Select a quarter and then press “Play” to initiate the interactive map. To get the performance ranking for a specific MSA, zoom in or scroll over the map or click on the numerical ranking legend for wider comparisons.N
2019Q2 HoHM Report: Housing market looking more sustainable
While home sales data have been a bit slower so far in 2019, the national LIHHM* sees positive, more sustainable trends from the housing sector. With the highest reading in three years, the index points to healthy housing activity over the next year or so.
Slower house price gains are improving housing sector sustainability, while reduced mortgage rates, solid job gains, and rising wages should lift home buyer demand this year. Although supply constraints remain, these fundamentals are positive for housing demand
More than half of the country’s 400 MSAs have a positive rating as house price gains in many areas have decelerated over the past year. The slowdown is more pronounced in larger cities, especially along the Pacific Coast where price appreciation is now below average.
Existing home sales dropped during 2018 as rising mortgage rates squeezed potential home buyers. Data show that the declines were sharper in states with the highest median sales prices. The outlook for the remainder of 2019 has improved with lower mortgage rates
* Leading Index of Healthy Housing Markets (LIHHM): A data-driven view of the near-term performance of housing markets based upon current health indicators for the national housing market and 400 metropolitan statistical areas (MSAs) and divisions across the country.
Housing outlook continues to brighten with the LIHHM in positive territory
The national LIHHM rose to a positive reading of 106.3 this quarter, the highest reading in three years. Demand metrics (led by solid job growth and strong household formations) remain highly positive and are indicative of near term health for the housing market. National house price growth continues to decelerate and is near the long-term trend, a positive for sector sustainability. Home buyer demand should respond positively to lower mortgage rates and faster income growth, although continued supply constraints are likely to cap any sales gains. Regionally, more than half of the LIHHM performance rankings are positive and indicate a healthy outlook for housing in those local markets. Demand factors at a regional level are generally supportive with low unemployment rates and faster household formations. Moreover, housing affordability is improving in many local areas as income growth outpaces house price gains while mortgage financing costs have declined.
Chinese investors have been the biggest purchasers of U.S. residential real estate for six consecutive years, but President Trump’s trade war, and China’s efforts to reduce its national debt and boost economic growth, could change that.
In 2018 dollars, Chinese buyers accounted for roughly 25% of total foreign investment in U.S. residential real estate. Canada was No. 2 at 9%.
Of the 284,000 properties sold to foreign buyers last year, some 40,400, or 15%, were bought by Chinese nationals. Five years earlier, Chinese nationals had purchased 23,075 homes, representing just 12% of all properties sold to foreign buyers.
Even China’s growing share in recent years represents a small percentage of overall investment in U.S. residential real estate. As of 2018, foreign buyers in aggregate accounted for just 3% of U.S. home sales, the association added. That figure had been rising, but experienced a modest decline between 2017 and 2018. The figures for 2019 are expected to be similar to the 2018 levels.Long before the current trade dispute, the Chinese government had been creating hurdles for its citizens who wanted to invest abroad. The country started restricting outbound investments in 2016, allowing residents to take only the equivalent of $50,000 out of the country, as a means of propping up the country’s currency. This not only made it more difficult to purchase real estate in America but prompted some Chinese investors to sell their U.S. assets.
A Chinese pullback could have serious effects for some West Coast markets
Unlike foreign buyers from other countries who spread their investments more evenly across the U.S., Chinese residential real-estate investment is highly concentrated on the Pacific Coast. Nearly 40% of Chinese buyers have purchased in California, home to a large Asian community.
But California isn’t the only place where a fall in Chinese buyers would make a difference. Chinese nationals represent a significant share of the foreign buyers of residential real estate in the New York City metropolitan area and growing shares of buyers in states including Florida and Texas.
Chinese buyers also play a big role in the residential-real-estate markets of college towns, as more Chinese students have opted to study at American universities, Yun said.
However, a retreat by Chinese buyers could be good news for Americans looking to purchase a home, especially in such costly Golden State markets as San Francisco, Los Angeles and San Diego. These are among the most expensive in the entire country, and their popularity had contributed to double-digit home-price appreciation in recent years.
The rate at which home prices are climbing has recently slowed as buyers have struggled with affordability. The lack of competition from foreign buyers, who typically enter competitive all-cash offers, could provide an opportunity to get a better deal on a home for locals looking to buy.
In a recent analysis, LendingTree surveyed 2,095 American homeowners aged 22 and older about their perceptions of owning a property versus renting.
