Jamaican sprinter Usain Bolt captivated audiences with his speed and charisma during the 2012 Summer Olympics. You may have noticed “The Fastest Man in the World” slows his steps ever so slightly when approaching the finish line during his individual events, confident that he had clinched the win. But in the team relay, he never let up as he ran full speed through the finish line. NAR Chief Economist Lawrence Yun attributes this to the team-mentality. Studies have shown that athletes often perform better in a team environment, he said.
REALTORS® also belong to a team, and consequently should work for the betterment of the industry and attainability of home ownership, Yun said during the economic update at the NAR Leadership Summit in Chicago Tuesday. Despite the fact that the economy is growing, the nation’s mobility rate has slid and owner-occupied sales are still stalled. Thus, the teamwork of REALTORS® is needed more than ever.
“Once you have the baton, you have to be the fastest runner in your association,” Yun said to the audience of REALTOR® association leadership and staff executives. “We have to get America moving again.”
Existing home sales came in at a seasonally adjusted annual rate of 4.37 million in June, up 8 percent year-over-year. Investors coming into the market account for many of those sales, but Yun called the growth “only a slight increase compared to what it could be.” Investors are needed, but Yun said he wants to see less hindrance for owner-occupied buyers, such as reevaluating the stringent underwriting standards from lenders that have been a stumbling block preventing buyers from entering market. Continue reading »
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
While the stock market continues its wild ride and as things begin to look gloomy for Europe, NAR Chief Economist Lawrence Yun is optimistic that the conditions needed for a housing recovery are present in today’s economy. “The market is trying to gain traction,” Yun told an audience of association executives at the National Association of REALTORS® Leadership Summit in Chicago today. “It’s not a nice recovery, but rather a struggling recovery. It’s frustrating.”
He noted that while GDP grew less than 1 percent in the first half of 2011, which indicates that the U.S. is on the brink of another recession, the number of jobs is increasing — albeit slowly. Consumers spending is also up. Last week, the U.S. Commerce Department announced that retail spending was up 0.5 percent in July. This small shift in the job market should force some sales, said Yun, as should the fact the affordability is high and rent prices are beginning to soar.
However, Yun said that buyers are still hesitant to purchase while the economy is fragile, and he believes that many deals are falling through because of financing. Yun estimates that if Fannie and Freddie lowered the credit score required for first-time home buyers from 762 to 720, housing sales would increase from 15 to 20 percent. Continue reading »
By Stacey Moncrieff, Editor in Chief, REALTOR® Magazine
In his State of the Union address Tuesday night, President Barack Obama made scant reference to housing and no mention of the mortgage interest deduction. That was probably a wise move on his part — not only because most Americans favor the deduction and there’s speculation (but no evidence that I know of) that he’ll get behind efforts to reform it, but also because such a mention would have been an odd duck in a speech that set out to inspire a country wearied by economic and political turmoil — and to focus the nation’s attention on jobs.
White House Chief Speechwriter Jon Favreau and President Barack Obama put the finishing touches on the president's Jan. 25, 2011, State of the Union address. (Source: whitehouse.gov)
That said, don’t get too comfortable. During the one-hour speech, Obama made clear his belief that tax reform is critical to reducing the nation’s deficit. Although no significant tax reform legislation is expected to gain traction in 2011 or even in 2012, count on NAR leaders to give new meaning to the term hawk as they keep an eye out for any proposals that could impact housing values and, in turn, hurt local governments.
Opening the State of the Union with a nod to new House Speaker John Boehner (R-Ohio), Obama went on to deliver blunt truths (“Our own engineers graded our nation’s infrastructure a ‘D’“; “America has fallen to 9th in the proportion of young people with a college degree.”); recall the nation’s great triumphs, from the transcontinental railroad to the space program to creation of the Internet; and call on Congress to help foster innovation, improve the education system, and rebuild the nation’s infrastructure. All three are essential to his top priority, he said, which is job creation: “We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business.”
In the real estate industry, that was bound to be a welcome message since healthy real estate markets depend on a strong job base. Whether Obama’s rhetoric will translate into a lower unemployment rate depends to some extent on how well the Democratic president, Republican-controlled House, and Democratic-controlled Senate work together.
A House United, Somewhat
Both before and after Obama’s speech, commentators talked about the sense of civility — in the wake of the Jan. 8 Tucson, Ariz., shootings — that permeated the chamber. House and Senate members, sitting in an unorthodox arrangement, wore black-and-white ribbons to honor the shooting victims. The family of Christina-Taylor Green attended the event as guests of First Lady Michelle Obama, and Mark Kelly watched from the Houston hospital room, where is wife, Rep. Gabrielle Giffords (D-Ariz.) is being treated.
