Monthly Archives: January 2017

Homeowners overestimating house worth by 1.33 percent

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The gap between homeowner’s estimates of their home’s worth and appraiser’s estimates has grown for the first time in the past six months.

According to Quicken Loans’ National Home Price Perception Index, on average, the appraiser estimate was 1.33 percent below the owner’s in December.

Prior to December, the gap between the two had been inching closer and closer together. However, Quicken Loans pointed out that home values decreased 1.19 percent from November to December, but rose 3.85 percent compared to December 2015. Yet, year-to-year, home price growth is slowing. From November 2015 to November 2016, home prices increased 5.28 percent.

“Home value growth has been mostly driven by enthusiastic buyers vying for a smaller than usual inventory of properties,” said Quicken Loans Chief Economist Bob Walters. “Appraised values have dipped along with the seasonal decline in sales around the winter months. It’s yet to be seen if value growth will build as sales rise in the spring, or as construction increases.”

In Philadelphia, the only Pennsylvania metro analyzed, homeowners were overestimating the cost of their home by 2.94 percent, compared to what appraisers said it was worth. This is continuing to widen, having only been 2.87 percent in November. However, this is a decrease from December 2015, where homeowners overestimated the value of their home by 3.50 percent. Philadelphia has consistently had one of the largest, if not the largest, gaps between homeowner’s estimates and appraiser’s.

The report also found that homeowners in the West and South areas of the country were more likely to match the appraisers’ opinions or even underestimate their home’s worth, as opposed to homeowners in the Northeast and Midwest, who tended to think their homes were worth more.

Buying is less expensive than renting in the majority of U.S. counties

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Buying a home is now more affordable than renting in nearly two-thirds of markets across the United States.

RealtyTrac combined data from the U.S. Department of Housing and Urban Development, the Bureau of Labor Statistics and public record sales deed data in 540 counties, with at least 900 home sales in last year.

The average monthly fair market rent on a three-bedroom residence in 2017 will cost 38.6 percent of average salary. Comparatively, a monthly home payment, which includes mortgage, property taxes and insurance, on a median-priced home will cost 36.6 percent of average salary.

Out of the 540 counties analyzed, there were 55 in which the average fair market rent for a three-bedroom property will cost more than 50 percent of average wages, according to RealtyTrac.

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” said Daren Blomquist, senior vice president with ATTOM Data Solutions, the parent company of RealtyTrac. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”

The report did find that both rent and the cost of homes for sale are increasing more quickly than salaries. Rents are expected to rise 4.2 percent this year, while home prices rose 5.7 percent in 2016, compared to 2015.  Average wages only increased 2.2 percent from last year. However, Philadelphia was named one of the 203 counties in which average wage growth was growing quicker than rent cost.

 

 

 

Jan. 31 RPAC Hall of Fame Nomination Deadline

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Submit a REALTORS® Political Action Committee Hall of Fame nomination form by January 31. If you are an RPAC investor with an aggregate lifetime investment history of $25,000 or more, check out the guidelines and nomination form. A nomination form must also be submitted for current Hall of Fame members transitioning into the $50,000, $75,000, $100,000 or $125,000 tiers. Hall of Fame inductees are honored at the May REALTORS® Legislative Meetings & Trade Expo.

2017 REALTOR® Broker Summit

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Learn from presenters, panels, and peer leaders in the industry offering fresh insights on current conditions while looking to the future of real estate. Seating for this elite event will be capped at 200.

Game Changer Grant Deadline

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The REALTOR® Party Game Changer Program originated from the thought that a state or local association may have a great, original public policy, advocacy or outreach idea relating to real estate, but it still may not neatly fall under the existing grant options within the REALTOR® Party programs. For that reason, the REALTOR® Party Game Changer Program was established. NAR looks for new programs, events or ideas that change the way business is typically conducted. In addition, Game Changer ideas should be ones that can be replicated with other states and local associations. Two rounds of applications are reviewed each year (deadlines of January 31 and July 31) for dollar amounts up to $15,000. If you have a Game Changing idea, please consider filling out an application.  For more information, contact Kyle Lambert London at 202-383-1203.

