MReport April 2019

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50 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA The Price of Entry Just how expensive is it for first-time buyers to break into the housing market? A ccording to a Zillow analysis, homebuyers are beginning to dis- tance themselves from other income groups, highlighting how expensive it is, especially for first-time buyers to break into the housing market. "Home prices have outpaced incomes for nearly a decade, push- ing homeownership further and further out of reach for first-time buyers even as homeownership aspirations remain very high," said Aaron Terrazas, Senior Economist at Zillow. More than a third of homebuy- ers now make more than $100,000, data revealed. However, on the other hand, about 3.5 million fewer households can afford a typical home compared to 2012. This is as a result of homebuyer incomes having outpaced homeowner incomes and remain more than double that of renters. Home values recorded an increase from 2012 to 2017, rising to 36 percent while the rise in incomes reflects a mere 11 per- cent. Zillow analysis shows that a typical homebuyer household in 2017 earned more than 62.7 percent of all households, up from 59.8 percent in 2012. At the same time, the share of buyer households making more than $100,000 a year grew eight percentage points to 38 percent, while those making $50,000 or less fell eight percentage points to 28 percent. The share of buyers making $50,000 to $100,000 held steady during that time at 34 percent. New York topped the list of homebuyers making more than $100,000 in 2017 at 59 percent, followed by Los Angeles at 56 percent, and Chicago at 43 percent. The breakdown of median house- hold incomes in the U.S. revealed that home buyers earn $79,900, while homeowner income is at $75,000. Almost half of renters, who moved in the past year (46 percent) considered buying a home during their search but ultimately ended up renting. "In the past, low interest rates, lax lending, and migration from pricier to more affordable com- munities have helped square that circle—but those palliatives break down sooner or later. If becom- ing a homeowner trends further toward the exclusive domain of society's most fortunate, wealth inequality could see an acceleration in the years ahead," Terrazas said. Homebuyers and homeown- ers, who historically had similar incomes, are seeing a widening gap as buyers pulled ahead during the recovery from the Great Recession. The analysis pointed out that to a large extent, this is because sales prices outpaced home values in many hot markets, meaning it takes more money to be a home buyer than to be a homeowner. Where the Inventory Is Steady growth in inventory could indicate steps toward a more balanced market. T he juggernaut that was the housing market mellowed a lot last year, especially as 2018 drew to a close. Home sales were down 12 percent year-over-year in December, freeing up more inventory, accord- ing to the latest National Housing Report from RE/MAX. December's drop-off in sales was the biggest for the month in a decade and was the fifth straight month in which sales numbers were down compared to a year earlier. "Home sales have cooled, es- pecially during the second half of 2018, but that was inevitable given the strong seller's market that has per- sisted for nearly a decade," said Adam Contos, CEO, RE/MAX. "We believe sales activity can pick back up if the pace of price escalation continues to moder- ate, interest rates tick further downward, and wage growth continues." It was also the third month in a row that inventory grew—up 4.6 percent from a year ago, and the first time in about a decade that a year ended with more inventory than the previous December. The month closed with an average of 4.1 months of inventory nation- ally, up even over November's 3.9 months of supply. "December's inventory gain, con- tinuing the three-month growth trend, is welcome news," Contos said. "The market remains choppy and there's still a long way to go, but these gains represent steps toward a balanced market, which in the long run is healthy for both buyers and sellers." Four metros had more than a half-year's supply in December, the most notable being Miami, with a 10-month inventory. San Francisco's 1.8 months of supply was the lowest in December. Homes were flying off the shelf in Omaha, where they closed in an average 26 days in December. That's just about half the month's national average of 54. Salt Lake City and San Francisco houses both moved in about 37 days. On the other side of the equa- tion, selling a home in Trenton, N.J. was a long wait. Homes that closed in December spent an aver- age of 113 days on the market. Home buyers still paid record amounts throughout 2018. Prices grew year-over-year in every month of 2018, with the biggest gains being the 13 percent upswing in Boise. Wichita and Salt Lake City also put up double-digit in- creases in median prices compared to the previous December. Eight metros did see their prices come down in December. The largest dip was Honolulu, where the median home price dropped almost 8 percent, compared to a year earlier. Overall, December's year-over-year increase was just over 2 percent, which was much smaller than Decembers past. "Home sales have cooled, especially during the second half of 2018, but that was inevitable given the strong seller's market that has persisted for nearly a decade." —Adam Contos, CEO, RE/MAX

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