The Real Estate 5/29/2014

Why Does The Stock Market Keep Bouncing Back?
The stock market has been on quite a run for the past five years or so. Granted, most of this was a rebound from the precipitous drop we experienced during the financial crisis and recession. However, a run this long and this far is hard to ignore. So many times in the past five years we have seen periods of weakness that looked like either corrections or the end of the run, only for stocks to bounce back and hit new highs. Why have stocks been so resilient?
There are a multitude of theories, but the bottom line is that stocks would not be doing well if companies were not doing well. It is that simple. Of course, that begs the next question, why have earnings been so strong when the economy has been in such a slow and painful recovery? One explanation delves into the theory that technology has made companies more efficient. Of course, that also means companies need to hire fewer employees to run their businesses and this is possibly one reason the labor markets have not recovered. Certainly, the growth of online shopping is one of the factors that come into play in this regard.
The real question is, what does the strong stock market say about the economy? Here is where there seems to be a disconnect. Is the stock market saying -- don't worry, the recovery is coming; Or is the stock market saying -- we don't care how slow the economy is, as long as we are producing results? If the markets could talk, we could find out an answer. Meanwhile, we will speculate that both answers are in play. If the markets felt that darker days were ahead of us, strong earnings today would not matter as much. 

The majority of metro areas in the first quarter continued to show price growth, but the gains are smaller than previous quarters, the National Association of Realtors® says in its latest quarterly housing report. Median existing single-family home prices rose in 74 percent of the 170 metro areas measured, based on closings in the first quarter compared with the first quarter of 2013. Twenty-two percent of the areas – or 37 – showed double-digit increases. For comparison, in the fourth quarter of 2013, 26 percent of metros had registered double-digit gains. “The cooling rate of price growth is needed to preserve favorable housing affordability conditions in the future, but we still need more new-home construction to fully alleviate the inventory shortages in much of the country,” says Lawrence Yun, NAR’s chief economist. “Limited inventory is creating unsustainable and unhealthy price growth in some large markets, notably on the West Coast.” Overall, the national median existing single-family home price was $191,600 in the first quarter, up 8.6 percent from $176,400 in the first quarter of 2013, NAR reports. At the end of the first quarter, inventories of for-sale homes did show some growth. There were 1.99 million existing homes available for sale at the end of the first quarter -- 3.1 percent higher than year-ago levels. The average supply during the quarter was five months. A supply of six to seven months is considered a healthy balance for the market. Source: NAR
Seventy percent of baby boomers say that the house they live in when they retire will be the best home they've ever had, according to a survey conducted by Better Homes and Gardens Real Estate. The survey had 1,000 respondents. What’s more, 57 percent say they plan to move out of their current home in order to search for their dream retirement home. “With approximately 77 million boomers in the U.S., it’s quite significant to see that this population has so much positive anticipation for the home in which they will be retiring — and for the majority, their aspirations involve making a move,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate. “Baby boomers are known for being a hardworking, trailblazing generation. As they have done with every other major life event, they are marching head-on into retirement with big plans and no desire to change pace. Our study shows that boomers continue to surprise with nuances of what they care about and what they are prioritizing.” About one in four boomers say they likely will buy a second home to use during their retirement years, such as a vacation or beach house. Source: Better Homes and Gardens Real Estate

The population is shifting to the South. Between 2010 and 2013, 51 percent of the population increase in 52 major metros nationwide was in the South, according to U.S. Census Bureau data. In comparison, the West accounted for 30 percent of the increase, followed by the Northeast at 11 percent and the North Central (Midwest) area at 8 percent. What’s more, the Census Bureau data shows that nearly 785,000 more people moved to major metro areas in the South than moved away. That’s far more than the 170,000 domestic migrants who moved to major metro areas in the West. On the other hand, the Northeast lost 485,000 net domestic migrants while the Midwest lost 280,000. The largest growth in domestic migration was to Texas. Source: NewGeography

Laura Glass at Landmark Bank Mortgage

Happy Memorial Day!

We Can't Thank You Enough

For every moment of peace, liberty, and greatness our country enjoys, we have someone who has worn a uniform to thank.

Please don't hesitate to contact me if I can be of service to you.

Laura Glass

The Real Estate Report 5/23/2014

Listing Shortage: Just The Beginning?

