Homebuilder Confidence Slips on Rising Material Costs

Concerns grow dues to higher prices

House under construction

Builder confidence fell to its lowest level since late last year as the construction industry cited major concerns about rising material prices.

Builder confidence in the market for newly-built single-family homes fell two points in July to 64 from the downwardly revised June reading, according to the National Association of Builders and Wells Fargo Housing Market Index. This represents the lowest reading since November 2016.

“Our members are telling us they are growing increasingly concerned over rising material prices, particularly lumber,” NAHB Chairman Granger MacDonald said. “This is hurting housing affordability even as consumer interest in the new-home market remains strong.”

And these concerns aren’t without warrant. The Commerce Department recently proposed yet another Candadian lumber tarrif increase of nearly 30% which could have drastic affects on homebuilders and homebuyers alike. Read more about that here.

Derived from a monthly survey that NAHB has been conducting for 30 years, the index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as good, fair or poor.

The survey also asks builders to rate traffic of prospective buyers as high to very high, average or low to very low. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates most homebuilders view conditions as good rather than poor.

All three of the HMI components fell in July, however they are all still historically high. The component measuring current sales conditions dropped two points to 70 while the index showing sales expectations in the next six months decreased by two points to 73. The component measuring buyer traffic slipped just one point to 48 in July.

“The HMI measure of current sales conditions has been at 70 or higher for eight straight months, indicating strong demand for new homes,” NAHB Chief Economist Robert Dietz said. “However, builders will need to manage some increasing supply-side costs to keep home prices competitive.”

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3 Tips to Succeed in Today’s Real Estate Market

KCM Crew, July 19th, 2017

3 Tips to Succeed in Today’s Real Estate Market | MyKCMIn today’s highly competitive real estate market, where inventory levels are not keeping up with the constant stream of buyer demand, there are steps you can take to ensure you are most prepared for success when buying a home.

The 3 tips we are going to expand on today come from a recent blog by Trulia entitled, The Skinny on Skinny Inventory.

1. Be Prepared

“Homebuyers should talk with a lender, real estate agent, and a home inspector BEFORE finding a home to make an offer on.”

Being intentional, pre-approved, and prepared will set you up for the accelerated time tables that come with a highly competitive market. If you are the most prepared buyer interested in a home, if you have already secured financial approval, and if you are ready to move fast, your bid will be that much more attractive to a seller.

2. Think Strategically

“Starter homebuyers don’t have a home to sell and can be flexible on closing dates compared to homebuyers who are also trying to sell at the same time.”

If you are one of the many first-time buyers looking for your dream home, know that being strategic and flexible about closing dates can also help your offer stand out from the rest. But don’t fret if you are a homeowner who will also have to sell your own house first – be upfront about your timeline with your agent and with any offers you make.

3. Seek Out the Ugly Ducklings

“Buyers might consider looking for homes that have been on the market for a while and investigate why. The reasons may be a deal-killer but all it takes is one ugly duckling to turn into a swan.”

Finding a fixer-upper or a home that needs a little love might be your best way to guarantee that you are able to find a home in the neighborhood that you want. The worst house on the best block will go for a steal and offer instant equity once you fix it up!

Bottom Line

In today’s market, full of bidding wars and tough competition, finding ways to stand out from the rest by getting creative will improve your chances of having a home to call your own.

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The Home Equity Problem for Generation X

DSNews.com, July 19th, 2017

There is a disparity with home equity between Gen Xers and millennials, according to a recent report released by Zillow—which says that millennials and Gen Xers have similar median loan to value ratios on their mortgage.

And the reason for this similarity, they say? The timing each generation got into the housing market in relation to the housing bust in the mid 2000s. Many Gen Xers were just beginning to purchase their homes in the years or months preceding the housing crash, which means they were hit the hardest when prices plummeted. Zillow estimates that homes lost 22.9 percent of their value on average between April 2007 and December 2011. Other generations that had been in the housing market for longer, like the Baby Boomers and the Silent generation, had built up enough equity in their home to sustain the crash.

Most millennials (64.2 percent) have entered the housing market in the past five years, which means they weren’t around when the market crashed, and subsequently entered as home prices were rising. If Gen Xers bought their house before the crash, and lost a good percentage of their equity, they would be just getting back to their original prices as millennials entered.

Certain metros were hit harder than others in the crash. For example, Las Vegas home values fell 62 percent between peak and trough, meaning that many millennials have more equity than their Gen X brethren. Similarly, median LTV ratio for millennials is far more favorable than it is to Gen Xers.

