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Tag: National Association of Realtors

  • These features may ‘set you ahead of the competition’ when selling your home, research finds

    These features may ‘set you ahead of the competition’ when selling your home, research finds

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    A prospective home buyer is shown a home by a real estate agent in Coral Gables, Florida.

    Joe Raedle | Getty Images

    Today’s home sellers may be able to command higher prices due to recent increases.

    Certain luxury features may help sell your home for more money or faster than expected, according to new research from Zillow.

    “If you have these features in your home already, you should definitely flaunt them in your listing description,” said Amanda Pendleton, Zillow’s home trends expert. “That is going to set you ahead of the competition.”

    The real estate website evaluated 271 design terms and features included in almost 2 million home sales in 2022. Those that came out on top may add up to about $17,400 on a typical U.S. home.

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    Two chef-friendly features topped the list of those that helped sell homes for more — steam ovens, which helped push prices up 5.3% over similar homes without them, and pizza ovens, which increased prices by 3.7%.

    Other features that rounded out the top 10 included professional appliances, which had price premiums of 3.6%; terrazzo, 2.6%; “she sheds,” 2.5%; soapstone, 2.5%; quartz, 2.4%; a modern farmhouse, 2.4%; hurricane or storm shutters, 2.3%; and mid-century design, 2.3%,

    Zillow also looked at which features helped sell homes faster than expected.

    Doorbell cameras topped that list, helping to sell homes 5.1 days faster. That was followed by soapstone, with a 3.8 day advantage; open shelving, 3.5; heat pumps, 3; fenced yards , 2.9; mid-century, 2.8; hardwood, 2.4; walkability, 2.4; shiplap walling or siding, 2.3; and gas furnaces, 2.3.

    To be sure, homeowners should not necessarily add these features with the idea they will see sale premiums, Pendleton said.

    Moreover, some more unique features — like she sheds, spaces dedicated specifically to female home dwellers and their hobbies — may make it so it takes a bit longer to find a buyer who appreciates the amenities.

    However, the features are signals of perceived qualify a buyer associates with a nice home right now.

    “These personalized features kind of add that wow factor to a home,” Pendleton said.

    Emphasis on improvements that spark joy

    The current housing market is “anything but traditional,” Pendleton notes.

    For buyers, there’s not as many listings to choose from as homeowners do not want to give up their ultra-low interest rates, she noted.

    “Homes that are well priced and well marketed are going to find a buyer very quickly today,” Pendleton said.

    Existing homeowners are now more likely to be thinking of different ways to re-envision their space, according to Jessica Lautz, deputy chief economist at the National Association of Realtors.

    Personalized features kind of add that wow factor to a home.

    Amanda Pendleton

    home trends expert at Zillow

    “There are a lot of people who want to remodel because they are locked into low interest rates and have no intention of leaving their property,” Lautz said.

    At the top of homeowners’ wish lists are ways to maximize the square footage of their home, Lautz said, such as basement remodels or attic or closet conversions. Adding home offices is also very popular as people continue to live hybrid lifestyles.

    Some improvements also stand to provide a 100% or more return when a home is put on the market.

    The top of that list includes hardwood floor refinishing, according to Lautz, which not only makes a home look more beautiful but also makes it more marketable.

    “It brings a lot of joy, and it has a lot of bang for the buck when you go to sell your home,” Lautz said.

    Putting in new wood flooring or upgrading the home’s insulation also tend to provide returns of 100% or more, she said.

    Zillow’s research found certain features may actually hurt a home’s resale value. That includes tile countertops or laminate flooring or countertops. Walk-in closets may also negatively impact a home’s value, as buyers may prefer to use the space for other purposes.

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  • Vast majority of U.S. homes are unaffordable to the average buyer

    Vast majority of U.S. homes are unaffordable to the average buyer

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    The cost of buying a home is drifting further out of financial reach for the average American, according to a report from Redfin. 

    The real estate website analyzed homes that went on sale last year and found that only 21% of them were affordable, meaning that nearly 80% of homes were outside the typical buyer’s budget. By comparison, about 60% of homes were considered affordable in 2021, the report released Friday found.  

