Tag Archives: affordable housing

Home Prices Set To Soar In 2018

 

https://martinhladyniuk.files.wordpress.com/2014/07/0acf0-lereahd.png?w=287&h=432The temperature may be frigid across much of the nation, yet home prices are sizzling and sellers are in the hot seat.

Sales prices jumped 7 percent annually in November, according to a new report from CoreLogic. That is the third straight month at that pace, far higher than the price gains in the first half of 2017. Low supply and high demand are fueling the spurt and neither of those is expected to ease up anytime soon. Supply is actually falling even more now, and a strengthening economy is pushing demand. This will have potential buyers out early this year, trying to get a jump on the spring market. “Rising home prices are good news for home sellers, but add to the challenges that home buyers face,” said Frank Nothaft, chief economist at CoreLogic, in the report. Nothaft said the limited supply is the worst at the lower end, and will hit the growing number of first-time buyers hardest.

The largest metropolitan areas are seeing the biggest gains.

In the nation’s top 50 markets, half of the housing stock is now considered overvalued, based on market fundamentals, like income and employment. CoreLogic defines an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level. Las Vegas led the November report as not only being overvalued, but showing a double-digit annual price gain of 11 percent. San Francisco was not far behind at 9 percent, and Denver came in third at 8 percent. Las Vegas and Denver are both considered overvalued, but San Francisco is not, as incomes in the tech capital far exceed the national level. Of the nation’s 10 major markets with the biggest price gains, seven are overvalued. These include Washington, D.C., Houston and Miami. Boston and Chicago are still seeing price gains but are considered at value. Without a significant jump in home construction, prices will remain high and likely move higher. Mortgage rates could also move slightly higher, and new tax policy limiting mortgage and property tax deductions, is hitting homeowners in some states hard.

All will combine to make housing less and less affordable in the new year.

By Diana Olick | CNBC

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Baby Boomers Who Refuse to Sell Are Dominating the Housing Market

Jake Yanoviak is hunting for houses. On a weekday afternoon in North Philadelphia, the 23-year-old painter cruises along on his bike, its black paint obscured under stickers from breweries and rock bands. He turns onto a side street, where he spots a few elderly neighbors, standing on adjoining porches. He parks, leans on one handlebar and makes his pitch.

“Anybody on the block considering selling?” Yanoviak asks gently. “I’m not a developer, I’m not interested in renting to students. I’m just a kid trying to buy a house, fix it up and live in it.”

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“We’re not going no place,” replies a 70-something woman, relaxing in fuzzy white pig slippers in the row house where she’s lived twice as long as Yanoviak has been alive. “All these houses are taken.”

Like much of his generation, Yanoviak is desperate to get a piece of an increasingly scarce commodity: prime American real estate. Millennials are finding themselves out in the cold because building has slowed, and longer-living baby boomers are staying put, setting up a simmering conflict between the two biggest generations in U.S. history.

 

To succeed, buyers and real estate brokers must show uncommon persistence and, at times, diplomacy. Yanoviak has tried sheriff’s sales, lost two bidding wars, ridden miles on potholed streets and left notes in mailboxes, all to no avail.

People 55 and older own 53 percent of U.S. owner-occupied houses, the biggest share since the government started collecting data in 1900, according to real estate website Trulia. That’s up from 43 percent a decade ago. Those ages 18 to 34 possess just 11 percent. When they were that age, baby boomers had homes at almost twice that level.

Public policy contributes to the generational standoff. Property-tax exemptions for longtime residents keep older Americans from moving. Zoning rules make it harder to build affordable apartments attractive to senior citizens.

“The system is gridlocked,” says Dowell Myers, a professor of urban planning and demography at the University of Southern California. “The seniors aren’t turning over homes as fast as they used to, so there are very few existing homes coming online. To turn it over, they’ll have to have a landing place.”

In Lexington, Massachusetts, a Boston suburb, broker Dani Fleming offers pizza and refreshments to entice the mostly elderly homeowners to attend seller seminars on “how to unlock the potential of your home.”

In Alameda, California, east of San Francisco, 38-year-old Angela Hockabout, her husband and their two children live with her 76-year-old mother-in-law, who is holding onto the home because the real estate taxes are so low. Under the almost-40-year-old ballot measure Proposition 13, they are tied to the property’s value when the house was purchased in the 1970s.

“Dear Homeowner, I have been looking to buy a house for almost a year and have not found one.”

