Published on: Feb 26, 2016 @ 10:21 am
Cash sales share declines moderated in November 2015
Cash sales accounted for 36.4% of total home sales in
November 2015, down 0.7 percentage points year over
year from 37.1% in November 2014. On a month-over-month
basis, the cash sales share increased by 2.5 percentage
points in November 2015 compared with October 2015. The
cash sales share typically increases month over month
in November, and due to seasonality in the housing
market, cash sales share comparisons should primarily
be made on a year-over-year basis. The November 2015
year-over-year decrease in cash sales share was the
lowest in nearly three years. From January 2013 until
October 2015 decreases in the cash sales share averaged
2.7 percentage points, ranging from -1.4 to -5.1
percentage points. The elevated cash share for November
was most likely related to the new federal mortgage
rules that took effect in October 2015 (TRID) as some
mortgage deals were delayed while the industry adjusted
to the new mortgage rules. These delays are not
expected to carry forward in future months. The cash
sales share peaked in January 2011 when cash
transactions accounted for 46.6% of total home sales
nationally. Prior to the housing crisis, the cash sales
share of total home sales averaged approximately 25%.
Real estate-owned (REO) sales had the largest cash
sales share in November 2015 at 63.2%. Resales had the
next highest cash sales share at 35.7%, followed by
short sales at 34.3% and newly constructed homes at
16.7%. While the percentage of REO sales that were
all-cash transactions remained high, REO transactions
accounted for only 8.7% of all sales in November 2015.
In January 2011 when the cash sales share was at its
peak, REO sales represented 23.9% of total home sales.
Resales typically make up the majority of home sales
(about 78% in November 2015), and therefore have the
biggest impact on the total cash sales share. Michigan
had the largest cash sales share of any state at 53.4%,
followed by Alabama (51.4%), Florida (50.2%), Kentucky
(49.1%) and New York (47%). Of the nation’s largest 100
Core Based Statistical Areas (CBSAs)[2] measured by
population, Detroit, Mich. had the highest cash sales
share at 61.5%, followed by West Palm Beach-Boca
Raton-Delray Beach, Fla. (53.4%), Miami-Miami
Beach-Kendall, Fla. (52.5%), Fort Lauderdale-Pompano
Beach-Deerfield Beach, Fla. (50.4%) and North
Port-Sarasota-Bradenton, Fla. (50.1%). Syracuse, N.Y.
had the lowest cash sales share at 13.1%.
Oil settles lower, but gains for the week
Oil futures turned lower late Friday, but still
finished the week higher for the second time in a row
as the market continued to mull the likelihood of a
slowdown in global production. West Texas Intermediate
crude “ran into some resistance technically” and pulled
back, said Colin Cieszynski, chief market strategist at
CMC Markets. Prices also likely saw some “profit-taking
ahead of the weekend just like we’ve been seeing in the
Dow today.” April West Texas Intermediate crude fell 29
cents, or 0.9%, to settle at $32.78 a barrel on the New
York Mercantile Exchange. It gained more than 3% for
the week.
NAHB – study reveals the housing preferences of the
boomer generation
The National Association of Home Builders (NAHB) has
had a long history of tracking the evolution of home
buyer preferences. Builders and other industry
professionals now have an opportunity to find out what
baby boomers want compared to other home buyers in
Housing Preferences of the Boomer Generation: How They
Compare to Other Home Buyers, a study recently released
by NAHB’s publishing arm, BuilderBooks. Based on a
comprehensive, nationwide survey of recent and
prospective home buyers conducted in 2015, the study
discusses how various designs influence the home
purchase decision; the location, features and size of
the homes consumers want, and the influence of certain
events and people on the decision to move to another
home. “This survey is a great resource for building
professionals, as it provides an inside look at the
things boomers, and other generations, are looking for
in today’s homes,” said Rose Quint, NAHB’s Assistant
Vice President for Survey Research, and one of the
study’s authors. “As the housing market continues to
recover, more consumers are in the position to purchase
a home, and it’s important for builders to have this
knowledge about their customers.”
Here are some of the findings on what home buyers want:
– The majority of all buyers (65%), and boomers in
particular (63%), would like to buy a single-family
detached home.
– Most home buyers (64%) prefer a single-story home,
but there is great variation by generation: Millennials
(35%), gen X’ers (49%), boomers (75%) and seniors
(88%).
– Fifty-eight% of home buyers want a full or partial
basement, but the preference declines with age:
Millennials (77%), gen X’ers (67%), boomers (50%) and
seniors (43%).
