More People Buying a #Home Without Even Visiting It

Posted on August 07, 2017 in Economy, Housing, Mortgages | Add Your Voice
Tech Check: More People Buying a Home Without Visiting It

One in three people who bought a home in the last year said they made an offer without seeing it in person.

Millennials were even more likely to have made an offer sight-unseen, with 41 percent saying they had done so. That’s according to a survey of recent home buyers commissioned by Redfin.

“Advances in technology, the speed of the market and fact that many millennials would rather not talk to sales people are clearly contributing to this trend,” says The Collingwood Group Chairman Tim Rood. “Web sites like offer one-stop shopping. People can view and buy the home and apply for a mortgage all in one place. Of course if they want to see the home, a real estate agent can be consulted as well.”

Says Rood, “This is the kind of needed, innovative thinking that will move the housing and mortgage business into the 21st century.”

The abundance of listing photos — including interactive 3-D photography that lets people virtually walk through listings and “drive by” the home on Google Maps — and other information made available about homes for sale online helps buyers feel comfortable bidding on a home they haven’t set foot in.

Then, mix in the severe shortage of homes for sale that is failing to keep up with strong buyer demand. In June, the national supply of homes for sale fell year over year for the 21st consecutive month. The median sale price for a home rose in June by 7.3 percent from last year. Serious buyers feel they must act quickly and decisively.

The typical home that sold in June went under contract in 36 days, the fastest pace since 2010. But the market was even faster in some metro areas. In Denver, Seattle and Portland, Ore., homes were on the market for just a week. In the Washington, D.C., area, the typical home sold in June found a buyer in 16 days.

In this market, the pattern is clear. Homes are often listed on Thursday or Friday, an open house is Sunday, and the home may be under contract by Monday or Tuesday (if it lasts that long).

Indeed, online may be the only way to get that home.

Real Estate, Mortgage Industries Ripe for Tech Disruption
A strong debut as a public company by Redfin Corp. signals that investors believe the real-estate brokerage industry is ripe for disruption, with shares soaring in their debut.

Redfin’s growth has been moderate compared to many venture-backed startups because the real-estate industry proved resistant to disruption and the company grew slowly since it started in 2004. But it has heated up recently as the housing market has sprung back to life. Redfin’s revenue jumped 43% to more than $267 million in 2016, up from $187 million in 2015.

Redfin was founded before the real-estate crash in 2008 and struggled through many of the years that followed. But it has a head start over a slew of startups that have sought to disrupt the real-estate industry more recently.

The company has faced pushback from more traditional real-estate brokerages because it pays agents a salary and discounts commissions. Like many upstarts, it relies heavily on technology, providing home valuations and other data on its website.

“What [investors] saw is a company that is really hard to replicate,” said Glenn Kelman, the company’s chief executive. “The Street gave us credit for time served.”

Redfin remains a bit player in the residential brokerage industry, with 0.58% U.S. market share. But investors appear to be betting that a sector can’t forever remain immune to the technological upheaval that is roiling other industries.

read more: Wall St Journal

Apple Poised to Save the Mall
Apple reported fiscal third-quarter earnings that handily beat analysts’ expectations, and revenue that topped estimates, as it sold more iPhones than expected. Despite expectations for a “lame duck” quarter ahead of the iPhone 8 launch, Apple sold 41 million iPhones during the quarter, surpassing 1.2 billion total iPhones sold.

“Just look at the Apple Stores. They are always bustling and filled with people — you get to experience the product and talk to an expert,” says Situs Executive Managing Director Steven Bean. “You may not buy your iPhone there, but they’ll get you eventually.”

Bean adds, “Apple is proof retail real estate is not down for the count — it’s catching its breath and adapting to a rapid pace of change as it always has. Like the Apple Store, retailers today need to provide an experience. If retailers aren’t quick enough, willing or able to adapt their business models to a consumer-driven world that is changing every minute, then they are bound to fail.”

Traffic at Apple Stores and ancillary merchants are sure to soar in the near future when the new iPhone 8 is released at a price said to top $1,000.

Situs’ Bean asks, “Is your business ready to profit from that? If not, make it so.”

Higher Degrees = Bigger Mortgages
Homebuyers need good credit, a down payment and, these days, maybe even a graduate degree.

The more advanced the education, the more likely a person is to own a home, according to a new study by real-estate site, which looked at homeownership, home size and data from the U.S. Census Bureau’s American Community Survey. Professional degree holders, including medical and law school graduates, have about a 76% ownership rate, followed by graduate school around 73.6%. Ownership rates were about the same for doctorate levels (73.7%) but people with less than a high-school degree had the lowest rate of ownership at 40.5%, followed by high school diploma holders, who had 56.4%. Home ownership rates for bachelor’s-degree holders was 67.3%.

