Timely Real Estate News………………………………….. 1 December 2019
Prices move upward in September
Home-price growth accelerated in September, marking two-straight months of price increases after a long period of decelerating gains. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 3.2% annually, up from 3.1% the previous month.
The results, which coincide with an increase in sales of existing homes, indicated that low mortgage interest rates continue to make an impact on the market.
“September’s report for the U.S. housing market is reassuring,” said Craig J. Lazzara, a managing director at S&P Dow Jones Indices. “It is, of course, too soon to say whether this month marks an end to the deceleration or is merely a pause in the longer-term trend.”
Price growth was greatest in Sunbelt cities, according to the report, such as Phoenix, where prices grew 6% from September of 2018. Prices declined in just one of the 20-city composite index tracked by S&P, San Francisco.
Another report released by the Federal Housing Finance Agency last week also showed prices increased nationally in September. Last week, the National Association of Realtors said sales of existing homes rose 1.9% in October.
Look for what is happening on the Westside in my next Schiffer Line, December 15.
21 million homes to be placed on US market by 2037
The U.S. housing market is on the verge of being inundated with homes for sale on a scale that hasn’t been seen since the housing bubble in the mid-2000s.
The tsunami is being driven by a grim reality: Baby Boomers passing away.
Four out of 10 U.S. homes are owned by residents age 60 or older, and five out of 10 by residents 55 or older. Over the next two decades, more than a quarter, or roughly 21 million homes, are likely to be vacated by 2037. During the last housing bubble there were only 450,000 new home sales per year, on average.
Although all of these homes will be hitting the market, they will be located in areas where most of the younger generations don’t want to live. The areas that will be impacted the most are traditional retirement communities, including California, Florida and Arizona. However, the areas that will be least affected are vibrant, affordable cities, including Dallas, Houston, and Atlanta.
On the face of it, this doesn’t sound all bad. Older homeowners have traditionally been replaced by younger ones and the U.S. has for a number of years suffered from a shortage of housing, a development that has dampened recent home sales activity and kept many millennials stuck in rentals. The buyers coming behind the baby boomers, the Gen Xers, are a smaller and more financially precarious generation with different preferences, posing a new kind of test for the housing market.
On the California housing front — home sales up slightly
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 404,240 units in October, up slightly over September. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales according to the California Association of Realtors.
October’s sales figure was up 0.1% from the 404,030 level in September and up 1.9% from home sales in October 2018 of a revised 396,720.
The California housing market continued to see gradual improvement in recent months as the current mortgage environment remains favorable to those who want to buy a home. With interest rates remaining historically low for the foreseeable future, motivated buyers finding that homes are slightly more affordable may seize the opportunity and resume their home search,
Mortgage Prepayments Climb to 6-Year High
“Mortgage prepayments, a common gauge for housing and refinancing demand, jumped to its highest level since May 2013—a good sign for the market”, according to a new analysis from data and analytics firm Black Knight, a national real estate tracking firm. Mortgage prepayments were at 1.81% in October, more than double the figure a year ago. That represents a 134% year-over-year increase.
What’s causing the improvement? Low mortgage rates are prompting more people to refinance their mortgage or buy a home. Consumers typically pay off previous loans when they buy a new home. The uptick is apparent: Existing-home sales increased 1.9% in October to a seasonally adjusted annual rate of 5.46 million—4.6% higher than a year ago.
While prepayments are rising, mortgage delinquencies decreased to 3.39% in October, which is just 3 basis points from a record low set in May. The lowest mortgage delinquencies are in Colorado, Washington, and Oregon.
The conforming loan limit for most of the U.S. will, no surprise, move higher on January 1. The Federal Housing Finance Agency (FHFA) just announced that the maximum origination balance for loans purchased or acquired by Fannie Mae and Freddie Mac during 2020 for one-unit properties will increase to $510,400. The conforming limit for 2019 is $484,350.
