The legion of data sources covering the real estate market regularly publish reams of sometimes overlapping trend reports, sales figures, economic analytics, commercial forecasts — all crammed with statistics delineated in pie charts, bar graphs and comparison indexes.
These dense reports come fast and furious — annually, quarterly, monthly and whenever insights surface. This is all great stuff for real estate insiders, investors, market watchers and others.
Here are highlights from this week’s stack of diverse documents.
ATTOM Data Solutions
Last quarter was a good one to sell a house. Home sellers enjoyed a banner fourth quarter in 2017 with an average profit of $54,000 over the purchase price — reaching the highest mark since the third quarter of 2007, according to ATTOM, the curator of the nation’s largest multi-sourced property database.
That profit represents an average 29.7 percent return on investment compared to the original purchase price, the company reported today in its Year-End and Q4 2017 U.S. Home Sales Report. That’s also up by almost three percentage points from the fourth quarter of 2016.
Oddly enough, the increase in sales profits and home appreciation did not encourage a rush to market as the average homeownership tenure rose to a new record of 8.18 years in 2017′s fourth quarter.
“It’s the most profitable time to sell a home in more than 10 years yet homeowners are staying put longer than we’ve ever seen,” Daren Blomquist, ATTOM senior vice president, said in the report.
Among the 155 metropolitan statistical areas with enough historical data, the North Port-Sarasota-Bradenton MSA ranked 51st in the year-over-year increase in the median sales price with a 6.6 percent rise to $236,325. Ocala took top place with a 14.3 percent jump, to $128,000.
In other significant statistics, over the past five years the Sarasota-Manatee median home sale price soared by 63 percent. This MSA’s peak median price reached $257,500 in 2006, but plunged to its lowest mark in 2011 — at $130,000.
Nationally, conservative political leanings and the residential real estate market appear to have something of a symbiotic relationship today. Big cities in red states recorded the strongest home price appreciation last year, ATTOM reported.
“While home sellers on the West Coast are realizing the biggest profits,” Blomquist said, “rapid home price appreciation in red state markets is rivaling that of the high-flying coastal markets and producing sizable profits for home sellers in those middle-American markets as well.”
In the red-hot red state housing markets, four of the five major metros (population 1 million or more) with the strongest home price appreciation since the bottom of the housing market in 2012 were in politically red states that President Trump won in the 2016 election: Detroit (up 127.8 percent); Atlanta (up 90.0 percent); Miami (up 88.5 percent); and Austin, Texas (up 88.2 percent). The lone blue state market in that top five was Las Vegas (up 100.0 percent).
Three of the top five major metros with the strongest year-over-year home price appreciation in 2017 were in politically red states: Kansas City (up 13.4 percent), Nashville (up 12.5 percent), and Salt Lake City (up 10.9 percent). The other two cities in the top five were San Jose (up 13.3 percent); and Las Vegas (up 12.3 percent).
S&P CoreLogic Case-Shiller
Home prices across the country increased by a slim margin in November, rising 6.2 percent compared with October’s 6.1 percent. But Standard & Poor’s also reported that its S&P CoreLogic Case-Shiller national home price index has logged year-over-year increases of 5 percent or more for 16 months.
Tampa, one of the 20 major metropolitan areas broken out in a composite index, saw home prices rise 1.0 percent in November, reaching a 7.1 percent increase over the prior year. That ranks as the fifth highest price gain among those cities.
“Home prices continue to rise three times faster than the rate of inflation,” says David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices.”
Construction costs rebounded after the financial crisis, he said, but that does not explain all of the home price gains. For the past eight years, construction of single family homes slowed. “Without more supply, home prices may continue to substantially outpace inflation,” Blitzer said.
Reis, which maintains a commercial property database and provides market analytics and research, this week published First Glance reports that preview 2017′s fourth-quarter trends and findings across the apartment, office, retail and industrial sectors, and for construction activity. These insights and projections come from various Reis economists.
Retail: The sector continued to withstand the closings of a number of stores in the fourth quarter. Expanding retailers absorbed space to balance the closing stores, keeping the neighborhood and community shopping center vacancy rate flat at 10.0 percent at the end of 2017.
Most of the year-end same-store sales announcements from major retailers were positive and above expectations. In short, the sales and employment numbers reinforce the property market statistics that defy the doom-and-gloom reports in the media on the retail sector. More retailers are expanding into retail spaces than are closing shop. All indications are that this will continue.
Industrial: Every market indicator that impacts the industrial sector saw robust growth at the end of 2017. Indications reinforce the sentiment that the industrial sector is poised for further growth in 2018.
The biggest driver for this sector may be improved economies in Asia and Europe that will continue to drive up trade. The recent tax bill will also boost the economy in the short run as it delivers higher retained profits for many companies and improve consumer confidence that should register in increased retail/e-commerce sales in 2018-2019.
Construction: While declines in new project completions were observed in all three major sectors, the implied conclusions vary by each sector’s long-run trend. Despite the decline from the previous quarter, the apartment sector has remained strong since the Great Recession, while the office sector has remained flat and the retail sector has continued to dip lower. Despite these long-run trends, submarket fundamentals remain key to understanding the economic impacts from external factor changes.
Apartment: While headwinds from high supply growth — historic highs for several markets — continue to act as a drag on multifamily fundamentals, there is no evidence that demand for apartment rentals has declined in any significant way. There are some positive signs from the for-sale single-family housing market, but it doesn’t appear that renters are converting into buyers in droves. Rosier projections for economic growth in 2018 should support demand for apartment rentals.
Office: Given lackluster demand, we may see vacancies rise even more over the next two years unless office leasing really picks up. Businesses may feel renewed confidence as the recently
passed Tax Bill should return more profits to businesses’ bottom lines. This could foster more robust leasing activity. If this happens, rent growth will likely increase as well, but given typical timings of when leases are signed, we may not see any impact on office fundamentals until late 2018 or so.
This real estate research firm produces monthly MarketPulse reports that focus on housing and mortgage metrics. One analysis in the January edition indicates the challenges prospective homebuyers face with mortgages and affordability.
Research analyst Andrew LePage shows the 6.3 percent rise in home prices in 2017 only addresses one factor in affordability as the typical mortgage payment jumped 12.1 percent as home loan rates rose by more than 0.4 percent over the year.
The “typical mortgage payment” is defined as a measurement of the impact of inflation, mortgages rates and home prices on affordability. The monthly loan payment is calculated on each month’s median home price and Freddie Mac’s average rate on a 30-year fixed mortgage.
That typical mortgage payment reached a record high in June 2006 at $1,259 and sank to its lowest level in February 2012 at $550. The October 2017 payment rose to $803 and is projected to hit $891 in October 2018 as mortgage rates and home prices increase.
“We expect a 5 percent increase in housing starts in 2018,” LePage writes. “While this will help, we need an even larger increase in home building to alleviate the erosion of affordability, especially in high-cost areas.”
Our take on a possible solution to the affordability crisis: Income levels need to rise.