Introducing Homelight’s Real Estate Recap, a monthly digest of the most relevant real estate news and trends! Each month, we scour the internet for the latest real estate news so that you don’t have to.
You’ll only get the real estate news that matters: the stuff that’ll help you stay on top of the housing market and make smarter decisions about your home.
Think of us as your elderly aunt who knows everything about anything and always has caramels in her pocket. We just want to feed you, squish your face, talk about old times and…. give you this month’s top real estate news stories.
So, let’s jump right into it!
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1. Miss Fannie Mae
+ This past month, the press has zoned in on one particular trend: rising mortgage rates. They’ve hit an all-time high since 2010 when it lingered around 4.7 percent.
From WashPost: US average mortgage rates edge up; 30-year at 4.86 percent. “Home borrowing rates remain at their highest levels in more than seven years, with the key 30-year rate approaching 5 percent. Mortgage buyer Freddie Mac said Thursday the rate on 30-year, fixed-rate mortgages ticked up to an average 4.86 percent this week from 4.85 percent last week. A year ago, it stood at 3.94 percent.”
+ So, what does this mean for homebuyers?
+ “For homebuyers who don’t have a lot of wiggle room in their wallets, the rise in monthly payments will reduce the number of homes affordable to them in their local markets. A buyer with a $2,500 monthly housing budget lost nearly $30,000 in purchasing power this year.” CNBC on Higher mortgage rates, rising prices costing homebuyers more than $1,200 a year.
But remember, mortgage rates are still at a historic low. And since rates have just started to rise, agents like Loretta Thomason, a top selling agent in Austin, Texas, haven’t seen the effect on her home sales just yet. “I would advise my buyers to lock in the rates now and purchase at this time” (after checking with their lenders). “Try to get a home before rates increase too much, where you’re no longer able to afford a property,” says Thomason.
+ Jon Coile from WashPost has a couple of other ways to finesse the higher mortgage rates as a homebuyer in What to consider when buying a home amid rising mortgage rates.
2. Tech rush: California to Austin, Texas
+ “Google, Apple, Amazon, Dropbox, and Oracle have all recently either built new facilities or significantly expanded existing ones in or near Austin, prompting dozens of smaller internet companies and start-ups to follow. The city remains affordable, as well, with a favorable cost of living compared to dozens of other major cities in North America.” From Washington Post: Movers and Shakers are flocking to rising tech hubs
+ With steep housing prices in the Silicon Valley and Bay Area, young home buyers don’t mind moving to other techie hubs that go easier on their savings account.
+ “In the Austin area, the biggest generator of inflow was San Francisco, unsurprising considering both cities are hubs for the technology sector.” Culture Map: California homebuyers continue coasting into Austin’s real estate market
+ Thomason: “I had a closing this morning—she works for Google and he’s at Amazon, and they moved here from California! This is their first home and this is where they can still build a home in the low $220K price range. I still see the California trend, with all the new companies moving into Austin.”
3. Rental news: Expedia versus Airbnb
+ Housing Wire: Expedia dives headfirst into short-term rentals, acquires Pillow and ApartmentJet. “Expedia announced this week that it is acquiring Pillow, a San Francisco-based startup that helps apartment owners work with their long-term residents to turn their occupied units into short-term rentals, and ApartmentJet, a software company that enables multifamily property owners to turn units into guest suites.”
Expedia acquired HomeAway back in 2015, which already taps into the short-term rental market. “According to Expedia, the acquisitions will ‘help unlock urban growth opportunities that, over time, will contribute to HomeAway’s ability to add an even broader selection of accommodations to its marketplace and marketplaces across Expedia Group brands.’”
“Our acquisitions of Pillow and ApartmentJet are important and foundational investments in the Expedia Group platform,” Okerstrom (CEO of Expedia) added. “We gain technologically advanced solutions that will help us give travelers new options for great places to stay in popular destinations while benefiting residents, owners, managers, and local tourism.
If you want to rent out rooms in your house, your role as a host is getting a whole lot easier. Especially with higher mortgage rates, it’s a great time for homeowners to consider short-term rentals as a way to make some extra cash.
4. Eye on the storm
+ After Hurricane Michael and Florence devastated areas in Florida and the Carolinas, it might be useful to look back to Harvey and consider what will happen to their housing market.
+ In WSJ: How Harvey Transformed House-Hunting in Houston, where there weren’t any floods, like the Heights neighborhood in Houston, “the median sales price of homes rose 8.2% to-date in 2018 from the year earlier, according to the Houston MLS. The median sales price of homes in River Oaks has shot up 22.6% year-to-date compared with a year earlier.”
Where Harvey gave no mercy, like the “traditionally affluent Bellaire, the median sales price of homes fell 11.8% over that same period.”
+ But, as reported in HomeLight’s hurricane comparison of Katrina and Harvey, Houston’s real estate market bounced back almost immediately. From HomeLight: Hurricanes Harvey vs. Katrina: Which Storm Hurt the Housing Market Most?
“Houston housing experts say the Harvey effect won’t last long, and that neighborhoods like Bellaire that might be down now are where the opportunity lies. There is skepticism that climate change will lead to another event of Harvey’s magnitude anytime soon” (WSJ).
