Waves of Homebuyers Hit the Housing Market Before Labor Day

25th August 2020 – The realtor.com Housing Market Recovery Index reached 104.8 nationwide for the week ending August 15, posting a 0.9 point decrease over last week and 4.8 points above the pre-COVID baseline. The ‘housing demand’ component remained above recovery, with this week’s index reaching 121.8, the second highest index value since March,
Locally, a total of 34 markets have crossed the recovery benchmark as of this week. The overall recovery index is showing greatest recovery in Las Vegas, Seattle, New York, Boston, and Philadelphia.

National Recovery Trends

Waves of home shoppers continue to drive the housing market recovery this summer, powering sales and putting a dent on inventory as back-to-school plans hang in the balance. The realtor.com Housing Market Recovery Index reached 104.8 nationwide for the week ending August 15, posting a 0.9 point decrease over last week and 4.8 points above the pre-COVID baseline. The slight drop in the overall index this week comes after visible and opposite changes to demand and supply components of growth.

The ‘housing demand’ component remained above recovery, with this week’s index reaching 121.8, the second highest index value since March, after posting a second consecutive weekly increase. In contrast, the ‘housing supply’ component declined back down to 97.5, after having surpassed the recovery threshold last week. New listings remain on the right trajectory but growth is still variable on a week to week basis, and consistent improvement will be key in the weeks to come.

With supply and demand moving in opposite directions, sellers are clearly gaining an upper hand as buyer competition builds up. While sellers are returning to the market, buyers are increasingly outnumbering them, causing overall levels of inventory to decline.

The pandemic has transformed the homebuying season to one that’s not dictated by the school calendar. In a typical year, online traffic peaks in July and begins to dwindle down in august as schools restart in the fall. This year, online traffic has continued to accelerate through August, as most of the country debates back-to-school plans. This bodes well for sellers in the next few weeks, as the usually quieter early fall season may see summer levels of activity.

Overall Housing Recovery Index 104.8 -0.9
Housing Demand Growth Index 121.8 +3.3
Listing Price Growth Index 106.5 +0.2
New Supply Growth Index 97.5 -4.2
Pace of Sales Index 104.7 +0.0

The ‘housing demand’ component – which tracks growth in online search activity – remained visibly above recovery, with this week’s index reaching 121.8, up 3.3 points over the prior week and 21.8 points above the January baseline. Homebuyer interest continues to outpace last year levels as detected on realtor.com over the last few months. While record-high prices, short supply and economic headwinds pose significant challenges, the pool of ready-to-transact buyers continues to grow.

Powered by a backlog of demand, the ‘home price’ component – which tracks growth in asking prices – increased by 0.2 points last week, and is now at 106.5, 6.5 points above the January baseline. With supply at record lows and buyer competition on the rise, sellers have regained leverage, enabling the fastest price growth recorded since January 2018. As inventory and foot traffic grow through the end of the summer, we’ll get a good indication of whether higher asking prices will translate into higher selling prices.

The ‘pace of sales’ component – which tracks differences in time-on-market – continues to remain above the pre-COVID baseline. The time-on-market index remained the same as last week, at104.7, 4.7 points above the January baseline, suggesting buyers and sellers are continuing to connect at a faster rate and setting up the peak homebuying season in August.

Notably, the ‘housing supply’ component – which tracks growth of new listings – declined to 97.5, down 3.3 points over the prior week, and 2.5 points below the January baseline. The temporary boost in new listings seen earlier came as the summer season replaced the typical spring homebuying season. More homes entered the market than typical for this time of the year, but further improvement could be limited going into the fall as the peak cycle subsides.

Local Recovery Trends

The Midwest Approaches the Recovery Threshold
Regionally, the West (112.7) continues to lead the pack in the recovery, with the overall index now visibly above the pre-COVID benchmark. The Northeast (107.4) and South (101.8) remain above recovery pace but conditions in the south declined slightly this week. The Midwest (99.7) continued to see slight improvements in market conditions.

