Economic Update

Boost from Buyers – Confidence in Housing Up

FannieMaeLogoConfidence in housing again met an all-time high in September according to Fannie Mae, propelled by optimism from buyers. Recently polled renters are also helping drive this trend, with the Home Purchase Sentiment Index® (HPSI) posting 88.3 in September, 0.3 percentage points higher than the month prior.

“The biggest driver for the increase in the HPSI is the rebound in the good time to buy sentiment, which outweighed the largest drag: a sizable reduction in the net share of consumers expecting home prices to rise over the next year,” says Doug Duncan, chief economist and senior vice president at Fannie Mae. “Details in the survey showed a meaningful pickup in the good time to buy component, especially from the renter respondents. Additionally, perceptions of easing inventory helped boost the net share saying that now is a good time to buy, which is consistent with less bullish home Realtor 01price appreciation sentiment during the month. Overall, we believe that the devastating impacts of the hurricanes will likely weigh on home sales in coming months, posing downside risks for our forecast, which already calls for only a modest gain in home sales this year.”

The share of home buyers surveyed for the Index who believe now is a good time to buy rose 10 percentage points to 28 percent, while the share of sellers who believe now is a good time to sell rose two percentage points to 38 percent. The share of those surveyed who believe home prices will go up fell eight percentage points to 40 percent.

Information provided by Keller Williams Dallas Metro North. Call us today – we have over 400 qualified realtors ready to assist you with your real estate needs!

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Here’s Why Home Building is Thriving in the Lone Star State

building - 6Home-building is floundering against soaring demand, with inventory now at its lowest in two decades. Are any markets keeping up?

New construction is taking off in at least three, where each are expected to gain 40,000 new homes this year, according to a recent study. Activity is exploding in Dallas and Houston, Texas, and New York, N.Y., the study found, with Dallas adding 48,772 homes to its stock, Houston growing by 47,946, and New York expanding by 40,006.

Researchers analyzed building permit data from the U.S. Census Bureau from 1980 to 2016, and the first half of 2017 – which offer a basis to estimate ground-breaking – to project how many new homes will be built across the largest 100 metropolitan areas this year, and which metro areas are constructing more than their historical average. The markets set to have the most permits after Dallas, Houston and New York? Austin, Texas (29,872) and Phoenix, Ariz. (29,280). Austin, markedly, is also outdoing its norm, with 107.7 percent more permits, followed by Charleston, S.C. (72.8 percent more) and Nashville, Tenn. (65.8 percent more).

business - growth 5How are Dallas, Houston and New York coming out ahead when the rest of the country is playing catch-up? Sheer size, for one, but also growth in employment, income and home prices, the study reveals. Home-building is connected to jobs for the simple fact that more jobs provide more residents income, which stokes demand for homes in the market. In fact, in the 100 metro areas assessed, every one percentage point climb in jobs (per data from 2010 to 2016) parallels an average 5 percent rise in permits.

The link between building and income is comparable: a one percentage point increase in the median household income (also using data from 2010 to 2016) leads to a 2.1 percent upswing in permits, on average, the study shows. More pay, the researchers say, ups the ability to purchase a costlier home – and new homes, without question, tend to be higher-priced.

The relationship between building and home prices is also a factor: a one percentage point step-up in home prices results in an average 1.2 percent tick up in permits – but with a significant distinction. Price growth upwards of 24 percent moves the needle in the opposite direction, possibly because at that point, builders begin shouldering higher land costs and incomes start to lag behind prices, researchers speculate.

Information provided by Keller Williams Dallas Metro North. Call us today – we have over 400 qualified realtors ready to assist you with your real estate needs!

What’s the Good News for October?

1-MercerCrossingMapMercer Crossing Development to open in Farmers Branch. A $1 billion mixed-use development in Farmers Branch is bringing hundreds of homes/apartments and is planned for more than 3,000 residents.  The 370-acre Mercer Crossing development is on the north side of LBJ Freeway near Luna Road.  Mercer Crossing will include 93 acres of urban commerce and 174 acres of residential single-family homes; built by six premier builders, M/I Homes, First Texas Homes, Beazer Homes, Megatel Homes, Oakdale Homes, and Siena Homes.   The first 30 homes should be starting in November 2017, and there are a total of 660 home lots, with larger home lots being around the lake.  Houses in the development will start at price of more than $300,000.  All of the lots have been sold to builders, and the builders have committed over $10 million in earnest money. Centurion American has also sold land to Coppell-based apartment developer Western Rim Properties for 1,250 apartments, of a total 2,500 apartments planned.

