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Existing-Home Sales Ease in August

Existing-home sales eased up in August for the second consecutive month despite mortgage rates near record lows as higher home prices and not enough inventory for sale kept some would-be buyers at bay, according to the National Association of REALTORS®. Only the Northeast region saw a monthly increase in closings in August, where inventory is currently more adequate.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August from a downwardly revised 5.38 million in July. After last month’s decline, sales are at their second-lowest pace of 2016, but are still slightly higher (0.8 percent) than a year ago (5.29 million).

Lawrence Yun, NAR chief economist, says recent job growth is not yielding higher home sales. “Healthy labor markets in most the country should be creating a sustained demand for home purchases,” he says. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”

“Tight inventory, rising prices and tepid economic conditions continue to hold back existing home sales, and housing progress overall,” says Quicken Loans Vice President Bill Banfield. “As interest rates are poised to rise in the near future, supply will need to increase to sustain significant growth in the market.”
Adds Yun, “Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.”

The median existing-home price for all housing types in August was $240,200, up 5.1 percent from August 2015 ($228,500). August’s price increase marks the 54th consecutive month of year-over-year gains.

Total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than a year ago (2.27 million) and has declined year-over-year for 15 straight months. Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in July.

The share of first-time buyers was 31 percent in August, which is down from 32 percent both in July and a year ago. First-time buyers represented 30 percent of sales in all of 2015.

“It’s very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago,” adds Yun. “While recent data from the U.S. Census Bureau shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale. Without more supply, the U.S. homeownership rate will remain near 50-year lows.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.44 percent in August for the second consecutive month and remained at its lowest rate since January 2013 (3.41 percent). The average commitment rate for all of 2015 was 3.85 percent.

Properties typically stayed on the market for 36 days in August, unchanged from July and down considerably from a year ago (47 days). Short sales were on the market the longest at a median of 144 days in August, while foreclosures sold in 42 days and non-distressed homes took 35 days. Forty-six percent of homes sold in August were on the market for less than a month.

NAR President Tom Salomon says in today’s fast-moving market, a Realtor® who knows about down payment options and their target area is essential to a successful buying experience. “Given the inventory shortages in most markets, new listings at affordable prices are receiving multiple offers and going under contract almost immediately upon becoming available,” he says. “Home shoppers serious about buying need to be ready with a pre-approval. This allows a Realtor® to hone in only on homes within the buyer’s price range and ensures any offer presented to the seller is taken seriously.”

Inventory data from Realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in August were San Francisco-Oakland-Hayward, Calif., San Jose-Sunnyvale-Santa Clara, Calif., and Seattle-Tacoma-Bellevue, Wash., all at a median of 33 days; Denver-Aurora-Lakewood, Colo., 36 days; and Vallejo-Fairfield, Calif., at a median of 37 days.

All-cash sales were 22 percent of transactions in August, up from 21 percent in July and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in August, up from 11 percent in July and 12 percent a year ago. Sixty-two percent of investors paid in cash in August.

Distressed sales – foreclosures and short sales – were 5 percent of sales in August (lowest since NAR began tracking in October 2008), unchanged from last month and down from 7 percent a year ago. Four percent of August sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 12 percent below market value in August (18 percent in July), while short sales were discounted 14 percent (16 percent in July).

Single-family and Condo/Co-op Sales

Single-family home sales declined 2.3 percent to a seasonally adjusted annual rate of 4.70 million in August from 4.81 million in July, but are still 0.6 percent above the 4.67 million pace a year ago. The median existing single-family home price was $242,200 in August, up 5.3 percent from August 2015.

Existing condominium and co-op sales leaped 10.5 percent to a seasonally adjusted annual rate of 630,000 units in August from 570,000 in July, and are now 1.6 percent above August 2015 (620,000 units). The median existing condo price was $225,100 in August, which is 3.7 percent above a year ago.

Regional Breakdown

August existing-home sales in the Northeast jumped 6.1 percent to an annual rate of 700,000, which is unchanged from a year ago. The median price in the Northeast was $274,100, which is 0.8 percent above August 2015.

