Existing-Home Sales Climb 3.6% in December

Posted on January 23, 2020 by Debbie Prosser

WASHINGTON (January 22, 2020) – Existing-home sales grew in December, bouncing back after a slight fall in November, according to the National Association of Realtors®. Although the Midwest saw sales decline, the other three major U.S. regions reported meaningful growth last month.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.6% from November to a seasonally-adjusted annual rate of 5.54 million in December. Additionally, overall sales took a significant bounce, up 10.8% from a year ago (5.00 million in December 2018).

On a full-year basis, total existing-home sales ended at 5.34 million, the same level as in 2018, as sales in the South region (+2.2%) offset declines in the West (-1.8%) and Midwest (-1.6%), as the Northeast remained unchanged.

Lawrence Yun, NAR’s chief economist, said home sales fluctuated a great deal last year. “I view 2019 as a neutral year for housing in terms of sales,” Yun said. “Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”

The median existing-home price2 for all housing types in December was $274,500, up 7.8% from December 2018 ($254,700), as prices rose in every region. November’s price increase marks 94 straight months of year-over-year gains. “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” Yun said. “The hope is for price appreciation to slow in line with wage growth, which is about 3%.”

NAR’s Home Affordability Index Ranking and Payroll Job Growth report found that affordability rankings declined in 81 metro areas, 34 of which saw non-farm job growth fall faster in 2019 Q3 than the national rate over the previous five years.

Total housing inventory3 at the end of December totaled 1.40 million units, down 14.6% from November and 8.5% from one year ago (1.53 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from the 3.7-month figure recorded in both November and December 2018. Unsold inventory totals have dropped for seven consecutive months from year-ago levels, taking a toll on home sales.

Properties typically remained on the market for 41 days in December, seasonally up from 38 days in November, but down from 46 days in December 2018. Forty-three percent of homes sold in December 2019 were on the market for less than a month.

First-time buyers were responsible for 31% of sales in December, moderately down from the 32% seen in both November and in December 2018. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in December 2019, up from both 16% in November and 15% in December 2018. All-cash sales accounted for 20% of transactions in December, unchanged from November and down slightly from 22% in December 2018.

Distressed sales5 – foreclosures and short sales – represented 2% of sales in December, unchanged from both November 2019 and December 2018.

Yun said conditions for buying are favorable and will likely continue in 2020. “We saw the year come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4% and housing starts ramp up to 1.6 million on an annual basis,” he said. “If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020.”

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage increased to 3.72% in December, up from 3.70% in November. The average commitment rate across all of 2019 was 3.94%.

“NAR is expecting 2020 to be a great year for housing,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, California. “Our leadership team is hard at work to secure policies that will keep our housing market moving in the right direction, like promoting infrastructure reform, strengthening fair housing protections and ensuring mortgage capital remains available to responsible, mortgage-ready Americans.

Single-family and Condo/Co-op Sales

Single-family home sales sat at a seasonally-adjusted annual rate of 4.92 million in December, up from 4.79 million in November, and up 10.6% from a year ago. The median existing single-family home price was $276,900 in December 2019, up 8.0% from December 2018.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 620,000 units in December, up 10.7% from November and 12.7% higher than a year ago. The median existing condo price was $255,400 in December, which is an increase of 6.0% from a year ago.

Regional Breakdown

Compared to last month, December sales increased in the Northeast, South and West regions, while year-over-year sales are up in each of the four regions. Median home prices in all regions increased from one year ago, with the Midwest region showing the strongest price gain.

December 2019 existing-home sales in the Northeast grew 5.7% to an annual rate of 740,000, up 8.8% from a year ago. The median price in the Northeast was $304,400, up 7.4% from December 2018.

Existing-home sales decreased 1.5% in the Midwest to an annual rate of 1.30 million, which is up 9.2% from a year ago. The median price in the Midwest was $208,500, a 9.2% jump from last December.

Existing-home sales in the South grew 5.4% to an annual rate of 2.36 million in December, up 12.4% from a year ago. The median price in the South was $240,500, a 6.7% increase from this time last year.

Existing-home sales in the West rose 4.6% to an annual rate of 1.14 million in December, a 10.7% increase from a year ago. The median price in the West was $411,800, up 8.1% from December 2018.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

For local information, please contact the local association of Realtors® for data from local multiple listing services (MLS). Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

NOTE: NAR’s Pending Home Sales Index for December is scheduled for release on January 29, and Existing-Home Sales for January will be released February 21; release times are 10:00 a.m. ET.