Kale, Tomatoes

In Omaha, Nebraska, Bill and Peg Swanson, a couple in their late 60s, say they might move if they could find affordable single-family homes aimed at seniors nearby. Still, like many from their generation, they like aging in place, tending their garden of green peppers, kale and tomatoes.

“There are a lot of reasons to stay here,” Bill Swanson says. “We still enjoy putzing around the yard.”

That kind of thinking ends up costing young home shoppers such as Yanoviak. After graduating from Carleton College in Minnesota with a degree in media studies, he now lives in West Philadelphia with his parents, an arborist and a director of a nonprofit. For a living, he does carpentry and helps paint movie sets. He’s looking at homes costing as much as $200,000 and may rent out rooms to friends.

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iORwGYGK2SdE/v3/1000x-1.jpgYanoviak looks at a Philadelphia zoning notice outlining a plan for multifamily units on that site.

Yanoviak scouts property with Google Maps, Zillow and the city’s property-record site. When he finds something, he calls his real estate agent, Cecile Steinriede, who checks it out. He also keeps an old-school sheaf of letters in the rear pocket of his pants, so he can hand them out or slip them in mailboxes.

“Dear Homeowner,” they read. “I have been looking to buy a house for almost a year and have not found one.”

Brewerytown

Yanoviak has his sights on a neighborhood called Brewerytown, a community of brick, masonry and vinyl row houses that range from tidy to decaying, with paint peeling, holes in roofs and weeds growing from cracks in sidewalks.

Along with inter-generational tension, Yanoviak’s search raises delicate questions of race and class. He’s white and college-educated, and he’s often knocking on the doors of working-class black homeowners who see their homes as key to an affordable retirement and a way to pass wealth to future generations. (None would give their names.) Yanoviak acknowledges the awkwardness. It doesn’t help, he says, when developers assault residents with insulting, low-ball cash offers.

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Yanoviak inspecting a house in the Brewerytown district.

“It’s inevitable for me to be perceived as an outsider,” Yanoviak says. “But I’m not trying to change the community. I’m trying to contribute in positive ways and be a neighbor.”

Resentments fester in neighborhoods of all ethnicities. In a traditionally Italian section of South Philadelphia, which is now out of Yanoviak’s price range, 70-year-old Nick Ingenito, sits on the front steps of the three-story brick house his grandmother’s aunt bought in the early 1900s.

‘Wouldn’t Move’

“Where do these young people get this money?” he says, looking out at the street where he played stick ball as a kid. “This neighborhood still has the soul of the past. Everybody I know — people older than me — wouldn’t move from here for nothing unless they couldn’t afford it no more.”

On a recent Thursday evening after work, Yanoviak, wearing a black T-shirt, jeans and a brown belt emblazoned with the Schlitz logo, mounts his bike to make the housing round. 

On one of his first stops, a black cat slinks under the wooden gate next to an abandoned house with bay windows that piqued Yanoviak’s interest. Using his bike as a ladder, he stands on the seat and stretches his chin over barbed wire. All he can see are bed springs and junk.

Yanoviak starts cycling again, taking both hands off the handle bar to tap on his iPhone, noting the address of a property he might want to revisit.

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Yanoviak carries pitch letters with him to hand out to homeowners and slip in mail boxes.

Church Properties

He stops to chat with the pastor of a church, which owns a handful of properties but isn’t selling.

“No, we’re holding out for God to do what he said he was going to do and that is to give us the block,” the pastor tells Yanoviak.

Then, he sees a gray-haired man puttering in his garage.

“I’m looking at properties in the neighborhood, there isn’t a whole lot on the market so I’m cold calling,” Yanoviak says.

“Give me $2 million,” the homeowner replies. “I don’t want no low number.”

It turns out the price is for the whole block. Even then, the potential seller has second thoughts.

“I wouldn’t sell even if you gave me $2 million — this is my retirement,” he says. “If you gave me a bag of money, I wouldn’t sell.”

After a few hours chatting with a half dozen owners and visiting eight properties, Yanoviak gets back on his bike, his pitch letters still hanging from the back pocket of his jeans. He heads back to his parents’ house, deferring for yet another day his search for a home.