Of course, this doesn’t apply to all housing markets. Homeowners don’t need college degrees in Long Island, N.Y., where the homeownership rate for people with a high school diploma was 74.5%, followed by Troy, Mich., at 69.2%, Grand Rapids, Mich., at 68.8%, and Deltona-Daytona Beach, Fla., at 68.2%. And then there are cities where it’s hard to own a home no matter how many years you went to school, such as San Francisco and New York, where professional degree holders earn a median income of at least $150,000 but homeownership rates are less than 60%. The largest jump in income was between graduate-degree holders and professional-degree holders (about $36,000), but it didn’t affect homeownership rates all that much — just 2.4 percentage points.

read more: MarketWatch

Sticker Shock Hitting Home Sales
There is still plenty of demand for housing. Potential buyers, both young and old, are trolling listings online and packing in to crowded open houses. But they are not rushing to write offers. The culprit may be sticker shock.

While buyers in June were still requesting tours at the same rate as May, 11 percent fewer were putting pen to paper on an offer, according to Redfin, a real estate brokerage which surveyed 15 major metropolitan housing markets. The same is true, however, throughout much of the nation.

“In this market, homebuyers have to move fast, yet high prices and low inventory are slowing down even the most earnest of house hunters,” said Nela Richardson, chief economist at Redfin. “Buyers toured in full force last month, even though there were fewer homes hitting the market. New listings fell 3.3 percent from May and were down 1.6 percent from a year ago. Faced with a low supply of homes for sale and extremely competitive conditions, many homebuyers are struggling to make it to the offer stage.”

The trend likely followed into July as well, as mortgage applications to purchase a home have fallen for three out of the past four weeks, according to the Mortgage Bankers Association.

The supply situation is only getting worse. Redfin found listings down 12 percent in June compared with a year ago in the markets it covers, but a wider survey from the U.S. Census shows the supply of existing homes, on a per capita basis, nationwide in the second quarter of this year was at the lowest level since 1982, when the government began tracking this data.

The number of vacant homes is at a 17-year low. All this due to the sharp decline in home construction after the last housing crash and soaring demand from first-time buyers who were sidelined during the recession.

read more: CNBC

Multifamily Drags Down Construction Spending
Construction spending, both public and private, dropped 1.3 percent in June.

Spending was at a seasonally adjusted annual rate of $1.21 trillion compared to the May estimate of $1.22 trillion, an upward revision of 0.3 percent from the original number.  June’s spending remained 1.6 percent higher than a year earlier.

The report from the U.S. Census Bureau came in way below analysts’ estimates.  Those polled by Econoday estimated spending would range from “unchanged” to a 1.0 percent gain; the consensus was 0.5 percent.  Econoday said of the report that it had much in common with the month’s personal income and outlays report also issued on Tuesday in that it had “lack of any apparent life.”

On a non-adjusted basis, there was $109.38 billion in construction put in place during the month compared to $104.59 billion in May.  During the first six months of the year, construction spending was $577.05 billion, up 4.8 percent from the same period in 2016.

read more: Mortgage News Daily

Blame These Celebs for High NYC Home Prices
Celebrities do more than add glam to their neighborhoods — they also boost property values, a new study shows.

The average sales price for a town house in Greenwich Village near Fifth Avenue barely hit $4 million in 2006 — but that figure has quintupled in the past decade, reaching nearly $20 million, thanks at least partly to its boldface residents, according to real-estate firm Leslie J. Garfield and DataLoft.

“It’s a herd mentality. Everybody wants to be where they are. It’s like, ‘I’ll have what she’s having,’ ” broker Dolly Lenz said.

Lenz is currently listing a home farther west at 271 W. 11th St. — near the mansions of actors Sarah Jessica Parker and Matthew Broderick — for $34.5 million.

Adding to that area’s cachet — and ­ka-ching — are such residents as actresses Liv Tyler and Julianne Moore.

The study shows that A-listers help boost prices by around 127 percent, ­B-listers by 67 percent and C-listers by 43 percent.

Then there are the tech-mogul residents who help the local real-estate economy along, too.

On West 10th Street, Facebook co-founder Sean Parker bought three town houses, and fellow co-founder Chris Hughes scooped 157 W. 12th St., with a secret tunnel, for $23.5 million in 2015.

Some stars, including Taylor Swift, rent in the area instead of buying, but the price-boosting effect is still the same, experts said.

In the West Village, the average sales price for a town house was $6.3 million about a decade ago. It’s now 127 percent higher, or $14.3 million.

In the East Village, the “celebrity premium” shot up prices 67 percent thanks at least partly to “Friends” TV star David Schwimmer and Broadway star Alan Cumming, the report said.

On the Upper East Side, where Kelly Ripa and her family call home, the average sales price jumped 13 percent in roughly the past decade, from $9.9 million in 2006 to $11.2 million, the study showed.

read more: NY Post

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Lou Giserman
Senior Media Consultant
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