1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).

4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at nar.realtor.

“Copyright National Association of REALTORS®. Reprinted with permission.”

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What’s Trending Next? A Dozen Home and Design Ideas for 2020

Posted on January 21, 2020 by Debbie Prosser

From building and decorating materials to room sizes, colors, and lighting, gift your clients with the knowledge gleaned from crystal ball gazers as we look ahead to 2020’s trends.

December 20, 2019 by Barbara Ballinger

Almost everyone enjoys making predictions for a new year—and certainly for a new decade. How about cooking appliances that tell you how to roast and broil to perfection? Or, better yet, new homes that come with a personal chef?

REALTOR® Magazine asked our favorite real estate trend watchers and influencers what to expect in 2020 and beyond. For starters, most agree that gray is on its way out, while deep hues are becoming the stars in interior paint. And more homeowners are following the craze of decluttering and tidying up popularized by Marie Kondo so they can focus on experiencing joy in their home.

While some fads are natural evolutions and others are more far-fetched, we’ve whittled it down to a dozen that are sure to inspire your buyers and sellers alike. Plus, don’t miss five up-and-coming kitchen trends that are bound to spark interest and maybe a remodel.

modern dining room

1. Comfortable Dining Rooms

Homeowners have decided they don’t want to give up their dining rooms—that’s in the past. Now they want dining rooms to be less formal and more functional, says architect Elisa Morgante of Morgante-Wilson in Chicago. The best way to do this is by investing in a multipurpose table that can take wear and tear, comfy chairs with high backs and armrests, and washable fabrics. Fun light fixtures are replacing delicate ones, and some traditional dining room furnishings are disappearing—such as china cabinets used for fancy entertaining, says real estate broker Jennifer Ames, partner at Engel & Volkers in Chicago.

dramatic curved staircase in foyer

2. Fabulous Foyers

Homeowners know the importance of exterior curb appeal, but now they’re taking advantage of the foyer as another opportunity to impress, says Liz Brooks, vice president of sales and marketing for Belgravia Group, a development firm in Chicago. At Belgravia’s condo building Renelle on the River, foyers are “gracious” in size with walls to hang a mirror or art or offer views through to a living room and beyond. The architects at Morgante-Wilson like foyers in multilevel homes to incorporate a dramatic stairway with wider or more curved treads, risers, and railings fabricated from novel materials. Some include a clerestory or skylight at the top to flood the area with light, says Morgante.

Wood Clad Apartment Building

3. Mass Timber

Mass timber is beginning to receive recognition as a smart building material because its production generates less carbon emission than steel or concrete, says sustainable architect Nathan Kipnis of Kipnis Architecture + Planning in Evanston, Ill. The material is also fire-resistant and strong and performs well during seismic activity, according to the Mass Timber Code Coalition. Plus, it’s cost-efficient and can be constructed faster since it’s prefabricated, and it can be used on walls, floors, and roofs—even in innovative sculptural forms. “With mass timber, there’s no waste on a site that must go into a landfill,” says Sam Ebersol, general manager of Mid-Atlantic Timber Frames, a heavy timber construction company in Paradise, Penn.

home elevator

4. Home Elevators

As the baby boomer population ages, first-floor master bedroom suites are becoming more popular. But not every house or townhome provides space to include them. In cases where a home has multiple levels, an elevator provides help for those who have trouble climbing stairs, says Kipnis. He recommends building the feature in new homes, or at least leaving adequate space—3 1/2 feet by 4 1/2 feet on each level for future installation. The cost will vary depending on materials, finishes, and an electrician’s hourly labor charge, but the total expense might run about $15,000 per floor.

rooftop common area

5. Communal Oases

Developers of multifamily buildings now recognize that homeowners want a green space to garden, even after they’ve vacated suburban homes. And while rooftop gardens have become more prevalent, other green spaces are popping up, too, as more developers note their health benefits. Carl Dranoff, founder of Dranoff Properties based in Philadelphia, planted a two-level garden at his newest project, Arthaus Condominiums in downtown Philly, which will include a greenhouse to grow orchids, outdoor plots to raise vegetables, flowers, and herbs, and an extended lawn off a communal event space. A horticulturalist will offer residents professional expertise. The architecture and interior design firm CetraRuddy in New York has focused on adding greenery in another way—through large terraces that bring more light and air and a sense of space into the interior of its ARO building in Manhattan, as well as its surrounding block. Such tactics are more important in denser urban environments, say the building’s principals, Nancy Ruddy and John Cetra.

