NAR Chief Economist Addresses Senate Committee

nar building washington dc

JULY 22, 2022

By Kerry Smith

Sales will weaken and for-sale inventory will grow, but it won’t do much to help affordability, Chief Economist Lawrence Yun said.

WASHINGTON – National Association of Realtors® (NAR) Chief Economist Lawrence Yun spoke before the U.S. Senate Committee on Banking, Housing and Urban Affairs as they dig deeper in an attempt to understand what’s happening in the U.S. housing market.

Yun told the committee that he doesn’t foresee a nationwide decline in home prices despite indications that price growth is set to slow. He testified that the potential for weaker sales should increase available for-sale inventory in some markets, but not enough to diminish persistent affordability constraints that, for many Americans, have kept homeownership out of reach for years.

“In the near term, I do not expect the situation to change appreciably,” Yun said Thursday. “Historic undersupply in the market, combined with continued demand, will likely drive ongoing issues with affordability for many Americans.

“Any short-term price adjustments, if they occur, will be less consequential compared to the immense longer-term housing affordability challenges we face as a country.”

Thursday’s hearing, Priced Out: The State of Housing in America, was recorded and can be viewed online.

The committee hearings come as the nation confronts a 6-million-unit housing shortage. The decades-in-the-making phenomenon has helped sustain year-over-year price growth for a record 124 consecutive months. A study of other circumstances influencing the market is also particularly compelling given COVID’s impact on U.S. housing and the more recent fluctuations in mortgage interest rates.

“When the Federal Reserve essentially went all-in in the early months of the pandemic … the decline in mortgage rates and the cautious reopening of the economy boosted housing demand,” said Yun. “The housing market always responds to changes in mortgage rates.”

Interest rates, which had been consistently in the 4-to-5% range in the decade preceding COVID-19, hovered near record lows of around 3% throughout much of 2020 and 2021. NAR’s most recent existing home sales report found that the average commitment rate for a 30-year, conventional, fixed-rate mortgage in June was up to 5.52%.

“Any increases in available inventory observed over the first half of this year have been offset by the corresponding increases in consumer costs,” Yun said on Capitol Hill, explaining that rate increases of roughly 2.5 percentage points have added about $800 per month to a median-priced house payment.

“This affordability crunch is felt most acutely as we move down the income scale and by minority households, given the current income distribution in America,” he continued. “That is why housing supply must be addressed to moderate home price and rent gains.”

© 2022 Florida Realtors®


How Homeownership Can Help Shield You from Inflation

How Homeownership Can Help Shield You from Inflation | MyKCM

If you’re following along with the news today, you’ve likely heard about rising inflation. You’re also likely feeling the impact in your day-to-day life as prices go up for gas, groceries, and more. These rising consumer costs can put a pinch on your wallet and make you re-evaluate any big purchases you have planned to ensure they’re still worthwhile.

If you’ve been thinking about purchasing a home this year, you’re probably wondering if you should continue down that path or if it makes more sense to wait. While the answer depends on your situation, here’s how homeownership can help you combat the rising costs that come with inflation.

Homeownership Offers Stability and Security

Investopedia explains that during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. So, as a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.

Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:

A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.” 

So even if other prices rise, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.

Use Home Price Appreciation to Your Benefit

While it’s true rising mortgage rates and home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win. Buying now lets you lock in at today’s rates and prices before both climb higher.

In inflationary times, it’s especially important to invest your money in an asset that traditionally holds or grows in value. The graph below shows how home price appreciation outperformed inflation in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):

How Homeownership Can Help Shield You from Inflation | MyKCM

So, what does that mean for you? Today, experts say home prices will only go up from here thanks to the ongoing imbalance in supply and demand. Once you buy a house, any home price appreciation that does occur will be good for your equity and your net worth. And since homes are typically assets that grow in value (even in inflationary times), you have peace of mind that history shows your investment is a strong one.

