Home sellers are making huge profits. So why aren’t more people selling?

Sellers profited about $54,000 on average at the end of 2017, according to Attom Data Solutions. That’s a 10-year high and means sellers were bringing in an average return on investment of nearly 30%.

But selling a home in this market is the easy part. Finding a home to move into? Not so much.

A dismally low supply of homes on the market has made house hunting difficult in many cities. The lack of available homes has driven up prices, leading to bidding wars and homes selling for well above asking prices. While that’s good news for sellers, it’s bad news when they become buyers.

“It is fun and exciting to see a huge appreciation in your home,” said Allie Howard, a Redfin real estate agent in Seattle. “But what scares [sellers] is not wanting to be stuck in a rental scenario when homes continue to appreciate and they get concerned they will be priced out.”

West Coast home sellers have seen the largest gains, with those in San Jose, California, experiencing a 91% return on investment at the end of 2017. San Francisco home sellers saw a 73% return.

Seattle is also a booming market for real estate sales.

Nicole Rendahl recently sold her four-bedroom Seattle home for $400,000 more than she paid for it in 2008.

She purchased the home for $1,199,000 and just sold it for $1.6 million in November. The sale closed in seven weeks.

“It went through multiple price reductions before we purchased it,” she recalled. “We were fortunate of the price reduction, we couldn’t afford it when it was originally listed.”

She and her family are now looking to upgrade, but they haven’t been able to find the perfect house.

They recently lost a bidding war, but Rendahl is hopeful that more inventory will hit the market soon. Her goal is to find and move into a place by the end of the summer.

Owners are staying in their homes for a little more than eight years, on average. From 2000-2008, the average tenure was four years.

And new homes just aren’t being built fast enough to keep up with demand. Only around one million new homes are currently hitting the market — that’s well below the historic norm of 1.5 million.

Not having a home to move into means more people are staying put, and that has ripple effects throughout the housing market.

“The longer home ownership tenure is a central piece to why the housing market is behaving as it is where home prices are rising fast and there is an inventory logjam,” said Daren Blomquist, ‎senior vice president, communications at Attom.

Historically, buyers in starter homes tend to trade up after a few years to a bigger house — frequently after starting a family. But if they can’t find a home to move into, they will stay in the starter home longer. The lack of buyers trading up makes it particularly tough for first-time buyers to break into the market.

“It is a bit of a chicken and egg situation. If builders built more homes, homeowners might move up, but because homeowners aren’t moving up, the builders aren’t seeing as much demand for new homes,” said Blomquist.

Buyers may also be facing higher borrowing costs this year since interest rates are expected to rise.

The average rate on a 30-year fixed mortgage has been below 4.5% since January 2014. Higher mortgage rates could also keep homeowners in their homes longer if they purchased when rates were at historic lows.

“It impacts the affordability equation,” said Cheryl Young, senior economist at Trulia.

source: http://money.cnn.com/2018/02/08/real_estate/home-selling-profit/index.html?iid=Lead

 

Mortgage Rates Approach Four-Year High

Mortgage interest rates were are moving up, though not to the point where they are expected to dampen the demand for home ownership or curtail the strength of the U.S. housing market.

The rate on a 30-year fixed mortgage climbed to 4.5% at the end of January, close to a four-year high, according to Capital Economics.

Mortgage Rates Approach Four-Year High
ILLUSTRATION: GETTY IMAGES/ISTOCKPHOTO

This comes as the yield on the 10-year U.S. Treasury has risen as well. On Friday it was at 2.83%, up from 2.50% a month ago, as investors have begun to discount stronger growth and higher inflation.

Mortgage rates have climbed steadily as the economy has improved. The housing market remains strong, supported by tight inventory, good job growth and favorable credit conditions.

True, rates for 30-year fixed mortgages were below 4% in 2016.

But Susan Maklari, an analyst at Credit Suisse, points out that over the past 20 years, the average for a 30-year fixed mortgage is just under 6%.