geometric bathroom tile

6. Graphic Bathroom Floors

Boldly patterned floors are adding a spark of interest in bathrooms that were recently trending very monochromatic and spa-like. Staging and design expert Kristie Barnett, aka The Decorologist, in Nashville, took this approach in one client’s homes. She used an encaustic, graphic floor tile, similar to those that show up along kitchen backsplashes. But Barnett adds one caveat for bathrooms: “When choosing this kind of pattern, it should be the lead actor in the show while other elements play supporting roles. A bathroom should still be a personal sanctuary, and too much visual noise could weary the eye.”

updated bathroom

7. Remodeling Before Listing

Many homeowners don’t want to take on the work and extra cost of fixing up their home before they list. Yet many buyers don’t want to invest in a home where they know there are walls to paint, countertops to replace, and floors to resand. Consider the latest trend that helps remove buyer objections: a contractor who tackles the work and fronts the cost or who partners with a firm that provides financing. Sellers then pay back the funds at closing. The big reward usually is a higher price and speedier sale, says Mike Valente, a licensed general contractor who works with many homeowners through his Renovation Sells firm in Chicago. Compass, a national real estate firm, has established its Compass Concierge service to deliver a similar revamp option. A calculator on the company’s website helps suggests how much sellers might spend.

living wall in outdoor courtyard

8. Living Walls

For homeowners downsizing to a property with a smaller yard—or for those who have trouble bending down—living walls offer a way to connect to greenery by growing plants, vegetables, and herbs along the walls of a home, garage, or outbuilding. Landscape designer Michael Glassman of Michael Glassman & Associates in Sacramento, Calif., says, “Gardening is going up rather than out for aesthetics and consumption.” He recommends vines like star jasmine and creeping fig, edibles such as tomatoes and cucumbers, and herbs like rosemary and basil. “Plant walls” resembling art are also showing up inside, especially when homeowners don’t have an outdoor space, says David Dynega, CEO of Detail Renovations in Great Neck, N.Y. 

fabric swatches

9. Better Looking Performance Fabrics

Instead of looking only at fabrics that appeal for color, pattern, or texture, homeowners want materials that will last and perform—hence, the name they’ve earned: performance fabrics. Originally, they were designed for outdoor spaces, where the sun, wind, water, or inclement weather took their toll. But as the fabrics have become more attractive, designers and homeowners have started using them indoors, where they can withstand the wear and tear of pets and people, says Chicago designer Rebecca Pogonitz of GOGO Design Group, who’s a big fan of the trend. Greg Voorhis, executive design director of Sunbrella, well-known for its performance fabric designs, says his firm is seeing the rise of more textured chenilles, boucles, and chunky wovens. “They bring new energy into familiar spaces without sacrificing comfort or durability,” he says.

floorplan

10. Downsizing Homes, Rooms, and Ornate Features

The McMansion craze has been dead for years, resulting in more homeowners looking to downsize and millennials never planning to go big. “They favor experiences over owning large high-maintenance, high-cost homes filled with lots of stuff,” says Ames. “It’s the Marie Kondo version of shedding stuff.” Many home shoppers are also looking for simpler architectural detailing that pares maintenance and cost, as well as fewer rooms that will go unused, Ames says. Lendlease, a development company that created the new Cirrus building in downtown Chicago, heeded this mantra when it planned its range of scaled-down units and beefed up its many shared amenity spaces, says Ted Weldon, executive general manager. Sheri Koones’ new book, Downsize: Living Large in a Small House (The Taunton Press, 2019), offers an abundance of information for homeowners looking to pare down

Navy accent wall in dining room

11. Deeper Hues

You can read into the emerging palette of deep hues a desire to counter global unrest, as some designers speculate, or you can take the colors as an antidote to years of pale grays. Either way, the darker hues are coming on strong. Pantone anointed “classic blue”—a very royal tone—as its color of the year. Could it be a nod to the Sussexes or appeal of The Crown? Sherwin-Williams’ Sue Wadden, director of color marketing, touts her company’s “naval” (SW 6244), “anchors aweigh” (SW 9179), “ripe olive” (SW 6209), and “dard hunter green” (SW 0041) as choices to visually mitigate stress. Another emerging trend: monochromatic rooms, donning a single paint color on the walls, trim, and ceiling.

