US existing home sales rise 1.8 pct in May vs 1.1 pct expected

U.S. home resales rose in May to a more than nine-year high as improving supply increased choice for buyers, suggesting the economy remains on solid footing despite a sharp slowdown in job growth last month.

The National Association of Realtors said on Wednesday existing home sales increased 1.8 percent to an annual rate of 5.53 million units last month, the highest level since February 2007.

April’s sales pace was revised down to 5.43 million units from the previously reported 5.45 million units. Economists polled by Reuters had forecast sales rising 1.1 percent to a 5.54 million-unit pace in May.

Sales were up 4.5 percent from a year ago.

The strong home resales added to retail sales data in painting an upbeat picture of the economy. That should help allay fears about the economic outlook which were stoked by last month’s paltry job gains.

Existing home sales surged 4.1 percent in the Northeast and climbed 4.6 percent in the South. Sales in the West, which has seen a strong increase in house prices amid tight inventories, jumped 5.4 percent.

In the Midwest, sales tumbled 6.5 percent last month. The decline, however, followed recent hefty gains.

The number of unsold homes on the market in May rose 1.4 percent from April to 2.15 million units. Supply was, however, down 5.7 percent from a year ago.

At May’s sales pace, it would take 4.7 months to clear the stock of houses on the market, unchanged from April. A six-month supply is viewed as a healthy balance between supply and demand.

With inventory still tight, the median house price soared 4.7 percent from a year ago to a record $239,700 last month.

This is breaking news. Please check back for updates. What are shares of homebuilders doing? Check here.

Buyers Be Warned: Home Prices Hit an All-Time High

The National Association of Realtors released its May 2016 existing home sales report for single-family residences.

danny4stockphoto/iStock

Frazzled home buyers may need to sit down and take a few deep breaths before reading any further. Those rapidly rising home prices have hit an all-time high—and show no signs of slowing down before Labor Day.

The median price of an existing (i.e. not newly constructed) home across the nation reached $239,700 in May, according to a recent report from the National Association of Realtors®. That’s up 3.8% from April and 4.7% from May of 2015.

The previous peak was last June at $236,300.

“The price increases are a natural result of the very strong demand for homes against very limited homes for sale,” says realtor.com’s chief economist, Jonathan Smoke. “It’s pent-up demand… coupled with the lowest mortgage rates we’ve had in three years.”

He predicts prices will continue to surge this summer as buyers fight over the not-nearly-enough residences on the market.

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But there is hope: the mad rush for available homes is expected to taper off come Labor Day, Smoke says.

“There’s a higher probability that interest rates will go up [in the fall]. School is back in session, which means fewer [parents] are looking to move,” he says, adding that the presidential election will cause some potential buyers in certain areas of the country, like Washington DC, to postpone home buying decisions.

The high prices have been a boon to sellers who are putting their properties on the market and cashing in.

“More homeowners are realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” NAR chief economist Lawrence Yun said in a statement. “Repeat buyers are using the proceeds from the sale of their previous home as their down payment.”

Residences also continued to fly off the proverbial shelves at the highest volume for the month of May since 2005—before the financial crisis walloped the world economy. This May, the number of sales hit 526,000, a 11.9% jump from April and a 6.3% rise from May of last year, according to the report. Those numbers were not seasonally adjusted, which is to say they weren’t smoothed out over a 12-month period to account for seasonal fluctuations.

The cost of becoming a homeowner is by far the highest in the West, home to astronomically expensive areas like San Francisco and nearby Silicon Valley, according to the report. The median home price in the region was $346,900 in May and the number of sales rose 0.9% year-over-year to 114,000.

The next most expensive region was the Northeast at $268,600, according to the report. The region also saw the fewest sales, at 69,000, in May. But the number of existing homes sold jumped 11.3% from the same time a year earlier.

The region was followed by the South, where the median home price hit $211,500. The warm weather region saw the most sales at 211,000, a 8.2% rise from a year earlier.

Last up was the Midwest, where prices reached $190,000. The number of sales reached 132,000 in May, a 5.6% bump from May of 2015.