In the Midwest, existing-home sales decreased 0.8 percent to an annual rate of 1.27 million in August, but are still 0.8 percent above a year ago. The median price in the Midwest was $190,700, up 5.5 percent from a year ago.

Existing-home sales in the South in August fell 2.7 percent to an annual rate of 2.16 million, but are still 0.9 percent above August 2015. The median price in the South was $209,700, up 6.7 percent from a year ago.

Existing-home sales in the West lessened 1.6 percent to an annual rate of 1.20 million in August, but are still 0.8 percent higher than a year ago. The median price in the West was $347,400, which is 9.2 percent above August 2015.

For more information, visit www.realtor.org. 

Real Estate Escrow Checking Accounts Now Offered by REALTORS® Federal Credit Union

Earnest money deposits play an important role in real estate transactions. While you’ve had several options for establishing escrow accounts for earnest monies, traditionally, credit unions haven’t been included in your options because of federal legislation prohibiting them from offering escrow accounts. That recently changed, however, thanks to efforts on behalf of real estate agents by the REALTORS® Federal Credit Union, a Division of Northwest Federal Credit Union.

“Whenever we talked to real estate professionals about our services,” explains Victoria Gillespie, senior vice president, REALTORS® Division and Enterprise Marketing, “the question kept coming up, ‘Can I open an escrow account?’” Recognizing that there was clearly demand and interest in this service, the Credit Union decided to challenge the status quo on behalf of its members and the real estate industry.

Rewriting federal laws, however, is never easy. As a first step, the Credit Union approached and gained the support of the National Association of Federal Credit Unions (NAFCU), a direct membership association that provides federally insured credit unions with advocacy, education and compliance support. Once NAFCU was on board, the next step involved lobbying efforts with the industry’s governing body, the National Credit Union Administration (NCUA).

Finally, earlier this year, the Credit Union’s efforts paid off and legislative changes went into effect. “We listened to our members and made it happen,” says Gillespie. Now, eligible Credit Union members have the option to open a Real Estate Escrow Checking Account with no minimum balance, no monthly fee and no per-item charges to house clients’ earnest money deposits. Fees are often associated with these accounts at other financial institutions.

Comprehensive Banking Services Exclusively for REALTORS®
Created by the National Association of REALTORS® (NAR) in 2008, the REALTORS® Federal Credit Union, a Division of Northwest Federal Credit Union, was formed to address the unique savings, lending and credit needs of NAR members.

Federal credit unions are not-for-profit cooperative financial institutions that are owned and operated by their members. Unpaid volunteers comprise the Credit Union’s Board of Directors, including two NAR representatives. All profits are reinvested in the co-op, keeping costs as low as possible for members.

In addition to the new availability of Real Estate Escrow Checking Accounts, members have access to a full complement of business banking services, including traditional and money market savings, competitive certificate investments, business loans (including commercial real estate loans and lines of credit), and much more.

The Credit Union also offers a full suite of personal banking products, making it simple to separate your personal and business expenses for easier record keeping while enjoying across-the-board cost savings. Members can also apply for two different REALTOR® Credit Cards, further simplifying efforts to separate business and personal records.

Convenient Access
REALTORS® Federal Credit Union is available 24/7 online, via mobile banking and through its bank-by-phone services. Members can make remote check deposits (using mobile technology) up to $250,000 per day for business accounts or $25,000/day for personal checking. In addition to over 30,000 ATMs nationwide, members receive personal assistance at more than 5,000 shared branch locations, or by contacting a Member Care representative at 866-295-6038.

Support the REALTOR® Family
By supporting REALTORS® Federal Credit Union, you support the entire REALTOR® family and help members get better borrowing rates, earn higher rates of return, and keep their banking costs as low as possible. New Real Estate Escrow Checking Accounts, along with all the other services offered by REALTORS® Federal Credit Union, serve as another example of the many ways NAR members can save money and gain special privileges through the REALTOR Benefits® Program.

Benefits of Credit Union’s Real Estate Escrow Checking Accounts

  • No minimum balance
  • No monthly fee
  • No per-item charges

For more information, visit www.realtorsfcu.org.

