Real Estate Roundup: Rising Home Sales and Prices Projected for 2017

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

2017 FORECAST: STEADY RISE IN HOME SALES, PRICES 
Next year will see steady growth in existing-home sales and prices, with stronger growth in 2018, according to the latest forecast by real estate analysts — boosted by a greater number of millennials entering their prime homebuying years, rising household formation, and continued job growth.

Forecasts for the coming year were a highlight of the National Association of Realtors’ annual Conference & Expo, held last week in Orlando, Florida. NAR analysts expect sales to grow  by 2 percent to 5.46 million in 2017, followed by 4 percent growth in 2018. The national median existing-home price is expected to rise by 4 percent next year.

NAR Chief Economist Lawrence Yun said that tight supply and affordability problems currently facing buyers in many markets will gradually ease next year.

“NAR surveys from both current renters and recent buyers prove that there’s an overwhelmingly strong desire among the younger generation to own a home of their own,” Yun said in a statement. “The housing market over the next couple of years should get a big lift in demand from these new buyers. The one caveat is it’s essential that there’s enough new and existing supply at entry-level prices for them to reach the market.”

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SAN JOSE, SAN FRANCISCO SELLERS LEAD U.S. IN HOME PRICE GAINS 
U.S. homes sold for an average of 23 percent above their purchase prices in the third quarter of 2016, the highest gain in nine years. And the news is even better in the Bay Area, where homes in the San Jose area sold for 68 percent above their purchase prices and 67 percent in the San Francisco area.

San Jose and San Francisco once again led the nation in home price gains, according to data compiled by ATTOM Data Solutions. They were followed by Portland, Oregon and Seattle (tied at 51 percent) and Los Angeles (49 percent).

The company’s Q3 Home Sales Report also showed that distressed sales nationwide fell to a nine-year low of 12.9 percent of all sales. All-cash purchases also fell to a nine-year low, to 25.9 percent of all sales, down from a peak of 44.8 in 2011.

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MILLENNIAL HOMEBUYERS TURN TO REFINANCING
Millennial homebuyers are growing in number, and they’re increasingly choosing to refinance their homes, too. That’s the news from mortgage software provider Ellie Mae, which released its monthly Millennial Tracker report last week.

Refinances accounted for 20 percent of all closed loans by millennial borrowers in September, up from 17 percent in August, the company said. Eighty percent of millennial loans were for home purchases, compared with 54 percent overall for U.S. borrowers.

Other findings from the September Millennial Tracker report:

• The average FICO score for millennial borrowers rose to 726 in September.
• The average interest rate on home loans continued declining, to 3.728 percent.
• The average loan amount increased to $184,179, up from an average of $181,326 in August.

“As the average rate on home loans continues to decline, we are seeing millennials with more purchase power, indicated by the average loan amount increase,” Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae said. “We’re also seeing a slight uptick in the number of refinances in September, indicating maturity among those millennials who previously purchased a home and are looking for an opportunity to lower the cost on their existing mortgage.”

(Photo: Flickr/SoulRider.222)

Article and images sourced from http://blog.pacificunion.com/real-estate-roundup-rising-home-sales-prices-in-2017/

Real Estate Roundup: U.S. Annual Income Growth Climbs to 50-Year High

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

HOUSEHOLD INCOME GROWTH SEES SIGNIFICANT ANNUAL GAIN
The average American worker got a much-needed monetary boost last year, though incomes have not yet returned to their prerecession highs.

Citing data from the U.S. Census Bureau, The Wall Street Journal reports that the median household income increased by 5.2 percent from 2014 to 2015 to $56,516. That’s the largest annual gain since 1967 but still 2.4 percent below the record high U.S. incomes of 1999. Incomes are 1.6 percent below their precession levels of 2007 and may surpass them next year at the current growth rate.

The news comes on the heels of an analysis by CNBC, which found that incomes in Silicon Valley grew by more than 20 percent from 2009 to 2014. The Bay Area is home to most of the highest-paying companies in the nation, with the overwhelming majority in the technology sector.

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SAN FRANCISCO NEW HOMES SHRINKING OVER THE PAST CENTURY
Although the average U.S. new home size is much larger than it was 100 years ago, square footage in San Francisco has become more scarce.

In a recent analysis, PropertyShark.com found that homes and condominums built with in the past six years are 74 percent larger than those built in the 1910s. The average new U.S. home is now 2,430 square feet, with the majority of large metro areas seeing double-digit-percent size gains from a century earlier.

San Francisco is one of four U.S. markets where new homes today are smaller than they were way back then. Since the 1910s, home sizes have shrunk by 28 percent in the City by the Bay, the largest declines in the country. The average new home in San Francisco is 1,150 square feet, second only to Boston for smallest in the nation.

