Spring into the Latest Housing Trends: March 2019’s Real Estate News Recap

Spring has sprung! Time to open up the windows, enjoy the fresh air, and read another edition of HomeLight’s Real Estate Recap.

Every month, HomeLight scours the web for the latest real estate stories to put together a quick, one-page rundown of all things housing.

With all the talk about March Madness, you’d be surprised to hear that the last month of the quarter (slow down, 2019!) was steady and quiet on the real estate front. Even with looming recession forecasts and aftermath of a tumultuous winter brought on by climate change, the market’s holding strong and heating up just like the weather.  

Here’s what you should know about real estate in March and what you can expect for the months ahead.

real estate spring news march
Source: (Tim Gouw / Unsplash)

1. Steady rates, happy buyers

In 2018, analysts predicted multiple interest rate hikes for the coming year, which we covered in our 2019 housing forecast. Good news, home buyers: it looks like the Fed is going to keep rates steady for now.

+ NY Times, Fed, Dimming Its Economic Outlook, Predicts No Rate Increases This Year
“The Federal Reserve said Wednesday that the United States economy was slowing more than it had previously thought and painted a far less rosy economic picture than the White House as it left interest rates unchanged and signaled little appetite for raising them again in the near future.”

“Forecasts released at the end of the two-day meeting show the typical member of the Federal Open Market Committee now expects not to raise rates at all this year, an abrupt halt to what had been five consecutive quarters of rate increases to the current range of 2.25 to 2.5 percent. Most officials now expect a single rate increase in 2020 and none in 2021. In December, when forecasts were last released, Fed officials said they expected two rate increases this year and another in 2020.”

mortgage rates
Source: (Freddie Mac)

+ HomeLight’s take: The economy is in a “good place” according to Jerome Powell, Chair of the Federal Reserve, but we shouldn’t get used to it. The Fed’s decision to stop hiking rates is a direct response to the slowdown in job growth, consumer spending, and business investments.

+ CNBC, Weekly Mortgage Applications Surge Nearly 9% on Lower Rates
“Mortgage applications jumped 8.9 percent last week from the previous week and 5.7 percent from a year earlier, according to the Mortgage Bankers Association’s seasonally adjusted report.

“Both refinance and purchase applications surged, but the more rate-sensitive refis were the real leader. Those applications jumped 12 percent for the week and were 8.5 percent higher than a year ago. For much of last year, the refinance market was minimal, down dramatically from 2017, as rates rose.”

+ HomeLight’s take: Buyers, remember to find a top real estate agent to help you find that home while rates are still historically low!

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2. New money vs. old money

Last month, an array of high-profile startups (think: Silicon Valley darlings) announced their plans to go public this year, and it so happens that all of them are located in one of the most expensive housing markets in the world—San Francisco. It’s kind of like the Great Gatsby, but in tech. And, without star-crossed lovers and murder. Oops, spoiler.

The green light flashes brightly over the Silicon Valley as new millionaires roll into the hilly Bay Area and buy, you guessed it, homes!

+ NY Times, When Uber and Airbnb Go Public, San Francisco Will Drown in Millionaires
“This year—with Uber, Lyft, Slack, Postmates, Pinterest and Airbnb all hoping to enter the public markets—there’s going to be a lot of it in the Bay Area. Estimates of Uber’s value on the market have been as high as $120 billion. Airbnb was most recently valued at $31 billion, with Lyft and Pinterest around $15 billion and $12 billion.

“Welcomed finally into the elite caste who can afford to live comfortably in the Bay Area, the fleet of new millionaires are already itching to claim what has been promised all these years. They want cars. They want to open new restaurants. They want to throw bigger parties. And they want houses.”

san francisco housing real estate
Source: (Jack Finnigan / Unsplash)

+ Forbes, 2019 IPOs Affecting Real Estate In Silicon Valley
“For decades now, Silicon Valley has been considered the center of the tech world when it comes to innovation. This has resulted in Silicon Valley housing being one of the highest priced real estate markets in the United States, if not globally. And it looks like 2019 may exacerbate that.

