Real Estate Information Archive

Good Monday Morning!

In the Eugene and Springfield area, the housing market has become very tight for first-time home buyers.  Lack of inventory, rising home prices, and now, increased mortgage interest rates have made the home search for first-time buyers even more difficult than it has over the past several years.  This trend is not something that is just specific to Eugene and Springfield.  The following article from "Realtor.com" addresses this national problem.

Soaring home prices and the shortage of properties on the market are taking a toll on buyers, particularly first-time buyers.

The share of first-time homeowners fell to just 29% of all existing home buyers in January, according to the most recent National Association of Realtors® report. That's down from 32% in December and 33% in January 2017.

"First-time buyers are typically people with a tighter budget," says realtor.com® Senior Economist Joseph Kirchner, who worries this could further depress homeownership rates down the line. "They're looking for homes on the more affordable end of the market, but that is where the lack of homes is most severe."

Nationally, the dearth of inventory also drove down the number of existing homes sold, 5.38 million overall, in January. (Existing homes have previously been lived in.) Monthly sales dropped 3.2%, while annual sales decreased 4.8%.

(Realtor.com looked only at the seasonally adjusted numbers in the report. These have been smoothed out over 12 months to account for seasonal fluctuations.)

“There’s plenty of demand, but people just cannot find a home on the market that meets their needs and they can afford," Kirchner says. "It’s not a good start for the spring market. The shortage will continue.”

Across the country, there were 15.5% fewer existing homes in January selling for $250,000 or less compared with a year ago. Meanwhile, there were 25% more selling for $500,000 or more.

In January, sales of single-family homes, which are often the most sought-after properties, hit 4.76 million. That's a 3.8% fall from December and 4.8% from the same month a year earlier.

Condos and co-ops fared a bit better, as they're generally priced a little lower than single-family homes, with the number of monthly sales rising 1.6% in January to hit about 620,000. But that's down 4.6% from January 2017.

The median existing home price was $240,500 in January. That was a 2.4% drop from December but represented a 5.8% jump from January of the previous year. However, the cost was still substantially less than the median price of a newly constructed abode.

New homes cost a median $335,400 in December, according to the most recent joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That's nearly 39.5% more than an existing home.

Around the country, higher prices and the lack of inventory took its toll. In January, the South had the most existing home sales, at about 2.26 million. However, that was still down 1.3% from December and was a 1.7% drop from January 2017.

The Midwest had the second most home sales, at 1.25 million, in January. That was down 6% from December and 3.8% lower than the same month last year.

There were 1.14 million existing homes sold in the West. That was a 5% drop from the previous month and a 9.5% fall from the previous year.

The Northeast had the fewest existing home sales, at just 730,000. That was also down, both by 1.4% month-over-month and 7.6% year-over-year.

Meanwhile, prices of existing homes were up in every region. They were the most expensive in the West, at a median $362,600 in January. That was a 8.8% jump over January 2017.

In the Northeast, median prices hit $269,100, up 6.8% annually. In the South, they were $208,200, up 4.3%, and in the Midwest, they were $188,000, up 8.7%.

In January, sales of single-family homes, which are often the most sought-after properties, hit 4.76 million. That's a 3.8% fall from December and 4.8% from the same month a year earlier.

Condos and co-ops fared a bit better, as they're generally priced a little lower than single-family homes, with the number of monthly sales rising 1.6% in January to hit about 620,000. But that's down 4.6% from January 2017.

The median existing home price was $240,500 in January. That was a 2.4% drop from December but represented a 5.8% jump from January of the previous year. However, the cost was still substantially less than the median price of a newly constructed abode.

New homes cost a median $335,400 in December, according to the most recent joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That's nearly 39.5% more than an existing home.

"It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth," NAR Chief Economist Lawrence Yun said in a statement.

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Good Morning!

If you are interested in what is taking place with our national housing market, the following article will give you a good idea as to what is taking place.  This article from "Realtor.com", talks about the shortage of homes for sale and the effect it is having on home prices.

It's anyone's guess just how much higher home prices will go—and if they'll ever slow down. Besides, if you could see the future, wouldn't you rather focus your energies on predicting the winning lottery numbers?

Nationally, the median existing-home price for single-family abodes zoomed up to $255,600 in the second quarter of the year, according to the new quarterly report from the National Association of Realtors®. (Existing homes are previously lived-in residences as opposed to newly built abodes.) That was up 10.1% from the first quarter of the year and represented a 6.2% rise from the second quarter of last year.

