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Home Value Increase Doubles Inflation Rate

by Hart Real Estate Solutions

Home values in the United States are increasing at twice the rate of the nation’s inflation rate according to Mortgage News Daily. S&P/Case-Shiller released a home value index for January, suggesting that values in the US rose by 5.4% since January 2015, year over year. That rate is the same rate seen in December as well as the whole 3rd quarter of 2015, helping confirm that real estate values are still trending up.

The western region of the United States drove most of the home value appreciation in the nation. Several cities saw 10% home values rise by more than 10 percent. Portland home values rose by 11.8% from 2015 to 2016. The number of US residents who have equity in their home continues to increase as home values rise.

Currently, there is only about a 5-month home inventory supply on the US housing market. Economists believe that a 6-month supply represents a balanced housing sector. With a low number of homes for sale, buyers will need to offer their highest and best offers, driving up home prices. Home inventory still might rise in 2016. In February, single family home start ups were their highest since November 2007.

 

Source: http://www.mortgagenewsdaily.com/03292016_case_shiller_indices.asp

Job Market Spurs US Housing Market Forward

by Hart Real Estate Solutions

Job growth in 2015 certainly helped spur the housing market forward. Most experts believe 2016 will follow the pattern, with job creation leading to increased activity in the United States Housing Market. Most believe the two sectors are linked and that as people find new, higher paying jobs, home values and activity will both rise with it.

The job market created 2.6 million new jobs in 2015. Unemployment hit 5% in 2015, down from 5.8% in 2014. Urban centers and high tech hubs experienced the most growth in both job creation and housing activity. Places like San Francisco, Denver and Seatlle all had huge employment gains. Low and behold, they are also some of the nation’s busiest and most expensive housing markets.

The relationship between job growth and housing market growth seems pretty apparent. As great jobs come onto the market, new workers will need to find places to live. The influx of workers leads to increased activity as well as increased price in these hot markets.

Bozeman, though certainly not a city, has experienced huge real estate growth recently. Guess what? The Gallatin County remains one of the top counties in the state for high wages and low unemployment. Montana had its lowest unemployment rate since 2007. And, it seems like no coincidence that Bozeman is also considered the tech capital of Montana and that it also has the fastest growing economy in Montana.

The improved economy has fueled a rise in real estate transaction across the nation. Bozeman’s housing market activity has increased consistently year over year, showing that Bozeman is also falling in line with patterns established by the national housing market.

 

Source: http://www.realtor.com/news/trends/housing-industry-rises-with-job-market/

 

 

Gallatin County Market Update - Single Family Home Sales Year End Report

by Hart Real Estate Solutions

Year end figures for 2015 have been released. Now, with concrete figures for all of 2015, we can compare real estate market growth in comparison to 2014. This month, we will compare single-family home sales in 2015 to annual sales figures during 2014. Here are a few stats:

  • Total home sales increased by 6.68% (1,392 sold in 2014, 1,485 sold in 2015)
  • Dollar volume increased by 8.93% ($609,153,302 in 2014, $663,572,593 in 2015)
  • Average sale price increased by 2.11% ($437,610 in 2014, $446,850 in 2015)
  • Median sale price increased by 12.02% ($297,250 in 2014, $333,000 in 2015)
  • Homes spent 9.28% time longer on the market in 2015 (88 Days on Market in 2014, 97 Days on Market in 2015)

Summary – Sales, dollar volume, as well as average and median sales prices continued to rise in 2015. The Gallatin market has grown consistently in the past couple years, with 2015 being no exception. Homes did spend a little longer on the market. New construction homes need to be listed once framed, contributing to higher days on the market. In exchange for spending more time on the market, single family homes sold at higher prices. The market continues to be very active and healthy.

Home Equity Continues to Expand Across US

by Hart Real Estate Solutions

More United States borrowers got into the black in 2015 and reported having equity in some form on their home. Now, many of these buyers also have more equity in general, as home prices have improved and the housing market has recovered.

Household holdings in real estate totaled 21.825 trillion dollars in the 3rd quarter of 2015. In 2014, real estate holdings totaled 20.461 trillion. From 2014 to 2015, holdings increased by 1.365 trillion dollars.

Home mortgage debt hit 9.46 trillion dollars in the 3rd quarter. Compared to 2014, that figure rose by 0.078 trillion dollars.

The difference in holdings growth (1.365 trillion) over the mortgage debt difference (0.078 trillion) shows that households across the US have seen a rise in their home equity.

In September 2015, 91% of US homes had equity. That number should grow as home values have risen across the United States. In 2014, 89% of borrowers had equity in their home. In March of 2015, 97% of Montana borrowers had equity in their home.

