NAR – pending home sales inch up 0.2% in November
Pending home sales were mostly unmoved in November, but
did squeak out a minor gain both on a monthly and
annualized basis, according to the National Association
of Realtors (NAR). Heading into 2018, existing-home
sales and price growth are forecast to slow, primarily
because of the altered tax benefits of homeownership
affecting some high-cost areas. The Pending Home Sales
Index, a forward-looking indicator based on contract
signings, rose 0.2% to 109.5 in November from 109.3 in
October. With last month’s modest increase, the index
remains at its highest reading since June (110.0), and
is now 0.8% above a year ago. Lawrence Yun, NAR chief
economist, says contract signings mustered a small gain
in November and were up annually for the first time
since June. “The housing market is closing the year on
a stronger note than earlier this summer, backed by
solid job creation and an economy that has kicked into
a higher gear,” he said. “However, new buyers coming
into the market are finding out quickly that their
options are limited and competition is robust.
Realtors® say many would-be buyers from earlier this
year, stifled by tight supply and higher prices, are
still trying to buy a home.”
One of the biggest questions heading into 2018,
according to Yun, is if the depressed levels of
available supply can improve enough to slow price
growth and make buying a home more affordable. While
last month’s significant boost in existing sales was
noteworthy, it did come with some concerns. Sales
prices were up 5.8% – more than double wage growth –
and the 3.4-month supply of homes on the market was the
lowest since NAR began tracking in 1999. “The
strengthening economy, and expectation that more
millennials will want to buy, serve as promising signs
for solid homebuying demand next year, while also
putting additional pressure on inventory levels and
affordability,” said Yun. “Sales do have room for
growth in most areas, but nationally, overall activity
could be slightly negative. Markets with high home
prices and property taxes will likely feel some impa ct
from the reduced tax benefits of owning a home.” Yun
forecasts for existing-home sales to finish 2017 at
around 5.54 million, which is an increase of 1.7% from
2016 (5.45 million). The national median existing-home
price this year is expected to increase around 6%. In
2018, Yun anticipates essentially no change (a decline
of 0.4%) in existing sales (5.52 million), and price
growth to moderate to around 2%. The PHSI in the
Northeast jumped 4.1% to 98.9 in November, and is now
1.1% above a year ago. In the Midwest the index rose
0.4% to 105.8 in November, and is now 0.8% higher than
November 2016. Pending home sales in the South
decreased 0.4% to an index of 123.1 in November but are
still 2.5% higher than last November. The index in the
West declined 1.8% in November to 100.4, and is now
2.3% below a year ago.
Trump targets Amazon in call for postal service to hike
prices
US President Donald Trump targeted online retailer
Amazon on Friday in a call for the country’s postal
service to raise prices of shipments in order to recoup
costs. “Why is the United States Post Office, which is
losing many billions of dollars a year, while charging
Amazon and others so little to deliver their packages,
making Amazon richer and the Post Office dumber and
poorer? Should be charging MUCH MORE!” Trump wrote on
Twitter. The US Postal Service is an independent agency
within the federal government and does not receive tax
dollars for operating expenses, according to its
website. The organization makes up a significant
portion of the $1.4 trillion US delivery industry.
Other players include Fedex Corp and United Parcel
Service Inc. Amazon was founded by Jeff Bezos, who
remains the chief executive officer of the reta il
giant. Bezos also owns the Washington Post, a newspaper
that Trump has repeatedly railed against in his
criticisms of the news media. Representatives for the
White House and Amazon were not immediately available
for comment. Shares of Amazon were last down 0.2% to
$1,183.50 in premarket trading.
CoreLogic – what caught the attention our readers in
2017
The numbers are in and our readers have spoken. We
tallied up the readership on our top 10 most-read
CoreLogic Insights blogs and found that top industry
executives were very focused on the health of the real
estate market, both nationally and in specific markets
across the country this year. The most-read blog, by a
wide margin, was a text mining analysis of public
listing information using word cloud which paired
certain listing terms to higher sales prices. Word
pairs like “quiet street,” “large backyard,” and
“hardwood floors” were among terms which could be tied
to higher sales prices. In addition, our audience also
engaged with our economic outlooks, credit
availability, and mortgage risk as prices continued
their upward spiral. And the envelope, please… Here
are the top ten most-read blog s (and video blogs) of
the year:
– Public Listing Comments Can Have an Impact on
Closing Price
– Is the Credit Cycle Turning?
– California Million-Dollar Home Sales Climb to a Q1
Peak as Stocks Soar
– Highest and Lowest Risk US Housing Marketing as of
Q1 2017
– US Economic Outlook: February 2017
– Hurricane Matthew Clocks Top Wind Speed for 2016 at
101 MPH
– Health of the Housing Market as of Q2 2017
– US Economic Outlook: October 2017
– Purchase Mortgages, High LTVs May Up Fraud Risk in
2017
– The Accuracy of Comparable-Property Data in an
Appraisal Report
2017 was a very busy blog year for our economists, data
research analysts and modelers, product experts and
industry SMEs. As we wrap up 2017 we’re proud to have
shared over 150 online, audio and video blog postings
representing more than 25 CoreLogic contributors. The
aim of CoreLogic Insights is to in form, educate and
provide perspective on many characteristics of the
housing economy and property markets. Our blogs address
housing policy and trends, mortgage performance,
property valuation, natural hazard risk, insurance and
international topics.
