More house hunters are looking for a home, but they’re having trouble finding one. Demand continues to exceed housing supplies in many markets, which is restraining contract signings this fall, the National Association of REALTORS reported Thursday.

NAR’s Pending Home Sales Index forward-looking indicator based on contract signings posted a reading of 106 in September, its lowest reading since January 2015. The index is also 3.5 percent below a year ago and has fallen on an annual basis in five of the past six months.

Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realize from the decline in mortgage rates from earlier this year, says Lawrence Yun, NAR’s chief economist. While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren’t keeping up with what’s being sold.

Recent hurricanes also continue to weigh on sales. Hurricane Irma’s direct hit on Florida weighed on activity in the South, but similar to how Houston has rebounded after Hurricane Harvey, Florida’s strong job and population growth should guide sales back to their pre-storm pace fairly quickly, Yun says.

Ongoing supply constraints are squeezing prospective buyers the most at the lower end of the market, Yun says. First-time buyers accounted for 29 percent of all transactions in September, which matched the lowest share in two years. Existing-home sales continue to be down on an annual basis in the price range below $250,000. However, sales remain higher in the upper price brackets, NAR notes.

Buyers looking for a little relief from the stiff competition from over the summer may unfortunately be out of luck in the coming months,Yun says. Inventory starts to decline heading into the winter, and many would-be buyers from earlier in the year are still on the hunt to find a home.

Source: National Association of REALTORS

 

Millennials desire for smaller homes may have a big impact on the future demand of some of the most popular homes today.

Young adults are getting married later in life, they’re delaying their first home purchase (often due to student loan debt) by up to seven years in some cases, and they’re also having children later in life.

The U.S. fertility rate has plunged to its lowest level since the Centers for Disease Control began tracking such data more than a 100 years ago. From 2011 to 2015, the number of 30- to 34-year-olds without children at home increased by 4 percent, according to Census data. Among 25- to 29-year-olds, the number increased by more than 5 percent.

What does this mean for housing? For millennials who remain childless, a large house with four or more bedrooms likely will no longer be as in demand. Households without children tend to prefer smaller homes, condos, or townhouses near city amenities rather than an oversized single-family home.

The fact that we’re having smaller-size families I think naturally means that the demand for smaller-size housing would get greater interest than before, Lawrence Yun, chief economist for the National Association of REALTORS, told The Washington Post.

As baby boomers enter retirement and their adult children move out, many are expected to choose to downsize too. Economists predict that could add increased pressure to the market for smaller two-bedroom condos and townhouses.

Yet, the new-home market is staying focused on building bigger rather than smaller. Ninety percent of new single-family homes had three or more bedrooms in 2016.

Source: One Big Reason Millennials Want Smaller Homes And It Could Change the Housing Market, Apartment Therapy (Sept. 25, 2017) and Adults Who Opt Not to Have Kids Cause Ripple Effects in U.S. Housing Market, The Washington Post (Sept. 14, 2017)

 

One of the biggest segments of new renters is empty nesters ages 55 and up, as multifamily developers reconsider their original focus on millennials. Between 2009 and 2015, the number of renters older than 55 increased 28 percent, or 2.5 million the largest uptick of any age group, according to data from rental listing site RENT. Meanwhile, the number of renters ages 34 and younger rose just 3 percent during the same time period.

Lowering living expenses, looking for a different lifestyle, less house-related work, and overall less responsibility can be achieved by downsizing, so a lot of retirees opt to rent, Simona Solomie, a broker with RE/MAX Masters in Morton Grove, Ill., says about the study’s findings.

But that doesn’t necessarily mean seniors are headed for urban high-rises when seeking apartment life. Nearly 40 percent of renters older than 55 chose a suburban lifestyle, according to RENT. Of the 20 largest metros in the country, the city of Riverside, Calif., has the largest percentage of seniors making up renter households (63 percent). Los Angeles, however, has posted the largest gain in senior renters about 134,000 between 2009 and 2015.

Source: The Biggest Game Changers in Renting Are Older, Highly-Educated Renters, and 2.5 Million Stronger, RENT Blog (Oct. 17, 2017)

 

Vinyl is the most common primary exterior wall material on single-family homes, according to the U.S. Census Bureau’s Survey of Construction data from 2016.

Vinyl tops the list at 27 percent, followed by stucco at 24 percent, brick or brick veneer at nearly 22 percent, and fiber cement siding at 20 percent. Wood or wood products comprised just 4 percent, and stone, rock, or other stone materials make up only 1 percent of exteriors nationwide. However, stone, rock, or other stone materials are the most commonly used secondary siding material on new single-family homes.

The popularity of exterior finishes can vary geographically. For example, vinyl is the most popular choice in the Middle Atlantic and New England regions, while stucco was the top siding choice in the Pacific and Mountain divisions. Brick or brick veneer is the top choice in the East and West South Central divisions.