“When tech Unicorn startups, like Uber, finally go public, they will likely be worth over $100 billion, putting at least $10 million in stock for every early employee, advisor, and investor. In addition to the startup ecosystem, the real estate landscape will also be affected.

“While 2018 was a rather crazy and fast ‘seller’s market,’ it is expected that things will be a little different in 2019 as buyers and sellers adjust to the new realities.”

+ SF Chronicle, Finally, Some Insight on the Impact of IPOs on Home Prices
Three new studies that look at previous IPOs found that they do raise home prices somewhat, with the biggest gains coming closest to the headquarters of companies going public.”

3. Spring sales and lower mortgage rates

This recap has been shaping up to be buyer-focused. But, sellers, take note! People are interested in your homes and it’s the best time to cash out, before more houses enter the market and mortgage rates rise.

+ Realtor Magazine, Happy Spring: Home Sales Post Strong Rebound
“A powerful combination of lower mortgage rates, more inventory, rising income, and higher consumer confidence is driving the sales rebound,” says Lawrence Yun, NAR’s chief economist.

+ HomeLight’s Take: Home sales are growing at a pace of 11.8% month over month, but down 1.8% year to year. So although the pace of sales isn’t quite what it was in the peak of the real estate boom in recent years, home sellers are still sitting pretty. People want to and are in the mindset of buying their homes.

+ Freddie Mac, Freddie Mac March Forecast: Lower than Expected Mortgage Rates and House Price Moderation to Help Spring Homebuying
Sam Khater, Freddie Mac’s chief economist, says, “The real estate market is thawing in response to the sustained decline in mortgage rates and rebound in consumer confidence—two of the most important drivers of home sales. Rising sales demand coupled with more inventory than previous spring seasons suggests that the housing market is in the early stages of regaining momentum.”

real estate housing building construction builder confidence
Source: (Jessy Smith / Unsplash)

4. Boastful builders

Back in December, we reported on the growing pace of new construction in the housing market and recommended home sellers to bite the bullet and sell their homes before the competition spiked. In the eyes of buyers, newer is always better, and it’ll be hard to compete with the new kids on the block.

Aaand, we were right.

+ NAHB, Builder Confidence Holds Steady in March
“‘Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home buying season,’” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

“‘In a healthy sign for the housing market, more builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,’” said NAHB Chief Economist Robert Dietz. “‘Increased inventory of affordably priced homes—in markets where government policies support such construction—will enable more entry-level buyers to enter the market.’”

+ Market Watch, Home Builder Confidence Jumps in February to Four-Month High 
“Big picture: Builders are in a sweet spot: economic conditions like a strong job market are helping them sell more homes, and falling mortgage rates are making that job even easier. But NAHB continued to note that ‘affordability remains a critical issue.’ Builders say regulations are still ‘excessive,’ and the Trump administration’s tariffs have made raw materials much more expensive.

“What they’re saying: The housing market slowdown of 2018 is starting to look like a pause, rather than the beginning of the end for the cycle. In January, mortgage purchase applications for new homes jumped 43% compared to December, slightly edging last January’s tally to touch the highest level since 2013, the Mortgage Bankers Association said last week.”

+ HomeLight’s take: If you’re thinking about selling a home, speak with a real estate agent who can help you navigate the changing market and price your home in the context of new construction developing in your area. 

affordability homes house real estate
Source: (Alisa Anton / Unsplash)

5. Priced out 

CoreLogic, a leading data-based company that analyzes real estate trends, reported on buyers’ behaviors this month that shed light on where are people moving to or whether they will move at all.

+ CoreLogic, Homebuying Patterns: Affordability, Climate and Jobs Affect Metro Choice
“According to CoreLogic data, homebuyers deciding to relocate to another metro were choosing adjacent, affordable metros in 2018.

