National Quarterly Housing Report

Each quarter we publish a national housing report covering the entire nation. We look at pricing trends, historical data and future predictions. This is a very broad look at the housing market and statistics vary tremendously within each city and even neighborhood. To get an exact profile on your home and the housing statistics for your neighborhood use this FREE tool:

Quarterly Pricing Update

As usual, in July, we give you a pricing update that’s our quarterly pricing update. And we want to start with the FHFA Actual Year-Over-Year price change in regard to individual markets, okay.

So, what we can see here, individual regions. What we can see on this chart is that in each region we had a very nice uptick in prices. So if we go all the way across the board, we’re still seeing very strong appreciation. We’re not seeing that 7, 8, 9% that we saw on the West Coast I should say. But we’re still seeing strong appreciation. Remember, normal historic appreciation is 3.6%. And every one of the regions bettered that in the last year.

Now when we break it down by state, the FHFA Report, we can also see that in every state that there’s no red states. There’s no state losing value.

Now there is some concern that there might be some individual metros losing some value. San Jose is one that pops up into my head. And we’re taking a close look at that. But across the board, we don’t have a challenge whatsoever, at all. And there’s no state with a challenge. That doesn’t mean that appreciation isn’t slowing.

The new Case-Schiller Report shows exactly that. We’re no longer at that 6-1/2% national appreciation we saw just a year ago. We’re back down to normal numbers.

But it had fallen as low as 3% and now we’re back up to again, the historic numbers of 3.5 to 4%, all right. And that’s where we’re bouncing right now. It’s going to be interesting the way this moves forward.

We’re going to jump over to the CoreLogic Report because we also want to give you the information from them.

Here’s the actual year-over-year percent change in price by state. So you can look at the states individually and see exactly where there are challenges and where there are not challenges, over the last year.

But probably more important is that CoreLogic forecasted what’s going to happen over the next 12 months. And as we can see, the entire country is very strong. As a matter of fact, they’ve up-ticked what they thought the national average appreciation increase would be, to 5.6%.

And we can see that the entire country is strong, state-by-state. And their national number is 5.6%. As a matter of fact, they up-ticked that number from last month.

And we can even go further than that. If we take a look at their May, June, and July reports, each of those three months they up-ticked where they thought the next 12 month’s appreciation would be. So, what does that mean? What they’re saying is, where they thought appreciation was going to be 90 days ago, they’re starting to be more optimistic about it. And the following month they went from 3.6 to 4.7. And then the last 30 days they said, wait a second. It looks like houses are going to appreciate at a higher level than we originally thought. And they up-ticked that to 5.6%.

So, what we’re seeing now is apparently, at least according to CoreLogic, we’ve hit bottom, and we’re making a turn back up.

I don’t think we’re going to return to that 7, 8, in some regions 12% appreciation. I think we’re going to bounce around between that 3-1/2 to maybe 5-1/2% home appreciation. And the reason they’re seeing that turn is, demand ticked up because interest rates have gone down. Which we’ll go over next.

The Home Price Expectation Survey came out the day before this recording. And we wanted to get you that information. This is a nationwide panel of over 100 economists, real estate experts, and investment and market strategists.

Now if we put all of their numbers together, we can see that the – all the projections together – they think that between now and 2023, nationally, prices will be up 16.8%. So we’re going to see nice appreciation over the next five years. At least average appreciation, all right. Meaning we’re not going to see any depreciation.

The bulls, the top 25% of those over 100 people surveyed, think it’s going to be much higher than that over the next five years. So we’re going to see an over 5% appreciation annually, for a total of 27.7%.

But probably the most important number on that graph is the bears. The most negative. The people that always see the glass half empty. Even they think that over the next five years we’re going to see appreciation limited, 6.7%. But again, the bar is in red. Even the bears are not considering depreciation.

And when we take a look at it over the next five years, all projections, this year we think – they think it’s going to level out at 4.1%. Then the pendulum is going to swing a little bit too far the other way. Remember, we’ve talked about you know, we’re on the longest stretch of an economic recovery ever. There’s going to be some slowdown in the economy probably. And they think that those values will drop below that 3% until they go back up to normal appreciation in 2022 and 2023.

We also like to give you the projected home price, percentage appreciation going forward from six major entities. The Home Price Expectation Survey, which we just gave you; Mortgage Bankers Association; Zelman and Associates; Freddie Mac; The National Association of Realtors; and Fannie Mae.

Now the Home Price Expectation Survey, because it surveys over 100 experts, we like to give that to you. But we also like to give you the projected home price, percentage appreciation going forward from six major entities. The Home Price Expectation Survey, which we just gave you; Mortgage Bankers

And in each one of these categories – each one of these institutions I should say – are projecting again, that we’re going to continue to see appreciation. Limited appreciation. But again, there are no numbers on there that are red. So the fear that we might be looking at depreciation is just – the experts aren’t saying that.

And when we take a look at 2005 and going back, 2006, if we look at the increase in home values from 2005 to 2018, it’s pretty interesting. Because, if the people stayed in their homes, and I know some people were unable to. You know, the economy bit at them. There were foreclosures and short sales. Some families were devastated.

But for the people that were able to stay in their homes, pretty much across the board, they would have had really nice appreciation. And nobody would have experienced that their house was worth less. At least not from the state level, all right. And that’s important that we get that.

Real estate is a great investment. And even those who bought at the height of the market, back at the boom, before the bust, even they, if they were able to stay in their home, saw appreciation coming at them. Now there are individual communities, that might not be the case. But we’re talking about across every state in the nation, that is the case.