National Association of REALTORS® – Pischke Motors La Crosse

National Association of REALTORS®

REALTORS® receive $500 off plus 2 years no extra charge oil changes

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National Association of REALTORS® and Chrysler Group, LLC, have partnered to offer members a $500 cash allowance on the purchase or lease of select new 2014/2015 Chrysler, Dodge, Jeep, Ram and THE FIAT 500L model. Plus, all REALTORS®meet Chrysler’s requirements for their “On the Job” Program and will receive at no charge a two-year service agreement (up to eight oil changes gas or diesel) lube and filter-with their purchase or lease². Family members in same household as the REALTOR®member also receive a special $500.00 discount. (*Click PROGRAM RULES button for list of eligible vehicles and rules. Contact dealer for program restrictions, limitations and compatibilities).

 

Pischke Motors La Crosse

434 4th Street South

La Crosse, WI  54601

Volume of US home sales reaches pre-recession levels

U.S. home sales hit their fastest pace in nine years last month, as interest rates remained low and unemployment steadily declined.

From April to May, sales rose by nearly 2 percent to a seasonally adjusted annual rate of 5.53 million, according to National Association of Realtors data. May’s sales volume was 4.5 percent higher than during the same period last year.

Prices are also up, according to the Wall Street Journal. The median sale price for a previously owned U.S. home last month was $239,700, a 4.7 percent jump from a year earlier and the highest median ever recorded.

Housing inventory is lagging behind demand as home builders scramble to keep up. There were 2.2 million existing homes on the market at the end of May — a 5.7 percent decrease from last year.

“We have a tight inventory situation—whatever is coming on the market is moving very fast,” Lawrence Yun, NAR’s chief economist, told the Journal.

The realtors’ group predicts the pace of existing home sales will continue to rise this year, perhaps by as much as 3 percent.

Sales of brand new homes are skyrocketing as well. In April, sales of new, single-family homes rose by nearly 17 percent from the previous month — the fastest pace of growth since January 2008. [WSJ]Cathaleen Chen

Oklahoma Association of Realtors offers Norman residents technology tips to make the most of digital resources

Technology continues to play an expanding role in the real estate industry. According to the National Association of Realtors (NAR), 92 percent of homebuyers searched online during their home-buying process with more than half using mobile devices or apps in the home research process. 

The Oklahoma Association of Realtors (OAR) is offering technology tips Norman residents should consider when buying or selling a home.

“From online lenders, real estate apps and virtual home tours, homebuyers and sellers have more tools at their disposal than ever,” said Chuck Harris, OAR president. “Norman residents should consult their Realtor to guide them through the process and find reputable tools that can help achieve their goals.”

OAR is offering the following tips:

Improve online listings. Millennials, those born from 1980 to 2000, account for 68 percent of all first-time homebuyers and are the largest group of overall buyers at 35 percent, according to NAR. 

This generation prefers online tools and resources when buying and selling a home, so it’s important to ensure online listings are as complete and polished as possible. Invest in professional photographs of the home, provide as much description as possible in listings and consider new technologies like true virtual tours and high quality video.

Story continues below video

Consider virtual tours. A true virtual home tour, more than just stitching together static photos, can give prospective buyers a 360-degree view of a home. 

Virtual tours can even replace open houses for those who prefer an online experience, such as millennials, and cut down on open house safety risks and potential theft issues. Preparing for a virtual tour will further force sellers to think about the home from a buyer’s perspective. Other social media options include Periscope and Facebook Live where Realtors can give real-time tours to their extensive following of buyers in online social spaces and those relocating from other areas.

Utilize online tools and apps. Online resources and apps like realtor.com help locate potential homes and even local Realtors. Other tools feature amenities in close proximity to a house, like Walk Score or Transit Score to understand commuting options. 

In addition, there are apps to help prospective buyers decide how much home they can afford. And when it’s time to move, there are apps, including Moving List, Moving Planner and HouseLogic that will help you get organized.

Stay true to local lenders. While online mortgage lenders, such as Quicken Loans, have shown improved performance for some borrowers, OAR recommends you follow the advice of your local Realtor to work with a local lender. 

Most have the same online tools—much like online-only lenders—and are a visible part of your community. Their reputation is based on providing quality service and they are invested in the relationships they’ve built with all the parties involved in the transaction.