Exercise self discipline, practice and consistency …

By Prashant Gopal | Bloomberg 

 

“Granite Islands And Backsplashes”: Even Singlewide Trailers Are No Longer “Affordable”

 

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Since the early 1900s, millions of Americans have relied on trailers as a source of no-frills, affordable housing.  In fact, roughly 22 million Americans live in trailer parks today, but the industry is hardly the stable source of affordable housing that it used to be…a lesson that 73-year-old Judy Goff of Naples, Florida recently discovered the hard way after Hurricane Irma ripped through her park and destroyed her home, along with roughly 1.8 million others.

As Bloomberg points out, when Goff went to a local LeeCorp dealer lot to replace her $46,000, 1,200 square foot trailer with something of similar size and value, what she found instead was “manufactured homes” stuffed with high-end upgrades like granite counter-tops and vaulted ceilings that rendered them too expensive for her $23,000 per year of income.

Last month, Judy Goff, a 73-year-old hardware store clerk whose double-wide in Naples, Fla., was blown to bits, pulled into a LeeCorp Homes Inc. sales lot and wandered through models with kitchen islands and vaulted ceilings. In the salesman’s office, she got the total price, including a carport, taxes, and removal of her destroyed trailer: $140,000. “I don’t have that kind of money,” said Goff as she stood amid the wreckage of her old home, whose walls and ceiling were stripped away, leaving her leather furniture and a lifetime of possessions to bake in the sun. “That was all I had.”

Goff—who just wants to replace the wrecked 1,200-square-foot trailer that she bought 17 years ago for $46,000, including the cost of land—says she feels boxed in. Her mobile-home community won’t allow single-wide homes or older used models as replacements. And every home must have a carport. She’s willing to give up such upgrades as the higher-end countertops, but that probably won’t be enough. Between her Social Security check and income from her job at Ace Hardware Corp., she earns only about $23,000 a year. “I just want a home that’s equal to what I had,” she says. “My home was a beauty.”

“I get that higher-end countertops and kitchen islands are where the better margins are, but that’s also going to put homes out of reach for a lot of buyers,” says Doug Ryan, director of affordable homeownership at the Washington nonprofit Prosperity Now. “The storm is revealing a whole lot of problems in the low-cost housing market.”

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Meanwhile, as we note frequently, while the cost of manufactured homes has surged, the pay for the bottom fifth of American wage earners has been somewhat stagnant for nearly two decades now. Even after a modest uptick recently, the bottom 20% of households have seen their income fall 9% since 2000, in real terms.

But, as low-income households have found it increasingly difficult to rebuild after devastating hurricanes, the surge in manufacturing home pricing has been a boon for billionaire Warren Buffett who made a big financial bet on the largest manufactured housing builder, Clayton Homes, back in 2003.

The industry, led by Warren Buffett’s Clayton Homes Inc., is peddling such pricey interior-designer touches as breakfast bars and his-and-her bathroom sinks. These extras, plus manufacturers’ increased costs for labor and materials, have pushed average prices for new double-wides up more than 20 percent in five years, putting them out of reach for many of the newly homeless.

Phil Lee, the 74-year-old founder of LeeCorp, has been riding a wave of retiring baby boomers who want affordable luxury. Driving a reporter in his black BMW SUV through Bayside Estates in Fort Myers Beach, where many of the fanciest homes he sells are installed, Lee points out units with pitched roofs that look almost indistinguishable from conventional homes, facing canals with boats tied outside. Their owners, former dentists, doctors, executives, and others, spent upwards of $150,000 to buy aging units just to clear the way for something more luxurious. On a palm-lined street flanked by ranks of 1970s-era trailers, Lee sees profit. “There’s no end to replacing these homes,” he says. “You get a hurricane in there and it really accelerates things.”

Terms such as “mobile home” or “trailer” are now verboten in an industry striving to break free of its downscale origins. Buffett’s Clayton Homes, which produces almost half of all new manufactured housing in the U.S. and competes with such companies as Cavco Industries Inc. and Champion Home Builders Inc., still builds lower-priced units, but there’s barely a sign of them on its website, which is mostly devoted to high-price models. The 2,000-square-foot Bordeaux features a separate tub and shower, a computer station, and a mud room, with prices starting at $121,000 and ranging as high as $238,000, not including delivery and installation costs. Clayton declined to comment.

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Of course, while mobile homes are becoming increasingly cost-prohibitive for low-income families in Florida and Texas, Silicon Valley’s future tech billionaires can’t seem to get enough of them.

Source: ZeroHedge

Home Prices In All US Cities Grow Faster Than Wages… And Then There’s Seattle

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From 1898 until Aug. 10, 1940, streetcars (here seen in 1910) made their way between upper and lower Queen Anne Hill, assisted by a weighting system called a “counterbalance.”