In terms of high equity, the Silent Generation is the generation with the highest number of LTVs under 10, (11.8 percent), followed by Baby Boomers (6.1 percent). Gen X is further behind at 1.3 percent, and millennials are close at 0.3 percent.

Zillow’s data shows that only 36.7 percent of all homeowners have a LTV of 0.

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Millennials Far More Likely to Regret their Real Estate Choices

One in five Americans say real estate mistake now holding them back

Houses sunset

The housing market improved significantly since the recession including rising home prices and a drop in foreclosures, however many Americans are still scarred from their last real estate choices.

About 44% of Americans say they regret their current home choice, or the process they went through to get it, according to the newest report from Trulia. This is down from 46% who regretted their decisions five year ago.

Trulia’s survey was conducted online in June by Harris Poll among 2,264 Americans age 18 and older.

Among those with regrets, more renters wished they had bought instead of rented, while more homeowners regret not buying a bigger or smaller home. While these regrets largely remained unchanged from 2013, fewer people expressed regrets today.

Millennials were the most likely generation to regret their home-buying decisions as 71% they regretted their decisions, Trulia’s study showed. That’s a far higher level of regret when compared to Baby Boomers at 28%.

The greatest regret among Millennials is that more than one third, 34%, said they wished they picked a different-sized home. About 29% of those wished they picked a larger home, while the remaining 5% said they wished it were smaller.

And these decisions continues to hold many Americans back today. More than one out of every five Americans, about 21%, say the housing purchase they made is holding them back from changing their current home.

Housing continues to grow more unaffordable, and 26% of those with an annual household income of $100,000 or more, which is about 50% more than the median U.S. household income of $73,298, said they didn’t think they could afford to buy a home in the current market.

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22 Easy Ways to Instantly Upgrade your Balcony

22 easy ways to instantly upgrade your balcony http://news.buzzbuzzhome.com/2016/02/upgrade-balcony.html via @buzzbuzzhome#BalconyUpgrades

new.buzzbuzzhome.com, July 18th, 2017

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Thinking of Selling? You Should act NOW!

KCM Crew, July 18th, 2017

Thinking of Selling? You Should Act NOW! | MyKCMIf you thought about selling your house this year, now more than ever may be the time to do it! The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned the concept of supply and demand: the best time to sell something is when supply of that item is low and demand for that item is high. That defines today’s real estate market.

Lawrence Yun, Chief Economist at the National Association of Realtors, recently commented:

“Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”

Yun goes on to say:

“Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”

In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction, including the inspection, appraisal and financing contingencies.

Bottom Line

As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas.

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What Can Change Homeownership Rates?

DSNews.com, July 18th, 2017

The pursuit of higher education, among other national trends, is going to play a key role in homeownership rates in the coming years, according to a new study from First American Financial Corporation. The study, dubbed “Six Trends Poised to Reshape Homeownership Demand,” looks at the unique factors that shape U.S. homeownership—and how those factors will influence housing demand in the years to come.

According to the study, education will factor into homeownership levels on several fronts. For one, it will increase income—and therefore homebuying power—for the more educated generations.

“The importance of education in relation to homeownership has almost doubled in less than 10 years,” the study reported. “In 1997, the difference in homeownership between those with a high school degree and those with a college degree was 10 percent. In 2016, the difference increased to 21 percent. The good news is educational attainment is growing. So, it is reasonable to expect homeownership rates to grow as well.”

The likelihood of homeownership actually increases by 3 percent once a person earns a bachelor’s degree and another 3 percent for any degrees past that.

The pursuit of higher degrees will also force Americans to delay marriage and family formation—both widely known drivers of homebuying. And according to the study, that trend has already had an impact.

“Because the marriage rate was increasing between 1995 and 2005 as Generation X got hitched, marriage was a net contributor to the growing overall homeownership rate, but from 2005 to 2004, the declining marriage rate alone has reduced the homeownership rate by 3.5 percentage points,” the study reported.

Economic conditions—particularly wage and job growth—will also play into the homeownership rates of the future, according to the study.

“The good news for the real estate industry is that there are some positive trends in income growth,” the study stated. “After a period of stagnant wage growth, median household income in the United States increased from $53,718 in 2014 to $56,516 in 2016. This upward trend in income translates, all other factors equal, to an almost 1 percent rise in the likelihood of homeownership.”

See the full study at FirstAm.com.

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