Bottom Line

If you’re ready to buy a home, it may make sense to move forward with your plans despite rising inflation. If you want expert advice on your specific situation and how to time your purchase, let’s connect.


Is the Number of Homes for Sale Finally Growing?

Is the Number of Homes for Sale Finally Growing? | MyKCM

An important metric in today’s residential real estate market is the number of homes available for sale. The shortage of available housing inventory is the major reason for the double-digit price appreciation we’ve seen in each of the last two years. It’s the reason many would-be purchasers are frustrated with the bidding wars over the homes that are available. However, signs of relief are finally appearing.

According to data from realtor.com, active listings have increased over the last four months. They define active listings as:

The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month.”

What normally happens throughout the year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Historically, housing inventory increases throughout the summer months, starts to tail off in the fall, and then drops significantly over the winter. The graph below shows this trend along with the month active listings peaked in 2017, 2018, and 2019.

What happened last year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Last year, the trend was different. Historical seasonality wasn’t repeated in 2020 since many homeowners held off on putting their houses up for sale because of the pandemic (see graph below). In 2020, active listings peaked in April, and then fell off dramatically for the remainder of the year.

What’s happening this year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Due to the decline of active listings in 2020, 2021 began with record-low housing inventory counts. However, we’ve been building inventory over the last several months as more listings come to the market (see graph below):There are three main reasons we may see listings continue to increase throughout this fall and into the winter.

  1. Pent-up selling demand – Homeowners may be more comfortable putting their homes on the market as more and more Americans get vaccinated.
  2. New construction is starting to take off – Though new construction is not included in the realtor.com numbers, as more new homes are built, there will be more options for current homeowners to consider when they sell. The lack of options has slowed many potential sellers in the past.
  3. The end of forbearance will create some new listings – Most experts believe the end of the forbearance program will not lead to a wave of foreclosures for several reasons. The main reason is the level of equity homeowners currently have in their homes. Many homeowners will be able to sell their homes instead of going to foreclosure, which will lead to some additional listings on the market.

Bottom Line

If you’re in the market to buy a home, stick with it. There are new listings becoming available every day. If you’re thinking of selling your house, you may want to list your home before this additional competition comes to market.


Crazy Market Or Not, The Same Fundamentals Of Selling Real Estate Apply

The sale of S506 serves as another testament that selling with a plan in place is the best way too close for the most money within the specific markets current days on market.

It took just over a month from my first meeting with the owner, to customize a plan detailing how to make the unit market ready, complete the pre-listing items identified, list the property on the MLS, hold an Open House and ratify an offer. Success takes a team effort and effective, constant communications. My clients did an awesome job. Congratulations!

Days On Market: 5, average for the building 28


SOLD | Serving the DMV | Inside the Beltway

8101 CONNECTICUT AVE, Chevy Chase MD 20815 | #LaurelsListing

One of the better,  if not the best value, inside the Beltway. 8101 Connecticut Ave Condo real estate sales were relatively slow compared to other years. Owners no doubt, like a lot of other sellers, took a wait-and-see approach. How long could the disruption caused by Covid really be? However, for owners that decided to forge ahead and sell their properties, it proved lucrative. So far in 2021, average days on market is 2, down from 7 in 2020. Grossing 104.14% of the list price, up from 98.32% in 2020. 

Great way to start the new year. 
I am currently having conversations with owners who no longer can or want to wait it out. 
Looks and feels like there will be more inventory at 8101 this year. 
What is for sale right now? Please call, text or email me for more information.


December: The Washington DC Metro Area Real Estate Market

These real estate markets reported record-setting activity in 2020, despite enduring a weaker spring market due to social distancing protocols.

The following analysis of the Washington, D.C. Metro housing markets has been prepared by Bright MLS and is based on December 2020 Bright MLS housing data.

