The Home Search Process. How buyers find homes.

The Home Search Process 2004 – Internet is more important for Realtors now than it ever has been.
Looking at the interactive graph here, there is an obvious increase of people who started their home search online. Indeed, the share of people using the Internet has increased by 28% since 2004. In 2013, 48% of first-time home buyers and 40% of repeat home buyers used the Internet in their home search process.homebuyer graphReal estate agents are mostly preferred by first-time homebuyers for their initial housing search. Especially last year, there was an increase of the first-time home buyers who asked for the services of a real estate agent. This trend shows how increasingly important is the role of real estate agents when there is limited inventory on the market.

Hover over the line graph to see the distribution for each one of the types of home buyers. If you are interested in a particular type of home buyer, please tap on it (see list on the top right corner of the dashboard).

 

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(NAR Leadership Summit 2014) Economic Forecast Presentation

Lawrence Yun, NAR Senior Vice President & Chief Economist, gives an economic update to the 2014 NAR Leadership Summit.

Lawrence oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1 million REALTOR® members. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them Blue Chip and the Harvard University Industrial Economist Council. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. USA Today in 2008 listed him among the top 10 economic forecasters in the country and he has been named among the Most Influential Real Estate Leaders by INMAN News over the past several years.

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Net Worth of Homeowners vs. Renters

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In the past 15 years, the net worth of the typical homeowner has ranged between 31 and 46 times that of the net worth of the typical renter.

Homeowner equity is a substantial component of homeowner wealth. The Federal Reserve’s Survey of Consumer Finances, conducted once every three years, provides a snapshot of family income and net worth along with basic demographic details and more detailed information on where families keep the wealth they have accumulated.

The most recent survey, conducted in 2013, offers a picture of the situation as home and equity prices normalized for most household balance sheets.

Data shows that median homeowners had nearly $200,000 in net worth or 36 times that of the median renter who had just over $5,000. The median value of owners’ homes was $170,000.

Many households own a primary residence (65.2 percent). It is the most commonly held non-financial assets after vehicles (86.3 percent).

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How Long Does It Take to Build a House?

 

The 2012 Survey of Construction (SOC) from the Census Bureau shows that on average it takes about 7 months from obtaining a building permit to completing a new single-family home. Looking at the houses completed in 2012, houses built for sale, on average, register the shortest time from permits to completion – between 5 and 6 months. Houses built on owner’s land take longer – about 8 months if built by a contractor and more than 11 months if they are owner-built (i.e., where the owner of the land serves as a general contractor). Single-family homes built for rent take, on average, between 8 and 9 months from permits to completion.In most cases, no time is wasted from the moment a permit is obtained and construction is started. Most homes built for sale and on owners’ land are started prior or within the same month as authorization. Houses built for rent, on average, register a slight delay of one month before construction is started.The time from permits to completion varies across the nine Census divisions. New England and Middle Atlantic register longer times of between 9 and 10 months. Pacific and East North Central division also show above average time of 8 months to completion. Builders in the East South Central Division manage to complete a home in 7 months, on average. The rest of the country registers times between 5 and 6 months.

time_to_build

For houses built for sale, the SOC also gathers information on sales, registered at the time when a buyer signs a sale agreement or makes a deposit on the home, not the final closing. For new single-family homes sold in 2012, the average time from completion to sale is under one month. However, this average is highly skewed by a relatively small number of homes that are not sold prior or while under construction. Looking at new single-family homes completed in 2012, more than three quarters of these properties were sold before or during the completion month, including 30 percent that were pre-sold (i.e., sold before being started). Only 6 percent of homes completed in 2012 remain unsold as of the first quarter of 2013. So, for most new single family homes there is no additional lag from completion to sale.

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Consumer Confidence: Highest in Nearly Seven Years

Consumers are feeling much better and more confident in recent months: the consumer confidence index in August rose to the highest mark in nearly seven years. Such a trend could lead to improvement in home sales and boost demand for retail commercial spaces.

Numerically, the index hit 92.4. The last time it was that high was right before the financial market crisis in October 2007 when the unemployment rate was very low at 4.7 percent (versus today’s unemployment rate of 6.1 percent). The index, however, is still shy of 100, where at least half of Americans would be saying that the economy is generally moving in the right direction.

For home buying, it is not only about financial capacity and mortgage rates. Confidence also matters. People need to feel they will be better off in the future in order to make a major expenditure. The index that captures only the future expectations was 90.9, also nearing the crucial 100 marker.

The very strong, high stock market has driven total household net worth to an all-time high. However, only about 10 percent of Americans have meaningful exposure to the stock market. Therefore the stock market is not the best gauge of economic sentiments of the middle class. In contrast, the consumer confidence index covers a whole swath of people across all income spectrums and therefore this index is much better in assessing the mood of normal Americans.

Confidence can change the world. In fact, when the Portuguese first circumnavigated the lower tip of Africa on their way to Asia for spices, the very stormy area with constant violent sea waves near the tip was given the scary name of Cape of Bad Storms. The King of Portugal immediately changed the name to Cape of Good Hope in order to encourage more sailors to make the trip. Portugal and subsequently Spain rose in economic power while the old trade route cities of Venice and Genoa lost economic power.

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