Housing Crunch to Hold in Most Price Ranges

DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 17, 2017

eugenehoffman.com

Home buyers at many income levels likely will see an inadequate amount of homes for sale in their price range in the coming months, according to a new housing affordability model created by the National Association of REALTORS® and realtor.com®.

The new Affordability Distribution Curve—which culls data from mortgages, state-level income, and listings on realtor.com®—examines how many listings are affordable to those in a particular income percentile. In January, it was below the equality line, and the gap was generally wider at lower incomes, which indicates tight supply conditions. For example, a household in the 35th percentile could afford 28 percent of all listings, while a household in the 50th percentile could afford 46 percent. A household in the 75th percentile could afford 74 percent of active listings.

"Consistently strong job gains and a growing share of millennials entering their prime buying years is laying the foundation for robust buyer demand in 2017," says Jonathan Smoke, chief economist at realtor.com®. "However, buyers with a lower maximum affordable price are seeing heavy competition for the fewer listings they can afford. At a time of higher borrowing costs, this situation could affect affordability even more as buyers battle for a smaller pool of homes and bid prices upward."

NAR and realtor.com®'s Affordability Score also accentuates the disjointed rate of accessible supply on the market across the country. Increasing price growth and higher mortgage rates caused January's Affordability Score to shrink from a year ago, nationally as well as in many states.

"Home prices have ascended far past wage growth in much of the country in recent years because not enough homeowners are selling, and home builders have not boosted production enough to meet rising demand,” says NAR chief economist Lawrence Yun. "NAR and realtor.com®'s new affordability measure confirms that buyers aren't exaggerating about the imbalance. Amidst higher home prices and now mortgage rates, households with lower incomes have been able to afford less of all homes on the market last year and so far in 2017."

The following states last month had the highest Affordability Scores (a metric which ranges from zero to 2): Indiana (1.23), Ohio (1.22), Iowa (1.18), Kansas (1.17), and Michigan and Missouri (both at 1.14). The states with the lowest Affordability Score were Hawaii (0.52), California (0.60), District of Columbia (0.65), and Montana and Oregon (both at 0.67).

"This shortfall of inventory at a time of healthy job gains in most states is one of the biggest reasons for the depressed share of first-time buyers and the inability for the homeownership rate to rise above its near-record low," says Yun. "The only prescription to reversing this adverse situation is to build more entry-level and mid-market housing that aligns with current household incomes."

Should You List With an Agent, Sell FSBO, or Sell to an Investor?

investorsgoldmine.com

February 15, 2017

By Eugene

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Should you sell to an agent? Sell on your own? Sell to an investor? These are the three big questions that every seller asks themselves first. In this blog post, we’ll share our thoughts on the question, Should you list with an agent, sell FSBO, or sell to an investor?

Thinking about selling your house? You might be exploring your options, Should you list with an agent, sell FSBO, or sell to an investor? The good news is, you can get the answers right here and be on the path to selling your house very quickly.

Should You List With An Agent?

Selling to an agent gives you a few advantages:

First, it’s very hands-off so you can go about your regular life and just sign papers or talk to your agent while they do all the legwork.

Second, you can money and time versus selling FSBO (see the next point) because you won’t have to market your property or pay for marketing materials.

Third, an agent often has a list of potential buyers (or access to a list) so they can quickly find people to buy for you quickly.

Fourth, agents have many tricks up their sleeve to help you sell – from special signs to open houses, etc.

Fifth, you don’t have to negotiate with any potential buyers, since many people do not like the negotiation process.

Sixth, you don’t have to be an expert at the contracts and agreements involved in the house-selling process. Your real estate agent is the expert and they’ll walk you through what you need to know but you don’t have to be the expert.

Seventh, you don’t have to be an expert in the laws of selling a house, financing, etc., which can be quite complicated. The agent will either take care of that for you or guide you appropriately.

Eighth, you don’t have to worry about knowing the right steps to take or when to take them. The agent already knows what you need to do and they’ll just tell you when you need to do it!

Or, Sell FSBO?

FSBO means “For Sale By Owner” and it means that you sell on the market (the same place an agent would sell) but you don’t use an agent; you represent yourself.

The biggest advantages to selling this way is that you can name your own price, decide who to sell to, negotiate on your own behalf (if you like to do that), and not have to pay the real estate agent’s commission at the end.

Don’t Forget – You Can Sell To An Investor

For those who want to sell fast and not pay any fees, or who may have a house in “as-is” condition that they don’t want to pay to fix and clean first, you might want to sell to an investor or professional house buyer (which is what we do here at Eugene Hoffman.)

