February 2018 Newsletter

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As February ~ the month of love~ comes to a close, the AARC wants you to know that we love having you at the heart of our organization. Whether you’re a current or future member, annual conference attendee, or just plain friend, you are vital to our success.

A big thanks to Andy Windham of Crawford Strategy for hosting our February webinar – and thank you to all who participated! Stay tuned for details on the next webinar opportunity.

An index of national house prices is showing a 6.2% year-to-year increase in November.  The S&P/Case-Shiller index is a rolling three-month average of house prices, and the November reading was nearly the same as the 6.1% annual increase in October. The highest year-to-year gains were in Seattle, Las Vegas, and San Francisco, which had house prices rise by 12.7%, 10.6%, and 9.1% respectively. Source: S&P Dow Jones

New home sales for January were reported at 593,000, far below the consensus forecast, and 7.8% below a revised December rate of 643,000.  Analysts note January is usually one of the weakest months of the year for new home sales, on a not seasonally adjusted (NSA) basis – and poor weather this year might have impacted sales a little more than usual. It’s too early to blame higher interest rates, or a negative impact from the new tax law, as the cause of slower sales – but February and March data will help sort it out. Source: Census Bureau

In the next few weeks, we’ll spring forward and celebrate the first day of Spring. The flowers and trees have begun to bloom and just like tending the garden, we want you to help us continue to grow!


Rachel Baker Chair, The AARC

AARC April Webinar

Rudolph2017eJoin the AARC team and your fellow members for our April Webinar.  Benjamin Rudolph of Relevance Advisors will present a timely and informative webinar for anyone wanting to learn more about Interactive & Search Engine Marketing.  The webinar will be April 25th at 2:30pm (Eastern) – Click to learn more and sign-up, April Webinar

The Shifting Search Landscape – Driving ROI from Pay Per Click

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The search marketing landscape is constantly evolving, making it challenging for marketers to keep up with the changes.  However, by understanding the capabilities within Google AdWords, marketers can target a specific audience with a specific message at a specific time on a specific device.  Setting up targeting by device is important because over half of all searches queries come from mobile devices.

In this webinar, attendees will learn how a multi-location senior living community provider changed its strategy to drive web traffic to underperforming locations, track calls, leverage local listing information, and measure in-person visits to its facilities.  At the end of this webinar, you will have a better understanding of:

This webinar will be tactical, so you will see specific examples of where to go in the AdWords interface to execute these strategies.

The webinar will be April 25th at 2:30pm (Eastern) – Click to learn more and sign-up, April Webinar

Housing starts soar in January, and building permits hit 10½-year high

Jeffry Bartash & Andrea Riquier, MarketWatch.com | February 17, 2018

The numbers: Construction on new homes in the U.S., as measured by housing starts, jumped almost 10% in January to an annual rate of 1.33 million. That’s the second highest level since the recession following the financial crisis and it easily exceeded the 1.24 million forecast of economists polled by MarketWatch.

Permits to build new homes also hit a 10½-year high, rising 7.4% to an annual rate of 1.4 million.

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What happened: Housing starts bounced back in January after a sharp decline in December tied to poor weather.

Building increased in the North, South and West. And two-thirds of the new units on which construction began were single-family homes, the bread-and-butter of the housing market.

Big picture: Housing starts are 7% higher compared to one year ago, reflecting a vibrant real estate scene that shows no sign of slacking off against the backdrop of the strongest economy in years.

See Also
Are We Heading Toward Another Housing Bubble?
The biggest problem? Demand for housing has continued to outstrip the number of properties available for sale, pushing prices higher and frustrating many would-be buyers.
Builders have responded in part by steadily increasing construction of single-family homes, a sign they have confidence in the economy. Stand-alone homes are almost always sold, rather than rented.

Market reaction: U.S. stocks opened higher on Friday. Such strong demand for housing has buoyed shares of big publicly-traded builders. The iShares U.S. Home Construction ETF ITB, +0.20% is up nearly 38% over the past 12 months, more than double the gain for the S&P 500 index SPX, +1.18% .

What they’re saying: “With home ownership turning higher for the first time in 13 years, a record-low number of single-family homes on the market, and builders more upbeat than during the housing bubble, residential construction should track higher regardless of what Mother Nature throws at it,” said Sal Guatieri, senior economist at BMO Capital Markets.

