An Update on the US Housing Market (ManageCasa)

An Update on the US Housing Market (ManageCasa)

US Housing Market 2019

Investors and home-buyers compete for available residential properties, because housing is in demand and in short supply.  That’s putting renewed upward pressure on prices (+5.5%) nationwide.

Existing home sales in August grew 2.6% from last August to 5.35 million completed transactions, according to NAR.

As expected, buyers are finding it hard to resist the current rates…The desire to take advantage of these promising conditions is leading more buyers to the market.” — Lawrence Yun, NAR Chief economist.

Shrinking Home Supply Effect

Shrinking supplies and lower mortgage rates are elevating demand for new homes too. Sales last month grew to 700,000.  The US Department of Commerce said new home sales grew 7.1% to annualized rate of 713,000 units last month.  The growth was highest in the South and West. Sales of new homes in the west grew 8% YoY and prices rose 5.7%.

Strong consumer confidence and lower rates (3.73% for 30 year fixed rate mortgage) are encouraging buyers to buy higher priced homes, which had sunk severely in the last year. First time homebuyers accounted for 31% of the sales, down from last month’s sales. All cash sales were even with July but down from last August at 2%.

Sales By Price Category

Screencapture courtesy of NAR

Home Prices and Sales Up

Home Sales Infographic courtesy of NAR.

Enjoy the following insight and data from Hud, NAR, US Census Bureau, NAHB, Trading Economics, Freddie Mac, Attom Data Solutions, Zillow, from today’s most credible housing information sources.

See the city housing market reports for San JoseLos AngelesSan FranciscoPhoenixChicagoDenverOaklandHonoluluLas Vegas and for California. See below for mortgage rate forecasts and discover the full benefits of the best property management software.

What’s Supporting the Property Market?

What is underpinning the continuing strength of the US property markets?  The stats point to greater demand from first time Millennial buyers, strong job and wage numbers, lower interest rates, strong retail spending supporting jobs, and lots of interest from individual property investors.

Individual rental property investors continue to believe rental income housing is a high performing investment, especially as the peaking stock market threatens to fall. With severe housing shortages and high purchase prices, it’s easy to see why these investors keep buying properties and why the demand for property management solutions is brisk.

Prices rose 5.5% YoY in July which is the lowest rate of growth in the last 3 years. Full NAR July data will be released on August 21st.

NAHB reports in July that builder confidence slightly higher in July (64 on the index). That’s despite rising building costs and labor shortages, economic turbulence, and despite rising single family affordability issues. The good news is mortgage rates should drop and lumber prices are half of what they were a year ago.

Is This the Right Time to Buy a Home?

If you’re hoping to time the purchase of a home, are deciding on whether you should buy a second home or rental income property, feel uncertain about the economy, and mapping out your future, you’ll find these real estate market insights valuable.  It may be the right time to buy in most cities, while in some, perhaps not.

In this well viewed chart from Zillow Research, you can see an upward trend in home prices. Zillow calls the market hot and expects average home prices across the country to reach $232,000. Their reports aren’t all rosy however. They expect home prices in San Jose to drop $53,000 in one year, while New York and Miami will see flat prices.

Screen Capture courtesy of Zillow

Housing Price Changes Over Time

Nationally, there are some surprises in housing prices.  In this chart, courtesy of Kiplinger research, prices in San Jose have jumped 130% since the recession bottom, while Denver, Seattle, San Francisco, Los Angeles, and Las Vegas home prices have doubled as well. Honolulu, New York, Boston, and Washington are a few cities that haven’t seen a full recovery.  Property investors: please check out the property management software that smart individual investors are using.

