The recently released Emerging Trends in Real Estate 2016 report from PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI) suggests that established hubs like New York and Washington, D.C. are losing steam, and developing cities in quieter markets may well be on their way to becoming the next great American metropolises.

Emerging Trends in Real Estate is a highly esteemed “trends and forecast publication” providing housing industry projections for the U.S. and Canada. For this year’s installment, PwC and ULI interviewed 404 people and received survey responses from 1,465 housing industry professionals.  

One survey respondent affirms, “2016 is the year of the secondary and tertiary markets. They continue to be more attractive on a relative opportunity basis than some of the gateway cities. Gateway cities, we know, are places people want to be, but we are thinking of cities like Nashville, Charlotte, Indianapolis, Louisville, Portland, Austin, Raleigh, Durham. These cities continue to attract lots of people. There are a lot of places that people love to live and work; they are manageable environments and have a better value proposition.”

Budding job markets and better home affordability are just two factors driving Americans to these growing cities. Judged on investment, development and homebuilding activity, the top 10 most lively real estate markets in the United States are:

1. Dallas/Fort Worth
2. Austin
3. Charlotte
4. Seattle
5. Atlanta
6. Denver
7. Nashville
8. San Francisco
9. Portland, OR
10. Los Angeles

These results show that the tide is always turning and business can sprout anywhere. It is crucial to remain attune to industry developments in order to take advantage of new business opportunities. While it’s these cities that are currently projected to boost the housing economy, tomorrow it might be yours, and you must be prepared when that challenge arrives.
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To read the PwC and ULI report in full, please click here.

The California Association of Realtors® (CAR) released its 3rd Quarter Housing Affordability Report last week and the numbers show that there has been an increase in the interest rates and a dip in the number of people who can afford to buy homes. This housing affordability index is one of the most reliable sources on information providing insight into the state’s housing economy.

According to CAR, the number of Californian families that can afford to buy a $487,420 median-priced home dropped to 29 percent in the 3rd quarter from 30 percent in the 2nd quarter. Compare this with the affordability index that peaked at 56 percent in the 3rdquarter of 2012.

The report also states that a family needs to earn a minimum annual income of $98,350 to be able to make the monthly payments of $2,460, which is inclusive of the principal, interest and taxes on a 30-year, fixed-rate mortgage. This is assuming the buyer received a 4.16 percent interest rate and made a 20 percent down payment.
The 2nd quarter of 2015 saw a median home price of $485,910, an annual income requirement of $96,140 and an effective composite interest rate of 3.95 percent.

A report from the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) reveals that on a national level, San Francisco, San Mateo and Redwood City, California were the least affordable markets for the 12th consecutive quarter. Only 10.5 percent of the homes sold here were affordable to families with a median income of $103,400 in these markets.

Another trend noticed by CAR’s report is that the affordability of condominiums and townhomes also dropped, but they remained more accessible than single-family homes. About 38 percent of buyers were able to afford a $390,740 median-priced condominium or townhome, with an annual income requirement of $78,840 to make monthly payments of $1,970. In addition to the increase in home prices, a rise in interest rates is one of the major factors impacting buying power.

Only two counties in California saw an improvement in affordability: Marin and Santa Barbara. In Marin County, the affordability increased to 19 percent from 17 in the 2nd quarter of 2015 and 15 in the 3rd quarter of 2014. Santa Barbara County comes in with 18 percent versus 16 in the 2nd quarter of 2015 and 14 in the 3rdquarter of 2014. This change in affordability is directly linked to the “plateauing of home prices” and a steady increase in income.
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Unfortunately, California has seen a significant decrease in home affordability, thus driving more people to look for affordable homes in other areas or place the purchase of a home on an indefinite hold.

Craigslist is a popular online portal that allows sellers and private parties to advertise everything from automobiles, homes, furniture and jobs. The advantage of such a big advertising database is that it helps you find listings in your area, but there is a major downside too: scams. Over the past few years, there have been fraudulent activities being conducted via Craigslist, including major real estate scams.

A recent article from Mercurynews.com reports that the police caught two men who were trying to rent out a vacant house, which they did not own. The house in this case was on sale and the men were trying to get a $3000 deposit for it. Luckily, the real estate agent selling the house came across the advertisement and reported it. It is scary to know that the men had even managed to change the locks on the door.

An article published in huliq.com talks about how a real estate agent received a call about one of their listings that was posted on Craigslist. Even though the house was for sale, the online posting showed that it was for rent. A potential renter had even spoken to a lady who claimed to be renting the house out and noticed that the lady had a Texas area phone number while the house was in Maryland.

She wanted the renter to wire her money before even showing the house. This renter was cautious and called the real estate agent to clarify the situation and was told that the house was only for sale. He went on to report the phone number to the police and soon the listing was removed from Craigslist.