According to the latest BLS data, average hourly wages for all US workers rose at a respectable 2.9% relative to the previous year, if still below the Fed’s “target” of 3.5-4.5%, as countless economists are unable to explain how 4.3% unemployment, and “no slack” in the economy fails to boost wage growth. Another problem with tepid wage growth, in addition to crush the Fed’s credibility, is that it keeps a lid on how much general price levels can rise by. With record debt, it has been the Fed’s imperative to boost inflation at any cost (or rather at a cost of $4.5 trillion) to inflate away the debt overhang, however weak wages have made this impossible.

Well, not really.

Because a quick look at US housing shows that while wages may be growing at a little over 2%, according to the latest Case Shiller data, every single metro area in the US saw home prices grow at a higher rate, while 15 of 20 major U.S. cities experienced home price growth of 5% or higher, something which even the NAR has been complaining about with its chief economist Larry Yun warning that as the disconnect between prices and wages hits record wides, homes become increasingly unaffordable. Paradoxically – the higher prices rise, the more unaffordable US homes become for the average American as we showed this weekend. In fact, as of this moment, homes have never been more unaffordable, which even more paradoxically hasn’t stopped priced from hitting new all time high virtually every month for the past year.

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And while this should not come as a surprise, one look at the chart below suggests that something strange is taking place in Seattle where prices soared by a bubbly 13.2% Y/Y, and which has either become “Vancouver South” when it comes to Chinese hot money laundering, or there is an unprecedented mini housing bubble in the hipster capital of the world.

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Putting the above data in context, here are two charts courtesy of real-estate expert Mark Hanson, the first of which shows how much household income increase is needed to buy the median priced home in key US cities…

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… while the next chart shows the divergence between actual household income, and the income needed to buy the median priced house.

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Source: ZeroHedge

Know the Competition: Who’s Buying Homes, Who’s Selling—and Who’s Not?

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With soaring rental prices, extremely low mortgage rates, and a stronger economy, it seems that just about everyone wants to buy a home these days. But high home prices are keeping many aspiring homeowners, as well as would-be sellers (who need a new home to move into) out of the market.

So who is buying and selling these days?

It turns out the typical buyer and seller both are getting older—and buyers need to make more money to be able to afford a home of their own, according to the 2017 Profile of Home Buyers and Sellers by the National Association of Realtors®. The report is based on a 131-question survey filled out by nearly 8,000 recent home buyers.

It turns out the typical buyer and seller both are getting older—and buyers need to make more money to be able to afford a home of their own, according to the 2017 Profile of Home Buyers and Sellers by the National Association of Realtors®. The report is based on a 131-question survey filled out by nearly 8,000 recent home buyers.

“Prices are going up,” says Chief Economist Danielle Hale of realtor.com®. “So in order to get into the housing market, buyers need to have more income to afford the same type of properties.”

Who is the typical home buyer these days?

Home buyers come in all shapes and sizes, but the typical one is about 45 years old. That’s up considerably since 1981, the inaugural year of the report, when the median age was just 31.

Buyers these days are also making good money, at about $88,800 a year, according to the report. It was $88,500 in the previous year.

Most buyers preferred the suburbs and more rural areas, at 85%, compared with urban areas, which is where just 13% of folks bought homes. And the vast majority, 83%, also preferred a stand-alone, single-family house, the kind that typically has a lawn out back.

The suburbs reigned supreme because that’s where many of the available homes with the desired features are, says Hale.

“Properties tend to be a bit more affordable than in urban areas,” Hale says. “You’ll get much more space in the suburbs for your money than you will in an urban area, and the schools do tend to be better as well.”

Calling all the single ladies

In another indication of just how much things can change in 36 years, about 18% of home sales were made by single women. That’s up from 17% last year and just 11% in 1981. And while it’s still well below the 65% of sales that married couples scooped up, it’s ahead of the 7% of sales that unmarried men made. An additional 8% of closings were made by unmarried couples.

There are more single women today than there have been historically, says Jessica Lautz, NAR’s managing director of survey research and communications. She points to how folks are marrying later in life, or not at all. Or, some may have been married before and become widowed or divorced.

Being able to have a 30-year fixed mortgage provides financial security, compared with facing rising rental prices, Lautz says.

In addition, single women buy homes that cost just a little bit more than single men: a median $185,000 versus $175,000 for the men. And that’s despite often making less than their male counterparts.

