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2 Trends Helping Keep Housing Affordable

by Amy McLeod Group


Two positive trends have started to emerge that impact the 2019 Spring Housing Market. Mortgage interest rates for a 30-year fixed rate loan have dropped to new lows, right as reports show that wages have increased at their highest rate in decades!

These two factors have helped keep housing affordable despite low supply of houses for sale driving up prices. First American’s Chief Economist, Mark Fleming, explains the impact,

“Ongoing supply shortages remain the main driver of the performance gap as the housing market continues to face an inventory impasse – you can’t buy what’s not for sale.

 However, an unexpected affordability surge, driven primarily by lower-than-anticipated mortgage rates, rising wages and favorable demographics, has boosted housing demand.”

Mortgage interest rates had been on the rise for most of 2018 before reaching their peak in November at 4.94%. According to Freddie Mac’s Primary Mortgage Market Survey, interest rates last week came in at 4.20%.

Average hourly earnings grew at an annual rate of 3.2% in March, up substantially from the 2.3% average pace seen over the last 10 years.

These two factors contributed nearly $6,000 worth of additional house-buying power for median households from February to March 2019, according to First American’s research. Fleming is positive about the prolonged impact of lower rates and higher wages.

“We expect rising wages and lower mortgage rates to continue through the spring, boosting housing demand and spurring home sales.”

Bottom Line

Low mortgage interest rates have kept housing affordable throughout the country. If you plan on purchasing a home this year, act now while rates are still low!

Contact The McLeod Group Network for all your Real Estate needs! 971.208.5093 or [email protected] 

By: KCM Crew


The numbers: 
Existing-home sales ran at a seasonally adjusted annual 5.21 million rate in March, the National Association of Realtors said Monday. That was 4.9% lower than February’s pace and missed the Econoday consensus of a 5.3 million rate.

What happened: Sales of previously-owned homes fell more sharply than expected in March as the usual housing headwinds stalked the market. The surge in February was the strongest in nearly four years, and the Realtor lobby group is attributing the March decline to a return to normalcy after that spike. Still, sales were 5.4% lower than a year ago.

The median price of a home sold in March was $259,400, a 3.8% increase versus a year ago. At the current pace of sales, it would take 3.9 months to exhaust available supply, still well below the long-time average of 6 months. Properties stayed on the market for an average of 36 days in March, down from 44 days in February but a bit longer than the 30 days averaged last year.

According to NAR’s measure of first-time buyers, they accounted for 33% of all transactions in March. But more recent comprehensive research – NAR’s is based on survey data – suggests first-time buyers currently make up about the same share of the market that they have for the past two decades.

Activity was mixed regionally, as always, but all regions saw a decline. In the Northeast, sales were down 2.9%, and in the South they fell 3.4%. In the West, which has suffered for several months, in large part because of the recent tax law changes, sales fell 6%. But the Midwest saw the biggest decline, of 7.9%.

Big picture: The housing market is getting a second wind from the steep decline in mortgage rates over the past few months, although rates may have bottomed out. And there still isn’t enough inventory of the type that’s most needed. “The lower-end market is hot while the upper-end market is not,” said NAR Chief Economist Lawrence Yun.

It’s normally the government’s data on newly-constructed homes that are so choppy, not the existing-home market, which accounts for most of the sales activity in housing.

What they’re saying: “March might be the closest approximation we have seen in a while to the true underlying sales pace,” said Amherst Pierpont Securities’ Stephen Stanley after the release. “The 3-month average through February was 5.14 million. The March pace picked up modestly from there but was still short of the 2018 tally of 5.34 million. The National Association of Realtors is optimistic (when are they not?!?) that lower mortgage rates and a better inventory situation will help to propel sales forward during the peak spring season.”

Contact The McLeod Group Network for all your Real Estate needs! 971.208.5093 or [email protected] 

By: Realtor.com, Andrea Riquier 

U.S. Pending Home Sales Rose 4.6% in January

by Amy McLeod Group


WASHINGTON—The number of existing homes that went under contract in the U.S. rose strongly in January, a sign of improvement for the housing market at the start of the year.

An index measuring pending home sales—a gauge of purchases before they become final—rose 4.6% to a seasonally adjusted reading of 103.2 in January, the National Association of Realtors said Wednesday.

 
 
 

Economists surveyed by The Wall Street Journal had predicted a 0.8% increase in January’s sales. The index was down 2.3% in January from a year earlier.

December’s reading was revised slightly lower, to 98.7 from an initial 99.0.

Pending sales offer a forecast of the housing market because they measure purchases at the time a contract is signed rather than at closing. Contracts typically take weeks to become final, and some are ultimately canceled.

“A change in Federal Reserve policy and the reopening of the government were very beneficial to the market,” said Lawrence Yun, the trade group’s chief economist.