Last week we wrote about a shortage of listings which has characterized the real estate markets for the last several months. From an economic perspective with bank owned properties still being put on the market, it seems that this shortage is surprising. Yet, it is not. Some three years ago, we reported that several analysts had concluded that we were not building enough houses to meet the demands of population growth. Here is a quote from one article published in Alpha in 2011 ... housing starts are going to have to increase by leaps and bounds over the next several years, if only just to catch up to the demands of a growing population...
The Census Bureau has projected that the population will grow from the baseline of 300 million in 2007 to 440 million in 2050, an increase of 140 million in just over 40 years. By contrast, it took the country 100 years to grow by 200 million during the last century. Another perspective? We are adding two times the population of the whole country in 1900 during the next three and a half decades. And these people will need somewhere to live.
One might argue that the current homeownership rate is around five percent less than at the peak of the real estate boom. But when you increase the population by 50%, a drop in the homeownership rate of 5% or even 10% does not make a dent. And keep in mind that many who rent will still be renting single family homes. Therefore, a drop in the homeownership rate does not necessarily drop the demand for single family housing--including condominiums. So the question we must ask: Is today's listing shortage the beginning of a severe housing shortage which could cause housing prices to increase further in the future? We don't have the answer with regard to whether such a shortage will occur or when it might occur, but the question is valid. Either way, expect more homebuilding to accommodate this growth in the future.

Sixty-nine percent of consumers recently admitting to having a “home crush”—a property they liked so much they were drawn back to looking at it more than once online or in person, according to a new realtor.com® survey of 1,000 consumers. But men and women respond quite differently to these crushes, according to the survey. For example, the survey found that women are more likely than men to have a crush on a home that was out of their financial league. Forty-one percent of women revealed their home crush is out of their price range, compared to only 30 percent of men who said the same. Men were more likely than women to move from one home crush to another. Thirty-six percent of men surveyed say they find a new house crush weekly, compared to 29 percent of women. But when it comes to true love, the sexes agreed on one thing that makes them most fall in love with a home: outdoor living space. Both men and women identified this feature as the top attribute in a home. Women's hearts tended to be set a-flutter by open floor plans, great curb appeal, and appliances and fixtures, while men said they swooned over good garage space, curb appeal, and open floor plans. Source: realtor.com ®

The federal government had a budget surplus of $114 billion in April, the Congressional Budget Office estimated. That is $1 billion more than a year ago and would be the biggest April surplus since 2008. CBO estimates receipts were 2% higher in April versus the same month a year ago. Spending rose 2.5%. For the fiscal year to date, CBO estimates the deficit to be $301 billion, down $187 billion compared to the same period in 2013. The fiscal year runs from October to September. Source: MarketWatch

Buy a new or existing home? An untouched abode offers advantages, of course, such as a sleek modern layout and few repairs. Buying an existing home, however, may allow you to seal the deal faster and can offer better short-term price appreciation. These head-to-head comparisons can help you decide which choice better fits your priorities.

1. Sales Price. Winner: Draw. All else being equal, new structures typically command 10% to 15% premiums over similar existing places. You're unlikely to be making an equal comparison, however. "In most of the country the lots in the best locations are already gone," says David Brown, a Dallas-based housing consultant for Metrostudy. The newest homes are often built farther from centrally located areas and may have smaller yards than their older counterparts, so they can wind up costing less.
2. Speed of Transaction. Winner: Existing. Most builders today are selling new homes from models, says Jody Kahn of John Burns Real Estate Consulting in Portsmouth, N.H. Once you agree to buy, the actual construction begins. The upside: There are still lots of ways to personalize the home, such as adding extra storage or creating an office. But the finished product probably won't be ready for six to nine months, which can be tough for those who need to move in soon. Timing the purchase is also a challenge when you're looking at a waiting period, especially if you have a home to sell.
3. Cost of Ownership. Winner: New. After a few decades, roofs get leaky and boilers go bust. You'll spend an average of $18,000 on a new roof, according to Remodeling magazine, and $3,000 for a furnace. New homes also carry lower utility bills. Energy use per house has fallen over the past decade in part thanks to changes to building energy codes, which call for more insulation and tighter sealing, and should fall further in new homes as more states adopt the latest 2012 codes. "New construction on average is 30% to 40% more efficient than existing homes," says Indiana energy consultant John Milligan.
4. Chance for Near-Term Gains. Winner: Existing. While handy homeowners can reap the benefits of sweat equity, a new home offers very little room for improvements and is likely to sell for about the same price as others around it. "New homes are for the most part based on a set of conforming architectural styles," says Corbett. Prefer new? It can pay to buy into a development early, since builders usually raise prices as construction progresses (particularly if the homes prove popular). The risk is that there's no guarantee how the neighborhood will turn out. Source: CNN/Money

Laura Glass

Interesting May Facts....

