A promising climb in home sales throughout the country amidst insufficient supply caused home prices to steadily rise in most metro areas during the second quarter, according to the latest quarterly report by the National Association of Realtors®.
The median existing single-family home price increased in 93 percent of measured markets1, with 163 out of 176 metropolitan statistical areas2 (MSAs) showing gains based on closings in the second quarter compared with the second quarter of 2014. Thirteen areas (7 percent) recorded lower median prices from a year earlier.
The number of rising markets in the second quarter increased compared to the first quarter, when price gains were recorded in 85 percent of metro areas. Thirty-four metro areas in the second quarter (19 percent) experienced double-digit increases, a decline from the 51 metro areas in the first quarter. Nineteen metro areas (11 percent) experienced double-digit increases in the second quarter of 2014.
Lawrence Yun, NAR chief economist, says the housing market has shifted into a higher gear in recent months. “Steady rent increases, the slow rise in mortgage rates and stronger local job markets fueled demand throughout most of the country this spring,” he said. “While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas.”
Adds Yun, “With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership – especially in higher-priced markets.”
The national median existing single-family home price in the second quarter was $229,400, up 8.2 percent from the second quarter of 2014 ($212,000). The median price during the first quarter of this year increased 7.1 percent from a year earlier.
The five most expensive housing markets in the second quarter were the San Jose, Calif., metro area, where the median existing single-family price was $980,000; San Francisco, $841,600; Anaheim–Santa Ana, Calif., $685,700; Honolulu, $698,600; and San Diego, $547,800.
The five lowest-cost metro areas in the second quarter were Cumberland, Md., where the median single-family home price was $82,400; Youngstown–Warren–Boardman, Ohio, $85,000; Rockford, Ill., $94,700; Decatur, Ill., $96,000; and Elmira, N.Y., $98,300.
Total existing-home sales3, including single family and condo, increased 6.6 percent to a seasonally adjusted annual rate of 5.30 million in the second quarter from 4.97 million in the first quarter, and are 8.5 percent higher than the 4.89 million pace during the second quarter of 2014.
“The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth,” says Yun. “In the meantime, inequality is growing in America because the downward trend in the homeownership rate means these equity gains are going to fewer households.”
At the end of the second quarter, there were 2.30 million existing homes available for sale4, slightly above the 2.29 million homes for sale at the end of the second quarter in 2014. The average supply during the second quarter was 5.1 months – down from 5.5 months a year ago.
Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $217,400 in the second quarter, up 3.1 percent from the second quarter of 2014 ($210,800). Fifty metro areas (82 percent) showed gains in their median condo price from a year ago; 11 areas had declines.
Rising home prices weighed on affordability in the second quarter compared to the second quarter of last year despite an uptick in the national family median income ($66,637)5. To purchase a single-family home at the national median price, a buyer making a 5 percent downpayment would need an income of $49,195, a 10 percent downpayment would require an income of $46,605, and $41,427 would be needed for a 20 percent downpayment.
NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says Realtors® are reporting strong competition and limited days on market for available homes – especially at the entry-level price range. “Buyers should work with their Realtor® to deploy a negotiation strategy that helps their offer stand out,” he said. “If a bidding war occurs, it’s important for the buyer to stay patient and only counteroffer up to what he or she can comfortably afford. It’s better to walk away and wait for the right home instead of being in a situation where one has purchased a home above their means.”
Total existing-home sales in the Northeast increased 10.3 percent in the second quarter and are 8.6 percent above the second quarter of 2014. The median existing single-family home price in the Northeast was $269,300 in the second quarter, up 5.2 percent from a year ago.
In the Midwest, existing-home sales jumped 13.4 percent in the second quarter and are 12.7 percent higher than a year ago. The median existing single-family home price in the Midwest increased 8.7 percent to $182,000 in the second quarter from the same quarter a year ago.
Existing-home sales in the South fell rose 1.1 percent in the second quarter and are 6.3 percent above the second quarter of 2014. The median existing single-family home price in the South was $202,900 in the second quarter, 8.7 percent above a year earlier.