Fewer first-time buyers are getting in on the action

High student debt, coupled with rising home prices, kept many first-time buyers out of the market. These real estate virgins made up only about 34% of home sales, according to the report. That’s slightly down from 35% last year and the long-term average of 39%.

Those who were able to buy a home were a median age of 32.

“Right around turning 30 is still a significant milestone in many people’s lives,” says Hale. “That’s why we tend to see a lot of first-time buyers.”

These buyers typically had a household income of about $75,000, up from $72,000 last year. They were likely to buy a 1,650-square-foot abode for about $190,000 in a suburban area.

“The dreams of many aspiring first-time buyers were unfortunately dimmed over the past year by persistent inventory shortages,” NAR’s Chief Economist Lawrence Yun said in a statement. “Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked homeownership out of reach for countless would-be buyers.”

Big student loan bills due every month also make it harder for many of these younger folks to save up for a down payment. And it could affect their debt-to-income ratios, which lenders look at before issuing mortgages.

About 41% of first-time buyers have debt, according to NAR’s report, up from 40% last year. And they now owe about $29,000—compared with $26,000 in 2016. Ouch.

“An overwhelming majority of millennials with student debt believe it’s delaying their ability to buy a home, and typically for seven years,” Yun said in a statement. “Even in markets with a plethora of job opportunities and higher pay, steep rents and home prices make it extremely difficult to put savings aside for a down payment.”

What kinds of homes are buyers snagging?

Buyers overwhelmingly opted for existing homes (ones that had previously been lived in), at about 85%, compared with just 15% who closed on brand-new abodes, according to the report. That’s likely because there are fewer newly built homes on the market as well as the newer homes tending to cost significantly more.

They shelled out a median $235,000 on their homes, which were a median 1,870 square feet. The typical home was built in 1991 and had three bedrooms and two bathrooms.

And they’re not moving far away. Usually buyers moved only about 15 miles from their previous home.

Who’s selling their homes?

They typical home seller in 2017 was much older than the typical buyer, at about 55 years old. Their household incomes were also higher, at about $103,300 a year.

“The age of sellers and repeat buyers continues to increase,” says NAR’s Lautz. That’s because many baby boomers are purchasing retirement homes later in life.

The top reasons for selling were a residence that was too small, the desire to be close to family and friends, and the need to relocate for work.

Sellers usually stayed about 10 years in their homes before putting them on the market. Their properties stayed on the market for a median of three weeks, compared with four weeks last year.

And, in a boon for sellers, they sold their homes for a median $47,500 more than what they originally paid for them, and got about 99% of their final listing price.

By Clare Trapasso | Realtor .com

Fannie Mae Says Economy Will Slow in 2nd Half Of 2017

WASHINGTON, DC – Expectations for 2017 economic growth remain at 2.0 percent amid a projected second half slowdown, according to the Fannie Mae Economic & Strategic Research (ESR) Group’s July 2017 Economic and Housing Outlook. With the expansion having entered its ninth year, incoming data point to a second quarter economic growth rebound to 2.7 percent annualized, up from 1.4 percent in the first quarter. However, the full percentage point rise in the saving rate since December signals increased caution among consumers, despite elevated consumer confidence. Decelerating corporate profit growth, commonly seen in the late stages of an expansion, presents a challenge to business investment that is compounded by tax policy uncertainty. In addition, residential investment will likely contribute less to second half growth due to lackluster homebuilding activity and tight for-sale inventory that is restraining home sales. Consequently, se cond half growth is expected to slow slightly to 1.9 percent. Moderate growth is expected to continue in 2018, with potential changes to fiscal and monetary policy posing both upside and downside risks to the forecast.

“While second quarter growth is poised to rebound, we expect growth to moderate through the remainder of 2017. Consumer spending, traditionally the largest contributor to economic growth, is sluggish and is lagging positive consumer sentiment and solid hiring,” said Fannie Mae Chief Economist Doug Duncan. “While labor market slack continues to diminish, wage growth is not accelerating and inflation has moved further below the Fed’s target. These conditions support our call that the Fed will continue gradual monetary policy normalization, announce its balance sheet tapering policy in September, and wait until December for additional data, especially on inflation, before raising the fed funds rate for the third time this year.”

