Housing Market To “Spring Forward” This Year

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market. Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right. Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows. The National Association of REALTORS (NAR) recently reported that the top 10 dates sellers listed their homes in 2015 all fell in April, May or June. Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2016, meet with a local real estate professional to evaluate the opportunities in your market. 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Further Proof This Isn’t a Housing Bubble

Two weeks ago, we posted a blog which explained that current increases in home prices were the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Today, we want to look at home prices as compared to current incomes. Here is a graph showing the monthly mortgage payment on a median priced home in the U.S. over the last 25 years: Mortgage payments are currently well below the historic average over that time period. Purchasers are not overextending themselves to buy a home like they did on the run-up to the housing crash. Lawrence Yun, the Chief Economist at the National Association of Realtors, recently explained in a Forbes article:

“Even though home prices are climbing far above people’s income, exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget. For someone making a 20% down payment, the monthly mortgage payment at today’s mortgage rates would take up 15% of a person’s gross income. During the bubble years, it was reaching 25% of income. The long-term historical average is around 20%. Therefore, a middle-income household does not need to overstretch their budget much if at all to buy a typical home.”

Bottom Line

Due to low interest rates, demand for housing has dramatically increased. This has caused a jump in home prices. However, low interest rates have also allowed the monthly cost of buying a home to remain well below historic norms. We are in a strong housing market, not a housing bubble.

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Lack of Inventory Challenging Many Housing Markets

Going into the 2016 spring market, the biggest challenge the real estate industry has is the lack of available housing inventory for sale. Here are a few experts and their thoughts on the subject:

David Crowe, Chief Economist for the National Association of Home Builders:

“Many sellers may not have an absolute decision as to whether to buy an existing home or a new home. So the low inventory of existing homes is locking them in place.”

Ralph McLaughlin, Chief Economist with Trulia:

“We are in a time of short supply, which is great news for sellers because they will likely be faced with multiple offers due to the little inventory out there…Buyers will be up against a lot of other people and against a short supply of existing homes.”

Lawrence Yun, Chief Economist with NAR:

“First-time buyers in high demand areas continue to encounter instances where their offer is trumped by cash buyers and investors. Without a much-needed boost in new and existing-homes for sale in their price range, their path to homeownership will remain an uphill climb.”

Fitch Ratings:

“One important issue that has restrained sales and starts is inventory. On an absolute basis, inventory has not expanded as much as in past recoveries, leading to less selection for buyers. This is especially true for existing home sales but is evident for new home construction as well. When it comes to U.S. housing inventory, more is better." 

Jonathan Smoke, Chief Economist for Realtor.com:

“The increase in sales is resulting in continued tighter-than-tight supply—measured by NAR to be four months in January.  For you non-economists out there, that metric measures the number of months it would take to sell the current inventory of available homes, at the current pace. Got it? Six to seven months’ worth of homes on the market is considered normal; four months is cray-cray.”

Agents: The spring buying season is upon us. Join us later today for a free webinar to discover “KCM’s 3 Step Action Plan to Dominating This Spring”.

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

We Helped Another Seller Achieve Over Asking

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming

We recently reported that home prices are continuing to rise across most of the nation. This has created concern in some pundits that a housing bubble, like we saw ten years ago, is forming again. We want to explain why these concerns are unfounded. The current increase in home values can be easily explained by the theory of supply and demand. Right now, the number of families looking to purchase a home is greater than the supply of homes on the market. Here is a chart that explains how the months’ supply of housing inventory impacts home values: According to the latest Existing Home Sales Report from the National Association of Realtors, there is currently a four-month supply of inventory. That puts us in the blue section of the above graphic. Home prices should be appreciating.

The difference in 2006…

A decade ago, the demand for housing was artificially boosted by lending standards that were far too lenient. Today, the strength of the demand for housing is legitimate, as lending standards are nowhere near what they were a decade ago. For proof of this, let’s look at a graph of the Mortgage Bankers’ Association’s Mortgage Credit Availability Index: The higher the number, the easier it was to get a mortgage. We can see that from June 2005 to June 2007, mortgage standards were much more lenient than they have been over the last nine years.

Bottom Line

Today’s price increases, unlike those a decade ago, are the result of qualified buyer demand exceeding the current inventory of homes available for sale. Once the supply increases, prices will level out. 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Put Your Housing Cost To Work For You!

There are many young people debating whether they should renew the lease on their apartment or sign a contract to purchase their first home. As we have said before, mortgage interest rates are still near historic lows and rents continue to rise.

Housing Cost & Net Worth

Whether you rent or buy, you have a monthly housing cost.

As a buyer, you are contributing to YOUR net worth.

Every mortgage payment is a form of what Harvard University’s Joint Center for Housing Studies calls “forced savings.”

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

The principal portion of your mortgage payment helps build your net worth through building the equity you have in your home.

As a renter, you are contributing to YOUR LANDLORD’S net worth.

Below is an example of the home equity that would be accrued over the course of the next five years if you had purchased a home in January; based on the results of the Home Price Expectation Survey. In this example, simply by paying your mortgage, you would have increased your net worth by over $44,000!
Bottom Line
Use your monthly housing cost to your advantage! Meet with a local real estate professional who can explain the opportunities available in your market. 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Exising Home Sales Inch Up In January

Some Highlights:

- Existing Home Sales rose to an annual rate of 5.47 million, representing an 11% increase year-over-year.

- Inventory levels remain below the 6-month supply needed for a normal market at a 4.0-month supply.

Lawrence Yun, NAR's Chief Economist, warns: "The spring buying season is right around the corner and current supply levels aren't even close to what's needed to accommodate the subsequent growth in housing demand."

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!