He added that rising incomes, a strong labor market and steady mortgage rates should help January’s positive trend to continue.

Still, the NAR reported earlier this month that its more closely watched index—final sales of existing homes, which measure purchases after closing—fell in January.

News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.

Contact The McLeod Group Network at 971.208.5093 or [email protected] for all your Real Estate needs! 

By: Realtor.com,  

Lack of Listings Slowing Down the Market

by Amy McLeod Group

As the real estate market continues to move down the road to a complete recovery, we see home values and home sales increasing while distressed sales (foreclosures and short sales) continue to fall to their lowest points in years. There is no doubt that the housing market will continue to strengthen throughout 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory!

Here’s what a few industry experts have to say about the current inventory crisis:

Lawrence Yun, Chief Economist for the National Association of Realtors

“Inventory coming onto the market during this year’s spring buying season…was not even close to being enough to satisfy demand, that is why home prices keep outpacing incomes and listings are going under contract in less than a month – and much faster – in many parts of the country.”

Sam Khater, Chief Economist for Freddie Mac

“While this spring’s sudden rise in mortgage rates [took] up a good chunk of the conversation, it’s the stubbornly low inventory levels in much of the country that are preventing sales from really taking off like they should… Most markets simply need a lot more new and existing supply to cool price growth and give buyers enough choices.”

Alexandra Lee, Housing Data Analyst for Trulia

This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters…Despite the second-quarter gain, inventory was down 5.3% from a year ago. Still, this represents an easing of the double-digit drops we’ve been seeing since the second quarter of 2017.”

Bottom Line

If you are thinking about selling, now may be the time. Demand for your house will be strongest while there is still very little competition which could lead to a quick sale for a great price.

Let’s get together and discuss your options! 971.208.5093 or [email protected]

By: KCM Crew

Days on The Market Drops to New Low in April

by Amy McLeod Group

According to recently released data from the National Association of Realtors (NAR), the median number of days that a home spent on the market hit a new low of 26 days in April, as 57% of homes were on the market for under a month.

NAR’s Chief Economist, Lawrence Yun, had this to say,

“What is available for sale is going under contract at a rapid pace. Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”

Strong buyer demand, a good economy, and a low inventory of new and existing homes for sale created the perfect storm to accelerate the time between listing and signing a contract.

The chart below shows the median days on the market from April 2017 to April 2018:

Bottom Line

If you are a homeowner who is debating whether or not to list your home for sale, know that national market conditions are primed for a quick turnaround! Let’s get together to discuss exactly what’s going on in our area, today! 971.208.5093 or [email protected].

By: KCM Crew

Home Prices: The Difference 5 Years Makes

by Amy McLeod Group

The economists at CoreLogic recently released a special report entitled, Evaluating the Housing Market Since the Great Recession. The goal of the report was to look at economic recovery since the Great Recession of December 2007 through June 2009.

One of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from December 2012 to December 2017 to show how prices over the last five years have fared.

Frank Nothaft, Chief Economist at CoreLogic, commented on the importance of breaking out the data by state,

“Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now.

Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels.”

The map below was created to show the 5-year appreciation from December 2012 – December 2017 by state.

Nationally, the cumulative appreciation over the five-year period was 37.4%, with a high of 66% in Nevada, and a modest increase of 5% in Connecticut.

Where were prices expected to go?

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

According to the December 2012 survey results, national homes prices were projected to increase cumulatively by 23.1% by December 2017. The bulls of the group predicted home prices to rise by 33.6%, while the more cautious bears predicted an appreciation of 11.2%.

Where are prices headed in the next 5 years?

Data from the most recent HPES shows that home prices are expected to increase by 18.2% over the next 5 years. The bulls of the group predict home prices to rise by 27.4%, while the more cautious bears predict an appreciation of 8.3%.

Bottom Line

Every day, thousands of homeowners regain positive equity in their homes. Some homeowners are now experiencing values even higher than before the Great Recession.

If you’re wondering if you have enough equity to sell your house and move on to your dream home, let’s get together to discuss conditions in our neighborhood! 971.208.5093 or [email protected].

By: KCM Crew

There’s More to a Bubble Than Rising Home Prices

by Amy McLeod Group

What truly causes a housing bubble and the inevitable crash? For the best explanation, let’s go to a person who correctly called the last housing bubble – a year before it happened.

“A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation…Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the ‘bubble’ bursts.

I have taken to calling the housing market a ‘bubble’.”

– Bill McBride of Calculated Risk calling the bubble back in April 2005

Where do we stand today regarding speculation?

There are two measurements that are used to determine the speculation in a housing market:

  1. The number of homes purchased by an investor and
  2. The number of homes being flipped (resold within a twelve-month period)

As compared to 2005, investor purchases are down dramatically (from 23% to 13%) and so is flipping (from 8.2% to 5.7%). McBride explains:

“There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell). Back in 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation.”