In the West, existing-home sales climbed 8.1 percent in the second quarter and are 8.1 percent above a year ago. The median existing single-family home price in the West increased 9.6 percent to $325,200 in the second quarter from the second quarter of 2014.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
NOTE: NAR releases quarterly median single-family price data for approximately 170 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.
Data tables for MSA home prices (single family and condo) are posted at http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability/data. If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.
1The Ann Arbor, MI MSA and Harrisburg-Carlisle, PA MSA will now be included in the single-family price report.
2Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/List4.txt.
Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.
NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.
Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.
3The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing.
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.
4Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
5Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 4.0%.
NOTE: Existing-Home Sales for July will be released August 20, and the Pending Home Sales Index for July will be released August 27; release times are 10:00 a.m. EDT.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Videos” tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab.
CONTACT: Adam DeSanctis, 202/383-1178, firstname.lastname@example.org
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Realtors® stand ready to protect and defend opportunities for homeownership, and many of them have gathered here at the 2011 REALTORS® Conference & Expo to prepare for the challenges ahead.
During the opening session today at this week’s meetings, National Association of Realtors® President Ron Phipps outlined obstacles and opportunities facing the real estate industry.
“For the first time in generations, the American dream of homeownership is being threatened,” said Phipps, broker-president of Phipps Realty in Warwick, R.I. “We need to keep housing first on the nation’s public policy agenda, because housing and home ownership issues affect all Americans.”
NAR is actively advocating public policies that promote responsible, sustainable homeownership. Those include ensuring affordable, accessible financing; supporting tax policies that encourage homeownership; and helping more people stay in their homes or avoid foreclosure through streamlined short sales.
As Realtors® convene in California this week, conforming loan limits is one top-of-mind issue. On October 1, Congress allowed those limits to revert from 125 percent of the local area median home price to 115 percent of the local median home price. As a result, home buyers and sellers in 669 counties across 42 states and the District of Columbia have been affected. The lower limits mean that fewer people will have access to mortgage loans, and the loans that are available will be more expensive.
“Mortgage availability remains a real concern since the private market has yet to return,” said Phipps. “While the housing market is still in recovery, we firmly believe that lower loan limits will only further restrict liquidity in mortgage markets.”
NAR has urged Congress to reinstate the higher loan limits temporarily, and more than 200 members of Congress currently support efforts to reinstate these limits.
Session attendees also heard about the results of last month’s New Solutions for America’s Housing Crisis forum. The forum was hosted by the Progressive Policy Institute and Economic Policies for the 21st Century and brought together policy leaders, industry representatives, members of Congress, thought leaders and the media.
From this forum, NAR has endorsed a five-point housing solutions plan to help reenergize housing markets and spur the economic recovery.
“Many of the solutions that came out of this forum evolved from ideas that Realtors® have been advocating for several years,” said Phipps. “Realtors® and the families we work with, day in and day out, know that homeownership matters, and now, with our combined and continued efforts, we’re going to make sure that policymakers understand that, too.”
This year’s Realtors® Conference & Expo is expected to draw approximately 18,000 Realtors® and guests. More than 400 exhibitors are expected to participate in the Expo, which showcases the latest real estate products and innovations across various fields, including technology, data communications and financial programs and services.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Owning a home has had long-standing government support in the U.S. because homeownership benefits individuals and families, strengthens communities, and is integral to the nation’s economy, the National Association of Realtors® said in testimony today.
NAR President-Elect Moe Veissi outlined the association’s recommendations for housing finance reform before the House Financial Services Subcommittee on International Monetary Policy and Trade.
“We must be better stewards of the U.S. housing finance system if it is to thrive and effectively serve American home buyers and mortgage investors into the future,” said Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Repairs to our current housing finance structure must be made, but we must be careful that changes to the system do not come at the expense of homeownership opportunities for middle- and lower income Americans.”