City Median Home Price % Change Since Peak
% Change Since Bottom
San Jose, Calif. 1,100,000 48.8 130.1
San Francisco, Calif. 860,000 22.4 127.4
Los Angeles, Calif. 634,000 6.1 91.6
Honolulu, Hi. 600,000 43.3 53.5
Oxnard, Calif. 589,000 -5.8 69.6
San Diego, Calif. 545,000 4.4 84.1
Seattle, Wash. 430,000 47.1 110.7
New York, N.Y.-N.J. 410,000 -4 38.1
Boston, Mass. 410,000 14.3 57.2
Denver, Colo. 383,000 66.3 100
Washington, D.C.-No. Va. 375,000 -13.9 37.5
Sacramento, Calif. 375,000 -6.8 115.5
Portland, Ore. 370,000 39.3 86.6
Bridgeport, Conn. 356,000 -18.6 24.7
Riverside-San Bernardino, Calif. 339,000 -14.7 100.3
Stockton, Calif. 335,000 -19.4 135.4
Modesto, CA 295,000 -20.8 136.4
Austin, Texas 290,000 81.1 80
Colorado Springs, Colo. 280,000 34.7 60
Las Vegas, Nev. 266,000 -20.9 137.1
Providence, R.I. 262,000 -14.5 69.5
Boise, Idaho 260,000 26.1 121.7
Salt Lake City, Utah 255,000 68.5 101.1
Miami, Fla. 255,000 -17.1 103.4

2019 Summer Real Estate Update

The 2019 summer real estate market report was colored by rising employment and wages, lowered interest rates, and a booming US economy.

Yet builders and buyers base purchases and investments on longer term outlooks.

The economic news has been so good however, that even longer term views are considerably brighter, and builders are getting back to work building homes, condos and apartments. This is one of those bright periods to buy.

What Are Some Reliable Housing Predictions?

Most experts are making predictions or forecasts of rising home sales and ultimately rising home prices and rental prices, while other media outlets are still insisting on housing market crashes ahead.

Mortgage Rates Today


Today, The Bank of America was offering 30 year fixed rate mortgages at a rate of 3.375% for a suggested monthly payment of $884.  Their 5/1 ARM variable rate is currently at 2.875%. With a further interest rate cut, more homes could become affordable for buyers.

Without inflation, it’s difficult for the FED to inflate the rates which would also jump up mortgage rates.  The red is expected to cut rates in the fall and that’s music to the ears of everyone in property management and residential real estate.

Mortgage Rate Forecast courtesy of Freddie Mac

The Big 4 Housing Market Factors

The economy, jobs rate and wages, low mortgage rates and rising housing availability are the 4 key factors which could revive the housing sector in 2020. Wages haven’t risen well, and if wages rise, we would likely be in for rapid price appreciation. With buyer and seller fear easing along with low mortgage rates, it’s a good time to buy a home. It may be a great time for multifamily apartment investors to grow their portfolios.

When the big 4 housing factors are present, it’s hard not to suggest stronger housing sales.  As you’ll read here, sales and prices are predicted to rise into 2020.

In the buying vs renting question, the weight is in favor of buyers and rental investors, because mortgage and lending costs are so low. Yardi reports that the U.S. average rent price increased by 2.5% or $35 year over year. As of July 2019, the national median rent for a one-bedroom apartment is $1,220. Although rents have flattened (.5% for 1 bedrooms and .5% for 2 bedrooms), they may too see rises soon enough.

This summer with price rises ahead, more homes for sale, and low mortgage rates, this seems to be an onboarding period for the great American home buying train.

Existing Home Sales Keep Rising

HUD reports that purchases of new homes fell for a 2nd straight month while sales of existing homes rose to a 3 month high. In response to political uncertainties, new home construction was down, yet more homes are being put up for sale.

Housing Supply to Summer 2019 – Chart Courtesy of NAR

According to NAR, total existing-home sales (single-family homes, townhomes, condominiums and co-ops), rose 2.5% from April to a seasonally adjusted annual rate of 5.34 million in May. Census Bureau stated that number of new home sales fell to a five-month low of 626,000 in May.

Infographic courtesy of NAR

Given how monthly volumes and prices fluctuate, next month’s results might reverse. Year over year home price increases were up 3% to 5% and not deterred by growing housing stock. Housing prices cooled the most in the West, including California.

With interest rates declining, and rumored to fall further this year, it’s no surprise to see big increases in mortgage refinancing, and a decline in the number of underwater borrowers. Inventory across the nation is becoming critically low again, and with low mortgage rates and fast rising sales, affordability will become the issue that will paint the headlines.

New Housing Needed

Lawrence Yun, NAR’s key rep says “more homes need to be built” yet despite continuing low lending rates, builders confidence does seem to be there. Building permits rose slightly in May to 269,000 units. Permits for the multi-family housing sector dropped 5% to 479,000 units.