“Construction activity has lost some steam following the first quarter’s weather-driven boost,” Duncan continued. “Meanwhile, very lean inventory continues to act as a boon for home prices and a bane for affordability, particularly among potential first-time homeowners. According to our second quarter Mortgage Lender Sentiment Survey, lenders expect to ease credit standards further. However, we continue to project that the pace of growth in total home sales will slow to 3.3 percent this year, as we believe rapid home price gains amid scarce supply will remain a hurdle for potential homebuyers despite improvements in credit access.”

Visit the Economic & Strategic Research site at www.fanniemae.com to read the full July 2017 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

By Matthew Classick | FNMA

Existing Home Sales Down 1.8% In June And Why It Matters

Existing Home Sales in June Dive 1.8 Percent: Same Old Problem? Second and Third Quarter Impact?

The wind down to the end of the second quarter is not going very well. Existing home sales in June fell 1.8% to a seasonally adjusted annualized rate of 5.52 million. The Econoday consensus estimate was 5.58 million.

The slip in pending home sales was no false signal as existing home sales fell 1.8 percent in June to a lower-than-expected annualized rate of 5.520 million. Year-on-year, sales are still in the plus column but not by much, at 0.7 percent which is the lowest reading since February.

Compared to sales, prices are rich with the median of $263,800 up 6.5 percent from a year ago. Another negative for sales is supply which fell 0.5 percent in the month to 1.96 million for an on-year decline of 7.1 percent. Relative to sales, supply is at 4.3 months vs 4.2 months in May.

High prices appear to be keeping first-time buyers out of the market with the group representing 32 percent of sales vs 33 percent in May and 35 percent for all of last year.

Rising prices and thin supply, not to mention low wages, are offsetting favorable mortgage rates and holding down sales. Housing data have been up and down and unable to find convincing traction so far this year. Watch for new home sales on Wednesday where general strength is the expectation.

Existing Homes Sales Month-Over-Month and Year-Over-Year

Same Old Problem?

Mortgage News Daily says Existing Home Sales Weakness Blamed on Same Old Problem.

Existing home sales slipped in June, with the blame again placed on low levels of inventory. The decline in sales, announced on Monday by the National Association of Realtors® (NAR), was anticipated, as pending home sales have decreased in each of the previous three months, ticking down 0.8 percent in May.

NAR said sales of existing single-family houses, townhouses, condos and cooperative apartments were down 1.8 percent in June, to a seasonally adjusted annual rate of 5.52 million units, the second slowest performance of the year.

Lawrence Yun, NAR chief economist, says the pullback in existing home sales in June reflected the lull in contract activity in March, April, and May. “Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” he said. “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

The median existing-home price for all housing types in June was $263,800, up 6.5 percent from June 2016 ($247,600). This is a new peak price, surpassing the record set in May. June marked the 64th straight month of year-over-year gains.

The median existing single-family home price was $266,200 in June and the median existing condo price was $245,900. Those prices reflected annual increases of 6.6 percent and 6.5 percent respectively.

The tight supply of homes continues to be reflected in short marketing period. Properties typically stayed on the market for 28 days in June, one day more than in May, but six days fewer than in June 2016. Short sales were on the market the longest at a median of 102 days in June, while foreclosures sold in 57 days and non-distressed homes took 27 days. Fifty-four percent of homes sold in June were on the market for less than a month.

“Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said NAR President William E. Brown. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.”

First-time buyers accounted for 32 percent of existing home sales in June, down from 33 percent the previous month and a year earlier, while individual investors purchased 13 percent, unchanged from a year ago.

Convoluted Logic

Supposedly buyers may have better luck because the pool of buyers is shrinking as summer winds down. Really? By that logic, if there was only one person looking there would be a 100% success rate.

Yun says “The demand for buying a home is as strong as it has been since before the Great Recession.”

Really? By what measure?

Attitudes and Price

This is not a case of inventory or strong unmet demand. Here are the real factors.

  1. The Fed re-blew the housing bubble and wages did not keep up. People cannot afford the going prices. Thus, the number of first-time buyers keeps shrinking.
  2. Millenials do not have the same attitudes towards debt, housing, and family formations as their parents.
  3. Millenials are unwilling to spend money they do not have, for a place that will keep them tied down. They would rather be mobile.

Second and Third Quarter Impact

The decline in existing home purchases portends weakness in consumer spending.

There will be fewer people painting, buying furniture, updating appliances, remodeling kitchens, adding landscaping etc. The pass through effect will be greatest in the third quarter unless there is a rebound.

By Mike “Mish” Shedlock

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