Existing Home Sales were up 3 percent in February, better than the 1 percent increase expected. This is a very strong report considering sales in the Northeast were actually down 12.3 percent—bad weather charms. The South and West saw a big jump in sales last month. Inventory dropped 8.1 percent year over year to the lowest on record. Properties stayed on the market for an average of 37 days, highlighting the competitive nature of today’s housing market. First-time homebuyers accounted for 29 percent.
Millennials are doing everything at a “slower pace” than their predecessors, including purchasing a home. The percentage of millennials who are at the head of the household is down. Twenty-eight percent of this decline can be attributed to housing costs, and real incomes of young adults grossly being outpaced by the rate of real median home price increases. We’re talking 1 percent increase in income compared to 29 percent increase in median home price. Of course, as with anything housing and real estate, it all comes down to location, location, location, and these are median prices not the average. Let’s note two costs that are essential but have greatly skyrocketed over the years, more than doubling from 2000 to 2016: education and health care. The average annual expenditure for millennials during this time jumped 36 percent. Looking forward, millennials and generation Z (the generation after millennials) could add 19 to 21 million additional households by 2025.
Another issue millennials are facing: low inventory. As first-time homebuyers looking for little down options, many are getting outbid on homes or dealing with multiple offer competitions. The good news: housing relief expected on the horizon. The annual increase in housing starts and completions, coupled with the increase in construction employment, indicates some relief might come to the housing shortage. February’s construction labor growth was the strongest since 2008—almost 10 years! Residential construction jobs were up 3.8% from last year. Short story: These increases highlight optimism that will support improvement in home building.
Mortgage Applications for last week were down 1.1 percent overall but purchases were up 1 percent from the week prior and are still up 6 percent from a year ago.
Looking to sell? One way to add value to your property: convert your cellar, a potential value increase of 30 percent and one of the least complex home improvements. Another option: loft conversions have a 15 percent potential value increase. Think extra bedroom, bathroom, office, etc.
Among the largest cities, Detroit came in at No. 3 for fastest growing year over year rent increases. No wonder competition around here for homebuying is fierce. Why pay a landlord when you can invest in a home?