Homebuying has been on the rise over the past few months, with record-breaking sales powering through the market in June, July and August. Buyers are actively purchasing homes, and the momentum is continuing into the fall. It is, however, becoming harder for buyers to find homes to purchase. If you’ve been thinking about selling your house, the coming weeks might just be the timing you’ve been waiting for.
According to the Pending Home Sales Report from the National Association of Realtors (NAR):
“Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 5.9% to 122.1 in July. Year-over-year, contract signings rose 15.5%. An index of 100 is equal to the level of contract activity in 2001.”
This means that for the past several months, buyers have signed an increasing number of contracts to purchase homes – well above where the market was at this time last year. Lawrence Yun, Chief Economist at NAR notes:
“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market…Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
Below is a graph that shows the impressive recovery of homes sales compared to previous years. The deep blue v marks the slowdown from this spring that turned into an exponential jump in sales that followed through the summer, skyrocketing above years past (see graph to right):
What Does This Mean for Sellers?
If you were thinking about putting your house on the market in the spring, but decided to wait due to the health crisis, it may be time to make your move. Buyers are in the market right now. With so few homes available to purchase, homeowners today are experiencing more bidding wars, creating an optimal time to sell.
Is This Trend Going to Continue?
As CNBC notes, there are no signs of slowing buyer demand this fall:
“The usual summer slowdown in the housing market is not happening this year. Buyers continue to show strong demand, spurred by the new stay-at-home world of the coronavirus and by record low mortgage rates.”
Danielle Hale, Chief Economist at realtor.com, concurred:
“In a typical year in the housing market, buyer interest begins to wane before seller interest causing the usual seasonal slowdown as we move into the fall. Due to a delayed spring season and low mortgage rates, we could see buyer interest extend longer than usual into the typically quieter fall. Whether this means more home sales will depend on whether sellers participate or decide to stay on the sidelines.”
As Hale mentioned, homeowners who are willing to sell their houses right now will play a big role in whether the trend continues. The market needs more homes to satisfy ongoing buyer demand. Maybe it’s time to leverage your equity and move up while eager home shoppers are ready to purchase a house just like yours.
If your current home doesn’t meet your family’s changing needs, let’s connect to help you sell your house and make the move you’ve been waiting for all year.
With the strength of the current housing market growing every day and more Americans returning to work, a faster-than-expected recovery in the housing sector is already well underway. Regardless, many are still asking the question: will we see a wave of foreclosures as a result of the current crisis? Thankfully, research shows the number of foreclosures is expected to be much lower than what this country experienced during the last recession. Here’s why.
According to Black Knight Inc., the number of those in active forbearance has been leveling-off over the past month (see graph):
Black Knight Inc. also notes, of the original 4,208,000 families granted forbearance, only 2,588,000 of these homeowners got an extension. Many homeowners have once again started to pay their mortgages, paid off their homes, or never went delinquent on their payments in the first place. They may have applied for forbearance out of precaution, but never fully acted on it (see graph):
The housing market, and homeowners, therefore, are in a much better position than many may think. Much of that has to do with the fact that today’s homeowners have more equity than most realize. According to John Burns Consulting, over 42% of homes are owned free and clear, meaning they are not tied to a mortgage. Of the remaining 58%, the average homeowner has $177,000 in equity. That number is keeping many homeowners afloat today and giving them options to avoid foreclosure.
While ATTOM Data Solutions indicates that there is a potential for the number of foreclosures to increase throughout the country, it’s important to understand why they won’t rock the housing market this time around:
“The United States faces a possible foreclosure surge over the coming months that could more than double the number of households threatened with eviction for not paying their mortgages.”
