How Falling Oil Prices Affect the Housing Market

A drop in oil prices can be great for savings at the pump, but some housing markets are seeing the bad side to that drop.

Long-Term Investment in Real Estate

Real Estate As A Long-Term Investment

by Lydia Saad: gallup.com

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Story Highlights

• Real estate leads four others as best long-term investment
• Gold drops to third this year, behind stocks
• Preference for bonds at 6%, down from 10% in 2011

PRINCETON, N.J. -- For the second straight year, more Americans name real estate than stocks, gold, savings accounts/CDs or bonds as the best long-term investment. Real estate leads with 31% of Americans choosing it, followed by stocks/mutual funds, at 25%. Meanwhile, gold dropped to third this year, a significant change from 2011 and 2012, when it was the runaway leader.

The percentages of Americans choosing real estate and stocks are steady this year compared with 2014. This follows three years, from 2011 to 2014, of increasing partiality toward both investments as the housing and stock markets recovered and gold's appeal waned. The public's preference for gold fell five percentage points in the past year, bringing its overall decline since 2011 to 15 points, the largest shift seen among the five investments tracked.

Savings accounts and bonds consistently have been lower on the list, although those identifying savings accounts as the best investment reached 19% in 2012 -- comparable to stocks and real estate at the time -- possibly reflecting Americans' greater desire for stability and security in the first few years after the 2008-2009 financial crisis. This figure has since stabilized near 15%. The percentage choosing bonds has only decreased since Gallup's baseline measure in 2011.

While this trend originates in 2011, an earlier version of the Gallup question that did not include gold shows significant shifts in preference for real estate and stocks between July 2002 and April 2007, with real estate declining from 50% amid the housing boom to 37% when values began to drop, and stocks increasing from 18% to 31% over that same time. Preferences for both then sunk further in 2008 and 2009 as the housing and equity markets suffered severe losses amid a housing mortgage crisis and the resulting global banking crisis and 2007-2009 recession.

Real Estate Favored by All Subgroups

Today real estate is either the top choice or tied for the top choice as the best investment among all major gender, age and income groups. Stocks, on the other hand, faces more competition for second place from gold and savings accounts among some groups.

In particular, and mirroring a pattern seen in the past, nearly as many women, and particularly women aged 18 to 49 years, prefer savings accounts/CDs as prefer stocks. And, savings accounts ranks a clear second among the lowest income group, those earning less than $30,000 annually.

Bottom Line

Real estate took a pounding in home values and consumer confidence after the sub-prime mortgage crisis that started in 2007 spurred the financial crisis of 2008, deepening the 2007-2009 recession. Gold gained appeal during this time, likely due to its tangible quality, but this has proved to be temporary. A return of Americans' confidence in real estate and stocks as solid long-term investments was first evident a year ago, paralleling real world improvements in these areas. Their continued strength this year indicates that was no fluke. Meanwhile, gold has slipped even further as an attractive way to maintain or grow wealth.

Survey Methods

Results for this Gallup poll are based on telephone interviews conducted April 9-12, 2015, with a random sample of 1,015 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia. For results based on the total sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. All reported margins of sampling error include computed design effects for weighting.

Each sample of national adults includes a minimum quota of 50% cellphone respondents and 50% land line respondents, with additional minimum quotas by time zone within region. Land line and cellular telephone numbers are selected using random-digit-dial methods.

Brought to you by the Tracy Tidwell Team at ERA TEAM Real Estate in Conway, AR.
http://www.tracytidwell.com
Tracy: 501-472-4709   ERA: 501-327-6731

Factory Expansion Boosts Home Sales

By Lorraine Woellert and Victoria Stilwell  Aug 21, 2014 3:09 PM CT

The economy in the U.S. took a step forward as home sales unexpectedly climbed, manufacturing accelerated and the outlook for the second half of 2014 brightened.

Purchases (ETSLTOTL) of previously owned homes rose in July to a 5.15 million annualized pace, a 10-month high, according to data from the National Association of Realtors in Washington. A factory gauge climbed in August to the loftiest level in more than four years, the index of leading indicators jumped last month and fewer Americans than projected filed claims for jobless benefits last week, other reports showed.

“The economy has got good momentum,” said Michelle Girard, chief U.S. economist at RBS Securities Inc. in Stamford, Connecticut. “The second half of the year is going to look a good deal better than the first half.”