In Summary:

  • In 2020, the total sales dollar volume for the D.C. metro reached $34.6 billion (+11.7%).
  • Total sales volume for the year (57,266) ended up 3.3%. Seven months of the year marked ten-year monthly highs.
  • New listing volume was essentially flat with 2019. Combined with strong buyer demand, it created the region’s tightest market on record.
  • The year saw buyers snap up homes across the metro area, as days on the market fell into the single digits for the first time (nine days).
  • In December, new pending sales showed an unprecedented year-over-year growth, up 30.3% in a traditionally slow month. It was the best gain for any month in the past ten years.

Existing-Home Sales Jump 4.3% to 6.85 Million in October

Key Highlights

  • Existing-home sales grew for the fifth consecutive month in October to a seasonally-adjusted annual rate of 6.85 million – up 4.3% from the prior month and 26.6% from one year ago.
  • The median existing-home price was $313,000, almost 16% more than in October 2019. Total housing inventory declined from the prior month and one year ago to 1.42 million, enough to last 2.5 months – a record low – at the current sales pace.
  • More than 7 in 10 homes sold in October 2020 – 72% – were on the market for less than a month.

Regionally

Existing-home sales in the South increased 3.2% to an annual rate of 2.91 million in October, up 26.5% from the same time one year ago. The median price in the South was $272,500, a 15.7% increase from a year ago.

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.

Click for full NAR news release


Homeownership Creates Wealth Even If That’s Not the Goal

3611 Perry Ave Kensington, MD 20895

What a beautiful day yesterday was to have a OPEN HOUSE. First in person Open I’ve held in months and buyers are out in droves. In our current market where listings and under contract in less than a week and inventory is under a month, buyers are committed to start building equity through ownership. – 3611 Perry Ave, Kensington MD 20895 *Contact me for local market area data and trends – Laurel

Homeowners who spent a lifetime working, raising families and paying mortgages have a greater net worth later in life. Among U.S. families who own rather than rent, a primary residence accounts for 90% of total wealth – and 99% for the bottom 20% of low-income owners.

WASHINGTON – Homeownership presents a great pathway to build wealth. Among all families, the ownership of a primary residence typically accounts for 90% of total wealth, based on the 2019 Survey of Consumer Finance data. Among those in the bottom 20% of the income percentile, it’s even more: The median value of holdings for a primary residence accounts for 99% of total family assets. For top earners, however – the top 10% income bracket – it’s 42%.

Housing wealth accumulation takes time. It’s built up slowly by paying off mortgage debt and through price appreciation. And while home prices can fall, prices tend to recover and go up over the long term. As of September 2020, the median sales price of existing home sales was $311,800 – a 35% gain since July 2006 when prices peaked at $230,000.

Nationally, a person who purchased a typical home 30 years ago gained about $283,000 as of the second quarter of 2020. Of the total wealth gain, 67% ($192,600) is from the price appreciation of 3.7% annually. Over a 10-year period, the wealth accumulation is $144,490, of which $114,233 (80%) is from price appreciation.

Nine of the top 10 metro areas with the largest housing wealth gains over a 10-year period were on the West Coast: San Jose-Sunnyvale-Sta. Clara; San Francisco-Oakland-Hayward; Anaheim-Sta. Ana-Irvine; San Diego-Carlsbad; Los-Angeles-Long Beach-Glendale; Seattle-Tacoma-Bellevue; Boulder, Colorado; Urban Honolulu, Hawaii; and Denver-Aurora Lakewood, Colorado. Naples-Immokalee-Marco Island rounds out the 10th.

However, in terms of home price appreciation and the rate of return (price appreciation less mortgage rate), the top metro areas are Cape Coral Fort-Myers, Florida; Grand Rapids, Michigan; Boise-City-Nampa, Idaho; Reno, Nevada; Port-St. Lucie, Florida; Las Vegas-Henderson-Paradise, Nevada; San Jose-Sunnyvale-Sta. Clara; Riverside-San Bernardino, California; Phoenix-Mesa-Scottsdale, Arizona; and Lakeland-Winter-Haven, Florida.