CEO Exchange 2016: What’s Next for Upstream, the ‘Google Drive’ of Real Estate

Forty-one.

That’s the amount of times listing data may be entered through the course of one real estate transaction, estimates Upstream™ CEO Alex Lange. That’s 41 instances in which data may become incomplete or incorrect, posing a challenge difficult to surmount as technology advances.

The result for brokerages has been a classic (and chronic) case of “too many hands in the pot”—a game of telephone, becoming more and more inconsistent as it’s passed among portals, platforms and vendors.

The crux of the matter, according to Lange, is lack of control.

“Brokers over time feel they’ve lost control of where their data asset is going,” said Lange at RISMedia’s CEO Exchange, held at the Harvard Club of New York City on Sept. 13 and 14. The sold-out gathering, which brought together 250 of the nation’s leading real estate brokers and influencers, was marked by several noteworthy sessions, including an update from Lange on Upstream. The initiative, set into motion by The Realty Alliance and Leading Real Estate Companies of the World® (and later, others), is intended to reset the data infrastructure, assigning control back to brokers.

“[With Upstream, brokers] have the ability to not only pick the targets—who’s going to get the data—but they can also determine what data they get, and they can determine the frequency in which they get it,” Lange told attendees. “The brokers are in control.”

Two of Upstream’s board members, Cary Sylvester and Mark McLaughlin, joined Lange in the update, offering perspective for brokerages small and large.

“Data is data. It should be stored once,” said Sylvester, vice president of Industry Development for Keller Williams Realty International. “Why are we competing for access to our own information?”

“Upstream will effectively be our ‘brain,’” said McLaughlin, CEO of Pacific Union International, recounting his technology team’s proposal for a similar system. “We control the distribution to everything, everywhere. It’s a fantastic new technology, and I can’t see any downside to it.”

The update addressed the prevailing misconception about the platform: is it a national MLS?

“Upstream is designed to work in conjunction with an MLS—it has almost no ability to ever try to be an MLS, and we specifically state we will never compete with an MLS,” emphasized Lange.

“We can all be on it. I can share a folder with Craig [Cheatham, member of Upstream’s Executive Committee], share a field with Cary, share multiple files across multiple entries, and rescind that permission at any time,” Lange added, likening the platform to Google Drive. “Upstream is just a platform—no one at Upstream can see the data, touch the data, or control the data.”

“The problem is that we need to get [the data] in one place and feed the entire ecosystem,” Sylvester explained. “Do we want to change the MLS structure today? No. How do we feed that ecosystem so that it can evolve and change? That’s what we’re looking for with Upstream, and why we’re so passionate about it.”

The initiative is gaining traction as it moves through development, with five MLSs and a sampling of brokerages currently piloting the platform. Lange anticipates transitioning out of the beta period in the first half of 2017, onboarding users gradually as development progresses.

Feedback from the industry has been encouraging, though not without questions.

“The reaction throughout our organization has been extremely positive and extremely supportive,” Sylvester said. “I get quite a few phone calls from brokers asking me, ‘When will it be in my market?’ Most are ready to make the switch.”

“Everyone’s appetite for this technology and the efficiencies it will create is very, very high,” said McLaughlin. “It will be a different experience in terms of data entry when we get our agents involved, but we’re looking forward to that challenge.”

“Use the Google Drive analogy as a lens to take any of the questions or concerns or thoughts you have in your office, and try to funnel it through that,” Lange told attendees.

“As competitors, we’ve all come together to solve one thing every one of us needs in our business,” McLaughlin added. “That’s the message to take back to your markets. Evangelize that message.”

Learn more about Upstream in Real Estate magazine.

This post was originally published on RISMedia’s blog, Housecall. Check the blog daily for top real estate tips and trends.

August Market Holds Steady

From 10,000 feet, the U.S. housing market has been nothing if not predictable in 2016 – inventory has been down, home values have grown at a remarkably steady pace and sellers have largely been sitting pretty. None of these trends shifted meaningfully in August, though there are a precious few signs emerging that hint at potential changes on the horizon.

