A 20% Increase in Home Sales During May

There is absolutely no doubt that the housing market is recovering steadily without any pit stops along the way. As statistics are released each month by multiple agencies, the news is always the same: records are being set, year-over-year increases in new home sales, existing home sales, and all home sales are happening almost every quarter, and the built-up housing inventory of the Recession is in its 103rd consecutive month of year-over-year decreases since the market dropped out in October, 2008.  That last statistic is pretty mind boggling when you think about how bad builders and home sellers alike were suffering, holding onto properties and paying the taxes, mortgages, and expenses on these properties – waiting for the market to turn.

Well, the good news is – it has! May, 2017 is showing the strongest sales numbers for any May in the 9-year history of the RE/MAX National Housing Report – a 20.6%, year-over-year increase of total home sales compared to 2016.  Two other records were also set during the month of May: the average time a home for sale was on the market was only 51 days, and the housing inventory supply shrank to a shockingly low time period of only a 2.6 month’s supply.

What isn’t news and is still being watched by many economists is the average home price increased to $232,500 – the second highest price in the month of May in the history of the report behind the median sales price of $236,062 in August, 2008, right before the Recession. Home prices and rising interest rates have been a concern as home buyers are trying to get loan approvals to being the home buying process.

“In May, we saw an uptick of both loan applications and home sales, which is encouraging in terms of more people getting into the market for homes,” said Adam Contos, RE/MAX Co-CEO. “We don’t expect that the Federal Reserve’s announcement on Wednesday to raise interest rates a quarter of a point will greatly affect the market’s momentum. But housing demand only intensifies the tug-of-war with tight inventories driving prices up.”

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Should I Rent or Should I Own

Do you ask yourself the question should I rent or should I own? If you are looking for a smart investment then owning is the way to go. Here are some things to think about when weighing owning versus renting.
Whether you are renting or purchasing your money matters!  Research where to get the most return for your money. The amount housing prices go up will greatly affect your return.  There are many resources to tap into where you can find great information about retirement, saving for college, investing and online financial services.
Look at a mortgage on a home as a means of saving money. A great advantage for homeownership is the ability to deduct your mortgage interest from your taxable income.

“Another primary advantage is the opportunity to build wealth via earned equity that is not available through renting,” says Daren Blomquist, senior vice president for ATTOM Data Solutions. “We know that home values do not always go up. But over the long term, they have consistently trended higher.”
Many people think of stocks, bonds, savings accounts, retirement accounts and cd’s as solid ways to save your hard-earned income but there can be challenges with these as well.  You might plan on and begin to set away a certain amount of income to one of these investments each month, however a life-changing event such as aging parents, growing children, job loss or health issues can wreak havoc on this plan.

Right now, a mortgage is more affordable than rent.   According to the U.S. Department of Housing and Urban Development, Bureau of Labor Statistics and Realty Trac, fair market rent on a 3-bedroom home is less affordable than a mortgage on a median-priced home in a majority of the counties across America.  Monthly rent takes up 38.6% of average wages where a mortgage only requires 36.6%.  Fair market rents across America are rising faster than the average wages.

Blomquist comments, “Today’s near record low homeownership rate, combined with low inventory of rental property, have combined to push rental rates higher during the housing recovery. In the majority of markets, home price appreciation has been outpaced by growth in rental rates.”
Remember it is not just a financial choice but an emotional choice as well when making a decision on your primary dwelling. Where we live makes a huge difference in our everyday life. From use of space to a lush backyard garden, to the installation of a fountain, outdoor kitchen, firepit, or home pool, Homeowners can enjoy more privacy and flexibility to make changes to their living space.

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It’s a Seller’s Market

Home pricing, fast home sales, bidding wars, and tighter inventory are the national trends for people selling their homes in 85% of the major markets around the United States. As the housing recovery has had a steady and substantial upward trajectory since its crash in 2008, home pricing has been both a boon and a warning for economists worried about too much, too fast causing a double-dip Recession scenario.  For now, for the first time in a long time, sellers have the advantage with a reported $44,000 increase in equity in a home sale during the 1st quarter of 2017.