Prices are continuing their steady climb because there simply aren't enough homes on the market to go around. As the economy has improved, more people who held off on becoming homeowners or trading up to bigger, better abodes are getting into the market. "Household incomes may be rising and giving consumers assurance that now is a good time to buy," NAR Chief Economist Lawrence Yun said in a statement. "But these severe inventory shortages will likely continue to be a drag on sales potential the second half of the year."

The cost of buying a single-family home increased in about 87% of the metros that NAR looked at. Prices dropped in just 23 markets.

That might explain why sales of all existing homes, which include both single-family residences and condos, fell 0.9% in the second quarter. They hit 5.57 million, according to the seasonally adjusted numbers in the report.

"With new supply not even coming close to keeping pace, price appreciation remained swift in most markets," Yun said. "An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth-building benefits of homeownership."

Even the median prices of lower-priced condos and co-ops shot up to $239,500. That's up nearly 9.5% from the first quarter of 2017 and represented a 5.4% rise from the second quarter of last year. Sorry, buyers.

The most expensive metros were, unsurprisingly, primarily in California. Silicon Valley's San Jose topped the list with a median price of$1,183,400 for a single-family, existing home, according to the report.

Silicon Valley buyers are "commonly very well-to-do people in their mid-20s to mid-40s. Most typically are working in high tech," says Realtor® Avi Urban of Keller Williams Palto Alto. "Many of them are making enormous amounts of money."

But prices fluctuate during the year depending on the season as well as the local job market, he says.

"As long as the Silicon Valley economy is doing well, I do not expect prices to go down," Urban says. "I expect prices to continue with more gradual, moderate appreciation."

San Jose was followed by its neighbor to the north, San Francisco, at $950,000; Anaheim, CA, at $788,000; Honolulu, at $760,600; and San Diego, at $605,000.

Meanwhile, the cheapest metros were Youngstown, OH, at $87,000; Cumberland, MD, at $98,200; Decatur, IL, at $107,400; Binghamton, NY, at $109,000; and Elmira, NY, at $111,600.

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Good Morning!

Here in the Eugene and Springfield area and nationally, new home sales are down.  This has contributed to the current national and local shortage of available homes for sale.  The following is an article from "Realtor.com" that will give you more information on why the inventory of homes for sale is so low at this time.

Here’s the good news: Sales of newly constructed homes rose in the beginning of the year. The bad news? It wasn’t enough to ease the housing shortage that is frustrating would-be home buyers across the nation.

Buyers purchased about 3.7% more new homes in January than in December, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. The January purchases were also 5.5% above where they had been a year earlier. (Realtor.com® looked only at the seasonally adjusted numbers, which have been smoothed out over 12 months to account for seasonal fluctuations.)

Sounds good, right? Well, not exactly.

“New-home sales should be growing much more than they are,” says Chief Economist Jonathan Smoke of realtor.com. “We should be seeing twice the volume of new-home sales, and we’re not.”

The reason is that there aren’t enough buyers who can afford the median $312,900 price tag of one of those new homes, often decked out with the latest appliances and finishes. They are nearly 37% more expensive than the median $228,900 price for an existing home in January, according to the most recent National Association of Realtors® data.

Prices on those new homes dipped 1% from December—but were nearly 7.5% higher than in January 2016.

New residences cost more because they’re expensive to build, with increased local red tape, high land and material costs, and a shortage of construction workers. So builders are going to erect only what they’re sure they can sell, Smoke says.

“It effectively limits who can buy the new homes and how many new homes can be built and sold,” Smoke says.

For example, about 55% of the new homes sold in January cost more than $300,000, according to the report.

Just 5% were under $150,000 and only 9% were between $150,000 and $199,999—the price categories that are most likely to fit into the typical first-time buyer’s budget.

The bulk of sales, about 30%, were between $200,000 and $299,999, and 27% were between $300,000 and $399,999.

Most of the home purchases were in the South—about 290,000—where prices are typically lower. The purchases were up 4.3% from December, but down 1% from January 2016.

The West, the country’s most expensive region, saw the second-most sales, at about 151,000. Monthly sales dropped 4.4% but rose 16.2% annually.

In the Midwest, new-home sales were up 14.8% from December and 4.5% from the same month a year earlier. There were about 70,000 sales in the region.

Meanwhile, the Northeast saw the largest surge in home purchases. Sales of the roughly 44,000 homes were up 15.8% from the previous month and rose 22.2% from a year earlier.

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Good Morning!

Eugene's recent housing market is currently seeing record low number of homes on the market for sale.  In fact, the inventory right now is less than two months and second lowest in the nation.  The price range of homes that is hardest hit by this shortage is those that are at or below the median sales price of around $265,000.  This is the price range that most young families and first time home buyers are in.  The housing shortage has created some severe problems in our area as the shortage continues to drive home prices higher, making them less affordable.  Home price increases have outpaced the increase in income for our local area and as a result have actually pushed many first time home buyers completely out of the market or pushed them into price prices where there are low inventory and high demand.