According to the company’s study, 67% of American homeowners believe owning a home is a better option than renting. However, LendingTree discovered that for many American homeowners, renting is still a viable option.
“About 15% of homeowners believe renting is easier than owning a home, and another 18% are neutral on the topic,” LendingTree writes. “Just 13% of homeowners across all ages wish they could go back to renting, but when broken down by age, 1 out of every 5 homeowners ages 22 to 37 say they miss renting.”
Interestingly, LendingTree says this breakdown is highly dependent on the number of years a homeowner has lived in their home.
“In most cases, the longer that survey respondents have been in their homes, the more likely they are to believe owning is easier,” LendingTree writes. “That changes for those who have owned for a decade or longer. Nearly 72% of homeowners who have spent seven to nine years in their home agree with the statement, compared with 65% of those with at least 10 years in their home.”
Additionally, the report found that age also plays a major role in homeowner satisfaction.
According to the study, 23% of Gen Xers claimed to be dissatisfied with their home purchases, this was followed by 21% of Millennials who expressed the same sentiment.
When it came to Baby Boomers and those aged 73 and older, LendingTree reports that only 14% and 3% held the same regrets, respectively.
Overall, the study revealed that homeownership tenure is a tremendous indication of whether or not a person is likely to return to the rental market.
“Our survey found that the longer you own your home, the less likely you’ll want to rent again,” LendingTree writes. “Only 7% of respondents who have owned their home for at least 10 years wish they could go back to renting, compared with 19% of those who have owned for three years or less.”
The image below highlights the percentage of Americans who wish to return to renting after owning a home:
(Click to enlarge)
Note: LendingTree commissioned Qualtrics to collect the responses of 2,095 American homeowners aged 22 and older from the dates of March 22-27, 2019.
If you want to paint your kitchen hot pink or mint green, that’s totally up to you (and, by the way, that would make for a pretty fab conversation-starting space!) However, if you ask real estate agents, they’ve got definite opinions on colorways for this all too important room in the house. (They also know that painting your kitchen certain colors, like brick or barn red, can actually devalue your home to the tune for more than $2,000, says a recent Zillow study!) Read on for their take on the best color palette for your kitchen:
Go for neutral and modern colors
“I work with a stager who uses Gray Mist and Edgecomb Gray, both Benjamin Moore paints, and people always asks what colors these are,” says Maria Daou of Warburg Realty in New York City. “They’re both soft colors that really look great in all types of light.”
When in doubt, stay uniform
“Unless you have nine-foot-plus ceiling heights, I would suggest you keep the kitchen walls and ceilings the same color,” says Robin Kencel of Compass Real Estate in Greenwich, Connecticut. She recommends keeping your kitchen white, and, if you’re on a budget, opting for Benjamin Moore’s Simply White, described as ‘reminiscent of the first snowfall.’
“This will end up creating an enveloping feeling and a sense of harmony in the space,” Kencel says.
But consider the power of contrasting color
“I love the look of white cabinets with a touch of gray,” says Peggy Dahan, of Siderow Residential Group in New York City. “I always suggest keeping it simple and easy to match when it comes to color. Another great way to contrast those white cabinets? Wood floors or tile floors that resemble wood. I’ve noticed that those are a big hit these days.”
If you want something a little more funky, consider contrasting top and bottom cabinets. Zillow’s 2018 Paint Color analysis found that these “tuxedo” kitchens (top and bottom cabinets painted with dark and light colors), were found to sell at a $1,500 premium.
Show off your stainless appliances
“For those with stainless appliances, a white kitchen looks great and there’s a huge demand for that palette,” says Lewis Friedman, of the Friedman Team at Compass Real Estate in New York City. “We often have clients paint cabinets and walls white, and Chantilly Lace by Benjamin Moore is a favorite.”
Brighten a dark kitchen
You might have gotten the gist that homebuyers often like white kitchens as they make things seem bigger. But you don’t have to paint your kitchen white for a spacious feel.
“While white cabinets and subway tiles have become practically de rigueur for everything, it’s become boring,” says Marie Bromberg of Compass Real Estate in New York City. Her antidote? Thinking light, like light wood and natural finishes and customizations.
“I painted my own walls Gentleman’s Grey by Benjamin Moore,” she says. “It keeps all of my kitchen’s secrets and doesn’t require that much maintenance.”
But Oregon’s new law will not fix the underlying problem of high housing costs, and it could even make matters worse for vulnerable families.