Toward that end, NAR supports H.R. 2413, the “Secondary Market Facility for Residential Mortgage Act of 2011,” introduced by Reps. Gary Miller, R-Calif., and Carolyn McCarthy, D-N.Y.
“H.R. 2413 offers a comprehensive strategy for reforming the secondary mortgage market and gives the federal government a continued role to ensure a consistent flow of mortgage credit in all markets and all economic conditions,” said Veissi. “Moreover, it supports the use of long-term fixed-rate mortgage products.”
Veissi testified that full privatization of the secondary mortgage market would all but eliminate products like the 30-year fixed-rate mortgage and that mortgage interest rates would be unnecessarily higher and unaffordable for many Americans, shutting otherwise qualified buyers out of the market.
“The 30-year fixed-rate mortgage is the bedrock of the U.S housing finance system, and without government support, there’s no evidence that this type of mortgage would continue to exist,” said Veissi. “Private firms’ business strategies would focus on optimizing their profits, creating mortgage products that are more aligned with the goals of their business than in the best interests of the nation’s housing policy or consumers.”
Veissi said that while the size of the government’s participation in housing finance should decrease if private capital is to return to the market and function properly, the federal government must have a continued role in the secondary mortgage market to avoid losing long-term, fixed-rate mortgage products and keep borrowing costs affordable for consumers.
“Continuing government participation in the secondary mortgage market is critical to ensuring that qualified home buyers can obtain safe and sound mortgage financing products even during market downturns, when private entities have historically pulled back,” Veissi said.
Recent reductions to the conforming loan limits by the federal government are already having an impact on mortgage liquidity according to early data from an NAR survey, which found that consumers who are now above the new lower conventional conforming loan limit are experiencing significantly higher interest rates and the need for substantially larger down payments.
Veissi said that the housing and economic recoveries have been slow and that activities that force economic activity to be constricted further should be resisted.
“For hundreds of years, this country has understood the value of homeownership because it helps families build wealth, supports community stability and contributes to our economy. We need to make sure that future housing policies continue to reinforce our long-standing value of homeownership, for the future of our families and our country,” said Veissi.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
We need to keep housing first on the nation’s public policy agenda, because housing and homeownership issues affect all Americans, and a housing recovery is necessary for the nation’s economic well-being.
That was the message delivered today by National Association of Realtors® President Ron Phipps during the New Solutions for America’s Housing Crisis forum, where he joined a panel of experts to discuss solutions for addressing the country’s housing and economic challenges. The event was hosted by Economic Policies for the 21st Century and the Progressive Policy Institute.
“As the leading advocate for homeownership, Realtors® know that issues like affordable financing, natural disaster insurance, the mortgage interest deduction, and foreclosures and short sales don’t just affect people who own a home – homeownership shapes communities and strengthens the nation’s economy,” said Phipps, broker-president of Phipps Realty in Warwick, R.I. “America needs strong public policies that promote responsible, sustainable homeownership and that will help stabilize the nation’s housing market to support an economic recovery.”
Phipps said that housing is not recovering at the rate it should be and called on legislators and regulators to do no harm. He said that proposed legislation and regulatory rules or changes to homeownership tax benefits need to help America out of today’s economic struggles and not further harm consumer confidence or exacerbate problems within the fragile real estate industry.
Overly stringent standards and lower mortgage loan limits are preventing qualified borrowers from getting loans, and Phipps called on lenders and regulators to reduce the overcorrection in underwriting standards for mortgages. He urged support for policies that ensure qualified borrowers can obtain safe and sound mortgages in all markets at all times and encourage sound lending without high downpayment requirements.
“Realtors® support strong underwriting, but too-stringent standards are curtailing the ability of creditworthy consumers from obtaining mortgages to purchase a home, and that’s impacting the recovery,” said Phipps. “Making mortgages available to creditworthy home buyers and streamlining loan modifications and short sales will help stabilize and revitalize the housing industry and reduce the rising inventory of foreclosed homes.”