Source: Vinyl Is the Most Widely Used Primary Exterior on New Homes, National Association of Home Builders Eye on Housing blog (Oct. 23, 2017)

 

Improved educational performance, higher civic participation, lower crime rates, and improved health remain the biggest social benefits linked to homeownership, according to a new research paper by NAR Chief Economist Lawrence Yun and research economist Nadia Evangelou, which appears in The Journal of the Center for Real Estate Studies. Some findings from the latest research cited in the paper include:

Health. Children of homeowners tend to be happier and healthier than children of non-owners, even after factoring in income and education levels. More recently, studies have found the wealth-building effect of homeownership and the sense of control it often brings in a stable housing market can positively affect homeowners mental and physical health. On the other hand, some studies suggest that areas where housing distress is high tend to see greater rates of mental health and stress-related health diagnoses among residents.

Crime. Research has confirmed homeowners have a lower instance of involvement in crime than non-owners. Also, neighborhoods with stable housing options regardless of ownership structure are more likely to have lower crime rates. Some studies have found, however, that foreclosure levels do influence burglary and violent crime rates.

Education. Researchers have found homeowners tend to accrue more wealth and save more money such financial practices are associated with lower rates of homeowner’s children dropping out of school.

Civic engagement. Homeownership and residential stability continues to be linked with an increased likelihood of electoral participation. Homeowners remain more likely to participate in local elections and civic groups than renters, the paper states.

Owning a home embodies the promise of individual autonomy and is the aspiration of most American households,the researchers note. Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family, and civic outcomes.

Source: Social Benefits of Homeownership and Stable Housing, The Journal of the Center for Real Estate Studies (2017)

 

Retiring baby boomers are less likely to be mortgage-free compared to people their age in previous generations, according to Fannie Mae. That could hurt boomers financial security and exacerbate the housing affordability crisis.

Slightly less than 50 percent of the oldest baby boomer homeowners in 2015 were mortgage-free, 10 percentage points lower than the number of Silent Generation homeowners who were in the same age group in 2000 and mortgage-free, according to Fannie Mae. The increasing prevalence of housing debt among older homeowners could compromise financial security in retirement by expanding housing affordability problems, crimping essential non-housing spending, increasing vulnerability to home loss through foreclosure, or limiting the accumulation of housing wealth, Fannie Mae researcher Patrick Simmons writes on the GSE’s Housing Perspectives blog.

Between 2010 and 2015, when the housing market was recovering from the crash, baby boomers were paying off their mortgages at an accelerated pace. But even if that trend continues, researchers predict, the rate of boomers who own their homes free and clear in retirement is unlikely to keep pace with previous generations.

The greater propensity of boomer homeowners to carry housing debt might signal the need to expand consumer outreach and education that helps older mortgagors manage their monthly housing expenses, including ensuring that they have fully exploited opportunities to reduce monthly mortgage payments through refinancing, Simmons notes. Educating younger boomers about options for shorter-duration mortgages that accelerate principal pay-down might also increase the likelihood that they enter retirement with little or no housing debt. For older boomer mortgagors who wish to eliminate housing debt, an option worth considering is trading down to less expensive homes.

Source: Baby Boomers Accelerate Their Advance into Free-and-Clear Homeownership, Fannie Mae’s Housing Insights (Oct. 5, 2017)

 

Your clients may one day live in a battery-powered home, and that’s getting closer to reality for homeowners in New York, California, Massachusetts, Hawaii, Vermont, and Arizona. Many municipalities in those states are revamping their electrical grids and turning to batteries to make them more efficient. But the average homeowner likely won’t notice the change. Most plans call for batteries to be tucked into a sort of neighborhood junction box or behind a fence in a substation, The Wall Street Journal reports.

Batteries can harness renewable energy sources and make utility companies less reliant on more expensive forms of electricity when demand runs high. Without batteries and other means of energy storage, the ability of utility companies to deliver power could eventually be threatened, according to the Journal.  Solar power, especially, tends to generate electricity only at certain times and it’s rarely in sync with a home’s needs.

In the aftermath of recent hurricanes, companies such as Sonnen and Tesla helped keep homes powered using batteries, demonstrating the importance of freeing people from total dependence on the electrical grid during emergencies. They found that battery power worked particularly well when combined with rooftop solar panels.

Real estate developer Mandalay Homes has announced plans to build up to 4,000 ultra-energy-efficient homes, which will feature 8 kilowatt-hour batteries from German manufacturer Sonnen. The bulk of the homes will be built in Prescott, Ariz. The development could be the largest home energy storage project in the country, Sonnen Senior Vice President Blake Richetta told the Journal.

In Vermont, Tesla Energy and Green Mountain Power have teamed up to offer 2,000 homeowners a Tesla Powerwall for $15 a month. The 13.5 kilowatt-hour batteries, which retail for $5,500, can be used when the electrical grid is strained at maximum capacity, saving utility companies from having to use pricier forms of electricity. Those savings could then be passed on to consumers.

