NAR Housing Economist 2013 Housing Trends

According to Lawrence Yun, chief economist for the National Association of Realtors (NAR), there were a few surprises in the housing market this year.

Price appreciation was more accelerated than anticipated, and cash purchases continued to make up an uncharacteristically large portion of sales.“The recovery accelerated a lot faster than we anticipated, which was great for sellers and for the 75 million homeowners who saw their home values appreciate,” Yun said in his 7 Housing Trends for 2013.

After a minimal rise from $179,000 to $180,000 over the year in 2012, the national median listing price shot up to $199,500 by September this year, according to Realtor.com.  Another surprise for Yun was the large portion of cash purchases. Over the past three years, cash purchases have made up about one-third of home sales, according to Realtor.com.  Both investors and overseas purchasers contribute to this trend, but Yun said, “Even some owner-occupant buyers are cash buyers because of the excessively tight underwriting standards for loans.”  “Some people are getting help from relatives to buy, and then they plan to take out a home equity loan later to repay them,” he said.

Other trends this year include rising mortgage rates, persistently high affordability, bidding wars, demand from first-time home buyers, and mounting popularity for real estate mobile apps.

As Yun expected, mortgage rates increased this year, “but they’re still very affordable when you look at rates on a historical basis,” he said.  Rising mortgage rates and rising prices contributed to a decline in affordability this year, but despite reaching a five-year low, Yun said, the affordability rate is “still the fifth highest for the past 30 years.”

Price appreciation, low mortgage rates, and a third ingredient—scarce inventories—created a recipe for bidding wars this year. As of September, the housing market holds a five-month supply of homes, according to realtor.com.  The market is also beginning to see more demand from traditional buyers.  While homeownership has declined over the past several years, there is now a “replenishment of renters who want to buy homes,” said Barry Habib, co-owner and chief market strategist for Residential Finance Corp., according to realtor.com.

Yun also took note of a growing trend among real estate brokerages to produce mobile apps to help both buyers and sellers. “Nearly every Realtor and brokerage in the country introduced a mobile app this year,” according to Realtor.com, and consumers are relying on those apps.

Sixty-eight percent of homebuyers used a mobile app while searching for a home, according to a study by Google and NAR.  

Not Just a Voice in the Wilderness - Home Ownership Matters - National Assoc of Realtors Update

By NAR 2013 President Gary Thomas

REALTORS® are finally being heard, and it makes you want to jump and shout!

Today President Obama delivered the message loud and clear—Home Ownership Matters!

I’m pleased to say that our efforts to make our voices heard by the Administration have had a positive impact. The President agrees with the National Association of REALTORS® (NAR) on an overwhelming majority of the housing finance issues of the day.

In a speech at the Desert Vista High School in Phoenix, the President spoke to area REALTORS® and others about housing policy and his vision for reform of the housing finance system. In the speech, he stated his commitment to ensuring consumers retain access to the 30-year mortgage—traditionally the quickest route into the middle class—and cutting red tape so that families have access to safe, reliable mortgages.

Additionally, the President expressed support for reform of the Federal Housing Administration (FHA) and the Government Sponsored Enterprises (GSEs). He said the Administration plans to continue the phase-out of GSEs Fannie Mae andFreddie Mac, now in conservatorship. At the same time, he supports the creation of a common securitization platform to encourage investment in mortgage-backed securities. NAR agrees with the Administration’s view that any new system includes a government guarantee.

The President said he supports the historic affordability role of the FHA, which is critical to first-time homebuyers. While we support the goal of maintaining the FHA as an affordable option, NAR believes the FHA should preserve access for all qualified middle class families.

The Administration calls on Congress to approve refinance programs that provide more relief to troubled borrowers. NAR supports the government’s refinancing program, known as “HARP,” along with “bright line” standards that provide certainty to community banks selling loans on the secondary mortgage market.

While we have concerns about specific FHA reforms, protecting loan limits and keeping down payments low, we believe recent bipartisan legislation introduced in the Senate is a good place to start.  President Obama made good use of the bully pulpit in stating his commitment to protecting the dream of homeownership for all Americans.

Over the past year, REALTORS® have sometimes felt like a voice in the wilderness. No longer.