Real estate predictions for 2017

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“Millennials will be buying properties. 2017 will be a year when we see more loan applications and purchases for millennials,” said Abby Shemesh, founder and CEO of Amerinote Xchange, on what trends he anticipates for the real estate industry in 2017.

Another trend Shemesh expects is that baby boomers will be downsizing this year. However, he said where the boomers and millennials buy may not be where you would expect.

“A lot of folks are saying that millennials will be purchasing in ‘hot’ cities, I disagree. A lot of markets are so saturated and overpriced. My assessment is that you will see a huge increase in cities that are not being focused on. It will be a huge migration, depending on the job situation for millennials. They may be moving to not-so-sexy cities.”

He said bigger cities in Pennsylvania will still see growth this year, but not at the rate they have experienced in the past year. “It will be steady in Philadelphia and Pittsburgh, but there may be slower periods. As for smaller areas, they should see more inventory this year, so they may be attractive.”

As for the baby boomers, he said they may still be heading south, but not as south as before. He thinks the southeast may see an uptick in boomers, as they strive to find housing that is affordable.

Shemesh also believes we will see mortgage rates increase. He predicts they will be as high as 4.75 percent, especially if the economy is doing well, but doesn’t see it going any higher.

“The president-elect should not make too much trouble for real estate market, at least for now,” he said. “I feel that his business practices align with how real estate markets can grow. But if he does something in politics that would significantly affect the American economy, it would affect real estate market eventually,” said Shemesh.

How can Realtors® prepare for the housing market this year? Shemesh believes it’s all in how you do business.

“I’ve seen agents blow by their competition by thinking outside the box. Broaden horizons and get more creative. All Realtors® in all areas can benefit from that advice. Let go of what you think you’re supposed to do. Apply yourself in a way that would be creative. Don’t be another agent waiting in line to submit a bid.”

Average monthly rent in the U.S. fell $4 in December

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Monthly rent costs in the U.S. dropped $4 in December, according to a recent Yardi Matrix Report on monthly rent.

Across the country, the average monthly rate for December was $1,210, according to data pulled from 124 markets. Year-to-year, rents saw an increase of 4 percent from December 2015.

Between September and December 2016, rents fell $10 on average. “Some of the drop can be attributed to normal seasonal factors, but it is clear that rents are in a period of deceleration after growing at high levels for the previous two years,” the report stated.

Specifically, multi-family rents fell .3 percent in December, a .1 percent decline from November. However, the decrease in rents was more lifestyle properties, which is defined as those who rent by choice. Lifestyle rents tend to be higher-end and those rents fell .4 percent. Renter-by-necessity properties only saw a decrease of .1 percent.

Yet, gains are still above the long-term 2.3 percent average, according to the report. Yardi Martix predicts a 3.9 percent increase this year in apartment rental costs.

Stabilized properties remained the same in occupancy rates at 95.7 percent, with lifestyle occupancy staying at 95.5 percent, and renter-by-necessity properties remaining at 95.7 percent. The report found that occupancy stayed about the same for the majority of 2016.

“With the economy creating jobs at a 2 million-per-year rate, and GDP growth showing strength, we expect no let up in apartment absorption,” the report stated. Yardi Matrix also predicted growth in the later half 2017, thanks to economic stimulus and an predicted decrease in new supply.

Statewide home sales and prices continue upward swing

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The Pennsylvania housing market continues to look positive, according to a report released today by the Pennsylvania Association of Realtors®.

The fourth quarter of 2016 experienced an increase in home sales, compared to the previous year. Existing home sales were up 5.2 percent in the fourth quarter with 33,188 sales, compared to the fourth quarter of 2015 and were up 7.2 percent overall in 2016 with 137,526 sales.

The median sales price rose in the fourth quarter as well, up 4.6 percent to $170,000, compared to the same quarter in 2015. The year ended with the median sales price up 2.8 percent higher than 2015.

Homes are selling quicker in many markets. Days on market dropped 6.3 percent from 80 days in 2015 to 75 in 2016.

“Sales and prices were up in most markets throughout the commonwealth,” said 2017 PAR President Kathleen McQuilkin. “Overall, we’re seeing healthy growth in the real estate market.”

