2020 has been a year full of the unexpected and has been unpredictable, to say the least. The economic effects of the pandemic have been staggering; businesses have had to close or make modifications that result in lost income, many Americans are collecting unemployment due to COVID-19 related layoffs. In this type of economic climate, it would be expected that the housing market and home prices would suffer as well.
Nevertheless, 2020 has brought drastic increases in home prices. According to an article published in Realtor Magazine, ” . Existing-home prices for all housing types jumped 15.5% year over year in October to $313,000, according to the National Association of REALTORS®.” In fact, this year’s home appreciation rate is the fastest appreciation rate the housing market has seen in 6 years.
The home value gains are seen across the United States. New York saw some of the lowest gains, being up 2.6% over the past year. However, areas in other parts of the Northwest, such as Maine, saw home values appreciate almost 15%. Western states are seeing values increase around 12 and 13 percent compared to last year.
Read the entire article.
Homeowners in the Chicagoland area may have noticed that home values around them are on the decline. After a steady climb in value over the past few years, it appears that the combination of high home prices, increasing mortgage rates and real estate taxes that continue to soar has caught up with the local market.
Recent data, provided by a group called Illinois Realtors, indicate “Sales of homes in Chicago were down 16.6 percent in September from a year earlier,” according to an article published by Crain’s Chicago Business. In fact, Chicago area home owners haven’t seen a decline this steep since May 2011. Disappointing news, especially considering the national figure only slide of 3.4 percent.
However, Dennis Rodkin also reports in the article that local experts warn against jumping to any conclusions about the long term projections. One expert stating “it is difficult to extract any trend from one month’s data and it will require more monitoring in the months ahead to determine longer-term market impacts.”
Read the entire article.
Real Estate is a popular investment vehicle for American investors. In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate. In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.
One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase. Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.
Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later. The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection. It can also make the buyer aware of repair expenses they should plan for later. A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.
The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.
Read the entire article.
Photo Credit: Antonio Carlos Cascatrina
The debate over why households choose renting over purchasing a home in the United States has been a hot topic lately. Analysts have indicated the young generation of millennials are not interested in being tied down to home ownership and prefer renting over buying. However, an article published by CNN by Daniel B. Kline, points out that it is not just millennials who are opting to rent instead of making a home purchase. Kline also notes that the decision to rent may not be a lifestyle choice, but a financially driven decision.
It is true that the number of households renting a home has increased over the past decade; almost by 10 million. It is also true that 65 percent of household headed by those 35 years old and younger rent their homes. However, it’s the heads of households aged 35-44 that made the biggest increase over the past decade. In this age group, “the percentage of renters jumped from 31% in 2006 to 41% in 2016”. Heads of households between 45-65 renting homes also increased over the past decade.
However, these households may not all be renting based on lifestyle choices. In fact, research indicates that many who rent homes would actually like to purchase a home someday. Further, surveys show that 65% of renters indicated that they are renting homes due to circumstances, not purely by choice. Circumstances such as increased home prices and tougher mortgage standards may be partially to blame.
Read the entire article.
Photo Credit: Mark Moz
The low inventory of homes for sale is causing some real estate companies to panic a bit. The number of homes for sale March 2017 compared to March 2016 fell seven percent according to the National Association of Realtors. In an article published by CNBC by Dian Olick, she quotes Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm, “”The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales.”
The cause of this low inventory issue can be attributed to a few factors. To begin, many homeowners are deciding to become landlords. Instead of selling a home when moving on, homeowners are holding on to their home and renting it out. Another reason is new home construction is declining. On average, home builders are building about 18 percent fewer homes than the historic average.
The good news for home owners looking to sell, homes are selling quickly and some are even selling above list price. Homes in April 2016 went under contract in 50 days, as of April 2017, that number decreased to 40 days.
Read the entire article.
Earlier this year, a Chicago-land home owner and real estate attorney filed a law suit against the website Zillow. She felt the home estimate quoted on the popular real estate website was significantly lower her home’s actual value. Further, she argued, it was deterring buyers and irresponsible of the website to publish unreliable information. “If it’s not reliable, you shouldn’t put it out there,” she stated in references to the website “Zestimates”.
Zillow emerged on the web about eleven years ago and has about 171 million virtual visitors a month, according to an article published in the New York Times, written by Nick Wingfield. The market values quoted on the site are calculated using algorithms that factor in common appraisal data such as the home’s square footage, location, recent home sales and tax assessments. According to the New York Times article, the site has an error rate of about five percent. Although down from the earlier error rate of 14 percent in Zillow’s earlier years, the error rate is still not satisfactory for many home homeowners who feel it is affecting their ability to sell their home at its true value.