REALTOR® Magazine Senior Editor Katherine Tarbox was in Washington for the speech, and reported on the civil tone of the evening:
Following from his progress during the lame-duck session, President Obama struck a chord of bipartisanship — and members of Congress got in on the act. For the first time in history, members from opposing parties sat together, applauding as the leader of the free world praised America for its greatness. “Remember, for all the hits we’ve taken these last few years, for all the naysayers predicting our decline, America still has the largest, most prosperous economy in the world,” Obama said.
By Robert Freedman, Senior Editor, REALTOR® Magazine
What’s impeding your market? In the Atlanta area, the big drag is distressed sales. Paul Brower, ABR, GRI, of Harry Norman, REALTORS®, in Marrietta, says the market is improved over last year and is expected to improve even more in 2011, but the metro area is trying to absorb the addition of 1,500 foreclosed properties each month. Until that overhang starts to ease, he says, the market can’t decisively turn around.
Sheila Pierce, CCIM, a broker who just sold her residential brokerage in Jacksonville, N.C., and now does mostly commercial work and consults for the area economic development agency, says her market was cushioned from the downturn by Camp Lejeune, the big Marines base there. First-time and new-home buyers have remained steady, but traffic of upper-income buyers is weak—and probably will stay weak until other parts of the country improve. Because right now, she says, relocating buyers that can’t sell their exuisting homes are having to rent.
Practitioners in resort areas say they’ve been seeing an increase in buyers with the means to pay in cash, which has helped sustain their markets in the last two years. That’s been evident in the affluent Lake Tahoe area, says Debra Howard, RSPS, CRS, of D. Howard & Co., in So. Lake Tahoe, Calif. But now her market is getting another boost. Thanks to lower prices (they’re down about 35 percent from their peak), the market is seeing an influx of lower-income buyers, including among those who work in the area.
In the short video above, practitioners talk about where things stand in their market areas.
By Robert Freedman, Senior Editor, REALTOR® Magazine
About half a dozen articles and editorials have come out in the last two days cautioning against the federal government imposing a national moratorium on foreclosures while banks review their processes. They’re summarized here for informational purposes only.
The Politics of Foreclosure, Wall Street Journal, Oct. 10, 2010. The foreclosure problem isn’t about whether some home owners had their homes wrongly foreclosed upon (there’s been no evidence of that to date) but to what extent banks were taking short cuts on foreclosure procedures in states requiring judicial foreclosures. Banks need to conduct their reviews and correct their processing mistakes, but talk in Congress about imposing a national foreclosure moratorium would unnecessarily disrupt the housing market at a time when it needs to find its bottom and move on.
SIFMA: U.S.-Wide Foreclosure Moratorium Would Be a ‘Catastrophe’, Dow Jones Newswires, Oct. 10, 2010. The Securities Industry and Financial Markets Association (SIFMA) says cases of incorrect foreclosure processing must be identified and addressed on a case-by-case basis but imposing a national moratorium while banks sort things out could be “catastrophic” for the housing market and the economy.
Senior White House Official: Not Sure About a National Foreclosure Moratorium, Washington Post, Oct. 10, 2010. White House Senior Advisor David Axelrod says there are valid foreclosures that would get caught up in a national moratorium, throwing the housing market into turmoil. Meanwhile, congressional leaders are ramping up talk about imposing a national moratorium.
Obama Administration Does Not Support U.S. Moratorium on Foreclosures, Washington Post, Oct. 11, 2010. FHA Commissioner David Steven says it’s crucial to protect households from being foreclosed upon in error but the government must be careful not to overreach and apply a remedy that will make the problem of foreclosures worse, which is what a national moratorium could do.
Foreclosure Freeze Could Undermine Housing Market, Associated Press, Oct. 11, 2010. Widely watched housing economists Karl Case of Wellesey and Mark Zandi of Moody’s Analytics were starting to become relatively upbeat about the housing market before the foreclosure processing problems came to light. Now both of them are concerned that the problem, and the effort to fix it, could set back the recovery. “Anything that slows the foreclosure process is a bad thing,” says Case. Banks say the issue isn’t whether the mortgages should have been foreclosed upon but about the procedures they used, because most people who were foreclosed upon were behind on their payments.
By Robert Freedman, senior editor, REALTOR® Magazine
One of the remarkable things about home sales today is the strength we’re seeing in the national median price. For July it was $182,600, up almost a percentage point from a year ago. That’s about what inflation is right now, according to the Consumer Price Index. When you consider the slowdown in sales volume now that the home buyer tax credit is ended, the resiliency in pricing is a bright spot.
