June 23, 2021

Florida's May Housing Market Strong, Shows 2020 COVID-19 Impact

Florida Realtors’ data: May had more closed sales, more new listings and higher median prices (up 27.7% for single-family homes, 24.1% for condos) than a year ago. 

 

ORLANDO, Fla. – Florida’s housing market continued to report more closed sales, higher median prices, more new listings and increased pending inventory compared to a year ago, according to Florida Realtors® latest housing data. Note that this month’s May 2020 comparison data reflects the state lockdown and economic uncertainty that occurred last spring during the coronavirus pandemic

“In May, Florida’s housing market continued to show strong year-over-year gains,” says 2021 Florida Realtors President Cheryl Lambert, broker-owner with Only Way Realty Citrus in Inverness“Of course, in May 2020, Florida remained under lockdown and was feeling the effects of the pandemic. Median prices continue to rise: Part of the reason is that the state is experiencing a greater share of luxury sales in 2021 compared to a year ago, but overall home price appreciation is also a big factor pushing costs higher.”

Closed sales of single-family homes statewide in May totaled 30,985, up 57.9% year-over-year, while existing condo-townhouse sales totaled 15,491, up 155.2% over May 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

The statewide median sales price for single-family existing homes was $344,900, up 27.7% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $250,000, up 24.1% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

May’s housing data offered insight into market trends, according to Florida Realtors Chief Economist Dr. Brad O’Connor.

“Florida’s inventory of existing single-family homes listed for resale increased slightly over the course of the month, rising from 31,618 as of the end of April up to 32,021 by May 31,” he says. “While that’s only a little over a 1% increase, it’s significant because this is the first time Florida’s single-family inventory has increased during any month since March of 2020. It comes on the heels of only a very slight month-over-month statewide decline of just 40 single-family active listings (inventory) from March to April. So that’s two consecutive months where the state’s single-family inventory has been relatively stable.

“Of course, we are still down 58.2% compared to a year ago, so we are by no means out of the woods in terms of the housing shortage – but we can at least take this flattening inventory curve as a sign that we might finally be at the start of a long march back toward a balanced market.

O’Connor explains one reason the decline in single-family inventory appears to have stopped is that the number of existing homes being listed for sale each month generally continues to be in line with recent historical norms prior to the pandemic.

“During May, 34,298 single-family homes came onto the market, which is only 179 fewer new listings than in May of 2018, and just 212 more than May of 2019,” he says. “At the same time, the number of single-family homes going under contract each month, which has been well above historical pre-pandemic norms since June of last year, has been slowly but surely trending back toward those norms in each successive month of 2021.

“This reversion toward historical norms in the level of contract signings is a strong indicator that monthly counts of closed single-family home sales will also move back toward more normal levels, and this appears to have started in earnest in May.”

On the supply side of the market, inventory (active listings) remained tightly constrained in May. Single-family existing homes were at a very low 1.1-months’ supply while condo-townhouse inventory was at a 2.0-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 2.96% in May 2021, down from the 3.23% averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to the Florida Realtors’ Newsroom and look under Latest Releases or download the May 2021 data report PDFs under Market Data on the site.

© 2021 Florida Realtors®

June 22, 2021

FHA Makes It Easier for Student-Loan Buyers to Get a Mortgage

People with student-loan debt should find it easier to buy a home with an FHA loan. The agency updated its calculations to “remove barriers and provide more access.”

WASHINGTON – The Federal Housing Administration (FHA) announced updates to its student loan monthly payment calculations. The agency said it removed barriers and provided more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt. FHA says its student-loan lending rules has a disproportionate impact on people of color.

“As our country comes together to remember Juneteenth and acknowledge National Homeownership Month, we are reminded of a basic truth: that, too often in our history, the march toward freedom has been a long, halting and uneven journey,” says Housing and Urban Development (HUD) Secretary Marcia L. Fudge. “Homeownership is the cornerstone of the American Dream and the best way to build generational wealth. I am proud that FHA is taking action to make it easier for borrowers with student loan debt to qualify for a federally insured mortgage. This new policy will make a big difference for individuals throughout our nation and is another step in our mandate to promote equity and opportunity for homeownership.”

The policy updates FHA Single Family Title II mortgages. It removes the current requirement that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing or are not in repayment. The new policy bases the monthly payment on the actual student loan payment, which is often lower, and helps homebuyers who, with student debt, meet minimum eligibility requirements for an FHA-insured mortgage.