billiard room

12. Hipsturbia

Live/work/play has become a way of life for millennials who aren’t willing to compromise when they have children. As they move to the suburbs for more space, they choose communities with urban amenities—thriving walkable downtowns with dining, shopping, entertainment, public transportation, and jobs. “Success has a way of spreading,” the Urban Land Institute noted when it coined the term “hipsturbia” in its Emerging Trends in Real Estate 2020 report, says Mary Cook, founder of Chicago-based Mary Cook Associates. “Every development we work on today is located in areas that fit this formula and foster community interactions,” she says. One example is Toll Brothers’ Apartment Living Oleander building outside Atlanta, which offers residents flexible community spaces equipped with state-of-the-art technology to accommodate events, co-working spaces, and more. The building sits on Emory University’s expanding Executive Park campus near new medical complexes designed to attract health care professionals.

Top 5 Kitchen Trends

kitchen

Instead of adding a 13th trend to the list, we decided to give kitchens their own section because they remain the number one focus in the home. The new fads being cooked up are giving this room an update in style, appliances, materials, and colors, as well as a way to enhance surrounding spaces since many are part of the open plan living-dining-kitchen area. While white may still dominate cabinets and countertops, other colors and materials are popping up—so are new technologies that help homeowners prepare food more effortlessly and healthily. Here are five kitchen trends to watch in 2020.

  1. Materials. GE appliances are showing an uptick in more white and black matte finishes as well as a new look of glass-covered stainless steel fronts that’s emerging. These new materials fit in better with other room furnishings, too, says Marc Hottenroth, executive director of GE’s industrial design division. Also showing up in kitchens is a greater mix of metals, such as brushed bronze and copper to help freshen appliances, which generally last about 10 years.
  2. Technology. Voice assistants now read recipes and cooking directions for homeowners so they don’t have to turn cookbook pages with flour-coated fingers. Appliances with gourmet guided cooking technology provide recipes and tutorials through an app that communicates with the appliance via Bluetooth. The chef no longer has to turn knobs to adjust temperatures. For instance, a rack of lamb might be roasted, then finished with a broil, which would all be adjusted automatically. And a new wall oven with hot air-fry capability is offering a healthier alternative to deep frying.
  3. Function. A new kitchen island is emerging, which combines an island with a dinette, according to Gena Kirk, vice president of design at KB Home, a national home builder based in Los Angeles. The island features a place to prepare meals at one height and an additional countertop that slides out at a lower level for people to eat around when desired. Scaled-down appliance sizes are becoming popular in smaller open-plan homes and condos. In its new Cirrus building, a 47-story tower going up on Lake Michigan, Lendlease camouflaged appliances behind millwork paneling, says Linda Kozloski, creative design director. The company also went with smaller, more European-size appliance choices because of the units’ smaller sizes, which helps counter rising construction costs. Example: a 24-inch-wide refrigerator was selected instead of a 48-inch model.
  4. Workspace. After so much buzz about whether to stay with granite or switch to quartz or quartzite, KB Home offers another idea: natural wood cutting boards for a portion of the countertop surface. The wood area provides a convenient workspace without having to pull out a cutting board or leave one out all the time.
  5. Details. Chicago kitchen designer Mick De Giulio, principal of de Giulio Kitchen Design, is introducing design character in novel ways to surprise and contradict. One example includes the hand-hammered finish on a stainless steel Bacifiore sink to add sophisticated sparkle instead of a plain-Jane stainless or ceramic white model. Another is the instillation of polished stainless steel toe kicks at the bottom of cabinets that hardly show the dirt, scuffs, or mess that painted wood ones do.

Trends are meant to inspire rather than make agents and their clients feel the need to rush into a renovation to make a house hip or more marketable than another. These points represent what’s new or coming through the pike. In the future, for example, there may be more technology that will warn homeowners about natural disasters before they occur. And before clients invests in any updates, make it clear that it’s best to do so for personal enjoyment rather than to boost salability.

“Copyright National Association of REALTORS®. Reprinted with permission.”

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Too Much Clutter?