That number may sound massive, but it is actually much smaller than it seems at first glance. Today’s actual quarterly active foreclosure number is 74,860. That’s over 7.5x lower than the number of foreclosures the country saw at the peak of the housing crash in 2009. When looking at the graph below, it’s clear that even if the number of quarterly foreclosures today doubles, as ATTOM Data Solutions indicates is a possibility (not a given), they will only reach what historically-speaking is a normalized range, far below what up-ended the housing market roughly 10 years ago. Equity is growing, jobs are returning, and the economy is slowly recovering, so the perfect storm for a wave of foreclosures is not realistically in the housing market forecast. As Odeta Kushi, Deputy Chief Economist for First American notes:
“Alone, economic hardship and a lack of equity are each necessary, but not sufficient to trigger a foreclosure. It is only when both conditions exist that a foreclosure becomes a likely outcome.”
While our hearts are with anyone who may end up in foreclosure as a result of this crisis, we do know that today’s homeowners have more options than they did 10 years ago. For some, it may mean selling their house and downsizing with that equity, which is a far better outcome than foreclosure.
Homeowners today have many options to avoid foreclosure, and equity is surely helping to keep many afloat. Even if today’s rate of foreclosures doubles, it will still only hit a mark that is more in line with a historically normalized range, a very good sign for homeowners and the housing market.
Today, home prices are appreciating. When we hear prices are going up, it’s normal to think a home will cost more as the trend continues. The way the housing market is positioned today, however, low mortgage rates are actually making homes more affordable, even as prices rise. Here’s why.
According to the Mortgage Monitor Report from Black Knight:
“While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016.”
How is that possible?
Black Knight continues to explain:
“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003.
This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.
In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.”
This is great news for the many buyers who were unable to purchase last year, or earlier in the spring due to the slowdown from the pandemic. By waiting a little longer, they can now afford 10% more home than they could have a year ago while keeping their monthly mortgage payment unchanged.
With mortgage rates hitting all-time lows eight times this year, it’s now less expensive to borrow money, making homes significantly more affordable over the lifetime of your loan. Mark Fleming, Chief Economist at First American, shares what low mortgage rates mean for affordability:
“In July, house-buying power got a big boost as the 30-year, fixed mortgage rate made history by moving below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased house-buying power by nearly $15,000.”
The graph to the right shows the last time homes were affordable by state.
Arkansas, Iowa, Kentucky, Louisiana, Maryland, and West Virginia – homes have not been this affordable in more than 25 years.
If you’re thinking of making a move, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Whether you’re thinking of purchasing your first home or moving into a new one and securing a significantly lower mortgage rate than you may have on your current house, let’s connect today to determine your next steps in the process.
Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?
According to NAR, the Pending Home Sales Index (PHS) is:
“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”
In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.
Why is this rebound important?
With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph here):
This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:
“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.
If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Let’s connect today to determine your best move forward.
** Data in this report reflect market activity from MAY 2020 compared to the previous month and year. Information is gathered from the Reno-Sparks Association of Realtors® (RSAR) for the Greater Reno-Sparks region via Northern Nevada Regional Multiple Listing Service (www.nnrmls.com). Data accounts for single-family resale residences only, and excludes townhouses/condos, manufactured/modular and new construction.
Here is the market overview:
And here are a more detailed look at the stats for May 2020 compared to the previous month and year:
- In May 2020, the Median Sales Price for single-family re-sale properties in Reno-Sparks combined was $399,900, a 3.6% decrease from April 2020, and a 2.5% increase from May 2019. As seen in the graph above, the median sales price has hugged the $400k price point over the last year and appears to be steady at this time.
- # of Units Sold inched up 387 to 396 from April to May 2020. The sales volume is down 42% compared to the same month last year. This volume is representative of properties that likely went under contract for sale in April and were in escrow for about 30 days.
Months Supply of Inventory (MSI) decreased 11.8% month over month from 2.4 to 2.1 months supply. This measure of inventory is also about 5% higher than last year. MSI accounts for the time it would take to “sell out” of the Reno-Sparks inventory at the current rate of sale if no new listings came to market. A balanced market is around 5-6 months of supply. Therefore, with a low 2.1 months supply, we are still very much considered to be in a “Seller’s Market.”