Although mortgage debt did expand in 2015, that fact is not necessarily negative. Oftentimes, mortgage debt expands, not because people are falling farther into debt, but because more home buyers are taking out mortgages. A majority of US home buyers need to take out mortgages to buy a home, so expanding mortgage debt often implies a healthier, growing housing market.

Delinquent mortgages have fallen in the past couple years, supporting the idea that more buyers are entering the market. As more homeowners see their equity grow, more potential buyers will see their financial success and want to also have a part in it.

 

 

Source: http://eyeonhousing.org/2015/12/housing-equity-continues-to-expand/

 

 

US Housing Market’s Third Quarter Best in Nearly a Decade

by Hart Real Estate Solutions

Existing home sales rose by 3.4% in the 3rd quarter of 2015 and has been one of the best quarters for the housing market in nearly a decade. The quarter has lead to a new annual rate of 5.48 million sales in 2015. Existing home sales increased by 8.4% compared to 2014.

In the United States overall, the single family median home price hit $229,000, up 5.5% from the third quarter of 2014. While home prices and sales continue to climb, their growth rates have slowed to a much healthier pace, providing a bit more depth and consistency to the US housing market.

Median prices rose in 87% of US markets and only 24 of these areas reported prices lower than in 2014.

In the West, existing home sales increased by 3.9% and are 9.7% higher than a year ago.

Issues still remain with lack of home inventory, which have pushed prices up and eliminated some first time home buyers from feasibly buying a home. But generally, more buyers are now able to buy a home than before.

 

Source: http://realtormag.realtor.org/daily-news/2015/11/13/housing-has-best-quarter-in-nearly-decade

 

Federal Reserve Raises Short Term Interest Rate

by Hart Real Estate Solutions

By unanimous vote, the Federal Reserve agreed to raise the federal fund rate (aka short-term interest rate) showing their confidence in an improving United States Economy. The Fed will raise their rates from near zero to 0.25 to 0.5 percent, a decision that had been expected to come at several different points in 2015. The Fed will shift between 0.25 and 0.5 based on market conditions. They are also willing to adjust their strategy based on how the economy performs in response to the move.

The Fed has kept rates at near zero since 2008. During the recession, the Fed did all they could to entice borrowers back into the fold. Now that the labor market and housing market have started performing well, the Fed has decided that now is the time to get rates up again. So far, the market has performed well in response to the news, with the Dow Jones Industrial Average rising by 224.18 points.

The Fed pointed to strong dollar values and a rebounding labor market as the major factors that convinced them to raise rates. As the dollar value has risen, emerging market companies that borrowed heavily during low rate periods will now have to pay more to payoff the debt.

But how will the rates affect the housing market?

With a rise in interest rates, each subsequent lender will need to raise their rates as well to keep their business profitable. It is fully expected that mortgage rates will increase over 2016. Mortgage rates have been at historically low levels during the recession. Buyer confidence has improved over 2015, allowing the Fed to raise rates without losing all their borrowers.

Although mortgage rates will in all likelihood increase, according to the National Association of Realtors Chief Economist Lawrence Yun,  the small uptick should not have a major affect on borrowers. However, other experts believe this is the first of several upticks, in which case mortgage rates may rise at several points over 2016.


Currently the 30 year fixed rate mortgage sits at 3.93 percent. In the short term, the housing market might actually have a small surge, as fence sitting buyers take the plunge with rising mortgage rates on the horizon.

 

 

Source: http://realtormag.realtor.org/daily-news/2015/12/17/what-fed-s-decision-means-for-housing

http://www.wsj.com/articles/fed-raises-rates-after-seven-years-at-zero-expects-gradual-tightening-path-1450292616

 

 

Storage Units Outperform Other Commercial Real Estate Sectors

by Hart Real Estate Solutions

Property investors might be surprised to learn that storage units have performed extremely well since the recession, offering their owners a great return on investment. Rents are high and most storage companies are reporting low vacancies. With the recession keeping new storage facility construction down, competition is also low, opening the door for investors across the United States.

While most other real estate commercial sectors have fallen flat in 2015, some storage companies have reported seven percent increases in rental income. Many investment firms have moved to constructing new storage spaces themselves to get their piece of the pie.

Publicly traded storage companies have also performed very well on the stock market. Extra Space Storage reported a 33% increase in their stock over 2015. They also reported that 94.5% of all their spaces in the United States were occupied, up from 92.1 percent.