Employment growth, historically low mortgage rates and more properties from which to choose are giving would-be homebuyers the confidence to take the plunge, just as improving business investment is probably behind the pickup in manufacturing. The data come as Federal Reserve Chair Janet Yellen prepares to address central bankers tomorrow on the job-market outlook, which may provide clues on policy makers’ next move.

The drop in jobless claims “is pointing to a labor market that’s gaining traction,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York. More data like this “will certainly mean that the Fed will be encouraged to move sooner rather than later” to raise interest rates, he said, although “the Fed needs a body of evidence greater than what they have now for them to feel decisive in one direction or the other.”

Fed Minutes

At their July meeting, Fed officials raised the possibility they’ll increase the target interest rate sooner than anticipated in light of labor-market strength, according to meeting minutes released yesterday. Weak wage growth and low inflation have given the Fed room to hold the target rate near zero, which has kept mortgage rates low.

Stocks rose, sending the Standard & Poor’s 500 Index to an all-time high, as data boosted optimism in the economy amid speculation the Fed will continue to support the recovery. The S&P 500 climbed 0.3 percent to 1,992.38 at the close in New York.

By the Tracy Tidwell Team at ERA Team Real Estate in Conway, AR
http://www.tracytidwell.com
Tracy: 501-472-4709   ERA: 501-327-6731

Millennials Mortgage Loans Eligibility Threatened by Debt

Housing Recovery Leaves Millennials Out in the Cold
The Fiscal Times By Marine Cole
May 4, 2014 5:30 AM

The housing market is moving toward a recovery – but it won’t take off for good until young Americans have enough money to buy their first home.

Discretionary Spending Power of Millennials

So far this year, a weak housing market has been a burden on economic growth. Mortgage loan applications dropped to a 14-year low in the first quarter as homeowners refinanced at a lower rate and Americans’ appetites for house hunting ebbed. In turn, the U.S. gross domestic product grew at a seasonally adjusted annual rate of 0.1 percent in the first quarter, according to the Commerce Department.

“The weak economic growth was the result, among other things, of housing,” said Greg McBride, Bankrate.com’s chief financial analyst. “I expect we’ll see improvements in the housing market but not at the pace we've seen in the past year.”

Homes have become too expensive for many Americans, especially for young people. Prices increased 13 percent for the 12 months ending in February in 20 major cities, according to the S&P/Case-Shiller Home Price index. Additionally, the supply of homes has remained tight. “There’s really nothing that’s compelling [people] to buy,” said Keith Gumbinger, vice president at HSH.com, which publishes mortgage and consumer loan information.

But the main problem is that Americans, especially young people who are burdened by rising debt loads such as student loans, won’t be able to obtain a mortgage unless they make more money. Personal income is on the rise—it grew 0.5 percent in April—but the growth isn't as fast as needed to spur a pickup in the housing market.

“The missing ingredient is growth in household income,” said McBride. “It’s been pretty moribund for a lot of people.”

Between a lack of substantial income, rising home prices and interest rates that are higher than a year ago, affordability is compromised for young Americans.

While the share of loan applications for mortgages of $400,000 and over increased in March compared to a year ago, applications at the lower end of the market for loans valued at or under $400,000, which represents the bulk of the market, have been shrinking, according to data from the Mortgage Bankers Association.

“There’s less growth in the large part of the housing market,” said Joel Kan, director of economic forecasting at MBA. “This is caused by a lower share of first-time buyers.”

Historically, first-time buyers have represented roughly 40 percent of existing home sales, but in March, they equaled 30 percent. That figure fell as low as 26 percent in January.

“For young adults, the biggest problem is saving enough for a down payment,” said Jed Kolko, chief economist at Trulia.

Would-be-first-time home buyers are often either renting or living with their parents because they are struggling to find jobs. The employment rate among 25-to-34 year-old Americans, which is considered the prime age group for housing demand, fell to 75.5 percent in April, after hovering around 76 percent for the last three months, according to the Labor Department. But the rate hasn't returned to pre-crisis levels.

“Having a job matters for housing,” said Kolko. “Even though their job prospects have improved from a year ago, [young people] are renting first before they buy their first home.”