“The Los Angeles metro experienced the highest net out-migration among all the metros over the last year, while the Riverside metro had the highest in-migration. Almost 25 percent of the applications in Riverside metro came from Los Angeles, mostly those seeking affordability. For example, the median sale price of homes in Los Angeles is almost double compared with Riverside’s median home price. Additionally, Los Angeles’ affordability index is much lower compared to Riverside.

“New York had the second highest out-migration, followed by San Francisco, San Jose and Washington. In contrast, the Dallas metro had the second highest in-migration, followed by Phoenix, Lakeland and Las Vegas.”

+ HomeLight’s Take: CoreLogic also gave insight to current foreclosure rates, which can tell us about the health of the housing market. And it seems like across the U.S., foreclosure rates have fallen to low levels. More people can afford their homes, and more can continue to buy.

spring house real estate
Source: (Toa Heftiba / Unsplash)

+ CoreLogic, As U.S. Delinquency and Foreclosure Rates Fall to Lowest Levels in at Least 18 Years, Some Borrowers Struggle in Natural Disaster Areas
“In November 2018, 4.1 percent of home mortgages were in some stage of delinquency, down from 5.2 percent a year earlier and the lowest for the month of November in at least 18 years, according to the latest CoreLogic Loan Performance Insights Report. The measure, also known as the overall delinquency rate, includes all home loans 30 days or more past due, including those in foreclosure.

“Miami, with the second-highest rate at 5.4 percent saw a sharp decrease in the overall delinquency rate, falling from 12.7 percent in November 2017. Houston also saw a large year-over-year decreases in the 30-plus-day delinquency rate, falling from 10.4 percent in November 2017 to 5.2 percent in November 2018.”

6. Coastal Cities Face Climate Change Crisis

After the coldest winter, blazing fires, and hurricane floods, we experienced the wrath of the elements in 2018 and the beginning of this year. It’s been a slow recovery, but scientists predict more to come and for coastal cities to prepare for the worst.

+ Forbes, That Sinking Feeling: Real Estate In The Age Of Climate Change
“A study published earlier this year by the First Street Foundation found that rising sea levels and associated effects has already destroyed nearly $16 billion in the years 2005-2017.

“On the West Coast, San Francisco and Seattle—the heart of America’s high-tech industry—are vulnerable; on the East Coast, ULI expects that a few relatively unimportant cities like Boston, New York, and Washington, DC will suffer extensive negative effects.”

coastal cities face climate change house real estate
Source: (Katie Manning / Unsplash)

+ Urban Land Institute, Rising Sea Levels Pose Risk to Institutional Real Estate Investment
“Coastal cities and their real estate markets face considerable risks from rising sea levels and other impacts of climate change, such as more extreme seasonal king tides and storms that occur with greater frequency and intensity.

“The results indicate that large swaths of real estate value lie in areas at high risk of being affected by sea-level rise. More than 24 percent of the NPI value is in metro areas whose central cities are among the 10 percent of cities most exposed to sea-level rise. This amounts to more than $130 billion of real estate. And a whopping 67 percent of the NPI’s value, or $360 billion, is in metro areas whose primary cities are among the 20 percent most exposed in the United States.”

+ WaPo, Factoring the Effects of Climate Change into Real Estate Investments
“Physical risks are those caused directly by specific catastrophic events—hurricanes, sea level rise, drought, wildfires—that are ultimately attributable to climate change and shifting weather patterns. Among the many negative impacts of such events are greatly increased cost of maintaining, repairing and reconstructing seriously damaged or destroyed structures; soaring costs of property insurance; and post-event business and economic productivity losses.”

+ The Real Deal, Insurance Premiums Could Rise as More Extreme Storms Hit Coastal Markets 
Premiums could rise as more extreme storms hit vulnerable markets and insurance companies update their climate models.”

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