THE U.S. HAS TWO HOUSING AFFORDABILITY PROBLEMS. RENT CONTROL WON’T FIX EITHER OF THEM.
The first affordability problem is that the nation’s poorest 20 percent have too little income to afford minimum quality housing without receiving subsidies. That’s not a failure of housing markets, but a function of the low wages and unstable incomes generated by labor markets. Poor families could be helped by expanding existing programs such as housing vouchers or the Earned Income Tax Credit (EITC) to cover more poor households. But to fund those programs, middle- and higher-income households would have to pay more in taxes—which state and federal lawmakers have been reluctant to propose.
The only effective long-term fix to the housing scarcity challenge is to build more housing—especially building less expensive housing in cities and neighborhoods where demand is high. This would require substantial changes to local zoning in nearly every U.S. city. But homeowners are a powerful lobby at every level of government, and only a fewboldelectedofficials have dared to challenge the NIMBYs.
EVEN WELL-DESIGNED RENT CONTROL POLICIES CAN REDUCE HOUSING SUPPLY, HARMING VULNERABLE FAMILIES.
The Oregon law tries to foresee and forestall some ways in which rent control can push landlords and developers into harmful responses. For instance, when landlords cannot raise rents, they often choose to not provide adequate maintenance. The Oregon law allows relatively generous annual rent increases of 7 percent plus inflation to avoid this problem. Although the bill is thoughtfully designed, any such regulations create incentives for developers and landlords to seek out loopholes. Past research shows that property owners in rent controlled cities are more likely to convert apartment buildings into condominiums. A developer considering building an eight-unit apartment building might revise their plans to build only five apartments, just under the cap set by Oregon’s law—thus contributing less new housing overall. Landlords may pre-emptively raise the rent more as they approach the 15 year mark when controls kick in. Even the increased tenant protections could backfire, encouraging landlords to screen out less desirable tenants—including many low-income families with young children.
FIXING HOUSING AFFORDABILITY WILL REQUIRE COURAGE FROM POLITICIANS, AND SOME SACRIFICES FROM AFFLUENT VOTERS.
Rent control is similar to another popular housing policy, inclusionary zoning, in that it tries to push the onus for improving housing affordability onto for-profit developers and landlords. Self-identified progressive homeowners may be willing to support politicians who advocate these policies. But neither rent control nor inclusionary zoning address the underlying causes of housing affordability, and indeed have the potential to discourage new supply and make the problem worse. Politicians need to be honest with their constituents about the cost of better policies as well as the costs of failing to act. Affluent households should pay more taxes to support poor families, and should allow new apartments in their own backyards.
Con Edison has requested a rate increase that, if approved, could have Westchester County customers paying about 6 percent more for electricity each month.
The company filed a rate request with the New York State Public Service Commission Jan. 31, seeking approval for rate requests totaling $695 million for the company’s electric and natural gas delivery systems. The increase would go into effect in 2020.
Con Edison supplies natural gas to 1.1 million customers and electricity to 3.4 million customers in New York City and Westchester.
With the increase, the bill for a residential costumer in Westchester using 300 kilowatt hours would rise $6.10, to an average of $114.04 per month. The average monthly bill for a New York City customer for the same usage would increase $4.45, to $81.78. For a typical commercial customer in the region, the monthly bill would increase $80.96 to $1,970.67, an increase of 4.3 percent.
The average monthly bill for a residential gas customer, using on average 100 therms per month, would increase $17.28 to $176.34, according to Con Edison, an increase of 10.9 percent.
The utility said the rate increase would fund infrastructure improvements and other investments in clean energy, energy savings and customer service.
“Our proposal will build on the progress we have made in putting tools in the hands of our customers to help them manage their energy usage,” Con Edison President Timothy Cawley said. “We’re making it easier for them to take advantage of energy efficiency, charge electric vehicles and communicate with us. We’re also improving our response to severe weather events and taking steps to protect the environment.”
Through a rate case proceeding, the state Public Service Commission will render a decision on how much the utility can raise rates. The state is required to provide a decision within 11 months.
“Our number one priority is ensuring utility rates are fair and reasonable, and we will not allow a multibillion-dollar utility to line shareholders’ pockets at the expense of ratepayers,” state Department of Public Service spokesman James Denn said. “Today, Con Edison is seeking a rate increase, but to be crystal clear, one has not been approved.”
The state has assembled what it said is a panel of 50 experts to review the rate filing. The process also allows for public comment, which often draws from industry groups, consumer advocates and large-scale electricity and gas users.