Watch Out For

• Posts that sounds too good to be true
• Posts with only images of the exterior, sometimes taken from across the street
• Weird email addresses and content with words like Dear Sir or Madam, spelling errors, references to being away on business and not showing the home until you pay
• Emails or phone calls asking for personal details like your social security number, employment history and salary details to run a background check to even show the house

Be Cautious

• Ensure that the person showing the home is the owner or property manager
• Do not give out your personal information without good reason
• Be alerted if the person asks you to transfer money before showing the house

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Make sure you do your due diligence before leaping into a suspicious transaction.

The thriving real estate market in California takes up more than 50 percent of the spots on the October 2015 list of 20 Hottest U.S. Real Estate Markets from Realtor.com®. With cities like San Francisco, Santa Rosa, San Jose, San Diego and Los Angeles on the list, this may be the right time to buy or sell a home in the Golden State. The latest 2016 California Economic & Market Forecast published by the California Association of Realtors® reports that there has been an increase in home sales in 2015. In 2014, sales were down by 7.6 percent but in August 2015 431,800 units sold compared to 395,080 in the same month last year.

One of the main factors impacting the housing economy is the increase in employment, a trend that might continue into the coming years. According to the California Employment Development Division, almost 470,000 jobs were added in metro areas in August 2015 and this has increased the buying capacity of the public. According to the employment rates, there has been a 2.4 percent increase in nonfarm employment in Southern CA, 1.8 percent in the Bay Area, 3.2 in the Central Valley, 3.1 in North Central and 0.9 in all of California.

The report also says that home prices have not increased significantly in California since 2013. The improvement in jobs and incomes and the low mortgage rates are other major contributing factors to the higher home sales this year. The lower interest rates offered by banks, credit unions and nonbank lenders have definitely increased affordability, both for first-time buyers and for those who were refinancing.

According to the National Association of Realtors®, home sales went up 8.1 percent YTD and 6.1 percent YTY in August 2015. The forecast for the eighth month of 2015 was a resale of 402,500 single family homes and as of October these numbers stand at 407,500. The current projection for August 2016 is 433,000.

The 30-year fixed mortgage rates that inched up (from 4.2 to 4.5) are expected to normalize by December 2015 and gradually increase over the next couple of years. The increase will not be sudden as that can cause an instantaneous halt in the thriving economy; it cannot be too slow either as the industry would not have any fallback area in case there is another downtime, so you can expect a gradual rise.

The report articulates that international buyers play a key role in the housing economy. In 2014, the top three countries investing in American real estate were China with 36 percent, Canada with 10 percent and India with 12 percent. In 2015, this list once again saw China as the front-runner with 43 percent, and Mexico and Korea each with eight percent. To keep this trend rising, the housing industry can introduce more programs and marketing materials to target these buyer groups.

The current home buyers include

• Millennial renters who are looking to buy their first homes
• Millennial home owners who are ready to upgrade
• Baby boomers who want to downgrade
• Minorities (who will play a big role in the housing economy in the next decade)

Recently, the National Association of Realtors (NAR) released their 2015 Profile of Home Buyers and Sellers assessing the characteristics of homebuyers and their home purchases in the past year. For the report, NAR sent a 127-question survey to 72,206 homebuyers in July 2014; these homebuyers had to have bought their home between July 2013 and June of 2014. NAR received 6,572 responses to their study.
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The profile revealed the following key findings:

Homebuyers

• The typical homebuyer was 44 years old, with a median household income of $86,100
• 83 percent of homebuyers bought a detached single-family home
• 67 percent of buyers were married couples, 15 percent single females, nine percent single males and seven percent unmarried couples
• 87 percent of buyers purchased their home through a real estate agent or broker
• 32 percent of homebuyers were first-time buyers, down from 33 percent a year ago
• 88 percent of buyers would use their agent again or recommend their agent to others

Home sellers

• The typical home seller was 54 years old, with a median household income of $104,100
• The most prevalent reason for selling was that the house was too small, followed by needing to relocate for a job
• Eight percent of home sales were FSBO, the lowest share recorded since the survey began in 1981
• Home sellers reported selling their homes for $40,000 more than they purchased it, on average
• 89 percent of home sellers utilized a real estate agent to sell their home

In relation to the drop in first-time buyers, NAR chief economist Lawrence Yun articulates that while there are many factors helping first-time purchasers, there are also things impeding them such as high rents, debt repayment and difficulties obtaining a mortgage. In the last year, buyer participation from married couples increased by two percent, single female buyers decreased by one percent and male buyers remained the same.
As is the case with the drop in first-time buyers, while NAR’s survey reveals positives for the housing market, it also sheds lights on numerous, and serious issues.

To view the 2015 Profile of Home Buyers and Sellers, please click here.

Seattle’s culinary and tech scenes, along with a National Association of REALTORS (NAR) affordability index of 110.62, combine to make one of the liveliest housing markets in the country. This is a well-known fact; in fact, Americans aren’t the only ones gravitating to the rainy city, foreign real estate investors are gobbling up the Pacific Northwest real estate at an increasing rate. But just how hot is Seattle?

