Monthly Archives: November 2016

Pending Home Sales Crawl Forward in October

“Fast Fact: Forty percent of sales in October sold at or above list price, an increase from 33 percent last October.

Pending home sales were mostly unchanged in October, but did squeak out a meager gain for the second consecutive month.

Lawrence Yun, NAR chief economist, says October’s minuscule uptick in contract activity nudged pending sales up to their highest level since July.

“Most of the country last month saw at least a small increase in contract signings and more notably, activity in all four major regions is up from a year ago,” added Yun. “Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.”

On the topic of housing supply — which has been grossly inadequate all year — Yun explains that the unwelcoming but expected seasonal retreat in new listings is now arriving at a time when price growth remains around triple the pace of wages and properties continue to sell at a much faster pace than a year ago. Furthermore, highlighting the heightened imbalance of supply in relation to demand, 40 percent of sales in October sold at or above list price, an increase from 33 percent last October.

“Low supply has kept prices elevated all year and has put pressure on the budgets of buyers,” Yun said. “With mortgage rates expected to rise into next year and put added strain on affordability, sales expansion will be contingent on more inventory coming onto the market and continued job gains.”

Tips to Help You Find a Home in a Low-Inventory Market

Follow these tips to help find a home sooner rather than later.

Follow the inventory: Inventory varies by location, property type and price range. You will have more to choose from, and probably get more bang for your buck if you search for a house in an area with more availability.

Look for homes investors avoid: Investors tend to steer clear of homes that cannot be flipped or rented, such as those in gated communities. Some of these communities let investors get away with flipping and renting when the market was hurting, but with the housing market recovery, homeowner associations are cracking down on investor activity.

Don’t forget “expired” and “canceled” listings: Many people try to sell their house by listing it on an MLS—but fail to complete a sale. Those listings become “expired” or “canceled.” Have a REALTOR® assist you in finding a home that is not currently on the market.

Seasonal patterns can favor buyers: Remember there are clear seasonal patterns for housing inventory. Identifying these patterns with a REALTOR® in your area can open up more opportunity for a great home purchase.

Time to talk about the hidden property tax in Texas

“The tax rate is going down.”

How many times have you heard this wonderful news — only to get your bill and find that your taxes have actually skyrocketed?

A perfect example is a recent headline in the Fort Worth Star-Telegram that read, “Fort Worth council considering lowering property tax rate by two cents.” But even with that two-cent reduction, the city still anticipates generating an additional $24 million, primarily because of increased appraisal values. The headline should have been, “Fort Worth council to increase property taxes $24 million.”

It’s a kick in the teeth to taxpayers, and at the Texas Association of REALTORS®, we call it the hidden property tax.

Texans enjoy a robust economy, and the values of our homes and businesses have increased dramatically. Those are good things. But property owners also pay some of the highest property taxes in the country — and many Texans are being taxed out of their homes.

Property taxes in Texas are calculated by multiplying your appraised value (minus any exemptions such as the homestead exemption) by your total property tax rate. This means that as appraised values go up across the state, your property tax bill can also go up, even if your tax rate goes down or stays the same. Any tax rate adopted by a taxing entity above the effective tax rate — that is, the rate that will ensure the entity brings in the same amount of money as it did last year — will add to your bill.

An increase in property value should not be an automatic increase in property tax revenue. A more honest and transparent conversation needs to occur so taxpayers completely understand why more tax revenue is needed. But the current system is confusing, and it ends up with more Texans seeing a hidden property tax increase.

The process is starting right now: Every year in August, cities, counties, school districts and other taxing entities determine their budgets for the following year. One step in this process is to set the tax rate, and once the tax rate is adopted, there’s no going back.

So what can you do? You’re paying more in property taxes, and local officials should be accountable. That’s where the Texas Legislature, the media and you should step in.

State lawmakers should rein in local taxing entities that hide behind annual appraisal increases to raise more tax revenue. The media should become more informed about property taxes rather than writing misleading headlines about lower tax rates.

And—most importantly—you, the taxpayer, should get involved. Educate yourself. Go to the budget hearings where tax rates are set. Voice your concern. Demand your local elected officials adopt the effective tax rate. Exercise your right to vote in local elections.