The Average # of Days from Listing to Contract in May 2020 was 39 days. Single family residences are taking 20% longer to sell this year than in May 2019, and only 1.6% longer than the previous month. These averages account for all price ranges.
As seen in the graph above, homes that sold in the $200k to $700k range during May 2020 received acceptable offers significantly more quickly than the rest of the market. The $1M to $1.5M range went into contract fairly quickly (66 days) compared to the $750k to $1M range and the $1.5M+ range (108 days).
With Seller’s receiving an average of 99% of asking in May 2020, we continued to see no significant change for this statistic overall. Please note that price reductions may have occurred prior to receiving 99% of asking.
Is the economic impact of COVID-19 pandemic causing foreclosures and short sales in Reno-Sparks at this time? So far, homeowners appear to be hanging in through the highest unemployment rate most of us have ever seen. The percentage of distressed sales on the market did increase 7% month over month, but is still down 30% from May 2019. Only 1.7% of homes listed on multiple listing service were considered “distressed,” meaning a bank-owned/foreclosure or short sale.
The last several weeks of real estate activity have brought a significant increase in the # of New Contracts. Month over month, we saw a 635 New Contracts for sale, a 63.7% leap from April 2020 and a 3.9% increase from last year.
# of New Listings to hit the market the week ending in May 2020 increased slightly by 3.8% compared to April 2020. Our # of New Listings are still down nearly 40% from the same period of time last year.
- Inventory is still low, but what IS on the market is moving, as indicated by the significant increase in New Contracts, which should lead to an increase in sales volume in the coming months.
- The Median Sales Price at $399,900 appears to be fairly steady at this time. Over the last year, the $400k Median has been a benchmark the market has hovered around during the last 13 months.
- The consensus among many real estate professionals is that “summer is the new spring.” The typical influx of activity that happens in March, April and May is beginning happening now. My colleagues and I have been extremely active over the last couple of months.
- With low inventory, however, we’ll need to see if buyer demand for fewer homes listed will continue, and ultimately put more upward pressure on prices again. Will the Median Sales Price start moving up again in the near future? We shall see…
- Buyer activity in Reno-Sparks comes largely from out-of-state, particularly California. While many of our relocation clients are looking to escape the crowds, traffic and high taxes of California during COVID-19 uncertainty, they are finding more reasons now than ever to make that move. We call them “California Refugees,” and we are here to help. Email me at firstname.lastname@example.org to learn more about the many benefits of moving to Reno-Sparks.
The # of New Listings brought to market (116 listings) dropped again, with 18.3% fewer homes being listed the week ending May 30 compared to the week ending May 23. There were nearly 31.4% fewer homes listed this week than during the same week in 2019.
Summing It Up…
- Overall, the Sales Volume and # of New Listings on the market remains low, especially this time of year.
- With New Contracts on the rise over the last several weeks, we should start seeing a subsequent increase in number of Units Sold in the weeks to come as well.
- Sellers are receiving a high percentage of their list price and the Median Sales Price has ticked up to $420k again, likely due to the low-inventory market and steady buyer demand.
- Mortgage interest rates are still extremely low, and many Buyers are taking advantage. Email me today for a highly skilled and knowledgable lender recommendation.
- For more information about the ins and outs of buying &/or selling real estate in today’s market, please do not hesitate to call me at 775-233-0682 or email email@example.com.
There are numerous reasons why owning a home is beneficial. We’ve quickly summed up the Top 8 Reasons to Own Your Home and here they are…
- Privacy. Creating space that is solely your own means no landlord visits. It’s not your landlord’s house… It’s yours, so nobody should be stopping by to “check in on things.”
- Accomplishment. Buying your own home is a reflection of your efforts and successes. Give yourself a pat on the back and be proud of what you acquire.
- Family. Purchasing and living in a home that is dedicated to your family brings them together and is your special place to make lasting memories.