This week Auction.com, the premier American online housing marketplace, released its Top Single-Family Housing Markets Reportfor fall 2015. The report lists the 50 hottest housing markets in the country according to current and projected housing figures.

On the list Seattle appears at number one, followed by Fort Lauderdale, Orlando, Palm Beach County and Portland, respectively. In their press release Auction.com delineates, “These markets had the best combination of rising home prices, favorable affordability and strong housing demand, combined with strong economic and demographic conditions that point to future demand.”

Of the top five cities in the list’s spring installment earlier this year, only Fort Lauderdale remains in the first five spots, improving from fourth to second place. Denver dropped from first to ninth place, San Antonio from second to 17th, Nashville from third to seventh and Dallas from fifth to 19th.
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The report goes on to outline that Seattle and Portland benefit from healthy housing demands coupled with powerful economies, due in no small part to their tech scenes. Having three cities in the top five is exceptionally encouraging Florida, and the state’s potential for continued buzzing housing markets is evident.
The top 10 list is rounded out by Columbus, Nashville, Charlotte, Denver and Oakland, respectively.
To learn more about the report or see the list in full, please click here.

Across the country, rents are on a continual upward trajectory while wages have remained stagnant.
Americans have risen to meet the challenge of increasing rent in several ways. Living with roommates is the most popular arrangement for people trying to lessen the impact of housing costs on their paychecks. According to Make Room data, among millennials living in Massachusetts in 2013, 13.2 percent reported living with roommates; in Colorado this figure was 11.7 percent, marking a three percent increase from 2008 for the Rocky Mountain state.

Americans have also staged protests and campaigns to fight for higher pay. The Fight for 15 campaign launched in 2013 with the goal of raising minimum wage to $15 per hour. The movement has had notable success in Los Angeles, New York, Seattle, San Francisco and Berkeley. Earlier this year, the Department of Labor (DOL) also contributed to the movement for higher pay, releasing aNotice of Proposed Rulemaking (NPRM) that would increase the salary threshold for employees eligible for overtime pay from $23,660 to $50,440 in 2016 and be updated yearly.

This progress in wage is noteworthy, but it is trumped by rent increases. According to Enterprise Community Partners analysis of U.S. Census Bureau data, over one in four families spend more than half their monthly income on rent and utilities. This leaves minimal money for food and other expenses such as car insurance and student loans, especially for households with children.

The Make Room campaign “partners with and convenes corporations, policymakers, nonprofit organizations and advocates to raise awareness in support of the 11 million families struggling to make rent.” The campaign is partnering with Enterprise Community Partners, an organization that advocates for and creates affordable housing throughout the U.S.

Make Room has been holding living room concerts with prominent musicians in the homes of struggling renters. Dubbed “Concerts for the First,” these events have taken place in Detroit, Los Angeles, Nashville and Denver. To raise the awareness of increasing rent, Make Room compiles videos of these performances, as well as of the individual stories of these families.
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The fight to afford rising rents on perpetually unchanging paychecks is a reality around the country, and significant change must occur in order to provide Americans with the basic necessities they are undeniably earning.

Today the National Association of Realtors (NAR) reported that after a disappointing August, home sales increased handsomely in September for all major regions (South, West, Northeast and Midwest) of the country. In fact, according to NAR, home sales have increased year-over-year for the last 12 successive months.
 
Existing-home sales—including single-family homes, townhomes, condominiums and co-ops—saw a 4.7 percent increase to a seasonally adjusted annual rate of 5.55 million in September, marking an 8.8 percent increase from a year ago.

Important Facts:

• The median existing-home price in September was $221,900, a 6.1 percent increase from a year ago
• Total housing inventory decreased 2.6 percent by the end of September to 2.21 million existing homes for sale, 3.1 percent lower from September 2014
• Only 29 percent of September sales went to first-time buyers, a 3 percent decrease from August

NAR chief economist and senior vice president of research Lawrence Yun addressed the sales increase, “September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007. While current price growth around 6 percent is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace.”
The increase in home prices and decrease in number of homes may prove significant obstacles to continued existing-home sale increases, but factors like better affordability may help counteract these barriers and make the dream of homeownership a reality for hopeful Americans.

I am very excited to be attending the 100th Annual MBA Expo & Convention next week from Sunday to Tuesday in Washington, D.C. 

As the publisher of N Magazine, I will be attending the event to cover all of the exciting things that are happening in the industry and what is to come for 2014.

If you will be in attendance and would like to schedule a meeting, email me at desiree@desireepatno.com. Thanks so much and I look forward to seeing everyone there!

In honor of Breast Cancer Awareness Month, the National Association of Women in Real Estate Businesses (NAWRB) is offering 10% off of their Platinum Marketing Services for the month of October.