Category Archives: Industry News

Baby boomers expected to lead remodeling over next decade

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For the past two decades, baby boomers have been the leaders in renovation spending.

According to the Demographic Change and the Remodeling Outlook, it looks like they aren’t backing down any time soon. Renovations by homeowners 55 and older are expected to increase by nearly one-third in the next decade (by 2025), representing more than 75 percent of total gains.

In 2025, baby boomers are expected to represent 56 percent of all renovation spending, up from 31 percent in 2005. Generation X members are expected to finally do the remodeling they have put off, due to the economy, and millennials are also expected to pour some money into renovations in their newly-purchased homes. Remodeling is expected to grow about 2 percent each year until 2025, the report found. In 2015, homeowner remodeling hit $340 billion, a new high.

“With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.

The study said that rising home prices are leading owners to update their homes, but this could be making these homes even pricier when they do hit the market. Baby boomers are most likely to update their homes to be more accessible, while millennials are updating for energy efficiency and automation.

“The remodeling industry should see numerous growth opportunities over the next decade,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Strong demand for rental housing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to in invest in upgrades.”

New home sales kick off 2017 on a high note

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Newly built single-family homes also saw an increase in sales in 2017.

Sales of these homes increased 3.7 percent in January. This is seasonally-adjusted annual rate of 555,000 homes, reported the U.S. Department of Housing and Urban Development and the U.S.. Census Bureau, according to a recent release from the National Association of Home Builders.

“This increase in new home sales is in line with our forecast for a steady, gradual recovery of the housing market,” said Granger MacDonald, chairman of NAHB. “However, the pace of growth may be hampered by supply-side headwinds, such as shortages of lots and labor.”

Median sales price of newly built single-family homes sold came in at $312,900. Inventory of newly built single-family homes is currently at a 5.7-month supply at the existing sales pace. In January, inventory hit 265,000.

“We can expect further growth in new home sales throughout the year, spurred on by employment gains and a rise in household formations,” said NAHB Chief Economist Robert Dietz. “As the supply of existing homes remains tight, more consumers will turn to new construction.”

The Northeast saw the highest increase in sales, rising 15.8 percent, with 44,000 new homes sold in January, compared to 38,000 in December. The Midwest also saw a large increase, rising 14.8 percent from 61,000 new homes sold in December to 70,000 in January. The South saw a slight rise, increasing 4.3 percent from 278,000 in December to 290,000 in January. However, sales in the West did see a decline of 4.4 percent, decreasing from 158,000 in December to 151,000 in January.

Single women unable to afford rent and mortgage in most major metros

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Single people, especially women, are struggling to afford homeownership and rent in most major cities.

Since single women’s median income is lower than men’s on average, they are priced out of several major cities.

PropertyShark and  RENTCafé recently priced the 50 biggest metros in the country to determine where single people could afford housing on their own. Being able to afford housing is defined as spending no more than 30 percent of one’s monthly income on rent or mortgage payments. They defined homes as starter units, such as studios and one-bedroom rentals, condos or houses.

Results found that in nine of the 50 cities, single men could afford mortgage, but single women could not. Fourteen cities, including Philadelphia, have priced out all singles. Philadelphia does have lower costs than other cities on the list, such as Manhattan and San Francisco, but based on the average salary, single people of both genders would struggle to afford housing. Women, more so, have a tough time in Philadelphia, the study found that it costs 54 percent of the average woman’s salary to pay a mortgage.

Renting is even worse, according to the study. For single men, they can afford the mortgage in 35 out of 50 cities. But rent? Not so much. They can only afford the rent on a similar building (typical one-bedroom or studio) in 18 cities. Single females can only afford rent in two of the 50 cities analyzed.

In Philadelphia, neither gender is likely to be able to afford a rent or a mortgage solo on the average salary.

Wichita, KS and Tulsa, OK are the lone two cities where both genders can afford a rent and a mortgage with their average salary.

Number of foreclosures continues to decrease

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Foreclosures have dropped nearly 40 percent year-to-year, according to CoreLogic’s recently-released December 2016 National Foreclosure Report.

In December 2016, there were 21,000 completed foreclosures, down 15,000 from December 2015. In December 2015, about 467,000 houses were in a stage of disclosure, compared to 335,000 a year later.

Additionally, the seriously delinquent rate was 2.6 percent in December, the lowest it has been since June of 2007. The serious delinquent rate is those homes that are 90 days or more past due, including loans in foreclosure or REO.

“While the decline in serious delinquency has been geographically broad, some oil-producing markets have shown the effects of low oil prices on the housing market. Serious delinquency rates have rose in Louisiana, Wyoming and North Dakota, reflecting the weakness in oil production,” said Frank Nothaft, the chief economist at CoreLogic.