This means that price gains from a purchase increased by $44,000, according to Attom Data Solutions’ report. There hasn’t been a sales gain this high since 2007.

“I am guessing we will see it get even better before it gets worse,” said Daren Blomquist, senior vice president at Attom. “If you are considering moving this spring, it could be a really good time to sell.”
This type of return on investment real estate sales results has caused bidding wars in competitive markets that have very low housing inventories. The time on the market for a home for sale has been a factor with an average of 45 days for “normal” markets and an average of just 21 days for fast-moving markets. Some homeowners thinking about selling are holding on a bit longer to see if this home pricing increase trend continues before they are willing to sell – getting the most bang for their buck. Also, “warnings” in the industry are indicating that if they do sell their home and sell it quickly, they may be stranded looking for a place to buy as the inventory is so tight. So, it can be blessing and a curse – a two-edged sword.

According to the report, the median home price for the 1st quarter of 2017 was $225,000, which is a shocking 13% increase from just a year ago. For those homeowners who went “underwater” with their mortgages during the Recession, the increase in home pricing / home equity has been a huge help, but some markets such as Las Vegas and Miami are still struggling with their housing recovery. Las Vegas is still showing a 26% decline in home pricing and Miami is at 22%.

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Home Prices Skyrocket in 1st Quarter

To see national total homes sales which include single-family homes and condos grow 5% year-over-year and 1.4% compared to the 4th quarter, 2016, reaching a total of 5.62 million total sales is incredible for the first quarter of 2017, but to know that it is the second highest growth rate in real estate sales since 2007’s 5.66 million is outstanding.  However, that is where home sales stand in the

first quarter of this year.  Currently, there is only a 3.7 month supply of homes available for purchase, turning the market into a buyer’s market vs. a seller’s market.  Unfortunately for buyers, this has caused a problem when trying to buy affordably because home pricing has once again been on the rise after leveling out after the Recession.

For three quarters in a row, home prices have been on the rise.  The national median sales price for a single-family home was $232,100 in the 1st quarter which is an increase of 6.9% in a year-over-year comparison with 2016.  The highest growth of prices was actually seen in the 2nd quarter of 2015 when prices went up 8.2% in one quarter. This is the second highest growth rate since. During the 4th quarter of 2016, home buyers experienced a 5.9% in home prices, so the startling upward trend in the 1st quarter of the year is of concern with inventory dwindling and more buyers entering the market.  The most problematic part of this is that as home prices rise, the interest rates have also been increased, so the combination of the two have shown a slight lull in home sales as buyers have had to

adjust and try to qualify with the new pricing and rates.

“Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” Lawrence Yun, NAR chief economist said. “Those able to successfully buy most likely had to outbid others – especially for those in the starter-home market – which in turn quickened price growth to the fastest quarterly pace in almost two years.”

Added Yun, “Several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction. This is why many of these areas – in particular several parts of the South and West – are seeing unhealthy price appreciation that far exceeds incomes.”

In the southern region, there is encouraging news as total home sales increased 5.8% year-over-year compared to the 1st quarter of 2016 but also quarter-over-quarter as compared to the 4th quarter of 2016. However, one thing to watch was the 8.8% increase in home pricing compared to the first quarter of 2016, bringing the average home price to $209,000 in the South.

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Mandeville Trailhead Acquires Italian Cuisine

The Mandeville Trailhead will soon enjoy the authentic Italian cuisine of a local restaurant owner – Giovanni “Gio” Vanchere – who was also a high-profile chef in Vegas while operating award-winning restaurants and briefly acting as the catering director at Caesars Palace. Vanchere will be moving his 10-year-old restaurant Gio’s Villa Vancheri to the corner of Woodrow and Lafitte Streets at 690 Lafitte St. in Mandeville.

This well-known Mandeville treasure has been located on the East Causeway Approach next to a Vietnamese restaurant for over 10 years and has had a steady and loyal clientele, especially considering that getting to the restaurant was sometimes hampered by the road construction that had

been an almost 3-year ordeal for people living and working off of Florida St. and Hwy. 190.  The new location previously housed the Opal Basil restaurant, which served its last meal April 29th.

