The Presidential Election and Its Impact on Housing

The Presidential Election and Its Impact on Housing

Every four years people question what effect the Presidential election might have on the national housing market. Let’s take a look at what is currently taking place. The New York Times ran an article earlier this week where they explained:

“A growing body of research shows that during presidential election years — particularly ones like this when there is such uncertainty about the nation’s future — industry becomes almost paralyzed. A look at the last several dozen election cycles shows that during the final year of a presidential term, big corporate investments are routinely postponed, and big deals are put on the back burner.

The research is even more persuasive on the final year of an eight-year presidential term, when a new candidate inevitably will become president.”

We are seeing this take form in the latest economic numbers. However, will this lead to a slowdown in the housing market? Not according to Fannie Mae, Freddie Mac or the National Association of Realtors.

The Impact on Housing Throughout 2016

Let’s look at what has happened and what is projected to happen by these three major entities.

National Association of Realtors

“In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007.”

Freddie Mac

“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.”

Fannie Mae

“Consumers and businesses showed caution at the end of the first quarter…(but) Home sales are expected to pick up heading into the spring season amid the backdrop of declining mortgage rates, rising pending home sales and purchase mortgage applications, and continued easing of lending standards on residential mortgage loans.”

Bottom Line

Even during this election year, the desire to achieve the American Dream is greater than the fear of uncertainty of the next presidency.

Where is Housing Headed for the Rest of 2016?

Where is Housing Headed for the Rest of 2016?

With the overall economy just inching along, some experts are questioning whether the housing market can continue its momentum throughout the rest of the year. People are beginning to ask questions such as:

  • Will disappointing economic news adversely impact housing?
  • Is affordability a major concern in today’s real estate market?
  • Are we approaching a new housing bubble?
  • Are mortgage standards too tight? Or have they loosened too much?

Freddie Mac, in their April Economic Outlook, addresses the disappointing economic news and what impact they think it will have on housing:

“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.

We’ve revised down our forecast for economic growth to reflect the recent data for the first quarter, but our outlook for the balance of the year remains modestly optimistic for the economy.”

What about real estate?

Freddie Mac was much more optimistic about housing…

“We maintain our positive view on housing. In fact, the declines in long-term interest rates that accompanied much of the recent news should increase mortgage market activity.”

They went on to conclude:

“We expect housing to be an engine of growth. Construction activity will pick up as we enter the spring and summer months, and rising home values will bolster consumers and help support renewed confidence in the remaining months of this year.”

Sales Contracts Hit Highest Level in Months

Sales Contracts Hit Highest Level in Months

The National Association of Realtors (NAR) just announced that the February Pending Home Sales Index reached its highest reading since July 2015.

What is the Pending Home Sales Index (PHSI)?

NAR’s PHSI is “a forward-looking indicator based on contract signings”. The higher the Pending Home Sales Index number, the more contracts have been signed by buyers that will soon translate to sales. February’s Index rose 3.5% month-over-month to 109.1.

What does this mean for the market?

Lawrence Yun, NAR’s Chief Economist explained:

“After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory.”

“Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau.”

So What Does This Mean For Buyers?

There is a lot of competition out there right now for your dream home. Prices are going to continue to climb, act now before you are priced out of your future home.

What Does This Mean For Sellers?

If you are on the fence about listing your home for sale and debating whether now is the time to move on with your plans of relocating… don’t wait!

There are more buyers that are ready, willing and able to buy their first, second, third, vacation, or investment property now than there has been in years! The supply of homes for sale is not keeping up with the demand of these buyers.

Listing your home for sale now will give you the most exposure to buyers and the best sales price.

Bottom Line

Whether you are planning on buying or selling a house this year, waiting to act no longer makes sense.

Put Your Housing Costs To Work For You

Put Your Housing Costs To Work For You

There are so many people these days debating whether they should renew the lease on their house or 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. The difference is whether you are helping someone else’s net worth, or your own.

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.

Put Your Housing Cost To Work For You! | Simplifying The Market

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 costs to your advantage! Ask questions, become informed. Let’s meet up to discuss the opportunities available in our Lake Tahoe market.

14,986 Homes Sold Yesterday… Did Yours?

14,986 Homes Sold Yesterday… Did Yours?

There are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is… If it hasn’t sold yet, maybe it’s not priced properly, or maybe it isn’t getting the exposure that it deserves.

After all 14,986 houses sold yesterday, 14,986 will sell today and 14,986 will sell tomorrow.

14,986!

That is the average number of homes that sell each and every day in this country according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.59 million. Divide that number by 365 (days in a year) and we can see that, on average, over 14,986 homes sell every day.

The report from NAR also revealed that there is currently only a 4.0-month supply of inventory available for sale, (6-months inventory is considered ‘historically normal’).

This means that there are not enough homes available for sale to satisfy the buyers who are out in the market now in record numbers. Your home SHOULD be selling.

Bottom Line

I realize that you want to get the fair market value for your home. You need to consider the fact that you may need to list it with a Realtor if you haven’t. Otherwise, however, if it hasn’t sold in today’s active real estate market, perhaps you should reconsider your current asking price.

Low Inventory Causes Home Prices to Rise

Low Inventory Causes Home Prices to Rise

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price report earlier this month. The report revealed that home prices are not only continuing to rise but that the increases are accelerating. Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

“Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead.”

Here are the percentage increases of home prices for the last two quarters:

Low Inventory Causes Home Prices to Accelerate | Simplifying The Market

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by CoreLogic in a recent blog post:

“With demand strong and inventory thin, the share of homes selling for the list price or more has also returned to pre-bust levels. With inventory tight, homes are more likely to sell above the asking price.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year. However, as Construction Dive reported, the amounts of cash necessary to buy a home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

Bottom Line

If you’re thinking of selling and moving down, waiting might make sense. If you are a first time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.