According to Census.gov, here are the national new building stats:

⦁ Building Permits: 1,294,000
⦁ Housing Starts: 1,269,000
⦁ Housing Completions: 1,213,000

Building permits rose in the South (6.8% to 693,000) and West (1.8% to 335,000) while they dropped in the Midwest (-8.4% to 174,000) and Northeast (-24.6% to 92,000).

Chart courtesy of Trading Economics

Census.gov also reports that privately‐owned housing completions in May dropped 9.5% to an annual rate of 1,213,000. The April forecast was for 1,340,000 housing completions. Single‐family housing completions in May were at a rate of 890,000 which was 5% below the revised April rate of 937,000. The May rate for units in multifamily buildings with five units or more was 319,000.

If you’re an investor or property manager, review the multifamilyaproperty management trendsUS Housing Marketapartment prices, and Rental Property reports.

Homeowner Equity Report

People buy homes and property to build equity and Americans are gaining big traction. A lot of young buyers are concerned and don’t want to lose out on the wealth building benefits of home ownership. Millennials in particular are ready to buy and are very frustrated at government action in the last 10 years. The memories of the last recession continue to fade however, and fewer mortgage holders are in trouble.

Homeowner equity in the US rose $264 billion in the first quarter of 2019. The gain over the last 4 quarters was $817 billion to reach $13.4 trillion. This means American wealth is growing fast creating plenty of funds for home upgrades, rental property upgrade, and a booming property management industry.

What are the Key Drivers of the Housing Industry:

They are low interest rates, high rent prices, strong employment and GDP, insufficient housing stock and the wrong kind of housing, demographic makeup, wages, population growth and migration, housing regulations, and builder and consumer optimism.

Should I Buy a Home This Year or Wait?

Buyers and renters are asking whether they should buy now or wait. Their decision is one thing, yet mortgage financing will have the biggest impact on whether renters can become buyers. Low mortgage rates and rising income will cause many to take the home buying leap, this summer.

Is it a Good Time to Buy a Home?

  • low interest and mortgage rates
  • American buyer wealth growing
  • new housing construction dropping
  • lots of new construction being released
  • recent economic data is positive
  • more housing stock available
  • high rent prices

The chance of a housing crash is so mininal given low mortgage rates, tight supply, high employment, excellent economy, and

US Rental Housing Market 2019

Despite flat year over year growth of renta, some apartment rental markets are seeing stong price growth, particularly in the 2 bedroom segment. Due to affordability issues, higher rent prices may fuel multifamily building across the country. Take a look at the Denver housing marketPhoenix housing marketHawaii housing marketSan Jose housing marketSan Francisco housing market and even the Oakland housing market for trends in multifamily building and apartment rental.

Find out more on the US rental market report and the US multifamily market report.

Rent prices by top cities. Chart courtesy of Zumper.

Millennials Driving the Market

Sales numbers from Freddie Mac and Fannie Mae, show most loan originations are from Millennials who are finding more starter homes to buy. With more Millennials hitting their family forming, home buying years, they’re outpacing even Generation X’s previous record home buying numbers. Millennials took out 45% of all mortgages last year.

2020 Housing Market Forecast

Corelogic HPI Forecast predicts home prices will increase 5.6% year over year by May 2020. They believe home prices will rise over the next month by .8%. Home prices in states such as Idaho, Utah, South Dakota, Nevada and Arizona are seeing price growth above 6.0%.

Their U.S. Home Price Insights report just released shows a large list of cities that are undervalued and overvalued. This might help investors learn which cities are the best to buy in this year.

Best Cities to Buy a Home?

The stats show mid-sized cities across the nation are growing in popularity, with improving economies and migration. These locations may give resistant sellers (Generation X and Babyboomers) a destination to move too. That’s an important factor for homeowners.

Check out the Phoenix housing marketLas Vegas Housing MarketDenver Housing MarketChicago Housing marketOakland housing marketNew York housing market, and the Honolulu housing market for conditions in those cities.

Realtors and Property Managers, please do register for a FREE Demo of the ManageCasa Property Management platform.  Grow your property revenues and commissions with a property management solution that makes it so easy.

**Written by Gord Collins and sourced from ManageCasa