September 2018 Market Update: Bear or Bull Market
Q3 Market Update: Last quarter, we addressed whether June’s slight decline was a market change or coincidence. And the summer answered YES to both. September’s $300,000 average price was a 3.4% increase from June’s $290,000. 2018 year-to-date, the median price is 9% higher and September 2018 over September 2017 (year-over-year) is up 11.7%. However, the market did shift from that of a crazy multiple offer condition on homes under $300,000. It moved to a more conventional home market with homes that are priced at market value obtaining a couple of offers. On the higher price point homes, the days a home is on the market rose slightly in September. What is the cause of this condition? Supply. The number of available units for sale that does not have an offer is the definition of Market Supply for home sales. In June, there were 4,335 single-family homes available and 939 condos. While in September there were 6,148 single-family homes available and 1,356 condos. This is a 42% increase in inventory for single-family and 46% for condos from June. In September 2017, there were only 1,356 homes without offers available on the market, that is a 456% increase in inventory. It is very uncharacteristic in any economic market for supply to increase at this rate. And for pricing to increase, normally these factors run in contrast to one another. If supply continues at this rate of increase, we expect to see pricing flatten or, for short period of time, decrease. What we have seen in the market for those homes that were being listed at a price point above market price, is that list price reductions are occurring in order for the home to sale. This shortens the gap between asking price and sale price on average. However, all indications on a broader range (such as over a year +) suggest that housing prices will continue to increase, just at a more moderate level. Remember list price is not market price, what a Buyer is willing to pay for a Home is Market Value. As you can see, the playing field is beginning to level off between buyers & sellers. Interest Rate According to an article posted on BankRate.com in September. Here are predictions about where the average rate for 30-year fixed mortgages is headed in the near future. -The Mortgage Bankers Association predicts it will rise to 4.8 percent by the end of 2018.– Freddie Mac expects it to average 4.6 percent for 2018 and jump to an average of 5.1 percent in 2019.– Realtor.com says the rate will average 4.6 percent and reach 5 percent by year-end. In last June’s Market Report, we shared the following PURCHASE POWER OF A BUYER. And how it is affected by just a 0.5% increase in rate. We thought the information was worth repeating since rates are still such a hot topic. If a Buyer makes an annual income of $75,000, at today’s current FHA 30-year mortgage rate (average is 4.5%) the typical maximum amount they can qualify to purchase is $290,000. If interest rates rise by 50 basis points to 5%, the same Buyer at the same income has their purchasing power reduced to $275,000. This is a 5.1% decrease in the purchase price they can now afford. Disclaimer: Qualifying for a loan considers many factors, this estimate is based solely on income ratios. We are not a mortgage lender; therefore, we cannot quote payments or rates. Economic Growth One of the economic figures that drive housing prices is the average salary increases, which is directly tied to job growth. In June, Nevada grew at 2.8% well above the national average of 1.6%. In addition, unemployment fell to 4.7% which is the lowest it has been since 2007. Wage increases tend to trend higher. The top five zip codes with the GREATEST percentage of appreciation were: Zip codes with the HIGHEST average sales prices were: How does the Las Vegas housing market compare to the national market? New Home Sales dropped 5.5% in September to a two-year low, according to a CNBC article on October 24th. The reason given was mostly tied to the rise in interest rates and the decline in the Buyer’s Purchasing Power as a consequence to the rising rates. If the new home sales rate were to remain at September’s levels than there would be 7.1 months of inventory. September has been a volatile month for the last few years, so before forming any opinions on the new home market we would like to see how 2018 finishes. However, Builder stocks are at record levels and climbing so that tells us that investors feel the market will be heading in the upward direction. Nationally, year over year sales has dropped by 11.6%. National Association of Realtors is reporting that one of the leading indicators for the existing home market, newly signed contracts, rose .5% from August. On the national level, we should see these contracts effect closed transactions by the year of the year. How does the Gross Domestic Product (GDP) affect housing? It is all in consumer confidence. October’s GDP rates were reported at 4.2%, breaking most expectations. When consumers are confident in their financial future, they make more capital purchases and the number one purchase is a home. Crown Point’s Takeaway for Quarter 3 of 2018 If you have additional questions, give us a call at (702) 930-9551. Curious what your home is worth? Click here to find out! If you would like to look at all current properties, click here. You may check other market update blogs here.
June 2018 Market Update: Where is the Housing Market Headed?