Posted on January 10, 2020 by Debbie Prosser

Got a spare hour of so?  Make some time to start tossing.  Get a trash bag, your recycling bin and a few boxes for donations and get down to business.  Working room by room, here are the things you can get rid of right away.

Kitchen

  1. Expired food in your fridge and pantry.  Check those condiments – they    don’t last as long as you think.
  2. Recipe books, cards and printouts you don’t use.
  3. Old or one time use cleaning supplies under the sink.
  4. Bottles of alcohol collecting dust.
  5. Old, stained and tattered sponges, dishrags and hand towels.

Living Room

  • Magazines you’ve already read.
  • DVDs that no one watches anymore.
  • Knickknacks that you are tired of looking at.
  • Extra throw pillows and blankets.
  •  Old toys and electronics that aren’t being used.

Bathrooms

  1.  Expired medications.
  2.  Old makeup, nail polishes and other skin care products.
  3.  Half-empty bottles of soap or soap remnants in the shower.
  4.  Hotel soaps, shampoos, lotions, sample packets.
  5.  Hair accessories, curlers, hot tools that are no longer used.

Bedrooms

  1.  Extra sets of sheets (you only need 2).
  2.  Clothes that don’t fit or you no longer wear.
  3.  Shoes that are worn out or never worn.
  4.  Broken, unused jewelry.
  5.  Extra buttons, clothing tags, safety & bobby pins.

Office

  •  Old instruction manuals.
  •  Print-outs you don’t have a use for.
  •  Books you’ve already read, don’t like, or won’t realistically get to.
  •  Shred old tax documents, bills and pay stubs.
  •  Extra pens, pencils and other office supplies.
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Why Are Homeowners Removing the Fireplace?

Posted on December 26, 2019 by Debbie Prosser

Some homeowners are viewing the fireplace as more of a liability than an asset—and they’re opting to remove it. After all, there are an average of 22,300 fireplace, chimney, or chimney connector fires each year, according to the Consumer Product Safety Commission. Some owners are removing them because of those potential dangers, but others’ reasoning is more design-oriented—they don’t want a fireplace because it’s taking up too much space in their home or even dating their home’s look.

Fireplaces can be conducive to open floor plans. “Recently, I had two clients remove their fireplaces because they were used as dividers between rooms,” Tamara Heidel, a real estate broker at Heidel Realty in Las Vegas, told realtor.com®. They were able to open up the space by removing the fireplace.

Home builders have reported that they’re adding fewer fireplaces into new homes they build. 

But losing a fireplace can affect a home’s appeal and possibly even its resale value, real estate pros say. A fireplace can particularly be viewed as a valuable amenity in colder climates, and removing one could even reduce the number of buyers drawn to a property, some agents say.

Fireplaces can add warmth and cozy vibes to listings. “Imagine sitting around the fireplace on a cold night to warm up or marking s’mores with your kids,” says Brett Ringelheim, a real estate pro with Compass in New York. It can be a sought-after amenity among buyers.

That’s why removing it seems absurd to some real estate pros. “You don’t want your home to be labeled ‘the house without a fireplace,’ especially in cold climates,” Benjamin Ross, a real estate professional with the Mission Real Estate Group in San Antonio, Texas, told realtor.com®.

Removing a fireplace isn’t easy, either. “The removal would not only be expensive but could compromise the home’s stability,” Katina Asbell, associate broker at Real Living Capital City Realty in Atlanta, told realtor.com®. The masonry base and chimney tend to be a big part of a home’s structure.

For owners who feel like their fireplace looks dated, it could be cheaper to renovate it, even with just a new coat of paint. Paint it white or replace the mantel, agents suggest.

Jared Greenberg, a real estate pro with Keller Williams Premier Realty in Katy, Texas, told realtor.com® that he’s never had buyers who didn’t purchase a home because it had a fireplace. “Even if someone doesn’t plan on using it, they can turn it into a decorative fireplace and put candles or stacked wood in it,” he says.

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New-Home Sales Surge to 12-Year High

Posted on December 26, 2019 by Debbie Prosser

More home shoppers purchased newly constructed homes in November, bringing new-home sales to their best three-month performance since 2007, the U.S. Commerce Department reported Monday. Economists credit low mortgage rates, low unemployment, and strong income growth for the sales uptick.