Join our effort to ensure we have a more honest and transparent property tax system in Texas. Help us change state law to empower you, the property taxpayer, so you aren’t taxed out of your home. Visit HiddenPropertyTax.com for more information, and sign up to be kept up-to-date on our efforts to change the local property tax system.

This op-ed originally appeared on TribTalk.org.

Existing-Home Sales Jump Again in October

Existing-home sales ascended in October for the second straight month and eclipsed June’s cyclical sales peak to become the highest annualized pace in nearly a decade. All major regions saw monthly and annual sales increases in October.

Existing Home Sales October 2016

Lawrence Yun, NAR chief economist, says the wave of sales activity the last two months represents a convincing autumn revival for the housing market.

“October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” he said. “Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes.”

“The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall,” said Yun.

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Numbers above are in millions.

The median existing-home price for all housing types in October was $232,200, up 6.0 percent from October 2015 ($219,100). October’s price increase marks the 56th consecutive month of year-over-year gains.

A New Land Use Initiative To Improve The Housing Market

Pearl City
Photo: Aerial view of Pearl City on the Island of Oʻahu. The median price for a family home on on O’ahu is $700,000.

Ensuring that the Hawaiian islands remain beautiful by regulating land use is the environmentally responsible thing to do, but does create a challenge for islanders who are left with a limited amount of habitable space. This lack of habitable land hinders the construction of affordable housing – making Hawaii one of the most expensive places to live in the United States and contributing to the island’s critical homelessness situation.

The economic and social challenges that limited living space brings is one that the Hawaii Association of REALTORS® wants to address with a new Land Use Initiative. HAR believes that the initiative will help to revise outdated land use regulations and improve the island’s housing situation. Some of these regulations have been in place since the 1960’s and add unnecessary costs as well as creating obstacles for the construction of affordable housing.

Because the association’s goal is to foster progress without hurting the island’s environment they moved forward with caution. Myoung Oh, the Government Affairs Director states, “HAR acknowledges our collective responsibility to protect Hawaii’s exceptional natural resources.”

HAR sought the advice of the National Association of REALTORS® who delivered insight with a land use initiative report by Robinson & Cole LLC. The report provided a thorough analysis of Hawaii’s housing situation, helping HAR to lay a well thought out and environmentally responsible plan to move forward with the proposed Land Initiative.

The report advised HAR to wait until all of Hawaii’s counties had completed the process of designating their protecting lands before introducing changes to the land use regulations. HAR agreed, and is using this time to gather more data about how to effectively reform Hawaii’s Land Use System.

The association will also be working with candidates for state office, as well as incumbents, about land use issues. “We’ll share ideas, and talk about where our efforts have fallen short, and where we can play a role moving forward. These conversations help our elected officials see us as a partner in solving land use challenges, rather than an opponent,” says Oh.

HAR is currently in the process of conducting a major consumer survey to gauge sentiment on everything from construction and traffic, to affordable housing, to the perception of REALTORS®. “It should be very revealing,” says Oh. “We’ll share the data with our legislators, again, as partners. And we’ll also use it to inform future consumer awareness efforts, to educate the public about the value of REALTOR® advocates.”

First-time Buyers, Single Women Gain Traction

First-Time Homebuyers
After slipping for three straight years, the share of sales to first-time home buyers has increased to 35 percent.
View the Infographic: First-time Buyers, Single Women Gain Traction Go

The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.

NAR’s annual Profile of Home Buyers and Sellers shows that the share of sales to first-time home buyers in the 2016 survey ticked up to 35 percent after slipping for the previous three consecutive years. In the 35-year history of NAR’s survey, the long-term average of first-time buyer transactions is 40 percent.

Lawrence Yun, NAR chief economist, says more new homeowners were able to break through what continues to be a laborious market for many trying to enter. “Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession,” he said. “Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise.”

Although the increase in new homeowners is encouraging, their overall share of the market is still subpar, according to Yun. The lack of affordable new and existing inventory, home prices in many markets rising far above wages and difficulty saving for a down payment because of rising rents and student debt is why the homeownership rate for 18- to 35-year-olds is currently hovering near its historical low .

“First-timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,” added Yun.

Single female buyers increase

As in year’s past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200). However, the survey revealed that single women made up more of the buyer pie than in recent. After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases.

“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” said Yun. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”

View the Infographic: First-time Buyers, Single Women Gain Traction Go