Real Estate Sale Forecast 2014 Predicted to be Similar to 2013 in Sales

Just the Facts

All-Cash Deals Make Huge Comeback Nationwide

Call it the summer of the cash sale.  All-cash home purchases skyrocketed during the summer months of 2013, with their share of total sales growing by more than 40 percent from the beginning of June to the end of August, amid sustained appetite from investors, a recent spike in interest rates and tight inventory.  Cash purchases accounted for 45 percent of sales in August, up from the 2013 trough of 32 percent seen in April and May, according to RealtyTrac data provided exclusively to Inman News.  (Note cash sales in Miami almost 80% of sales; in Dallas about 20%.).  Graph below is from Realty Trac 

2014 to be Similar to 2013 in Sales

Although total existing-home sales this year will be up about 11 percent to nearly 5.2 million, little change is seen in 2014, with sales forecast to increase less than 1 percent. The national median existing-home price should rise 11 to 12 percent for all of 2013, easing to an increase of 5 to 6 percent next year, with general improvement expected in inventory supplies.   Pending home sales slowed in August, with tight inventory conditions, higher interest rates, rising home prices and continuing restrictive mortgage credit impacting the market, according to the National Association of REALTORS®.   Lawrence Yun, NAR chief economist, said the decline was expected following elevated levels of closed existing-home sales at the end of summer. “Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” he says. “Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead.”

-       RISMedia, September 29, 2013

Market Update! For the week of September 30, 2013

Keeping you updated on the market! For the week of  September 30, 2013

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MARKET RECAP Lower Mortgage Rates Prevail Mortgage rates can be as difficult to forecast as the flight path of a butterfly, but forecast we do. Last week, we said we expected to see the 30-year fixed-rate mortgage fall after the Federal Reserve announced there would be no tapering of quantitative easing. Our forecast was for the rate on the 30-year loan to fall below 4.5%, and possibly trade in the 4.25%-to-4.5% range for the near future. It looks like we got it right. Bankrate.com's latest survey shows the 30-year loan averaged 4.47% nationally. Of course, some local markets didn't see quite that much reduction, while others saw more. But all in all, we are seeing rates lower than we've seen in the past four months. We expect the 30-year loan to hold near today's levels. The fact is that economic growth remains sluggish. The latest and final revision of 2 nd quarter gross domestic product (GDP) shows less growth than expected. The consensus estimate was for GDP to grow at a 2.7% annualized rate, but the final number shows a 2.48% growth rate. Sluggish GDP growth gives the Federal Reserve reason and room to continue buying $40 billion worth of mortgage-backed securities (MBS) each month. In addition, concerns over a looming federal government shutdown, due to political wrangling over the debt ceiling, will keep interest in Treasury notes and bonds high. Investors are also pondering what impact the Affordable Healthcare Act (Obamacare) will have on businesses when it's implemented next month. In short, there's a lot of uncertainty that will keep investors interested in haven securities like Treasury notes and bonds and MBS. Their interest should help hold mortgage rates at these lower levels. To be sure, we see little impetuous for mortgage rates to move much high. But keep an eye on next Friday's employment report. Should that come in stronger than expected, rates could temporarily spike. On the flip side, if the employment report comes in weaker than expected, rates will move lower. The past couple employment reports have disappointed, so it's likely most economists have proffered less-optimistic predictions. Our crystal ball points to job growth meeting or slightly exceeding exceptions. In that case, we could see an uptick in mortgage rates at the end of the week. But with all the other uncertainties baked into the credit markets, we doubt rates would move meaningfully higher. So we see an extended opportunity to take advantage of lower rates. Keep in mind, though, the long-term bias – an eventual tapering and higher inflation – points to higher mortgage rates down the road. The risk, as we've said so often, remains in procrastinating.

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Construction Spending (August)	Tues., Oct. 1, 10:00 am, ET	0.6% (Increase)	Important. Gains in residential spending slowed in recent months, but commercial spending is moving higher.
Mortgage Applications	Wed., Oct. 2, 7:00 am, ET	None	Important. Purchase applications jumped to their highest level since July, which points to strength in underlying home sales.
Factory Orders (August)	Thurs., Oct. 3, 10:00 am, ET	0.3% (Increase)	Moderately Important. Orders remain subdued, thus reflecting sluggish economic growth.
Unemployment Situation (September)	Fri., Oct. 4, 8:30 am, ET	Unemployment Rate: 7.3% Payrolls: 180,000 (Increase)	Very Important. Another month of sluggish job growth and low-employment participation ensures continued quantitative easing.

