After several years of slow recovery, the housing market began to show signs of improvement in 2013. Some homeowners saw their home equity grow as home prices rose and single-family home sales increased. However, the market still has its challenges and Realtors® remain committed to helping build a responsible, sustainable housing market in 2014.
According to the National Association of Realtors®’ Chief Economist Lawrence Yun, 2013 was a recovery year, as annual existing-home sales are expected to increase 10 percent over a year ago, totaling just above 5.1 million, and national median existing-home prices are projected to be 11 percent above last year. The 2013 market also experienced a shortage of housing inventory. NAR data showed inventory levels swung from a record high of 11.9 months in July 2010 to a recent low of 4.3 months in January 2013. Recently however, inventories have started to increase – current unsold inventory shows a 5.1-month supply of homes.
“Tight inventory typically means rising home prices,” said Donald Byrd, President of the Johnston County Association of REALTORS®. “This is what we’re experiencing now. Prices have gained 18 percent over the past two years. An increase in prices has helped lift many homeowners into positive equity again and foreclosures and short sales have declined. When homeowners benefit from price appreciation and housing equity increases, this helps the economy through greater consumer confidence and spending.”
Despite these positives, housing affordability for some buyers declined in 2013. Yun predicts affordability will continue to decline in 2014 if mortgage rates continue to rise and particularly if qualifying for a mortgage remains difficult. Johnson County Assocation of REALTORS® says Realtors® have reported that tight credit restrictions are preventing qualified buyers from becoming homeowners, and that is also making it more difficult for some homeowners to sell their homes. JCAR thinks mortgage availability will only be worsened by regulatory reforms stemming from the Dodd-Frank Act Wall Street Reform and Consumer Protection Act that go into effect in January 2014.
“While these new rules reduce risky loan products and establish critical lending protections for consumers, they could also preclude many potential home buyers from entering the housing market,” said Byrd. “Qualified buyers with good jobs and strong credit histories cannot continue to be turned down for loans. Lenders need to return to sensible lending standards this year.”
Yun predicts we’ll continue to see healthy gains in existing-home sales this year, and prices will continue to rise. However, he also projects mortgage rates to rise and inventory shortages to continue.
JCAR says Realtors® remain actively involved with lawmakers to ensure housing and homeownership issues are first on the nation’s public policy agenda this year. Several critical issues affecting housing will continue to take precedence this year. Byrd says delaying further flood insurance rate increases is one of them. Also, as debates surrounding federal tax reform likely heat up again this year, Realtors® will continue to urge the preservation of property and homeownership tax policies. Realtors® also support legislation and regulations to create healthier housing and mortgage markets, something Byrd says is vital to the recovery.
“Despite the challenges we face in the coming year, I believe Realtors® are feeling confident and optimistic about the future of our nation’s housing market,” said Byrd. “Homeownership is an investment in our future, and I believe 2014 will present tremendous opportunities for buyers, sellers and investors.”
According to a recent survey, more and more renters aspire to become homeowners. Data shows that nearly sixty percent of current renters plan to purchase a home in the next two years.
The survey also revealed key motivations behind the respondents’ plans for home ownership. Forty-nine per cent simply want the chance to call themselves homeowners, and forty-four per cent view owning a home as a good
financial investment while thirty-six per cent need more space for their family and/or children
On February 23rd, the Johnston County Association of REALTORS® is hosting a Home Ownership Expo at Johnston
Community College in the Paul A Johnson Auditorium from 10am-4pm. This event is free to the public. The purpose of the expo is to educate the public on the benefits of home ownership and affordability in today's market. The expo
will be used to stimulate home sales through educating the public as to the local housing options in regards to availability and affordability including the benefits of home ownership.
At the Expo, you can talk to Realtors®, builders, mortgage lenders, home inspectors, carpet-flooring representatives, cabinet-counter top representatives, landscapers, and interior designers. There will be associates with many products related to home ownership as well as individuals throughout the day speaking on pertinent home ownership information. In addition to many resources, one can enjoy food, cash prizes, and giveaways at the Home Ownership Expo.