Summary

Thinking about selling your house? It’s smart to be exploring your options and wondering, Should you list with an agent, sell FSBO, or sell to an investor? The good news is, you can get a great answer right here and be on the path to selling your house very quickly.

Need Down Payment Money To Purchase Investment Property In Orlando? Here's What You Can Do

wecanbuycash.com

February 11, 2017

By Eugene

Buying an investment property requires capital – not just for the purchase itself but also for the down -payment. If you need down payment money to buy an investment property in Orlando, here’s what you can do to get it.

If you’re planning on buying an investment property you need the money. If you’re getting a loan or seller financing to acquire the property then the lender is lending you some of the money for it but chances are, you’ll need to provide a down payment  first.

Here’s What You Can Do If You Need Down Payment Money To Purchase Investment Property

Unfortunately, a down payment can be a lot of money – even 5%, 10%, 20% or 25% of the purchase price of the property (depending on the situation).

Fortunately, it’s not impossible. If you need down payment money to purchase investment property in Orlando, here’s what you can do in 4 simple tips…

1. Save The Money

This might seem obvious but many overlook it, yet it’s what our parents and grandparents probably did! Just find out how much you need and work hard to save up that money first.

2. Borrow The Money

You may be able to borrow the money from a friend, family member, or from another source of capital like a home equity line of credit on your house. This is a useful strategy but just make sure that the payment terms aren’t going to be out of reach.

3. Partner With Another Investor

One of the easiest strategies to get a down payment is to partner with another investor who is willing to put up the down payment money in exchange for something – perhaps an ongoing piece of the cash flow, a piece of the appreciation, or even just to loan the money for repayment plus interest.

4. Invest With Your IRA

Did you know that you can buy with your IRA? It’s true – and a lot simpler than people realize. If you have money in your IRA, and you’d like to acquire properties, then you may be able to buy properties inside your IRA with the cash you have there already. You may even find that you can buy the properties outright (without a down payment and a mortgage) with the money you have saved, but there are other ways you can structure this. Ask us about how you can do this and we can walk you through the simple process of making sure you can buy properties inside your IRA.

5 Rental Market Predictions: By Amie Fisher

eugenehoffman.com

The rental market has been growing at an accelerated pace for several years — with rental appreciation outpacing home value appreciation in many regions — but as the rate of growth has started to slow, what can we expect in 2017?

Zillow’s senior economist, Dr. Skylar Olsen, predicts that rent growth, which peaked in July 2015 and has since slowed in some areas, will continue at a steady but more moderate pace across the U.S., with notable exceptions in hot markets.

Here are five top predictions for the rental market this year.

1. Rental affordability will improve as incomes rise and rent growth slows

Skylar expects that rising rents will stabilize throughout 2017, with overall U.S. rental appreciation remaining flat, around 1.5 percent. Booming markets — notably West Coast metros like Seattle, Portland, the Bay Area and San Diego, as well as Denver — will continue to see appreciation above 5 percent (and much higher in some neighborhoods), so it could take several more years before those regions cool down.

Why has appreciation slowed? The deceleration is largely a result of more rental inventory. Additional housing units are being added, with construction of multifamily buildings (those with five or more units) nearing pre-recession levels. Construction of single-family homes is still low, with approximately 740,000 building permits issued in 2016 compared to pre-recession averages of 1 million or more (soaring close to 2 million during the building frenzy of the housing bubble).

2. The homeownership rate will go up as millennials age

Homeownership is still at near-historic lows, falling annually since 2006. Most new household formation in recent years has been in the form of rental households. This trend may soon change, however, as millennials age and approach major life events, such as getting married or having children. While they’re not buying in large numbers just yet, they plan to: A Zillow survey found that millennials, more than any other demographic, consider homeownership integral to the American Dream and see it as a path toward greater personal freedom.

Does that mean you’ll soon be struggling to fill vacant units? Not likely. There are still plenty of young people left in the rental pool, and there are barriers to homeownership. Even if all the millennials in the 33-year-old range — the median age for first-time buyers — decided they wanted to buy, there’s not enough inventory to accommodate them. In addition, according to the Zillow Group Consumer Housing Trends Report, almost 70 percent of millennials who’ve been renting for more than a year make less than $50,000 annually, putting a home purchase out of reach for many. Thus, the shift toward homeownership will be a gradual one.

3. New development will prioritize smaller homes close to public transit, but many renters will still be pushed to the suburbs

As baby boomers downsize and seek out smaller homes in walkable neighborhoods, competition for housing in urban areas will increase. In many areas, rents have risen fastest near the downtown core; this combination of low inventory and high rents means more people, especially those with low incomes, need to move farther away from the city to find affordable rentals. As a result, more people will be driving to work — a reversal of a decade-long trend — as they move outside areas served by public transit. Denser development of smaller homes near public transit and urban centers is a likely solution to this problem and is expected to increase in 2017.

