Len and Leslie Marma | Marshfield Real Estate, Scituate Real Estate, Pembroke Real Estate


Many would-be buyers sitting on the sidelines

Houses sunset

Although homes continued selling at a record pace, existing home sales dropped in June due to low levels of inventory, according to the latest report from the National Association of Realtors.

Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8% to a seasonally adjusted annual rate of 5.52 million in June. This is down from 5.62 million in May.

Despite this monthly decrease to the second lowest level of 2017, the sales pace is still up 0.7% from last year.

“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” NAR Chief Economist Lawrence Yun said. “The demand for buying a home is as strong as it has been since before the Great Recession.”

“Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines,” Yun said. “The good news is that sales are still running slightly above last year’s pace despite these persistent market challenges.”

Home prices continue to rise, increasing 6.5% from last year’s $247,600 to $263,800 in June 2017. This increase surpassed May as the new peak, and marks the 64th consecutive month of annual gains.

Total housing inventory dropped 0.5% from May and 7.1% from June last year to 1.96 million existing homes available for sale. Inventory has now fallen annually for 25 consecutive months. Unsold housing inventory rests at a 4.3-month supply, down from 4.6 months a year ago.

“It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” Yun said. “Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year.”

Properties stayed on the market for an average 28 days in June, up from May’s 27 days but down from 34 days last year.


Millennials, first-time buyers hit the hardest


house case

Existing home sales dropped in June as housing inventory was unable to keep up with the increasing demand for homes.

Housing demand continues to increase, one expert explained, suggesting existing home sales could increase once again later this year.

“There are several factors that are helping to boost housing demand, including: solid job gains, faster household formations, and low mortgage rates, and these suggest that existing home sales should move higher as the year progresses,” Nationwide Chief Economist David Berson said.

One expert put the amount of housing demand into perspective, and explained two possible outcomes for homebuyers due to low inventory levels and high demand.

“There are about as many homes for sale now as there were in 1994, except there are about 63 million more people in this country now than there were then,” Zillow Chief Economist Svenja Gudell said. “A combination of very low inventory and very high demand leads to two main outcomes, neither of which is particularly favorable for stressed home buyers desperate to make a deal.”

“First, those homes that are available to buy are often on and then off the market in a flash, in many cases staying on the market for only a few short days before going pending,” Gudell said. “High demand and low inventory also serves to push prices higher at a rapid clip, as bidding wars break out for those scant few homes available.”

The chart below from Trulia shows how existing home sales in June compare to the pre-recession average.

Click to Enlarge

existing home sales

(Source: Trulia)

“The quickening pace of existing homes sales indicates a robust demand for homes,” Trulia Senior Economist Cheryl Young said. “Steady mortgage rates will continue to encourage demand even in an environment of high prices and little supply. As a result, home buyers are snatching up inventory at rates near equal to the pre-recession peak.”

One economist explained first time homebuyers and other groups looking for affordable housing are the most effected by the inventory shortage.

“This situation primarily affects low to moderate priced home buyers, including millennials, first-time buyers and people of modest means,” realtor.com Senior Economist Joseph Kirchner said. “These groups have had extreme difficulty finding homes and the plummeting sales we have seen for months isn’t showing signs of slowing soon.”


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Americans spend a little more than 25 minutes a day commuting to work. Add in the time that it takes to get home and Americans are spending nearly an hour a day getting to and from work. To improve your commute, you could join city transportation committees and push for roadway upgrades and public transportation expansion. But, it takes time to see the results of those efforts.

Measurable big city residence savings

Moving into a house in a big city is a quicker path to a shorter work commute. Time and auto maintenance savings aren't the only ways that you can save money if you move to a big city. Other money savings that you could enjoy after you take up residence in a big city are:

  • Auto expenses - It's not just auto maintenance costs that you can save if you rent or buy a house in a big city. You can forego a car in many big cities. Instead of paying monthly auto payments and auto insurance, you can pocket that money. You can also use the money to build your savings.
  • College tuition - Respected colleges and universities are located in major towns. As a big city dweller, you can save on college tuition, because you'll qualify for the lower in-state tuition rates.
  • Thrift shops and consignment stores - Forget shopping at upscale stores, designer shops and malls. Take advantage of lower prices at thrift shops and consignment stores.
  • Roommates - Split the cost of renting an apartment or renting a house in a big city. Take in a reliable and a safe roommate. College students living in a big cities regularly take advantage of this housing savings.
  • Exterior house costs - Yards are often smaller in big cities. Save on yard equipment if you take up residence in a big city. For example, you can save on fertilizer, snow blowers and hedge cutters.
  • Higher paying jobs - Fortune 500 companies are often headquartered in big cities. You could earn thousands more a year if you work in a big city.
  • Work from home - Open a home business. Reserve space at a temporary office to conduct meetings with potential clients. Attend networking and social events in the city to find new clients. There are plenty of opportunities to network with financially successful prospects in big cities.

Don't rule out moving to a big city during your house search. Ask colleagues, friends and relatives to recommend realtors that charge reasonable commissions. You could also try out big city living by closing on a rent-to-own home. Try to get it written into your rent-to-own contract that you'll be refunded a certain portion of your rent should you decide not to buy the house. Also, put the price you agree to pay for the house, should you decide to buy, into the written contract.

Continue to save for a down payment while you rent. Another thing to do if you rent,instead of buy a house, in a big city is to take actions that strengthen your credit. Do this and not only can you save by living in a big city, you'll position yourself for greater savings when you do buy a house.




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