What are the experts saying about speculation in today’s market?

DSNews recently ran an article which asked two economists to compare the speculation in today’s market to that in 2005-2007. Here is what they said:

Dr. Eddie SeilerChief Housing Economist at Summit Consulting:

“The speculative ‘flipping mania’ of 2006 is absent from most metro areas.”

Tian LiuChief Economist of Genworth Mortgage Insurance:

“The nature of housing demand is different as well, with more potential homeowners and far fewer speculators in the housing market compared to the 2005-2007 period.”

And what does McBride, who called the last housing bubble, think about today’s real estate market?

Sixty days ago, he explained:

“In 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation. And even more dangerous during the bubble was the excessive use of leverage (all those poor-quality loans). Currently lending standards are decent, and loan quality is excellent…

I wouldn’t call house prices a bubble – and I don’t expect house prices to decline nationally like during the bust.”

Bottom Line

Speculation is a major element of the housing bubble formula. Right now, there are not elevated percentages of investors and house flippers. Therefore, there is not an elevated rate of speculation.

Let The McLeod Group Network assist you with all your home buying and home selling questions. 971.208.5093 or [email protected].

By: KCM Crew

A Housing Bubble? Industry Experts Say NO!

by Amy McLeod Group

With residential home prices continuing to appreciate at levels above historic norms, some are questioning if we are heading toward another housing bubble (and subsequent burst) like the one we experienced in 2006-2008.

Recently, five housing experts weighed in on the question.

Rick Sharga, Executive VP at Ten-X:

“We’re definitely not in a bubble.”

“We have a handful of markets that are frothy and probably have hit an affordability wall of sorts but…while prices nominally have surpassed the 2006 peak, we’re not talking about 2006 dollars.”

Christopher Thornberg, Partner at Beacon Economics:

“There is no direct or indirect sign of any kind of bubble.”

“Steady as she goes. Prices continue to rise. Sales roughly flat.…Overall this market is in an almost boring place.”

Bill McBride, Calculated Risk:

“I wouldn't call house prices a bubble.”

“So prices may be a little overvalued, but there is little speculation and I don't expect house prices to decline nationally like during the bust.”

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices:

“Housing is not repeating the bubble period of 2000-2006.”

“…price increases vary unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.”

Bing Bai & Edward Golding, Urban Institute:

“We are not in a bubble and nowhere near the situation preceding the 2008 housing crisis.”

“Despite recent increases, house prices remain affordable by historical standards, suggesting that home prices are tracking a broader economic expansion.”

Let’s get together to discuss your home buying and home selling needs. 971.208.5093 or [email protected]

By: KCM Crew

Thinking of Selling your Home? Competition is Coming

by Amy McLeod Group
Thinking of Selling your Home? Competition is Coming | MyKCM

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.7% over last year.

How will this impact buyers?

More inventory means more options. Danielle Hale, Realtor.com’s Chief Economistexplained this is good news for the housing market - especially for those looking to buy:

"It's not spectacular construction growth, but it's slow and steady in the right direction. Eventually, the pickup in single-family home construction will mean [buyers] will have more options. Especially with the limited number of sales right now, more options are really needed."

How will this impact sellers?

More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:

  1. A great price on their home as buyers outbid each other for it
  2. A quick sale as buyers have so little to choose from
  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal

With an increase in competition, the seller may not enjoy these same benefits. As Hale said:

"As new construction continues to increase, home shoppers will eventually have more [choices] and a bit more time to make purchase decisions compared to today's quick-moving housing market."

Bottom Line

If you are considering the sale of your home, it might make sense to beat this new construction competition to the market.

Contact The McLeod Group Network to find out how much your current home is worth! 971.208.5093 or [email protected]

By: KCM Crew

Home Sales Expected to Increase Nicely in 2018

by Amy McLeod Group
Home Sales Expected to Increase Nicely in 2018 | MyKCM

Freddie MacFannie Mae, and The Mortgage Bankers Association are all projecting that home sales will increase in 2018. Here is a chart showing what each entity is projecting in sales for the remainder of this year and the next.

Home Sales Expected to Increase Nicely in 2018 | MyKCM

As we can see, each entity is projecting sizable increases in home sales next year. If you have considered selling your house recently, now may be the time to contact The McLeod Group Network and put it on the market. 971.208.5093 or [email protected]

By: KCM Crew

Displaying blog entries 1-10 of 18

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The McLeod Group Network
Keller Williams Capital City
1900 Hines St SE #220
Salem OR 97302
971-208-5093
Fax: 971-599-5229

**Disclaimer: Amy McLeod, and her team, do not initiate, process, or service mortgages.  And provide this information only as a service.  You should confirm information here with your Licensed Mortgage Lender.