5. Aftermath of the storm
+ So, your house is actually better insured for volcano damage than floods. Unless you in live in Hawaii or Washington, a volcanic eruption is probably the least of your worries. Storms and hurricanes on the other hand cause floods, which are not covered…
+ “Towns and cities along the Panhandle coast were left in ruins, and damage extended well inland into southern Georgia. The storm’s high winds stripped roofs and caused trees to fall on homes and cars. Coastal communities were walloped by a massive storm surge, which forecasters predicted could reach as high as nine to 13 feet before the storm. Only homeowners who bought separate flood insurance for their homes were covered if water from Florence damaged their house. And there weren’t many people in that boat.”
+ From Market Watch: After Hurricane Michael, what homeowners need to know about disaster insurance. You might want to consider purchasing flood insurance to avoid paying cash upfront if and when another hurricane hits.
+ CNBC: Tech and real estate turn to the cloud to protect cities from floods. “One four-year-old company, Boston-based Opti, installs underground smart water management systems that connect to the technology cloud and track the weather. The systems control water coming into and out of urban lakes, retention ponds, tanks, pipes, cisterns, even constructed wetlands.”
“‘We’re able to take the weather forecast and use it to predict how much runoff is going to occur, and drain the facility down in advance to create new storage without building a new major capital asset,’ Opti CEO Marcus Quigley said.”
6. A team… like the Red Sox?
+ PR Newswire: Number of Real Estate Teams are Growing, NAR Survey Finds
+ NAR found that a rising trend in real estate teams. A team is typically led by one main agent in charge of showings and listings. The other team members are each responsible for one specific aspect of your sale.
+ “The survey asked Realtors® to choose from a list of activities to explain their primary functions on a team. The most common answer was agent (88 percent), followed by broker (50 percent), marketing (47 percent), administrative (47 percent) and transaction coordinator (34 percent).”
“‘This growing trend not only helps our members share workloads and responsibilities but also allow Realtors to benefit from the experience of fellow professionals. The synergies of a well-functioning team are often an incentive to relinquish some of the independence of a solo practitioner and offer many attractive features for both licensees and their customers,’ said NAR President Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri, and CEO of RE/MAX Boone Realty.”
+ This trend shows just how much harder it is to sell a home by yourself. Can you make a drone video or VR experience of your house for buyers? Probably not, huh? But, more importantly, do you know the market well enough and deal with real estate transactions on a daily basis? Without a real estate agent or team on your side, you’ll be competing with staffs and groups who know what they’re doing. Find a top real estate agent or team in your area with HomeLight to compete with the market.
+ NAR: 2018 Teams Survey, from July – October 2018.
“Among respondents that are not currently on a real estate team, nine percent have strongly considered and 30 percent have briefly considered joining or starting a real estate team.
- Twenty-nine percent of respondents had two people on their real estate team.
- The median number of people on a real estate team was four.
- The median year that real estate teams were established was in 2014.
- Typically, respondents joined their current real estate team in 2016.”
7. Avocado toast and house hunting
+ “The researchers found homeownership declining most steeply among people under the age of 30 when compared with other generations. ‘They’re not able to hit the mark at the same age as their parents,’ said Tamara Sims, a research scientist at Stanford. Why the delay? People often want to put down roots once they have a family. Indeed, the likelihood of owning a home by the age of 30 swells by nearly 30 percentage points for those already married and with children. But younger people today are not in a rush to wed and reproduce.”
+ Due to student loans, rising prices, and a shift in home ownership culture, younger people just aren’t buying as many homes. But, this isn’t any reason for baby boomer home sellers to fret! As the circle of life continues, the oldest of millennials are now approaching 38 years old, closer to a secure age to buy a home. 33% of home buyers in the U.S. in 2018 were first-time buyers—we forecast a gradual increase in first-time buyers as millennials get older. Guess ya can’t stay young forever.
8. Tiny homes, big roles
+ As small as 400 square feet and as large as 1,000, tiny homes are once again in the news. This time, they have a bigger role to fill other than appeasing a couple looking to downsize but also keep a bathtub and queen size bed in a 500 square feet box. Veteran Chris Stout realized that Tiny houses for homeless vets make a lot of sense, CNN.
Instead, people are starting to realize its use in more practical and powerful ways. “Our anticipated length of stay [homeless veterans] is six months, but as long as they’re working towards their goals, they’re welcome to stay. We see these tiny homes as an educational tool to teach them how to maintain a home, cook for themselves and live next to neighbors. So far, eight of the original 13 residents have moved into permanent housing. They take their furniture with them, so it takes about 72 hours to prepare a home for the next resident. We’ll also have a community center providing medical, dental, barbershop, veterinarian care, as well as a fellowship hall, so we can have group events. So far, we have helped more than 8,000 veterans.”
+ In Arizona, which ranks dead last for elementary school teacher salaries in the country, school districts decide to target the state’s housing problem as another way to keep teachers in the area despite their low pay. CBS News: How tiny homes are helping cash-strapped teachers in Arizona.
“‘The Vail Unified School District purchased a five-acre lot for two dozen tiny homes. The district will charge $125 a month for the land and utilities, but the teachers will own the homes, paying around $600 a month – half the cost of the average mortgage in Vail. We have to be aggressive in pursuing all avenues that we can to attract and retain high-quality teachers, and we feel that this is one of those ways,’ said John Carruth, associate superintendent of the school district.”
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