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HOW HAPPY ARE BAY AREA RENTERS?
Satisfaction levels among Bay Area renters vary widely, although its most expensive city earns high marks from tenants.

That’s according to Apartment List’s annual renter confidence study, which polled 30,000 tenants nationwide and graded cities based on 10 different criteria, including affordability, access to public transportation, and job opportunities. Although San Francisco is the nation’s most expensive rental market, tenants there are pretty content, with the city earning an overall grade of A-minus. Other Bay Area rental markets with an A rating include Berkeley, Daly City, and Sunnyvale.

Renters in other parts of Silicon Valley are more lukewarm about their situations, with Santa Clara and San Jose receiving a C and a C-minus, respectively. Renters in three Bay Area cities are downright disgruntled; Oakland, Richmond, and Concord all come away with an F.

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MILLENNIAL HOMEOWNERSHIP RATE WILL KEEP FALLING
Much has been written about low homeownership rates among the youngest generation of homebuyers, and one respected real estate analyst sees that trend continuing for the next decade.

CNBC reports that homeownership rates for those under the age of 35 has dropped by 21.2 percent since 2004, the biggest decline of any demographic. John Burns of John Burns Real Estate Consulting told CNBC that he expects homeownership among millennials to continue declining until 2025.

Burns also predicts a nationwide decrease in homeownership across all demographics over the next decade. By 2025, about 60 percent of the population will own homes, the lowest level since the 1950s.

(Image: Flickr/FutUndBeidl)

Article and images sourced from http://blog.pacificunion.com/real-estate-roundup-u-s-annual-income-growth-climbs-to-50-year-high/

Closed Home Loan Activity Is Among Nation’s Lowest for Bay Area Millennials

Sky-high real estate prices are keeping the vast majority of young buyers on the sidelines of the Bay Area housing market in 2016, with the San Francisco metro area posting one of the smallest percentages of closed home loans for that demographic.

Mortgage-processing company Ellie Mae’s Millennial Tracker tool, which compiles data on closed home loans for buyers born between 1980 and 1999, says that 17 percent of applicants for mortgages in the San Francisco-Oakland-Hayward metro area were millennials between January and August of 2016. The numbers dovetail with recent data from San Francisco-based lender Earnest, which found that less than 10 percent of under-35 residents in the Bay Area’s two largest metro areas own homes.

The analysis again illustrates the importance of having an above-average credit score for Bay Area homebuyers, regardless of their age. It also shows how dual incomes affect young buyers in the region, with roughly two-thirds of successful applicants classified as married across all local regions.

The following is Ellie Mae’s breakdown of closed loans so far this year in Bay Area metropolitan statistical areas (the company lacks data for Napa County):

San Francisco-Oakland Hayward: Millennials accounted for 17 percent of closed loan applications in the San Francisco metro area so far this year, the second lowest rate among the country’s 25 most populous cities and only slightly higher than Los Angeles. The average young buyer borrowed $464,392 to purchase a home appraised at $672,438. The average FICO score stands at 751, and 59 percent are married.

San Jose-Santa-Clara-Sunnyvale: Silicon Valley’s income growth has given millennials slightly more buying power, with a 19 percent closed-loan rate so far this year. San Jose millennials require the best credit score in the Bay Area in order to finalize a loan — 754 — and 63 percent are married. The average successful lender borrowed $527,704 to buy the average home appraised at $814,469.

Santa-Cruz-Watsonville: There have been even fewer millennial borrowers in Santa Cruz than in the Bay Area proper this year, with that demographic accounting for just 12 percent of activity. Those who were successful have FICO scores of 754, identical to their Silicon Valley neighbors. Sixty-six percent are married, and the average loaner borrowed $460,393 to buy a $626,053 home.

Santa Rosa: Through August, millennial buyers have represented 15 percent of closed home loans in Sonoma County in 2016, with 57 percent classified as married. The average FICO score is 740, with lenders typically issuing a $374,089 loan to purchase a home appraised at $494,200.

Vallejo-Fairfield: Millennials have accounted for 22 percent of all successful 2016 loan applicants in the Solano County suburbs, more than anywhere else in the Bay Area, and also seal the deal with lower average FICO scores of 727. The Vallejo-Fairfield area has the region’s least expensive homes — appraised at an average of $375,913 — which translates to an average loan of $300,482. Fifty-seven percent of young buyers in Solano County are married.

(Photo: Flickr/Lucas)

Article and images sourced from http://blog.pacificunion.com/closed-home-loan-rates-among-nations-lowest-for-bay-area-millennials/

Staging Can Increase a Home’s Appeal During Bustling Spring Season

With the coming of spring, potential Bay Area home buyers will begin pounding the pavement, and homes that make a good first impression are the most likely to make the biggest impressions on eager buyers in what could be a crowd of open houses.