Phipps recommended that political and industry leaders work together to help reshape real estate and put the country back on the right track. “Our goal is to help ensure that anyone in this country who aspires to own their own home and can afford to do so is not denied the opportunity to build their future through homeownership,” Phipps said.
NAR Chief Economist Lawrence Yun also participated in the forum on a panel, “Homeownership, Tax Policy and Deficits.” Yun said it’s a misplaced argument to say the mortgage interest deduction is suddenly part of the deficit problem, when it’s been part of the federal tax code for nearly 100 years.
“The mortgage interest deduction is vital to the stability of the American housing market and economy,” said Yun. “Now is the worst possible time to discuss changes to the tax laws, which could impair the housing market’s fragile recovery and a broader job market recovery.
“Reducing or eliminating the MID is a de facto tax increase on homeowners, who already pay 80 to 90 percent of U.S. federal income tax. And middle-class families would be among the hardest hit; 65 percent of families who claim the MID earn less than $100,000 per year,” said Yun.
Yun also emphasized that any changes to the MID would greatly hamper the ability of small businesses to create jobs given that housing equity is often a major source of funding.
A video webcast of the event is available for viewing at www.livestream.com/progressivepolicyinstitute.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Pending home sales slipped in August with a mixed regional performance but are higher than a year ago, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, declined 1.2 percent to 88.6 in August from 89.7 in July but is 7.7 percent above August 2010 when it stood at 82.3. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said the decline reflects an uneven market. “The biggest monthly decline was in the Northeast, which was significantly disrupted by Hurricane Irene in the closing weekend of August,” he said. “But broadly speaking, contract signing activity has been holding in a narrow range for many months.”
The PHSI in the Northeast fell 5.8 percent to 63.6 in August but is 1.3 percent higher than August 2010. In the Midwest the index declined 3.7 percent to 76.2 in August but is 8.2 percent above a year ago. Pending home sales in the South rose 2.6 percent to an index of 96.9 and are 7.6 percent higher than August 2010. In the West the index declined 2.4 percent to 108.1 in August but is 10.5 percent above a year ago.
Yun said the market is underperforming given a pent-up demand in household formation. “We continue to experience a pattern in which financially qualified home buyers, willing to stay well within their means, are being denied credit – a factor in elevated levels of contract failures,” he said. “Based on the improving fundamentals of population growth, some job additions, rent increases and higher stock market wealth, we should be seeing existing-home sales closer to 5.5 million, but are expecting just over 4.9 million this year. The unnecessarily restrictive mortgage underwriting standards are attenuating the housing recovery and are a risk factor for the overall economy.”
Although economic growth as measured by the Gross Domestic Product is expected to remain positive, uncertainty is causing some consumer hesitation. “We need to remove the road blocks to the housing recovery for people who are trying to take advantage of excellent affordability conditions,” Yun added. “Unfortunately, some buyers also will face notably higher mortgage rates on jumbo loans because of a lack of competition in the banking industry.”
VScreen was featured in September’s issue of ‘Real Estate Magazine’, highlighting how video marketing is taking the real estate industry by storm and what its future holds.
Internet video marketing is rapidly taking center stage in the real estate industry…and experts say it’s no surprise. Featured in September’s issue of Real Estate Magazine, VScreen CEO Stephen Schweickart said real estate video’s compelling statistics provide indisputable ammunition to back the claim. With video comprising over 50% of all Internet activity…and YouTube now being both the world’s 2nd ranked search engine and website…Schweickart says the handwriting is on the wall. “It’s not a matter of whether or not Realtors will incorporate video into their marketing…but rather how far behind they will fall before seeing the light”.
‘Old school’ brokers and agents may limit their concept of video to traditional home video tours…but according to Real Estate Magazine…that’s only a small slice of the pie. Schweickart says it’s important to know what kind of video content really matters to viewers…and then film accordingly to meet that need. “At VScreen, we produce a wide variety of content ranging from ‘how-to’ videos on real estate related topics for brokers to place on their websites…all the way to local market update videos and agent profiles. In fact, 84% of all videos viewed on-line are either informational or how-to in nature, versus only 14% that are transaction based (buy/sell)”…Schweickart added.