Zillow believes there is room for improvement as well. Last week they announced that they are not only open to suggestions but willing to pay for the best idea. The “Zillow Prize” is $1 million dollars and will be awarded to the party able to present Zillow with the most improved algorithm.
To read the entire article and get more info on how to get in on the competition for the million dollar Zillow Prize, click here.
Photo Credit: Blue
Many American homeowners can look back on 2016 as a year of growth. Specifically, growth in the amount of equity they now have in their home.
According to a report released by the Federal Reserve, the average American homeowner gained just over $12,000 in equity from September 2015 to September 2016. In some of the hot markets of the U.S., homeowners may have seen upwards of $25,000 in equity growth during that time frame.
Factors such as the low interest rates that continued to be available throughout 2016, coupled with the low inventory of homes for sale, drove the value of homes upward. In an article published in The Chicago Tribune by Kenneth R. Harney, additional factors for increased home values are detailed.
Harney goes on to suggest what homeowners with significant equity in their homes might choose to do with it. Homeowners who decide they want to tap into the equity instead of letting it continue to grow are advised to use the funds, which might be accessed via a home equity credit line, in a responsible manner such as home renovations, consolidation of credit card debt or student debt. Since rates are expected to rise in 2017, homeowners considering a HELOC as an option might want to act sooner rather than later.
Read the entire article for more details.
Photo Credit: Diloya
For the past four and a half years, the median prices of homes in the United States have been increasing year over year. This positive news, coupled with the fact that home owners are making the choice to own their properties longer, has helped more and more home owners become “equity rich”.
The findings from a report released by ATTOM Data Solutions revealed 23.4% of home owners are considered equity rich, meaning they have a loan-to-value of at least 50%. In fact, the number of homeowners with at least 50 percent loan to value ratio increased by 2.6 million from the third quarter of 2015 to the third quarter of 2016.
According to an article written by Kelsey Ramirez, published by HousingWire.com, the amount homeowners who fall into the category of “seriously underwater” is smaller than last year at this time. Specifically, the number of homeowners with a loan-to-value ratio of more than 125 percent decreased by 854,000.
Just as the real estate market varies in markets across the U.S., trends for homeowners’ equity or lack thereof vary based on geographical locations. More equity rich home owners are seen in locations such as San Jose and Los Angeles, as well as Honolulu and Pittsburgh. Conversely, in locations such as Las Vegas, Cleveland, Toledo, and Detroit, there is still a large percentage of home “seriously underwater”.
Read the entire article.
Photo Credit: Svilen Milev
The number of U.S. homeowners is at a 50 year low, many more households have decided to rent a home instead of purchase their own home. Although the reasons for this decision vary, many might assume renting is a more cost effective choice than making the commitment to purchase a home.
However, in a study performed by Trulia which compared the monthly expenses associated with renting and owning a home, it found that renting can be 37.7 percent more expensive than owning a home. The study included monthly expenses such as mortgage payments, taxes, home owners insurance and the cost of upkeep and repairs. The major factor influencing the affordability of buying a home is, of course, the low mortgage rates that are still available to buyers.
Even the possibility of a Federal rate increase won’t have much effect on the affordability of homes. According to the article written by Kendall Baer, published by DSNews, “…Rates would need to increase drastically in order to push the rent vs. buy decision toward renting.” In fact, in many areas of the U.S., home prices are increasing and it is that rise in home prices that will truly impact housing affordability.
Nevertheless, a number U.S. real estate markets have reported rental expenses that fall significantly below the monthly expenses of owning a home. To find out in which areas of the U.S. it makes more sense to buy a home and in which areas, renting may be a more cost effective option, read the entire article.
This year, the real estate market has made significant improvements in many areas of the United States. According to an article published in USA Today by Thomas C. Frohich, the median home price was at the highest since 2007 at the end of 2015, and increased another 4.9 percent by the end of 2016’s second quarter.
There are several U.S. cities reflecting this growth in housing prices, such as Boulder, CO, which had a 18.5 percent home price increase over the past year. However, there are still many cities that are not reporting the same home pricing increases. In fact, some cities, such as Atlantic City-Hammonton, NJ are seeing declines in home values.
The National Association of Realtors (NAR) reviewed home prices in close to 200 U.S. metropolitan areas. A list of the fastest growing markets as well as the real estate markets on the decline were compiled. Topping the list of growing cities behind Boulder, CO were Elmira, NY, Springfield, IL and Port St. Lucie, FL. Cities with the most significant decline in prices besides Atlantic City were Binghamton, NY, Erie, PA and White Plains, NY. Economic factors such as unemployment often seemed to be tied to the home prices in an area. Inventory, demand and location are other factors that drive home prices up or keep them low, even declining.
To read the entire article and see the entire listing of growing and shrinking cities, click here.