Notably, it was primarily the ‘housing supply’ component which decreased the South’s overall score this week. The ‘housing supply’ component, measuring new listings, declined -3.4 points in the South, while all other components grew. While the Midwest and Northeast continued to see improved supply conditions, the West’s ‘housing supply’ component also declined, by 2.7 points, potentially indicating a small slip in seller confidence in the South and West this week.

Social distancing and economic resilience continue to be key factors driving local differences in the housing recovery. Per our earlier research, the spread of COVID-19 is closely linked to the housing slowdown, with markets with higher cases per capita more likely to see a bigger impact on supply and the pace of sales. The speed and sustainability of the reopening, and each market’s ability to contain COVID-19, are dictating the speed of recovery across the regions.

Finally, resilient economies may have an edge in the housing recovery, and areas with strong job markets before COVID-19, especially those with thriving tech sectors, are seeing buyers and sellers reconnect faster than the rest of the country. Are you ready to list your house? Talk To Tammy, 636.931.9100 

COVID-19: Landlord FAQs

Must a landlord consider unemployment assistance as a form of income?

  • In most cases, no. Owners are under no federal requirements when it comes to counting unemployment assistance as income in connection with lease applications. In addition, the one-time $1200 check received by many taxpayers was a tax rebate or credit and should not be included in calculating a tenant’s income. If you are in a state or locality that has “source of income” provision in its discrimination laws, owners should check with legal counsel to determine how to treat unemployment compensation to avoid discrimination claims.
  • If you participate in HUD-assisted housing, the amount of assistance a family receives may be affected by the amount of income they receive and so it is important to know how to count unemployment assistance.  Recent HUD guidance says that different types of unemployment assistance is treated differently in calculating a family’s “annual income”:
    • Regular payments of unemployment insurance are treated as annual income.
    • Pandemic Unemployment Assistance (“PUA”, CARES Act §2102): this is unemployment assistance for individuals who are self-employed, seeking part time employment or who otherwise would not qualify for regular unemployment assistance. HUD says PUA payments are included in annual income.
    • Federal Pandemic Unemployment Compensation (“FPUC,” CARES Act §2104): This is the payment of $600 that supplemented regular unemployment compensation and that ended at the end of July 2020. HUD has determined FPUC payments are “temporary income” that is not included in annual income.
    • Pandemic Emergency Unemployment Compensation (“PEUC”, CARES Act §2017): This program provides up to a 13-week extension of unemployment compensation (from 26 weeks to a total of 39 weeks). HUD has determined that PEUC payments are included in annual income.

Communications with residents

What is the best policy for communications with residents?

If they have not done so already, housing providers should communicate frequently with residents, providing them with regular updates about the steps they are taking to maintain a healthy environment. Signs and posters should be placed around the property to encourage personal hygiene (wash your hands!) and other steps individual tenants can take to make themselves and the property safer. Examples are available on the CDC website (cdc.gov). If they have not done so already, housing providers should explain to residents that the COVID-19 virus is still spreading rapidly through the population and that they should assume that other people – including other residents at the property – may be carrying the virus and take appropriate precautions. Residents should be reminded that if everyone takes precautions to protect themselves from the virus, it will improve the health prospect of all residents.

What should I do if I learn that a resident or staff person has tested positive for the COVID-19 virus?

First, do not respond to rumor or gossip. A verbal report from one tenant that another tenant is sick or has suspicious symptoms is not sufficiently reliable to take action.

The situation is different if a housing provider receives a reliable statement from a tenant that he/she has tested positive, or a similar report from a public health official. Although the law varies greatly from place to place, as a general matter, a landlord has a duty to warn tenants of known hazards at their property. While there is no case law specifically with respect to COVID-19, reliable information that someone at the property has tested positive for the virus could be deemed to constitute knowledge of a hazard that should be shared with other tenants. At a minimum, disclosing that information will encourage other tenants to redouble their efforts to avoid the virus, which will make the housing provider’s job easier. But, as discussed below, you should not disclose specific resident or employee names or information. Better to communicate the issue generally and steps taken to protect residents and staff so they are not exposed. Both HUD and the CDC have advised that housing providers can inform residents that a staff member or another resident has tested positive for the virus.