Laws of Economics Still Work Higher prices bring in more supply; more supply leads to lower prices. This is how things are shaping up in the new-home market. Sales jumped 7.9% to an annual rate of 421,000 units in August. The number of new homes for sale rose 6,000 for the month. Supply stands at five months, a considerable improvement over the 4.6-month supply that prevailed a year ago. More supply – more new homes – means pricing pressure. The median new home price slipped 0.7% to $254,600 in August, marking the fourth-consecutive monthly decline. This follows the news on existing-home sales, which showed a slight downtick in the median price to $212,100. Over the past couple months, we've been warning that price appreciation will likely slow. The latest data from the S&P/Case-Shiller Home Price Index support our contention. Case-Shiller's 20-city index shows price growth slowed to 0.6% in July, down from 0.9% in the prior two months. Trends don't last in perpetuity, so a slowdown in price-appreciation was (is) inevitable. Because trends don't last in perpetuity, we pounded the table hard in 2010 and 2011 for buyers to get in the game. We were adamant back then because we expected the downward price trend to soon reverse course, which it did. We expect price-appreciation growth to continue to slow. More supply will come to market, because more sellers will see slowing price growth and will want to capture gains. In turn, their actions will further slow price-appreciation growth. That said, if anyone is waiting for slow-to-no price growth, he or she needs to keep in mind that any money saved on a purchase price could easily be offset by higher financing costs.

 The largest real estate company in the world goes public--

RE/MAX set to go public Wednesday

All eyes in the world of real estate world will be watching Wednesday as franchisor Re/Max Holdings Inc. goes public, an event that expected to shed light on investor sentiment about the housing recovery.  “We know that the real estate market has cooled off since the spike in rates, and while Lennar just told us that the home building business is doing much better than we thought, this may not be the ideal moment for a real estate brokerage play like RE/MAX to be coming public,” Mad Money host Jim Cramer said today.  “I do think Re/Max is worth watching, if only to see which way the market jumps — it could be an important tell for everything associated with residential real estate.”

According to Nasdaq.com, shares in Re/Max will begin trading on Wednesday, Oct. 2, sharing the limelight with Burlington Coat Factory.  Re/Max has said it expects to net at least $177 million from the initial public offering.

The franchise network serves more than 90,000 agents in 6,300 offices and 90 countries. The IPO of 10 million shares is expected to be priced at between $19 and $21 per share.  Re/Max will also grant underwriters of the IPO a 30-day option to buy up to 1.5 million additional shares.  If underwriters fully exercise their option to purchase additional shares, the net proceeds will total $205.2 million, the company said in an amendment to its S-1 registration statement with the Securities and Exchange Commission.

-         Inman News, September 26,2013

What's Trending in Real Estate

What's Trending in Real Estate

These six hot topics are gaining traction.

SEPTEMBER 2013 | BY GRAHAM WOOD

Be sure to stay ahead of the curve.