Maklari doesn’t expect that the higher rates will impede the housing market.

Consider that the monthly payment for a $200,000 mortgage at 4.0% is $955. At 4.5%, it’s about $55 a month higher – probably not enough to break the bank.

Mortgage Rates Approach Four-Year High

November Home Prices Marching Higher: Case-Shiller

The S&P CoreLogic Case-Shiller national home price index for November rose to 6.2% year over year to a non-seasonally adjusted (NSA) index of 195.94. The month-over-month percentage increase was 0.2%.
In all 20 U.S. cities included in the 20-city home price index, November house prices increased year over year, and 13 of 20 also posted NSA month-over-month increases. Seattle (12.7%), Las Vegas (10.6%) and San Francisco (9.1%) posted the largest year-over-year gains. San Francisco (1.4%) and Tampa (1.0%) posted the largest month-over-month increases, while Chicago and Cleveland posted 0.4% month-over-month declines, and Charlotte, Detroit and San Diego posted drops of 0.3% compared to October.
The S&P CoreLogic Case-Shiller NSA home price indexes for November increased by 6.4% year over year for the 20-city composite index and by 6.1% for the 10-city composite index.
Economists had estimated an NSA year-over-year gain in the 20-city index of 6.4%. The NSA monthly gain of 0.2% came in at the consensus estimate.
The index tracks prices on a three-month rolling average. November represents the three-month average of September, October and November prices.
Average home prices for November remain comparable to their levels in the winter of 2007.
The chairman of the S&P index committee, David M. Blitzer, said:
Home prices continue to rise three times faster than the rate of inflation. The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.
Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.
Compared to their peak in the summer of 2006, home prices on the 10-city and 20-city indexes remain down about 3.6% and 1.1%, respectively. Since the low of March 2012, home prices are up 49% and 52.3% on the 10-city and 20-city indexes, respectively. On the national index, home prices are now 6.1% above the July 2006 peak and 46.2% higher than their low-point in February 2012.
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Rick Kurtz

November Home Prices Marching Higher: Case-Shiller

The S&P CoreLogic Case-Shiller national home price index for November rose to 6.2% year over year to a non-seasonally adjusted (NSA) index of 195.94. The month-over-month percentage increase was 0.2%.

In all 20 U.S. cities included in the 20-city home price index, November house prices increased year over year, and 13 of 20 also posted NSA month-over-month increases. Seattle (12.7%), Las Vegas (10.6%) and San Francisco (9.1%) posted the largest year-over-year gains. San Francisco (1.4%) and Tampa (1.0%) posted the largest month-over-month increases, while Chicago and Cleveland posted 0.4% month-over-month declines, and Charlotte, Detroit and San Diego posted drops of 0.3% compared to October.

The S&P CoreLogic Case-Shiller NSA home price indexes for November increased by 6.4% year over year for the 20-city composite index and by 6.1% for the 10-city composite index.

Economists had estimated an NSA year-over-year gain in the 20-city index of 6.4%. The NSA monthly gain of 0.2% came in at the consensus estimate.

The index tracks prices on a three-month rolling average. November represents the three-month average of September, October and November prices.

Average home prices for November remain comparable to their levels in the winter of 2007.

The chairman of the S&P index committee, David M. Blitzer, said:

Home prices continue to rise three times faster than the rate of inflation. The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.

Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.

Compared to their peak in the summer of 2006, home prices on the 10-city and 20-city indexes remain down about 3.6% and 1.1%, respectively. Since the low of March 2012, home prices are up 49% and 52.3% on the 10-city and 20-city indexes, respectively. On the national index, home prices are now 6.1% above the July 2006 peak and 46.2% higher than their low-point in February 2012.

 

source: http://247wallst.com/housing/2018/01/30/november-home-prices-marching-higher-case-shiller/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2FRyNm+%2824%2F7+Wall+St.%29