That’s where home staging can help.

A recent survey by National Association of Realtors’ 2015 Profile of Home Staging showed that 81 percent of homebuyers found professionally decorated properties easier to visualize as a future home. Staged homes typically sell within 30 days, according to research by The International Association of Home Staging Professionals and HomeStaging.com. Additionally, staging usually leads to a higher final sales price.

“Staging isn’t about decorating your home,” says Laney Nelson, Accredited Staging Professional stager for Walnut Creek-based East Bay Staging. “It’s about selling.”

THE BASICS AND BENEFITS OF STAGING

Stagers conduct a home assessment, examining items to be removed and refurbished, neutralizing decor to appeal to a majority of buyers, and maximizing both indoor and outdoor space to generate positive impressions of the home’s features. Replacing carpeting and flooring, painting, cleaning, landscaping, changing furniture, and even simple fixture replacements can help a property connect with buyers.

But mixing conflicting styles and accessories can put off homebuyers, according to Kelly Wood, a buyer’s specialist and a former stager. “The extremes don’t really work,” she says.

Additionally, staging and repairs offers the appearance of home upkeep, both in the real world and online, says Danielle Cirelli, owner of Walnut Creek-based staging company Designed to Sell. “Photos are an essential part of marketing because over 90 percent of the buyers will preview a property online,” she says.

Millennials, who currently make up the largest share of homebuyers, are even more likely to peruse online listings before visiting a home. Pacific Union CEO Mark A. McLaughlin stressed the importance of technology on the real estate industry in his recent Inman Select Live presentation, saying that digital strategies are geared toward users likely to “give you eight seconds.”

CONNECTING WITH A STAGING PRO

Sellers who decide that staging is the way to go will likely want to employ the services of a pro. Many expert real estate professionals offer their clients a list of recommended contacts – including architects, general contractors, and interior designers – who can help enhance a home’s appeal. Some real estate professionals provide staging services as a part of their service package. Sellers can also find a staging company through online resources such as Yelp and Angie’s List or referrals from friends and family.

Though some sellers might fret over staging expenses, it actually costs less — an average of $675, according to NAR’s study — than the first price reduction – typically at least 10 percent of asking price. And a lingering home on the market sans staging can incur additional price cuts, according to Nelson.

“Every month a home is on the market, there is a price reduction of usually 5 percent,” she says.

(Photo: Flickr/boulderite)

Article and photo sourced from http://blog.pacunion.com/spring-staging-tips/

Is Bigger Better? Attitudes On Home Size Differ Between Millennials and Baby Boomers

Do You Want a Bigger Home? It Depends on Your Age.

Would you like your home to be bigger? Maybe another bedroom or bathroom, a larger kitchen or family room? You’re not alone.

Fully 43 percent of Americans said they would prefer to be living in a bigger home than their current residence, according to a recent poll, while 16 percent would rather downsize and 40 percent are happy with the amount of space they currently have.

Those preferences change markedly, however, depending on age, according to a recent survey of 2,000 Americans by analysts at Trulia.

The poll results reflect a dynamic we’re seeing in the Bay Area.

Sixty percent of millennials — those ages 18 to 34 — said their ideal residence would be larger than where they live today, which makes sense considering that many millennials start their careers, and families, while living in cramped urban apartments. Only 13 percent said they’d rather have a smaller home than their existing one.

Baby boomers think differently, though the poll showed surprising results for this generation. Current talk suggests that boomers — ages 55 and higher — are fleeing their big, empty-nest homes, but the poll tells a more nuanced tale: 21 percent preferred a smaller home, but 26 percent were still looking for something bigger. Fifty-three percent, meanwhile, said they wouldn’t change a thing.

In between, both in age and preference, is Generation X. Among those aged 35 to 54, nearly a majority, 48 percent, said they would prefer a bigger home, with only 14 percent looking for something smaller.

Trulia analysts said that the Gen X results reflect that fact that homeowners in this age group bore the brunt of the recent housing crisis, and many were forced into smaller homes. Then again, Gen X households are also crowded with teenage children.

In the Bay Area, poll results are reflected in millennials living in urban rental units and condominiums inSan Francisco and Oakland, with more families and older, more established residents in larger homes in suburban regions.

“Households must make tradeoffs between things like accessibility, amenities, and affordability when choosing what size homes to get,” Trulia noted in a summary of its poll results. “The ‘ideal’ sized home for most Americans may be larger than where they’re living now. But that spacious dream home may not practical.  As result, the mismatch between what Americans say they want and what best suits their circumstances may persist.”

(Photo: Flickr/James Gaither)

Article and photos sourced from:  http://blog.pacunion.com/do-you-want-a-bigger-home-it-depends-on-your-age/ by Pacific Union