As an interesting twist on transit, what about self-driving cars? Skylar noted that autonomous vehicles have the potential to impact housing in a positive way: Used efficiently, they could ease congestion in cities and reduce the need for parking lots, which in turn would free up space downtown for housing. Of course, improvements in technology and new infrastructure will have to come first, so expect a long wait.

The suburban migration is not just a reaction to affordability, however. More millennials will choose to move to the suburbs as they age and start families in pursuit of good schools and security. The Zillow Group Report found that after affordability, renters’ top priority when seeking a home is neighborhood safety (a concern of 90 percent of respondents).

4. New homes will cost more as construction becomes more expensive

Construction of single-family homes is not keeping up with demand. This is due, at least in part, to labor shortages and rising construction wages. Labor may become even scarcer as immigration policies tighten: It is estimated that 10-20 percent of the single-family construction labor force consists of undocumented workers, and the potential loss of this workforce would drive up wages even further.

With the cost of construction and the price of land on the rise, more builders are looking to increase profits by focusing on high-end homes — which are not affordable for many first-time buyers. Renters, like buyers, list single-family homes as their first choice in housing (vs. multifamily units or condos), according to the Zillow Group Report. If there aren’t enough entry-level single-family homes to purchase, they will continue to rent.

5. Interest rates will increase (no, really!)

Economists have been expecting interest rates to go up for some time now, but their predictions have been foiled by stagnant wages (until recently) and volatility in foreign assets markets over 2016. Given falling unemployment rates and recent wage growth, Skylar believes the time is right for the Fed to act. With a new administration in the White House supporting low interest rates, however, the Fed may encounter renewed pressure to keep rates down.

This Law Has Landlords Everywhere Worried DAILY REAL ESTATE NEWS | THURSDAY, FEBRUARY 09, 2017

Three laws to worry about.
1. Mandatory inspections by government.
2.  Government placing a Vacant Home Tax.
3. Government forcing landlords to pay tenant a fee when they cannot afford to pay rent.

Portland, Ore., city council members want to put a stop to landlords sticking renters with higher rents.

Last week, City Council members approved a “relocation assistance” bill that is raising eyebrows of landlords across the country. Here’s what the new bill does: If a landlord raises the rent by more than 10 percent of a renter -- and doing so would force the renter to have to move -- the landlord will have to pay the tenant between $2,900 to $4,500 in moving fees. The amount they pay the renter is dependent on the size of the original lease. Council members say that amount would be sufficient then to not only cover average moving costs but also the first and last months’ rent and a security deposit.

Read more: Make a Perfect Match With Automated Renter Screening

City Council members say the new law is to help prevent renters getting stuck with higher rental costs that force them to move out. Council members say currently 1,800 Portland residents are homeless and unable to find affordable housing.

“This notion could spread, especially to more progressive cities,” says Michael Vraa, a tenant advocacy attorney at Home Line in Minneapolis. “The vast majority of cities and states do not have rent control, and there is no legal limit on how much landlords can raise rent. In other words, one year your rent could be $2,000 … the next, $3,000.”

Portland’s ordinance is temporary and will expire once city officials declare the city’s “housing emergency” over.

Meanwhile, Portland building owners are threatening to sue the city council. They say the law will bankrupt small landlords who are raising costs to maintain their properties.

“What if heating costs rise? What if the property needed a new roof? What if property insurance has risen? Does the landlord eat these costs or is it only fair that the cost is shared?” asks Denise Supplee, a real estate professional, investor, and co-founder of SparkRental. “It makes me mad that too often the landlord is vilified, when they are ordinary folks trying to make a living. I have seen my share of ridiculously tenant-friendly laws that can quickly put a landlord out of business, however this Portland one tops the list.”

Source: “New Law Keeps Landlords From Hiking the Rent, and You’ll Never Guess How,” 

44% of Markets Zoom to Record Price Highs DAILY REAL ESTATE NEWS | MONDAY, FEBRUARY 06, 2017

https://goo.gl/5hp3a6

Among 201 metro areas with populations of at least 200,000, 89 of those metros – or 44 percent – reached new all-time home price peaks in 2016, according to new data released by ATTOM Data Solutions.

Read more: Sellers See Biggest Profits Since 2007

Notably, markets reaching new price highs included:

• Dallas-Fort Worth, Texas: $230,571
• Houston, Texas: $214,795
• Atlanta, Ga.: $181,000
• Boston, Mass.: $390,000
• San Francisco: $720,000

Several Ohio markets – Dayton, Columbus, and Cincinnati – also saw new all-time home price peaks reached in 2016.