The national foreclosure inventory has dropped as well. From November to December 2016, it fell 1.9 percent, the 62nd month in a row that it declined. Year-to-year, foreclosure inventory decreased 29.5 percent.

The foreclosure rate of all homes with a mortgage dipped below 1 percent, falling to .8 percent, once again matching June 2007 levels.

In Pennsylvania, the foreclosure inventory is 1.1 percent, slightly above the national average, but nowhere near New Jersey (2.8 percent) and New York (2.7 percent). Year-to-year, the commonwealth saw a decrease of 29.1 percent in foreclosure inventory. The number of completed foreclosures for the year 2016 in Pennsylvania was 13,366, and Pennsylvania’s serious delinquency rate is above the national average, at 3.5 percent.

“Foreclosure and delinquency trends continue to head in the right direction powered principally by increasing employment levels, stringent underwriting standards and higher home prices over the past few years,” said CoreLogic President and CEO Anand Nallathambi.

Optimism about housing market this year continues to grow

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Fannie Mae’s January Home Purchase Sentiment Index rose to 82.7 in January, an increase of 2 percent from December, after five months of declining numbers.

Compared to January 2016, the HPSI, which surveys around 1,000 Americans on housing, is up 1.2 percent. Additionally, more people feel it is a better time to sell, as that number rose from 13 percent in December to 15 percent in January.

However, the number of respondents who think now is a good time to buy dropped from 32 percent in December to 29 percent in January. Forty-two percent of Americans believe home prices will rise, an increase of 7 percent from the previous month.

“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability. If consumers’ anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more.”

More than two-thirds of respondents (69 percent) said they are not worried about losing their job, an increase of 1 percent from the December’s HPSI. Fifteen percent said their household income is “significantly higher” than it was this time last year, a 5 percent increase from December.

 

Compared to previous generations, millennials are less apt to move

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In 2016, only one in five millennials had moved in the past 12 months.

This is a decrease from 2000, when 26 percent of young adults had moved in the previous year, as well as 1963, when, yet again, 26 percent of young adults reported moving the year before, according to a recent report from the Pew Center.

The Pew Center analyzed why millennials aren’t as apt to move. Most likely, it’s due to lack of funds, thanks to lower-paying jobs. In fact, most millennials who did move in 2016 did so for a job, the Pew Center reported. Student loan debt is also a huge part of millennials’ inability to get a mortgage, and purchase a home.

For those millennials that did move last year, 22 percent moved into a home they purchased. Comparatively, in 1981, 35 percent of young adults the same age moved into a home they had purchased.

There are also three main factors that separate millennials from previous generations. One of the top reasons is that less millennials are married at this age than previous generations. Today, 42 percent of millennials aged 25 to 35 live with their spouse. In 1963, 82 percent of those aged 25 to 35 lived with a spouse.

Millennials are also less likely than previous generations to own a home, only 37 percent live in an owner-occupied that isn’t their parents’, compared to 56 percent of baby boomers at the same age. Finally, millennials are less likely to have children at this age.

Despite not owning a home, thus making it easier to move, and not having children, many millennials are hesitant to move, thanks to lack of funds, high student debt and their inability to get a mortgage.

 

 

 

Fido does impact where pet owners live and how they renovate

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Ninety-nine percent of those with a pet believe the animal is a part of their family, according to NAR’s 2017 Animal House: Remodeling Impact report.

And they are looking out for the whole family’s best interest when they search for a home. Sixty-one percent of households either own a pet, or are planning to get one. Twelve percent of pet owners have moved for their animal, and 19 percent said they would consider moving to better accommodate their pet. Nearly one-third of pet owners have not put an offer on the house because it was less than ideal for their animal.

And of those that own a pet, 61 percent said it’s difficult to find a rental property or homeowner association that allows animals. Ninety-five percent reported that they think living in a housing community that allows pets is important. Sixty-two percent said it is important to have animal-friendly amenities, like a walking path, animal store or animal grooming, near their residence.

On the other hand, more than two-thirds of Realtors® surveyed reported that owning a pet has an effect when listing a home. They suggested owners should replace anything that has been damaged, clean the home to remove any scents and take the pet out during showings as the top three ways to avoid negative feedback from potential buyers.

Homeowners are also remodeling to accommodate their pets. More than half (52 percent) of pet owners completed a home project to better serve their pets’ needs. Twenty-three percent added a fence to their yard, 12 percent added a dog door and 10 percent added laminate flooring. Ninety-four percent reported they felt “satisfied” with their remodeling. Of those who remodeling, 44 percent paid a professional, while 56 percent completed the project themselves. Realtors® also reported that more than 90 percent of homebuyers with a pet want a fenced yard.

Nearly 90 percent of households would not give up their pet for a residence.

“In 2016, 61 percent of U.S. households either have a pet or plan to get one in the future, so it is important to understand the unique needs and wants of animal owners when it comes to homeownership ” says NAR President William E. Brown. “Realtors® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.”