In announcing the change, FHA says it enhances FHA’s ability to serve one of its core demographics – first-time homebuyers. Over 80% of FHA-insured mortgages are for first-time homebuyers on average each year, and FHA estimates that more than 45% of these borrowers also have student loan debt, with much of this debt impacting people of color.

“These changes remove unnecessary constraints for otherwise creditworthy borrowers and reinforce FHA’s ability to serve those who need us most, including first-time homebuyers and underserved communities,” says Principal Deputy Assistant Secretary for the Federal Housing Administration Lopa Kolluri.

Lenders may implement the changes immediately but must implement the changes for FHA Case Numbers assigned on or after Aug. 16, 2021.

June 21, 2021

Flipping Rates Fall as Home Prices Rise

ATTOM: Only 2.7% of single-family homes and condos in 1Q were considered a house flip down from 4.8% during 4Q 2020 and from 7.5% year-to-year.

NEW YORK – Investors are growing concerned about the difficulties to make money in flipping homes after a frenzy of buying activity has sent home prices climbing.

Only 2.7% of all single-family homes and condos in the first quarter were considered a house flip – transactions that occurred within 12 months of one another. That’s down from 4.8% during the fourth quarter of 2020 and down 7.5% from one year earlier, according to a new report from ATTOM Data Solutions, a real estate research firm.

Gross profits are dropping, too. On the typical home flip – which reflects the difference between the median sales price and the median price paid by investors – gross profit declined nationwide in the first quarter to $63,500 – down from $71,000 in the fourth quarter of 2020. Profit margins for returns in the first quarter translated into a 37.8% return on investment compared to the original sales price.

Investors still chasing home flips appear to be speeding up transactions to capitalize on the current market. Flippers who sold homes in the first quarter took an average 159 days to complete their transactions, the lowest level since the third quarter of 2013.

“It’s too early to say for sure whether home flippers … have gone into an extended holding pattern,” says Todd Teta, chief product officer at ATTOM. “But the first quarter of 2021 certainly marked a notable downturn for the flipping industry, with the big drop in activity suggesting that investors may be worried that prices have simply gone up too high. After riding the housing boom along with others for years, they now might be having second thoughts. Whether this is the leading edge of a broader market downturn is little more than speculation.”

Additional highlights from ATTOM Data Solutions’ 1Q flipping report

  • Home flipping rates fell in 70% of 108 local markets tracked. The largest quarterly decreases – down by nearly 70% or more – in home flipping occurred in Memphis, Tenn.; Lakeland, Fla.; San Francisco; Columbia, S.C.; and Palm Bay, Fla.
  • The largest increases in quarterly home-flipping rates occurred in Springfield, Mass. (up 114%); Albuquerque, N.M. (up 103%); Springfield, Ill. (up 95%); South Bend, Ind. (up 86%); and Boston, Mass. (up 79%).
  • Homes flipped in the first quarter were sold for a median price of $231,500, down 3.9% compared to the fourth quarter. It’s the first quarterly decrease in typical resale prices since the fourth quarter of 2018, and the largest quarterly decline since the first quarter of 2011.
  • The largest quarterly increases in profit margins during the first quarter were in Springfield, Mo. (ROI up 120%); Provo, Utah (up 118%); Omaha, Neb. (up 101%); Lynchburg, Va. (up 101%); and Pittsburgh, Pa. (up 88%).
  • The biggest quarterly investment-return decreases in home flipping during the first quarter occurred in Memphis, Tenn. (ROI down 64%); Austin, Texas (down 54%); Houston (down 50%); New Orleans, La. (down 38%); and Louisville, Ky. (down 37%).
  • The portion of flipped homes in the first quarter that were purchased with cash by investors rose to 59.2%. About 41% of homes flipped in the first quarter had been bought with financing.
June 18, 2021

Mortgage Rates Drop Again, Falling to Average 2.93%

Inflation hasn’t pushed mortgage rates higher because the market believes it’s only temporary, says Freddie Mac chief economist.

MCLEAN, Va. – This week’s average mortgage rates fell a bit more, to 2.93% from last week’s 2.96% for a 30-year, fixed-rate loan, according to Freddie Mac’s weekly update.

In times of rising inflation, mortgage rates begin to rise. However, that hasn’t happened this time, at least so far.

“Mortgage rates continue to drift down as markets concur with the view that inflation increases are temporary,” says Sam Khater, Freddie Mac’s chief economist.

