687 residential closed sales on less than one acre, including condominiums, were reported for November 2020. Compared to November 2019, residential closed sales were up 11.7%, 687 v. 615. The average closed sales price was $335,963 up 20% from November last year when the average closed sales price was $279,746. The median closed sales price for this November was $309,500 up 16.8% from the median closed sales price from a year ago.
Year to date closed sales through November are up 1.3%, 7,387 v. 7,295. The year to date average closed sales price through November is $319,852 up 13% compared to last year’s year to date closed sales price of $283,074. Median closed sales price through November is $299,900 compared to last year’s closed sales price through November of $260,000, an increase of 15.3%.
Inventory continues to be at record lows. As of this report, with 335 residential single family properties on the market, supply is less than one month at approximately a 15 day supply. New construction sales are up nearly 16% through November 2020 compared to same period last year.
Vacancy rates have a direct impact on gross rent multipliers (GRMs) as well as the development of capitalization rates. Effective gross income and net operating income of real property are also impacted by vacancy rates and are considered in risk assessment analysis by income producing property investors.
Homeownership Rate: (The following information is from the 3rd Quarter 2018.)
The United States Census Bureau reported the following information for the third quarter:
Homeownership Rate 64.4% Up from 64.3% during the 2nd Quarter
Homeowner Vacancy Rate 1.6% Up from 1.5% during the 2nd Quarter
Rental Vacancy Rate 7.1% Up from 6.8% during the 2nd Quarter
Source: United States Census Bureau
The Bureau of Labor Statistics reported the national unemployment rate in October was 3.7 percent.
Labor Force Statistics from the Current Population Survey
Age: 16 years and over
Years: 2014 to 2018
Jan... June... Dec...
2014 6.6 6.7 6.7 6.2 6.2 6.1 6.2 6.2 6.0 5.7 5.8 5.6
2015 5.7 5.5 5.5 5.4 5.5 5.3 5.3 5.1 5.1 5.0 5.0 5.0
2016 4.9 4.9 5.0 5.0 4.7 4.9 4.9 4.9 5.0 4.9 4.6 4.7
2017 4.8 4.7 4.5 4.4 4.3 4.4 4.3 4.4 4.2 4.1 4.1 4.1
2018 4.1 4.1 4.1 3.9 3.8 4.0 3.9 3.9 3.7 3.7 3.7 3.9
Source: Bureau of Labor Statistics (www.bls.gov)
Over the past year, increasing interest rates were the topic and concern of many of the nation’s economists and housing experts. The Federal Reserve implemented an “unwinding” policy that would have significant effects on worldwide markets and draw sharp criticism from market participants including the National Association of Realtors and the President of the United States. The Fed raised interest rates four times in 2018 with the latest rate increase taking place in December. With so many concerns over increasing borrowing costs, housing affordability and inverting yield curves, the Federal Reserve appeared to have “applied the brakes” for 2019.
Fed chairman Jerome Powell stated the central bank can be more patient when it comes to future rate hikes and they are willing to take a “wait and see” approach to the economy as low inflation reports and increasing job numbers show a stable outlook. Powell also stated that the Fed would continue allowing it’s nearly $4 trillion portfolio of bonds to shrink each month, to a level substantially smaller than it is now. These automatic monthly reductions have been criticized by some as a steady tightening of financial conditions which could lead to liquidity issues. When asked about rate increases for 2019, Chairman Powell said, “There is no pre-set path for rates …particularly now.” If global growth slows more, “I can assure you ... we can flexibly and quickly move policy, and we can do so significantly if that’s appropriate,” he added.
The 10- year treasury yield continued to decline in January and ended the month at 2.64 percent which gave potential home buyers lower and more favorable mortgage rates.
Interest rates were still considered to be near historically low levels. Strict loan qualifications were found to be required for most conventional loans. FHA guidelines were found to be positioned to allow more leniency.
Crawford Report February 2019
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