- Community. Owning your home ties to you the community and neighborhood, giving you a sense of belonging (if you so desire).
- Comfort. Having a place to call your own allows you to surround yourself with enhanced experiences… Construct a home gym, design a hobby room, create a killer home office and enjoy!
- Stability. Investing in and controlling your future direction and security could prove to be beneficial in the long-run.
- Personal Expression. Painting rooms your favorite colors and hanging art are just a couple benefits to putting your own style into your abode.
- Financial Investment. Investing in the real estate puts you in a position to grow your assets and wealth.
- June is National Homeownership Month, and it’s a great time to consider the benefits of owning your own home.
- If you’re in a position to buy, homeownership might help you find the stability, community, and comfort you’ve been searching for this year.
- Let’s connect today to determine if homeownership is the right next step for you and your family.
The # of New Listings brought to market dipped slightly, with 6.6% fewer homes being listed the week ending May 23 compared to the week ending May 16. There were nearly 45% fewer homes listed this week than during the same week in 2019.
Summing It Up…
- Buyer demand continues to keep pace with the level of active inventory, resulting in continued steadying of the Median Sales Price that has hovered around the $400k mark for months.
- Sales Volume, Active Inventory and # of New Listings are still down significantly from the same week last year. However, with Buyers staying on track with purchases, our activity appears stable.
- Mortgage applications rose for the 6th straight week, as they were fueled by historically low mortgage rates and pent-up demand. The Mortgage Bankers Association reports that mortgage applications are up 9% year over year. Refinancing applications have doubled since the same week last year as well. If you are in need of a qualified loan officer, contact me now and I will refer you to the best in our industry.
- For more information about the ins and outs of buying &/or selling real estate in today’s market, please do not hesitate to call me at 775-233-0682 or email firstname.lastname@example.org.
Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone. This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:
“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”
What does the survey indicate about sellers?
Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes as stay-at-home directives continue to be lifted and they feel more confident, which means more homes will start to be available for interested buyers.
Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:
“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”
What does the survey note about buyers?
The recent pandemic has clearly impacted buyer preferences, showing:
- 5% of the respondents said buyers are shifting their focus from urban to suburban areas.
- 1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.
- Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.
If you’re thinking about putting your house on the market, let’s connect today. We can strategize about preparation and marketing when the timing is right for you. There’s a good chance an eager buyer is looking for a home just like yours when you’re ready to sell.
The # of New Listings is still lagging a bit, with 13% fewer homes being listed the week ending May 16 compared to the week ending May 9. Consistent with the # of Sold Units this week AND the # of Active Listings, the New Listing count is down about 34% compared to this same week last year.
Summing It Up…
- With the re-opening of businesses across the states, and increased activity of potential buyers over state borders, the real estate market in Northern Nevada continues to forge ahead through the current global health crisis.
- While Sales Volume, Inventory and the # of New Listings are all down about 36%, 32% and 34% respectively compared last year, the market is concurrently experiencing a upward trend in new contracts that should result in an increase in sales volume in the coming months.
- Buyer demand continues to keep pace with the rate of sale in the low inventory climate, and Sellers are receiving an average of 99.1% of their list price. Therefore, the Median Sales Price has been bopping above and below the $400k mark for several weeks. The rate of market appreciation appears to be on idle through this strange COVID-19 time.
- According to Bankrate.com, the average benchmark mortgage interest rate today (May 21, 2020) is still low… At 3.54% the average rate is down 2 basis points over the last 7 days. Naturally, rates can fluctuate from day to day, and are reflective of the borrowers strength of employment history, credit score and debit-to-income ratio. If you are looking to purchase now and need to connect with a great lender to find your best mortgage rate, contact me. I’ll point you in the right direction!
- For more information about specific property values and to search real estate for when YOU are ready to purchase/sell, please do not hesitate to call me at 775-233-0682 or email email@example.com.