    Redfin Deputy Chief Economist Taylor Marr said those stats boil down to one truth: housing affordability is at its lowest point in history. 

    “Many millennials were able to buy their first home before or during the pandemic homebuying boom, but many others were priced out of homeownership and forced to keep renting,” he said in the report. “That means a lot of young adults missed out on a major wealth-building opportunity: the value of homes owned by millennials has risen nearly 30% in the past year.”


    MoneyWatch: How to maneuver the housing market slowdown

    03:47

    Redfin defined an “affordable” home as one whose mortgage payment would equal 30% or less of the average monthly income of residents in the county where the home sits. Redfin found that the highest percentage of affordable homes were in Akron, Cleveland and Dayton in Ohio, Pittsburgh and St. Louis, Missouri. Five California cities — Anaheim, Los Angeles, Oxnard, San Diego and San Francisco — had the lowest percentage of affordable homes. 

    The Redfin report dovetails with a recent Bloomberg analysis that shows Americans will need a higher income to land their first home. First-time buyers in 2022 had a typical household income of as much as $90,000 compared to just $70,000 in 2019, Bloomberg reported Friday. 

    The housing market is expected to pick up steam in the coming weeks as the historically hectic spring buying season kicks into gear. House hunters today face mortgage rates of around 6.6%, up from 3.75% a year ago. The median home price hit $415,000 last month, up from $406,000 in January, according to National Association of Realtors data. 

    Why are prices rising?

    Home prices are climbing for a couple of reasons, Redfin said. The Federal Reserve’s monthslong battle with soaring inflation has helped push mortgage rates skyward, thus increasing borrowing costs for buyers. Also, demand for homes soared in 2022 and builders couldn’t keep up with the pace, driving prices for existing homes even higher. 

    The next few months will be tough sledding for buyers and sellers alike. Many homeowners are leery of selling because they might have to buy another house at a much higher mortgage rate, while buyers are still seeing far elevated prices, Daryl Fairweather, chief economist at Redfin, told CBS News on Thursday.

    “The one silver lining is that if you manage to be able to afford a home, if you can get that mortgage, you’re going to face a lot less competition,” Fairweather said.

    Khristopher J. Brooks

    Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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  • Housing Market Continues To Slide – Sales Down 4% In November

    Housing Market Continues To Slide – Sales Down 4% In November

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    Key Takeaways

    • Existing home signed sales contracts went down 4% in November, extending the slide to ten months straight.
    • It’s further evidence of a continued slowdown in the housing sector, with prices down 9.1% since May.
    • It’s an expected side effect of the Fed’s policy of raising interest rates to bring down inflation, with the average 30 year fixed rate mortgage doubling over the past year.

    The housing market in the US has had a rough few months. According to the National Association of Realtors, contracts to buy previously owned homes in the US fell a lot more than expected in November – the sixth straight month of decline.

    The main reason behind the fall is due to the Federal Reserve raising interest rates in an attempt to curb inflation, which is causing the housing market to almost grind to a halt.

    The NAR’s Pending Home Sales Index, which is based on signed contracts, showed that the number of contracts fell by 4% to 73.9 in November. To put that in perspective, contracts are down 37.8% compared to the same time the previous year. Ouch.

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    Why is the housing market slowing down?

    But why is this happening? Well, the housing market is particularly sensitive to changes in interest rates, and the Fed’s aggressive rate hikes have caused borrowing costs to increase significantly. In fact, the 30-year fixed mortgage rate reached 7% in October for the first time since 2002, more than doubling in just nine months.

    New mortgages are now a heck of a lot more expensive than they were a year ago, and it’s making potential buyers wary of diving in on such a major purchase.

    This sudden increase in borrowing costs has essentially pulled the rug out from under what had been a red-hot housing market, which was fueled by historically low borrowing costs and a rush to the suburbs during the coronavirus pandemic.

    The decline in signed contracts means that existing home sales are also certain to fall after notching their 10th straight monthly decrease in November. According to data from the previous week, the annual sales rates of both new and existing homes have decreased by 35% since the beginning of the year, reaching their lowest point since 2011. This represents one of the quickest declines on record.

    And to make matters worse, new single-family housing starts and permit issuance reached a two-and-a-half-year low last month as well.