Source: Your Next Home Could Run on Batteries,The Wall Street Journal (Oct. 15, 2017) 

 

A little music may be just what your listing needs. Some real estate professionals believe that soft music playing in the background can be just the subtle, emotional pull that welcomes buyers inside your open house or house tour.

Tom Hignite, owner of Miracle HomeBuilders in Milwaukee, plays music during his open houses and tours, but he’s careful that his song choices fit the home’s vibe.

It’s trying to create a sense that goes with the home, Hignite told realtor.com. With a contemporary home, a lot of times it’s New Age … [it] sounds almost Zen-like. If it’s an older home, mansion-like, we’ll want to have classical music, maybe piano and violin music. A property in an urban neighborhood may benefit from some jazz, he adds.

Researchers from Australia investigated whether music can truly turn a shopper into a buyer in studies conducted in 2015. Researchers found that study participants made meal choices that corresponded with the background music they heard. In a second part of the study, music also was found to make people want to spend more money than if no music was being played. Therefore, researchers concluded that music can add more perceived value to a product.

Having some soft, soothing music playing at an open house does help with the sale, Michelle Galli, a listing agent with Century 21 M&M in Los Banos, Calif., told realtor.com.  It gives the prospect a calm, relaxing feeling … so they can picture themselves in the home in serenity.

But the music choice is key, real estate pros say. You don’t want anything too loud and distracting, but you also don’t want anything too soft like elevator music, Hignite says. Instrumental jazz tends to be a good choice, agents say. For more insights on music choices, visit realtor.com.

Source: Tune Up Your Open House: How to Use Music to Sell Your Home, realtor.com (Oct. 12, 2017)

 

With inventories so tight, many consumers say they’re even willing to live in a haunted house.

Thirty-three percent of more than 1,000 consumers recently surveyed say they’re willing to live in a haunted house, and another 25 percent said they’d consider it, according to a newly released survey by realtor.com.

Haunted houses are a popular attraction this time of year, but we wanted to see how many people would actually live in one, says Sarah Staley, a housing expert who commented on the study’s findings. What we found may be a sign of today’s tight housing market, or for many living in a haunted house doesn’t have to be a deal breaker.

Further, 47 percent of respondents said they’d live in a home where someone has died, and 27 percent additional respondents said they’d at least consider it, according to the survey.

Still, 40 percent of consumers said they’d need a price reduction in order to choose a haunted home over a non-haunted home. Also, a good neighborhood, extra square footage, and more bedrooms would convince them too, according to the survey. On the other hand, 42 percent of respondents insist they aren’t open to the idea of buying a haunted home, even for those extra perks.

For some consumers, living in a haunted house may not be considered a stretch because they claim they’ve already lived in one. For example, 28 percent of respondents said they have lived in a haunted house, and another 14 percent think they may have. They say their house was haunted because of strange noises, odd feelings in certain rooms, and even some reports of objects moving or disappearing.

Source: realtor.com

 

Homeowners who earn a high income are showing a preference for the suburbs and even the far-out burbs over downtown living. A Census Bureau analysis of the 53 largest U.S. metros shows that only 3 percent of homeowners employed full-time who make more than $75,000 annually live downtown, while 11.4 percent live in inner-ring neighborhoods. But 14 percent live in the exurbs, and 71.5 percent are in the suburbs.

In 2015, a $75,000 salary represented the 77th percentile of incomes nationwide, according to Chapman University researcher Erika Nicole Orejola. She found that 16 of the 20 counties with the largest share of full-time employed residents who were earning more than $75,000 were suburban. The majority of residents were driving to work and living in low- to moderate-density communities. The remaining four counties in the top 20 fell on the other end of the spectrum and are considered some of the most urbanized parts of the country, such as New York and San Francisco.

Based on her research, the following counties have the most high-wage earners:

  1. New York County (Manhattan)
  2. Fairfax County, Va.
  3. San Francisco
  4. Santa Clara, Calif.
  5. Norfolk, Mass.
  6. Montgomery County, Md.
  7. Washington, D.C.
  8. Monmouth, N.J.
  9. San Mateo, Calif.
  10. Westchester, N.Y.

For households that earn incomes of more than $200,000 annually, the same urban counties ranked high: San Francisco (third), New York County (fifth), and Washington, D.C. (16th). But the remainder of the top 20 were mostly in suburban locales, led by Santa Clara, Calif., and Fairfax County, Va.

The biggest factors influencing where buyers settle are housing costs, jobs for a spouse, commute times, proximity to family, and quailty of K-12 schools, according to a survey by the Center for Demographics and Policy at Chapman University of more than 1,000 professionals ages 25 to 64 with household incomes greater than $80,000.

Source: Where America’s Highest Earners Live, Forbes.com (Oct. 3, 2017)