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2018 Forecast: Is Inventory Relief on the Way?

Nov 29, 2017 by

Ask the 60-some percent of brokers in RISMedia’s 2017 Power Broker Survey: Almost every housing market is plagued by short supply. In fact, inventory nationally for pre-owned properties is at 3.9 months, down 10.4 percent from last year, the National Association of REALTORS® (NAR) recently reported.

The challenge, according to realtor.com®, could moderate in the next year. Groundbreaking is projected to ramp up 3 percent, with single-family starts up 7 percent, realtor.com’s 2018 National Housing Forecast reveals.

The catch? Activity won’t kick up until later in the year, and many builds will be higher- and/or mid-priced—not an ideal scenario in the short term. Lower-priced homes, which were hit hardest in the recession, will be the last to recover.

“We are forecasting next year to set the stage for a significant inflection point in the housing shortage,” says Javier Vivas, director of Economic Research for realtor.com. “Inventory increases will be felt in higher-priced segments after home-buying season [in the fall], which limits their impact on total sales of the year.”

Home prices will increase in 2018, but at a lesser pace than in 2017, the forecast shows: 3.2 percent. As with inventory, prices in the starter supply will take longer to lose steam. Existing-home sales are expected to grow 2.5 percent to 5.60 million. Considerable gains in prices and sales will be seen in: Las Vegas-Henderson-Paradise, Nev.; Dallas-Ft. Worth-Arlington, Texas; Deltona-Daytona Beach-Ormond Beach, Fla.; Stockton-Lodi, Calif.; Lakeland-Winter Haven, Calif.; Salt Lake City, Utah; Charlotte-Concord-Gastonia, N.C.; Colorado Springs, Colo.; Nashville-Davidson-Murfreesboro-Franklin, Tenn.; and Tulsa, Okla.

Realtor.com also anticipates 43 percent of buyers in 2018 will be millennials, up from the 40 percent projected for 2017. The biggest group of millennials is turning 30 in 2020, so their share is likely to continue tracking upward.

Expected to grow, as well, are mortgage rates, averaging 4.6 percent and possibly reaching 5 percent by year-end, the forecast states. Action by the Federal Reserve and economic factors, including inflation, will precede the rise. Markedly, more first-time homebuyers were able to get a Federal Housing Administration (FHA) mortgage this year than last year, despite a rate uptick. The 30-year, fixed mortgage rate averages 3.92 percent at present, according to Freddie Mac.

2018’s homeownership rate, meanwhile—which has gone up thus far this year—is forecasted to land at 63.9 percent.

A potential wrench is tax reform. The forecast was made prior to the House bill passing and the Senate bill being voted on; as such, realtor.com cautions that certain cuts—among others, the mortgage interest deduction and the state and local tax (SALT) deduction—could lead to less in the way of prices and sales.

The forecast, however, is optimistic overall.

“As we head into 2019 and beyond, we expect to see these inventory increases take hold and provide relief for first-time homebuyers and drive sales growth,” Vivas says.

For more information, please visit www.realtor.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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On Low Inventory: From Challenge Comes Opportunity

Jul 5, 2017 by

Low inventory is the foremost issue in the housing market, with no let-up in the impossible demand for the few reasonably-priced homes available for sale. Supply shortages, according to at least one constituent, are now the No. 1 barrier of entry for homebuyers.

Fifty-eight percent of mortgage professionals recently surveyed by the National Association of Mortgage Professionals (NAMB) cited low inventory as the biggest hurdle for homebuyers today, compared to the far-flung 18.5 percent that pointed to the down payment, as well as 7 percent that reported credit, as an obstacle. Supply is especially challenged in California and Texas, with 73 percent of mortgage professionals in California and 58 percent of mortgage professionals in Texas saying limited listings are the primary impediment to home-buying in their state.

Other members of the industry have made similar observations. REALTORS® surveyed in the National Association of REALTORS® (NAR) Member Profile attributed transactions lost to “difficulty finding the right property” and “housing affordability,” while 62 percent of real estate brokers surveyed in RISMedia’s 2017 Power Broker Report believe scarce supply is currently their most pressing problem.

The inventory dilemma has overtaken concerns about mortgage lending standards, which, though to some are still too strict, have relaxed since the early, strong-armed days post-recession. In fact, according to a recent survey by Fannie Mae, more lenders have taken steps to open up access to credit since the start of 2017, and more plan to continue to do so in the future.

Coming up with enough money for a down payment has become less of a factor, according to the NAMB survey, but remains significantly tied to affordability, which is not only shrinking, but also shuttering dreams of owning a home—a mismatch in sentiment between homebuyers and the professionals that serve them. Tellingly, 70 percent of renters recently surveyed by Zillow are most concerned about saving for a down payment, not the lack of supply.

The discrepancy suggests a knowledge gap that both mortgage professionals and REALTORS® can fill. The industry’s emphatic perspective on inventory, as well, is a chance to inform—to remind buyers of the value of a professional, especially when faced with fast-moving supply.

Undeniably, there are few homes out there—but there are also many opportunities. How will you use today’s environment to your advantage?

Sources: Fannie Mae, National Association of Mortgage Professionals (NAMB)

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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Low Housing Inventory Not Stopping Low Down Offers

Apr 6, 2017 by

Even though this is a tough environment with inventory being so low, low down payment offers are still being accepted over offers with more money down.

The post Low Housing Inventory Not Stopping Low Down Offers appeared first on National Real Estate Post.

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Report: Same Old Story for Inventory

Mar 25, 2017 by

Housing inventory hit a new low in the first quarter of 2017, bottoming out from the early days of the recovery from the recession, according to Trulia’s recently released quarterly Inventory and Price Watch. Supply overall fell 5.1 percent year-over-year, dragged down by an 8.7 percent decrease in starter home supply and a 7.9 percent decrease in trade-up supply. Premium supply dribbled down just 1.7 percent.

Trulia_Inventory_Q1_2017

“Recovering home values have proven to be a double-edged sword,” says Ralph McLaughlin, chief economist at Trulia. “While homeowners across the country are thrilled to regain equity in their homes, many have not been in a hurry to trade up. This has added to the inventory gridlock that ties up would-be starter home inventory from ever coming on to the market, further constraining supply and decreasing affordability.”

The starter home squeeze is being felt by first-time homebuyers, who, given the current supply, have to spend more of their monthly earnings to afford an entry-level home: 38.8 percent. The median list price of a starter home in the first quarter of the year was $ 166,015.

“Saving up for a down payment is one of the biggest obstacles to homeownership for first-time buyers,” McLaughlin says. “In markets plagued with tight inventory and decreasing affordability, millennials who make up most of these first-time buyers may find homeownership increasingly out of reach. However, there continues to be an uptick in new construction, which should help increase supply in some inventory-constrained markets.”

Source: Trulia

For the latest real estate news and trends, bookmark RISMedia.com.

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