2-Amazon.com4North Texas communities partnering to entice Amazon.com to the Metroplex. The Dallas & Fort Worth Chambers are working together to bundle area pitches into a combined, regional pitch which must be turned into Amazon before the October 19th deadline.  The 2 chambers are coordinating the north Texas effort to entice Amazon’s 2nd headquarters location to the DFW area.   HQ2 is expected to create more than 50,000 jobs and represent a direct $5 billion dollar investment into the local economy.  More than 12 North Texas cities, with 30 – 50 specific site proposals, made the internal deadline to be included in the regional pitch.  Lewisville has 2 development sites being proposed:  Castle Hills on the eastern edge of Lewisville is one of the areas to make a pitch and the 2nd location proposed by Lewisville is undisclosed, but thought to be in the southwestern portion of the city (Vista Ridge Mall site which was recently sold at auction?) Allen proposed 2 sites, one being included in a project there called The Strand.  Frisco is submitting at least 6 site proposals along the Tollway.  Dallas is submitting 4 including one put forth by the Texas Bullet Train group which would have them locate in the Cedars area of Dallas and help to create a super economy between Dallas and Houston. Fort Worth suggests 8 sites including on the banks of the Trinity River in Ft Worth.  Plano is pitching 6 possible sites including their historic downtown.  McKinney has a proposal, Arlington and Irving met the deadline as well.  Carrollton sent in 2 sites and Grapevine sent in a site proposal including land owned by DFW Airport.  Denton submitted 3 site proposals – one north, one south and one in downtown Denton.

3-Retire4Texas ranks as one of 2018 Best Places to Retire; Dallas is 11th in Nation! In U.S. News & World Report’s 2018 Best Places to Retire in the United States, released on 10/02/17, the Lone Star state comes out smelling like a yellow rose. Six of the top 12 cities on the new top 100 list are in Texas, with Dallas coming in 11th in the nation.  The ranking measures included housing affordability, the job market, health care, retiree taxes and overall happiness.  Sarasota, FL showed up as the best place to retire in America and San Antonio came in at #1 in Texas, #3 in the nation.

4-Southwest1Southwest adds Boeing 737 to fleet, increasing area coverage and reducing emissions. On Oct. 1, 2017 , Southwest flew its inaugural flight on its new plane – the Boeing 737 Max.   Southwest is now one of the country’s largest domestic airlines, carrying more than 124 million paying passengers in 2016 and adding international flights to Mexico, Central America and the Caribbean.  Looking at Southwest’s new 737 Max, it can be hard to distinguish it from its predecessor, the 737-800.  The Max has updated winglets and larger engines, but its dimensions are nearly the same. Inside, the Max has the same blue-clad interior, approximately 30 additional seats and the galleys have been updated.  Southwest is expected to have 9 of the new aircraft in service by year end 2017 and 36 total by year end 2018. In 10 years, Southwest could have as many as 391 of the aircraft, a figure that represents more than half of the carrier’s current fleet size of about 700 aircraft.  The aircraft’s engines burn an estimated 14% less fuel than the previous generation of 737s, helping Southwest save on its second largest operating expense while cutting down emissions.  Perhaps most important is the 500 nautical miles of additional range Southwest says the jet will provide, which will increase the routes that are possible operationally and profitably.

North Texas Housing Market remains strong

Keller Williams Dallas Metro North presents the September 2017 Market Reports, Courtesy of Texas Association of Realtors® (TAR) and Greater Lewisville Area Realtors® (GLAR). How is your market doing?

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Information provided by Keller Williams Dallas Metro North. Call us today to see how YOUR market is doing! We have over 400 qualified realtors eager to assist you with your real estate needs. 

Inventory on Longest Downward Stretch in Two Decades

Arrow downHousing inventory is officially on its longest downward stretch in two decades, with 11 percent fewer homes on the market year-over-year in June, according to the latest data preview from realtor.com®. Prices in June were 9 percent higher than those one year ago, with the national median at $275,000 and the national median age of inventory at 60 days.

“We have now gone 24 months in a row seeing the number of homes drop on a year-over-year basis, the longest streak in more than two decades,” says Javier Vivas, manager of Economic Research at realtor.com. “More markets than ever are struggling with inventory problems; in 80 percent of markets, there are fewer homes for sale currently than this time last year.

shutterstock_232969765“It’s good to see that more homes are coming onto the market, but the bulk of those homes are too pricey for the largest, most desperate group of buyers. With no clear indication that newly-built homes will be able to provide short-term relief soon, there appears to be no end in sight for the inventory shortage. The market will likely remain very challenging for would-be buyers throughout the summer.”

