paycheck, as the report points out.

9. San Francisco

California

Coming in as one of the most unaffordable markets on the list, people in San Francisco spend 56.2% of their income on a home. On the plus side, the unemployment rate is really low at 3.7%, and Millennials make up 15% of the total population.

8. Albany, New York

Moving to the East coast, the report stated that Albany is slowly becoming what is referred to as the “Silicon Valley of the East coast.”

Millennials make up 12.7% of Albany’s population. The city boasts a 4.5% unemployment rate, and Millennials only spend about 27.3% of their income on housing.

7. Buffalo, New York

Buffalo has an unemployment rate of 5.6% and is the most affordable market on the list, with people only spending 22.7% of their salary on their home.

And, the city has a Millennial population of 13.4%.

6. Los Angeles

California

This next city is one of the most expensive cities on the list. People spend about 64.1% of their income on a home, while the unemployment rate is in line with the national average at 4.7%.

Meanwhile, Millennials make up 15% of the population.

5. Houston

This Texas city is home to a strong portion of Millennials, with the cohort making up 14.5% of its population.

Although people spend 36.1% of their income on homes, the unemployment rate in Houston is slightly higher than the national average at 5.4%.

4. Seattle

Washington

The Northwest city houses the second largest Millennial population, at 15.2%. The report attributed the draw to big company names such as Starbucks, Amazon, Filson, K2 and REI.

And thanks to those companies, the city has an unemployment rate of 4.2% and offers affordability of 35.6%.  

3. Orlando

florida

Sliding into the third spot, Millennials in Orlando account for 14.6% of the total population in Orlando. Plus, homes are affordable in the Florida city and only require 34% of income. The unemployment rate is below the national average at 4.4%.

2. Miami

Staying in the Sunshine state, the Millennial population makes up 13.1% of the population in Miami.

But it’s not easy to lock in a home in Miami, as the city requires the average buyer to spend 49% of their income on a home. Its unemployment rate is 5.1%, slightly above the national average.

1. Salt Lake City, Utah

Utah

Salt Lake City comes in at the No. 1 spot and is also the only city on the list that doesn’t touch the coast. Millennials make up 15.8% of the population.

Millennials in the area enjoy a low 2.9% unemployment rate and only spend 30% of their income on their home.

As for why, the report stated that Millennials are drawn to the relaxed vibes of the mountain town, along with the large tech companies such as Adobe

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Experts: Don’t read too deep into February’s existing home sales drop

Existing home sales came in lower in February, but experts warn against reading too deep into the drop, saying one month hardly sets a new trend.

Experts predicted the combination of pent-up housing demand and historically high consumer confidence will increase existing home sales in the months ahead.

“Strong consumer confidence in the housing market should keep existing home sales from sliding in the coming months, with homebuyers also seeing some relief in low inventory from the new construction end,” Trulia Senior Economist Cheryl Young said. “But gridlock at the lower end of the housing market will keep existing home sales well below pre-recession levels.”

This chart shows the steady increasing trend of existing home sales each year. Since 2010, home sales showed a steady increase each year.

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existing sales

(Source: Trulia)

And this increase won’t be letting up anytime soon, housing experts say.

“It’s important not to read too deeply into the one-month dip in existing home sales in February; the housing market is still running quite hot, and the next few months look to be as competitive and fast-moving as ever,” Zillow Chief Economist Svenja Gudell said.

Other experts agree, pointing out that Millennials are just reaching their prime home-buying years.

“Despite a monthly drop, existing sales remain above last year’s levels, due to a continually strengthening labor market and pent-up demand from both entry-level and trade-up buyers,” Quicken Loans Vice President Bill Banfield said. “Consumer confidence in the economy is also very high, which is a critical psychological element to consider as Millennials continue to enter their prime home-buying years.”

However, not everyone agrees that existing home sales will continue to rise.

“With little chance of a sustained rise in the number of existing homes for sale over the next year, sales are set to tread water even as the demand for homes rises steadily on the back of a strong labor market,” Capital Economics Property Economist Matthew Pointon said.

However, the root cause for the decrease in home sales is inventory, which continues to plague the market.

“There are plenty of buyers in the market, but they are unable to find the homes they want at the prices they can afford,” realtor.com Senior Economist Joseph Kirchner said. “These affordability challenges are the result of inventory shortages, which leads to bidding wars, and rising mortgage rates, resulting in higher monthly payments.”

“We see the largest inventory shortages among the most affordable homes, which also saw the greatest decline in sales with homes under $100K down 15% from a year ago,” Kirchner said.

But housing inventory isn’t just a problem for homebuyers – it remains a problem for buyers and sellers alike. Sellers are hesitant to put their home on the market as they are unsure they will be able to find a new home once they sell theirs.

“Homebuyers are still plagued by low levels of resale homes on the market, and rising mortgage rates compound concerns for first-time and trade-up homebuyers gearing up for spring home buying season,” McLaughlin said.