Housing Stirs Economy in 2013

Just the Facts

Housing Boom Stirs Economy

Today, the federal government announced that the unemployment rate dropped in February to 7.7% from 7.9%, and 236,000 new jobs were created last month.  The big reason – the national housing boom.    There is an estimated one million new home starts in 2013, up from 600,000 in 2012.  With this boom comes new construction workers, cabinet makers, kitchen appliance makers, a furniture boom, etc.  One new home creates 36 jobs, and with one million new homes – the economy grows.

-          ABC Moneywatch, March 8, 2013

Immigrants Buoy the Housing Market

Immigrant homebuyers have bolstered the housing market across the country and will continue to fuel demand at least through 2020, according to a new study.   Foreign-born buyers are now accounting for the bulk of growth in homeownership in states with large immigrant populations, especially with the new housing boom this past year.  Immigrants who make up 13% of the U.S. population now account for 39% of net growth in homeowners.  Immigrants are more likely to buy a home after they become settled and economically stable in the U.S., typically after renting a few years.  Hispanics had a 15% homeownership rate in the 1980s.  Today, 53% of Hispanic families own their own home.  Foreign-born buyers represent 82% of the growth in home sales in California, 65% in New York and 42% in Texas.    Most foreign-born homebuyers in Texas are in Houston and Dallas.

-          Wall Street Journal. March 7, 2013

U.S Home Prices Rose 9.7% in January

Nationwide home prices shot up by almost 10 % in January.   And researchers at Core-Logic Inc. said Tuesday that indicators point to a similar home price gain in February.  It was the biggest such increase in seven years in the final days of the housing bubble.  Dallas-area home prices were up 8.1% in January, but some northern suburbs showed an increase of more than 15% from one year earlier.

-          Dallas Morning News, March 7, 2013

Homes selling for more than List

Just the Facts

New Housing Boom Mantra - Paying More Than List

It all seems long ago now – the casual home shopper, the drives to check out the neighborhood, the luxury of sleeping on the largest decision you’ll ever make.  Trying to buy a home now feels more like being thrust into the trading pit at the Chicago Mercantile Exchange – the frenzied bidding, the need for lightening fast decisions, the packs of serious shoppers at an open house.  In one fraught situation, a home near Union Station in Washington, D.C., drew 168 offers in December and sold for almost twice the asking price. In the tonier neighborhoods of Los Angeles, 20 bids per house is not uncommon, according to real estate agent David Kean. And the speed of deals can be intense. "In the middle of a snowstorm we have seen houses sell in one day," says Sam Schneiderman, owner/broker at the Greater Boston Home Team agency. "At open houses on million-dollar homes you are literally bumping into people, it's that crowded."

A dearth of homes for sale has run smack into a suddenly energized buying crowd egged on by rising values. The National Association of Realtors says the number of existing homes on the market in January -- 1.74 million -- was 25 percent lower than a year ago, and the lowest level since 1999.  Price is obviously the main lever in all deals. What’s particularly important now is to understand how the seller will handle bids. Some collect all bids and immediately choose a winner, typically the highest offer, which is often more than the asking price. Other sellers give the top three or five bidders the chance to make one counteroffer. In those instances, you want to get into the bake-off but leave yourself room to counter.

In today's tight market, some sellers are asking every bidder to counter. That's what happened to a client of Schneiderman's in the recent sale of a house in Newtown Center, Massachusetts, listed for $975,000. The seller got nine offers -- four to nine offers is the norm now, Schneiderman says -- and asked for counter bids on all nine. Schneiderman's client bid $1,016,000 and lost. The seller's agent said the winning bid was "significantly higher."

       -        Bloomberg News, March 1, 2013

RE/MAX DFW Associates Has High Customer Retention

Based on  postings of source of business, the agents at RE/MAX DFW Associates report 40 percent of all home sales are repeat business – clients whom the agents have worked with in the past.  Most importantly, over 80 percent of all RMDFW agents reported a repeat business sale or listing in 2012.  This is an extremely high rate in the industry.  RISMedia Magazine in their surveys report:

1)      Six percent of agents with 3 to 5 years of experience received repeat business last year.

2)      Agents with 6 to 15 years of experience, the number is only 17 percent for 2012.

3)      Only 38 percent of agents with over 16 years of experience received repeat business during the previous calendar year.

Most real estate agents do not make an effort to maintain a solid relationship after the closing.  Yet every closing is a huge opportunity for referrals and future repeat business.