Trump’s agenda in 2018: What’s next?
After Republicans scored their first major legislative
victory with a tax reform bill passed just before the
end of 2017, the has started
looking ahead to next year’s legislative docket. While
President Donald Trump’s aggressive plans to reform
health care, infrastructure and the tax system during
the first year of his tenure fell short on some
accounts, his plans for next year appear equally
ambitious, with welfare and infrastructure reform
topping the list, according to National Economic
Director Gary Cohn. Here’s a look at what the
administration and Congress are set to take on as we
head into the New Year.
Health care
While the GOP failed to pass multiple efforts to repeal
and replace the Affordable Care Act in 2017, the
president has not given up on designs to overhaul the
former administration’s signature legislative
achievement. In a tweet fired off in November,
President Trump reiterated that ObamaCare is a
“disaster,” adding that Republicans would begin to
repeal and replace “right after Tax Cuts.” While
different variations of repeal and replace narrowly
failed to pass the Senate this year, the president took
steps toward dismantling the Affordable Care Act
through an executive order issued in October. That
order directed the administration to look into allowing
employers to form associations and obtain coverage
across state lines, expanding the use of short-term
limited duration insurance (STLDI) plans and expanding
the use of Health Reimbursement Arrange ments, or
tax-free accounts that allow employers to reimburse
employees for medical expenses. The overall goal of
these directives, according to the White House, was to
provide near-term relief for Americans and to lower
costs by increasing competition and choice.
Welfare reform
One of the other items the president has brought up as
a priority after Republicans overhaul the tax system is
reforming welfare, which includes government programs
like Medicaid, Food Stamps and Housing Assistance.
“We’re looking very strongly at welfare reform, and
that’ll all take place right after taxes, very soon,
very shortly after taxes,” Trump said at the White
House last month. During an interview with Axios in
late-December, Cohn said he expected that welfare
reform would receive bipartisan support, with at least
60 votes in the Senate. There are bills currently
floating around Congress that aim to strengthen work
requirements for welfare programs, something that
coincides with the administration’s stated goals of
using welfare as an interim strategy to help lift
Americans out of unemployment and poverty. Office of
Management and Budge t (OMB) director and Consumer
Financial Protection Bureau (CFPB) interim director
Mick Mulvaney, a known deficit hawk, said back in March
that the administration was looking to create jobs and
put those who want to work, back to work. At the same
time, he said the White House would weed out welfare
freeloaders and take steps toward making sure Americans
aren’t exploiting programs, while assuring that the
administration would not deny deserving people
services.
Infrastructure
Senior White House officials have said President Trump
will release the full details of his infrastructure
plan early next year. It is expected to require at
least $200 billion in direct government funds over the
course of a decade, in addition to funding from the
private sector. While an infrastructure revamp was
widely viewed as a bipartisan proposal at the outset of
the president’s tenure, experts believe the outlook may
be murkier after the passage of a tax reform bill that
could pile on to the deficit. Trump promised a $1
trillion infrastructure overhaul, which was supposed to
be detailed within his first 100 days in office. US
Transportation Secretary Elaine Chao said in September
that states and localities will compete for government
funds, with the most innovative projects winning more
federal dollars. The infrastructure revamp is expected
to address everything from bridges, roads and airports
to energy, broadband and even Veterans Affairs
hospitals. Cohn told Axios that having broadband in
rural areas is a priority. He also said that the
government needs to reimagine infrastructure based on
the future, adding that the US can’t keep building
cities in 2050.
Housing reform
US Treasury Secretary Steven Mnuchin has been a key
player in the tax reform discussions, but has his
sights set on housing reform for the coming year. “I am
determined that we have housing reform and that we come
up with a permanent solution for Fannie [Mae] and
Freddie [Mac] so that they’re not in the current form,
which is essentially owned by the government,” he said
during a November speech at the Economic Club of New
York. “That’ll be a big focus of mine for next year.”
Mnuchin also said this is something he expected housing
reform to be completed on a “bipartisan basis.”
ATTOM – the off-market housing market
There’s a strange omission from the long list of
industries vanquished, disrupted, and dismantled by the
Internet. Retail chains are closing, cabs are not being
hailed, and hotel rooms are going empty. But amid the
rumble and ruin of traditional commerce, multiple
listing services (MLS) remain remarkably impervious to
disruption. That isn’t stopping would-be MLS disrupters
like REX from trying. “The MLS is an antiquated tool
created by real estate brokers to keep buyers dependent
on them,” according to REX. “But the Internet changed
all that.” The MLS has survived previous declarations
of its demise. If such predictions were true we should
now see a marketplace filled with broker-less
transactions, those selling for-sale-by-owner,
so-called FSBOs. In fact, precisely the opposite has
happened. Self-sellers are a vanishing species.
