The National Association of Realtors’ most recent Existing Home Sales Report revealed that home sales were up rather dramatically over last year in five of the six price ranges they measure.
Only those homes priced under $100,000 showed a decline (-4.6%). The decline in this price range points to the lower inventory of distressed properties available for sale and speaks to the strength of the market.
Every other category showed a minimum increase of at least 4.6%, with sales in the $250,000- $500,000 range up 15.2%!
Here is the breakdown:
What does that mean to you if you are selling?
Houses are definitely selling. If your house has been on the market for any length of time and has not yet sold, let’s meet up to see if it is priced appropriately to compete in today’s market.
|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:
Freddie Mac, in their April Economic Outlook, addresses the disappointing economic news and what impact they think it will have on housing:
What about real estate?
Freddie Mac was much more optimistic about housing…
They went on to conclude:
IS STUDENT DEBT STANDING IN THE WAY OF HOMEOWNERSHIP?
Student loan balances have doubled since 2007 to well over $1 trillion. Meanwhile, millennials are taking much longer than previous generations to buy their first home. A recent study examined whether student loan debt is preventing young adults from purchasing homes*.
Surprisingly, the study concluded that there is no causal relationship between student debt and delayed homeownership. In fact, debtors in their late 20s were more likely to own a home than non-debtors. The study gives several alternative explanations for why millennials are delaying their first home purchase when compared to prior generations. Mainly, the delay in homeownership seems to be part of a larger trend of delaying the period of life known as “transition to adulthood”. For example, the share of 18-34 year-olds who are married with children has also fallen from 27% in 2000 to 20% in 2015.
The study did find one major correlation between student loans and delayed homeownership: student loan debtors who dropped out of college did have much lower rates of homeownership vs. student loan debtors who graduated from college.
Moral of the story? If you’re going to take out student loans, it’s better to graduate from college with a degree that leads to a high-paying job.
*Jason Houle and Lonnie Berger. 2015 “Is Student Loan Debt Discouraging Home Buying Among Young Adults?”89:589-621, Social Service Review
|With home prices expected to appreciate by over 5% this year, some are beginning to worry about a new housing bubble forming. Warren Buffet addressed this issue last week in an article by Fortune Magazine. He simply explained:
Later, when questioned whether real estate and/or mortgaging could present the same challenges for the economy as they did in 2008, Buffet said:
What factors are driving home prices up?
It is easily explained by the theory of supply and demand. There is a lack of housing inventory for sale while demand for that inventory is very strong. According to a recent survey of agents by the National Association of Realtors (NAR), buyer traffic was seen as either “strong” or “very strong” in 44 of the 50 states (the exceptions being: Alaska, Wyoming, North Dakota, West Virginia, Connecticut and Delaware).
Also, in NAR’s latest Pending Home Sales Report, it was revealed that the index was the highest it has been in a year.
What does the future bring?
As prices rise, more families will have increased equity in their homes which will enable them to put their home on the market. As more listings come to market, price increases should slow to more normal levels.
Anand Nallathambi, President & CEO of CoreLogic, recently addressed the issue:
|The Gallup organization recently released a survey in which Americans were asked to rank what they considered to be the “best long term investment.” Real estate ranked number one, with 35% of those surveyed saying it was a better long term investment than stocks & mutual funds, gold, savings accounts or bonds.
Here is the breakdown:
The survey revealed that real estate was the number one choice among each of the following groups:
Even stock investors ranked real estate number one. According to the report: