MReport June 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 34 of 67

TH E M R EP O RT | 33 FEATURE 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 A Cloud Looms Over the Spring Buying Frenzy It may be the season for buying, but there's not much to buy. A fter a record high in January, the Redfin Housing Demand Index fell 8.5 percent in February. However, despite the dip, this was the strongest Febru - ary for homebuyer demand since at least 2013. The Demand Index, based on Redfin customer requests for home tours and writing offers, showed that buyers requesting tours were down 8.2 percent while buyers requesting writing offers were down 7.7 percent. Redfin blames the reduction in demand on the small inventory. "The only factor holding back sales this spring is sup - ply," said Redfin Chief Economist Nela Richardson. "Limited inventory, particu- larly for starter homes, has put a crimp in the 2017 market. We expect to see more listings hit the market this spring, but there will still not be enough inventory to match homebuyer demand." Homebuyer demand was still up year-over-year, growing by 20 percent compared to February 2016. Some areas saw strong increases in demand, despite the smaller inven - tory. The Denver-area housing de- mand grew 100.4 percent year over year in February, but inventory in Denver is currently 30.7 percent lower than last year "The Denver metro is seeing incredibly limited selection, with the number of homes for sale down to its lowest level in over 30 years," said Redfin Real Estate Agent Corey Keach. "But that hasn't stopped buyers, from whom there is as much, if not more, in - terest than last year. Add that up, and you have a lot of pressure on the market, with multiple offers basically an expectation, particu- larly for those single-family homes in price ranges below $500,000. And it's rare for a non-cash buyer to win any home under $300,000." Other cities haven't been so lucky. The Portland-area demand index dropped 32.8 percent year over year in February. Fewer homebuyers, 20.7 percent fewer, toured homes while 42.9 percent fewer buyers requested writing of - fers than last year. 10.4 percent fewer homes were for sale than this time last year in Portland, and the blame could be put on an ex - ceptionally cold winter. However, more listings should be on the way, according to Redfin Agent Brian Thomas. "Demand from prospective sell - ers is extremely strong at the mo- ment, which means that by early April, once these homes hit the market, there should be enough listings to make for a very busy season. Also, we are still seeing consistent multiple offers on homes in inner Portland and much of the Vancouver area, so the buyers are there—we just need everything to defrost," Thomas said. Rising Interest Rates to Put Downward Pressure on Prices As rates rise, home price acceleration in many markets may taper off. I n March the Federal Reserve raised the interest rate 0.25 percent. That hike was only the third since the housing crash, but it's enough to send in - dustry experts groping for answers about its potential impact. One strongly anticipated effect of rising rates is a slowdown in home price appreciation. The March Pro Teck Valuation Services Home Value Forecast asked a direct ques - tion: Could there be a slowdown, or a reduction in home prices if it costs more to borrow money? "The simple answer is, yes," said Pro Teck CEO Tom O'Grady. "Sale price appreciation is forecast - ed to taper off in [San Francisco, Nashville, and Raleigh] as interest rates increase. San Francisco is already anticipated to experience a slight dip due to the two rate increases from the Fed over the last several months." According to Pro Teck, these metros in particular would experi - ence home price reductions if rates rise more than anticipated, as they've all seen all-time-high values as an offshoot of histori - cally low rates these past several years. San Francisco, because of its already high cost of housing and lower affordability, could see as much as a 10 percent dip in home prices if rates increase more than anticipated, the report stated. Beyond predictions, Pro Teck identified the strongest markets in the country. As it's been for months, Washington State metros featured heavily in the ten best- performing cities in the United States. Bremerton topped the list, which also included Mount Vernon, Oak Harbor, and Seattle. All top metros are seeing increased sales, but a correspond - ing decrease in both active homes on the market and active days on market, the report stated. Seattle has the lowest total months of remaining inventory, at barely a month-and-a-half. It also has the lowest number of active days on market, 37. On the flipside, eight of the bottom ten metros have experi - enced "a negative percent change in active listings," which Pro Teck called a healthy sign. Huntsville, Alabama, showed that the bottom of the market is also the most competitive, with less than five months of inventory for homes costing less than $200,000. "Higher priced homes seem to be staying on the market for ex - tended periods," the report stated. "For example, homes priced between $500,000 and $549,000 remain on the market for an aver - age of 17 months." "The only factor holding back sales this spring is supply." —Nela Richardson, Chief Economist, Redfin OUR CLIENTS ENTRUST US WITH OVER $6 BILLION IN ASSETS. Here's Why IRA Services Trust Stands Alone: A name you can trust in an industry it helped start. Direct customer service assistance from our highly trained in-house staff. Reasonable and competitive pricing without any hidden fees. The highest level of information security you'll find in any of our competitors. Smooth process for all your administrative transactions. User-friendly online access to all your accounts 24 hours a day, 7 days a week. IRA SERVICES AND IRA SERVICES TRUST COMPANY AND THEIR REPRESENTATIVES DO NOT OFFER TAX OR LEGAL ADVICE. DO NOT PROVIDE INVESTMENT ADVICE, DO NOT SELL INVESTMENTS, DO NOT EVALUATE, RECOM- MEND, OR ENDORSE ANY ADVISORY FIRM OR INVESTMENTS. INVESTMENTS ARE NOT FDIC INSURED AND ARE SUBJECT TO RISK, INCLUDING THE LOSS OF PRINCIPAL. CLIENTS ARE ADVISED TO PERFORM OR FACILITATE THEIR OWN DUE DILIGENCE WHEN INVESTING. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE LEGAL OR TAX ADVICE AND SHOULD NOT BE CONSTRUED TO APPLY TO ANY INDIVIDUAL PERSON OR SITUATION. EACH PERSON SHOULD CONSULT WITH HIS OR HER OWN PERSONAL TAX ADVISOR, FINANCIAL PLANNER, ATTORNEY OR ACCOUNTANT WITH RESPECT TO SUCH INDIVIDUAL'S SPECIFIC SITUATION AND SHOULD NOT RELY UPON THIS INFORMATION WITHOUT SUCH CONSULTATION. (800) 248-8447

Articles in this issue

Links on this page

Archives of this issue

view archives of TheMReport - MReport June 2017