Stephen Stanley, chief economist at Amherst Pierpont Securities, noted that most of the starts gain came from multi-family buildings.

“The more reliable single-family starts figure posted a decent gain of 3.7% to 877,000 in January, in between the November blowout reading of 946,000 (which likely reflected a catch-up after hurricanes disrupted construction in September and October) and December hangover reading of 846,000,” Stanley said.

“To put the figure more in perspective, the 2017 average for single-family starts was 849K, so January’s level represents a continuing solid uptrend, especially considering that weather may have held activity down somewhat last month. The single driving fundamental in the housing market remains that demand is outstripping supply, so upside surprises on housing starts are just what the doctor ordered.”

Tax Reform Law Will Benefit Builders, Small Businesses

J.P. Delmore, National Association of Home Builders | January 19, 2018

The landmark tax reform legislation took effect for the tax year starting Jan. 1, 2018. After significant improvements made during the legislative process, and due to the robust engagement efforts of NAHB and its membership, NAHB supports this final tax legislation.

The changes made to the tax code will help middle-class families, maintain the nation’s commitment to affordable housing and ensure that small businesses are treated fairly relative to large corporations.

Watch video highlights of NAHB’s influence during the tax reform debate.

  • Screenshot for video highlights of NAHB’s influence during the tax reform debate.


    Supports Middle-Class Families

    The legislation supports the American Dream of homeownership and strengthens opportunities for Main Street home builders to add much-needed housing inventory to the market.

    • Retains the mortgage interest deduction and the deduction for second homes, but reduces the mortgage interest cap from $1 million to $750,000.
    • Allows taxpayers to deduct up to $10,000 of state and local taxes, including property taxes and the choice of income or sales taxes.
    • Maintains existing law that allows home owners to exclude up to $250,000 (or $500,000 for married couples) in capital gains on the profit from the sale of a home if they have lived in the house for two of the last five years.
    • Retains seven tax brackets, with rates ranging from 10% to 37%. This will provide tax relief for individuals and small businesses and represents a tax cut for most taxpayers.

    Protects Affordable Housing Options

    The new tax law retains private activity bonds (PABs), which will enable the Low-Income Housing Tax Credit to maintain its effectiveness as the most indispensable tool for the production of affordable housing. Without PABs, we would face the loss of more than 788,000 affordable rental units over the next decade.

    Expands Economic Growth

    NAHB economists predict that the new law will boost GDP growth over the next 10 years, while also rewarding work and promoting labor supply and wage growth.

    Importantly, the bill helps address the housing market’s severe inventory shortage with its reformed rule for businesses, allowing for greater investment and growth. This will help small builders buy land, obtain financing and build more homes over the next 10 years.

    A healthy housing industry means more jobs and a stronger economy. Fully 15 percent of the U.S. economy relies on housing and nothing packs a bigger local economic impact than home building. In fact, three jobs are created with the construction of each new single-family home.

    Small business provisions in the tax bill include:

    • Retains existing carried interest rules, but assets must be held for three years.
    • Allows most taxpayers with pass-through income to deduct 20% of that income based on wages or on wages plus a capital element.
    • Provides real estate businesses a choice between the following:
      • Limiting their interest deduction to 30% of net income without regard to depreciation, amortization, and depletion. This distinction makes the limitation less restrictive than one based on adjusted gross income.
      • A 100% deduction for business interest, but with certain tradeoffs.
    • Preserves the benefit for real estate investors to make tax-free exchanges of property, commonly referred to as “like-kind” exchanges.
    • Gives the taxpayer the choice of taking 27.5- or 30-year multifamily depreciation, depending on how they elect to treat their business interest.

    NAHB is providing this information for general guidance only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question. None of this tax information is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

Fourth Quarter Home Prices Up 5.3 Percent; Nearly Two-Thirds of Markets at All-Time High

Adam DeSanctis , NAR.com |
February 13, 2018

WASHINGTON (February 13, 2018) — An uptick in existing-home sales in the final three months of 2017 pulled down housing inventory to an all-time low and kept home-price growth at its recent robust pace, according to the latest quarterly report by the National Association of REALTORS®.