    So, it looks like the housing market is feeling the effects of the Fed’s actions in real-time, and it’s not looking good. NAR Chief Economist Lawrence Yun summed it up by saying, “falling home sales and construction have hurt broader economic activity.”

    Where to from here for the housing market?

    There’s no getting away from it, the situation is probably going to get worse before it gets better. The Fed has made it clear that they plan to hike rates as much as they need to in order to get inflation back down to the target range of 2-3%.

    It has started to come to head back down, but it’s still staggeringly high at 7.1%.

    That means we can expect rates to go up further from here, and potentially by quite a lot. For potential homebuyers, mortgages are therefore going to continue to get more expensive. That’s going to mean fewer buyers on the market for homes, which is going to further put the brakes on real estate activity.

    And that’s the whole point.

    Anyone who expects the housing market to pick up soon will find themselves face to face with the Fed, who are determined to take the heat out and bring down inflation.

    After every Federal Open Market Committee meeting, where the members of the Fed agree on where to set the rates, individual members are surveyed on where they see rates 12 months from now.

    This is known as the ‘dot plot’ due to the way the data is represented, and the current dot plot shows the median expectation for rates is that they hit 5.1% by the end of next year. That’s still a significant increase from the current level of 4.25 – 4.5%.

    What does that mean for potential home buyers?

    If you’ve been looking to get on the housing ladder, this change in interest rate policy is likely to have thrown you for a bit of a loop. The houses you’ve been eyeing up probably haven’t come down in price, but the mortgage you’d need to buy it definitely has.

    The ongoing pressure on the housing market is likely to cause prices to moderate in the short to medium term. We’ve already seen this start to happen. According to Redfin, the median sale price in May in the US hit $433,425. In May, that’s slid to $393,682.

    If interest rate continue to go up as they’re expected to, and home sale numbers also continue to fall, it’s highly likely that prices will keep going down too.

    That’s going to take some of the sting out of the rising cost of a mortgage. You’ll still be paying a higher level of interest than you would have been 12 months ago, but if the price of the home you’re buying going down too, then the mortgage might not be as big.

    Either way, one of the best ways to help insulate yourself against these sorts of changes is to have a bigger down payment.

    The bigger the down payment, the more mortgages that will likely be available to you and the lower your ongoing repayments can be. For those looking to boost the size of their down payment, there are a couple of options you can consider.

    Obviously you could try to save more of your income. That’s easier said than done in the era of sky high cost of living. The other alternative is to look to the investment markets in an aim to grow your down payment that way.

    Wading into markets right now can be a challenge. It could be a great time to get in, with the major falls we’ve seen, but they could also have further to fall. If you’re nervous, consider adding our AI-powered Portfolio Protection.

    This uses AI to analyze your portfolio’s sensitivity to a range of different risk factors such as interest rate risk, overall market risk and oil risk. It then automatically implements sophisticated hedging strategies to help guard against them.

    It’s the type of strategy usually reserved for high flying hedge fund clients, but we’ve made it available for everyone. You can add Portfolio Protection to any of our Foundation Kits.

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  • Existing Home Sales Tumble For A Record 9th Straight Month

    Existing Home Sales Tumble For A Record 9th Straight Month

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    Existing home sales retreated for the ninth straight month in October as higher mortgage rates discouraged potential buyers, according to the National Association of Realtors. All four major U.S. regions registered month-over-month and year-over-year declines.

    Total existing home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — decreased 5.9% from September to a seasonally adjusted annual rate of 4.43 million in October. Year-over-year, sales dropped by 28.4% (down from 6.19 million in October 2021).

    “More potential home buyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” said NAR chief economist Lawrence Yun. “The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”

    Total housing inventory registered at the end of October was 1.22 million units, which was down 0.8% from both September and one year ago (1.23 million). Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months in October 2021.

    “Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun added. “In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%.”

    The median existing-home price for all housing types in October was $379,100, a gain of 6.6% from October 2021 ($355,700), as prices rose in all regions. This marks 128 consecutive months of year-over-year increases, the longest-running streak on record.

    Properties typically remained on the market for 21 days in October, up from 19 days in September and 18 days in October 2021. Sixty-four percent of homes sold in October 2022 were on the market for less than a month.