“Much of this is due to a growing economy and the shift from a manufacturing economy to a service-based economy,” notes Matthew Watercutter, a senior regional vice president and broker of record for HER REALTORS® in Ohio. “Median home prices in our markets reached its highest peaks in 2016, largely due to lack of inventory, and supply and demand. Buyers are moving and relocating, causing a great deal of competition for quality inventory, and causing homes to sell quickly, and at a higher price than in recent years. Because appraisers look to the past, and do not predict the future, there are still some appraisal issues where appraisals are not meeting sales price. This can only be rectified through strong sales, so this issue will likely resolve itself.”

ATTOM Data Solutions’ report also notes that 95 of the 201 metro areas analyzed still remain below their pre-recession (2009 or earlier) peaks in median home prices in 2016. For example, New York-Newark-New Jersey City remains 14.3 percent below its peak; Chicago is 12 percent below its peak; Washington, D.C., is 3.2 percent below; Philadelphia is 2.9 percent below; and Los Angeles is 1.8 percent below its peak.

Source: RealtyTrac

President Trump Seeks to Dismantle Dodd-Frank DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 03, 2017

https://goo.gl/ItRbpv

President Donald Trump reportedly will sign an executive action Friday to scale back the regulatory system that was put in place in 2010 in response to the financial crisis. The Trump administration has set out to remove what it views as regulatory burdens by overhauling mortgage financing giants Freddie Mac and Fannie Mae and easing lending regulations.

Read more: After Election, What Happens to Housing Issues?

"Americans are going to have better choices and Americans are going to have better products because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year," Gary Cohn, White House National Economic Council director, told The Wall Street Journal. "The banks are going to be able to price product more efficiently and more effectively to consumers."

President Trump is to order a sweeping review of the Dodd-Frank Act rules, which will include a close look at how the government supervises big financial firms that aren’t traditional banks, Cohn says. Cohn says that existing regulations under Dodd-Frank have made it too difficult for banks to lend and has limited consumers’ choices of financial products.

Cohn says the Trump administration also is planning to overhaul mortgage finance giants Fannie Mae and Freddie Mac, which have remained under the government conservatorship since the financial crisis.

"This is a table setter for a bunch of stuff that is coming," Cohn says.

The changes are expected to be met with some criticism, particularly among Democrats, who have argued in the past that the regulations protect the average borrowers as well as investors from abusive practices. They have pushed for tighter controls on banks and lenders in response to the subprime mortgage crisis.

"I'm not sitting here saying we want to go back to the good old days," Cohn told The Wall Street Journal. "We have the best, most highly capitalized banks in the world, and we should use that to our competitive advantage. But on the flip side, we also have the most highly regulated, overburdened banks in the world."

Source: “Trump Moves to Undo Dodd-Frank: White House Says Banks Burdened By Rules After Financial Crisis,” The Wall Street Journal (Feb. 3, 2017) [log-in required] and “Trump to Order Review of Dodd-Frank, Halt Obamas Fiduciary Rule,” Bloomberg (Feb. 3, 2017)

Saving for a Down Payment? This is How Long It Will Take. Written by Realtor Magazine

https://goo.gl/bhRVyz

Depending on where you live, saving for a down payment can take several years of financial planning. For example, in some markets, it may take the average person nearly a decade to save enough to buy a home. In California, that especially rings true.

Read more: Ease Your Buyers' Down Payment Woes

California is home to four of the five cities on a recent list by SmartAsset of the places where it takes the longest to save for a down payment: San Francisco, Los Angeles, San Jose, and San Diego.

SmartAsset scanned the data on median home prices and median household income in the 15 largest cities in the U.S. From there, researchers calculated how long it would take for a household to save enough for a 20 percent down payment if consumers saved 20 percent of their incomes. (Note: Buyers are not required to have 20 percent down for a mortgage. It’s often recommended, but buyers can take advantage of several other low-down payment loan offerings.)

Here’s how many years buyers can expect to wait to save enough to afford a 20 percent down payment in these cities:

1. San Francisco, Calif.: 9.84 years
2. Los Angeles, Calif.: 9.38
3. New York, N.Y.: 9.27
4. San Jose, Calif.: 7.20
5. San Diego, Calif.: 7.01
6. Chicago, Ill.: 4.59
7. Austin, Texas: 4.17
8. Philadelphia, Pa.: 3.80
9. Phoenix, Ariz.: 3.45
10. Dallas, Texas: 3.09
11. Jacksonville, Fla.: 2.92
12. Houston, Texas: 2.85
13. Columbus, Ohio: 2.83
14. Indianapolis, Ind.: 2.82
15. San Antonio, Texas: 2.50