The housing markets ranking in realtor.com’s Hotness Index for June:

1. Vallejo-Fairfield, Calif.
Median Age of Inventory: 31 days

2. San Francisco-Oakland-Hayward, Calif.
Median Age of Inventory: 29 days

3. Kennewick-Richland, Wash.
Median Age of Inventory: 34 days

4. Sacramento-Roseville-Arden-Arcade, Calif.
Median Age of Inventory: 34 days

5. Columbus, Ohio
Median Age of Inventory: 37 days

6. Detroit-Warren-Dearborn, Mich.
Median Age of Inventory: 37 days

7. Boston-Cambridge-Newton, Mass.-N.H.
Median Age of Inventory: 37 days

8. Colorado Springs, Colo.
Median Age of Inventory: 33 days

9. San Jose-Sunnyvale-Santa Clara, Calif.
Median Age of Inventory: 27 days

10. San Diego-Carlsbad, Calif.
Median Age of Inventory: 37 days

Information provided by Keller Williams Dallas Metro North. Call us today – we have over 400 qualified agents ready to assist you with your real estate needs!

Sellers saying “Now is a good time to sell!”

shutterstock_1638721Many homeowners have been reluctant to list their homes for sale – some by choice, some for fear of being unable to afford a new home, or of coming out in the red.

71% of survey respondents believe now is a good time to sell
Recently released findings from a survey by the National Association of REALTORS® (NAR) show more homeowners are ready to move on and unload… or, at least, say they are. Seventy-one percent of survey respondents for the quarterly Housing Opportunities and Market Experience (HOME) report believe now is a good time to sell, an increase from 69 percent the previous quarter and 61 percent one year ago.

“There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy,” says Lawrence Yun, chief economist at NAR. “As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth. Perhaps this notable uptick in seller confidence will translate to more added inventory later this year. Low housing turnover is one of the roots of the ongoing supply and affordability problems plaguing many markets.”

Renters less sure about their home-buying prospects
Renters, however, are less sure about their home-buying prospects. Fifty-two percent of renters surveyed believe now is a good time to buy a home, a decrease from 56 percent the previous quarter and 62 percent one year ago. Eighty percent of homeowners surveyed, to compare, believe now is a good time to buy. Forty-two percent of respondents believe homes are affordable, with respondents living in the Midwest most likely to believe homes are affordable and respondents living in the West least likely to believe homes are affordable.

Business 01Survey respondents are reining in their optimism in the economy, as well, according to the report. Fifty-four percent of those surveyed believe the economy is improving, which is in contrast to a record 62 percent the previous quarter. (Homeowners, notably, tend to be more optimistic about the economy.) The survey’s Personal Financial Outlook Index, which gauges respondents’ sentiment on their financial situation over the next six months, dropped to 57.2 in June.

“It should come as little surprise that the confidence reading among renters has fallen every month since January (64.8) and currently sits at its lowest level (53.8) since tracking began in March 2015 (65.7),” Yun says. “Paying more in rent each year and seeing home prices outpace their incomes is discouraging, and it’s unfortunately pushing homeownership further away – especially for those living in expensive metro areas on the East and West Coast.”

New Home - family - 01Twenty percent of respondents, especially those with annual incomes less than $50,000 and/or under age 34, would consider moving to a more affordable area.

“Areas with strong job markets but high home prices risk a migration of middle-class households to other parts of the country if rising housing costs in those areas are not contained through a significant ramp-up in new home construction,” Yun says.

Information provided by Keller Williams Dallas metro North. Call us today – we have over 400 qualified agents ready to assist you with your real estate needs.

Bounce Back in Pending Home Sales a Welcoming Sign

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After declining for three straight months, pending home sales reversed course in June as all major regions, except for the Midwest, saw an increase in contract activity, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index, a measure of housing contract activity, climbed 1.5 percent to 110.2 in June from an upwardly revised 108.6 in May. At 0.5 percent, the June index increased annually for the first time since March.

Lawrence Yun, NAR chief economist, says the bounce back in pending sales in most of the country in June is a welcoming sign. “The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” he said. “Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.” Added Yun, “Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago.”

Couple Cheering 02Yun noted that there could potentially be a sliver of increased hope in the months ahead for prospective first-time buyers, who continue to struggle reaching the market. Sales to investors last month were the lowest of the year (13 percent), which helped push all cash transactions to 18 percent – the smallest share since June 2009 (13 percent).

Source: National Association of Realtors

Information provided by Keller Williams Dallas Metro North. Call us today – we have over 400 qualified agents ready to assist you with your real estate needs!