Over the past year the U.S. housing market has made significant strides. A look ahead, however, shows a number of regulatory issues left unresolved that could potentially harm the industry in 2013.
Several regulations on the horizon stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act could affect housing, mortgage finance, and homeownership. In addition, the question of how to reform Fannie Mae and Freddie Mac still remains unclear. As the leading advocate for homeownership, Realtors® want to make sure these changes will not harm the progress already experienced in the housing market or make mortgage lending more challenging.
One regulation that stems from Dodd-Frank is Qualified Mortgage. This regulation requires that no lender make a mortgage loan without making a reasonable and good faith determination that the borrower has the ability to repay the loan. The full rule for QM has not been determined yet, but depending on the definition, this regulation could reduce many consumers’ access to credit. The National Association of Realtors® supports a definition of QM that establishes strong consumer protections, promotes mortgage liquidity, and offers lenders a safe harbor to reduce litigation.
“Dodd-Frank was created to address abuses in the industry. While Realtors® recognize the need for additional regulation, regulators must avoid adopting unrealistic requirements that will affect homeowners and potential buyers, as well as do harm to the recovering housing market,” said Donald Byrd, President of the Johnston County Association of REALTORS®.
What potentially could be another burdensome regulation is the Qualified Residential Mortgage. This requires that financial institutions retain 5 percent of the risk on loans they securitize. Exempt from the requirement are mortgages that meet the QRM definition, as well as FHA and VA mortgages. Currently, the proposed rule narrowly defines QRMs as requiring an 80 percent loan-to-value, which would require a 20 percent down payment. The rule would also limit mortgage payments to 28 percent of gross income – a very tight standard, according to Realtors®.
“The definition of QRM is important because it will determine the types of mortgages that will be available to borrowers in the future,” said Byrd. “NAR firmly believes Congress intended to create a broad QRM exemption - strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk, and not high down payments.”
GSE reform is also likely to come up this year. Fannie Mae and Freddie Mac were placed under conservatorship by the Federal Housing Finance Agency in September 2008 and the debate continues over how to reform them. A number of comprehensive plans have been introduced to the public, as well as comprehensive legislation aimed at reforming the secondary mortgage market. Currently, there is no proverbial favorite, and discussion surrounding the GSEs is expected to continue through 2013.
NAR supports a comprehensive GSE reform strategy. Realtors® believe the new system must involve some government presence to ensure a continual flow of capital at all times and in all markets. Also, the secondary mortgage market model must ensure that mortgages are affordable and always available to creditworthy buyers, require sound underwriting standards, and provide for rigorous oversight.
“Issues like affordable financing and available credit doesn’t just affect people who own a home – homeownership shapes communities and strengthens the nation’s economy,” said Byrd. “We need to ensure that any regulations and reforms do not jeopardize a housing recovery and ensure the dream of homeownership is available to all Americans.”
If you’re in the market for a home and you’ve been playing the wait-and-see game, now may be the time to step off the fence, because the buyer’s market may be turning. According to data from the National Association of Realtors®, houses are selling faster as supply struggles to meet demand in many areas of the country.
“Recent data shows that housing inventory is tightening and homes are selling much more quickly,” said Denise Pilkington, President of the Johnston County Association of Realtors®. “We first noticed this short amount of time on market during the spring and it has created more of a balance between home buyers and sellers in Johnston County. This balance is reinforcing price growth in the market because correctly priced homes usually sell more quickly.”
NAR data shows that at the end of August, national housing inventory was at a 6.1-month supply. This is 25.6 percent below a year ago when the supply was 8.1 months. In contrast, during the peak of the boom in 2004 and 2005, inventory levels averaged 4.3 months and the median selling time was four weeks. And in 2009 during the economic downturn time on market peaked at 10 weeks with a 10-month annualized supply.
“For some time now, home buyers have had numerous advantages such as low interest rates and historic affordability,” said Pilkington. “With homes beginning to sell more quickly than before, it’s evident that home buyers are taking advantage of these opportunities. This is good news not just for buyers, but also for sellers. These market conditions are creating a tremendous balancing act between buyer and seller, and thus helping to create a healthy housing market.”
