Metros with Fastest-Growing Economies

Metros with Fastest-Growing Economies. Image courtesy of noppasinw / FreeDigitalPhotos.net

Florida is emerging as the new leader for economic growth, fueled by baby boomers and retirement communities. Oil towns had dominated in recent years but as the energy boom fades, growth has been tapering off.

Instead, Naples, Fla., emerged as the leader on a list of metro areas that are expected to see the most economic growth next year, according to a new report from the U.S. Conference of Mayors, prepared by IHS Global Insight. Naples is expected to see its economy grow 4.9 percent in 2016. Metro areas in Florida made up half of the top 19 economic performers. For example, The Villages, a senior community, ranked third and has been the fastest-growing city by population for two consecutive years.

Here’s a list of the metros expected to see the most economic growth in 2016:

• Naples-Immokalee-Marco Island, Fla.: 4.9%
• Sebring, Fla.: 4.8%
• The Villages: 4.7%
• Cape Coral-Fort Myers, Fla.: 4.5%
• Austin-Round Rock, Texas: 4.4%
• Raleigh, N.C.: 4.3%
• Ocala, Fla.: 4.2%
• Fayetteville-Springdale-Rogers: 4.2%
• Dallas-Fort Worth-Arlington: 4.1%
• San Jose-Sunnyvale-Santa Clara, Calif.: 4.1%
• Laredo, Texas: 4.1%
• Orlando-Kissimmee-Sanford, Fla.: 4.1%

Source: “These 18 Cities Will See the Most Economic Growth Next Year,” Bloomberg (June 18, 2015)

First-Time Buyers Fuel Latest Sales Boost

First-Time Buyers Fuel Latest Sales Boost. Image courtesy of digitalart / FreeDigitalPhotos.net

Existing-home sales rose in May to their highest pace in nearly six years, largely attributed to a big rise in the number of first-time home buyers, according to the National Association of REALTORS®’ latest housing report, released Monday. All major regions saw sales increases in May, with the Northeast seeing the most notable rise.

Existing-home sales – measured as completed transactions of single-family homes, townhomes, condos, and co-ops – climbed 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May. Sales are 9.2 percent above last year at this time.

The market share of first-time home buyers rose to 32 percent of transactions in May, matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers, NAR reports.

“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low downpayment programs,” says Lawrence Yun, NAR’s chief economist. “More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

As the supply of homes remain tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation, Yun notes. “Without solid gains in new home construction, prices will likely stay elevated – even with higher mortgage rates above 4 percent,” Yun says.

5 Stats to Gauge the Market

Here’s an overview on key market conditions from NAR’s latest existing-home sales report:

1. Inventory: Total housing inventory rose 3.2 percent to 2.29 million existing homes available for sale by the end of May. That is 1.8 percent higher than a year ago. Unsold inventory currently is at a 5.1-month supply at the current sales pace, down from 5.2 months in April.

2. Home prices: The median existing-home price for all housing types was $228,700 in May – nearly 8 percent above May 2014 home prices.

3. Days on the market: Properties typically stayed on the market for 40 days in May, up from 39 days in April. Still, that marks the third shortest time since NAR began tracking days on the market in May 2011. Forty-five percent of homes sold in May were on the market for less than a month.

4. All-cash sales: All-cash sales comprised 24 percent of transactions in May, down considerably from a year ago when they made up 32 percent of transactions. Individual investors, who account for the  bulk of cash sales, purchased 14 percent of homes last month, down from 16 percent a year ago. Sixty-seven percent of investors paid cash in May.

5. Distressed sales: Foreclosures and short sales remained at 10 percent for the third consecutive month in May. Distressed sales are below the 11 percent share a year ago. Seven percent of May sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in May while short sales were also discounted 16 percent.

Regional Breakdown

The following is a snapshot of how existing-home sales fared across the country in May:

• Northeast: existing-home sales rose 11.3 percent to an annual rate of 690,000. Sales are now 11.3 percent above a year ago. Median price: $269,000, up 4.8 percent above May 2014 levels.
• Midwest: existing-home sales rose 4.1 percent to an annual rate of 1.27 million in May. Sales are 12.4 percent above May 2014. Median price: $181,900, up 9.4 percent from a year ago.
• South: existing-home sales increased 4.3 percent to an annual rate of 2.18 million in May, and are 6.9 percent above year ago levels. Median price: $198,300, up 8.2 percent from a year ago.
• West: existing-home sales increased 4.3 percent to an annual rate of 1.21 million in May, and are 9 percent above a year ago. Median price: $324,000, up 10.2 percent above May 2014.

Source: National Association of REALTORS®

Apartment Occupancies Soar to Record High

Apartment Occupancies Soar to Record High. Image courtesy of artur84 / FreeDigitalPhotos.net

Apartments are filling up nationwide. The national occupancy rate in May reached 95.3 percent, the highest ever, reports Axiometrics, a real estate analytics firm.

“The May rate historically is the start of each year’s occupancy peak, meaning occupancy should remain at the current level or higher,” says Stephanie McCleskey, Axiometrics’ vice president of research.

Higher occupancy rates have come with higher rents. In May, rents rose 5 percent nationally, making it the fourth consecutive month at or above that mark.

“Owners and investors are having a profitable start to the year,” McCleskey says.

Apartment demand has been high from millennials who are forming their own households as well as baby boomers looking to downsize, CNBC reports.

