Posts Tagged as Real Estate Industry News

Coronavirus Fears

Coronavirus Is Infecting The Real Estate Market: What You Should Know

Coronavirus, a deadly disease originating in China and spreading worldwide, has taken center stage in recent news. Can a health crisis have an effect on current real estate trends? Experts weigh in on how coronavirus may impact the U.S. housing market.

Putting the Brakes on the Luxury Real Estate Market?

At this point, there have only been 11 confirmed cases of coronavirus in the United States. But according to Lawrence Yun, chief economist for the National Association of Realtors® (NAR), the luxury real estate market is already taking a hit. Many high-end properties on both coasts are purchased by wealthy Chinese buyers, to the tune of $13.4 billion in NAR’s most recent annual report.

In the short term, this could repress an already sluggish luxury market, which is defined as properties selling for $1 million-plus. Bay Area broker Amy Kong, president-elect of the Asian Real Estate Association of America, reports lower attendance at open houses marketed toward Asian buyers.

Interest Rates on the Decline

China is the world’s second-largest economy, so anything impacting their financial outlook has a ripple effect around the globe. On January 30, rates for 30-year fixed-rate loans dropped nine basis points to 3.51% While lower rates could trigger an uptick in buyers, the benefit could be negated by sellers raising list prices.

What’s Ahead?

Yun makes a comparison between coronavirus and the outbreak of severe acute respiratory syndrome (SARS) in the early 2000s. SARS had a negligible effect on U.S. real estate, but Chinese buyers weren’t as active then. Fortunately, the consensus is that once the coronavirus is under control the market will bounce back to business as usual.

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Experts Predict a Strong Job Market and Low Mortgage Rates Will Fuel 2020’s Housing Market

Heading into 2020, a strong job market and low mortgage rates should bode well for the housing market. But thanks to a shortage of inventory and new listings, the positive real estate trends may turn out to be a mixed blessing.

Golden Age of Home Buying?

Unemployment and interest rates are both at their lowest levels in years. While widespread economic uncertainty in 2019 seemed likely to push mortgage rates north of 5 percent, rates actually declined to an average below 4 percent. In contrast, at the turn of the millennium mortgage rates were averaging 8.5 percent.

The National Association of Realtors Makes Their Predictions

According to the National Association of Realtors, mortgage rates are expected to remain low during the year. NAR chief economist Lawrence Yun says 30-year fixed mortgages will stay below 4 percent and finish the year around 3.8 percent.

Increases in new-home sales are projected to hit a 13-year high of 11 percent, but supply of existing homes will continue to be tight, resulting in a more modest 4 percent increase. Yun calls this a “healthy development for potential home buyers,” as prices will remain relatively affordable.

Despite the optimistic outlook, Yun does offer a word of caution. Increases in economic activity and inflation may trigger a corresponding rise in interest rates.

Real Estate Experts Weigh In

Other experts tend to agree with NAR’s outlook. Realtor.com and Redfin both anticipate tight inventory in the face of strong demand. As a result, the biggest challenge facing buyers will be finding homes, not affordability. In terms of mortgage rates, Bankrate.com chief financial analyst Greg McBride also sees them holding steady at or slightly below 4 percent.

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Now May be the Best Time to Sell

Forbes Says Statistically May is the Best Time to List a Home

Spring has sprung, and with it, homebuyers come out of the woodwork. A study by ATTOM Data Solutions recently revealed May is statistically the best time to sell a home. How will this affect real estate trends?

At a Premium

Homes listed in May from 2011 to 2017 reaped the largest premiums above market value, at 5.9% above any other month. Though sales in earlier months reap less of a reward, however, those willing to list earlier enjoy less competition.

May sales don’t take the cake, however. The highest premiums are on a single day of the year, June 28th, where market values an average of 9.1% higher. Other top days include February 15th, May 29thand 31st, and June 21st, with premiums between 8.1-9%. Keep timing in mind, however. Homes selling during these times are typically listed prior to sale. 

