Luxury Home Sales Soar

Luxury Home Sales Soar. Image courtesy of photostock / FreeDigitalPhotos.net

Affluent buyers are feeling bullish about housing, as luxury home sales skyrocket, Bloomberg reports. Million-dollar homes in the U.S. are selling at double their historical average, according to data released by the National Association of REALTORS®.

Sales of homes that cost $1 million or more increased 7.8 percent in March compared to a year earlier. Meanwhile, sales of homes that cost $250,000 or less — which represent about two-thirds of the housing market — dropped 12 percent in March year-over-year.

“The real estate market is the ultimate reflection of confidence, wealth, and income,” says Sam Khater, deputy chief economist at CoreLogic.

Transactions for homes costing $2 million or more soared 33 percent in January and February compared to a year earlier, according to an analysis by DataQuick of 25 of the top U.S. metro areas. The transactions were the highest for a two-month period since DataQuick began its tracking in 1988.

“The luxury markets are on fire,” Christie’s International CEO Bonnie Stone Sellers told Bloomberg. “The trends in luxury housing are similar to trends in other luxury goods. Whether you’re buying a third home in Manhattan as a pied-a-terre or another Picasso, these are acquisitions of passion, of lifestyle, and of experience.”

There have been some blockbuster sales recently. The latest to grab headlines was the $147 million sale of an East Hampton’s property, which now carries the title as the priciest home sale ever in the U.S. This came two weeks after the sale of a single-family home in Greenwich, Conn., known as Copper Beech Farm shattered home records at the time at $120 million.

“The stock market is very strong, and this is a way to monetize and concretize some gains,” says Gary Wasserman, CEO of Allied Metals Corp., who is looking to boost his personal real estate portfolio. “We had quite a shock to our collective confidence in 2008 and 2009. The resurgence of the economy has underscored for us that this country remains a very strong place, and that the future remains strong.”

Source: “Million-Dollar Home Sales Thrive While Low End Stumbles,” Bloomberg Businessweek (May 2, 2014)

Historic Low for Young Adult Home Ownership

Historic Low for Young Adult Home Ownership. Image courtesy of imagerymajestic / FreeDigitalPhotos.net

Young Americans are putting off home buying at unprecedented levels. The home ownership rate for the Millennial generation age group has fallen to its lowest level since the U.S. Census Bureau started tracking home ownership by age in 1982.

The home ownership rate in the first quarter of 2014 for Americans 35 and under fell to 36.2 percent, dropping from 36.8 percent in 2013. Broken down even further, Americans in the 25-29 age group had the biggest decline in home ownership rates at 33.3 percent, followed by 47.5 percent for the 30-34 age group.

Granted, home ownership for all age groups has fallen to 64.8 percent, the lowest level since 1995. But Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., says that high student loan debt and sluggish unemployment are added elements that are keeping many young Americans on the sidelines.

“The labor market for younger people remains pretty bad. Obviously you’re worse off without a college degree, but for people with college degrees, if they have a regular job, often it’s not paying very well and often they are jobs that pay just as well for people who have just a high school degree,” Baker says. “They also have a lot of debt. So it’s not surprising that people in their late 20s or early 30s are less likely to buy a home than what might have been the case 20 or 30 years ago.”

The unemployment rate for those ages 20-24 is 12.4 percent, according to March data from the Bureau of the Labor Statistics. The unemployment rate for Americans 25-34 years old is 7 percent, compared to the national average unemployment rate of 6.7 percent.

“Those stories you hear about people in their 20s or early 30s living with mom and dad, those aren’t just stories, and if people don’t move out, they’re not going to buy a house again because we’re still in the aftereffects of the worst financial crisis in 75 years,” said David Wessel, senior fellow of economic studies at the Brookings Institution in Washington, D.C.

Source: “Homeownership for Millennials Declines to New Lows,” U.S. News & World Report (April 30, 2014)

Markets Poised for Biggest Price Gains

Markets Poised for Biggest Price Gains. Image courtesy of cuteimage / FreeDigitalPhotos.net

Veros Real Estate Solutions is softening its housing price forecast for this year to 3.4 percent appreciation for the 12-month period ending March 31, 2015 for the top 100 metro areas. Last quarter, Veros had forecasted a 5.1 percent for the following 12 months.

“The wave of appreciation may have crested, but it has been an impressive recovery in many respects,” says Eric Fox, Veros’ vice president of statistical and economic modeling. “The market is stabilizing and the overall outlook is very positive. However, we won’t see the rapid gains we have experienced in prior quarters. Those days appear to be behind us for the foreseeable future.”

