Shasta Association of REALTORS® My Market
The real estate market can be fast paced and ever-changing, like attempting to take a still photograph of a speeding target! With that in mind, we offer My Market! The resources herein are designed to provide you with market information, not just figures, necessary for your home buying or selling decisions. Of course, this information cannot take the place of the knowledge and experience of your REALTOR®, rather it supplements those professional skills to sort through and interpret how those market changes impact you as a buyer or seller.
Supply Crisis Begins to Wan?
In a recent report from the California Association of REALTORS®, since the housing market began to turn around in earnest in the 2013 timeframe, the market has been characterized by a low level of inventory. In fact, the dearth of supply underlies much of the challenges in California’s current housing environment. The supply shortage has caused home prices to rise much faster than incomes, which has led to a deterioration in affordability and an erosion of homeownership. At the same time, California’s economy continues to pump out good jobs across the spectrum of wage and skill categories and indeed, across every geographic area in the state. This growth in demand has come into direct conflict with the shortage of homes such competition for the homes that do sell end up selling quickly, for a premium, and often go to the highest bidder.
However, there are some initial signs of optimism as we enter the busy home-buying season. In fact, for the first time in nearly three years, California has seen an increase in the number of active listings on the market. Overall, there was a 2% increase in the number of homes available for sale in April. While this is a proverbial drop in the bucket relative to the housing needs we have, it still represents an important milestone, which, taken together with a precipitous deceleration in the decline in listings during the first quarter of 2018, and it suggests that the housing supply crisis could be beginning to ease.
It is true that a single month does not form a trend, but consider this growth in the context of the past few years: In each and every month of 2017, the number of active listings declined in California. What’s more, they declined by double-digit percentages every single month last year. Fast forward to 2018, and active listings were down by just 6.6%; they fell 1.3% in February; and they declined by just 1.0% in March before beginning to rise in April. From this perspective, the recent uptick in listings does appear to be part of a broader shift where more homes are coming onto the market.
Interestingly, this shift in the market place is largely coming from the bottom end of the market. Homes priced above $1 million have already been enjoying double-digit increases in listings for much of the past year. However, all of the growth was more than offset by declines in the number of active listings priced below $750,000. In April, the bottom end of the market still shrunk, but with homes priced below $300,000 declining by 13%, the pace of the decline has been roughly halved over the past 12 months. In addition, California finally saw an increase in the number of listings priced between $300,000 and $750,000. It was in the mid-single-digits, but the fact that the bottom was not falling as fast combined with modest growth in middle-priced segments and solid growth at the top end, caused the total number of listings to increase for the first time in years.
It is important to note that unsold inventory still declined because home sales increased by more than active listings, and that a few months of modest growth will not be enough to alleviate years of chronic undersupply, but it is a critical first step to being able to chip away at the overhand that has accumulated. (Article courtesy of California Association of REALTORS®, Market Snapshot, May 2018)
Mortgage investors want to make it easier for gig-economy workers to get loans
The two biggest sources of home-mortgage money in the country – investors Fannie Mae and Freddie Mac – are quietly working on ways to make qualifying for a home purchase easier for participants in the booming “gig” economy.
The gig economy refers to hundreds of income-earning activities that allow workers to set their own hours, work for as long or as little as they choose, and function as independent contractors or freelancers as opposed to salaried employees. Prominent examples include people who work as drivers for Uber or Lyft, assemble Ikea furniture through TaskRabbit and offer rooms in their homes on Airbnb.
Estimates vary, but anywhere from just under 20 percent to 30 percent or more of the U.S. workforce participates in some way in gig economy. Last year, Intuit, which owns TurboTax, estimated that 34 percent of the workforce earned money in gig pursuits and projected that this could rise to 43 percent by 2020.
But when buying a home, the challenge for these workers is to make their gig-sourced earnings count as income for mortgage-qualification purposes. Lenders typically look for stable and continuing income streams: two years of documented income plus reasonable prospects that those earnings will continue for another several years.
Source: The Washington Post . . . read the full story. (Article courtesy of California Association of REALTORS®, Market Matters, May 2018)