The number of new listings entering the market continued to fall in the fourth quarter of 2016, down 7.5 percent, compared to the same period in 2015. The months supply was at 4.8 in the fourth quarter, down 25 percent from the same quarter in 2015.

“We’ve seen a continuing trend of fewer listings entering the market, with an overall decrease of 4 percent in inventory in 2016,” McQuilkin said. “This has created a competitive market because there are fewer homes available. Inventory is lower and demand is growing. Homes that are in good condition and priced competitively are seeing multiple offers. This could continue to be a challenge in the new year.”

McQuilkin said percentage of original list price received is up as well. “Statewide, we saw properties selling at 93.5 percent of the original list price,” she said.

“Overall, Realtors® are positive about the market in 2017,” she added. “We’re continuing to see low interest rates and low unemployment rates which inspires consumer confidence.”

To view the entire market report, visit PARealtor.org.

Gov. Wolf met with Realtors® on Act 133

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Pennsylvania Realtors® met with Gov. Tom Wolf today for a ceremonial signing of Act 133 of 2016. The act amends the Municipal Code and Ordinance Compliance Act, originally enacted as Act 99 of 2000, which will change how some municipalities issue use and occupancy certificates. Act 133 took effect Jan. 2.

“The new legislation will prohibit municipalities from denying use and occupancy certificates due to point-of-sale inspection issues,” according to Hank Lerner, Esq., PAR director of law and policy. “Some municipalities were inappropriately withholding or impeding U&O certificates, leading to some real estate transactions being postponed or cancelled due to minor property maintenance violations.”

Realtors® sent more than 13,000 emails to state legislators urging them to support this legislation.

“We heard of numerous transactions being delayed or canceled due to municipalities denying the U&O certificates based on minor violations,” said 2016 PAR President Todd Polinchock. “We appreciate that state legislators heard our concerns for homebuyers and sellers and passed this legislation and that Gov. Wolf signed the bill when it arrived on his desk.”

“One of the provisions of Act 133 states that a violation found through a point-of-sale inspection cannot be used to deny a permit or to require pre-settlement repairs,” Lerner explained. “But the act also gives municipalities a permit structure that should help ensure necessary repairs are made in a timely fashion after transfer. These new amendments clarify the rights and responsibilities of both municipalities and property owners so these concerns don’t occur in the future.”

Municipalities cannot require repairs be made before the closing, according to Lerner. “The buyer and seller can certainly negotiate pre-settlement repairs if they choose, but it cannot be required. Regardless of the number or type of violations found in a municipal report, the municipality must issue a permit of some sort and can’t require repairs/renovations be completed as a condition of issuing the permit. However, while a permit can’t be withheld, the type of permit may depend on the type of violations that are found,” he said.

More detailed information is available at PARealtor.org. Members with clients experiencing issues with a municipality not following the amended code should contact their local government affairs director or field staff representative. They will be monitoring these situations throughout the state and providing information to PAR.

Voice control: The most sought-after smart home product

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Voice control is the most-wanted smart home product this year, according to a recent survey.

Nearly three quarters of respondents who have smart home products said they want voice control, according to Coldwell Banker’s survey with Vivint Smart Home. Almost half of the respondents already have it.  Most Americans (57 percent) who use voice control use it to control their smart entertainment. One-third reported they use it to control smart lighting and/or smart security products. Those who want the products are also looking to control entertainment (43 percent), control smart lighting (43 percent) and to control smart temperature (41 percent).

Not surprisingly, millennials lead the pack with already having voice control in their homes. Fifty-eight percent of millennials have voice control features for their smart home products, followed by 50 percent of Generation X and 26 percent of baby boomers. However, Generation X are the ones who most desire voice control, according to 79 percent of them. Millennials are right behind, with 74 percent wanting voice control, and 63 percent of baby boomers want it.

Across generations, those with children want voice control activation for their smart home products, 81 percent of parents want the ability to control their smart home products with their voice, and 65 percent already have it.

The majority of respondents said they seek voice control for their smart home products to have hands-free control (30 percent), increased user-friendliness (17 percent) and to be flexible with their location (14 percent).

The smartphone is the leading product that has lead people to seek voice control in their homes. Seventy-four percent of Americans with smart product voice control have it on their phones already.