Laura Glass

The Real Estate Report 4/30/2014

It Sure Seems Like Spring

Even though there has been snow in some parts of the country very recently, it feels like springtime with regard to the economy. We continue to have some fairly positive economic news released. The releases have included a stronger than expected retail sales report and leading economic indicators for March. Any good news regarding consumer spending is good news for the economy as a whole. The news from the real estate sector we received last week was much less promising and again we wonder how much this news was affected by the weather.

This week is a very important week and will go a long way to let us know whether the cold winter slowdown is behind us. We start out with pending home sales then follow with consumer confidence and a meeting of the Federal Reserve and then towards the end of the week personal income and spending numbers are released. And that is just the warm up. After the private payroll data is release by ADP on Wednesday, the jobs report closes out the week.

Lately there has been no report more important than the release of the employment numbers for the month. With the Federal Reserve making their post-meeting announcement on Wednesday, personal spending data on Thursday and the employment report release on Friday, it could be a week with plenty of fireworks. Any one release could give us a surprise that could shake up the markets. At this point, the markets believe that the economy is waking up. We just might see if the economy awakens groggily or with plenty of vigor.

The 2013 State of Hispanic Homeownership Report, published by the National Association of Hispanic Real Estate Professionals, finds that Hispanics are expected to comprise 50 percent of all new home buyers by 2020. The U.S. Hispanic population accounted for an increase of 2.6 million owner households—or nearly 47 percent of all home ownership growth in the country between 2000 and 2013. The population of Hispanic people in the United States is growing rapidly and is a key indicator of housing demand, the report notes. The Hispanic population in the U.S. is currently about 53 million. Between now and 2050, that number is expected to grow 167 percent—compared to a 42 percent growth rate projected for the rest of the U.S. population. “This is a story of pent-up demand,” says Jason Madiedo, president of NAHREP. “Latinos are ready to buy homes now. Their biggest obstacle coming into today’s market isn’t credit; it’s lack of available housing. The readiness of this first-time buyer market represents a whole new purchase cycle that can drive recovery in local communities and put the housing recession behind us once and for all.” Source: RISMedia. Click Here For The Full Report.

The number of homes for sale is on the rise, a long-awaited welcome to home buyers who are finding more selection than last spring and less competition, according to realtor.com®’s National Housing Trend Report for March of the 146 markets it tracks. Inventories of for-sale homes on realtor.com® in March increased 9.5 percent higher than year ago levels, according to the report. The median list price is $199,900 – 5.3 percent higher than in March 2013. The median age of inventory has also risen – 22.9 percent above year ago figures to a median of 102 days on the market. “These figures suggest that the market is more balanced than it was in 2013, when a shortfall in available supply led to double-digit increases in many markets’ housing prices,” according to the realtor.com® report. “Having more homes on the market may mean more affordable prices for first-time and move-up buyers. Lack of inventory in 2013 led to intense competition, creating another barrier to home ownership.” Bidding wars were frequent last year and caused prices to rise and become out of reach to some first-time home buyers who could barely save for a down payment, says Steve Berkowitz, CEO of Move, Inc. “While inventory is still low, the continuing annual lift in the number of homes on the market that we’ve seen over the first months of 2014 is an indicator that buying conditions this year may be notably improved from the frenzied pace of last spring,” says Berkowitz. Source: realtor.com®

Both parties have to come together in a transaction, and real estate professionals sometimes find themselves wedged in the middle of buyer and seller disagreements. Some sellers may accuse the home buyers of being too pushy with their demands. Here are several ways that homebuyers have been annoying some sellers recently, including:

·         Disrespectful house visitors: Some buyers may not be respectful when touring a home, letting their child run wild or bounce on the furniture, cranking up the heat and air conditioning, or even using the restroom.

·         Submitting a long list of defects: Ron Phipps, principal with Phipps Realty in Warwick, R.I., and a former president of the National Association of Realtors®, says that buyers are doing themselves a disservice when submitting an offer with a long list of what’s wrong with the house. It makes sellers question why the buyers would want this place. Instead, Phipps recommends a gentler approach:

·         Too many visits: After buyers have committed to purchase a home, they want to make lots of visits to their future home, bringing the decorators, architects as well and entire family with them, says Mike Lubin, associate broker for Brown Harris Stevens in New York. The sellers may find the constant visits disruptive, however, as they’re busy packing and possibly doing repairs to meet a deadline.

·         Renegotiation: Buyers may agree on the price but then repeatedly demand concessions and discounts. The home inspection can be a culprit. For example, buyers may realize the furnace has about five good years left and then make a demand for a new furnace or monetary equivalent. “A realistic buyer knows everything’s not going to be perfect,” says Matt Laricy, managing partner with Americorp Real Estate in Chicago. Source: Bankrate.com 

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