The new location of Gio’s Villa Vancheri will open around June 17th. Vanchere is pleased to now own a location, instead of renting one, and he is going to use all of the available square footage to showcase his wares.  The bottom level of the new restaurant will features tapas – European-style – and an antipasti bar.  Outdoor seating will be available on the second floor and will be the main part of the restaurant serving the authentic Italian dishes that have made Vanchere popular over the last 10 years.

“It’s been very gratifying to have the following of friends we have now and our new location will have more room for them,” he said. “And, it will be my own building.”

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Challenges Facing Millenials to Buy a Home

With home pricing increasing in the last 3 consecutive quarters of 2016 and 2017, interest rates inching up because of the Fed allowing interest rate increases, and the supply of housing dwindling because of an active real estate market, the home buyers in the market to purchase a home are in for a lot of challenges as they try to find a home to buy. Interestingly, the demographic of home buyers

entering the market this spring is predicted to be 45% millenials.

“Millennials are mostly first-time buyers and they are competing against repeat buyers who have more buying leverage and experience,” said Javier Vivas, manager of economic research for Realtor.com. He added that Millennials recently became the dominant group of users searching for homes on the website.

Most millenials will probably be first-time home buyers, and these buyers new to the market will be going up against seasoned home buyers who know how to bargain and bid for the homes that they have been evaluating since last year. Combined with a rise of 7% in home values (according to Zillow) and a shortage of home for

sale inventory in the housing market – approximately a 3% drop compared to the same time last year; millenials will need to approach their purchase decisions prepared both financially and proactively.

Homes going on the market in this type of environment are typically swooped up quickly or immediately have several people bidding on one house. Advice to these first-time buyers would be to establish your loan approval before even beginning the home search process so that you know exactly the type and price of home you can afford. Then, move quickly on any new homes for sale that come on the market.  If the bidding war gets out of control, move on to the next prospect because going out of your approval amount or budget will only hold up your ability to close the sale. Most of all, don’t get frustrated – interest rates, though going up slightly, are still historically lower than in any years past, making now an excellent time to buy a home.

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St. Tammany Parish Is in the Top 3 Fastest Growing Parishes

St. Tammany Parish is in the top 3 fastest growing parishes in Louisiana.  The entire Baton Rouge area (Ascension & Livingston Parishes) had the highest amount of growth in 2016 at 3.66% and 3.27% respectively.  St. Tammany Parish grew by 3.08% from 246,026 residents in 2014 to 253,602 in 2016. The census shows that there is a lot of “Southshore / Northshore movement” with people moving into St. Tammany Parish from Jefferson and Orleans parishes.  There are also new home

residents moving in from Tangipahoa and Washington parishes, adjacent to St. Tammany Parish.  People from Pearl River County (Picayune, MS) also reported moving to St. Tammany Parish in 2016.

St. Tammany Parish has been on a progressive growth trend since 2010 with 7.5% growth from 2010 to 2016.  There are two main reasons for this – the birth of new children and the steady incoming tide of new or returning St. Tammany homeowners.  The actual numbers that show this growth are 234,568 residents in 2010 grew to 253,602 residents reported on the census during 2016.  This growth is not overshadowed by the “Katrina effect” where we saw a surge of home buyer and renters from the Southshore right after the storm.  This growth is independent and accounts for 2,000 to 3,000 people moving to St. Tammany Parish annually over the last 16 years.

St. Tammany Parish also has a high “retention rate” with more people staying in the parish than

moving out of it.  In 2016, for instance 2,416 more people moved into the parish than those moving out. Also, St. Tammany Parish has proven to have the ability to attract a “brand new audience,” attracting more people moving into the parish from out-of-state than any other parish in Southeast Louisiana.

Other facts to note include that births in St. Tammany Parish have been approaching the amount of 3,000 since 2011.  In 2016, that birth rate amount finally topped 3,000, so that has accounted immensely for growth in St. Tammany Parish. The “small town feel” with all of the trappings of commercial development, retail, entertainment, dining, and services of the cities of Slidell, Covington, and Mandeville are the draw of people moving into the parish.  Although still considered a “bedroom community,” St. Tammany Parish also offers homeowners pretty much any lifestyle amenity they could need.

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