Be aware, however, that some local public health agencies have urged housing providers not to disclose this information, largely to protect the privacy interests of persons who test positive. Before notifying other residents, even generally, that someone at the property has tested positive, you should try to determine if your local public health agency has published guidance.

If I decide to disclose that someone at the property has tested positive, can I disclose who that person is?

No: Medical information is subject to a variety of state and federal privacy protections, and providing personally identifying information about someone who has tested positive would likely violate these principles. And employees may also be protected under privacy and labor laws. Given the widespread presence of the virus and the many asymptomatic people who may be spreading the virus, information that a particular person has the virus may not provide really useful information. As a practical matter, it also may create issues for that resident or employee that will only complicate dealing with other residents: disclosing this information would make it much less likely that another person who tests positive would disclose that information to you. Housing providers should politely discourage any request to share personally identifying information about a person who tests positive, explaining that they treat all residents’ privacy seriously and reminding residents that if they tested positive, they would want the housing provider to treat their personal health information similarly.

A resident has tested positive for the COVID-19 virus. Can I ask them to vacate their unit or evict them?

Except in extraordinary cases, no: HUD guidance is that in most cases, persons who have tested positive can successfully isolate themselves in their unit until they recover. If a person who has tested positive for COVID-19 refuses to self-isolate, however, the housing provider should consider taking additional action. Housing providers should check with their legal counsel to determine whether their lease form and applicable landlord/tenant law allows additional action against non-compliant tenants. While it does not expressly discuss grounds for eviction, the Fair Housing Act does not protect persons from discrimination claims who present a “direct threat” to the health or safety of others. Conceivably, someone who fails to comply with direction to self-isolate may present such a direct threat. But courts advise that each “direct threat” claims must be based on an “individualized assessment” of the specific facts of each case, including whether some action less than eviction may persuade the person who has tested positive to follow self-isolation guidance. In serious cases, it may be appropriate to seek advice from local public health or law enforcement officials.

Cleaning

What additional cleaning procedures should housing providers adopt?

Since the beginning of the pandemic, the CDC has urged constant cleaning and disinfecting of public spaces. In a multifamily housing property, this will include disinfecting door handles, counter surfaces, elevator buttons, handrails, light switches, and laundry rooms, including controls for washers and dryers. Making extra efforts to clean and disinfect the property is probably the most visible way to demonstrate your concern for keeping your property virus-free and to encourage residents to make their own anti-virus efforts. Cleaning and disinfecting operations should happen multiple times each day – of course, whenever a surface is touched, it may become contaminated, but multiple cleaning will eliminate at least some possible exposure. Where possible, hand sanitizing stations and disinfecting wipes should be made available near doors, elevators and other “touch points” for residents’ use. Even during this re-opening phase, it is best to continue this cleaning process vigilantly until it is clear there are no or minimal reported cases in your state or region.

Disinfecting contaminated apartments.

Professional cleaning companies are gearing up to provide this service. The apartment should be treated as if it has exposed to a type of toxic substance. Cleaning protocols should be consistent with CDC guidance. For example, if an apartment is vacated by a sick resident, CDC recommends that the windows should be opened for at least 24 hours to allow ventilation that may help remove the virus. It also would be reasonable to leave the unit vacant for two weeks (considered generally to be the maximum incubation period reported for people with the virus). Cleaning personnel should still wear gloves, goggles and masks as appropriate and should scrupulously follow all warning labels on products they use.

Stay informed and stay healthy! If you’re ready to list your house or want to find your new dream home, Talk To Tammy636.931.9100

6 Home Trends Buyers Love

Open floor plans, smart homes, and outdoor areas are among the features in top demand for home shoppers this year. Home improvement website Fixr’s recent study, Single-Family Home Construction and Remodeling Trends 2020, highlights the renovation and construction choices of buyers and homeowners in 2020. The results reveal some key areas of interest in home design that real estate professionals may want to spotlight.