Timing is Everything 

Though April, May, June, and July are peak listing times for most markets, real estate trends vary from market to market, with some cities bucking the national trend. To ensure a faster selling time and fewer lowball offers and price cutting requests from potential buyers, listing in April is a strong alternative to May. This timing also allows for a May sale and escrow closing in June. If you waited slightly longer, you might make more, but it may also take longer to sell. 

Timing Stats 

Realtor.com statistics show 29 out of the 50 top metros nationwide hold a peak listing date of April. As buyers come out of hibernation in the spring, April listing leading to May sales garner:

> 14% more views.

> 5% less competition, as most buyers wait until still is out to list.

> Sales 6-days faster.

> 6% higher sales price ($17k on average).

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2020 Real Estate Sales Projections

What’s Changing in Corporate Real Estate in 2019 – The Emerging Trends

What trends will be rippling across the commercial real estate selling sector in 2019?

Commercial Occupants are Thinking ‘Smarter’

As with residential real estate, commercial real estate tenants are turning to smart, tech-enabled designs to help them control costs, boost productivity, and improve occupant experience. Outperforming older buildings, new technologically advanced buildings are meeting the societal need to be a part of the ‘internet of things.’

For example, they’re incorporating systems that support a mobile work style and responding to occupants’s needs such as lighting, temperature, and even inventory supplies via smartphone apps and sensors. Expect entire buildings to soon be built from the internet up as this trend builds and businesses start shopping for better buildings.

Also, look for the owners of older buildings to boost their chances of real estate selling success by remodeling and retrofitting older structures.

Cohabitating and Co-Working

People will continue to look at the workplace as a service, much like a hotel, increasingly embracing the co-working concept. WeWork and similar ventures are setting the standard for such co-working spaces. Today’s users have expectations on what they should offer, including features like plug-and-play desks, collaborative workspaces, community programming, and amenities.

Corporations are on-board as well, looking to co-working for flexibility not seen in traditional leases, and leaning on co-working spaces when they need to contract, expand, or test a market.

More Balanced Design

Shifting from extremely open layout plans and restricted square footage, today’s companies are acknowledging that placing everyone from the CEO to clerical workers in an open-plan space doesn’t always work, sending workers to hermit in conference rooms and closets to find focus and quiet.

Today’s offices are being adjusted to accommodate activity-based workspaces instead and paying closer attention to workplace design as it relates to employee tasks.

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Time to Get Listed for the Season

Forbes Article Writer Predicts No Housing Recession in 2019

Stressing out over recent real estate selling trends pointing to a housing recession on the horizon? Not everyone is on board with that assessment, including Forbes article contributor Lawrence Yun. Despite existing home sales falling 2%, falling nearly every month of 2018, and a 12% decline in housing starts (typically an indicator of a recession), Yun does not see the possibility of a downturn on the horizon.

A Difference of Opinion

Yun sees incorrect conclusions being drawn from these statistics. He notes that rather than a demand shortage, as seen at the depths of the 2008 housing recession in which an oversupply of 12 months of inventory was on the market, today it’s quite the opposite.

Real estate selling trends showcase a shortage of inventory. It would take just 4.3 months to exhaust current supplies, as compared to a balanced market of 6-7-months of inventory. Homes continue to be pocketed at a swift pace, spending very little time on the market (about 26-days in June).

Bidding wars are still alive and well. Demand is there. Supply is not. ‘A problem much better to have,’ denotes Yun, who believes muted growth points to neither a price decline nor a looming foreclosure crisis.

Making Sense of Muted Growth

So what does he believe 2018’s muted growth points to? The affordability crisis. As a lack of inventory drives prices up, especially in hot markets, buyers are increasingly being priced out of home ownership. Until more homes are built to meet entry-level housing needs, prices will continue to climb.

The 1.3 million housing starts projected in 2019 will be insufficient to moderate prices and support sales. Skilled labor shortages, tariffs, crippling impact fees, and laborious permitting processes don’t help. Yun sees this as a far cry from the overbuilding and overzealous lending practices pre-bubble.

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