Jonathan Smoke Archives

Does The Buying Season Really Start In Fall?

Traditionally, the housing market heats up in the spring and continues to sizzle through the summer months. There are many reason this is true – including more favorable weather and the school year. However, if you’re able to choose when you buy your next home, spring and summer may not be the best times to buy. In fact, according to an analysis from NerdWallet, sale prices peak in June and July then begin falling in autumn. However, that’s actual sale price, not what the home was listed for. The data showed listing prices dropped less than half a percent in fall but sale prices fell nearly 3 percent by November. That’s $8,300 less on a median-priced home. And if you can wait even later, winter offers the best savings. Because fall and winter see fewer buyers active in the market, there is less competition and more room for negotiating a better price. Realtor.com chief economist, Jonathan Smoke, says buying is best the later you wait. “If your circumstances give you the freedom to be able to choose the best time to look to sign a contract on a new home, there’s no question that the market dynamics favor you the most to do that in the dead of winter, ideally in January or February, right before the activity starts to heat up,” Smoke said. More here.

What Can 1st Time Buyers Expect In This Market?

Because they are vital to the health of the housing market, first-time home buyers are a closely watched group. In recent years, they have been less active but there is new research indicating that the number of first timers is spiking. So what can new home buyers expect their first time through the home buying process? According to economist Jonathan Smoke, they may face more challenges in this market but can improve their chances by getting their finances in order, raising their credit score above 700, and planning for a down payment. “The market has seen growth despite higher prices in part because of pent-up demand from very qualified buyers who were able to meet the challenging mortgage qualifications that are the norm these days,” Smoke says. “A key question for the months ahead is whether a higher share of first-time buyers is ready or capable of qualifying for a loan and closing on a home.” In other words, if these potential buyers can get approved for a mortgage, there could be an upcoming surge in sales to younger Americans. The good news is mortgage credit has generally been more available over the past few years. Unfortunately, the flip side is that, at the same time, a higher percentage of buyers report having trouble raising their credit score and difficulty saving for a down payment.

Hot Housing Market May Cool This Fall

The housing market had a strong first of half of the year. In fact, according to Jonathan Smoke, Realtor.com’s chief economist, it was the best spring in a decade. However, a number of factors will likely cause things to slow down in the second half of the year. “As a result of a very strong spring and summer leaving us with low inventories, mortgage rates potentially moving back up, and the presidential election creating more uncertainty, we may see a weaker housing market in September, October, and November,” Smoke says. “However, given the performance so far this year, 2016 should end as the best year in a decade.” And, though things may slow down in the months ahead, that’s no reason to believe the real estate market will have a bad 2017. Smoke says housing should remain strong next year, unless there is a substantial increase in mortgage rates over a short period of time. But that type of rate increase should only occur if the economy is also strong. And, if that’s the case, then lower unemployment and higher wages should help offset the effects of higher rates. Smoke feels that positive conditions and favorable demographics will keep the housing market strong and healthy for at least two more years. More here.

Low Inventory Presents Challenge For Buyers

Home buyers looking to buy a house this year have been met with a more challenging housing market than in years past. Following the housing crash, supply outweighed demand and the market favored buyers. With more homes than buyers, prices were low and buyers had all the negotiating power. This year, on the other hand, higher home prices, fewer choices, and more competition from other buyers have led to increasing concerns about affordability and the likelihood of finding the right house. According to a recent gathering of housing economists at the annual convention of the National Association of Real Estate Editors, low inventory is at the root of all of these issues. That’s because, when there are more buyers than there are homes for sale, home prices increase and sellers have the upper hand. Speakers at the convention, including the National Association of Realtors’ chief economist, Lawrence Yun, and Realtor.com’s, Jonathan Smoke, pointed to inventory as key to balancing the market and helping moderate home price increases. “One thing holding back the market is supply,” Smoke said. “Inventory continues to be constrained despite demand.” Yun agreed, calling inventory, “grossly inadequate.” Fortunately, high buyer demand and still-low mortgage rates have helped affordability levels and kept home sales numbers up despite low inventory in many markets. More here.

Strong January Heats Up Spring Forecast

Early indications are that economic uncertainty and turmoil in the financial markets didn’t curb consumers’ interest in buying a home at the beginning of this year. In fact, according to Realtor.com’s chief economist, Jonathan Smoke, an initial look at the data shows buyer interest increased in January. “Our initial readings on January affirm the positive growth we expect to see in the residential real estate market in 2016,” Smoke said. “Our traffic, searches and listing views exhibited the January ‘pop’ we saw last year, which made for a strong spring.” Additionally Smoke says there have been large numbers of prospective buyers who have indicated that they intend to buy a home in the spring or summer of 2016. This is encouraging news for the housing market, especially since mortgage rates have declined rather than increased since the Fed’s decision to raise interest rates. That leaves low inventory and tight credit standards as the two major obstacles for home buyers this year. Fortunately, credit availability has been easing recently and increasing new-home construction should help alleviate some of the upward pressure on home prices that comes from a lower-than-usual number of homes available for sale. According to Smoke, the best advice for buyers hoping to buy a house in 2016 is to start early. More here.

A Look Back At The 2015 Housing Market

All the numbers have yet to be reported but, according to Realtor.com’s chief economist Jonathan Smoke, 2015 was a year of growth and improvement for the housing market. New and existing home sales both rose, with gains seen among first-time and repeat buyers, as well as buyers who were relocating and/or changing jobs. Home prices also increased, helping homeowners see significant gains in equity. However, despite the fact that prices rose and demand was strong – which would normally lead to a boom in housing construction – most of the gains in residential construction were found among apartment buildings rather than single-family homes. With a lower-than-normal number of homes for sale putting upward pressure on prices, affordability was increasingly a concern for home buyers. Buyers, however, were helped by continued improvement in the job market and mortgage rates still hovering near historic lows, which boosted consumer confidence even as prices neared pre-crash levels in some markets. All in all, Smoke says the housing market is definitely stronger than it was a year ago but offers a few suggestions for further growth. “We need new construction to keep up with the household formations driven by demographics and healthy job creation,” Smoke writes in an article posted to realtor.com. “We need more affordable housing to decrease the impact of burdensome rents. And we need expanded, risk-appropriate access to credit to help households that can afford to buy.” More here.

September May Be Best For Buyers

Spring and summer are known to be the hottest times of year for home shoppers and sellers. But, according to a recent article from Realtor.com’s chief economist, Jonathan Smoke, September may actually be the best month for buyers to sign a contract to buy a house. Smoke says prospective buyers will find more choices and less competition if they’re looking to buy now. “Normally inventory peaks in August and begins to slow as the nights grow longer,” Smoke says. “But this year the typical seasonal decline will start a bit later. There will be more choices in September than any other month in 2015.” And, since the school year has started, overall demand will be down, which means prospective buyers will have less competition than they would earlier in the year. Also, fewer buyers and more homes available for sale means upward pressure on prices will start to ease, giving potential buyers an edge. Finally, Smoke argues that now is the best time to buy because mortgage rates remain historically low, which makes affordability conditions even more favorable for prospective buyers. More here.