All-Cash Sales Falling Nationwide

All-Cash Sales Falling Nationwide

All-cash sales are on the decline, accounting for 32.4 percent of total home sales in November 2016, down 4.5 percentage points year over year, according to CoreLogic’s most recent housing data. That’s a significant drop from January 2011, when cash sales were at their peak: a whopping 46.6 percent of all home sales nationally. CoreLogic experts predict cash sales will fall to a historical norm of about 25 percent by mid-2017.

Cash sales are most common in the REO market (60.2 percent of REO sales were cash in November 2016), followed by resale homes (32.3 percent), short sales (31.9 percent), and newly constructed homes (15.5 percent), according to CoreLogic. REO sales have been steadily declining since their peak in January 2011, which helps explain the overall drop in cash sales.

The state with the largest number of cash sales in November was New York, at 47.4 percent of transactions, according to CoreLogic. Other states with elevated percentages of cash sales include Alabama (47.3 percent), Michigan (44.1 percent), Florida (42.4 percent), and Indiana (41 percent).

Source: “Cash and Distressed Sales Update: November 2016,” CoreLogic Insights Blog (Feb. 27, 2017)

Parents May Need a New Mortgage Perspective

Mortgage Perspective

Parents are having a tough time saving money. Fifty-one percent of parents recently surveyed say their mortgage was having a “major impact” on their ability to save, according to Bankrate’s Money Pulse survey for February.

“It’s probably not as much about the mortgage as it is that stage of life,” says Jonathan Smoke, realtor.com®’s chief economist.

Homeowners with children are likely to be in their early 30s to mid 50s and have many financial goals. They’re not only tending to the needs of their children but also saving for college and retirement, maintaining a home, and paying the mortgage.

Jim Sahnger with Schaffer Mortgage in Palm Beach Gardens, Fla., says parents may need to change how they think of mortgage payments: It’s not just another form of paying off debt but it’s a form of savings.

“If you look at it from the aspect of you’re building equity, that’s obviously important,” Sahnger says. Further, home ownership can help shield you from rental cost increases, and there are tax benefits to owning, he adds.

Two in three parents who don’t own a home say that financial issues such as poor credit or being unable to afford the down payment are preventing them from buying.

The Bankrate survey also found that 15 percent of Americans say they’re very or somewhat likely to purchase a home this year, with older millennials (ages 27 to 36) and Generation Xers (ages 37-52) showing the greatest likelihood of buying.

Source: “Parents Have Trouble Saving Because of Mortgage Payments, Bankrate Survey Finds,” Bankrate.com (February 2017)

Contract Signings Would Be Higher If…

Contract Signings Would Be Higher If…

Pending home sales weakened in January as insufficient supply levels of homes for sale continues to press on many markets, particularly in the Midwest and West, the National Association of REALTORS® reported Monday.

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 2.8 percent to a reading of 106.4 in January. The latest reading on the index is about 0.4 percent above a year ago, but it’s the lowest reading since that time.

“The significant shortage of listings last month, along with deteriorating affordability as the result of higher home prices and mortgage rates, kept many would-be buyers at bay,” says Lawrence Yun, NAR’s chief economist. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it’s not uncommon to see a home come off the market within a month.”

Yun says that Americans’ interest in purchasing a home is at the highest level since the Great Recession. More households are feeling confident about their financial situation, and job growth is strong. However, despite their optimism, more home shoppers are faced with limited choices due to a shortage of homes for-sale. The limited supply is also driving up prices in many areas.

“January’s accelerated price appreciation is concerning because it’s over double the pace of income growth and mortgage rates are up considerably from six months ago,” says Yun. “Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location.”

Further, real estate professionals may see their sales more limited over the next few months. Yun says existing-home sales will likely “be choppy in the coming months as buyers compete for the meager number of listings in their price range.”

Source: National Association of REALTORS®

What Threatens Your Closings the Most

What Threatens Your Closings the Most

The majority of contracts settle on time, but more than a quarter of practitioners are citing delays due to common culprits.

In the latest REALTORS® Confidence Index report, 29 percent of real estate professionals say they faced a delay to settlement and 5 percent reported a contract that was terminated. Sixty-seven percent of practitioners reported their contracts were settled on time.

Among the contracts that had a delay to settlement, 38 percent were due to issues related to obtaining financing and 22 percent were from appraisal issues. Survey respondents blamed appraisal-centered delays on the shortage of appraisers, valuations that were not in line with market conditions, and “out-of-town” appraisers who were not familiar with local conditions.