1. Generation X jumps to the top. Generation X—those ages 33 to 47—made up the largest chunk of home buyers, at 31 percent, between July 2011 and June 2012, according to the National Association of REALTORS®’ “Home Buyer and Seller Generational Trends” report. Generation Y—those 32 and younger—made up the second-largest group, at 28 percent, followed by younger baby boomers (18 percent) and older baby boomers (14 percent).
2. Mobile real estate search. Consumers are taking to their mobile devices in droves for real estate searches. According to online marketing firm The Search Agency, real estate ad clicks on smartphones grew 10.7 percent between the fourth quarter of 2012 and the first quarter of 2013. Tablet ad clicks shot up even higher, increasing 20.2 percent quarter over quarter—and 87 percent year over year. It all goes to show that consumers are becoming far more comfortable searching for real estate on mobile devices.
3. Paperless business. Want to spend more time helping clients and less time dealing with all that paperwork? There’s a plethora of online tools that allow you to file and manage documents electronically, One option is RES.NET. In addition to keeping all his paperwork stored securely online, San Diego sales associate Jesse Zagorsky of SDREOSold likes that it lets him link his profile to all of his transactions. It also allows him to communicate with everyone involved in each transaction. “The system [frees] up my time to spend helping customers,” he says. And don’t forget DocuSign, a program for creating and transmitting documents electronically from any device. (Discounts are available to NAR members through the REALTOR Benefits® Program.)
4. Reversal of fortune in inventory? The complaint is widespread: Housing inventory has been stubbornly low in the past year. Well, perhaps that’s starting to change. The number of listings nationwide ticked up by 4.3 percent to 1.9 million homes on the market in June, according to realtor.com®. That’s the highest monthly jump in a year, and rising home prices could persuade more sellers to throw their homes on the market in the coming months.
5. Drone photography. The use of miniature remote--controlled -helicopters for taking aerial photos and -video of properties is piquing interest among real estate agents. But it’s important to note that this marketing practice currently violates Federal Aviation Authority rules pertaining to the use of drones for commercial purposes. The agency is expected to release proposed rules for such use later this year. Congress has given the FAA until September 2015 to finalize a plan. Six states have put laws on the books restricting the public and private use of drones. NAR recommends that REALTORS® avoid using drones until the FAA has released clearer rules.
6. Micro apartments. In some major metropolitan areas, people are living large in smaller spaces. So-called micro apartments—which are often less than 200 square feet—are becoming popular in San Francisco, New York, Seattle, Boston, Providence, R.I., and Portland, Ore., reports CNN Money. But it’s not only those just-out-of-college grads flocking to these tiny units. In some “micro buildings,” the average tenant is 33 years old and makes less than $35,000 a year, according to Reuters.

Dallas Home Prices Now 4% Over the 2006 Boom

Just the Facts

Top Schools Equal Higher Home Prices

An analysis by Redfin illustrates the steep price premiums that homeowners are willing to pay for homes served by top-ranked schools, offering the latest concrete evidence that buyers place remarkable importance on the quality of schools.  Redfin’s study found that buyers pay an average of $50 more per square foot for homes served by top-ranked schools than for those served by average-ranked schools. It also found that, even within the same neighborhoods, buyers will pay substantially more for homes served by top-ranked schools than they do for comparable homes served by average-ranked schools.  The online survey, conducted this summer, found that of those who said school attendance boundaries were important:

* 23.6 percent would pay 1 to 5 percent above budget.

* 20.7 percent would pay 6 to 10 percent above budget.

* 9 percent would pay 11 to 20 percent above budget.

* 40.3 percent would not go above budget.

        -      Inman News, September 25, 2013

Dallas Home Prices Now 4% Over the 2006 Boom

Dallas and Denver are now the two American cities where home prices has reached and surpassed the levels in the 2006-2007 boom.   And price increases are expected to continue into 2014.  Most Americans (55%) think home prices will go up over the next 12 months, according to a new Bankrate.com report.  "It seems like Americans' love affair with real estate has returned," said Greg McBride, CFA, Bankrate.com's senior financial analyst.   There is concern on the part of some prospective home buyers that prices may be running away from them, said McBride.   "The housing market is aiding the economic recovery," he said.   

-          Dallas Morning News, September 25, 2013 (excerpts)

All Top 100 Markets Gained in July

The July report for Homes.com showed gains for single-family properties in all 100 markets, up from 87 in the previous reporting period.  The Homes.com Local Market Index has been expanded to include midsized markets ranked from 101-300. It provides a closer look at smaller markets nationwide, showing increases in 293 of the top 300 markets, up from 250 the previous month. Year-over-year, all midsized markets increased.  Rebound data for July 2013 in the top 100 markets revealed that 22 markets across the U.S. are fully recovered – up from the previous month’s 19 markets. Additionally, 44 U.S. markets now show a rebound of 50 percent or more, up from 41 in last month’s report.

-          RISMedia September 25, 2013

Dallas Cowboys to Bring $23.4 Billion to Frisco, Texas

Dallas Cowboys to Bring $23.4 Billion to Frisco

Elizabeth Morris, CEO for Insight Research, recently presented to the Frisco City Council how the Dallas Cowboys mixed use development would impact the region.

Here are the details of the 91 acre project:

• This section alone will add around 400,000 square feet of new commercial space and 50,000 square feet of new restaurant space

• 2 Hotels plan to be developed

• An addition of 4,500 jobs by full development in 12 years which is the year 2026

“The Economic Impact she projected was 23.4 Billion in 30 years!”

She also mentioned that the tax revenue alone will bring the city of Frisco 1.2 Billion in the next 30 years!