Sales of new single-family homes increased 1.3% to an annualized pace of 719,000 in November. “Fueled by the limited number of resales available for purchase, low interest rates, and low unemployment, new home sales are finishing the year strong,” says Greg Ugalde, chairman of the National Association of Home Builders. New-home sales are running 10% higher than in 2018. Plus, builder confidence is high, indexes show, which bodes well for 2020, adds NAHB Chief Economist Robert Dietz.

Low inventory of new homes, however, continues to put pressure on prices. The median sales price of a new home rose 7.2% compared to a year ago, reaching $330,800 in November. Inventory of new homes stand at a 5.4-month supply. There are 323,000 new single-family homes for sale (but just 76,000 are completed and ready to occupy).

New home sales are performing strongest in the South, up 14.5% from a year ago in November, followed by a 12% increase in the West. In the Northeast and Midwest, meanwhile, new-home sales are down 10.4% and 7.6%, respectively.

Inventory remains a pressing issue for the overall housing market in both the new-home and existing-home markets. Lawrence Yun, chief economist at the National Association of REALTORS®, says that housing starts are short by 135,000 compared to the long-term average—and well short of the 5 million to 6 million that is needed to fully end the housing shortage.

“More home construction appears to be on the way as we move into 2020, as reflected in the very high confidence of home builders,” Yun said last week. “They are clearly recognizing an improving business opportunity. Overall, more construction will mean more housing inventory to choose from for consumers. Home sales can then easily rise while taming the fast growth in home prices.”

Last week, NAR also released a report that showed sales of previously owned homes fell in November, likely due to inventory constraints. Yun said existing-home sales likely will be “choppy when inventory levels are low,” but a strong economy should help keep demand strong.

“Copyright National Association of REALTORS®. Reprinted with permission.”

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What Does ‘Active With Backup Offers’ Mean?

Posted on December 19, 2019 by Debbie Prosser

By Terri Williams | Dec 17, 2019

Like any other type of business, the real estate world is filled with lingo that might not be discernible at first blush. Terms such as “pending” or “contingent,” commonly seen in online listings, may be familiar, but what about “active with backup offers”? According to Clara Nicolosi, a broker and owner at Re/Max of Hot Springs Village, AK, “active with backup offers” is also known as “taking backup offers.” 

It’s a scenario in which all parties allow the seller to continue advertising and entertaining additional offers, in case the first accepted offer falls through. But why would a seller keep the property active after accepting an offer?

“In most cases, you see this situation when the buyer has a home to sell, and it has an accepted offer but has not closed,” Nicolosi says. This contingency would release the purchaser out of the contract should his previous residence not sell.

Other reasons sellers will accept backup offers

Understandably, many buyers don’t want to juggle two house mortgages.

“In today’s market, some buyers have a stipulation that they have to sell their house in order to buy the new one and their old house isn’t under contract yet,” says Jennifer Murtland, team leader for Team Synergi Real Estate in Cincinnati.

There are other reasons a seller may take backup offers, but they similarly relate to circumstances that indicate the best offer might not pan out.

“’Active with a backup offer’ could mean the seller accepted an offer but doesn’t feel sure that the buyer is a strong candidate, so they want backups in case the first offer falls through,” says Alejandro Figueroa at Keller-Williams Realty in Fort Lauderdale, FL.

Backup offer process

So what happens when you want to submit a backup offer? According to Rick Snow, a broker at EXIT East/West Realty in El Paso, TX, when a backup offer is submitted, it is negotiated as if it were primary, but with the understanding (in writing, on a backup addendum form) that there is already a contract in place and that the second offer would become the primary offer only if the first one fails to perform or terminates within a certain time period.

There are a few things you need to keep in mind when submitting a backup offer. For one thing, it’s legally binding.

“It is best for buyers to treat submitting backup offers no differently than submitting a regular offer,” says Amy Sanford of Amy Sanford Real Estate, in Nantucket, MA. The only difference is that your offer is less likely to be accepted.

Should you submit an offer?

All of our experts agree that you should indeed submit an offer on a house whose status is active with backup offers.

“In the event that the primary offer does not go through, the second offer will go to contract without the house going back on the market,” says Jamie Safier, a licensed real estate salesperson at Douglas Elliman in New York.

Whether your offer is accepted depends on a number of factors—including your local real estate market and the condition of the property—but it could happen.