According to the 2016 edition of the National
Association of Realtors (NAR) Profile of Home Buyers
and Sellers, “only eight% of recent home sales were
FSBO sales again this year. For the second year, this
is the lowest share recorded since this report started
in 1981.” But the picture is markedly different at the
local level in markets where MLS disrupters like REX
are operating. Single family home sales listed on the
MLS represented 89% of single family home sales deeds
recorded in Los Angeles and Orange counties combined,
according to an ATTOM Data analysis of public record
deed data and MLS data provided by First Team Real
Estate, the largest independent brokerage in
California. Most off-MLS sales are the result of these
so-called pocket listings, according to Michael Mahon,
president at First Team Real Estate, which covers the
Southern California market. “We ha ve agents who have 50
to 75 buyers sitting there as pent-up demand waiting
for listings,” he said. “A lot of these home sellers
are willing to entertain an offer that they feel is
fair for the asking price they are wanting to get for
the property … a ready, willing and able buyer in queue
is very appealing.”
The share of off-MLS sales were also much higher than
the national average across the country in Dallas and
Phoenix. An ATTOM Data Solutions analysis of MLS closed
sales counts provided by the Texas A&M Real Estate
Center and public record closed sales counts in Dallas
County, Texas, shows MLS-closed sales of single family
homes in 2016 represented 86% of single family home
sales recorded with the county for the year. In
Maricopa County, Arizona, home to the city of Phoenix,
MLS-closed sales of single family homes represented
just 75% of the single family home sales recorded with
the county for 2016, up slightly from 74% in 2015,
according to an ATTOM analysis. What do Dallas and
Phoenix have in common? They are both testing grounds
for a quickly growing alternative to listing for sale
on the MLS: iBuyers such as Opendoor and Offerpad.
Opendoor has been able to assemble $320 million in
equity and more than $500 million in debt financing.
Such numbers instantly make Opendoor a notable player
in the local real estate markets where it is active.
Moreover, if it finds success, it will be able to go
back to the equity and credit markets for additional
funding. “The Opendoor difference is simplicity,
convenience and certainty,” said Evan Moore, Opendoor’s
head of agent experience. “For sellers, Opendoor makes
it easy for homeowners to receive a fair market value
offer in a few clicks, eliminating the hassle of home
showings and months of uncertainty and giving them the
power to close on their timeline. For buyers, Opendoor
also provides the ultimate in convenience by providing
on-demand access to Opendoor homes all day everyday.”
It’s not just disruptive startups like Opendoor and
Offerpad that are expanding off-market purchasing,
however. HomeVestors, a 21-year-old company known for
the “We Buy Ugly” houses signs has exponentially
expanded the markets it operates in since the housing
bust, according to CEO David Hicks. “We buy direct from
the home owner, without hitting MLS,” Hicks said. “And
the people we’re buying them from, they don’t want a
Realtor or anyone else traipsing through their house. …
They got cats or they got smell. Those are the houses
we are buying.” NetWorth Realty is another direct buyer
that has been around for several years and is
continuing to grow, with 1,726 deals totaling $234
million in 2016, up from 941 deals totaling $88 million
in 2013, according to its website. “We’ll find
properties. Our properties are off-market, they a re not
on the MLS,” said Networth Realty president Mark Bloom,
adding that the properties are also kept off-market
when re-sold to investor clients in an effort to
provide those clients with fixed pricing outside of a
competitive bidding environment. “We fix our pricing.
We keep all of our inventory off market.” The growing
number of acquisitions by iBuyers like Opendoor and
Offerpad are catching the attention of the Arizona
Regional MLS, which in its August STAT report devoted
three pages of commentary to an analysis of off-MLS
sales in the market, including those by iBuyers. “As an
analyst, the number one question I get asked is, ‘What
percentage of homes sold are listed on the MLS?’”,
writes Tom Ruff, housing analyst with The Information
Market, a subsidiary of the ARMLS.
Traditional MLS relationships are being challenged by a
growing number of member brokers who believe the
fastest and easiest way increase profits is to stop
dividing commissions, forget about MLS cooperation, and
cut out other brokers. “Off-MLS listings may contribute
to the unraveling of the MLS as we know it,” said
consultant Stefan Swanepoel in a 2016 report published
by NAR called the Definitive Analysis of the Negative
Game Changers Emerging In Real Estate – the DANGER
Report. Is there a way that “coming soon” transactions
could be made more palatable? “Coming soon can be an
issue from many fronts,” said Matthew L. Watercutter,
principal broker and senior regional vice president
with Ohio-based HER Realtors. “The only way for ‘coming
soon’ to be truly a benefit, is you still do not show
the home to anyone until it is actively marketed, so
all potential buyers have a fair and equal
opportunity.”