-          RISMedia Magazine, February 28, 2013

Record National Home Sales in January

January posted a 4.5% increase in previously owned home sales in January, and new homes posted a 16% increase.  The only month better than January 2013 in the past six years was April 2010 – the last month of the federal tax credit.   The increase is the latest positive report for the housing market, which began recovering last year after a deep, six-year slump. Steady hiring and nearly record-low mortgage rates have encouraged more Americans to buy homes.  Home prices, meanwhile, rose by the most in more than six years in the 12 months ending in December.  Steady price increases are also contributing to the housing recovery. They encourage more people to buy before prices rise further. Higher prices also build homeowners' wealth, which can spur more spending and economic growth.

       -      Associated Press, February 27, 2013

Prices in DFW are pushing UP

Just the Facts

Why Home Sellers Are Seriously Scarce

The lack of home sellers as the spring selling season nears is of little surprise.  Nationwide, the supply of existing homes for sale has fallen for seven straight months.  Competing multiple offers abound with most of the country now a seller’s market, just one year into a housing recovery following the worst downturn since the Great Depression.   The shortage of sellers is expected to ease as home prices rise.  Many homeowners cannot afford to sell because they do not have enough equity to put into another home.  Some potential sellers are waiting for the prices to rise a bit more.   Many have learned to be content during these past few years of the national recession.  They have simply rearranged their priorities and decided their current home is fine.    Major companies have nixed potential employee relocations.  And some are simply concerned with our national politic malaise.   But with all of this – economists predict sellers will sell again, and soon!

-          USA Today, February 27, 2013 and Wall Street Journal, February 27, 2013

Builders Fuel Home Sale Rise

Sales of new homes are surging in the U.S., far outpacing sales of existing homes and creating an unusual disparity in the housing recovery.   The trend partly reflects the small inventory of previously owned homes, now at a 13 year low.  But the strong sales of new homes also show how the nation’s home builders have mastered the art of selling.  New home sales jumped 28.9% in January from a year earlier, as sales of previously owned homes rose 9.1%.  This desperate selling pace exists even though a typical new home costs 37% more than one already built, the widest gap since figures started being tracked in 1968, according to Barclay’s Capital.   In the past two years, more builders have offered to pay closing costs and arrange home loans through their in-house lender, and made heavy use of government backed loans with little or no down payment.   Over three times more new homes today are sold with an FHA mortgage than just two years ago.  The result – it is easier to buy a new home, although the better value may be an existing previously owned home.

-          Wall Street Journal, February 27, 2013

Investors Driving Up Home Prices

During the housing bubble, investors played a significant part in overheating home values.  And when all the air went out of the home market, the mortgage companies and ultimately the economy were left holding the bag when the investors bailed out.  Now that housing is picking up steam again, investors are back buying up thousands of homes in North Texas and across the country.  Indeed, a flood of dollars (by investors) is driving up home prices and dramatically reducing the number of homes for sale.  And while most of the purchases are for cash, what happens five years from now if many of these investors cash out of their deals?  The numbers are just huge.  In some markets, investors are 20% of home sales.  In other markets, it is much more.

-          Dallas Morning News, March 1, 2013

Dallas Projected 25%-30% Gains

Just the Facts

Dallas Projected to Have 25%-30% Home Price Gain

Over Next Three Years

Two recent respected studies, one from a federal agency and the other from one of the most respected world banks, show that home prices will increase in most, but not all U.S. cities over the next three years.  Both reports show that Dallas is poised to have the largest price gain over the next three years of any American city, due to its significant expected population growth.   Houston and Denver also rank high in expected price gain.   Some major U.S. cities are still expected to have declining home values.

71% Believe Their Home Value Will Go Up in 2013

What a change a few months make.  In December polling, some 71% of Americans believe the value of their home will increase in 2013.  That is up from only 37% that believed that just ten months ago.   With that optimism, Americans are beginning to “move-up” again – selling their existing home and buying a large home.   The percentage of first time home buyers is stable, but with the increase of move-up buyers, the real estate market is hot in almost every part of the United States.     Virtually every market saw a 5% to 25% increase in home sales in 2012, and that number will surely increase in 2013.

-          Real Trends Report, January 12, 2013

Home Affordability Record in 2012

The National Association of REALTORS announces that 2012 was a record year for housing affordability.  NAR’s national Housing Affordability index stood at 198.2 in November, based on the relationship between median home prices, median family income and average mortgage interest rate.   The higher the index, the greater the household purchasing power; record keeping began in 1970.  An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median priced single-family home.  Housing affordability was 184 in 2011, and is projected to drop to 160 in 2013, due to rising home prices and increased government regulations.