Johnston County Association of REALTORS® expects the fall season to be a busy one for the area’s housing market. “Whether you are a buyer or a seller, the best move you can make it to contact a Realtor®,” said Pilkington. “Working with a Realtor® can really give you the advantage you need in this competitive market. Buying or selling a home is an important decision, and Realtor® are trusted resources who can help you navigate that process.”
Realtors® have always been politically engaged, whether they’re making their voices heard in the voting booth or getting involved on a grassroots level. An overwhelming majority of NAR members – 93 percent – voted in the last national election, and earlier this year nearly 14,000 of them gathered in our nation’s capital for the Rally to Protect the American Dream. Through the years the National Association of Realtors® has remained vocal and active in protecting the rights of the nation’s 75 million homeowners and those who aspire to homeownership.
During this election season, Realtors® aren’t the only ones defending homeownership. Housing is a top-of-mind issue for voters. In a recent national survey by the Woodrow Wilson International Center for Scholars, 62 percent of voters rated the importance of homeownership as a 10 on a scale of 0–10. A majority of respondents also believed that increasing homeownership should be a national priority.
“Issues like the mortgage interest deduction, foreclosures and short sales, and access to affordable financing don’t just affect people who own a home – homeownership shapes communities and strengthens the nation’s economy,” said Denise Pilkington, President of Johnston County Association of REALTORS®. “As the leading advocate for homeownership and housing issues, Realtors® want our country’s current and future leaders to understand the vital role real estate plays in both the long- and short-term health of this nation.”
Johnston County Association of REALTORS®. says housing is a key driver in our national economy. Housing accounts for more than 15 percent of the U.S. Gross Domestic Product and home sales in this country generate more than 2.5 million private-sector jobs in an average year. And for every two homes sold, a job is created.
“The housing market plays an essential role in the future of our nation’s economy,” said Pilkington. “While the housing market and the economy are continuing to recover we need to focus on doing no harm to the market and ensuring public policies that promote responsible, sustainable homeownership.”
Another housing issue Realtors® are fighting to protect is the mortgage interest deduction. This important benefit allows homeowners to deduct the interest paid on a mortgage during tax time, which can reduce the carrying costs of owning a home and provide significant savings for many American families.
“The mortgage interest deduction makes a big difference for middle- and lower income families,” said Pilkington. “Sixty-five percent of families who claim the MID earn less than $100,000 per year. Reducing or eliminating the mortgage interest deduction would hinder the fragile housing market, as well as the broader economy, and Realtors® remain strongly committed to ensuring that all homeowners continue to receive this important benefit.”
“The decision to become a homeowner is a very personal one, but anyone who is willing and able to assume the responsibilities of owning a home should have the opportunity to pursue that dream,” said Pilkington. “As the leading advocate for homeownership, Realtors® will continue to urge lawmakers to make sure housing and homeownership issues are a top priority in this year’s important election.”
As rents around the country continue to increase, the value of homeownership
remains strong. Results from the National Association of Realtors® Commercial
Real Estate Market Surveyshow vacancy rates in the multifamily sector are
decreasing, meaning apartment availability, or landlord-owned spaces, is
tightening. As a result, rents arerising – creating a landlord’s market.
Coupled with this trend, a number of recent surveys show the American dream is
still alive and well. According to a recent report from the Woodrow Wilson
International Center for Scholars, 75 percent of current renters hope to
purchase ahome of their own in the near future. Another study, commissioned by a
large real estate valuation firm, found that three out of four Americans
still aspire to own a home and consider it a life goal.
Denise Pilkington of the Johnston County Association of REALTORS®
isn’t surprised that consumers continue to aspire to homeownership.
“Homeownership is an investment in your future, and Americans recognize the
benefits it bring sover time,” said Pilkington. “For many people, rising rents
can drive the value of ownership home– after all, a fixed-rate mortgage might
last 15 to 30 years; renting is forever.”