And the probability of home prices being lower in two years, Arch Mortgage Insurance does a report on that. And as you can see here, they think North Dakota – because they tied into the energy – they think there’s a moderate probability that home prices could be lower in two years.

The whole rest of the country is either a low probability of it happening, or even a minimal possibility that’s going to happen. So, again, for the people that are thinking that well, you know, if the economy slows up, then we’re going to see some sort of return to you know, devastating numbers. That’s just not the case. And that’s what this particular month’s report is showing us.

And here is a graph from the ‘Z’ Report. And what it does is it surveys the bottom one-third of the income group in the country, the middle third of the income group, and the upper third. And that will represent starter homes, you know, lower-priced homes, the mid-priced homes, and the upper priced homes. And what we can see, the gray is historically how much optimism do they have for future price appreciation?

So, in the bottom third, historically 62% think that prices are going to continue to appreciate. Right now, 65%, above the average. The middle third income, the average across years is 70% believe the prices are going to be – going to continue to appreciate nicely. That number is up to 74%. But the interesting thing, on the upper end, the higher income group, their average is 74%. But right now only 69% believe that there’s going to be nice appreciation going forward.

So, I think in the upper end we do have a little bit of a challenge because of a tremendous overabundance in inventory. And the consumer themselves – that’s who’s being surveyed here – the consumer themselves believe yeah, in the upper end, if we’re in the upper end, we’re going to see some price pullback.

Shifting gears entirely, I want to talk about what I believe is a tremendous opportunity. Here’s the percentage of your investor purchases, a new report put out by CoreLogic.

Of all the homes sold in this country, 11.3% were purchased by investors. Of the starter homes in this country, over 20%, one out of five starter homes are purchased by an investor. The move up homes dropped to 7.8%. And the high-end homes are at 6.3%.

Now when I looked at that chart and I originally read it I said, oh my, God. You know, the institutional, the professional investors, they’re getting more involved. And then as I got deeper into the report I said, wait a second. That’s not necessarily the case.

As a matter of fact, Ralph McLaughlin at the National Association of Real Estate Editors, a conference that was done late in June, we had our representation there from our organization. This is what he said at that conference.

“Investor buying activity in the U.S. is at record highs. And our records go back confidently, about 20 years.” So for the last 20 years, investor buying activity, compared to the last 20 years, is at record highs.

What’s going on and why? Well it turns out it’s not the big institutional guys that are leading the increase in home buying. It’s actually the smaller guys. It’s those that have bought between one and ten properties over this 20 year period. They’re the ones that are really leading the increase in investor home buying. Let’s take a closer look at that from their report.

What we can see is what I consider the mom-and-pop investors. Someone who bought one to ten houses over the last 20 years. That number is increasing dramatically. But that the professional investor – people who buy houses and you know, that’s kind of their living – that number has dropped.

And the institutional investors, the people purchasing homes, the single-family rentals, and that sort, that number has dropped significantly.

So, where there’s a feeling I think, amongst agents, that the institutional, they’re taking a lot of
properties out of the market. No, it’s actually the mom-and-pop.
Now there are two opportunities there. Number one is, some of that mom-and-pop, they’re not buying them just for single-family rentals. They’re going to fix them up and turn them over. So what they’re doing is many of them are purchasing properties in our markets that a first-time home buyer might not even be interested in because it needs too much repair.
They’re going in, they’re repairing it, and putting it back on the market in many cases. They’re flipping it. Only they’re taking a property that is not saleable to that first-time home buyer, and making it saleable to the first-time home buyer.

So, they’re not taking inventory off the market. They’re actually adding more inventory to the market. And we need to be in touch with those mom-and-pop investors. We need to know who they are in our community. We need to know how to talk to them.

Mark Fleming, the Chief Economist at First American, First American did a survey. Here’s a quote from him. “Title agents and real estate professionals indicate home buyers encouraged by unexpectedly lower mortgage rates in 2019 – a tailwind helping to boost demand and inspire existing homeowners to sell their homes.”

All right, so now because interest rates are lower – we’ll get to where they are in a second – it’s
increased seller traffic. The number of people.

Here’s the Realtor Confidence Survey. There are more – than used to be totally, you know, gray and orange. Either weak or very weak, the seller traffic. The number of people talking to agents about selling their home.

But what we’re starting to see is, across the country, the very weak has disappeared. They’re still some weak states. But more and more of the country is turning medium blue or darker blue, meaning more and more sellers are coming out, putting their house on the market. And I think that some of that are our mom-and-pop investor.

But remember, if we take a look at interest rates, they shot up at the end of last year. And that slowed everything up. And they started going up in the third quarter. In the fourth quarter, it really slowed things up. But since then, since December, interest rates have dropped. As a matter of fact, as of this writing, their lowest rate in three years. That does two things. It spurs buyer demand, not just from the first time buyer, but also that second and third-time buyer who currently owns a house and has to put it on the market.

And the second thing it does is, people who had low-interest rates on their home, and maybe we’re saying, well I’m not going to sell right now. I don’t want to lose my lower interest rate, well now that rate lock as they called it, all right, doesn’t exist. Because they still can buy their next house at a very low below 4% interest rate.

But that window of opportunity is going to disappear. And we have to make sure we take advantage of it when it’s there. And I think that time is right now.

As usual, you can find all the resources used for this article in the image above. If you have comments and or a different opinion I would love to hear from you. Solano, Napa, Sonoma and Lake Counties, the areas the team and I cover vary greatly. If you plan to buy or sell please talk to us first. It is important you understand the market your home is located in. Below are links to these specific market reposts live 24/7 data you can use to assess your cities statistics.

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