Why does Eugene have one of the lowest inventories of available housing?

One major culprit is the fact that city and county land planners have refused to extend the urban growth boundary for Eugene.  This has caused a dire shortage of building lots and the shortage has lead to huge price increases for the existing lots.  The result of this is lack of new construction, which has fallen well below demand and has lead to a very high price for any new construction.  The urban growth boundary freeze is the primary culprit for low inventories and non-affordable housing, especially for young families and first-time home buyers.  As available lots become even more scarce the cost of housing continues to skyrocket and the affordability factor continues to decline.  This is not a healthy situation for any community.

Right now, City and County land planners are again refusing to expand the urban growth boundary for residential in Eugene.  This means a continuation of lot shortages, high priced lots, housing shortages and non-affordable housing for Eugene.  This refusal to extend the urban growth boundary for residential has choked our community for years and now during a time of crisis in the local housing market the planners refuse to help remedy our problem.

If you are concerned with the current housing crisis in Eugene, then I urge you to contact both county and city land planners and express your concern.  The failure to create affordable housing in Eugene will continue to choke our economy and drive our young families to other cities.

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Good Morning!

As I have been writing about in previous weeks posts, the inventory of homes for sale both in the U.S. market and here locally in the Eugene and Springfield market is at historic low levels.  In Eugene and Springfield, we remain at just 1.6 months of home inventory, second lowest in the nation.  A healthy Real Estate market will typically have around 6 months of inventory. This is a balanced market.  The following is an article from CNBC that talks about the national housing shortage and some of its causes.

House hunters out this spring will have to pound more and more pavement to find their home sweet home.

The number of for-sale listings fell again in December to the lowest level since 1999, according to the National Association of Realtors. There were just 1.65 million homes for sale at the end of December, which at the current sales pace would take only about 3 ½ months to exhaust. A normal, balanced market has about a six-month supply. This, as the busy spring market is already on the verge of starting. "To say early buyer demand is strong in early 2017 is an understatement — it is titanic. Redfin data shows that buyers are out touring in droves, ready to pounce on new listings that fit the bill," said Nela Richardson, chief economist at Redfin. "The only thing missing is homes for sale to satisfy demand because there just aren't a lot of homes available to buy right now. We are in a real estate black hole until those listings show up again."

In some local markets, the situation is more dire. The share of communities with supply at less than three months jumped from about 13 percent to more than 20 percent in the past year, according to a survey by Proteck Valuation Services, a real estate appraisal and analytics company. For example, in Dallas, the supply of homes for sale dropped by nearly 41 percent from December 2015 to December 2016.

"This means fierce competition for homes, where buyers that are able to act fast and pose less risk to the seller have the advantage. These 'favored' buyers would include those already pre-approved for a mortgage, those with larger cash down payments and those with no contingencies (like the sale of another home)," according to the Proteck report.

The shortage is being driven by surging demand and weak home construction. Single-family housing starts continue to rise, but very slowly each month. Builders are still operating at well below normal construction levels, and that doesn't even account for pent-up demand from the housing crisis and growing household formation.

"The homeownership rate is at a near 50-year low, and it could remain at this level," said Lawrence Yun, chief economist at the NAR. "I'm not sure if this is the trend that America wants."

"We are in a real estate black hole until those listings show up again." Nela Richardson, chief economist, Redfin

The older edge of the millennial generation is finally looking toward homeownership, but finding nothing but frustration in their neighborhoods.

Tight supply is pushing home prices past their peaks in some markets and well past income growth nationally. Mortgage rates were historically low in 2016, helping to offset the higher prices, but that is not the case this year. Rates are already up significantly since the election and are expected to continue higher. Only a few of the big volume home builders are putting resources into the starter home market.

"I continuously say that the industry and the first-time buyer need more homes priced below $250,000, but the high costs of lots, labor and regulations puts tight margins on this price point. In coming months we'll watch to see what influence the rise in rates had," said Peter Boockvar, chief market analyst at The Lindsey Group.

First-time buyers continue to make up less than a third of the sales market; historically they are usually at about 40 percent. Affordability is weakening, but mortgage credit availability also continues to be difficult.

As rates rise, fewer potential borrowers qualify for the strict debt-to-income levels lenders now require. Some are looking to the Trump administration to loosen regulations on lenders, but that could take time and is unlikely to happen before the spring season. The administration already froze a last-minute cut in the FHA insurance premium by the outgoing Obama administration, which might have opened the market to more homebuyers.

"Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first-time buyer," said Yun. "It'll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market."

Have An Awesome Week!

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