The utility last sought a rate increase in 2016. The company asked the state to approve an electric increase of $482 million and a gas increase of $154 million. After a joint-agreement involving 22-separate parties, the PSC authorized a three-year rate plan in 2017 that allowed for annual electric increases of $199 million, and a gas increase of $35.5 million in year one, $92.3 million in year two and $89.5 million in year three. The decision, according to the PSC, included measures to boost the availability of energy efficiency and smart-grid technologies.
While Con Edison’s proposal is for 2020, the company indicated in its announcement that it intends to discuss multiyear rate plans with the PSC. A multiyear plan, the company said, could result in lower annual increases and provide more cost certainty. It also agreed to a two-year rate plan in its 2014 rate case.
Among the efforts Con Edison said it would fund with the rate increase is its $100 million plan to increase the storm resiliency in Westchester. The four-year plan would strengthen the county’s overhead electric system. The company announced the plan last year amid public pressure from elected officials after a series of snow storms in March caused some of the most significant outages in company history.
Governor Charlie Baker, a Republican who once campaigned against raising taxes, unveiled a proposal Friday to hike the tax on Massachusetts real estate transfers by 50 percent, and funnel the more than $1 billion it could generate in the next decade into steeling cities and towns against the effects of climate change.
The plan, which Baker intends to include in his state budget proposal on Wednesday, marks one of his most high-profile bids to address climate resiliency as he begins his second term.
But it’s also expected to face heavy resistance within real estate circles, where trade groups warn a tax hike could exacerbate the region’s already steep housing costs.
Baker’s proposed tax increase would add nearly $1,200 in taxes to the sale of a $500,000 home, with those costs paid by the seller.Get Metro Headlines in your inbox:The 10 top local news stories from metro Boston and around New England delivered daily.Sign Up
Baker said the increase to the so-called deeds excise rate could generate anywhere from $130 million to $150 million annually toward a Global Warming Solutions Trust Fund, which cities and towns could then tap through grants, loans, and other avenues for local projects. That could include modernizing public buildings, fortifying sea walls, or improving drainage and flood control methods, depending on a city or town’s needs.
“This is an excise tax that’s basically about property. And the proposal we’re making here is to protect property,” Baker told reporters after unveiling the contours of the plan to hundreds of local officials at the Massachusetts Municipal Association’s annual meeting.
“We think in the long run, the cost benefit on this one is a good deal for Massachusetts residents,” Baker said.
The tax increase, which would need legislative approval, could mean hundreds, if not thousands, more dollars borne by those unloading their homes.
Under current law, a home seller in most parts of the state pays $4.56 in transfer taxes per $1,000 of a purchase price. That means for a $500,000 home sale, a seller pays a $2,280 tax bill. If Baker’s proposal passes, the transfer tax rate would jump to $6.84 per $1,000, meaning for the same $500,000 sale, the tax bill balloons to $3,420.
On Cape Cod, where the excise tax is lower than the rest of the state, the increase is actually more dramatic under Baker’s proposal. The $3.42 per $1,000 of a purchase price home sellers currently pay would jump by 67 percent to $5.70.
As a candidate in 2014, Baker continually opposed tax and fee increases, later allowing that if the state offered a new service and attached a fee to it, he didn’t think he would be breaking his commitment. En route to winning reelection last fall, he reiterated that he is against broad-based tax increases for the sake of “balancing the budget.”
During four-plus years in office, he has signed a number of new fees and taxes into law, including an assessment to help cover the cost of the state’s Medicaid program and an estimated $800 million payroll tax, split between employers and employees, that goes into effect in July to pay for a new paid family and medical leave program. Baker also signed off on a new $2 surcharge on car rental transactions to raise up to $10 million toward training for local police.
Baker defended his pursuit of the tax hike in the new climate change proposal. “There’s no program in Massachusetts that’s going to put a billion dollars on the table to put the kind of resiliency programming in place that we’re going to need to deal with the intensity and the frequency of storms,” he said.
His administration, however, also noted that it has already invested $600 million in programs targeting the effects of climate change.
The proposal is the second major climate-change-focused initiative Baker has touted since winning reelection. Last month, Massachusetts and eight other states announced a landmark agreement to create a system to impose regionwide limits on transportation emissions, the nation’s largest source of carbon pollution.
Within hours, the plan was drawing resistance from the real estate industry. Tamara Small, chief executive of NAIOP Massachusetts, the powerful trade group for commercial real estate, questioned tying the fund to property sales.