In areas like Los Angeles, where the median home value is 115 % of the new baseline loan limit the conforming limit is higher than that baseline but cannot exceed 150 % of it. That calculation caps the loan limit for these “high cost” areas at $765,600, or 150 % of $510,400. The high cost limit this year is $726,525.
The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. Earlier, FHFA published its third quarter 2019 FHFA House Price Index (HPI) Report which estimated the annual gain in home prices over the previous four quarters at an average of 5.38 %. That percentage is reflected in the new baseline limit. As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2020 in all but 43 counties or county equivalents in the U.S.
There are higher limits for properties that contain two, three, or four units. The baseline limits for multi-unit properties will vary.
This change will go into effect on January 1 2020, but you can apply for that loan now and lock in the rate. Please contact me to assist you in making that new purchase and looking in these great new rates!
Homebuyers want walkable neighborhoods….
In a survey by the National Association of Home Builders, 60% of home buyers say they want to live in a walkable neighborhood. One developer in Tempe, AZ, is creating just that: a 1,000-person rental unit development where no cars will be allowed.
Tenants’ leases will not allow cars parked onsite or in the surrounding area. The development is testing the demand for walkable neighborhoods, which young adults claim they desire. The Arizona development will be urging residents to ditch their cars and take advantage of bikes, scooters, ride-hailing, and nearby public transit. The development is near a light rail station that will connect residents to Arizona State University, downtown Phoenix, and the airport.
“Transportation has changed a lot over the last decade and real estate hasn’t kept up,” Ryan Johnson, co-founder and chief executive of the Cul de sac development, told The Wall Street Journal. “Now there’s the chance for us to build the first post-car development.”
Double master suites are a growing trend
As more homeowners want to live near their families and multigenerational households become more common, relatives and adult children move in together; as a result, more household members want to choose the owners’ suite, which is often the largest bedroom in the house with an ensuite bathroom.
Builders are responding by adding two master suites into more floor plans, whether it’s a single-family home or condo. K. Hovnanian Homes offers several townhouse communities with two master bedrooms. The rooms include large ensuite bathrooms and walk-in closets.
First-floor master suites are growing more popular because it gives adults the option of a separate living space and allows for children to have more flexible space on the second floor. And two-owner suite give owners the option to fill a current need or a possible future need.
Some builders are adding a dual master bedroom on the main level of the home with a separate entrance so loved ones can maintain close connections as they grow. These spaces also allow the owners to age in place, as they can maintain their independence while having their children just steps away.
Baby its cold outside
They are forecasting that we might have cold and rainy weather this year, and the plight of the homeless simply breaks my heart. Driving around and seeing all the encampments on the public streets is very painful to witness. In an attempt to make the situation just a little better, I am launching a campaign through OneWarmCoat.org to collect coats, jackets, etc. that can be given out and hopefully make these people’s lives a little more comfortable. If you have any extra coats or jackets that you can spare, please contact me at 310 442-1384 or email@example.com and I will come by and pick them up and deliver them to The People Concern (formerly known as OPCC & Landmark) in Santa Monica. I will be collecting these items until the end of February.
How was your Thanksgiving?
Mine was quiet and somewhat uneventful. Rather than making a whole bird for just the three of us, I decided to make “parts” (wings, thigs and legs), and it was a huge success. We were still able to express our gratitude and thanks for all the wonderful things we have in our lives. I had just come off spending almost 2 weeks of taking care of Mom 24/7 while her primary care giver was on holiday in Spain. I cannot deny it was hard work to deal with someone with dementia and all of its attendant problems, but it also gave me a true appreciation for all of the caregivers in the world plus the added joy of spending the extra time with my Mom! As for business, it continues to move on. Buyers are still looking to find that special home and wondering about timing.
Time to get going with shopping for those holiday gifts.
Please let me know how I can assist you with all of your real estate needs.
Remember the real estate market really doesn’t slow down during the holidays!
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at firstname.lastname@example.org www.caroleschiffer.com
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