“While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices,” Khater adds. “With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”

Mortgage rates for the week of June 17, 2021

  • The 30-year fixed-rate mortgage averaged 2.93% with an average 0.7 point for the week, down from last week’s 2.96%. A year ago, the 30-year FRM averaged 3.13%.
  • The 15-year fixed-rate mortgage averaged 2.24% with an average 0.6 point, up slightly from last week’s 2.23%. A year ago, the 15-year FRM averaged 2.58%.
  • The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.52% with an average 0.3 point, down from last week’s 2.55%. A year ago, it averaged 3.09%.

© 2021 Florida Realtors®

Posted in National News
June 17, 2021

NAR: Vacation Home Sales Rose 16.4% in 2020

Lee County tops NAR’s list of U.S. counties for the highest increase in vacation home sales, with Collier County also making the top 10 list. In 2020, vacation home sales were 5.5% of total existing-home sales; in 2019, they were 5%. Vacation home median prices were up 14.2%.

WASHINGTON – Vacation homes sales soared during the COVID-19 pandemic, according to a new study from the National Association of Realtors® (NAR) in its 2021 Vacation Home Counties Report. Overall, buyers flooded the real estate market in the second half of 2020 and through April 2021 as the pandemic raged, causing vacation home purchases to rise.

Florida remains a top spot for vacation home sales – two metros made NAR’s top 10 list, with Cape Coral at No. 1 – but Americans also showed a preference for other second-home hot spots, including four North Carolina metros that also made the top 10 list.

Top 10 U.S. metros with the largest uptick in 2020 vacation home sales

  1. Lee County, Fla.
  2. Oscoda County, Mich.
  3. Swain County, N.C.
  4. Collier County, Fla.
  5. Dukes County, Mass.
  6. Alleghany County, N.C.
  7. Garrett County, Md.
  8. Barnstable County, Mass.
  9. Alcona County, Mich.
  10. Macon County, N.C.

The percentage of 2020 vacation home sales out of all existing-home sales increased to 5.5%, an increase from 5% in 2019. Year-to-year, vacation home sales were up 16.4% in 2020, compared to the existing-home sales growth of 5.6%.

In 2021 so far (through April), the share of vacation home sales to total existing-home sales was 6.7% – a jump of 57.2% year-over-year compared to 20% for total existing-home sales.

“Vacation homes are a hot commodity at the moment,” says Lawrence Yun, NAR’s chief economist. “With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers.”

Traditional second-home locations – areas where vacant seasonal, occasional or recreational-use housing account for at least 20% of homes saw sales climb at a rate even higher than the overall market during this period. Existing-home sales from 1,060 non-vacation home counties increased by an average of 11.2% year-to-year; in 145 vacation-home counties, they jumped 24.2%.

According to NAR’s report, median existing-home sale prices in vacation counties also rose faster than in the rest of the country, up 14.2% compared to 10.1%.

Vacation-home counties did lag overall single-family home sales in one way: They took longer to sell. Nationwide, they remained on the market 59 days in 2020 compared to 30 days in 2019. But even this wasn’t as true in traditional vacation-home counties, where they sold 13 days faster in 2020 than they did in 2019. Nevertheless, homes largely sold at a faster pace in vacation home counties compared to the prior year by 13 days; in non-vacation counties, it was only 8 days.

“The enduring opportunity for remote work will continue to raise the already high demand for property in these counties, particularly in those counties with reliable broadband internet service,” Yun says.

Among the nine U.S. divisions included in NAR’s study, the South Atlantic (Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia and the District of Columbia) saw the strongest sales growth, with home sales up nearly 31% in 2020 in the vacation home counties.

The second highest sales growth was in the Middle Atlantic division (New Jersey, New York and Pennsylvania), with home sales typically up 27.8% in 2020 in vacation home counties. Third in line was the West South Central division (Arkansas, Louisiana, Oklahoma and Texas) where sales typically increased by 25.7% in 2020 in the vacation home counties. In the New England division (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), sales generally climbed 25.3% in 2020 in the vacation home counties.

In the midst of an ongoing supply shortage, Yun notes an increase in the number of buyers willing to pay for homes in all cash, especially for vacation homes. From January through the end of April 2021, all-cash sales increased to 53% of all vacation home purchases, up from under 50% in past years. In comparison, 22% of all existing-home sales over the same period were all-cash sales.

“Realtors all over the country have indicated that buyers in a position to pay in all cash are doing just that,” says Yun. “From a seller’s perspective, paying in this manner makes for a much more attractive offer given the strong demand right now for vacation homes.

