Top Real Estate Markets for 2020

What are the top real estate markets for 2020?  The folks over at Realtor.com recently put together their forecast for 2020 and they say these are the places where their paychecks will go the farthest and people can enjoy a more laid-back pace of life.  Interestingly, they are mostly medium-size metros in the South and non-coastal West.  Indeed….

“The cities that we expect to do best in 2020 are not necessarily big, fancy, coastal cities, but secondary markets where the job market is still pretty good but housing is affordable,” says Danielle Hale, chief economist of realtor.com.

Realtor.com’s top 10 markets for 2020 are:

  1. Boise City, ID
  2. McAllen, TX
  3. Tucson, AZ
  4. Chattanooga, TN
  5. Columbia,SC
  6. Rochester, NY
  7. Colorado Springs, CO
  8. Winston-Salem, NC
  9. Charleston, SC
  10. Memphis, TN

Click here to read the full story at Realtor.com.

 

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Despite Growing Housing Crisis, Rent Control Makes a Comeback

Protesters in Oregon (via Rental Housing Journal)

With the ever-increasing lack of affordable housing in this country the last thing we need is more rent control – especially in urban areas where across the board demand is high and supply is low.  A recent story in Multi-Housing News reminds us that while rent control “seemed to be on the ropes a few years ago” it started rearing its ugly head in places like New York, California and Oregon – all of which passed new rent control measures in 2019 and likely paving the way for others to follow suit.

“Unfortunately, what passes for action to alleviate the crisis is often shortsighted. Solutions that are more likely to have an impact—such as increased density, a streamlined entitlement process and additional subsidies—are difficult to implement in the current political climate.”

“Of the rent control measures passed to date, New York’s is the most punitive and has had the most immediate impact. The larger problem, though, is twofold: Once in place, it is easier to progressively tighten the screws and make the laws more onerous for property owners. The second problem is that rent control gives the appearance of action and diverts attention from the real solution, which is that we need to build more units that are affordable.”

“Alleviating the affordable housing issue in the U.S. will take commitment and cooperation from builders, municipalities and other stakeholders. The depth of the crisis has spurred action, but the fact that rent control remains the first response for some states is a sign that finding solutions is likely to be an arduous process riddled with bumps.”

Click here to read the full story at MultiHousingNews.com.

 

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When Your Insurer Decides Your Property Isn't Worth the Risk

BY  ON DECEMBER 26, 2019

A recent story in the Wall Street Journal (reposted on Realtor.com) explored about how some California homeowners recently found out their insurers wouldn’t renew their fire-protection policies. They reported that, in response, California announced a one-year moratorium forbidding insurers from dropping customers who live in or adjacent to ZIP Codes affected by this Fall’s wildfires.  In addition, the California Department of Insurance said that over the past four years, insurers have declined to renew policies for 350k California homeowners who live in areas at high risk for wildfires.  They say  the problem isn’t just limited to California and that homeowners on the East Coast are losing coverage as well.  Homeowners  basically have three options (but each one has drawbacks):  1 – Adding disaster-resistant features could make your home more insurable;  2 – Shopping for comprehensive coverage from a different insurer; and, 3 – A state’s FAIR plan, which stands for Fair Access to Insurance Requirements and is considered the insurer of last resort.  Meanwhile, in California:

There are also fears that insurers will ask the state’s Department of Insurance for across-the-board rate increases—or stop doing business in the state altogether to avoid further losses.  “The problem with that is that carriers are not nonprofits. If you strip away their ability to underwrite, they can’t afford to do business,” says Karl Susman, a Los Angeles-based insurance broker.

Click here to read the full story at Realtor.com.

Click here to read the full story at the Wall Street Journal.

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Renters Spent $4.5 Trillion on Housing During 2010s

BY  ON DECEMBER 26, 2019

According to recent report from Zillow, renters spent a cumulative of $4.5 trillion on rent during the 2010s.  In fact, they point out that in 2019, renters spent more than $512 billion on housing – the most of any year in this decade. Not surprising, metro New York renters spent the most in 2019 and throughout the decade, followed by Los Angeles and San Francisco.

