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New Homes Built Lag While Demand Rises

by Galand Haas

Good Monday Morning!

Sales of new homes have lagged over the recent upswing in home sales not only locally, but nationally.  In the Eugene and Springfield area the problem is simply that we are out of affordable land for home sites.  The local government has put a halt on expansion of the urban growth boundary and the amount of land that is available for building has all but gone away.  This has not only driven up building lot prices, but it has made it difficult for home builders to find lots suitable for buidling new homes.  Also the recession has not been forgotten by many builders and they are wary of building spec homes.  This also has created a decrease in the numbers of news home being built and on the market.  Here is an article from Realtor.com that addresses this situation nationally.

Despite the hordes of frenzied home buyers hoping to take advantage of very low mortgage interest rates and sign on the dotted lines for their dream homes, builders still aren’t putting up nearly enough residences to appease the rising demand.

There was no monthly change in the number of newly constructed homes that went under contract—54,000, to be exact—from May to June, according to a new residential construction report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. But compared with June 2015, sales of the brand-new properties were up 22.7%.

The numbers were not seasonally adjusted, which means they weren’t smoothed out over a 12-month period to account for the ups and downs of home buying at different times of the year.

“[Builders aren’t] taking any risks. They aren’t starting homes without buyers,” says Jonathan Smoke, chief economist of realtor.com®. Builders are taking orders for the bulk of new abodes, he says, instead of building them on spec. And “they’re not offering homes in more affordable price points.”

New homes, complete with brand-new appliances, typically cost more than existing residences. For example, the median price of the new homes was $306,700 in June, according to the report. That was up nearly 6.2% from May and almost 6.1% from the same month a year earlier.

Meanwhile, the median price of an existing home reached an all-time high of $247,700 in June—still a relative bargain selling for a whopping 23.8% less than a new home, according to National Association of Realtors® data.

In June, just 3,000 new homes costing less than $150,000 were sold, according to the government report. Buyers closed on an additional 12,000 selling for between $150,000 and $199,999. But the bulk of sales were in the $200,000 to $499,999 range. About 33% of the sales were in the $200,000 range, 21% were in the $300,000 range, and 18% were in the $400,000 range.

“[Builders either aren’t] trying or they’re not capable, in this environment, of offering lower price points,” Smoke says.

Across the country, monthly sales of new homes remained virtually unchanged from May to June, according to the report.

The West was the only region to see a monthly uptick as buyers signed on the dotted line on 14,000 new residences—up nearly 7.7% from 13,000 the previous month. They were also up almost 27.3% from the same time a year earlier.

Sales were up annually 50% in the Northeast, with 3,000 homes purchased in June. They rose 33.3% year over year in the Midwest, with 8,000 sales, and 20.8% year over year in the South, with 29,000 sales.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

1471 Barrington Ave

Price: $549,900    Beds: 5    Baths: 3    Sq Ft: 3756

Luxurious and grand! Great room with surround sound speakers, Brazilian cherry hardwood floor & gas fireplace. Huge theater/bonus room prewired for surround sound. Open kitchen with cherry stained cabinets, island, LED under & above cabinets & toe k...View Home for Sale >>


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A Very Dangerous Situation if Homeownership Continues to Falter

by Galand Haas

Good Morning!

It is not common knowledge, but homeownership in the United States is at a 51 year low.  This is a frightening fact because the idea of homeownership is the foundation of the American Dream.  There are many factors that have contributed to this fall off on homeownership.  There is currenlty a large difference in what our two presidential candidates plan to do to stimulate the housing industry.  Do your homework and vote wisely. It is a very dangerous situation if homeownership continues to falter.  Here is a recent article from Realtor.com that talks about some of the conditions that are having an impact on homeownership.

Buying a home is hard enough these days as wannabe homeowners have to contend with a shortage of residences in some markets—along with ever-rising prices and plenty of drag-down, no-holds-barred competition. But guess what? It’s about to get even worse.

Builders and developers applied for fewer new-home construction permits in June, according to the U.S. Department of Commerce’s monthly new residential construction report. So get ready for a continuing decrease in the supply of new homes later this year and into the next. (It takes about six to nine months to complete a residence once a permit is secured.)

And, yes, that’s expected to drive prices up even higher.

The number of permits issued were down 15.4%, to just 114,000, in June compared with the same month a year earlier, according to the report. But before panic sets in, it’s helpful to realize that this was actually a 5.8% bump from May.

The numbers were not seasonally adjusted, meaning they weren’t smoothed out over a 12-month period to account for fluctuations.