“We have had as many as five backups in position, and the fifth ended up the winner,” says Michael Edlen at Coldwell Banker Residential Edlen Team in Los Angeles.

Should your backup offer be higher than asking?

Some people might think it’s strategic to sweeten the pot by submitting a backup offer that’s higher than asking price. This all depends on your budget and how much you want the house, but some experts would endorse this strategy.

“If the winning offer ends up being $5,000 over the asking, would you be kicking yourself if you didn’t offer that price?” says Fiona Dogan, real estate agent with Julia B. Fee Sotheby’s International Realty in Rye, NY.

Safier agrees, and says if this is a house you’re excited about, make sure you have a good offer on the table.

“Sellers are allowed to take more than one backup offer, and if it’s your dream house, submit what you’re most comfortable with. In a hot market, you want to be the first in line should the primary buyer’s deal fall through.”

However, Snow is against offering more, unless that’s what the market dictates. And, according to Nicholas Oliver, principal broker at HomeDax Real Estate in New York, submitting a high backup offer may not persuade a seller to accept it.

“The seller may simply give the current accepted offer the opportunity to match the higher bid,” he says.

Terri Williams is a journalist who has written for USA Today, Yahoo, the Economist, U.S. News and World Report, and the Houston Chronicle. Follow @Territoryone

“Copyright National Association of REALTORS®. Reprinted with permission.”

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The Biggest Changes Coming in 2020 Real Estate—and What Buyers and Sellers Need to Do

Posted on December 5, 2019 by Debbie Prosser


It has, in fact, been the most consequential stretch in American real estate history, one that has fundamentally altered the landscape. Cosmopolitan coastal cities are out; affordable midsize cities are in. Baby boomers and Gen Xers are no longer the dominant forces in buying, ceding that turf to millennials. Yet after all this time, it seems that home buyers still can’t get much of a break, according to a new report from realtor.com®.

“In 2020, there will be opportunity for buyers, but in many ways the challenges they’ve faced for years are going to persist—challenges like difficulty finding the home that’s right for them, and competing with other buyers, especially in affordable price points,” says Danielle Hale, chief economist at realtor.com, whose team pulled together a forecast of housing trends for 2020.

In other words: The more things change, the more they’ll stay the same. A lack of homes for sale has been making things difficult for buyers since 2015, and next year, inventory could reach historic lows. And although single-family home construction is expected to increase 6%, it still won’t be enough to keep up with demand.

There is a bright side, though: Mortgage rates are expected to remain reasonable, at an average 3.85%.

Let’s take a closer look at the biggest factors that will shape the real estate market in 2020.

Affordability, affordability, affordability

OK, it’s not as catchy as “location, location, location,” but achievable price points will be key in the coming year, especially as millennial buyers solidify their position as America’s main home buyers (more on that later).

Now that we’ve apparently hit the ceiling of crazy price growth, it seems that buyers are just over overpaying.

“Many people would prefer to live in the San Franciscos and [other] big cities, but for the right price they will make the decision to go to another city,” says Hale.

Perhaps a city like, say, McAllen, TX, where sales are expected to rise 4.4% and home prices to appreciate 4% in 2020. Compare that with a 9.5% drop in sales for Las Vegas, and 1.1% decrease in home prices.

Texas, Arizona, and Nevada are expected to welcome an influx of home shoppers priced out of California. Meanwhile, would-be buyers from pricey Northeastern markets will likely head to the Midwest or Southeast. There, they can find affordable housing as well as solid, diversified economies.

Millennials mature into home buying

“The largest cohort of millennials will turn 30 in 2020—historically, that’s when people tend to think of buying their first home,” says Hale. The oldest millennials will be turning 39. By the middle of the year, she says, this generation will account for more than 50% of mortgages taken out in the country. Yes, that’s more than all other generations, combined.

Surprised? Well, the popular notion that millennials aren’t interested in settling down just isn’t proving true as members of this generation, born in 1981 through 1997, partner off and start families.

“Family changes tend to drive home-buying decisions,” Hale notes. “Millennials are going to be active in the housing market not just because they’re just at the age when they’re thinking about becoming first-time home buyers, but they’re also in the age range when they’re having kids.”

But while they may be motivated, they’ll face a lot of competition for the scarce homes on the market—from roughly 71 million of their peers nationwide.

Where are the homes?

