Signs are pointing to a new Housing Bubble… will it really happen again, and when?

A recent report by CoreLogic revealed that U.S. home values appreciated by more than 37% over the last five years. Some are concerned that this is evidence we may be on the verge of another housing “boom & bust” like the one we experienced from 2006-2008.

Recently, several housing experts weighed in on the subject to alleviate these fears.

Sean Becketti, Freddie Mac Chief Economist

 “The evidence indicates there currently is no house price bubble in the U.S., despite the rapid increase of house prices over the last five years.”

Edward Golding, a Senior Fellow at the Urban Institute’s Housing Finance Policy Center

 “There is not likely to be a national bubble in the way that we saw the first decade of the century.”

Christopher Thornberg, Partner at Beacon Economics

 “There is no direct or indirect sign of any kind of bubble.”

Bill McBride, Calculated Risk

 “I wouldn’t call house prices a bubble.”

David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices

 “Housing is not repeating the bubble period of 2000-2006.”

A recent article by Teo Nicolais, a real estate entrepreneur who teaches courses on real estate principles, markets, and finance at Harvard Extension School concluded that the next housing bubble may not occur until 2024.

The articleHow to Use Real Estate Trends to Predict the Next Housing Bubble, looks at previous peaks in real estate values going all the way back to 1818. Nicolais uses the research of several economists. The article details the four phases of a real estate cycle and what defines each phase.

Nicolais concluded his article by saying:

“Those who study the financial crisis of 2008 will (we hope) always be weary of the next major crash. If George, Harrison, and Foldvary are right, however, that won’t happen until after the next peak around 2024. 

Between now and then, aside from the occasional slow down and inevitable market hiccups, the real estate industry is likely to enjoy a long period of expansion.”

Bottom Line

The reason for the price appreciation we are seeing is an imbalance between supply and demand for housing. This has created a natural increase in values, not a bubble in prices.

This Month in Real Estate: January 2018

 

Click the image to watch the video:

Home Prices:

The median home price increased to $248,000 in November, which was up 0.8 percent from October and up 5.8 percent from November of last year. The median home price has increased by approximately $13,600 in the past year alone.

Home Sales:

The National Association of REALTORS® reported home sales at a seasonally adjusted annual rate of approximately 5.8 million homes during the month of November. This was an increase of 5.6 percent from October and an increase of 3.8 percent from November of last year.

Home Inventory:

There was a 3.4-month supply of housing inventory in November, which was a 12.8 percent decrease from October. The total number of available homes for sale has decreased by 15.0 percent compared to November of last year.

Keller Williams Journey to the Top

It’s official, in the United States: Keller Williams is #1 in real estate!

Greatness isn’t something that just happens – it is something that is earned. And, it isn’t something that comes from the top down – it is built from the ground up.

While each individual act of greatness builds to form something greater than the sum of its parts, it doesn’t diminish where it started. Today we celebrate the accomplishments made by our Keller Williams family toward greatness.

Keller Williams Realty has surpassed a remarkable milestone in the journey – just one of many that have come before and many that will come after.

In 2013, Keller Williams was #1 in agent count in the United States and North America. And then, in 2015, KW became #1 in the world. In June of 2017, the efforts of a worldwide network of agents carried Keller Williams to become the #1 real estate company by volume (U.S.). And now, as of December 2017- the KW family is also number one by units (U.S.)!

Together – with a strong network of global real estate professionals, Keller Williams has built a company that has imagined a new way of doing business, and The Indigo Skye Group couldn’t be happier to be associated with this great Company!

From all of us at KWRI, we are humbled and honored to be in business with you. Thank you! Thank you! Thank you!

~ Indigo Skye Group – Keller Williams Realty

Will the new tax laws take mortgage deductions out of your pocket??

Wondering if the new tax laws will take deductions out of your pocket? Here are a few ways the bill will affect homeowners and the housing market:

MORTGAGE INTEREST DEDUCTION

Prior to this tax reform bill, homeowners could deduct the interest on their mortgage debt, up to $1 million. The new law caps the interest deduction on mortgage debt to $750,000 for new mortgages. Current homeowners are not impacted by this change.

Additionally, homeowners are no longer allowed to deduct the interest they pay on home equity debt. VERY IMPORTANT: the home equity line of credit (HELOC) deduction is NOT grandfathered. So, individuals with a HELOC will lose the deduction.

PROPERTY TAXES

The new tax bill also curbs how much homeowners can deduct for paying property taxes. The previous tax law allowed taxpayers to deduct state and local income or sales tax and also property taxes.

Property, state and local income taxes face a combined $10,000 deduction limit.

CAPITAL GAINS ON HOME SALES

One tax break that remains in place is a rule that lets homeowners shield some of the profits they make selling their home from capital gains taxes.

For individuals, the break applies up to $250,000 in profits on the sale of a principle residence; for married couples, it is up to $500,000.

 

For more information on how the new tax bill might effect your homeowner deductions contact your CPA or tax professional.

D-FW will be one of the country’s hottest home markets in 2018

North Texas’ hot housing market won’t cool in 2018, according to a new forecast.

The Dallas-Fort Worth area is expected to be one of the top home markets in the country next year, according Realtor.com’s just-released projections. Only Las Vegas will have a stronger home market in 2018, the report predicts.

The D-FW area is forecast to see about a 6 percent increase in home sales and a 5.57 percent hike in median home prices in the year ahead. That’s twice the national growth rate for sales and prices, according to Realtor.com

In Realtor.com’s  2017  forecast, the D-FW market was ranked 48th with home sales estimated to see a 5.09 percent increase and median home prices predicted to grow at 4.13 percent.

Rising home inventories in many U.S. markets will enable home sales to grow.

“Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond,” Javier Vivas, director of economic research for Realtor.com, said in the report.

Next year is likely to see a rise in millennial homebuyers who will account for more than 40 percent of new mortgages.

“Millennials are a driving force in today’s housing market,” Vivas said. “They already dominate lower price home mortgage and are getting close to overtaking older generations for mid- and upper-tier mortgages.”

D-FW will be one of the country’s hottest home markets in 2018

Realtor.com says the biggest uncertainty for next year’s housing picture is the current federal tax code overhaul, which could reduce incentives for homeownership and raise taxes for some homebuyers.

realtor chart on top home markets indigo skye group blog
Article by Steve Brown at the Dallas Morning News.

A Tale of Two Markets: A 6-Month Update

 A Tale of Two Markets: A 6-Month Update

Six months ago, we reported that the mismatch between the type of inventory of homes for sale and the demand of buyers in the US was causing the formation of two markets.

In the starter and trade-up home categories, there were significantly more buyers than there were homes for sale, causing a seller’s market. In the premium, or luxury, home categories, the opposite was true as there was a surplus of these homes compared to the buyers that were out searching for their dream homes, which created a buyer’s market.

According to the National Association of Realtors latest Existing Home Sales Report, the inventory of existing homes for sale in today’s market is at a 4.2-month supply. Inventory is now 6.5% lower than this time last year, marking the 27thconsecutive month of year-over-year decreases.

Looking at the latest report from Trulia, we can see that not much has changed, and in fact, recent natural disasters across the country have made inventory conditions even more dire.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

chart of real estate data indigoskyegroup.com blog

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, which is leading to a highly competitive seller’s market in these categories.

Premium homebuyers, on the other hand, have the best chance of less competition and more inventory of listings in their price range with a 14.7-point surplus, which is creating more of a buyer’s market.

Bottom Line

Real estate is local. If you are thinking about buying OR selling this fall, let’s get together to discuss the exact market conditions in your area.