The reason builders are holding off on putting up more homes is because they’re worried the number of buyers could drop off if the economy falters, says Jonathan Smoke, chief economist of realtor.com®.

“The presidential election poses a big wild card,” Smoke says. “At the same time, the world is teetering on entering a recession due to a number of factors, including most recently Brexit.”

It’s also important to note that those newly built abodes, often with state-of-the-art appliances and electronic systems, cost more than those which have been lived in—so developers have lots to lose if those properties don’t sell.

For example, the median price of a new home was $290,400 in May, according to the most recent Commerce data available. Existing (i.e., not new) homes went for a median of $239,700 in May, according to the National Association of Realtors®.It wasn’t just permits to build single-family homes that were down. Permits to put up sorely needed condo and apartment buildings, with five units or more, also dropped year over year by about 39.2%, to just 36,600 in June. But, on the bright side, the number was up nearly 4.9% from May.

“This environment is good for the landlord and property owner, but not so much for virtually everybody else,” Smoke says. “It’s going to be even harder to find an affordable place to rent than it has been.”

In a welcome bit of good news, June saw the completion of the greatest number of new residences over the past year, according to the report.

The number of finished abodes surged 16.5%, hitting 99,500 residences, in June compared with a year earlier, according to the report. It was also up 19% from May.

In addition, the number of completed condo and apartment buildings, with five units or more, were also up 14.5% from a year ago and 46.5% from May, according to the report.

But with permits down, the number of new homes hitting the market simply can’t—and won’t—continue.

“We’re just not seeing the growth in new construction that would be necessary to improve the shortage of apartments for rent and homes for sale,” Smoke says. So “we’re likely to see continued rent and home price increases.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

425 W 28th Ave

Price: $279,000    Beds: 3    Baths: 2    Sq Ft: 1586

Serene and secluded! Various beautiful trees provide privacy and great views. Features hardwood floor, two fireplaces, vinyl windows, ductless heat pump, built-in storage/shelves in home and in garage. Upstairs main level offers seclusion and mounta...View Home for Sale >>


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Local Market Activity for July 2016

by Galand Haas

Good Morning,

July numbers are in and just as I predicted last month, the figures indicate a slight slowing of the housing market in the Eugene and Springfield area.  Not only were total home sales down from June of this year, but they were also below the level of July 2015.  I would expect to see this trend continue for the remainder of the year.  As indicated by the increase in home values, there seems to be some price resistence beginning.  When home prices increase faster than the economy, there will a market slow down as homes start to become harder to afford.

Lane County had another month of mixed activity in July. Pending sales (549) ended 4.8% ahead of July 2015 (524) but fell 1.1% short of the 555 offers accepted last month in June 2016.

New listings fared similarly—the 670 offered in July topped July 2015 (647) by 3.6%, but fell one short of the 671 offered last month in June 2016 (-0.1%).

Closed sales, at 418, ended 22.9% below July 2015 (542) and 20.2% below June 2016 (524). Even so, these 418 closings were stronger than the 390 closings posted two years ago in July 2014.

Year to Date Summary

Comparing the first seven months of 2016 to the same period of 2015, closed sales (2,833) have increased 3.8% and pending sales (3,359) have increased 5.6%. New listings (4,088) have decreased 4.1%.

Average and Median Sale Prices

Comparing 2016 to 2015 through July of each year, the average sale price rose 6.7% from $243,300 to $259,700. In the same comparison, the median sale price rose 6.5% from $220,000 to $234,400.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

1615 Taney St

Price: $299,000    Beds: 4    Baths: 2    Half Baths: 1    Sq Ft: 1913

Brand new home! Great quality construction with plaster finished walls, maple hardwood & porcelain tile floor, hickory cabinets, granite counters, 9 ft ceiling, LED dimming lights, 3 skylights one of which opens. Great room layout with gas fireplace...View this property >>


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The U.S. Presidential Election and Housing Market Trends

by Galand Haas

Good Monday Morning!

The 2016 election season has been one of the most divisive presidential races in this country's history and unfortunately, that unrest has been something of a wet blanket on the housing market nationally. While many areas in the nation have enjoyed a boom market, the sense of unease and nervousness has convinced many Americans to wait before buying or selling a home. This is not a new scenario for our country, even in years with less chaos and uncertainty, Realtor associations nationwide have noted that consumers tend to be more cautious during an election year. The question is:

Should prospective sellers and buyers hit the pause button during an election year?

