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Tag: Sean Becketti

Three Trends Key To Real Estate’s Future

So much time is spent analyzing monthly numbers and mortgage rate fluctuations that the big picture can sometimes get lost in all that data. Sure, paying attention to the short term movements of the market can give buyers and sellers an idea of what they should expect once they put their home up for sale or make an offer on a house, but in order to really know where the real estate market is headed in the future, there are some other more significant trends to watch. According to Freddie Mac’s most recent monthly insight report, increasing income inequality, the rising share of land costs, and the increase in land use restrictions will play a large role in determining who buys homes, where they buy, and how much they pay in the years to come. “The change in income distribution shifts the demand for housing – both the total demand for homeownership and the demand for different types of housing,” Sean Becketti, Freddie Mac’s chief economist, says. “The rising share of land costs shifts the supply of housing – houses cost more than before because of the higher cost of the land component of the house. And land use restrictions limit the supply of more-affordable housing in richer states. No analysis of the future housing market is complete without considering them.” More here.

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Housing Outlooks Have Differing Visions

The housing market has been sort of a mixed bag this year. While home sales are expected to exceed last year’s levels and mortgage rates are still hovering near record lows, fewer houses for sale have presented potential home buyers in many markets with increased competition and higher prices. In short, you could look at the numbers and come to a couple of different conclusions. As an example, two recently released forecasts have differing views on what lies ahead for the residential real estate market. Fannie Mae’s Economic & Strategic Research Group’s October 2016 Economic and Housing Outlook sees housing momentum beginning to slow. Doug Duncan, Fannie Mae’s chief economist, says recent declines in sales, construction, and mortgage applications may mean continued weakness in the near term. However, Duncan also acknowledges the fact that improved demand from first-time home buyers is an encouraging sign. On the other side of the fence, Freddie Mac’s most recent forecast calls for continued gains and calls the housing market an economic bright spot. “As the economy sputters along a little bit faster than stall speed, the U.S. housing market continues to be a bright spot, though there’s less room to run than in the prior few years,” Sean Becketti, Freddie Mac’s chief economist, says. “We see new home sales improving some next year driven by increases in single-family housing construction which will push total home sales slightly higher.” More here.

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Home Sales To Have Best Year In A Decade

The housing market is likely to see its best year of sales in a decade, according to a new outlook from Freddie Mac. In fact, the group’s forecast calls for sales to reach 6.04 million by the end of the year. Sean Becketti, Freddie Mac’s chief economist, says the housing market still has some challenges but is far better balanced than it was even just a few years ago. “This is a good sign for the housing market as it continues to be an even brighter spot in the economy,” Becketti said. “However, the housing market still has challenges, which is reflected in our housing starts forecast. Low levels of inventory across many markets will continue to put upward pressure on house prices for the foreseeable future.” But though Freddie Mac expects home prices to continue to increase due to a lower than normal number of available homes for sale and has revised their forecast for new home construction downward, they also expect mortgage rates to remain low through the end of the year. In other words, the residential real-estate market will continue to look much as it does today for the next several months. Inventory will continue to be the big issue, causing prices to rise while mortgage rates near historic lows help support both refinance and home purchase activity. More here.

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Optimistic Outlook Sees Brighter Days Ahead

According to Freddie Mac’s March Outlook, the housing market is poised to have its best year since 2006. The optimistic forecast is based on the belief that an improved job market – combined with low mortgage rates and a growing number of housing starts – will help boost sales this year and build momentum for 2017. “Housing markets are poised for their best year in a decade,” Sean Becketti, Freddie Mac’s chief economist, said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017.” According to the outlook, Freddie Mac expects housing starts to increase this year, which will help slow down the rate at which home prices have been increasing. In fact, the outlook says annual house price appreciation will be 4.8 percent in 2016. In 2015, it was about 6 percent. More here.

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Why Buyers Need To Watch The New Home Market

Last year, home sales were stronger than they’ve been in a long time. After years of volatility and gradual gains, the buyer boom was a welcome relief. However, the return of buyer demand created a new concern for housing. As more prospective buyers entered the market, there were fewer homes available for them to choose from. This caused home prices to rise. Now – though the housing market remains strong at a time when global economic uncertainty has slowed the U.S. economy – analysts and industry experts are keeping an eye on housing affordability and what affect it may have on sales in 2016. Sean Becketti, Freddie Mac’s chief economist, says the issue isn’t going to be resolved quickly. “Housing was one of the few bright spots in the economy last year, and we expect continued improvement in 2016,” Becketti says. “The imbalance between demand for housing and the supply of both houses and apartments has supported rapid growth in both house prices and rents. The gap between demand and supply will not be closed any time soon, thus we project continued house price appreciation in 2016.” In short, how quickly that gap is closed will be determined by how quickly new homes are being built and put up for sale in any particular area. Though rising equity will lead to more homeowners putting their homes up for sale, new home construction is the real key to balancing the market and stopping affordability from becoming a bigger issue – which is why home buyers would be wise to keep an eye on the new home market. More here.

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The Homeownership Rate & Millennial Buyers

Since 2004, the homeownership rate has declined from its all-time high of 69.2 percent to 63.4 percent as of the second quarter of this year. And, though the percentage of Americans who own their own home has declined among all age groups, the number of Millennial homeowners is particularly low. Millennials – typically defined as those between the ages of 18 and 34 – have been slow to enter the housing market and many analysts believe it is one of the chief reasons residential real estate has been slow to recover since the housing crash. And though there has been a spike in home sales this year and an increasing number of first-time buyers active in the market, their numbers remain low compared to historical averages. Sean Becketti, Freddie Mac’s chief economist, says student loan debt plays a role but isn’t solely responsible for the lower-than-normal number of young Americans buying homes. “The low homeownership rate among Millennials is still something of a puzzle,” Becketti said. “However, student debt plays a role – higher balances are associated with a lower probability of homeownership at every level of college and graduate education.” But while student loan debt has tripled over the past 10 years, the rate of homeownership among Americans with student loans was just one percent lower than the rate of those without student loans, indicating debt isn’t the only thing holding young buyers back. More here.

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