As technology grows…the importance of search engine optimization and keeping current with mobile technology is especially important when considering how video impacts such marketing strategies. According to VScreen…brokers and agents don’t have the time to keep up to speed with every new development and technology…but they should be working with someone who is. The measurable results of Internet video have solidly established the medium as the premier tool for Internet marketing for real estate professionals.
VScreen is a leading Internet video strategy firm and cutting-edge production studio, offering turnkey video solutions for companies looking for the latest in syndicated consumer video content, custom video production and automated video technology. Specializing in vertical markets such as real estate, VScreen is the trusted video source for the most reputable national brands within their respective industry, serving clients such as Yahoo! Real Estate, REALTOR.com, Zillow.com and many others.
Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors®. Monthly gains were seen in all regions.
Total existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.
Lawrence Yun, NAR chief economist, said there are some positive market fundamentals. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” he said. “Investors were more active in absorbing foreclosed properties. In addition to bargain hunting, some investors are in the market to hedge against higher inflation.”
Investors2 accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.
All-cash sales accounted for 29 percent of transactions in August, unchanged from July; they were 28 percent in August 2010; investors account for the bulk of cash purchases.
“We had some disruptions from Hurricane Irene in the closing weekend of August, when many sales normally are finalized, along the Eastern seaboard and in New England,” Yun said. “As a result, the Northeast saw the smallest sales gain in August, and some general impact is expected in September with widespread flooding from Tropical Storm Lee. Aberrations in housing data are possible over the next couple months as markets recover from disrupted closings and storm damage.”
Yun said an extremely important issue currently is the renewal and availability of the National Flood Insurance Program, scheduled to expire at the end of this month. “About one out of 10 homes in this country need flood insurance to get a mortgage, and we would see significant negative market impacts without it,” he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.27 percent in August, down from 4.55 percent in July; the rate was 4.43 percent in August 2010. Last week, Freddie Mac reported the 30-year fixed rate fell to a record low 4.09 percent.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the market is remarkably affordable for people with secure jobs, good credit and long-term plans. “All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation,” he said.
“The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price. Buyers may be able to find more favorable credit terms with community and small regional banks, and Realtors® can often give buyers advice to help them overcome some of the financing obstacles,” Phipps said.
Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price – were reported by 18 percent of NAR members in August, up from 16 percent July and 9 percent in August 2010.
The national median existing-home price3 for all housing types was $168,300 in August, which is 5.1 percent below August 2010. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 31 percent of sales in August, compared with 29 percent in July and 34 percent in August 2010.
Total housing inventory at the end of August fell 3.0 percent to 3.58 million existing homes available for sale, which represents an 8.5-month supply4 at the current sales pace, down from a 9.5-month supply in July.
Single-family home sales rose 8.5 percent to a seasonally adjusted annual rate of 4.47 million in August from 4.12 million in July, and are 20.2 percent above the 3.72 million pace in August 2010. The median existing single-family home price was $168,400 in August, which is 5.4 percent below a year ago.
Existing condominium and co-op sales increased 1.8 percent a seasonally adjusted annual rate of 560,000 in August from 550,000 in July, and are 8.3 percent higher than the 517,000-unit level one year ago. The median existing condo price5 was $167,500 in August, down 3.3 percent from August 2010.
Regionally, existing-home sales in the Northeast increased 2.7 percent to an annual pace of 770,000 in August and are 10.0 percent above a year ago. The median price in the Northeast was $244,100, which is 5.1 percent below August 2010.
Existing-home sales in the Midwest rose 3.8 percent in August to a level of 1.09 million and are 26.7 percent above August 2010. The median price in the Midwest was $141,700, down 3.5 percent from a year ago.