For the 49th month in a row, the median U.S. home value rose year-over-year in August, to a Zillow Home Value Index of $188,100, up 0.4 percent from July and 5.1 percent from August 2015, according to Zillow’s August Real Estate Market Report. In each month thus far in 2016, annual home value growth has been no slower than 5 percent per year, and no faster than 5.2 percent – a notable stretch of consistency.

This year’s stability in U.S. home value appreciation continues a trend that began roughly two years ago. Throughout much of 2015, home values grew in a similarly narrow range, between 4.4 percent and 4.7 percent annual growth, before accelerating into the 5 percent range at the end of last year – where it has largely stayed since. This long period of steady annual home value growth almost looks like an anomaly when seen next to the sometimes wild up and down swings experienced nationwide over the past two decades.

A potential answer for why the market has been so stable of late, as it happens so often in real estate, could boil down to location, location, location. As we’ve often said, the U.S. housing market is really nothing more than a collection of dozens of local markets, each behaving differently and with their own unique fundamentals. Some once red-hot markets, including the San Francisco Bay Area, have cooled considerably this year. Home values in the five-county San Francisco metro were growing at an 11.7 percent annual pace as recently as January; as of August, the pace had slowed to 6 percent. In the San Jose metro – the heart of Silicon Valley – annual home value appreciation slowed from 11.1 percent growth in January to 5.8 percent in August.

At the same time, home value growth in other markets – particularly in the booming Pacific Northwest – has picked up the pace. In the Seattle metro, annual home value growth has accelerated from a 10.4 percent annual pace in January to 11.3 percent in August. Just to the south, in Portland, annual home value growth has picked up from a 13.2 percent pace at the beginning of the year to 14.8 percent currently.

In 267 of the 516 total metro areas analyzed in August, home value growth has accelerated compared to January. Home value growth was slower in August compared to January in 249 markets. This relatively even distribution of markets where home value growth has picked up steam over the course of the year, and where it has trailed off, stands in marked contrast to the boom and bust years. Then, most markets largely moved in lockstep driven by larger, national economic trends – first up during the boom, then down during the bust. Today, when roughly the same number of markets are pulling one way as pushing the other, it sets up a situation in which the larger market as a whole looks pretty stable.

Home Value Growth: Bigger at the Bottom

Of the 35 largest metro areas analyzed, annual home value growth in August was fastest in Portland (up 14.8 percent year-over-year), Dallas (up 12 percent) and Seattle (up 11.3 percent). Only one of the 35 largest markets experienced annual home value declines (Indianapolis, down 1.6 percent year-over- year). In 25 of the largest 35 markets, the pace of annual home value growth in August was faster than the U.S. average.

Looking beyond the median, annual home value growth at the bottom end of the market continues to far exceed growth at the top end. In August, the typical U.S. home valued in the bottom one-third of all homes was worth $106,200, up 7.3 percent from August 2015. The typical home valued in the top one- third was worth $342,600, up 3.8 percent year-over-year.

Some Relief from Rising Rents

In August, national median rents rose 1.7 percent year-over-year to $1,405 per month, according to the Zillow Rent Index. Unlike home value growth, which has remained largely stable for a while now, annual growth in rents has slowed considerably. A year ago, U.S. median rents were growing at a 6.2 percent annual pace.

On a monthly basis, national rents have fallen by 0.1 percent in each of the past two months – the first consecutive monthly declines in rent since April and May of 2014, and the first consecutive July/August monthly declines since publication of the Zillow Rent Index began in late 2010.

Rents rose year-over-year in August in 33 of the country’s 35 largest markets, declining only in Chicago (- 0.2 percent) and Pittsburgh (-0.5 percent). Annual rent growth was fastest in Seattle (up 9.7 percent), Portland (up 7.4 percent) and Sacramento (up 5.5 percent). The two Bay Area markets of San Jose and San Francisco, respectively, remain the most expensive large rental markets in the country, by far. Renters in and around San Jose should expect to spend $3,517 per month on rent; in the San Francisco area, median rent runs $3,406 per month. Los Angeles is the next priciest rental market, at $2,593 per month.