“When we have a market downturn, which I think is not far down the road . . . that could affect the amount of money that could be raised,” Small said. “When you’re talking about a 50 percent increase, there’s no doubt that for someone who is trying to sell their home, that’s going to increase prices. That’s going to have an impact.”
The Massachusetts Association of Realtors, which opposes the increase, said efforts to support climate resiliency shouldn’t target only those looking to sell property, said Justin Davidson, the group’s general counsel.
“This proposal would quite frankly increase the cost of housing in Massachusetts,” he said. “We’ll be reaching out to legislators to let them know about our position.”
Baker is likely to have powerful support, too. The plan received a “very positive response” from local officials at their annual meeting, according to Geoffrey Beckwith, the Massachusetts Municipal Association’s executive director, who called it a “common sense funding solution.”
“There’s a direct connection between what cities and towns have to do, and the proposal the governor made,” Beckwith said.
Environmental groups, who have been critical of Baker before, offered cautious praise Friday for this proposal, noting they’re still waiting to see all of the details.
“I think it’s a great signal that he intends to take climate change and climate resilience and adaptation seriously,” said Elizabeth Turnbull Henry, president of the Environmental League of Massachusetts. “Massachusetts has 1,500 miles of coastline. The time is now to be thinking about how we’re going to pay for the investments that we need to protect ourselves.”
Bradley Campbell, president of the Conservation Law Foundation, said he was encouraged by Baker’s plan, but called the money it could raise “modest” compared to the projected need.
“Ultimately, I think there will be a need to look at multiple revenue sources to assure that the cost burden of climate risk is allocated in a fair and equitable way,” he said. “This proposal provides a solid start to that dialogue.”
Sam Khater, Freddie Mac’s chief economist, says, “Mortgage rates have stabilized during the last month and are essentially at the same level as last spring – yet the most recent home sales are roughly half a million lower over the same period. Given that the economy remains on solid footing and weekly mortgage purchase application activity has been strong so far in 2019, we expect the decline in home sales to moderate or even reverse over the next couple of months.”
30-year fixed-rate mortgage (FRM) averaged 4.45 percent with an average 0.4 point for the week ending January 24, 2019, unchanged from last week. A year ago at this time, the 30-year FRM averaged 4.15 percent.
15-year FRM this week averaged 3.88 percent with an average 0.4 point, unchanged from last week. A year ago at this time, the 15-year FRM averaged 3.62 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.
Information compiled by Freddie Mac shows that mortgage rates continued to increase in the fall. The 30-year FRM – Commitment rate, inched up by four basis points to 4.87 percent from 4.83 percent in October. With the November increase, the 30-year FRM – Commitment rate, was at the highest level since February 2011. As a result of rising home costs, builder confidence in the market for newly-built single-family homes fell four points to 56 in December and affordability was at the lowest level in a decade.
The Federal Housing Finance Agency reported that the contract rate for newly-built homes, inched up 10 basis points to 4.77 percent in November. Mortgage rates on purchases of newly built homes (MIRS) increased by 11 basis points over the month of November to 4.86 percent.
After increasing the federal funds rate to 2.25 percent to 2.50 percent at the December Federal Open Market Committee meeting, the Fed remains cautiously on track to continue its gradual approach to raising interest rates with one or two possible rate hikes in 2019.
Moreover, the 10-year Treasury rate fell from above 3.21% at the start of November to 2.7% at the start of January. This decline will reduce mortgage interest rates. The average market rate, according to Freddie Mac, was 4.51% at the start of January.
Builder confidence in the market for newly-built single-family homes fell four points to 56 in December on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) as concerns over housing affordability persist. Although this is the lowest HMI reading since May 2015, builder sentiment remains in positive territory.
Builders report that consumer demand exists, but customers are hesitating to make a purchase because of rising home costs. However, recent declines in mortgage interest rates should help move the market forward in early 2019. Builder confidence dropped significantly in areas of the country with high home prices, which shows how the growing housing affordability crisis is hurting the market. This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All the HMI indices posted declines. The index measuring current sales conditions fell six points to 61, the component gauging expectations in the next six months dropped four points to 61, and the metric charting buyer traffic edged down two points to 43.
Looking at the three-month moving averages for regional HMI scores, the Midwest dropped two points to 55; the West and South both fell three points to 68 and 65, respectively; and the Northeast registered an eight-point drop to 50.