NAR Chief Economist Lawrence Yun at his monthly press conference in Washington yesterday attributed that resiliency to the equilibrium of prices to household income (including mortgage-payment to income) and the drop in new-home construction.
In his analysis, homes are priced at a level that matches closely with households’ ability to pay. Thats’ a reasonable place for prices to be right now, all things considered, and he thinks any big swings up or down are unlikely in the next few months, even if home sales continue to struggle and inventories stay high.
Of course, if inventories stay high well into the fourth quarter, then home prices could once again come under pressure.
So, prices are aligned with the economy and interest rates remain historically low (4.42 percent on average). What’s missing is consumer confidence, and that appears to be dependant in part on evidence that jobs are growing.
Watch Yun’s press conference in the player above.
NAR releases 2Q10 metro home price data
By Robert Freedman, Senior Editor, REALTOR® Magazine
From a price perspective, the latest news is good for the housing market. Home prices for the second quarter are up on a year-over-year basis in almost two-thirds of the big metro areas that the National Association of REALTORS® tracks, and in almost 10 percent of markets, the gains were in the double digits. The national median home price at the end of June was $176,900, about 1.5 percent higher than the same time last year.
Although the clear firming up of prices is positive, the question you’re no doubt asking is: What happens going forward? The second-quarter data reflects the impact of the home buyer tax credit. When it comes out, the third-quarter data won’t have the stimulus effect of that credit. So, what the numbers look like at the end of September will be illuminating.
Based on his most recent comments, NAR Chief Economist Lawrence Yun believes prices should hold steady, with no swings either up or down, for the near term even though the tax credit is gone and the economy isn’t being cooperative. The reason for the predicted stability is the way prices change over time. Price shifts tend to reflect longer-term trends, and the long-term trend for the past year or so has been stabilization. Continue reading »
By Robert Freedman, Senior Editor, REALTOR® Magazine
Almost 85,000 of you sent letters to your members of Congress over the last month or so to get them to do what by any measure is the right thing to do: give your clients more time to close on their deals so they can get the home buyer tax credit. President Obama signed the legislation into law a day later. Your calls also helped spur Congress to renew the National Flood Insurance Program.
The tax credit deadline extension was needed because of the high percentage of transactions today that are short sales. You know better than anyone how long these transactions can take, so clearly anyone who had a ratified contract submitted by April 30 would be challenged to get that purchase closed by June 30, the original deadline date. That two-month time frame only makes sense for buyers who are buying under normal conditions. And short sales haven’t been the only problem. Many lenders have simply been handling more applications than they could handle in a timely fashion.
The tax credit was a short-term program so you would expect hiccups like what we saw with the mismatch between the contract submission deadline and the closing deadline. But flood insurance renewal is a different matter. Few people would disagree that Congress needs to give the program a thorough look, and indeed NAR has been out front in calling for commonsense reforms that improve the program’s efficiency and its fairness. But there doesn’t need to be a disconnect between reviewing the program with an eye toward improvement and keeping the program going so routine transactions can get completed. Both can and should be done at the same time, especially today, when improvements to real estate markets remain fragile. (See the 3-minute video interview above with NAR Chief Economist Lawrence Yun on today’s release of pending home sales figures.) Continue reading »
By Robert Freedman, senior editor, REALTOR® Magazine
Home sales are doing pretty well right now, with sales at an annual pace of almost 5.7 million units, but the question on everyone’s minds is, what happens now that April 30 has come and gone and no more contracts will be eligible for the home buyer tax credit? (That’s the case even if the deadline for closing is extended, which Congress is looking at doing.)
Well, NAR Chief Economist Lawrence Yun thinks existing-home sales will continue doing pretty well for the next month. At a press conference yesterday (June 22), he said he expects sales to be about the same for June as in May. (See the video.)
But come July, sales could drop, because the stimulus effect of the tax credit will be gone and all that will be left to support sales is the economy and households’ confidence in buying. On the plus side, interest rates are expected to stay historically low and prices remain low, with lots of bargains to be had. But the big question continues to be job creation. If we see it, housing will follow. If we don’t, housing could lose the momentum it’s seeing.
Jobs, of course, is something no one can control. Even in a growing economy it’s not a given that businesses will start hiring. As Yun has said on a number of occasions, even if sales are picking up, businesses are unlikely to hire until they feel the pick-up is something that will be sustained over time. That’s because hiring represents an investment not in the present but in the future. Without that expectation of future growth, a strong performance today isn’t enough to justify the expense of hiring.
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