Q2 Market Update: Is the housing market changing directions or was June just a coincidence? In June the median price of a single-family home was $290,000, a 1.7% decrease from May. 2018 year-to-date, the median price is still 8.07% higher and June 2018 over June 2017 (year-over-year) is up 12.9%, both still very impressive numbers. Of course, one month is not a market indicator as many factors impact this figure. One factor to look at for June is the number of smaller homes sold was greater than the normal allocation, which skewed the percentage. So, June in and of itself is not an indication that we have seen a top in the resale home market value in the Las Vegas Valley. What is a trend that we are watching very closely and could indicate future market pricing, is the Supply. The number of available units for sale that do not have an offer is the home market Supply. This number has risen from January and February record lows (supply) to June having 4,335 single-family homes available and 939 condos. This is a 17% increase of inventory for single-family and 47% for condos. Basic economics tells us more supply, if not equaled with increase in demand, will cause a reduction in price. Nevada, according to the Number Report, is still below the peak median price set in June of 2006. A contradiction in the economic numbers was that while the median price decreases slightly, the number of days a home was on the market for sale substantially decreased. In June 78% of the homes listed sold in less than 30 days. This is a considerably better number than January 2018 at 58.6%. What other significant factors impact housing prices: Interest Rate The Federal Reserve has risen rates twice this year, a 50-basis point increase (.5%). They also indicate two more rate increases for the remainder of 2018, another 50-basis point. The Federal Reserve rates do not have a direct impact on the mortgage, but their policy does influence the bond market which is what drives mortgage rates. See the information below on how much buying power a homebuyer loses when rates increase. As a Seller why should the rise of interest rates be a concern for you? First, of course you may be a Buyer as well for your replacement home. Second, indirectly as a Seller you want to see the most qualified Buyers looking and making offers on your home. When Buyer’s lose purchasing power, the price they can afford to offer drops. If a Buyer makes an annual income of $75,000, at today’s current FHA 30-year mortgage rate (average being 4.5%) the typical maximum amount they can qualify to purchase is $290,000. If interest rates rise by 50 basis points to 5%, the same Buyer at the same income has their purchasing power reduced to $275,000. This is a 5.1% decrease in the purchase price they can now afford. Disclaimer: Qualifying for a loan considers many factors, this estimate is based solely on income ratios. We are not a mortgage lender; therefore, we cannot quote payments or rates. Demand Obviously the interest rate rise can move a percentage of people out of a certain price point, decreasing demand at that price point. We have also seen a large influx from California buyers this year, due to the state increase in income tax and gasoline tax, increasing demand. Economic Growth One of the economic figures that drives housing prices is average salary increases, which is directly tied to job growth. In June, Nevada grew at 2.8% well above the national average of 1.6%. In addition, unemployment fell to 4.7% which is the lowest it has been since 2007. Wage increases tend to trend higher after these two trends. So, the future of Nevada employees is looking bright and they should see more on their checks in the upcoming year, increasing their purchasing power on a home purchase. The top 5 zip codes with the GREATEST percentage of appreciation were: Zip codes with the HIGHEST average sales prices were: Las Vegas housing market vs national market In June the national housing market reported similar numbers to Nevada. One of the most surprises numbers was that June’s new housing starts nationally were down 12.3% from May. However, May had the highest number of starts since the height of the market in 2007. So, this may be a slight market correction from the May high. Realtor.com reported that national inventory has declined by 4% year-over-year in June. And that transactions moved at a more rapid pace with 10% closing more quickly than in June 2017. The national average sales price was reported to be at a 9% increase year-over-year. Nevada was at a 12.7% increase, well above the national average. Fannie Mae released their June data indicating that The Home Purchase Sentiment (tracking peoples intentions, attitude, and perceptions about housing), fell slightly from 91.3% to 90.7%. It is still an indication that over 90% of potential Buyers and Sellers feel it is a Good Time to Buyer or Sell. 19% reported higher incomes this year. Some of hottest markets in the U.S. such as Seattle, Silicon Valley, and Austin, Texas appear to be headed for a cool down in home prices. Nationally, existing home sales dropped in June for a third straight month and national inventory has risen. California saw inventory rise 12%. Crown Point’s Take Away For this market update, our Buyers who have been experiencing a tough time finding that perfect home, relief is around the corner. We expect to see inventory housing levels rise in Las Vegas, giving more options to Buyers. There may be a couple of months of a “sweet spot” where inventory is up, giving you more options, before interest rates rise, reducing your purchasing power. For our Seller’s, the intense Crown Point marketing of your home with a WOW & Sizzle 1st impression is going to be even more important. We always feel it is critical to obtain maximum value. But with the increase of supply your home really needs to stand out in the market to achieve the best price possible. We do not foresee a significant change in Median Price for 2018. Do expect to see, however, the amount of multiple offers per home reduced, trending towards a more traditional market. It will be healthy for the market to stabilize at a more sustainable growth rate. Nevada economic factors are certainly looking strong for the second half of 2018 and into 2019. If you have additional questions, give us a call at (702) 930-9551. Curious what your home is worth? Click here to find out! If you would like to look at all current properties, click here. You may check other market update blogs here.
Finding the Perfect Mattress
You’ve got more options than ever when mattress shopping these days with no shortage of brick-and-mortar and online-only retailers to choose from. Here are the factors you should consider when you’re shopping for a perfect night’s sleep. Mattress construction: The most popular types are innerspring, memory foam, and adjustable air mattresses. Each has pros and cons when it comes to durability and comfort customization. Firmness: This plays a huge role in the quality of your sleep. Mattresses that are too firm or too soft can cause aches and pains, so it‘s recommended that you test them for 10 to 15 minutes in store before making a purchase. Sleeping position: Your mattress should match your sleeping style (side, back, face-down, etc.). You want it so that keeps your spine in proper alignment. For example, some mattresses are better for side sleepers, while others are better for back sleepers. Size: It’s not quite as simple as choosing between a king and a queen size. You should also consider your height, as some are a better fit for shorter people while tall people will want a longer mattress so their limbs aren’t hanging over the edge of the bed. Stability: For couples, you should consider how the mattress reacts when one person moves, so the other person’s sleep isn’t disturbed in the middle of the night. View available homes: Available HomesSchedule a Buyer Consultation Appointment (phone or in person): Buyer AppointmentHome evaluation (home value): Home ValueSchedule a consultation about selling my home: Seller Appointment
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