Housing Health A Decade After The Crash

Following the housing crash and financial crisis, there was talk that Americans may stop aspiring to homeownership and would no longer see the housing market as a sound investment and reliable creator of wealth. After all, homeowners who saw the values of their homes plummet might become leery and those who hadn’t yet bought a home may’ve considered themselves lucky. And yet, a decade down the road, the market has largely recovered and demand from buyers is running high. Lawrence Yun, the National Association of Realtors’ chief economist, says that is thanks to reforms enacted after the crash. “Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher than normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession,” Yun says. And it’s true. Today, market conditions are fueled, not by a lack of a demand, but by a lack of enough homes to meet the high level of demand. Fortunately, Yun sees even more improvement on the horizon. In fact, his forecast for the next year includes rising inventory, moderating price growth, and more home sales as affordability conditions ease and make homeownership even more attractive to prospective buyers. More here.

Where Homeowners Have The Most Extra Cash

Your financial health isn’t really about how much money you make. It’s more about how much you have left over once you’ve paid all your bills. After all, if you make $1 million a month but also spend $1 million, you’re still struggling financially. And no one likes worrying about money. For that reason, a recent analysis took a look at the 50 biggest cities in the country and – based on household income, home prices, and cost of living – tried to determine where homeowners were able to live most comfortably. Fortunately, the results show that in 44 of the 50 cities included the average homeowner had money leftover at the end of the month. But surprisingly, the hardest places for Americans to put away a little extra cash weren’t necessarily the most expensive places to live. In fact, cities in the Midwest and South were among the toughest, rather than pricier areas on the coasts. For example, Detroit, Memphis, New Orleans, and Cleveland were four of the six cities where residents showed a negative balance. Philadelphia also made the list. The number one spot, however, was Miami, where a high cost of living and a low median income make it a tough place to save. More here.

Log And Timber Homes Increasing In Popularity

If you were asked to name a hot home design trend, you probably wouldn’t guess log homes. And yet, new data from the National Association of Home Builders shows last year’s sales of log and timber homes were 56% higher than in 2012. That’s a big jump. So what’s behind the increase? Well, for one thing, today’s log and timber homes don’t resemble what might come to mind when thinking of an old-fashioned “log cabin.” According to the NAHB, “Revenues from log and timber frame homes have risen at a faster pace than units sold over the past six years as floorplans for the homes have expanded and offerings more extravagant.” In other words, today’s log homes are bigger and more luxurious than in the past. In fact, the average log home is 2,031 square feet. Still, the popularity of the homes is impressive when considering the fact that sales last year were only 7.8 percent below the number sold in 2006, while the rest of the single-family construction industry is down 42 percent. In short, log homes have been around forever and, based on their current popularity, they aren’t going anywhere any time soon. More here.

Home Buyer Must Haves Mean Compromise

Searching for a home to buy can be frustrating. Mostly because it’s not always easy to find a house in the right neighborhood with every one of the features you dreamed of. If you find the perfect kitchen, the house will have too few bedrooms. Or you’ll find a house with the right number of bedrooms and the kitchen will be too small. In other words, buying a house means compromise. And, in today’s market, buyers are having to make difficult choices. For example, a new analysis from the National Association of Realtors’ consumer website found that for 73 percent of recent buyers school district was an important factor in deciding which house to buy. But, among those buyers, nearly 80 percent said they had to give up other home features in order to find a house in their preferred district. Some of the features these buyers said they gave up included a garage, a large backyard, an updated kitchen, and an outdoor living area. In short, you might not get everything you want in one house. So prioritize your wish list and know what’s most important to you. More here.

Are Unequal Housing Markets Good For Buyers?

Income inequality is a hot topic these days. But what about housing market inequality? Well, a recent analysis looked at 50 of the largest metropolitan areas with an eye for which had the biggest city-wide disparity between high-end homes and the lowest-priced available homes. The results may surprise you. That’s because, the housing markets with the widest range between the high and low end of the market aren’t necessarily the markets that would immediately come to mind. In other words, cities like San Francisco – which features some of the country’s highest priced homes – were more equal than Midwestern cities where the cost of living is much lower. In fact, the number one most unequal housing market was Detroit, where the home values range from $32,000 to $431,000. Salt Lake City, on the other hand, was the most equal market, with median prices between $191,000 to $597,000. In this case, inequality might just be better for buyers. That’s because, the most unequal markets offer a wider range of prices for buyers to choose from, which means home buyers at all ends of the spectrum will have an easier time locating something that fits their budget. More here.