Laurie Goodman, director of the housing finance policy center at the Urban Institute, recently published a paper claiming that the rental surge will only get bigger. Goodman predicts that out of the 22 million households formed in the next 20 years, 13 million will be renters.

“We are nowhere near building enough to meet demand,”  Goodman says.

Source: “Apartment Occupancy at All-Time High: Here’s Why,” CNBC (June 18, 2015)

Lenders Feel More Upbeat About Housing

Lenders Feel More Upbeat About Housing. Image courtesy of hywards / FreeDigitalPhotos.net

Mortgage lenders are growing increasingly optimistic that demand for mortgages for home purchases will remain strong over the next three months. Fannie Mae’s second quarter 2015 Mortgage Lender Sentiment Survey showed more lenders are reporting credit loosening and there’s a strong demand from borrowers for home purchase loans.

The latest results solidify a rosier outlook for housing, Fannie Mae economists note. “We expect a continued housing expansion in 2015, after an uneven and disappointing 2014,” says Doug Duncan, Fannie Mae’s chief economist.

The survey showed that senior mortgage executives are increasingly optimistic, and significantly more optimistic than consumers about future home prices. The share of lenders expecting home prices to rise over the next 12 months reached a survey high of 70 percent in the second quarter.

What’s more, the share of lenders reporting an increase in mortgage purchase demand over the prior three months reached a survey high for GSE-eligible and government loans, 77 percent and 65 percent, respectively.

“This quarter’s results showed that the growing optimism of lenders has been rewarded,” says Duncan. “The share of lenders reporting increased purchase mortgage demand over the prior three months reached a survey high for both GSE-eligible and government loans. At the same time, the positive gap grows between lenders reporting loosening or maintaining existing credit standards, relative to those reporting tightening. While not matching first quarter 2015 levels, the profit margin and purchase mortgage demand expectations over the next three months remain above the 2014 readings.”

Source: Fannie Mae

A Big Pick Up in Home building Is Coming.

A Big Pick Up in Home building Is Coming. Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net

Permits for future home construction climbed to a near eight-year high in May, which sets the stage for greater inventories from home builders in the months ahead.

Building permits surged 11.8 percent to a seasonally adjusted annual pace of 1.28 million units, the highest since August 2007, the Commerce Department reports. This marks the second consecutive month of increases in housing permits, which have been above a 1 million-unit pace since July.

“Residential construction has been the laggard in this [housing] recovery and the moon shot surge in new permits today means the final piece of the recovery puzzle is now falling into place,” Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters.

While the future signs look bright, groundbreaking on new homes posted a drop in May, plunging 11.1 percent to a 1.04 million-unit rate. However, that follows a strong April, where housing starts were at a revised rate of 1.17 million, the highest since November 2007, the Commerce Department reports.

Jonathan Smoke, chief economist at realtor.com®, blames the rain for the slowdown last month in home building. May’s record rainfall across the country made it difficult to begin construction on new homes, Smoke notes.

“As Milli Vanilli once crooned: Blame it on the rain,” Smoke says. “You can easily pull a permit in the rain, but it’s a bit harder to break ground and start construction.”

Housing permits are up 25 percent year-over-year, Smoke says. Regionally, housing permits in the Northeast increased to the highest level since March 1987, while in the Midwest, permits neared a one-year high in May. Permits, however, dropped in the South and West.

With job growth increasing and incomes rising, Americans are increasingly finding themselves in a better position to buy a home, Smoke says.

Source: “U.S. Building Permits Near 8-Year High; Starts Pull Back,” Reuters (June 16, 2015) and “Blame it on the Rain: Housing Starts Were Way Down in May – But Permits Hit an 8-Year Record,” Reuters (June 16, 2015)

Commercial Agents See Higher Incomes, Sales

Commercial Agents See Higher Incomes, Sales. Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net

As the commercial market shows signs of improving, commercial real estate professionals are reporting an uptick in annual gross income as well as the number of sales transactions and their sales volume, according to the 2015 National Association of REALTORS® Commercial Member Profile, which is based on a survey of nearly 2,000 members.

The incomes of commercial REALTORS® has risen over the past five years. The median gross annual income was $126,900 in 2014, a rise from $96,200 in 2013.  Appraisers and brokers reported the highest annual gross income while sales agents – often those who are newest to the field – had the lowest, according to the report.

Commercial REALTORS® completed a median of 11 sales transactions in 2014, up from eight last year. The median sales transaction volume among members was $2,916,700 – an increase from $2,554,700 in 2013.

“After years of slow recovery, the commercial real estate market has shown meaningful growth and our members are seeing significant improvements in their business activity,” says NAR President Chris Polychron. “REALTORS® who practice commercial real estate help build and revitalize communities by facilitating investment in commercial properties that support millions of jobs nationwide. There is every indication that continued improvement to commercial markets will help stimulate economic growth for the rest of the country.”

Thirty-two percent of commercial members said they were involved in international transactions in 2014, with 18 percent saying they saw an increase in international clients.

Also, 83 percent of commercial members reported having a leasing transaction, according to the report. The median transaction leasing volume for members who reported at least one transaction was $500,000 in 2014 – a more than 15 percent increase from 2013.

“When it comes to leasing transactions, the report tells us that the more years of experience an agent or broker has the more high value transactions in which they are involved,” says Lawrence Yun, NAR’s chief economist. “The broad improving leasing trend will continue this year and next because of rising occupancy rates across all commercial property types.”

Source: National Association of REALTORS®