According to NAR’s Commercial Real Estate Market Survey, the average apartment
rent is expected to rise 3.8 percent this year compared to 2.2 percent last year,
and the trend ison track to continue into 2013.
The decision to own a home is a very personal one, but given today’s
market conditions, it makes sense for people to consider homeownership over
renting. Fixed-rate mortgages remain at record lows, which means that a mortgage
payment could be cheaper than monthly rent. And unlike rent, a fixed-rate
mortgage won’t steadily increase at the landlord’s discretion.
Owning a home has also never been more affordable. NAR’s Housing Affordability
Index rose to a record high of 205.9 in the first quarter of 2012, the first time
the quarterly index has broken the 200mark since record keeping began in 1970.
The combination of median home price, median family income, and current interest
rates has opened a door for families who may have been previously shut out of
homeownership. The index shows that in the first quarter, the median income
family earning just under $61,000 could afford a home costing $325,500, more than
double the national median existing single-family home price of $158,100.
“As landlords continue to raise rents to keep up with market conditions, and
renters adapt to lifestyle changes that require more financial stability and
long-term planning, homeownership is one of the best ways build a solid
foundation for the future – of our families, our communities and ou rnation,”
said Pilkington. “Despite the challenges of today’s economy, the dream
of homeownership remains stronger than ever in the hearts of Americans, and
Realtors® are committed to keeping that dream alive for current and future
In an election year, rhetoric heats up and many issues come to the foreground; some have even questioned the long-standing value of American homeownership. To ensure that homeownership, housing and real estate issues are a public policy priority in this country, Realtors® from across the country will rally in Washington, D.C. on May 17 to protect the American dream.
“As the leading advocate for homeownership and housing issues, Realtors® want our country’s current and future leaders to understand the vital role realestate plays in both the long- and short-term health of this nation,” said Denise Pilkington, President of the Johnston County Association of REALTORS®. “That is why we will join forces this on May 17 in Washington. Realtors® believe that everyone should have the opportunity to pursue the dream of homeownership, and we will fight against obstacles that make it more difficult for people to buy, own and invest in real estate.”
The Rally to Protect the American Dream will take place in front of the Washington Monument on the morning of May 17 in Washington, D.C. Members of Congress will join Realtors®as they hear from speakers about how homeownership
issues affect individuals, communities, small businesses and the nation. The rally will also highlight the important role housing plays in the economic recovery.
Speakers include National Association of Realtors® President Moe Veissi, NAR Chief Economist Lawrence Yun, California Association of Realtors® Treasurer Chris Kutzky, Florida State Representative and Realtor® Matt Hudson, Certified
Commercial Investment Member Greg Hrabcak, as well as U.S. Rep. Steny Hoeyer and U.S. Sen. Johnny Isakson. Approximately 10,000 Realtors® areexpected to attend the rally. The rally is also part of NAR’s Midyear Legislative Meetings & Trade Expo taking place in Washington May 14-19.
Recent opponents have said the government should take a step back in its role to further homeownership and that homeowners shouldn’t be able to take advantage of certain tax benefits. Critics have also voiced concerns that owning
a home may not be a wise investment.
NAR says issues like the mortgage interest deduction, foreclosures and short sales, affordable financing and available credit don’t just affect people who own a home – homeownership shapes communities and strengthens the nation’s economy. The Johnston County Association of REALTORS® also points out that housing is a key driver in our national economy. Housing accounts for more than 15 percent of the U.S. Gross Domestic Product and home sales in this country generate more than 2.5 million private-sector jobs in an average year.
“Over the past few years members have seen buyers in Johnston County with good jobs and strong credit histories turned down for loans,” said Pilkington. “They have also seen hardworking families unable to refinance into a lower
monthly mortgage payment and people losing homes to foreclosure because the bank was too slow to process a short sale. These problems are happening in every neighborhood across the country, and Realtors® are more determined than ever to fight against these obstacles and make sure the American Dream of homeownership is protected for current and future generations.”
For more information about the Rally toProtect the American Dream, visit www.realtorrally.org.
Johnston County Association of REALTORS®
Read our regular Press Releases to see how we fight for homeownership in America.