February 2020 Newsletter

You can work as much or as little as you want.  You can pursue hobbies, and a job doesn’t keep you tethered to a place where you have to shovel snow (unless you like to!).  You can spend lots of time with old friends, and there are abundant opportunities to make new ones.

So why does “retirement” get a bad rap?

Yes, yes, nobody likes the thought of getting old, and – perhaps more poignantly – the thought of being PERCEIVED as old.  But our society has run away from the term “retirement” to an almost silly degree – I challenge you to find references to retirement in the marketing efforts of AARP, the industry’s “big dog” with nearly 40 million members, all aged 50+.  Love the branding effort where their “RP” is positioned as “Real Possibilities,” not (gasp!) Retired Persons.

We are the American Association of Retirement Communities, and we’ve been around long enough to remember when the “R” word wasn’t taboo.  We don’t have the budget to do a branding campaign for Retirement (heck, the AARP doesn’t appear to either…), but we do have members and affiliates who are one the forefront of creating places and programming for folks of a certain age.  While society may have disdain for “Retirement Communities,” the concept of “leaving one’s job and ceasing to work” and finding “a feeling of fellowship with others, as a result of sharing common attitudes, interests, and goals” (definitions lifted from Google) sounds pretty darn good.  Especially since I shoveled snow off my driveway before work this morning.

The AARC has tools and networking opportunities for professionals seeking to attract retirees to their community.  Let us know how we can help you capitalize them!

Bill Houghton
Chair, The AARC

AARC Annual Conference

“2020 – Focused on The Future”
November 11 – 13, 2020

Our AARC Board of Directors is excited to announce the 2020 conference location: Myrtle Beach South Carolina.  Every year, we strive to put on a high-energy, high quality conference and Myrtle Beach is a destination for all to enjoy!

The Annual Conference of The American Association of Retirement Communities is a key spot on the calendar for decision-makers in the business of retiree attraction.  Economic development, marketing and research leaders have convened at The AARC’s annual event for over two decades. Past conference attendees have included Mayors, City Planners, Chamber and Convention Bureaus and Developers from over 20 states. We strongly believe that our conference is only as good as our presenters and speakers so we are always in search of the industry’s top minds and we would love for you to be a part of 2020’s success.

More information coming soon!

Existing-Home Sales Drop 1.3% in January

But sales are up from one year ago

Quintin Simmons, National Association of Realtors | February 21, 2020

WASHINGTON (February 21, 2020) – Existing-home sales declined in January, continuing a fluctuating pattern of monthly increases and declines, according to the National Association of Realtors®. Significant declines in the West region dragged down nationwide numbers, with the other three major U.S. regions reporting marginal – or no – changes last month.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year, up 9.6% from a year ago (4.98 million in January 2019).

Lawrence Yun, NAR’s chief economist, finds the outlook for 2020 home sales promising despite the drop in January. “Existing-home sales are off to a strong start at 5.46 million.” Yun said. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”

The median existing-home price2 for all housing types in January was $266,300, up 6.8% from January 2019 ($249,400), as prices increased in every region. January’s price increase marks 95 straight months of year-over-year gains. “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun said.

Total housing inventory3 at the end of January totaled 1.42 million units, up 2.2% from December, but down 10.7% from one year ago (1.59 million). The housing inventory level for January is the lowest level since 1999. Unsold inventory sits at a 3.1-month supply at the current sales pace, up from the 3.0-month figure recorded in December and down from the 3.8-month figure recorded in January 2019.

NAR’s latest quarterly report found that an overwhelming majority of metro areas experienced price gains while witnessing very minor increases in inventory in the final quarter of 2019.

Properties typically remained on the market for 43 days in January, seasonally up from 41 days in December, but down from 49 days in January 2019. Forty-two percent of homes sold in January 2020 were on the market for less than a month.

First-time buyers were responsible for 32% of sales in January, up from 31% in December and up from 29% in January 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.

“It is good to see first-time buyers slowly stepping into the market,” Yun said. “The rise in the homeownership rate among the younger adults, under 35, and minority households means an increasing number of Americans can build wealth by owning real estate. Still, in order to further expand opportunities, significantly more inventory and home construction are needed at the affordable price points.”

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in January, equal to December 2019 and up slightly from 16% in January 2019. All-cash sales accounted for 21% of transactions in January, up from 20% in December but down from 23% in January 2019.

Distressed sales3 – foreclosures and short sales – represented 2% of sales in January, unchanged from December 2019 and down from January 2019.

Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in January were Fort Wayne, Ind.; San Francisco-Oakland-Hayward, Calif.; Sacramento-Roseville-Arden-Arcade, Calif.; Lafayette-West Lafayette, Ind.; and San Jose-Sunnyvale-Santa Clara, Calif.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 3.62% in January, down from 3.72% in December. One year ago, the commitment rate was 4.46%.

“We are hopeful and also confident that home sales will improve this year,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “NAR has and will continue to do its part in the industry, reiterating the social and economic benefits of homeownership and advancing conversations surrounding housing affordability concerns.”

Single-family and Condo/Co-op Sales

Single-family home sales sat at a seasonally-adjusted annual rate of 4.85 million in January, down from 4.91 million in December, but up 9.7% from a year ago. The median existing single-family home price was $268,600 in January 2020, up 6.9% from January 2019.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in January, down 1.6% from December but 8.9% higher than a year ago. The median existing condo price was $248,100 in January, an increase of 5.7% from a year ago.

Regional Breakdown

Compared to last month, January sales increased in the Midwest and the South, while year-over-year sales are up in each of the four regions. Median home prices in all regions increased from one year ago, with the Northeast region showing the strongest price gain.