To make matters worse, lending standards continue to be tight, a trend that started after the financial crisis in 2008. But there are some early indications that lending may loosen up a bit  thanks in part to new mortgage rules that give more clarity to banks about  their responsibilities when it comes to default. So far, Wells Fargo is making a comeback in the sub-prime home loan market, but few other lenders, particularly banks, are following suit.

Overall, there are some encouraging signs that this may be a mere bump on the road rather than a major shift in the housing recovery.

“It’s definitely a hiccup,” said Kan. “How big of a hiccup, we don’t know yet. We expect things to firm up a bit later in the year, but more rapidly next year.”

While interest rates have increased in the past year to 4.34 percent in March, from 3.57 percent for a 30-year fixed-rate mortgage, they continue to be lower than historical averages, which eligible home buyers should note. Price appreciation has also slowed down and will be more modest from now on.

“It will take some time for young people who recently got a job to be able to purchase their first home,” said Kolko. “That’s the most important factor in the long term.”

By the Tracy Tidwell Team at ERA Henley Real Estate in Conway, AR
http://www.tracytidwell.com
Tracy: 501-472-4709   ERA: 501-327-6731

Housing Market Recovery Spreads

Improvement in the Job Market Creates Demand in Housing

DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 09, 2014
The housing recovery is gaining strength in regions beyond just the booming energy states, according to the National Association of Home Builders/First American Leading Markets Index.

"It's a promising sign to see areas like Los Angeles and San Jose joining the top ten largest [metros] showing a recovery,” says NAHB Chief Economist David Crowe. “We still expect 2014 to be a strong year for housing and to aid in the overall economic recovery. The job market continues to mend and, with that, we will see a steady release of pent-up demand of buyers."

The index shows that 59 of the 350 metro markets tracked by the index have returned to or exceeded their last normal levels of economic and housing activity.

The index examines current housing permit, price, and employment data to see how close markets are performing at their historical normal levels.

Also, 28 percent of metro areas tracked had their score rise this month. Eighty-three percent have shown an improvement over the past year as well.

Topping the list on the index, Baton Rouge, La., continues its streak on the index, performing at 42 percent better than its last normal market level. Additional major markets that are exceeding their previous norms are: Honolulu; Oklahoma City; Austin and Houston, Texas; San Jose, Calif.; and Harrisburg, Pa.

Smaller metros showing the strongest recovery continue to mostly be centered in states experiencing the energy boom. For example, Odessa and Midland, Texas, have markets that are performing at double their strength prior to the recession. Other top-performing smaller metros include Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D.

"Things are getting slowly better overall," says NAHB Chairman Kevin Kelly. "And with the housing market now entering the spring buying season, the fact that the nation's economy is headed in the right direction is a very promising sign."

By the Tracy Tidwell Team at ERA Henley Real Estate in Conway, AR
http://www.tracytidwell.com
Tracy: 501-472-4709   ERA: 501-327-6731




Source: National Association of Home Builders

Tax Season and the Housing Market

Tracy Tidwell Team

www.tracytidwell.com

ERA Henley Real Estate

501-472-4709

It's a new year and the race is on in the housing market!

 Every year around tax season we see an influx of people looking to use their tax refund towards a down payment on a new home. It can get pretty busy at this time; as the number of people looking for houses increases, the availability decreases. That is why as a home buyer it is important to get ahead of the game now.

   More home buyers mean less real estate selection. The real estate market heats up during tax season. The housing market becomes more like a race track with the first one to the finish line getting the best home. It is a sad thing to see someone's dream house snatched up before they get a chance to make an offer.

 What can I do about it?

• Start looking now. Don't wait until you get your tax return to begin looking for a house. Chances are, the house you decide to buy has already been seen by other potential home buyers. It is better to start searching for a house now so that you are ready as soon as you receive your tax refund. Believe me someone else is doing the same thing. Talk to a REALTOR® and discuss your strategy. An early start on the season not only helps to insure that you get the house you want but, it also allows the real estate agency to assist you better as you are contacting them before the rat race begins.
• Get your finances in order. This doesn't just mean filing taxes on time. It is a good idea to get a credit report and clean up your credit before you begin making offers on properties. Nothing can put a closing on hold faster than a glitch in your credit. Don't get put on the sidelines as your new home gets bought by someone else.

As always, if you have any other questions or concerns about real estate, feel free to contact us. We are here to help.