Still, Veros sees five markets—mostly centered in California—seeing home price appreciation well above national averages. The five markets Veros is betting on for the highest home appreciation over the next 12 months are:

1. San Jose-Sunnyvale-Santa Clara, Calif.: +9.7% forecasted price appreciation
2. Los Angeles-Long Beach-Santa Ana, Calif.: +9.3%
3. Midland, Texas: +9.3%
4. Bismarck, N.D.: +9.1%
5. San Francisco-Oakland-Fremont, Calif.: +8.8%

Source: “These Cities Will Be the Strongest & Weakest Housing Markets in 2014,” HousingWire (May 1, 2014)

Biggest Regrets About the Purchase of a new home

Biggest Regrets About the Purchase of a new home. Image courtesy of Grant Cochrane / FreeDigitalPhotos.net

Though buyer’s remorse is never fun, there’s usually something we’d change if we could go back and make a big purchasing decision again. In a new survey, Chase Bank found out what some of the most common things are that recent home buyers would change about their real estate purchase if given a second chance.

Chase’s survey, “What I Wish I Knew About the Homebuying Process,” asked 807 recent home buyers about their attitudes following the purchase of a home, taking the temperature of how people are living with their real estate decision. Here’s what home buyers say they would do differently if they could make the decision over again.

Get Smarter About Financing

While nine out of 10 buyers surveyed say they felt prepared at the time they bought their home, 56 percent say that in hindsight, they should have known more about financing. Specifically:

• 22 percent say they weren’t as educated about the ins and outs of closings as they should have been.
• 19 percent say they weren’t as well-versed on making an offer and negotiating.
• 15 percent say they needed more guidance on the overall financing of a home.

Pick a Different-Size House/Area

Sometimes you don’t know whether a house suits your needs until you start living in it. That would seem to be the case for 39 percent of respondents, who say they would choose a house of a different size or a different price — or even in a different neighborhood — if they could redo their purchase.

Adjust Expectations

A good chunk of buyers weren’t expecting the home-buying process to take as long as it did, with 40 percent saying it took longer than they thought it would. Sixteen percent say they got a “pleasant surprise on timing,” according to the survey.

Be More Prepared to Spend on Maintenance

Eventually, we all have to face the cold, hard facts of home ownership: It can be expensive. Thirty-four percent of respondents say that home-maintenance costs ended up being more than they expected. Among first-time home buyers, 51 percent say they “got that sinking feeling” when faced with maintenance costs. What’s more, 80 percent of survey respondents say they considered their home move-in ready when they bought it, but 76 percent have since completed or planned renovations.

Source: Chase

Marriage Delays Behind Falling Home Ownership Rates

Marriage Delays Behind Falling Home Ownership Rates. Image courtesy of Ambro / FreeDigitalPhotos.net

More Americans are choosing to postpone marriage and families, and that’s one of the main culprits behind the falling home ownership rate, suggests Sam Zell, chairman of landlord Equity Residential, the largest U.S. apartment landlord.

“The deferral of marriage has such a staggering impact on real estate, and I just don’t think people focus on it,” says Zell. “I don’t think the multifamily market has ever had a better set of future demographics.”

In 2010, about 54 percent of adults were married, a drop from 57 percent a decade earlier, according to U.S. Census Bureau data. The median age of marriage has risen to 28.2 for men and 26.1 for women, according to the 2010 data.

The U.S. Census Bureau reported this week that the home ownership rate dropped to the lowest level in nearly 19 years, falling to 64.8 percent in the first quarter. The previous three months the home ownership rate had stood at 65.2 percent.

The home ownership rate peaked at 69.2 percent in 2004.

Source: “Zell Says Home Ownership Rate to Fall as Marriages Delayed,” Bloomberg (April 29, 2014)

Survey: Real Estate Is Fastest-Growing Industry

Survey: Real Estate Is Fastest-Growing Industry. Image courtesy of cooldesign / FreeDigitalPhotos.net

Twelve of the 20 fastest-growing industries in the U.S. over the past year are related to real estate and construction, according to data from Sageworks, a financial information company. What’s more, all of the industries on the list that are related to construction saw sales growth at 2 percentage points to 15 percentage points above the average sales growth of all other privately held companies in Sageworks’ database.

Topping the list of fastest-growing U.S. industries: Offices of real estate agents and brokers. Also, among the top six on the list were residential builders, foundation contractors, and lumber wholesalers. In the commercial sector, nonresidential builders, engineering firms, and heavy-construction firms ranked within the top 11.

“The economy is just improving in general, and these industries are indicators that things are moving in the right direction,” says Sageworks analyst Chuck Nwokocha.

Source: “The Fastest-Growing Industries Over the Last Year,” Forbes.com (April 28, 2014)