    “Affordability constraints are throwing a wrench into the previous momentum of the market, causing home buyers to step back as they are being priced out,” said Zillow senior economist Nicole Bachaud. “And home sellers are not immune either. Current rates are forcing would-be sellers to stay put in their existing homes with much lower rates, reducing the flow of new listings onto the market.”

    “Both a pullback in demand and supply are limiting sales counts,” she added. “Without a significant improvement in affordability, existing home sales will likely continue to disappoint compared to the pandemic peak. Recent downward movement in mortgage rates might provide some reprieve in the coming months, but with home values appearing to hold strong, affordability challenges remain top of mind.”

    First-time buyers were responsible for 28% of sales in October, down from 29% in both September 2022 and October 2021. NAR’s 2022 Profile of Home Buyers and Sellers – released earlier this month – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.

    “Home sales are plummeting, and prices have fallen four months in a row,” said Holden Lewis, home and mortgage expert for NerdWallet. “It’s a classic tale of prices falling along with demand. But supply is dwindling, too, a situation that has kept prices from falling further than they otherwise would have.”

    All-cash sales accounted for 26% of transactions in October, up from 22% in September and 24% in October 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in October, up from 15% in September, but down from 17% in October 2021. Distressed sales – foreclosures and short sales – represented 1% of sales in October, down from 2% in September and identical to October 2021.

    According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.90% in October, up from 6.11% in September. The average commitment rate across all of 2021 was 2.96%.

    “Mortgage rates have come down since peaking in mid-November, so home sales may be close to reaching the bottom in the current housing cycle,” said Yun.

    Realtor.com’s Market Trends Report in October shows that the largest year-over-year median list price growth occurred in Milwaukee (+34.5%), Miami (+25.1%) and Kansas City (+21.4%). Phoenix reported the highest increase in the share of homes that had prices reduced compared to last year (+35.9 percentage points), followed by Austin (+31.2 percentage points) and Las Vegas (+24.4 percentage points).

    Single-family and condo/co-op sales

    Single-family home sales declined to a seasonally adjusted annual rate of 3.95 million in October, down 6.4% from 4.22 million in September and 28.2% from one year ago. The median existing single-family home price was $384,900 in October, up 6.2% from October 2021.

    Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 480,000 units in October, down 2% from September and 30.4% from the previous year. The median existing condo price was $331,000 in October, an annual increase of 10.1%.

    “For consumers looking to buy or sell a home, having a Realtor by their side to navigate one of the more challenging and complex markets we’ve seen in some time will be essential to successfully completing transactions,” said NAR President Kenny Parcell, a Realtor from Spanish Fork, Utah and broker-owner of Equity Real Estate Utah. “Realtors understand local market conditions and provide timely and trusted advice, from listing to closing.”

    Regional breakdown

    Existing-home sales in the Northeast trailed off 6.6% from September to an annual rate of 570,000 in October, a decline of 23.0% from October 2021. The median price in the Northeast was $408,700, an increase of 8.0% from the previous year.

    Existing-home sales in the Midwest retracted 5.3% from the previous month to an annual rate of 1,080,000 in October, falling 25.5% from the prior year. The median price in the Midwest was $274,500, up 5.9% from October 2021.

    In the South, existing-home sales declined 4.8% in October from September to an annual rate of 1,980,000, a 27.2% decrease from this time last year. The median price in the South was $346,300, an increase of 8% from one year ago.

    Existing-home sales in the West waned 9.1% from September to an annual rate of 800,000 in October, down 37.5% from one year ago. The median price in the West was $588,400, a 5.3% increase from October 2021.

    Compass president Neda Navab said would-be sellers locked in at ultra-low mortgage rates are understandably reluctant to list their homes for sale today and trade that rate in for one that is twice as high, which keeps inventory low and upward pressure on prices.

    “There have been some faint signals recently that mortgage interest rates may be at or near their peak, and might fall into the 5% range late in the second quarter or in the second half of 2023,” she said. “But that’s by no means guaranteed, and rates will more likely need to fall back into the 4% range to really unlock demand again – which still looks to be a long way off.”

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    Brenda Richardson, Senior Contributor

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