How Often People Move Can Impact the Housing Market

Just like any other consumer product the more something is in demand the better the market for it. The housing industry is no exception to the rule. Everyone needs a place to live so this, in turn, affects every aspect of the housing market from real estate to lending to title. The data collected regarding if and when people are moving can interpret if the housing market is thriving.

There are a variety of sources and people interpreting the data collected. This can hinder a potential home buyer’s research when it comes to the housing market. There are many “spin doctors” who want to influence the public and might be steering them in the wrong direction. When it comes to research, there are many ways to discern what is fact and what is fiction.

Go to the facts, remember for the most part numbers don’t lie. The Census Bureau is a great neutral source. The Census Bureau is supervised by the Economics and Statistics Administration within the Department of Commerce.

The history behind the Census Bureau is interesting within itself. Founded in 1790 when Secretary of State Thomas Jefferson appointed U.S. marshalls throughout the country to collect data on the 3.9 million residents. For the next 150 years, the six question census added many categories that included manufacturing, agricultural, mining, fisheries, native language and others. In 1940, data on housing was added (other than the names of those living in households) and the real estate industry began using the data to predict the health of the housing market.

The homeownership rate is an important statistic to focus on as a baseline to research. An interesting fact according to the census, is that the homeownership rate has held steadily for approximately 60 years. According to housingwire.com, the ” rate is calculated on the proportion of households that are owner-occupied and has continuously held strong in the 60-70% range throughout the years.” Throughout the years the highest at 70% was in 2005 and the lowest at 62% was during the recession.

Statistics in migration patterns show that 43% of people move due to housing-related issues, 27% move because of family-related issues, 18.5% move because of employment issues and 10.6% move for other various reasons. The Southern Region of the country has seen the largest migration pattern.

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NAHB’s Analysis Shows Gain in Custom Home Building for 2019

This New Home for Sale is our 2020 Parade of Homes house at River Club in Covington, Louisiana.Low Mortgage interest rates have supported a surge in custom home building in the fourth quarter of 2019. The NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey revealed that custom home building increased at the end of 2019.

The US Census Bureau’s Survey of Construction (SOC) is a survey conducted by the US Census Bureau and partially funded by HUD (Department of Housing and Urban Development). The SOC reports up to date national and regional data on housing starts, completions and characteristics of all residential housing. The data which is collected includes the start date, completion date, sales date, sales price (single-family houses only), and physical characteristics of each housing unit, such as square footage and number of bedrooms. The Quarterly Starts and Completions by Purpose and Design is based on the Building Permits Survey and from the Survey of Construction (SOC).

The National Association of Home Builder’s analysis shows 44,000 total custom building starts during the fourth quarter of 2019. This is a 16% gain over the same quarter in 2018 which totaled to 38,000 total custom building starts. Data shows a solid gain occurred during the last four quarters with custom housing starts totaling to 177,000.

The custom home building market will continue to expand with demand from both owner and contractor built homes. The low mortgage interest rates will protect the custom home building market thus maintaining the positive custom home building outlook.

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The New Year Starts Off With Mortgage Rates Below Last Year’s Average

A new year has brought good news for the housing industry. The +first week reported that the average U.S. fixed rate for a 30-year fixed mortgage averaged at a low 3.72%. The findings were 80 basis points below data reported a week earlier.

George Ratiu, Realtor.com’s chief economist said, “The conventional 30-year loan slid 2 basis points to 3.72% in the first week of 2020. Rates remain about 80 basis points lower than the first week of 2019.”

Ratiu predicts that employment and wage gains will fuel the housing industry. The economy will maintain a moderate growth trajectory this year.

The 15-year FRM also was at a low 3.16% which was down from this time last year’s reportings of 3.99%. The average rate dropped in just one week from 3.19% to 3.16%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage also averaged 3.46% which was lower than the 3.98% reported this time last year.

“As mortgage rates remain favorable, buyers are likely to get a head start on the spring shopping season in the first couple of months of this year,” Ratiu said. “A stronger infusion of new homes in affordable price ranges would be a welcome gift for the New Year.”

Sam Khater, Freddie Mac’s chief economist, believes the rates have maintained around 3.7% for the last couple of months because of ” the combination of improved economic data and market sentiment has led to stability in mortgage rates.”

