Archive for July, 2013

Homeownership rate: Nobody panic

The Bloomberg headline: "American Dream Slipping as Homeownership at 18-Year Low."

It’s slipping away! It’s all falling apart! It’s the end of a dream!

Well, no. Bubbles are funny that way. The reality is that the current rate — about 64 percent — is the same rate it averaged from 1965 to 1995.

But "Homeownership rates back to normal" isn’t as exciting a headline, is it?

Here’s the chart via Calculated Risk (click to enlargofy):

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The causes — or not — of home sales (or not)

Here’s 30 seconds on causation vs. correlation. It’s important.

Just because one thing happens around the same time as another thing, it doesn’t mean they’re connected. It’s a mistake a lot of people make.

Here’s a simple and clear example: A new principal comes to a school. A year after she arrives, reading scores are up eight percent. It must be because of her, right?

That’s correlation. The two things happened around the same time.

But that year the school district’s lines were redrawn, and it had rained a lot more than usual; less outdoor recess = more library time.

So maybe it was the principal’s new policies that increased scores, or maybe it was the change of student body, or maybe it was the extra time students had in the library. We don’t know the actual causation.

Keep this in mind when you see headlines like "Pending Home Sales Squeezed by Changing Mortgage Rates." (That happens to be from Realty Times.) Home sales may have slipped from month to month just as interest rates rose slightly, but that doesn’t mean one caused the other.

Apparently, babies named "Ava" caused the housing bubble.A lot of other things also happened. We had some crazy-hot weather, for example, so why not "US Heat Wave Keeps Home Shoppers Away"? Or "Birth of Britain’s Prince George Has Americans Glued to TV Instead of House Hunting"?

Those things also occurred around the same time, and they make about as much sense as a family saying, "We were gonna buy a house, but mortgage rates went up two-tenths of a percent, so forget it."

In the February/March issue of Commonwealth we wrote about how to read the real estate numbers and news — about which numbers actually mean things, and how it’s easy to spin them. If you haven’t read the piece, you should.

There’s nothing wrong with conclusions, but you might not want to jump there too quickly.

Pending home sales up nearly 11 percent

The June Pending Home Sales Index from NAR is up 10.9 percent over last year, marking 26 straight months of increases.

(Month-to-month the number is down, but that doesn’t matter as much. In fact, the monthly figures have been up in odd-numbered months and down in even-numbered months since last December. Translation: Who cares?)

The southern region didn’t do quite as well; we were up only 9.5 percent over 2012. Still, quite a nice showing as the recovery continues.

Oh, and adding to the good news, new-home sales have also been up year-to-year for 21 straight months, and in 24 of the last 25 months.

Read the full story over at NAR, but ignore the headline.

Shocking result from a new survey

A new survey from Move (the folks who run Realtor.com) found a surprise: "Buyers Will Pay More for Good Schools."

Three out of five home buyers surveyed said that school boundaries greatly impact their home purchasing decision.

One fun fact: About 62 percent of people said they’d give up a pool or spa for a better school district.

However, there’s a limit. More than 90 percent would not pay 11 to 20 percent above their budget to get a home in a desirable school district.

Read more over at Realtor.com.

Mack Strickland named to Appraiser Board

imageA quick congrats is in order to long-time VAR member Mack Strickland of Chester — president of Strickland Appraisal Services — who was named by Governor Bob McDonnell to the Real Estate Appraiser Board.

New NAR survey finds that Americans support home ownership

A new survey from NAR found that consumers are upbeat about housing. They "overwhelmingly believe that buying a home is a good financial decision," and they consider owning a home to be a top priority.

The Housing Pulse Survey found that 80 percent of Americans believe it’s a good idea to buy a home, and that half of renters now consider home ownership "one of their highest personal priorities."

There’s more. Check out the full survey results over at Realtor.org.

Big changes at Realtor.com

imageRealtor.com will soon be changing to better compete with the likes of Trulia, Zillow, and other real estate listing aggregators. That’s the result of a nearly unanimous vote of the NAR board of directors, which has seen Realtor.com’s market share erode in the face of third parties.

The "new" Realtor.com will now…

  • …include listings from non-Realtor companies and brokers — not just Realtor-owned MLSs;
  • …include information about not-yet-listed properties such as new homes and communities, as well as unlisted properties that are for rent;
  • …include information about defaults, short sales, foreclosures, distressed-property auctions, and REOs unless the listing broker objects. (Previously permission worked the other way around: The site wouldn’t list those properties without the listing brokers’ consent.)

Why the change? Although Realtor.com is still the big gun of real estate websites ("preferred by consumers in the home sales space two times more than Zillow and 28 times more than Trulia" according to NAR), it’s been losing traffic to those sites. "particularly in markets where there are many non-Realtor practitioners."

Realtor.com also wanted to push back against sites like Zillow, according to Curt Beardsley, its vice president of business development:

The site, he said, leaves the real estate practitioner out of its advertising; puts inaccurate Zestimates next to list prices; encourages consumers to sell without an agent; posts inaccurate, out-of-date information; and buries basic listings behind pages of “featured” (paid) listings.

Oh, and if you’re worried about your listings being mixed with those of non-Realtors, fear not. NAR said that Realtor.com "will continue to clearly distinguish Realtor-represented listings and will use language that more prominently emphasizes the difference between Realtors and non-Realtors.”

Want the whole story, including history going back to the 1990s? Click here for the NAR article.

VAR Home Sales Report gets covered in Richmond, Bloomberg

imageWe got some great coverage in the Richmond Times-Dispatch — which was picked up by Bloomberg Businessweek — on how well the Richmond housing market is recovering.

"The second quarter report shows improvements in almost every region of the state and in every major metric," said Stacey Ricks, spokeswoman for the Realtors’ association, referring to the data. "Home sales are up, median sales prices have increased, the number of days on market is way down and even foreclosures have slowed across the commonwealth."

Check out the details on all Virginia’s housing markets in our monthly and quarterly Home Sales Reports.

Proposal would end door-to-door US Mail service

imageCongressman Darrell Issa (R-Calif.) is proposing that the U.S Postal Service end door-to-door delivery in favor of neighborhood "cluster boxes" — the kind you might see in a condo complex.

Issa says the change could save the Post Office $4.5 billion a year.

(Contrary to popular belief, the USPS does not receive federal funding. All its money comes from postage and delivery sales and services.)

Virginia’s residential sales volume (measured by the dollar value of real estate sold) passed an important milestone in the second quarter of 2013. Sales volume surpassed the volume sold in 2010 when sales were boosted by tax credit incentives. The 2010 comparison is important because the 2013 Virginia housing market has advanced beyond the peak of the 2010 market, despite significant economic stressors (government sequester) and without economic incentives (tax credits). All in all, the second quarter was strong and continues to exhibit signs of recovery.

Comparing the 2013 housing market to the 2010 housing market performance, inspired us to look back at sales volumes in the two years (2005 and 2006) prior to the peak “bubble” market in 2007 as possible benchmarks to recovery. A comparison of 2005-2006 sales volume to 2012-2013 shows that the Virginia housing market is well on its way back to normal. With unemployment rates continuing to fall and mortgage interest rates remaining low, we are looking forward to a strong market in July and August. The next two months may indicate whether we will continue to see encouraging numbers through the end of the year.

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Analysis and commentary by Ted Koebel, Senior Research Associate, and Mel Jones, Research Associate, of the Virginia Center for Housing Research at Virginia Tech.

Click here for full Q2 2013 Home Sales Report

Cover 2013-Q2