January 2020 existing-home sales in the Northeast saw no movement, recording an annual rate of 730,000, which is up 7.4% from a year ago. The median price in the Northeast was $312,100, up 11.5% from January 2019.

Existing-home sales increased 2.4% in the Midwest to an annual rate of 1.29 million, which is up 8.4% from a year ago. The median price in the Midwest was $200,000, a 5.4% increase from last January.

Existing-home sales in the South grew 0.4% to an annual rate of 2.38 million in January, up 11.7% from a year ago. The median price in the South was $229,900, a 6.3% increase from this time last year.

Existing-home sales in the West fell 9.4% to an annual rate of 1.06 million in January, an 8.2% increase from a year ago. The median price in the West was $393,800, up 5.2% from January 2019.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

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For local information, please contact the local association of Realtors® for data from local multiple listing services (MLS). Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

NOTE: NAR’s Pending Home Sales Index for January is scheduled for release on February 27, and Existing-Home Sales for February will be released March 20; release times are 10:00 a.m. ET.

Will the Market Get the New-Home Supply It Needs?

At the International Builders Show, economists predict greater opportunities for construction in 2020

Buck Wargo, Realtor.com | January 27, 2020

The lagging pace of new-home construction has been a big contributor to the national inventory shortage, but a homebuilding resurgence—of sorts—could open up more options for buyers this year, economists predicted during January’s International Builders’ Show in Las Vegas. Strong buyer demand, coupled with solid job growth and low mortgage rates, helped builders boost productivity in 2019, a trend that is expected to continue through 2020.

At the trade show, the National Association of Home Builders released its 2020 forecast, calling for 3% growth this year in single-family starts (to about 920,000 units) and 1% growth in 2021. NAHB predicted that new-home sales will increase 2.5% to 708,000 this year, which would mark the first time such sales surpassed 700,000 since 2007.

Still Not Enough

The projected increases still fall shy of meeting the demand for new homes, economists said. A chain reaction is occurring in the market: Fewer seniors are downsizing, which limits options for move-up buyers, forcing them to stay put and starve the market of the starter homes that first-time buyers are desperately seeking. Currently, there is an historically low 1.7 million homes on the market. “Given the historically low number of homes for sale relative to the growing number of households, there is only one outlet to meet demand: new-home construction,” said David Berson, senior vice president and chief economist at Nationwide Economics. “So 2020 should be a good year for new-home construction.”

Current national demographics support 1 million to 1.1 million newly built housing units per year, said NAHB Chief Economist Robert Dietz. When factoring in multifamily construction—which the NAHB predicts will reach 383,000 units—total housing starts are expected to hit 1.3 million units this year, up more than 2 percent from last year. However, that remains well below the average 1.5 million units that were constructed annually from 1960 to 2007, Dietz said. “Builders are still underbuilding as they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers, and a lack of buildable lots,” he said. “These affordability headwinds are impeding more robust construction growth.”

Sales Expected to Rise

Despite challenges in the new-home market, the national homeownership rate, which reached 65% at the end of 2019, is expected to continue climbing but remain below 2004’s all-time high of 69.2%, according to the NAHB. Dietz said he expects existing-home sales to increase 3% this year and predicted that residential remodeling will jump 1.2%. “The housing market is entering the year with a great deal of momentum from 2019,” said Frank Nothaft, chief economist at CoreLogic. “This is the first time in post–World War II history that unemployment and mortgage rates are both below 4%. That will help fuel demand.”

The South and West—which have affordable markets that attract jobs and are more conducive to outdoor amenities—will lead new-home growth in 2020, Nothaft said. Dallas and Houston are leaders, averaging 30,000 new-home sales between October 2018 and September 2019. Atlanta, Phoenix, and Austin, Texas, which all averaged at least 15,000 new-home sales in the same period, follow closely behind, Nothaft said.

Here are other market dynamics you should be aware of this year.

  • Price hikes. National home prices are projected to rise 4.8%, up from 3.6% in 2019, Nothaft said. Rents are likely to increase 3%, he added.
  • Equity. The average homeowner gained $5,300 in equity during the 12-month period ending in September, Nothaft said. Idaho, Wyoming, and Utah led the pack with an average gain of more than $20,000.
  • Type of home sale. Nationally, only 2% of entry-level sales in the fourth quarter of 2019 were newly built, with Phoenix and Dallas being the only markets approaching 5%. In the same time period, the luxury market accounted for 12% of new-home sales, and the custom-home market reached 18%—the highest share since the second quarter of 2008, Nothaft said.
  • Square footage. Home sizes are getting smaller, as seniors and young buyers desire less space to achieve affordability. The median home size fell from more than 2,500 square feet at the end of 2014 to less than 2,300 square feet in 2019, according to NAHB.
  • Financing. Some 64% of new-home sales last year were financed using conventional conforming loans; 17% were FHA loans; 12% were VA loans; and 6% were jumbo loans, Nothaft said.

Remodeling Activity Shows Promise

The NAHB said interest in remodeling remains high, and homeowners likely will spend more than the $158 billion they spent on home improvement projects in 2019. However, costs and labor shortages are making it difficult for contractors to meet demand—just like in the new-home market. “We’re not only seeing more requests for proposals because the housing stock is limited but also for aging-in-place work because boomers want to stay in their homes longer,” said Nick Scheel, a remodeler from Spokane Valley, Wash., who spoke at the conference. “Because people are choosing to stay in their homes, the demand and backlog for remodeling remains high.”

Buck Wargo is a real estate reporter and writer based in Las Vegas.