National Association of REALTORS® – Pischke Motors West Salem

National Association of REALTORS®

REALTORS® receive $500 off plus 2 years no extra charge oil changes

Click Here

National Association of REALTORS® and Chrysler Group, LLC, have partnered to offer members a $500 cash allowance on the purchase or lease of select new 2014/2015 Chrysler, Dodge, Jeep, Ram and THE FIAT 500L model. Plus, all REALTORS®meet Chrysler’s requirements for their “On the Job” Program and will receive at no charge a two-year service agreement (up to eight oil changes gas or diesel) lube and filter-with their purchase or lease². Family members in same household as the REALTOR®member also receive a special $500.00 discount. (*Click PROGRAM RULES button for list of eligible vehicles and rules. Contact dealer for program restrictions, limitations and compatibilities).

Pischke Motors West Salem

1460 W City Highway 16

West Salem, WI  54669

Lagging Demand for Luxury Homes May Mean Deals for Buyers

The inventory of homes listed over $1 million rose 12.6% year over year.
ENLARGE

A surplus of high-end homes for sale is giving more bargaining power to buyers.

In the U.S., the inventory of homes priced from $500,000 to $750,000 rose 15.9% in March compared with the same period last year, according to the National Association of Realtors. The inventory of homes over $1 million rose 12.6% year over year. Inventories dropped in April, likely due to the seasonal pattern of spring sales and perhaps some buyers taking advantage of deals, but real-estate agents say they are still seeing more expensive homes sit longer than midrange and lower priced homes.


Behind slowing sales at the upper level: Stock-market volatility has made wealthy buyers more cautious, and there are fewer foreign buyers than last year due to the dollar strengthening and other economic issues overseas, says Lawrence Yun, NAR’s chief economist.

“The stock market has come back up, but we don’t know yet if that means the upper-end home buying market will begin to return,” Mr. Yun says. ( News Corp,
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which owns The Wall Street Journal, also owns Realtor.com, the listing website of the National Association of Realtors.)


ENLARGE

What also could be happening is simply a “normalizing” of the home market, says Brad Blackwell, executive vice president and portfolio business manager for Wells Fargo Home Mortgage. That’s good for jumbo borrowers, who now have a wider choice of homes and won’t have to bend to sellers’ demands that waive financing and inspection contingencies to compete with cash buyers.

However, the thresholds for looser inventory differ widely by location as different market forces come into play. In suburban Hartford, Conn., homes priced between $300,000 and $450,000 are selling briskly, but listings of $600,000 to $800,000 often stall depending on location and whether they are priced reasonably, says Jessica Starr, agent/owner of Simsbury, Conn.-based Starr Realty, a team affiliated with Keller-Williams Realty. “A lot of people bought at the peak of the market [prerecession] and are taking a loss,” she adds.

Hartford is a good example of how local conditions impact the upper end of home sales. A number of big companies, including General Electric,
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are moving their headquarters from the area. That may create a glut in inventory, but other affluent, less geographically driven buyers, such as doctors, may swoop in for bargains in family friendly neighborhoods, Ms. Starr says.

In Portland, Ore., homes priced from $300,000 to $600,000 sell in five days with 10 to 20 offers, but listings start to sit on the market at $750,000 and get really challenged above $1 million, says Shannon Baird, a broker with Portland-based Living Room Realty. For example, a grand 1920s Tudor-style home with five fireplaces and a marble-floored ballroom was first listed at $1.6 million, but sat for five months and is finally set to close in June for $1.425 million, she says.

One of the biggest hurdles is changing the mind-set of homeowners attuned to quick sales and bidding wars, Ms. Baird says. One recent $840,000 listing had four counteroffers starting at $770,000 before buyer and seller agreed on $815,000. These days, Ms. Baird advises sellers to review their asking price and consider lower offers after 14 to 21 days.

In San Francisco, Maggie Visser, an agent with the San Francisco-based Paragon Real Estate, says stock-market gyrations have definitely slowed sales to tech-industry employees, many of whom cash out stock options to buy. Also slackening in the Bay Area is the market for newly constructed condo units, where sales had been driven by Chinese buyers, Ms. Visser says.

