MReport July 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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20 | TH E M R EP O RT FEATURE What Makes for a Hot Housing Market? The housing market plays out in different ways for buyers, sellers, and real estate agents. With the summer season in full swing, take a look at which regions of the country are becoming popular with these groups. By Danielle Hale W hat makes for a "hot" real estate market? Real estate agents know it when they see it, while buyers and sellers know it when they've lived through one. A "hot" market can be defined as one where homes are selling quickly, measured by low days on the market, and where the houses are getting a lot of atten- tion from buyers, measured as page-views per listing. In general, these real estate markets tend to be persistent—hot markets tend to stay hot for a while, and cooler markets tend to remain cool. A Different Beat A hot real estate market is likely where most homeowners and sellers would prefer to be. It's com- forting for homeowners to know that the area where they've invested what's likely a sizeable chunk of their nest egg is in-demand. Being in a hot market is generally an indication that, if they needed or wanted to, homeowners could sell their home quickly, possibly even for a premium price. However, it's a double-edged sword for a buyer. Sure, once you make a home purchase, it's great to know that the area you are in is in high demand, and because this demand tends to be persistent, it's not likely to change overnight. However, the process of becoming a successful homebuyer in a hot real estate market can be exhaust- ing and emotionally draining, even more so than the typical home- buyer's journey. With homes selling quickly, a buyer will likely have to make sig- nificant financial and life decisions faster than they might otherwise choose to. Moreover, in the face of abundant competition, a buyer may have to make multiple offers before they successfully secure a home. As an industry professional, there are pros and cons as well. Being busy can be a good thing, but it comes with challenges, too. While a hot market might help listing agents, buyer's agents may find that guiding them through an extra-competitive market requires more patience and expectation management. Additionally, lenders and other transaction facilitators may find buyer and buyer-agent demands are higher in hotter markets, as stronger offers demand tight timelines. The Hot and Cold of it I n general, the hottest metro areas in the country are on the West Coast, in the Rocky Mountain states, in Texas, and in the Midwest, although the hottest market in the country in April— Boston—doesn't fit within any of these categories. Interestingly, as the housing market overall has cooled, the hottest markets in the country have also reflected this trend. Only nine of the top 20 markets are seeing homes sell at least as fast as they did one year ago, and only half of the top 20 markets are seeing more page views per listing. Having more homes being available for sale is driving the slowdown in page views per list- ing, even in the hottest markets. In fact, in keeping with the national trend of more homes being available for sale this year, 14 of the top 20 markets have more active listings this year than one year ago. Among those 14 markets, all but three have more newly listed homes hitting the market this year than last year, which is helping to drive up the number of homes for sale. The three markets with more homes available for sale and a shrinking number of newly listed homes (Colorado Springs, Colorado; Modesto, California; and Stockton-Lodi, California) are cool- ing relative to last year along with other markets where the number of newly listed homes is grow- ing, but total homes available for sale are increasing even more, as indicated by homes taking longer to sell. Despite this cooling, these housing markets remain hotter than the others across the country. A for Affordability O ther than the inherent commonalities (homes sell fast and get a lot of views from buyers), these markets also tend to be affordable, especially those that are rising in the ranking list. Taking a look at the most improved markets makes that even more apparent. Four of the five most improved markets have a lower median listing price than the national price of $310,000—the exception being Orlando, Florida, which has a slightly higher median listing price of $312,000. Additionally, when factoring in the price of homes relative to local incomes, all of these most- improved markets see the share of local median income needed to purchase the typical listing is well under the current national aver- age of 30%. All markets, except Orlando, range from just 20-26% of monthly median income needed to finance the purchase of the typical listing. They are notably more afford- able for below-median income families, too. In each of these markets, except Orlando, the

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