“The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices,” said Sam Khater.

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A 4.1% Rise From November 2018 In Construction Spending

The Census Bureau reported the November 2019 U.S. spending rate for U.S. construction is 4.1% above 2018’s rate for last November. According to the report construction spending amounted to a seasonally adjusted annual rate of $1.324 trillion.

Out of the total construction spending, spending on private construction was 1.6% above November 2018’s and is at a seasonally adjusted annual rate of $985.5 billion. Residential construction spending came in at a seasonally adjusted annual rate of $536.1 in November making it 2.7% up from a year ago.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.

Homebuilders are confident in the current housing market. The National Association of Home Builders and Wells Fargo suggest the sentiment levels are at 70 points making the rate the second-highest level in 2019. The points are 10 points higher than reported this time in 2018.

The positive housing market is expected to continue in 2020. This forecast is based upon the number of applications for new building permits which were at the highest level in November 2019 than they have been in a decade.

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September was a Positive Month For New Home Sales

This September was reported to be 15.5% higher year-over-year due to the lower mortgage rates. The National Association of Home Builders’ data shows that sales were 7.2% higher in the first nine months of 2019 than those reported in the first nine months of 2018. This first nine months this year brought in 527,000 sales beating the 491,000 sales reported for the same time frame in 2018.

Signs show sales volume increasing with the more new homes that are reported being built. New home sales for the first nine months of 2019 were up 12.8% in the South, and 7.3% in the West compared to the first nine months of last year.

This fall is a great time to purchase a new home with the median new home sales price at $299,400. Right now, nearly 15% of newly built homes are priced under $200,000! This buyers market will not last, so if you are in the market to purchase a home, buy your new home before the new year.

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Reasons Why the Biggest Housing Boom in History Is Just Beginning

This newly completed, new construction home is located in Covington just outside of New Orleans.

The year 2006 brought one of the most profitable side jobs for Americans, flipping houses. In fact, that year, it was reported that one in ever ten homes purchased were to flip. In 2008, it all came crashing down. Many went bankrupt because they were stuck with owning flips that were on the fast pace to a dramatic depreciation in value. The housing crash not only affected the housing market, but also caused Americans to loose their jobs and businesses. Fortunately things are turning around for the housing market. Today, housing stocks are one of the best investments out there.

According to Forbes.com housing stocks are currently booming. NVR Inc., a homebuilder, is a slam dunk. It was reported that in February 2019, NVR stocks were at a 45% gain beating the S&P 500 at 10%. Those that purchased the stock back in February have made a lot of money. According to the site’s research, housing stocks will be the way to go for years to come.

Another two stocks to invest in are Vulcan Materials (VMC) and Martin Marietta Materials (MLM). Both companies sell concrete and gravel which is used a lot in the house building industry. Homebuilders use both for housing foundations, roads and sidewalks. According to the chart, these two stocks have rocketed in the past year. Revenues in the company are rising and hitting all-time highs.

Housing expert Barry Habib, founder and CEO of MBS Highway, has the insider knowledge from the top players in the US housing market. The biggest issue he sees is supply and demand. Since 2009, only 900,000 homes have been built per year. Habib says this is the lowest inventory since the 1950’s. This is one of the biggest housing shortages we have had. He says that with existing inventory, it would take under six months to sell everything currently on the market.

“The most important driver of home prices is supply and demand. And right now, there is a chronic undersupply of homes in America,” Habib stated.

Habib believes the market is about to be flooded with homebuyers. Millennials have been recorded to be the biggest generation the country has seen. The National Association of Realtors states that one in three homebuyers today is a Millennial.

“On average, folks buy their first home at age 33. Guess what the median age of Millennials is right now? 34. In the past year or two, the first wave of young homebuyers came into the market. But every year for the next decade, tens of millions of Millennials will hit home-buying age.”

This flood will definitely play an important roll in the prices of homes. Supply and demand is the most important driver for home prices. With such a tight supply in inventory the housing market will continue to boom.

What does that mean for homebuilders? They will have job security for a while to come. This fall, new home starts rose to their highest level since the summer of 2007 and building permits are at the highest level since the spring of 2007. Habib believes “the American housing boom has years to run.”

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