August Inventory: Slim Pickings Continue

The overall number of U.S. homes for sale continued to fall year-over-year in August, down 5.4 percent from August 2015. U.S. inventory has fallen on an annual basis in each of the past 19 months, and in 48 of the past 57. In a somewhat encouraging trend, overall inventory did rise year-over-year in a dozen of the largest 35 markets in August, including both Bay Area markets, which may be contributing to slowing home value gains in those areas.

Still, inventory remains well below peak levels from a few years ago in every large market. In all but one of the top 35 metros, inventory is down from peak by 25 percent or more (Pittsburgh is the only exception, down 24.7 percent from peak). In 31 of the 35 largest markets, overall inventory is down by more than 40 percent from peak levels.

A big driver of faster home value growth overall among more entry-level homes is a lack of such homes to buy relative to the most expensive homes. Nationwide, inventory of bottom-third homes available for sale in August was down by 9.2 percent annually, compared to a smaller 1.8 percent annual decline in the number of top-third homes available.

Outlook

Looking ahead, Zillow expects national home values to continue growing, though at a slower pace, rising another 2.7 percent through August 2017 to a Zillow Home Value Index of $193,217. U.S. rents are also expected to keep growing over the next year, by 1.7 percent through August 2017 to a Zillow Rent Index of $1,429.

As the busy summer season winds down, the housing market is starting to smooth out ever-so-slightly. This is good news for frenzied buyers tired of tight inventory, rapidly rising home prices and intense competition. Inventory, while still down nationwide and in most areas, is actually starting to rise in a handful of markets, including the Bay Area, Texas and parts of the Southwest. Rent growth has slowed considerably, giving renters a chance to save enough to buy a home. But make no mistake, it’s still tough out there for buyers, especially in Western markets like Seattle, Denver and Portland that have strong job growth. Things won’t switch from a sellers’ market to a buyers’ market overnight, but conditions are improving modestly.

For more information, visit www.zillow.com.

Economic Growth Set to Accelerate

Economic growth is poised to accelerate to 2.6 percent in the second half of the year, a rebound from the lackluster growth of 1.0 percent in the first half of 2016, according to Fannie Mae’s Economic & Strategic Research (ESR) Group’s September 2016 Economic and Housing Outlook.

The ESR Group’s full-year 2016 forecast remains at 1.8 percent, consistent with their prior forecast. Consumer and government spending are expected to drive growth despite a cooldown in consumer activity so far in the third quarter. At the same time, inventory investment and net exports are likely to drag on growth and nonresidential and residential investment are expected to be neutral for the year.

“Consumers continue to carry the economy and the earnings slowdown in the August jobs report may be an aberration in the recently improving personal income growth trend,” says Fannie Mae Chief Economist Doug Duncan. “However, the declining trend in business productivity has negative implications for businesses’ profit outlook, as low productivity tends to boost labor costs, which could act as a headwind for hiring and investment. Corporate profits are down 4.9 percent from one year ago, extending their streak of annual declines. We expect nonresidential fixed investment to post a modest increase in the third quarter following three consecutive quarterly declines, while residential investment is likely to decline for the second consecutive quarter.”

“A bright spot for housing market activity is the strengthening of new home sales, which is significantly outperforming activity in recent years,” says Duncan. “The share of new home sales that are under construction or not started has climbed to nearly 70 percent, improving the outlook for single-family homebuilding. Existing home sales underperformed 2015 for the first time in July, however year-to-date sales are still 2.6 percent higher than during the same period last year. Additionally, the share of for-rent multifamily building starts has trended up with recent trends in homebuilding activity favoring the rental market.”

For more information, visit www.fanniemae.com.

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©2015 BHH Affiliates, LLC. An independently owned and operated franchisee of BHH Affiliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of HomeServices of America, Inc.®  Equal Housing Opportunity.  Licensed in Virginia.

Berkshire Hathaway HomeServices Premier, REALTORS
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2772 Electric Rd., Suite 1
Roanoke, VA 24018
Phone: 540-343-5000
Fax: 540-343-5135
Email: info@BHHSPremier.com 

 

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Daleville, VA 24083
Phone: 540-966-3033
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