A recent study showed that housing prices tend to drop slightly, approximately 1.5 percent, during an election year. But even if that is the case, many real estate experts agree that consumers shouldn't feel the need hunker down until after the show is over and a new president is chosen. The fact is that real estate values locally and nationally are determined by only one factor: Supply and Demand.

The great Warren Buffet said "Be fearful when others are greedy and greedy when others are fearful". Translated for the general public, that means that we should do the opposite of what others are doing.

When the media is predicting gloom and doom, many buyers and sellers will make the decision to sit on the sidelines. What does that mean for sellers? Often it means lower housing inventory which equals less a smaller pool of buyers and possible multiple offer situations. For buyers it can add up to less competition and the opportunity to find a bargain. Added to that the fact that mortgage rates are still at historic lows, now is definitely the right time to get the most bang for your buck.

Have an awesome week!

THIS WEEKS HOT HOME LISTING!


3686 Yogi Way

Price: $250,000    Beds: 3    Baths: 2    Sq Ft: 1776

Spacious and bright! Lovely one level home on corner lot with RV parking. Stamped concrete in front walkway. Wonderful entertaining space in the huge vaulted Great Room. Living room opens to kitchen and dining area with slider. Well-sized master sui...
View Home for Sale >>


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Nationally the Housing Market Remains Robust

by Galand Haas

Good Monday Morning!

It is not just the Eugene and Springfield area that is having a hot Real Estate market.  Nationally, the housing market has been robust and just as in Eugene and Springfield, home prices are on the rise as well. Here is a short and informative article about the national housing market from Realtor.com.

Frazzled home buyers may need to sit down and take a few deep breaths before reading any further. Those rapidly rising home prices have hit an all-time high—and show no signs of slowing down before Labor Day.

The median price of an existing (i.e. not newly constructed) home across the nation reached $239,700 in May, according to a recent report from the National Association of Realtors®. That’s up 3.8% from April and 4.7% from May of 2015.

The previous peak was last June at $236,300.

“The price increases are a natural result of the very strong demand for homes against very limited homes for sale,” says realtor.com’s chief economist, Jonathan Smoke. “It’s pent-up demand… coupled with the lowest mortgage rates we’ve had in three years.”

He predicts prices will continue to surge this summer as buyers fight over the not-nearly-enough residences on the market. But there is hope: the mad rush for available homes is expected to taper off come Labor Day, Smoke says.

“There’s a higher probability that interest rates will go up [in the fall]. School is back in session, which means fewer [parents] are looking to move,” he says, adding that the presidential election will cause some potential buyers in certain areas of the country, like Washington DC, to postpone home buying decisions.

The high prices have been a boon to sellers who are putting their properties on the market and cashing in.

“More homeowners are realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” NAR chief economist Lawrence Yun said in a statement. “Repeat buyers are using the proceeds from the sale of their previous home as their down payment.”

Residences also continued to fly off the proverbial shelves at the highest volume for the month of May since 2005—before the financial crisis walloped the world economy. This May, the number of sales hit 526,000, a 11.9% jump from April and a 6.3% rise from May of last year, according to the report. Those numbers were not seasonally adjusted, which is to say they weren’t smoothed out over a 12-month period to account for seasonal fluctuations.

The cost of becoming a homeowner is by far the highest in the West, home to astronomically expensive areas like San Francisco and nearby Silicon Valley, according to the report. The median home price in the region was $346,900 in May and the number of sales rose 0.9% year-over-year to 114,000.

The next most expensive region was the Northeast at $268,600, according to the report. The region also saw the fewest sales, at 69,000, in May. But the number of existing homes sold jumped 11.3% from the same time a year earlier.

The region was followed by the South, where the median home price hit $211,500. The warm weather region saw the most sales at 211,000, a 8.2% rise from a year earlier.

Last up was the Midwest, where prices reached $190,000. The number of sales reached 132,000 in May, a 5.6% bump from May of 2015.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

2484 Crowther Drive

Price: $299,000    Beds: 3    Baths: 2    Half Baths: 1    Sq Ft: 1911

This Heitman Custom Home has been beautifully maintained and offers wonderful amenities and details. Some of the features include crown molding, tray and vaulted ceilings, wainscoting, custom cabinets, hardwood and tile floors, granite and abundant ...View Home for Sale >>


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Displaying blog entries 1-5 of 5

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Photo of Galand Haas Team  Real Estate
Galand Haas Team
Keller Williams Realty Eugene and Springfield
2644 Suzanne Way
Eugene OR 97408
Direct: (541) 349-2620
Fax: 541-687-6411

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