Copyright © 2020 National Association of Realtors® (NAR)


Existing-Home Sales Soar 9.4% to 6.5 Million in September

Key Highlights

  • Existing-home sales grew for the fourth consecutive month in September to a seasonally-adjusted annual rate of 6.54 million – up 9.4% from the prior month and nearly 21% from one year ago.
  • The median existing-home price was $311,800, almost 15% more than in September 2019. Total housing inventory declined from the prior month and one year ago to 1.47 million, enough to last 2.7 months – a record low – at the current sales pace.
  • More than 7 in 10 homes sold in September 2020 – 71% – were on the market for less than a month.

Regionally

Existing-home sales in the South increased 8.5% to an annual rate of 2.80 million in September, up 22.3% from the same time one year ago. The median price in the South was $266,900, a 13.0% increase from a year ago.

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.

Click for full NAR news release

September 2020 Real Estate Statistics – DC Metro Area

Have You Ever Seen a Housing Market Like This?

Have You Ever Seen a Housing Market Like This? | MyKCM

The year 2020 will certainly be one to remember, with new realities and norms that changed the way we live. This year’s real estate market is certainly no exception to that shift, with historic highlights continuing to break records and challenge what many thought possible in the housing market. Here’s a look at four key areas that are fundamentally defining the market this year.

Housing Market Recovery

The economy was intentionally put on pause this spring in response to the COVID-19 health crisis. Many aspects of the common real estate transaction were placed on hold at the same time. Thankfully, technology and innovation helped the industry power forward, and business gradually ramped back up as shelter-in-place orders were lifted.

The result? Total transformation of the market from rock-bottom lows to exceptional highs. Today, the housing recovery is being called truly remarkable by many experts and is far exceeding expectations. From pending home sales to purchase applications, buyers are back in business and homes are selling – fast.

Have You Ever Seen a Housing Market Like This? | MyKCM

According to the Housing Market Recovery Index by realtor.com, the market has surpassed pre-pandemic levels, and has regained the strength we remember from February of this year (See graph below):

Record-Breaking Mortgage Rates

Historically low mortgage rates are another 2020 game-changer. Today’s low rate is one of the big motivating factors bringing buyers back into the market. The average rate reached an all-time low on multiple occasions this year, and it continues to hover in record-low territory.

When rates are this low, buyers have a huge opportunity to get more for their money when purchasing a home, something many are eager to find while continuing to spend more time than expected at home this year, and likely beyond.

Continued Home Price Appreciation

One of the key drivers of home price appreciation this year is historically low inventory. Inventory was low going into the pandemic, and it is still sitting well below the level needed for a normal market. Although sellers are slowly making their way back into the game, buyers are scooping up homes faster than they’re coming up for sale.

This is a classic supply and demand scenario, forcing home prices to rise. Selling something when there is a higher demand for what is available naturally bumps up the price. If you’re ready to sell your house today, this may be the optimal time to make your move. As Bill Banfield, EVP of Capital Markets at Quicken Loansnotes:

“The pandemic has not stopped the consistent home price growth we have witnessed in recent years.” 

Increasing Affordability

Even as home prices continue to rise, affordability is working in favor of today’s homebuyers. According to many experts, rates this low are off-setting rising home prices, which increases buyer purchasing power – an opportunity not to be missed, especially if your family’s needs have changed. If you now need space for a home office, gym, virtual classroom, and more, it may be time to reconsider your current house.

According to Mortgage News Daily:

“Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.

Bottom Line

With mortgage rates hitting historic lows, home prices appreciating, affordability rising, and the market recovering like no other, 2020 has been quite a year for real estate – perhaps one we’ve never seen before and may never see again. Let’s connect today if you’re ready to take advantage of this year’s record-breaking opportunities.