Other issues that caused delays involved titles, sales contingencies, problems related to distressed sales, home/hazard or flood insurance issues, or a buyer losing a job.

Among contracts that were terminated, the most common reasons were related to home inspections, obtaining financing, and appraisal problems.

The median number of days to close a contract was 40 days in January, down slightly from 42 days a year ago in January 2016, NAR reports.

Source: “REALTORS® Confidence Index: January 2017,” National Association of REALTORS® (Feb. 22, 2017)

Where FHA Loans Are the Most Popular

Where FHA Loans Are the Most Popular

In 2016, 15.5 percent of home purchases were completed using Federal Housing Administration loans, according to ATTOM Data Solutions. For many borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of a home.

The following are the eight metros with populations of more than 200,000 that had the largest percentage of purchases using FHA-insured loans in 2016.

1. McAllen-Edinburg-Mission, Texas

• FHA sales: 35%

2. Ogden-Clearfield, Utah

• FHA sales: 34.2%

3. Merced, Calif.

• FHA sales: 32.6%

4. Visalia-Porterville, Calif.

• FHA sales: 31.9%

5. Salt Lake City, Utah

• FHA sales: 29.6%

6. Beaumont-Port Arthur, Texas

• FHA sales: 29.2%

7. Indianapolis-Carmel-Anderson, Ind.

• FHA sales: 27.9%

8. Amarillo, Texas

• FHA sales: 27.9%

Source: “10 Hottest Markets for FHA Mortgages,” National Mortgage News (2017)

Existing-Home Sales Reach Decade High

Existing-Home Sales Reach Decade High

Existing-home sales in January reached their fastest pace in nearly a decade, with all major regions except the Midwest posting gains last month, the National Association of REALTORS® reports.

Sales By Region

Here’s how existing-home sales fared across the country in January:

• Northeast: Rose 5.3 percent to an annual rate of 800,000, 6.7 percent above a year ago. Median price: $253,800, which is 2.5 percent above a year ago.
• Midwest: Dropped 1.5 percent to an annual rate of 1.29 million, 0.8 percent below a year ago. Median price: $174,900, up 6.5 percent from a year ago.
• South: Increased 3.6 percent to an annual rate of 2.31 million, 3.1 percent above a year ago. Median price: $201,400, up 9.2 percent from a year ago.
• West: Rose 6.6 percent to an annual rate of 1.29 million, 8.4 percent above a year ago. Median price: $332,300, up 6.8 percent from a year ago.

Source: National Association of REALTORS®

Total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—rose 3.3 percent to a seasonally adjusted annual rate of 5.69 million in January. That’s 3.8 percent higher than a year ago and marks the strongest month since February 2007, according to NAR.

“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,” says NAR chief economist Lawrence Yun. “Market challenges remain, but the housing market is off to a prosperous start as home buyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.”

5 Stats to Gauge the Market in January

1. Home prices: The median existing-home price for all housing types in January was $228,900—a 7.1 percent increase from a year ago.
2. Inventories: Total housing inventories at the end of the month increased 2.4 percent to 1.69 million existing homes available for sale. That is still 7.1 percent lower than a year ago (with a 1.82 million supply). Unsold inventory is at a 3.6-month supply at the current sales pace.
3. Distressed sales: Foreclosures and short sales made up 7 percent of all sales last month, down from 9 percent a year ago. In January, 5 percent of sales were foreclosures and 2 percent were short sales. Foreclosures sold at an average discount of 14 percent below market value, while short sales were discounted 10 percent.
4. All-cash sales: All-cash transactions comprised 23 percent of transactions in January, down from 26 percent a year ago. Individual investors make up the bulk of all-cash sales. They purchased 15 percent of homes in January, down from 17 percent a year ago.
5. Days on the market: Thirty-eight percent of homes sold in January were on the market for less than a month. On average, sold properties spent 50 days on the market, down from 64 days a year ago. Short sales lingered on the market the longest, at a median of 108 days, while foreclosures sold in 51 days. Non-distressed homes spent a median of 49 days on the market.

“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,” Yun says. The REALTORS® Affordability Distribution Curve and Score, a new measurement of homebuying activity created by NAR and realtor.com®, revealed that the combination of higher mortgage rates and home prices made active listings less affordable for households in more than half of all states last month.

Source: National Association of REALTORS®