How A Sellers’ Market Could Be Good For Buyers

The housing market is about supply and demand. When there are a lot of buyers and too few homes, prices and competition rise, making it a good time for homeowners who want to sell. When there are more homes than buyers, prices fall and bargains abound. In short, the market will usually favor either buyers or sellers. But, naturally, conditions that are good for buyers will lead to more buyers and vice versa. In other words, the pendulum swings back and forth. Which is why, a recent survey holds hope for buyers concerned about higher prices and increasing competition. The National Association of Realtors’ Housing Opportunities and Market Experience survey found that 75 percent of Americans think now is a good time to sell a home. And, if the perception that it’s a good time to sell leads to more homes being listed for sale, that will soon begin to moderate prices, making buying a more affordable proposition for the almost equal number of Americans who say they think now is a good time to buy. More here.

Pending Home Sales Slow Slightly In April

Between the time an offer is accepted and the deal is closed, a home’s sale is typically referred to as pending. That’s because, there’s a chance, during this period, that the sale won’t go through, as there are a number of hurdles yet to clear. The buyer’s loan and financing have to be finalized and steps like the home inspection and appraisal can also alter the terms of the deal or end it altogether. In short, buying a home is a major transaction and there’s usually a few weeks between the contract signing and closing. For that reason, the National Association of Realtors tracks pending home sales each month, as they can be a good indicator of what future home sales will look like. According to their most recent report, pending sales fell 1.3 percent in April, with most regions flat from the month before. The slight decline was mostly due to a drop in the Midwest. Still, the report is an indication that inventory levels in much of the country are holding sales back. With a fewer-than-normal number of homes for sale, buyers are having more difficulty locating the right house and, as a result, the number of home sales has not matched the level of demand. More here.

The Latest On Where Home Prices Are Headed

Home prices are a top concern for both home buyers and sellers. After all, a lot of the calculus that goes into determining whether or not it’s a good time to sell or buy a house is based on where home values are and where they are expected to be in the future. For that reason, it’s good to follow the S&P Case-Shiller Home Price Indices, as they are considered the leading measure of U.S. home prices. According to the latest data, prices have continued to rise at around the same pace they’ve been increasing, with both month-over-month and year-over-year data showing little change. In short, prices are going up but no faster than they have been. David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, says things aren’t expected to change any time soon. “Unless inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,” Blitzer says. But despite rising prices, Blitzer notes that the market is calmer today than it was during the last price boom in the early 2000s. More here.

Generation Z May Become Homeowners Earlier

Generation Z – which is defined as people born between the mid-1990s and early 2000s – is quickly approaching adulthood and will soon face the decision of where to live and whether to rent or buy. But, according to a recent analysis, they may be facing challenges past generations didn’t. For example, the results of one study show that they will spend less time renting but will pay more than young people have in the past. With current median rent at $1,418 per month and rising, generation Z is expected to spend $226,000 on rent in their lifetime. That’s a lot. And it’s more than baby boomers or millennials spent. But despite that, generation Z is expected to become homeowners earlier than millennials have. One reason is the cyclical nature of the economy. Another is the fact that more than half say they considered buying before renting their current place. Also, they are just as likely as older generations to say they consider owning a home to be part of achieving the American Dream. In other words, if long-term economic trends hold up, the next generation of home buyers will have a better economy and job market to help fuel their dreams of homeownership. More here.

Changes Come To The Luxury Home Market

The high end of the real estate market has followed a different path since the financial crisis and housing crash. But while the luxury home market was able to avoid some of the ups-and-downs the rest of the market has endured, things are beginning to change. In fact, one recent analysis shows the number of homes for sale priced at or above $1 million dollars fell significantly during the first quarter of this year, as compared to the year before. And, if inventory continues to drop, the luxury home market could see some of the spiking prices and competition for available homes that buyers have found in more affordable price ranges. However, those this may be true, the effects have, so far, been far more muted than in the overall market. For example, the average luxury home was on the market for 82 days during the last quarter. That’s faster than the same time last year but much longer than the overall average. For comparison, the National Association of Realtors’ most recent numbers show the typical existing home was on the market for just 30 days, with 50 percent of homes sold in less than a month. More here.