While millennials are raring to buy, Gen Xers and boomers are pretty comfortable where they are, thank you very much. Boomers are living longer, healthier lives, and staying in their houses longer. Gen Xers often aren’t quite done with raising kids or ready to retire, so except for the lucky ones trading up, they also aren’t inclined to move.

Since older owners aren’t quite chomping at the bit to give up their houses en masse—and with levels of new construction still low in most parts of the U.S.—there just won’t be enough housing to meet the demand. And while in previous years this scarcity has driven up home prices, home price appreciation is finally flagging, with predicted growth of just 0.8%.

After the housing crash in 2008, which wiped out quite a few builders, those who remained have largely focused on higher-end developments with bigger profit margins. Although they’re finally showing signs of a shift toward building more entry-level homes, faced with overwhelming demand, it will take a few years for a significant number to come to market.

How to buy a home in 2020

Those looking to buy an entry-level home will face a tough search, so they should be prepared for it to take a while—and to act quickly when needed.

“Finding a property that is right for you and snatching it up before someone else does is going to be the primary challenge,” Hale says.

Those with a bit more to spend will have more to choose from, less competition, and possibly more motivated sellers.

How to sell a home in 2020

Sellers of entry-level homes should be sitting pretty, as those will continue to be the most in-demand properties next year. If anything, those sellers should be prepared to move out quickly!

Others should brace themselves for a longer wait, especially as the price point moves up. The number of existing-home sales is expected to dip 1.8% next year. Higher-end sellers should do their homework: “They might need to think about the competition and pricing their home competitively,” Hale says.

“Copyright National Association of REALTORS®. Reprinted with permission.”

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Community Bans Cars to Test Walkability

Posted on November 21, 2019 by Debbie Prosser

A 1,000-person rental development underway in Tempe, Ariz., will be a carfree zone. Tenants’ leases will not allow cars parked onsite or in the surrounding area. The development is testing the demand for walkable neighborhoods, which young adults claim they desire. The Arizona development will be urging residents to ditch their cars and take advantage of bikes, scooters, ride-hailing, and nearby public transit.

Culdesac Tempe will consist of three-story buildings and, instead of parking spaces, will feature retail and open spaces, such as communal fire pits. The development is near a light rail station that will connect residents to Arizona State University, downtown Phoenix, and the airport.

“Transportation has changed a lot over the last decade and real estate hasn’t kept up,” Ryan Johnson, co-founder and chief executive of the Culdesac development, told The Wall Street Journal. “Now there’s the chance for us to build the first post-car development.”

A 2010 survey by the National Association of Home Builders showed 60% of home buyers say they want to live in a walkable neighborhood.

Young adults like to drive less and have been leading the calls for greater walkable neighborhoods. Fewer 16-year-olds are getting their drivers licenses. In 2017, only about a quarter of 16-year-olds had a driver’s license, down from half in 1983, according to a study by transportation researcher Michael Sivak.

Culdesac developers hope to use the Tempe project as a model for other parts of the country, such as Denver and Dallas.

But not everyone believes carfree neighborhoods will take off.

“‘Quirky’ is probably the right word,” Robert Dietz, chief economist of the National Association of Home Builders, told The Wall Street Journal. “People are more adaptable in terms of taking Uber and public transport, but a lot of households still want one car.”

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Designers Sound Off on the Worst Bathroom Colors

Posted on October 16, 2019 by Debbie Prosser

Nothing ruins a bathroom like a bad hue, and the gray trend may be one of the worst offenders, designers say.

“Bathrooms tend to be enclosed spaces, so greige-y muddy colors can make the space feel smaller and dingy,” Ariel Okin, an interior designer in New York City, told Apartment Therapy. “Lighter colors like bright crisp whites, powder blues, and spring greens always play really well in a bathroom, as do moodier shades such as inky navy and hunter green.”

A “gold beige” is a color that design consultant Kelly Bernier told Apartment Therapy she avoids as a bathroom color. “It’s not a current color, doesn’t work with any recent tile, and will make your room look dated,” she says. “Greige” is a range of colors combining grey and beige; some tones are warmer and some are cooler.

On the other hand, bright and neutral paints—like blues and whites—work great in bathrooms when paired with textures and color in the finishes, Sara Raak, a lifestyle and product stylist, told Apartment Therapy.

“Copyright National Association of REALTORS®. Reprinted with permission.”

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