1. Open floor plan and two-story homes represent the most popular layouts.

Floor Plans

While there has been a trend toward open floor plans for the past few years, 2020 is seeing an overwhelming consensus: 90% of experts selected an open floor plan as the most popular single-family layout. And it’s likely to remain so in the future.

As quarantine periods and social distancing guidelines force families to spend more time together at home, large common areas command a premium value. Family rooms, dens, and open kitchen areas are acquiring new importance.

Another large percentage—77%—are favoring two-story houses in 2020. Compare this to the 29% who preferred single-story homes, or the 2% who favor split-level residences.

2. Smart homes rank first among design choices.

Popular Design Choices

A growing trend in home design is the smart home, in which AI-based automation systems are seamlessly incorporated into electric circuits, heating/cooling systems, and entrances. Buyers this year are likely to appreciate homes in which smart thermostats, security cameras, and smart outlets are already installed.

Since installation of many smart systems is relatively affordable, this represents an important opportunity for real estate professionals to make their listings trendy, modern, and full-featured.

3. Most homeowners make accessibility modifications to their home for future personal use.

Modification Reasons

Homeowners looking to age in place are exploring renovations that allow them to do so more easily. Homes with accessibility features likely will be more attractive to senior buyers as they look toward a future of independence, even as their physical abilities may decrease. This future need is a motivating factor behind such renovations (54%) than current personal use (11%) or current use for an aging relative (22%).

Buyers also are evaluating potential homes with accessibility modifications in mind. For instance, a front yard with space for a ramp will be more appealing than one with front steps leading directly to the street.

4. Energy efficient homes with tight building envelopes are among the top designs for green construction.

Green Construction

As Americans deal with furloughs, layoffs, and economic uncertainty, many are paying more attention to their energy bills. Energy efficient homes are suddenly much more attractive than conventional properties, and buyers who may not have ever considered green construction are making energy efficiency a priority.

Sixty-two percent of design experts say energy efficient homes are a top priority in 2020, according to Fixr’s study, far outweighing other options like cool roofs or solar panels.

Prevent Energy Transfer

Experts say a tight building envelope—more than exterior or interior insulation—is the most common way to prevent energy seepage. A tight building envelope minimizes air transfer and can be an important feature of an energy efficient and environmentally friendly home. A home with both effective insulation and a tight building envelope will provide the best value to a buyer who desires lower energy bills and minimal heating requirements.

5. Family space and outdoor kitchens are trending in 2020.

Outdoor Living

Outdoor playsets, firepits, and recreation-oriented yards are seeing an uptick in popularity, especially among married couples with kids. For real estate and staging pros, this means that a little attention to backyards, porches, and other outdoor living areas can ignite extra buyer interest.

This is a 2020 trend that has only been cemented by quarantine rules and social distancing regulations. As playgrounds, parks, and outdoor amusements became unavailable, families were forced to think in terms of what outdoor activities they could offer their children on their own property.

Outdoor Living Spaces

But outdoor living spaces aren’t limited to playgrounds, decks, and patios. Fixr’s research shows that outdoor kitchens were nearly twice as popular as a traditional patio. The outdoor kitchen is another trend that has been steadily increasing over the past few years, and it will be interesting to see how it continues to evolve in 2020 and 2021. New recommendations for socially distant entertaining, which may be better suited for meals and meetings with friends outside, may increase the number of homeowners wanting both outdoor kitchens and seating spaces.

6. Contemporary and modern will be the most common styles used in modular construction.

Prefab Construction

Modular and prefab construction continues to be widely used, and Millennials are most likely to build modular homes. As part of the Fixr survey, consumers were asked which style of prefab building would be most popular in 2020. A large majority (62%) indicated that a contemporary, modern style would be most commonly selected by home buyers. The runner-up choice was ranch-style—but it was only selected by 22% of respondents.