Here are a few things to consider when financing a more expensive home:

• Low interest rates. A bigger mortgage costs less now than it may in the future. Jumbo mortgage average interest rates are still near record lows—3.72% for the 30-year fixed rate and 2.87% for a five-year, adjustable-rate mortgage on the week ending June 10.

• More cash on hand. Lenders require higher down payments and more cash reserves as borrowers reach higher loan amounts, or “tiers.” For example, Wells Fargo
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will lend up to 89.9% on amounts up to $1 million, 80% on amounts between $1 million to $2 million, 75% on loans between $2 million and 2.5 million, and so on.

• Budget for all costs. Home buyers who are trading up should make sure they can also afford higher property taxes, homeowners’ insurance, and maintenance, Mr. Blackwell says. “It’s also always important for buyers of luxury houses to factor in the increased cost of furnishing that home,” he adds.

National Association of Realtors declares support for alternative credit scoring

The National Association of Realtors sent a letter to two members of Congress this week, declaring the organization’s support of alternative credit-scoring models that could be used to open the credit box to previously underserved borrowers.

In a letter sent this week to Rep. Ed Royce, R-CA., and Rep. Terri Sewell, D-AL., NAR President Tom Salomone writes that NAR supports the “Credit Score Competition Act of 2015,” which Royce and Sewell introduced last year.

The bill, which is yet to be considered by the House Financial Services Committee, would enable Fannie Mae and Freddie Mac to consider other credit-scoring models beyond the FICO credit score the government-sponsored enterprises currently use when determining what loans to purchase.

In Royce and Sewell’s view, lower-to-middle income Americans who are qualified to buy a home but are unable to do so because of their FICO score or lack thereof will “specifically benefit from the GSEs using other credit scoring models.”

Royce and Sewell’s bill becomes the latest in a growing movement to push beyond FICO.

In 2014, Freddie Mac’s CEO Donald Layton told HousingWire that Freddie was already considering “one or two alternatives to FICO.”

And earlier this year, the Federal Housing Finance Agency noted in its 2015 Scorecard Progress Report that Fannie and Freddie are both still considering alternative credit-scoring options.

Proponents for FICO alternatives note that GSEs currently use the FICO 4 model, which has been in use by Fannie and Freddie since before the housing crisis.

FICO itself released FICO 9 in 2014, which is supposedly more accurate and beneficial for first-time homebuyers, but the GSEs have not adopted it yet.

In NAR’s letter of support for the Royce and Sewell’s bill, Salomone notes the bill could help “many households” achieve the “American Dream” of homeownership.

“A borrower’s credit score is a critical access factor when trying to enter the housing market; with a poor score, or none at all, a borrower stands little to no chance of obtaining a loan,” Salomone writes.

“Yet millions of Americans, particularly minorities, immigrants, and people with modest incomes, come from backgrounds that avoid debt, leading many to have little to no credit history,” Salomone continues. “With new credit scoring models that incorporate additional predictive metrics and payment history, many of these ‘thin file’ individuals would be able to obtain credit and enter the housing market. Furthermore, borrowers with medical debt and paid off debt may see relief.”

The benefits of alternative credit-scoring methods extend beyond borrowers, as Royce and Sewell noted when they announced their bill.

According to Royce and Sewell, allowing Fannie and Freddie to make mortgage purchasing decisions with access to “multiple empirically derived, statistically sound credit scoring models” alleviates some of the risk in their portfolios and lowers the chance of systemic risk to the housing market.

As Salomone notes, given the market share of Fannie and Freddie, the use of alternative credit-scoring methods by the government-sponsored enterprises could have a significant impact on borrowers previously unable to get a mortgage.

“Fannie Mae and Freddie Mac are the largest mortgage purchasers in the nation, but they rely on credit score models that don’t necessarily take into account something as simple as whether borrowers have paid their rent or utility bills on time,” Salomone writes.

“Homeownership is an integral part of the American Dream that shouldn’t be out of the reach for low-income, rural and minority borrowers who lack access to traditional forms of credit,” Salomone concludes. “This legislation takes an important step towards addressing this issue and helps make homeownership a reality for more Americans across the country.”

