Survey: Consumer Confidence in Housing Hot This Spring

 

Survey: Consumer Confidence in Housing Hot This Spring

Daily Real Estate News | Tuesday, April 08, 2014

Consumer attitudes are reflecting greater optimism in the housing market heading into real estate's traditionally strong spring selling season, according to Fannie Mae's March 2014 National Housing Survey.

In the poll of 1,000 people, 38 percent say it's a good time to sell a home, up from 26 percent a year ago. The poll also shows that 69 percent of those surveyed say it's a good time to buy, and 52 percent say it's easier today to get financing for a home.

Americans also feel more confident about their personal finances: An all-time survey high of 40 percent say their personal financial situation has improved during the past year.

"The housing recovery continues to proceed in fits and starts," says Doug Duncan, Fannie Mae’s chief economist. "Rising mortgage rates and a lack of supply have dampened housing market momentum. However, we see several positive signs going into this year's spring home-buying season, compared with last year. For example, consumers are less pessimistic about their personal finances and more optimistic about the current selling environment and their ability to get a mortgage. Still, those who are pessimistic about buying or selling a home today tend to point to economic conditions as the primary issue, and most consumers continue to say the economy is on the wrong track. Looking forward, we expect to see a pickup in economic growth later in the year, and this may boost the confidence of prospective buyers and sellers."

However, consumers' home-price expectations softened a bit in the latest survey. The average 12-month home-price-change expectation fell from last month, reaching 2.7 percent, the survey shows. Also, slightly fewer respondents — 48 percent — said they thought home prices would rise in the next 12 months.

Source: Fannie Mae

 

Landlords are Pushing Up Rents Again

Landlords are Pushing Up Rents Again

Daily Real Estate News | Monday, April 07, 2014

As apartment demand continues to rise, landlords are projected to increase their rents for the fifth consecutive year. A rise in apartment construction isn’t likely to offer relief to tenants anytime soon either, USA Today reports.

Between 2000 and 2012, apartment rents have risen 6 percent while incomes among renters have fallen 13 percent in that time period, according to a report from Apartment List, a rental housing website that adjusts for inflation.

"That's what we call the affordability gap," says John Kobs, Apartment List's chief executive. "I don't see that improving in the near future."

The vacancy rate for apartments has dropped from 8 percent to 4.1 percent from 2009 to 2013, according to Reis, a commercial real estate data provider. Meanwhile, the average national effective rent has increased 12 percent to $1,083 from 2009 to 2013, according to Reis, which data reflects apartments in buildings with 40 or more units.

During that same time period, the median price of an existing home has risen about 14 percent, according to the National Association of REALTORS®. Many renters – which surveys show want to buy a home – are unable to purchase a home due to tight credit conditions that are preventing them from obtaining financing.

Rents rose the most in 2013 in Seattle, increasing 7.1 percent in the past year, followed by San Francisco, which has risen 5.6 percent, Reis reports.

More apartment buildings are under construction nationwide to respond to rising demand. Reis experts expect a stronger job market will push more people out of living with their parents or being roommates and increase rental demand. Reis predicts the effective apartments will rise 3.3 percent this year to an average $1,118 nationwide.

Source: “Growing Demand for Apartments Pushes up Rents,” The Associated Press (April 5, 2014)

 

Home Buyers May Face Sticker Shock This Spring

Home Buyers May Face Sticker Shock This Spring

Daily Real Estate News | Monday, April 07, 2014

As the spring market heats up, more buyers are finding higher home prices than they may have expected, CNBC reports.

“People quite frankly came out and got sticker shock … they picked up the price sheet and saw, ‘Wow, that’s way more than I thought’ because home prices had gone up so much in 2013,” Brad Hunter, chief economist at Metrostudy, told CNBC.

Existing-home prices were up 9.1 percent in February above year ago levels, according to the National Association of REALTORS®. Meanwhile, incomes are up just 2.1 percent from a year ago, according to the Bureau of Labor Statistics.

Home builders also have been raising their prices over the past year. For example, D.R. Horton, one of the nation’s largest builders, announced earlier this year that it planned to raise home prices in some of its markets this spring. In January, the builder said the average price of its homes under contract was up 10 percent in the past year. 

Buyers also are facing rising mortgage rates and tighter credit conditions.

Still, while prices have been on the rise, home prices are well off their peak from the housing boom in 2006, housing experts note. Inventories remain constrained in many markets as some home owners wait for higher home prices before they list.

"I think buyers are extremely fickle, and what's weird about it is the market is in a funk on both sides, it's like trying to get pandas to mate at the zoo," Glenn Kelman, CEO of Redfin, told CNBC. “Sellers feel like, 'I can rent it out. I've got a very low mortgage rate on this place, and when I sell the house I'm also giving up a 30-year mortgage on it at 3.5 percent.'"

Source: “Homebuyers Face Spring Sticker Shock,” CNBC.com (April 4, 2014)

Buy-to-Rent Market Predicted to Expand

Daily Real Estate News | Monday, August 05, 2013

According to a report by Morgan Stanley, the buy-to-rent market is only a fraction of where it could be, and the market is ready for major growth in the coming years. 

Morgan Stanley analysts predict that the buy-to-rent market will grow from $17 billion today to more than $100 billion in the next several years. They called it a “sustainable business with a long runway for growth.”

According to analysts, institutional investors may be able to anticipate a more than 10 percent return on investments, as rents nationwide continue to rise. 

"Over the past three years, investor activity has removed significant amounts of distressed supply from Southern California, Phoenix and Las Vegas," according to the report. "Consequently, select MSAs in Florida, the Midwest and the Northeast now constitute a greater proportion of the nation’s distressed properties, making them potentially more attractive to institutional buy-to-rent investors."

Source: “Morgan Stanley predicts buy-to-rent boom,” HousingWire (July 31, 2013)

Brace Your Buyers for Higher Home Prices


Brace Your Buyers for Higher Home Prices

Daily Real Estate News | Monday, July 29, 2013

Home prices are rising across the country and the prices for new homes in particular may increase significantly in the near future. Economist Bradley Hunter with Metrostudy told The Chicago Tribune that he predicts newly-built homes could see a 9 percent increase in price by the end of the year. 

“Here's what's happening: Land values are going up very fast right now in prime locations, what we call the ‘A’ locations,” Hunter explains. “In the best A (and B) markets, we expect prices to rise by 11 percent to 15 percent. Builders are desperate to buy lots, which in some cases are 30 percent to 50 percent higher than last year.”

The “A” and “B” locations, as Hunter refers to them, tend to be closer to the center city—near jobs, retail, and services. 

Hunter does see some relief for those looking to buy in the coming year, however.

“I think the builders are going to have to come to grips with a new affordability mentality,” Hunter says. “They're going to have to reckon with these forces — rising mortgage interest rates, mainly — that are going to limit how much they can raise prices. That's why 10 percent to 15 percent price increases will become 3 to 6 percent pretty soon — in six to 12 months. It depends on when mortgage rates move higher. If they go up, say, by 2 percent or 3 percent, it will have a noticeable impact on what people can afford and therefore on what builders are offering.”

Source: “Builders navigating complex housing market,” The Chicago Tribune (July 26, 2013)