Monthly Archives: September 2016

Pending Home Sales Retreat in August; What Home Buyers Need to Know

After bouncing back in July, pending home sales cooled in August for the third time in four months and to their lowest level since January.

The National Association of REALTORS Pending Home Sales Index declined 2.4 percent to 108.5 in August from a downwardly revised 111.2 in July.

The association’s chief economist, Lawrence Yun, says suffering supply levels have taken the wind out of the momentum the housing market experienced earlier this year.

According to Yun, evidence is piling up that without more new home construction the current housing recovery could stall.

Earlier this month, NAR released a new study that revealed single-family home construction is not keeping pace with job creation and is lacking overall in 80 percent of measured metro areas. When combined with the scant supply levels for existing homes, these tight inventory conditions continue to hamper affordability in many of the largest cities in the country – especially those in the West.

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.

Existing-Home Sales Soften Further in August

Fast Fact: Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.

Existing-home sales eased up in August for the second consecutive month despite mortgage rates near record lows as higher home prices and not enough inventory for sale kept some would-be buyers at bay. Only the Northeast region saw a monthly increase in closings in August, where inventory is currently more adequate.

Lawrence Yun, NAR chief economist, says recent job growth is not yielding higher home sales. “Healthy labor markets in most the country should be creating a sustained demand for home purchases,” he said. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”

Added Yun, “Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.”

“Given the inventory shortages in most markets, new listings at affordable prices are receiving multiple offers and going under contract almost immediately upon becoming available,” NAR President Tom Salomone said. “Home shoppers serious about buying need to be ready with a pre-approval. This allows a Realtor® to hone in only on homes within the buyer’s price range and ensures any offer presented to the seller is taken seriously.”

The median existing-home price for all housing types in August was $240,200, up 5.1 percent from August 2015 ($228,500). August’s price increase marks the 54th consecutive month of year-over-year gains.

Hawai’i Homeowners May Find Themselves Without National Flood Insurance

Lower Twin Falls
Photo: Severely swollen Lower Twin Falls after a tropical rainstorm. The flash flood blocks the path to the Upper Twin Falls.

For most Hawai’i homeowners the idea of living on the island without flood insurance is unthinkable. Being surrounded by water, and vulnerable to tropical storms, means that flood insurance is an important and necessary safety measure. In fact, approximately 109,5822 acres of island land are in a Special Flood Hazard Area (SFHA).

However, homeowners on the Islands who rely on the National Flood Insurance Program (NFIP) to protect their property from flood-related damage may soon find themselves without any protection if the state government doesn’t act soon.

The State of Hawai’i and its four major counties are considered “Participating Communities” in the NFIP. Participating communities are required to enter into an agreement with the Federal Emergency Management Agency (FEMA). This agreement requires that Hawai’i adopt and enforce floodplain management ordinances that meet or exceed the minimum regulations set by the federal government.

Though this agreement with FEMA sounds straightforward enough, the island is running into a problem. Construction requirements were recently revised in order to provide permit and building code requirement exemptions for certain types of agricultural buildings. This change means that Hawai’i is now in conflict with FEMA’s floodplain management regulations. As a result, the island now has until July 31, 2017 to resolve the issue or risk losing access to NFIP protection.

Should the state and FEMA fail to reach agreement, the impact would be significant. There are currently 60,199 NFIP-backed policies in the state, with insurance coverage exceeding $13 billion.

And the consequences for Hawai’i if they lose the NFIP extend far beyond just flood insurance. State and local participating communities are eligible for Federal Disaster Assistance in the event of a Presidential Disaster Declaration.

However, if the State of Hawai’i is no longer participating in the NFIP, certain forms of Federal Disaster Assistance may not be available to government, businesses, and individuals to aid in recovery. This would be a devastating loss of support since it estimated that Federal Disaster Assistance has been made available to the State of Hawai’i since 1980, and has totaled over $400 million dollars.

Hawai’i Association of REALTORS® (HAR) Government Affairs Director Myoung Oh spoke to the seriousness of this issue, “If Hawai’i no longer has the shoulder of the Federal government, it will be devastating for current and new homeowners as they will be without flood insurance. In cases where flood insurance is mandated by the mortgage, it may likely be a forced placed insurance or skyrocketed premiums through private insurers.”

The state’s Department of Land and Natural Resources will be proposing amendments to relevant statutes in order to ensure that federal flood insurance and federal disaster assistance will continue to be made available in the State of Hawaii.