In the South, existing-home sales increased 5.4 percent to an annual pace of 1.94 million in August and are 16.9 percent higher than a year ago. The median price in the South was $151,000, which is 0.8 percent below August 2010.
Existing-home sales in the West jumped 18.3 percent to an annual pace of 1.23 million in August and are 20.6 percent higher than August 2010. The median price in the West was $189,400, down 13.0 percent from a year ago.
The following is an excerpt from the monthly RE/MAX National Housing Report. For more information or to see the full two-page report, contact (303) 796-3667.
The August 2011 RE/MAX National Housing Report, which surveyed 53 U.S. metropolitan areas, shows that home sales reached a level 18% higher than August 2010. Traditionally, June is the highest sales month, but this year July and August were the two summer months that experienced higher sales than in 2010. The inventory of homes-for-sale dropped for the 14th consecutive month, while total inventory remains almost 19% below the level in August 2010. And the Median Sales Price of homes sold in August, like July, was down fractionally, while the loss from last year’s prices continues to shrink.
“We’re pleased to see transactions pushing higher in August and without any artificial stimulus,” said Margaret Kelly, CEO of RE/MAX, LLC. “Although the housing recovery will continue to be uneven, the market is struggling to return to normal despite uncertainty in the economy and stubborn unemployment rates.”
Transactions – Year-Over-Year Change
Closed Transactions in the month of August were 3.7% higher than July and 18.0% higher than August 2010. Unlike June, both July and August home sales were up double digits from 2010. Of the 53 metro areas surveyed, 47 experienced a rise in Home Sales from 2010, most notably: Pittsburgh, PA +60.6%, Minneapolis, MN +48.4%, Albuquerque, NM +43.0%, Milwaukee, WI +37.1%, Seattle, WA +29.4%, Phoenix, AZ +26.4% and Chicago, IL +25.7%.
Median Sales Price
The Median Sales Price for August was $189,831. This is just 0.6% below the price in July and 3.6% below the price in August 2010. Home prices have risen in 4 of the last 8 months, while on a year-over-year basis, the Median Price has improved for 5 consecutive months. Of the 53 metro areas reviewed for this report, 14 saw prices rise from July, and 10 saw prices rise over August 2010, including: Detroit, MI +15.7%, Orlando, FL +14.2%, Milwaukee, WI +10.6% and Pittsburgh, PA +2.2%.
Days on Market – Average of 54 Metro Areas
For all properties sold in the month of August, the average Days on Market was 90. This was just 2 days higher than the average of 88 seen in July, but 6 days higher than the average seen in August 2010. July had an average Days on Market of 88, which was the first month since September 2010 that the average was below 90. Days on Market is the number of days between first being listed in the MLS and when a sales contract is signed.
Months Supply of Inventory – Average of 54 Metro Areas
Because foreclosure notices have reached a 44-month low, it seems to follow that homes-for-sale have been falling. The average inventory of homes-for-sale in the 53 metro areas surveyed dropped 4.8% from July and 18.9% from August 2010. This results in a 6.8 Months Supply of homes for August, which is down from 7.2 in July and 9.2 in August 2010. The Months Supply is the number of months it would take to clear the active inventory at the current rate of sales. A six-month supply is considered a balanced market between buyers and sellers.
About the RE/MAX Network:
RE/MAX was founded in 1973 by Dave and Gail Liniger, real estate industry visionaries who still lead the Denver-based global franchisor today. RE/MAX is recognized as a leading real estate franchisor with the most productive sales force in the industry and a global reach of more than 80 countries. With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised more than $100 million for Children’s Miracle Network Hospitals, Susan G. Komen for the Cure® and other charities. Nobody in the world sells more real estate than RE/MAX. Please visit www.remax.com or www.joinremax.com.
The RE/MAX National Housing Report is distributed each month on or about the 15th. The first Report was distributed in August 2008. The Report is based on MLS data in approximately 54 metropolitan areas, includes all residential property types, and is not annualized. For maximum representation, many of the largest metro areas in the country are represented, and an attempt is made to include at least one metro from each state. Metro area definitions include the specific counties established by the U.S. Government’s Office of Management and Budget, with some exceptions.