June 16, 2021

8 Out of 10 Homes Sold at or Above List Price

Homes.com: In the past six months, 82% of listings sold for list price or higher, plus 1 in 10 had no showings before contract signing, and 1 in 4 had 5 showings or less.

NEW YORK – With a low supply of homes for sale, sellers find sales happen quickly and fetch higher and higher offers. In the past six months, 82% of owners who listed their home accepted offers at list price or above, according to a new survey of about 1,600 homeowners conducted by Homes.com.

What’s more, homes are selling faster too:

25% of home sellers said they had five or fewer showings before finding a buyer

26% had between six and 10 showings before selling

Nearly 10% say they had no in-person showings at all and still sold their home due in part to the uptick in virtual tours that have been increased during the pandemic.

In April, almost 9 out of 10 homes sold were on the market for less than a month, according to National Association of Realtors®.

Twenty-seven percent of sellers surveyed say they accepted offers $10,000 or even $20,000 higher than their requested sales price, according to the Homes.com seller survey.

Sellers expect more than just the best price from offers lately. Many sellers in the Homes.com survey said say they refused to consider offers with any contingencies or other strings-attached: 28% required all-cash payments, no contingencies, and 30 days or less to close, and 14% opted to sell their home “as is.”

June 14, 2021

Migration Study Finds Big Gains in Some Florida Metros

The study looked at net gain – people moving in vs. people moving out – and Fort Myers moved to No. 1 in the first quarter from No. 8 one year earlier.

ORLANDO, Fla. – Updater, a data company and part of the National Association of Realtors®’ (NAR) inaugural REach program, looks at data such as Wifi account changes to analyze moving trends and produces quarterly reports on relocations in its United States Migration Report: Q1 2021. Updater’s report analyzes 300,000 moves over the past year.

According to Updater, several Florida metros showed notable population increases in the first quarter of 2021. The company looked at net migration – the number of residents moving in versus the number moving out – and listed Florida as No. 4 nationwide for attracting the highest percentage of new residents compared to the number of Floridians who moved out. Nevada ranked first, followed by South Carolina and Tennessee.

Florida metro rankings in the top 20

1. Fort Myers: No. 1 compared to No. 2 the previous quarter and No. 8 one year earlier (1Q 2020)

5. Sarasota: No. 5 compared to No. 6 quarter-to-quarter and No. 32 year-to-year

11. Tampa: No. 11 compared to No. 17 quarter-to-quarter and No. 16 year-to-year

12. West Palm Beach: No. 12 compared to No. 7 quarter-to-quarter and No. 22 year-to-year

13. Lakeland: No. 13 compared to No. 29 quarter-to-quarter (Not listed year-to-year)

16. Jacksonville: No. 16 compared to No. 28 quarter-to-quarter and No. 17 year-to-year

17. Melbourne: No. 17 compared to No. 3 quarter-to-quarter and No. 18 year-to-year

Updated also noted a new trend – or the reversal of an old trend: People seem to be moving back to cities after the pandemic drew many of them to smaller towns or suburban areas. The exodus from cities such as New York, San Francisco and Boston slowed after losing record numbers of residents in 2020.

“It’s been fascinating to watch migration patterns shift away from cities and to warmer weather climates during the pandemic,” says David Greenberg, Updater founder and CEO. “With vaccinations underway, restrictions lifting in some of our hardest-hit cities, and companies rolling out permanent hybrid working solutions, we’re anticipating a summer moving season unlike any other with a series of new atypical patterns.”

June 11, 2021

Mortgage Rates Keep Hovering but Down Slightly This Week

The 30-year, fixed-rate mortgage averaged 2.96% this week, down marginally from last week’s 2.99% as it remains in under-3% territory.

MCLEAN, Va. – The 30-year fixed-rate mortgage (FRM) averaged 2.96% this week, according to Freddie Mac’s weekly survey. It’s a slight drop from last week when the FRM came close to the 3% mark, averaging 2.99%.

“The economy is recovering remarkably fast, and as pandemic restrictions continue to lift, economic growth will remain strong over the coming months,” says Sam Khater, Freddie Mac’s chief economist.

“Despite the stronger economy, the housing market is experiencing a slowdown in purchase application activity due to modestly higher mortgage rates,” Khater adds. “However, it has yet to translate into a weaker home price trajectory because the shortage of inventory continues to cause pricing to remain elevated.”