Survey: 25 percent of Americans interested in buying this year

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Twenty-five percent of adults reported that they are very likely or somewhat likely to purchase a home this year, according to a recent survey by Bankrate.

Of all non-homeowners surveyed, 15 percent reported they are somewhat or very likely to purchase a home in 2017.

Specially, older millennials (aged 27-36) and Generation Xers (aged 37-52) are more likely to buy within the year. Nearly 40 percent of minorities, more than double the percentage of white adults, reported they are likely to buy a home this year.

“Among millennials, there’s a lot of pent-up demand for home buying,” said Holden Lewis, Bankrate.com’s senior mortgage analyst. “They have been stymied by stagnant wages, student loans and a lack of available starter homes. If enough affordable homes are put on the market, we might see a surge of first-time homebuyers in their early to mid-30s.”

Mortgages do cause hesitation in some would-be homebuyers. Thirty-seven percent of possible homebuyers reported that the size of the mortgage has a major impact on their savings for the future, while 46 percent reported it has a minor impact on their savings.

Parents also struggle more to save, according to the report. Two-thirds of non-homeowners with young children said they are unable to purchase a home due to lack of good credit or the inability to save for a down payment. Eighteen percent reported they don’t want to own a home.

“Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream,” added Lewis. “They’re caught between the costs of raising children and paying those mortgages and saving money.”

Realtor.com® Chief Economist Jonathan Smoke said that while most people believe they need 20 percent for a down payment, “in reality, it averaged 11 percent last year.”

 

Existing-home sales kick off 2017 hitting decade high

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Existing-home sales increased 3.3 percent, and reached a 10-year high in January, according to the National Association of Realtors® recent release.

Sales hit 5.69 million, the strongest sales pace since February 2007. The sales pace is 3.8 percent higher than January 2016, but the median home price rose 7.1 percent year-to-year to $228,900. This is the 59th consecutive month representing year-to-year price increases.

Nearly every region, excluding the Midwest, saw increases. In the Northeast, sales rose 5.3 percent, increasing to an annual rate of 800,000, 6.7 percent higher than January 2016. The median home price was $253,800, up 2.5 percent from this time last year.

“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” he said. “Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability condition,” said Dr. Lawrence Yun, chief economist at NAR.

First-time homebuyers represented a third (33 percent) of purchasers, an increase of 1 percent from December and last January.

Housing inventory saw an increase of 2.4 percent, rising to 1.69 million existing homes for sale. However, it is still 7.1 percent below January 2016’s housing inventory, which was 1.82 million. Time on the market has also dropped from 52 days in December to 50 days in January.

All-cash sales represented 23 percent of purchases, a 2 percent increase from December, but a 3 percent decrease from January 2016.

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range,” said Yun. “The combination of higher rates and prices led to households in over half of all states last month being able to afford less of all active inventory on the market based on their income.”

 

Developing your own real estate brand to stand out in a crowd

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Realtors® are “kind of everywhere,” said Deb Gabor, author and founder of Sol Marketing.

“Realtors® need to develop a personal brand. What differentiates one from the other is a personal brand, which is the relationship someone has with their clients. Standing out for Realtors® can be everything from a unique approach to the market to specializing in particular brands of home, such as remodeled homes that were mid-century, getting even that narrow with the type of buyer,” she said.

Gabor said that your brand should be defined by the client or by the product, such as the kind of homes you list, or the neighborhoods you specialize in or the price.

“Your brand should be defined by some kind of concept that transcends the whole industry, a unique point of view,” she added.

One of the best things you can do when creating your brand is make sure you use substantial differentiation. “The biggest mistake I see by Realtors® is that they market on bells and whistles, things others can imitate, without making themselves stand out.”

Gabor suggested asking yourself the following three questions:

  1. What does it say about a person that they used me as their Realtor®?
  2. What is the singular thing my clients get from me they can’t get anywhere else?
  3. What is the client trying to create? How do I, as a Realtor®, help make them the hero in the story?

“Think of yourself as a brand. You are not just a person. A brand is an experience. How do you want people to experience doing business with you? The best brands in the world are the ones who become part of the person who uses them,” said Gabor.

Another thing to ask yourself is what does it say about a client that has hired you to list their home or help them find their dream home, said Gabor.

“The best brands are the one that become a part of someone’s self-image. Create the irrational loyalty, which is when your clients feel so attached to a brand that if they were to use something else, they would feel like you were cheating on them. So that when people are going up the property ladder, they wouldn’t even hesitate to think of their Realtor®. That idea of irrational loyalty when people say ‘my Realtor®.’ Referring to you as ‘my’ Realtor® is a good indicator that someone is irrationally loyal,” she said.

“Branding is strategic, but branding is not that hard,” added Gabor.