-          REALTOR Mag, January 2013

2013 Predictions

Just the Facts

Home Prices Could Jump 9.7% in 2013

J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base case estimate and up to 9.7% in its most bullish scenario of economic growth.  Standard & Poor’s has revised its estimate upward and now expects a 5% average rise in 2013.  The J.P. Morgan analysts boosted their base case estimate after a convincing rise in the “net demand” for housing in 2012 which surpassed two million homes.  Net demand is the pace of existing home sales minus the inventory of homes available for sale.   “Net demand has picked up a lot in 2012,” said John Sim, a strategist for J.P. Morgan.  “Once you get north of the 2 million territory, you are in positive growth.”  The bank expects net demand to rise to 2.7 million in 2013.

      -       Wall Street Journal, Dec 14, 2012

New Home Starts Surge with 50% Increase

The DFW area saw  new home construction increase by nearly 50% in the fourth quarter from one year ago.   Builders started 4,549 homes in the area – the largest fourth quarter start in five years.  Builders have had a hard time keeping up with the demand in 2012, and the strong surge is expected to accelerate in 2013.  The $200,000 to $500,000 price range is very strong, and more homes are badly needed in the market.   Less than 2,000 finished, vacant new homes were on the market at the close of 2012, the lowest inventory in 14 years.

-          Dallas Morning News, January 8, 2013

NTREIS HOME SALES AT 4 YEAR HIGH

North Texas pre-owned home market ended 2012 with the best sales total in four years.  The area saw a 16% gain in the number of single-family homes sold through the Realtors’ multiple listing service for North Texas.  And median home sale prices in 2012 rose 8% from the year before, according to numbers released Tuesday by the Real Estate Center at Texas A&M and NTREIS.

-          Dallas Morning News, December 9, 2013

Taylor Morrison Purchases Texas-Based Darling Homes

Taylor Morrison, a leading North American homebuilder, has purchased Texas homebuilder Darling Homes. The transaction closed on December 31.  Darling Homes, founded by brothers Bill, Steve and Bob Darling, has been building high quality family homes in the Dallas-Fort Worth Metroplex and Greater Houston Areas for more than 25 years. Darling Homes has received numerous industry awards.

“My brothers and I are delighted to be joining Taylor Morrison,” said Bill Darling. “Taylor Morrison has a customer-focused attitude and an internal culture that is a close fit with our own. It’s great to see that the Darling brand will continue in this way.”   Sheryl Palmer, CEO and President of Taylor Morrison said, “We have always been

impressed with the Darling brand and the team’s passion and commitment. It’s wonderful to think that we can now help to develop this complementary brand as part of Taylor Morrison.”

About Taylor Morrison

Headquartered in Scottsdale, Arizona, Taylor Morrison is a builder and developer of single-family detached and attached homes. Under the Taylor Morrison® brand, the Company operates in Arizona, California, Colorado, Florida and Texas. Under the Monarch brand, the Company operates in Ontario, Canada where the Company builds and develops single-family detached and attached homes in both Toronto and Ottawa.  Monarch also builds high-rise condominiums in Toronto. Taylor Morrison serves a wide array of homebuyers, including entry-level, move-up, luxury and active adult customers, through its innovative product mix. For more information, please visit www.taylormorrison.com.

-          Taylor Morrison & Darling Homes press release, January 2, 2013

Texas seeing steady price gaines

Just the Facts

Texas to Have 5% Home Price Gain in 2013

For the first time in seven years, all 50 states are expected to have price gains this year.  Some states, such as Texas, Florida, California and Arizona are expected to have the largest price gains, from 2.9% to 5.6% gain.  Texas is expected to see one of the healthiest price gains in the nation at or near 5%.

-          Scholastic Corporation, NAR, January 1, 2013

January DFW Foreclosures - Record Low

The DFW area has had a tapering drop off of foreclosures for two years, but nothing like the sharp decrease for January 2013.  Just under 2,400 area homes are threatened with forced sale by lenders on the second Tuesday next week.  That is a 42 percent decline from January 2012, according to data from Foreclosure Listing Service.  Monthly foreclosure filings have not been this low in North Texas since mid-2005, according to records.  The January number, which is a 70 percent decrease from two years ago, is actually the normal number of monthly foreclosure postings during the early 2000s before the recession.  Collin County had the largest decrease in foreclosure postings, down 44 percent from one year ago.

-          Dallas Morning News, December 31, 2012

Coppell & Grapevine – Only One Month Supply of Listings

The Dallas Morning News reports that Coppell and Grapevine have the lowest inventory of preowned homes for sale in North Texas, with only a one-month inventory and dropping.   Specialists explain that a six-month supply of inventory is a balanced market between buyers and sellers.  But a one-month inventory market puts the negotiating strength on the seller’s side with numerous homes selling for over list price.  It causes for a high frustration with buyers.   Coppell and Grapevine may see a healthy price increase in their market due to supply and demand.

-          Dallas Morning News, December 2012

We Continue to Soar