Transactions are the total number of closed residential transactions during the given month. Month’s Supply of Inventory is the total number of residential properties listed for sale at the end of the month (active inventory) divided by the number of sales contracts signed (pended) during the month. Where “pended” data is unavailable, this calculation is made using closed transactions. Days on Market is the number of days that pass from the time a property is listed until the property goes under contract for all residential properties sold during the month. Median Sales Price is the median price of all residential properties sold during the month.
MLS data is provided by contracted data aggregators, RE/MAX brokerages and regional offices. While MLS data is believed to be accurate, it cannot be guaranteed. MLS data is constantly being updated, making any analysis a snapshot at a particular time. Every month the RE/MAX National Housing Report re-calculates the previous period’s data to ensure accuracy over time. All raw data remains the intellectual property of each local MLS organization.
West Penn Multi-List, Inc., the Pittsburgh area’s definitive source for real estate information, today released its August 2011 statistics.
“We’re pleased to announce that residential homes placed under agreement in August 2011 were up 23.25 percent over August 2010,” said Ronald Croushore, current president of the West Penn Multi-List, Inc. and president/owner of Prudential Preferred Realty. “This increase was due in part to the attractive financing options and extremely low interest rates.”
These numbers represent the 13-county area serviced by the West Penn Multi-List, Inc. (Allegheny, Armstrong, Beaver, Butler, Washington, Westmoreland, Fayette, Greene, Clarion, Lawrence, Mercer, Somerset and Indiana Counties).
The Allegheny County real estate market showed marked improvements, with homes placed under agreement up 25.26 percent, and closings up 26.41 percent over August 2010. The time on market for those homes that sold only escalated 6.17 percent, which means that it took only five days longer for a home to sell in August 2011 versus August 2010.
Other counties basked in the under contract cycle with Butler County up 29.15 percent, Washington County up 47.39 percent, and Westmoreland County up 17.68 percent.
“The really good news for homeowners is that properties that actually closed were up 18.77 percent versus August of last year, and the average sale price of homes that sold was up 3.79 percent,” Croushore said.
The “average days on market” was up slightly by 9.88 percent, which translates to roughly eight days from the date the home was placed on the market until it went under agreement.
This is more good news for home buyers and sellers in Southwestern Pennsylvania. “The real estate market has prospered in this area during the advantageous mortgage rate cycle,” Croushore said. “Interested home buyers should seriously consider taking advantage of the low rates, and prospective sellers should contact a real estate agent to prepare their homes for the active real estate market.”
The West Penn Multi-List, Inc. is committed to providing the most innovative and cost effective multiple listing services to its broker subscribers. The West Penn Multi-List, Inc. provides state of the art programs for the benefit of the brokers and their agents. These programs are offered to stay current with advancing technology and enhance the professionalism of the brokers and their agents, which results in unparalleled service to their customers. The West Penn Multi-List, Inc. strives to protect the integrity of the data while recognizing that the data is the exclusive property of the broker. For more information, visit www.westpennmls.com.
Commercial real estate vacancy rates are flat and projections for growth have been moderated because economic growth and job creation have been weaker than expected, but modest improvements are expected over the coming year, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the weakening economy will slow the growth in demand for space. “Disappointing economic growth in recent months means a slower recovery for most of the commercial real estate sectors, although multifamily housing continues to benefit from pent-up demand resulting from an abnormal slowdown in household formation in recent years,” he said. “Many young people, who normally would have struck out on their own from 2008 to 2010, had been doubling up with roommates or moving back into their parents’ homes. However, they’ve been entering the rental market as new households in stronger numbers this year. As a result, apartment vacancy rates are declining and rents are rising at faster rates.”
Growth in the Gross Domestic Product slowed to 0.4 percent in the first quarter and 1.3 percent in the second quarter, much lower than the 4 to 5 percent expansion needed after a recession.