Home UptickThe national median existing single-family home price in the fourth quarter was $247,800, which is up 5.3 percent from the fourth quarter of 2016 ($235,400). The median price during last year’s third quarter climbed 5.6 percent from the third quarter of 2016.

Single-family home prices last quarter increased in 92 percent of measured markets, with 162 out of 177 metropolitan statistical areas1 (MSAs) showing sales price gains in the fourth quarter compared to a year ago. Twenty-six metro areas (15 percent) experienced double-digit increases (11 percent in the third quarter), and 18 metros eclipsed their previous peak sales price. Overall, home prices are now at their all-time high in 114 markets (64 percent).

Lawrence Yun, NAR chief economist, says 2017 capped off another year where home prices in most markets ascended at a steady clip amidst improving sales and worsening inventory conditions. “A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” he said. “Remarkably, home prices have risen a cumulative 48 percent since 2011, yet during this same timeframe, incomes are up only 15 percent. In the West region, where very healthy labor markets are driving demand, the gap is even wider.”

Added Yun, “These consistent, multi-year price gains have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation; however, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

Total existing-home sales2, including single family and condos, increased 4.3 percent to a seasonally adjusted annual rate of 5.62 million in the fourth quarter from 5.39 million in the third quarter, and are 1.3 percent higher than the 5.55 million pace during the fourth quarter of 2016.

At the end of the fourth quarter, there were 1.48 million existing homes available for sale3, which was 10.3 percent below the 1.65 million homes for sale at the end of the fourth quarter in 2016. The average supply during the fourth quarter was 3.5 months – down from 4.2 months in the fourth quarter of last year.

The national family median income rose to $74,4924 in the fourth quarter, but overall affordability still edged downward compared to a year ago because of the combination of rising mortgage rates and home prices. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $55,585, a 10 percent down payment would require an income of $52,659, and $46,808 would be needed for a 20 percent down payment.

“While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally,” said Yun. “In areas where homebuilding has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”

The five most expensive housing markets in the fourth quarter were the San Jose, California metro area, where the median existing single-family price was $1,270,000; San Francisco-Oakland-Hayward, California, $920,000; Anaheim-Santa Ana-Irvine, California, $785,000; urban Honolulu, $760,600; and San Diego-Carlsbad, $610,000.

The five lowest-cost metro areas in the fourth quarter were Cumberland, Maryland, $84,600; Youngstown-Warren-Boardman, Ohio, $90,200; Decatur, Illinois, $100,000; Binghamton, New York, $108,900; and Wichita Falls, Texas, $110,400.

Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $237,500 in the fourth quarter, up 7.0 percent from the fourth quarter of 2016 ($222,000). Eighty-four percent of metro areas showed gains in their median condo price from a year ago.

Regional Breakdown

Total existing-home sales in the Northeast jumped 10.1 percent in the fourth quarter but are 0.4 percent below the fourth quarter of 2016. The median existing single-family home price in the Northeast was $268,100 in the fourth quarter, up 4.2 percent from a year ago.

In the Midwest, existing-home sales rose 6.0 percent in the fourth quarter and are 2.3 percent above a year ago. The median existing single-family home price in the Midwest grew 7.2 percent to $193,800 in the fourth quarter from the same quarter a year ago.

Existing-home sales in the South increased 3.8 percent in the fourth quarter and are 1.8 percent higher than the fourth quarter of 2016. The median existing single-family home price in the South was $221,600 in the fourth quarter, 5.0 percent above a year earlier.

In the West, existing-home sales in the fourth quarter were at an annualized rate of 1.23 million (unchanged from the third quarter), up 0.3 percent from a year ago. The median existing single-family home price in the West increased 7.2 percent to $374,400 in the fourth quarter from the fourth quarter of 2016.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE: NAR releases quarterly median single-family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local REALTORS® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, REALTORS® are advised that for business purposes, local data from their association may be more relevant.

Data tables for MSA home prices (single family and condo) are posted at https://www.nar.realtor/research-and-statistics/housing-statistics/metropolitan-median-area-prices-and-affordability . If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of REALTORS®.

1 Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/List4.txt (link is external).

Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

2 The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing.

3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

4 Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 3.9%.

NOTE: Existing-Home Sales for January will be released February 21, and the Pending Home Sales Index for January will be released February 28; release times are 10:00 a.m. ET.