Weekly Real Estate Report 3/14/2014

Spring Thaw?
Here is about the only thing we will predict. This winter is not lasting forever. It may seem like it has lasted forever but a spring thaw will come. When it comes, we will see that many Americans will emerge from their homes with a bad case of cabin fever. What will we do when the weather is nice? Well, many will wash the salt off their cars. Others will go looking at cars, homes and furniture. Still others will start spring cleaning and see that they need to begin home improvement projects.
The next question is -- will they just look or will they buy? We know some will come out and spend. This will give a boost to the economy, but we don't know how much of a lift the economy will experience. We do know that the winter slowdown is a temporary phenomenon, but we also know that short- term factors can affect long-term performance. The winter lull could have a lasting effect upon growth in 2014 or if the consumer comes out roaring with our spring thaw it will be but a small speed bump in the road as opposed to a big winter pot hole.
Did February's jobs report give us a clue? It would have been easy to write off poor numbers to bad weather if we did not have two disappointing jobs reports preceding February's release. As it turns out the number for February did not give us a clear picture. The new jobs created were 175,000 and this was slightly more than expected, but certainly not something that would make us forget December and January. The unemployment rate rose slightly to 6.7%, which was slightly higher than expected, but last month the rate dropped by the same amount. The revision of the data from the previous two months also did not show a clear picture as the previous numbers were revised higher, but by a nominal amount. Looks like we will have to wait for March and April to see how strong the thaw is going to be.

Saving for a down payment remains the No. 1 obstacle to homeownership. Many American's have good credit and have the income to qualify for a home loan -- especially considering the fact that owning is cheaper than renting in most areas of the country. Yet, coming up with the cash is the problem. Here is what most renters do not realize. There are several alternatives designed to lessen or eliminate the cash necessary to purchase. Many renters do not realize that they may be eligible for no-down payment programs if they are a veteran or live in a rural area. Others can use techniques such as gifts or loans against 401K programs. Even the lender can help with special programs which can lessen or eliminate mortgage insurance and closing costs. Many times the issue is not a lack of resources, but a lack of education.  Source: The Hershman Group
*If you are interested in finding out more about the different ways to reduce or even eliminate the amount of cash necessary to purchase a home -- we have available a special article which covers these alternatives. Just contact me and I will forward this valuable information to you.
As rental housing demand continues to surge, more landlords are testing out dynamic pricing to figure out what to charge tenants based on real-time supply and demand—adopting a software system similar to how Priceline.com determines hotel rates and airfare, CNN/Money reports. Landlords use real-time supply and demand to determine what to charge tenants. Therefore, when demand for apartments is high, the software will advise the landlord to raise rents on vacant apartments. In turn, when demand drops, the software will suggest lowering rent rates. The software automatically lowers the rent based on day-to-day market conditions until a tenant takes the apartment. Dynamic pricing is used to determine the rent of some 5 million apartments today, says Andrew Rains, president of the multifamily division at Rainmaker Group, a company that produces one of the software packages most widely-used by landlords to determine prices. “When pricing is done manually, emotion enters into it,” says Rains. He adds that the software also helps avoid overpricing units that can lead to vacancies and steep losses for landlords. Source: CNN/Money

The average new-home size has increased more than 300 square feet since 2009, growing from 2,362 square feet in 2009 to 2,679 square feet in 2013, according to recently released Census Bureau data. With that added square footage, new homes are adding more bedrooms, bathrooms, and amenities than they had in 2009. Forty-eight percent of homes built in 2013 had four bedrooms compared to 34 percent with that number in 2009. Thirty-five percent of homes in 2013 had three or more full baths compared to 23 percent in 2010. Also, homes today are also accommodating more garage space. Twenty-two percent of homes built in 2013 had garage space to fit three cars or more compared to 16 percent in 2010. The amenities that builders say they are most likely to include in new homes are a walk-in closet in the master bedroom, low-e windows, a laundry room, and a great room, according to the National Association of Home Builders. Amenities favored by many builders are granite countertops, double sinks, and a central island in kitchens, as well as nine-foot or higher ceilings, a front porch, exterior lighting, and a patio. Bigger homes also translate into higher prices. The average sales price rose from $248,000 in 2009 to $318,000 in 2013. Source: NAHB

Laura Glass at Landmark Bank