Storage units may provide great rental income to investors while also helping buffer them from market volatility. Storage units generally stay in demand, based on deaths, moves, divorces etc.—all reasons that tend to not follow housing market trends. Storage unit values have held true since the recession and have since recovered better than other commercial sectors.

 

Source: http://realtormag.realtor.org/daily-news/2015/10/14/real-estates-hot-new-sector-storage-units

 

 

Property Taxes Rising Suggests an Improved Economy

by Tim Hart

Property tax collections increased by 3 percent over the past year. Collections increased by 13 billion dollars to a total of 503 billion collected. The figures include both commercial and residential property taxes.

Property taxes might be rising thanks to improving home values. State and local governments might be re-appraising homes to raise their listed value. Whether it has happened enough in different towns and states to affect the national average is unclear.

Interestingly, property taxes have taken up a smaller percentage of total tax collections than in recession years. In 2010, property taxes held 44.9% of the total share whereas now they hold 38.9% of the total. According to the National Association of Home Builders, that proportion is very close to the pre-housing boom levels seen in 2001 to 2003.

This trend would suggest that non property taxes have grown significantly faster over this time than property-based taxes, meaning that Americans are taking in more income and are generally having better economic success than in years previous. As everyone’s financial situation improves, it would make sense for the housing market to see similar results as it tries to creep back to a normal, healthy market.

 

Source: http://realtormag.realtor.org/daily-news/2015/09/25/property-taxes-are-rise

 

 

Foreign Investments on Record Pace in US Real Estate Market

by Tim Hart

Foreign investors have taken on the United States Real Estate Market in full force in 2015 thanks to an improving US economy and low interest rates.

According to the real estate services firm JLL, foreign investments totaled 24.1 billion dollars at mid-year compared to 23.6 billion for all of 2014. JLL only keeps track of transactions greater than 5 million dollars so some hotels and multi-family developments were excluded. The CoStar group, another commercial firm, has the total spent at nearly 39 billion.

Chinese investors have taken a large portion of the investor market. They accounted for 1.9 billion dollars in the second quarter of 2015. Many investors are looking for a safe place to keep their money while the Chinese economy has struggled and the US continues to have very low interest rates. Interestingly, instead of putting away money in large lavish personal residences as seen in other years, these investors have shifted towards more humble, income producing commercial and residential properties.

In 2014, 28% of foreign investment came from Chinese investors. They spent 104 billion in total in 2014. To put that in perspective, Canada came in second place at 11.2 billion spent.

So long as the US economy continues to strengthen and so long as interest rates remain low, it would be logical to expect foreign investment to hold true, if not increase. Foreign investment will help deepen the housing market overall. Domestic investors might not enjoy the increased competition, but having that competition can really help individual buyers and sellers sell and buy at a great price.

 

Source: http://realtormag.realtor.org/daily-news/2015/08/21/foreign-investment-in-us-poised-for-record

http://realtormag.realtor.org/daily-news/2015/09/15/chinese-eye-us-real-estate-safe-haven

 

91% of US Homes Have Equity

by Tim Hart

After 759,000 properties regained equity in the second quarter, almost 45.9 million homes now have a higher property value than the remaining balance on their mortgage. In essence, 91% of US homes with mortgages now have equity—great news for the recovering US Housing Market.

At the end of 2014, 89% of US homes had equity, totaling 44.5 million homes.

Ninety five percent of mortgaged homes valued at 200k or more currently have equity. At the end of 2014, that number was at 94 percent of mortgaged homes.

Homeowners with lower home values struggled to get over the equity hump in comparison to those buying more expensive homes. But these homeowners also saw the biggest improvement over 2015. In 2014, 84% of buyers under 200k had equity in their home but in 2015, 87% now have equity.

Much of the country has recovered from negative equity issues seen during the recession. Five states alone contributed to nearly 32% of the negative equity seen in the entire US. Although terrible news for these specific states, the general outlook for the nation overall might be even more positive than these numbers suggest. The US states with the highest negative equity rate (% of mortgaged homes in state without equity) are Nevada (20.6%), Florida (18.5%), Arizona (15.4%), Rhode Island (13.8%) and Illinois (13.1%).

Montana was in the top 5 states for lowest percentage of negative equity homes. In March of this year, Montana had 97% of homes with mortgages in positive equity. Although certainly not major, that number has climbed to 97.2 percent.

If property values rise by an additional 4.7 percent, experts believe another 800,000 homeowners will have positive equity in their home by July 2016.

 

Source: http://realtormag.realtor.org/daily-news/2015/09/16/91-properties-now-have-equity

 

Displaying blog entries 1-10 of 43

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