This year has been in many ways an uncharted year, full of unexpected surprises. But even as priorities have changed, many home buying and renovation trends have remained consistent. Keeping track of these trends can help us stay relevant as we navigate the real estate industry in a socially distant world. Looking for a new home? Talk To Tammy, 636-931-9100

Existing-Home Sales Climb RECORD 20.7%

June 2020, Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic, according to the National Association of Realtors®. Each of the four major regions achieved month-over-month growth, with the West experiencing the greatest sales recovery.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 20.7% from May to a seasonally-adjusted annual rate of 4.72 million in June. Sales overall, however, dipped year-over-year, down 11.3% from a year ago (5.32 million in June 2019).

“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” said Lawrence Yun, NAR’s chief economist. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”

The median existing-home price for all housing types in June was $295,300, up 3.5% from June 2019 ($285,400), as prices rose in every region. June’s national price increase marks 100 straight months of year-over-year gains.

Total housing inventory3 at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019.

Yun explains that significantly low inventory was a problem even before the pandemic and says such circumstances can lead to inflated costs.

“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply.”

Yun’s concerns are underscored in NAR’s recently released 2020 Member Profile, in which Realtors® point to low inventory as being one of the top hindrances for potential buyers.

Properties typically remained on the market for 24 days in June, seasonally down from 26 days in May, and down from 27 days in June 2019. Sixty-two percent of homes sold in June 2020 were on the market for less than a month.

First-time buyers were responsible for 35% of sales in June, up from 34% in May 2020 and about equal to 35% in June 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.

Individual investors or second-home buyers, who account for many cash sales, purchased 9% of homes in June, down from 14% in May 2020 and 10% in June 2019. All-cash sales accounted for 16% of transactions in June, down from 17% in May 2020 and about equal to 16% in June 2019.

Distressed sales5 – foreclosures and short sales – represented 3% of sales in June, about even with May but up from 2% in June 2019.

“It’s inspiring to see Realtors® absorb the shock and unprecedented challenges of the virus-induced shutdowns and bounce back in this manner,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “NAR and our 1.4 million members will continue to tirelessly work to facilitate our nation’s economic recovery as we all adjust to this new normal.”

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 3.16% in June, down from 3.23% in May. The average commitment rate across all of 2019 was 3.94%.

Single-family and Condo/Co-op Sales

Single-family home sales sat at a seasonally-adjusted annual rate of 4.28 million in June, up 19.9% from 3.57 million in May, and down 9.9% from one year ago. The median existing single-family home price was $298,600 in June, up 3.5% from June 2019.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 440,000 units in June, up 29.4% from May and down 22.8% from a year ago. The median existing condo price was $262,700 in June, an increase of 1.4% from a year ago.

“Homebuyers considering a move to the suburbs is a growing possibility after a decade of urban downtown revival,” Yun said. “Greater work-from-home options and flexibility will likely remain beyond the virus and any forthcoming vaccine.”

Regional Breakdown

In a complete reversal of the month prior, sales for June increased in every region. Median home prices grew in each of the four major regions from one year ago.

June 2020 existing-home sales in the Northeast rose 4.3%, recording an annual rate of 490,000, a 27.9% decrease from a year ago. The median price in the Northeast was $332,900, up 3.6% from June 2019.

Existing-home sales increased 11.1% in the Midwest to an annual rate of 1,100,000 in June, down 13.4% from a year ago. The median price in the Midwest was $236,900, a 3.2% increase from June 2019.

Existing-home sales in the South jumped 26.0% to an annual rate of 2.18 million in June, down 4.0% from the same time one year ago. The median price in the South was $258,500, a 4.4% increase from a year ago.

Existing-home sales in the West ascended 31.9% to an annual rate of 950,000 in June, a 13.6% decline from a year ago. The median price in the West was $432,600, up 5.4% from June 2019.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries. Talk To Tammy, and see what the best options are for you with selling your house or finding the right home. 636-931-9100, Tammy Fadler

Key Housing Indicators Begin to Turn Around in May

  • National inventory declined by 19.9 percent year-over-year, and inventory in large markets decreased by 21.9 percent.
  • The inventory of newly listed properties declined by 29.4 percent over the past year, and 28.6 percent in large markets
  • The May national median listing price was $330,000, up 1.6 percent year-over-year.
  • Nationally, homes sold in 71 days in May, 15 days more slowly than last year

Realtor.com®’s May housing data release reveals that the U.S. housing market likely reached its low point during mid-April, with constrained new listings and minimal price growth. Signs of recovery emerged, as yearly declines in newly listed inventory slowed and listing prices recovered. However, despite many positive trends, COVID-related challenges linger, as homes were on the market more than two weeks longer than this time last year. 