“A healthy recovery is already occurring in the multifamily sector, with average apartment rent expected to rise 2.5 percent this year and another 3.2 percent in 2012,” Yun said. “Normally, rising rents correspond to rising home prices. However, this isn’t happening in this recovery because buyers are constrained by unnecessarily restrictive mortgage underwriting standards, so the underlying demand isn’t drawing inventory down quickly enough to support price growth.”
Looking at commercial vacancy rates from the third quarter of this year to the third quarter of 2012, NAR forecasts vacancies to decline 0.3 percentage point in the office sector, 0.6 point in industrial real estate, 0.7 point in the retail sector and 0.9 percentage point in the multifamily rental market.
The Society of Industrial and Office Realtors®, in its SIOR Commercial Real Estate Index, an attitudinal survey of 266 local market experts,1 shows an erosion in market conditions. All regions posted declines except the West.
The SIOR index, measuring the impact of 10 variables, declined 2.6 percentage points to 54.9 in the second quarter, following a strong gain of 6.8 percentage points in the first quarter.
The SIOR index remains well below the level of 100 that represents a balanced marketplace, but had seen six consecutive quarterly improvements prior to last quarter’s decline. The last time the index was at 100 was in the third quarter of 2007.
Fundamentals are largely unchanged, with vacancy rates relatively flat. Eight out of 10 respondents said office and industrial leasing activity is below historic levels, and seven out of 10 said asking rents are below a year ago. It remains a tenant’s market, with many tenants benefiting from moderate concessions and rent discounts.
Construction activity is nearly nonexistent in most areas, and it is a buyer’s market for development acquisitions. Local experts said commercial office and industrial prices are below construction costs in 83 percent of markets.
NAR’s latest COMMERCIAL REAL ESTATE OUTLOOK2 offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,3 a source of commercial real estate performance information.
Vacancy rates in the office sector are forecast to fall from 16.6 percent in the third quarter of this year to 16.3 percent in the third quarter of 2012.
The markets with the lowest office vacancy rates currently are Washington, D.C., with a vacancy rate of 8.6 percent; New York City, at 10.1 percent; and Long Island, N.Y., 13.0 percent.
Office rents are expected to rise 0.8 percent in 2011 and another 1.5 percent next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is projected to be 28.3 million square feet this year.
Industrial vacancy rates are likely to decline from 12.7 percent in the current quarter to 12.1 percent in the third quarter of 2012.
At present, the areas with the lowest industrial vacancy rates are Los Angeles, with a vacancy rate of 5.5 percent; Orange County, Calif., 6.2 percent; and Miami at 8.9 percent.
Annual industrial rent is expected decline 0.9 percent this year before rising 2.0 percent in 2012. Net absorption of industrial space nationally should be 47.8 million square feet this year.
Retail vacancy rates are projected to decline from 12.9 percent in the third quarter of this year to 12.2 percent in the third quarter of 2012.
Markets with the lowest retail vacancy rates currently include San Francisco, 3.8 percent; Northern New Jersey, 6.1 percent; and three markets at 6.4 percent each: Los Angeles; Long Island, N.Y.; and San Jose, Calif.
Average retail rent is forecast to decline 0.4 percent this year, and then rise 0.7 percent in 2012. Net absorption of retail space is seen at 5.6 million square feet this year.
The apartment rental market – multifamily housing – should see vacancy rates drop from 5.5 percent in the current quarter to 4.6 percent in the third quarter of 2012. Apartment vacancies below 5 percent generally are considered a landlord’s market.
Areas with the lowest multifamily vacancy rates presently are Minneapolis, 2.5 percent; New York City, 2.8 percent; and Portland, Ore., at 2.9 percent.
Multifamily net absorption is likely to be 237,700 units this year.
The COMMERCIAL REAL ESTATE OUTLOOK is published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.
The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.
Approximately 79,000 NAR and institute affiliate members specialize in commercial brokerage services, and an additional 171,000 members offer commercial real estate as a secondary business.