The Real Estate Report April 2, 2014

We had a very robust last half of 2013. The economy expanded and the job creation machine heated up. The Federal Reserve Board predicted even stronger growth this year. So what happened? We saw the economy take a step back, especially with regard to the creation of jobs. Even the real estate market seems to have quieted down since roaring back in 2013.
This has given us a lot of fuel for speculation. We have speculated about the weather and political situations such as Ukraine having at least a temporary effect. Yet we go into April wondering whether late last year was a mirage or did we just decide to all stay inside during the cold weather. This speculation makes the jobs report to be released on Friday very important. We had some improvement in job creation in February after weak reports for December and January. Yet we are still far below the levels of the second half of 2013.
Most market watchers are not expecting the employment numbers to bounce right back. But they are expecting continued improvement, especially in light of the fact that first time claims for unemployment fell significantly during the middle part of March. There were still plenty of winter storms in March but with the days getting longer and temperatures rising, the stage is set for some level of progress. At this point a very poor or a very strong jobs report would be a surprise. In March we set the clocks forward one hour. Today we have April Fools' Day. Hopefully spring is really here to stay.

Younger home buyers tend to view their home as a strong investment, more so than older buyers who tend to view their homes as a match to their lifestyle, according to the 2014 NAR Home Buyer and Seller Generational Trends study, based on a survey of more than 8,700 responses from buyers and sellers. The survey provided an in-depth look at the generational differences of recent home buyers and sellers. The largest group of recent buyers is millennials, those under the age of 34, who comprised 31 percent of recent home purchases, according to the NAR survey. Generation X buyers, born between 1965 and 1979, accounted for 30 percent of recent purchases, and younger boomers, born between 1955 and 1964, accounted for 16 percent. “Given that millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand,” says Lawrence Yun, NAR’s chief economist. “Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people. The median age of millennial home buyers is 29 and the median income is $73,600, according to the NAR study. They typically purchased an 1,800-square-foot home costing about $180,000. In comparison, gen X buyers' median age is 40 and median income is $98,200, and they tend to purchase a 2,130-square-foot home costing $250,000. Among some of the study's other findings, 87 percent of buyers age 33 and younger consider their home purchase a good financial investment compared to 74 percent of buyers 68 and older and millennials were more likely to buy in an urban or central city area than older boomers. Source NAR 
According to a poll of 140,000 LoanSafe.org members, boomerang buyers – who were ousted from the housing market due to foreclosures or short sales, spent years renting to rebuild their credit, and have saved enough to buy again – are now expected to help turn the real estate market around. These buyers could flock to the market at the same time that investors and retirees pull back, as new government programs aim to help consumers with bankruptcies or loan defaults become homeowners again, sooner than they would have otherwise. Jon Maddux, LoanSafe.org co-founder, says boomerang buyers in markets across the nation are showing interest in getting back into homeownership, with almost 80 percent of poll respondents who lost homes during the crisis interested in buying again. Moreover, 41 percent of respondents interested in re-entering homeownership have higher incomes than during their first purchase; 63 percent have lower debt obligations; 46 percent plan to purchase in a lower price range; and 50 percent expect to make at least a 10 percent down payment. Source: Sarasota Herald-Tribune

Inventories of homes for sale have increased 10 percent year-over-year, signaling growing seller optimism and a strong, early start to the spring home-buying season, according to realtor.com®’s latest National Housing Trend Report, which tracks 146 markets. The median list price edged up 7.6 percent higher in February compared to year-ago levels. The nationwide median list price is $199,000, realtor.com® reports. The median age of inventory also rose 6.5 percent year-over-year to 114 days. “Overall, these figures indicate a continued reinforcement of steady gains and market stabilization that we’ve been watching since late last summer,” says Steve Berkowitz, CEO of Move Inc. “Seller confidence is the factor to watch as we head into the spring home-buying season, and these are very encouraging indicators—not only are more homes coming onto the market, but typically we don’t see a rise in asking prices this early into the year. This is the market these sellers have been waiting for.” Still, realtor.com® notes that inventories are still low by historical standards. About 99 of the 146 markets that realtor.com® tracks saw year-over-year gains in inventory levels. Sixty-three of those markets saw levels rise by 10 percent or more. Source: Realtor.com

Landmark Bank Laura Glass