For-Sale Homes Still in Short Supply, but New Listings Trend Improves

The total number of homes available for sale continued to be constrained in May. Nationally, inventory decreased 19.9 percent year-over-year, a faster rate of decline compared to the 15.3 percent year-over-year drop in April. This amounted to a loss of 255,000 listings compared to May of last year. The volume of newly listed properties in May decreased by 29.4 percent since last year. While still well below last year’s levels, the rate of decline in newly listed properties has improved from a decline of 44.1 percent year-over-year in April, signaling that sellers are starting to return to the marketplace, which is needed to restore inventory levels to healthy market conditions 

Housing inventory in the 50 largest U.S. metros declined by 21.9 percent year-over-year in May. This is an acceleration compared to the 16.0 percent year-over-year decline in April. The metros which saw the biggest declines in inventory were typically those hardest hit by COVID-19, such as Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (-38.6 percent); Providence-Warwick, RI-MA (-35.8%); and Baltimore-Columbia-Towson, MD (-34.5%). This month, none of the largest 50 metros saw an inventory increase on a year-over-year basis and 43 out of 50 saw greater inventory declines than last month. However, 45 out of the 50 markets saw the yearly decline in newly listed properties improve somewhat since last month.

COVID-19 Extends Days on Market

Homes continue to sell more slowly than last year due to stay at home orders and modified behavior resulting from COVID-19. Nationally, the typical home sold in 71 days in May, 15 days more slowly than May of last year. In the 50 largest U.S. metros, the typical home spent 58 days on the market, and homes sold 13 days more slowly, on average, compared to last May. Last month, the increase in time spent on market was more apparent in the 50 largest metros. This month, it appears that the nation’s largest metros have improved relative to the national rate. Among the larger metropolitan areas, homes saw the greatest increase in time spent on the market in Buffalo-Cheektowaga-Niagara Falls, NY (+34 days); Pittsburgh, PA (+33 days); and Detroit-Warren-Dearborn-MI (+32 days); among other areas that have been particularly hard-hit by COVID-19.

Listing Prices Hit New Highs Despite COVID-19

The median national home listing price grew by 1.6 percent year-over-year, to a new high of $330,000 in May. This is a re-acceleration from the 0.6 percent year-over-year growth seen in April. Movements in the median listing price continue to be partly driven by a change in the mix of inventory. This month, the share of more expensive properties on the market recovered and increased compared to last month. Moreover, our weekly data shows the year-over-year change in the median listing price growing by as much as 3.1 percent year-over-year in the week ending May 30th. The nation’s median listing price per square foot grew by 5.4 percent year-over-year, an acceleration from the 4.0 percent growth seen last month.  

Within the nation’s largest metros, median listing price growth also accelerated compared to last month. Listing prices in the largest metros grew by an average of 3.3 percent last year, an acceleration from the 1.6 percent year-over-year gain seen last month. Of the largest 50 metros, now 35 saw year-over-year gains in median listing prices, up from 30 last month. Los Angeles-Long Beach-Anaheim, CA (+14.9%), Pittsburgh, PA (+14.0 percent); and Cincinnati, OH-KY-IN (+12.1%); posted the highest year-over-year median list price growth in May. The steepest price declines were seen in Detroit-Warren-Dearborn, MI (-3.4 percent); San Antonio-New Braunfels, TX (-3.2 percent); and Seattle-Tacoma-Bellevue, WA (-3.1 percent). 

We can help you list your house with the right price or find you your new home, Talk To Tammy! 636.931.9100