– When asked if they would buy a home without a living
room, 37% of buyers say they would, 42% would not and
21% are not sure. The share of buyers willing to part
with this formal space falls steadily with age:
Millennials (43%), gen X (40%), baby boomers (37%) and
seniors (26%).
And here are some of the findings on what most buyers
do not want:
– Few buyers (8%) or boomers (7%) prefer a central
city location. About two-thirds prefer a home in the
suburbs (close-in or outlying) and just over a quarter
prefer a rural area.
– Only 14% of buyers overall (and 13% of boomers) are
willing to pay more for a home out of pure concern for
the environment.
Personal income, spending both up 0.5% in January
The Commerce Department said on Friday consumer
spending increased 0.5% as households ramped up
purchases of a range of goods and the return to normal
winter temperatures boosted demand for heating.
Consumer spending, which accounts for more than
two-thirds of US economic activity, rose by an upwardly
revised 0.1% in December. The report added to data on
manufacturing and employment that have suggested
economic growth picked up at the start of the year.
Gross domestic product increased at a 1.0% annual pace
in the fourth quarter. Economists polled by Reuters
had forecast consumer spending rising 0.3% last month
after a previously unchanged reading in December.
There were also signs of price pressures stirring last
month, which will most likely be welcomed by Fed
officials against the backdrop of low inflation
expectations that are threatening to keep inflation
below the US central bank’s 2% target for an extended
period. A price index for consumer spending edged up
0.1% after dipping 0.1% in December. In the 12 months
through January, the personal consumption expenditures
(PCE) price index increased 1.3%, the largest increase
since October 2014. The PCE index advanced 0.7% in
December. Excluding food and energy, prices rose 0.3%.
That was the largest increase since January 2012 and
followed a 0.1% gain in December. The so-called core
PCE price index increased 1.7% in the 12 months through
January, the largest rise since July 2014. The core
PCE, the Fed’s preferred inflation measure, rose 1.5%
in December. Consumer spending last month was
supported by a 0.5% rise in income. That was the
largest increase since June and added to a 0.3%
increase in December. Wages and salaries shot up 0.6%
also as minimum wage increases came into effect in some
states. Wages and salaries increased 0.2% in December.
Florida single-family home prices up 14% over last year
Florida’s housing market reported rising median prices,
fewer all-cash closed sales and a tight inventory of
for-sale homes in January, according to the latest
housing data released by Florida Realtors. As
predicted by Florida Realtors, January 2016
single-family home sales rose, totalling 16,529, an
increase of 2.7% from January 2015. “Florida’s housing
market remains on a steady path,” said Matey Veissi,
Florida Realtors president, broker and co-owner of
Veissi & Associates in Miami. “While inventory levels
are tight, the months’ supply of homes for sale remains
stable and distressed property sales continue to fall.”
Statewide, the median single-family home sales price
was up 13.7% from last year at $199,000, according to
data from Florida Realtors’ industry data and analysis
department. Condo sales prices are also up 10.9% from
last year at $152,000. January marked the 50th month in
a row that statewide median sales prices for both
single-family homes and for townhouse-condo properties
rose year-over-year. “The current market offers a
great opportunity for sellers, who are getting nearly
94% (for existing single-family homes) of their asking
price at the closing table; existing townhouse-condo
sellers are getting more than 93% of their asking
price,” Veissi said. “And while mortgage rates are
inching higher, they remain historically low, which
gives consumers more buying power.”
Although the townhouse-condo market was down by 4.8%
compared to January 2015, data reflected few short
sales and cash-only sales during January 2016.
“Overall, statewide sales growth remained slow in
January, but it’s important to note that this trend has
not been uniform across all price points,” Florida
Realtors Chief Economist Brad O’Connor said. “Taking a
closer look at the data, what we are seeing are large
year-over-year declines in properties selling for less
than $150,000. Sales in this price range, which
comprised over a third of January’s total sales, were
down by nearly 17% compared to January 2015.” “Sales
of homes in price tiers of $150,000 or more, on the
other hand, were actually up over 14%, year-over-year,”
he said. “An overall rise in home values is partly
responsible for these contrasting trends, but the real
culprit is a lack of inventory in lower price tiers
that has resulted from high rates of investor activity
and conversions into rentals.” Inventory was at a
4.5-months’ supply in January for single-family homes
and at a 5.9-months’ supply for townhouse-condo
properties