National Association of Realtor’s Chief Economist to speak in Bristol

Posted: Wednesday, May 25, 2016 5:39 pm
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Updated: 9:28 pm, Wed May 25, 2016.

National Association of Realtor’s Chief Economist to speak in Bristol

Tammy Childress

HeraldCourier.com

Lawrence Yun, the National Association of Realtor’s Chief Economist and senior vice president, will be speaking at the Hilton Garden Inn in Bristol, Va. Thursday at 11:30 a.m.

Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1 million REALTOR members.

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Market Trend

Beware of agents who will “buy” your listing

Home

(credit: San Diego Real Estate Today)

It’s one of those hush-hush practices that homeowners rarely hear about but real estate agents know only too well: It’s called “buying the listing.”

What it means is that some agents want the listing to sell your house so badly that they’ll go along with whatever price you ask, even if it’s outlandishly above what comparable houses are commanding.

They know that there’s only a minuscule chance the house will sell at the inflated price you’re proposing but they take the listing anyway. They fully expect that after a few weeks with no takers, you’ll sober up and agree to what may have to be a series of price reductions.

Buying the listing works for some agents because they get cut into a commission payout that they would have missed had they lost the listing to competitors who counseled lower prices. Plus they reap immediate benefits: They’ve got their name plastered on a sign in front of your house, and they can hold open houses that could bring them new clients and other houses to sell.

But there are potentially big drawbacks for you as the seller. Overpricing a house can doom it to months of sitting unsold, even with price reductions. Serious buyers get turned off by new listings with inflated prices and they may not come back when the price inevitably gets reduced. At the end of the process, you could be left with a final price well below what you would have gotten had you priced it realistically earlier.

Buying the listing is a controversial issue in the real estate field. Most agents insist they don’t condone it or engage in it themselves. It’s also potentially an ethical violation for members of the National Association of Realtors, who are prohibited from “attempting to secure a listing” by “deliberately mislead[ing]” the owner as to the market value. Not advising overly optimistic sellers about the true value of their property — solely to obtain the listing — can be construed as misleading them.

How common is this? It depends on location and market segment. Some agents report that it rarely occurs in their areas. Others, such as Tony Marriott, an agent with Keller Williams Arizona Realty in Phoenix and Scottsdale, say it’s so commonplace that “better than 50 percent of the listings” start out notably overpriced.

Agents elsewhere say that initial listings with inflated prices account for anywhere from 10 percent to more than 30 percent of all new properties put on the market. Diana Keeling, an agent with Coldwell Banker in Bethesda, Maryland, told me the practice is most common in the upper brackets, where “a lot of agents want the listing at all costs.”

Dean Moss, a Keller Williams Realty Partners agent in Chicago, says “some agents have agendas of listing as many houses as they can” — regardless of how off-base the initial pricing may be — “as an advertising billboard for themselves.” Passersby see their signs frequently and figure, wow, that agent must be the best. Moss says when he confronts these agents and tells them their list price is off the charts, they sometimes reply, “I know. Make an offer!”

Some agents defend taking listings at elevated prices because they discuss pricing strategy in advance with the sellers. They draw the line: If the sellers of a house that should be priced around $400,000 are insisting on a listing at $495,000, they won’t touch it. But if they see the sellers are trying to push a little — say pricing at $415,000 or $420,000 — they’ll take the listing.

Alan May, a Coldwell Banker Residential Brokerage agent in Evanston, Illinois, says he’s open to listing properties that are slightly overpriced, but only after showing the sellers comparable recent sales and agreeing to price adjustments downward if the house doesn’t sell within specific time periods.

Bottom line: If you’re planning to sell your house, arrange for multiple presentations by agents who specialize in your neighborhood. Study the market analyses they offer. Don’t choose your agent mainly because he or she says your house is worth the most. Choose based on the key factors: proven sales record at or close to listing prices; strength of marketing strategies and resources; outstanding references and reviews.

If you let an agent buy your listing at a price that’s not supported by hard data, you may regret it months later when it still hasn’t sold and your asking price is much lower.