For the week of June 10, 2021:

  • The 30-year fixed-rate mortgage averaged 2.96% with an average 0.7 point, down from last week’s average 2.99%. A year ago, it averaged 3.21%.
  • The 15-year fixed-rate mortgage averaged 2.23% with an average 0.6 point, down from last week’s 2.27%. A year ago, it averaged 2.62%.
  • A 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.55% with an average 0.2 point, down from last week’s 2.64%. A year ago, it averaged 3.10%.

© 2021 Florida Realtors®

June 10, 2021

Homeowners Want to List – but They Fear What Comes Next

Many owners would love to get top dollar for their home, but they weigh that perk against the downside – buying another home – and fears outweigh their desire to list.

NEW YORK – Some homeowners are reluctant to sell amid a hot housing market because the profit they stand to make is less of a concern than the burden of finding a new home.

Selling appears easy right now – list, accept multiple bids, and sell for top dollar. But the prospect of fierce and expensive bidding wars to secure their next home is discouraging.

Thad Wong, co-founder of @properties, says that “even with low rates and the appreciation of their home, they can’t find something better than what they live in right now.”

With so many homeowners unwilling to sell, housing inventory is extremely tight; the number of existing homes on the market at the end of April was down 20.5% year over year, while the number of listed homes plunged to record lows earlier this year. The low stock underpins continuing home price appreciation, making homeownership too costly for many buyers.

The timing of dual transactions – selling one home and buying another at the same time – contributes to the problem since many families can’t afford to buy a new property without selling a current one first. And since sellers often receive multiple bids in the current market, agents say offers with contingency clauses are likely to be rejected.

The supply shortage is particularly pronounced at lower price points. The National Association of Realtors said the supply of existing homes on the market priced between $100,000 and $250,000 fell more than 30% in April from a year earlier, while the stockpile of homes listed for over $500,000 grew.

“I don’t think we can really alleviate the shortage until people feel like they can sell their home and move,” says Meredith Hansen with Keller Williams Greater Seattle.

Source: Wall Street Journal (06/04/21) Friedman, Nicole

June 10, 2021

Rising Prices Change Answer to “Should I Buy or Rent?”

Renters are traditionally told that it makes sense to buy if they’ll live in a home at least three years. But people who bought in 2017 are now sitting on a nest egg.

NEW YORK – If you own a home in the top 10 metropolitan U.S. housing markets, it may be worth a lot more than what you paid for it, even if you bought it just a few years ago. The median sales price of a home in these areas has jumped an average of 57% in the past four years, according to new data from Realtor.com.

That’s a feat that normally would have taken 10 years to achieve, Danielle Hale, chief economist for Realtor.com, tells USA TODAY. “If you are a somewhat recent owner, it might surprise you to learn that you could actually sell your home and make some money much sooner than you might have expected to,” Hale says.

Realtor.com looked at the 300 largest metropolitan areas and ranked them by how much their sale prices have climbed since 2017. The median time these listings stay on the market has dropped by 30 days, and these houses are now selling in 25 days.

Leading the pack is Boise, Idaho, where the median price surged by 72% to $385,000 from $224,000. The market with the highest median price was the Stockton-Lodi, California, area at $460,000, a 51% increase from January-February 2017 to the same period in 2021.

Affordability was a key factor in the markets that experienced price increases. The largest price increases occurred near major Western cities that are tech hubs. Besides Boise, other hot metro areas with those characteristics include Spokane, Washington, and Ogden, Utah.

“Boise is attracting a lot of people from major California markets like San Francisco and San Jose,” Hale says. “The climate is similar, the prices are much more affordable, and it has lots of outdoor activities.”

The list includes cites in Western, Midwestern and Southern states, including Arizona, California, Colorado, Florida, Indiana, North Carolina, Utah and Wisconsin.

A recent survey by Realtor.com found that 10% of homeowners plan to list their homes this year, and more than a quarter (26%) plan to do so within the next three years. One of the biggest drivers was turning a profit. In the current seller’s market, where multiple bids on houses are now the norm, 29% of would-be home sellers expect to set the list price above what they think the house is worth, the survey found.

Hale says it typically takes three to five years for a homeowner to get to a break-even point when the costs of buying make sense over renting.

The median sales price for an existing single-family home soared 18.4%, to $334,500, in March, marking a historic high, according to the National Association of Realtors. Housing inventory stood at 1.07 million units at the end of that month, down 28% from a year earlier.

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