“While the total amount of rent paid has increased each year this decade, that trend is by no means immutable,” said Zillow Group Economist Joshua Clark. “With rental appreciation expected to decrease in the coming year and a homeownership rate that has been ticking up over the past few years, a small or even negative change in total rental spending could be in the cards in the early 2020s.”

Metropolitan Area

Total Rent Paid
2010-2019

Total Rent
Paid 2019

1-year Change in
Total Rent Paid

10-year Change
in Total Rent Paid

United States

$4.5 trillion

$512.4 billion

2.9%

46.5%

New York, NY

$506.9 billion

$56.6 billion

3.0%

35.0%

Los Angeles-Long Beach-Anaheim, CA

$345.9 billion

$39.2 billion

1.9%

38.7%

Chicago, IL

$137.7 billion

$15.2 billion

2.9%

35.8%

Dallas-Fort Worth, TX

$104.2 billion

$13.2 billion

3.2%

83.7%

Philadelphia, PA

$80.8 billion

$9.2 billion

2.9%

45.8%

Houston, TX

$90.4 billion

$10.8 billion

1.7%

65.8%

Washington, D.C.

$133.6 billion

$15.1 billion

3.7%

55.6%

Miami-Fort Lauderdale, FL

$106.2 billion

$12.3 billion

2.1%

54.5%

Atlanta, GA

$76.2 billion

$9.8 billion

5.4%

84.5%

Boston, MA

$98.1 billion

$11.3 billion

1.4%

48.7%

San Francisco, CA

$141.1 billion

$16.4 billion

2.3%

56.4%

Detroit, MI

$44.7 billion

$5.0 billion

0.5%

38.2%

Riverside, CA

$63.1 billion

$7.4 billion

5.5%

49.7%

Phoenix, AZ

$63.6 billion

$7.8 billion

7.5%

60.4%

Seattle, WA

$80.0 billion

$10.1 billion

4.1%

71.2%

Minneapolis-St Paul, MN

$44.7 billion

$5.3 billion

3.2%

65.6%

San Diego, CA

$86.2 billion

$10.4 billion

4.9%

53.6%

St. Louis, MO

$27.5 billion

$3.1 billion

4.1%

37.8%

Tampa, FL

$43.9 billion

$5.3 billion

4.0%

61.9%

Baltimore, MD

$42.4 billion

$4.6 billion

-0.1%

36.6%

Denver, CO

$50.7 billion

$6.3 billion

3.4%

88.2%

Pittsburgh, PA

$22.3 billion

$2.5 billion

1.3%

35.3%

Portland, OR

$41.1 billion

$4.7 billion

1.7%

50.8%

Charlotte, NC

$28.1 billion

$3.6 billion

5.5%

80.3%

Sacramento, CA

$40.5 billion

$4.8 billion

4.2%

45.0%

San Antonio, TX

$26.8 billion

$2.9 billion

-0.4%

47.8%

Orlando, FL

$35.7 billion

$4.6 billion

4.3%

83.9%

Cincinnati, OH

$21.7 billion

$2.5 billion

2.4%

43.6%

Cleveland, OH

$23.1 billion

$2.6 billion

3.8%

38.8%

Kansas City, MO

$24.3 billion

$2.9 billion

3.2%

69.1%

Las Vegas, NV

$38.0 billion

$4.5 billion

5.6%

38.3%

Columbus, OH

$24.7 billion

$2.8 billion

1.1%

50.4%

Indianapolis, IN

$21.7 billion

$2.5 billion

2.6%

45.8%

San Jose, CA

$56.3 billion

$6.6 billion

0.4%

65.8%

Austin, TX

$36.7 billion

$4.7 billion

5.1%

92.6%

Virginia Beach, VA

$26.8 billion

$2.8 billion

0.4%

22.5%

Nashville, TN

$23.0 billion

$2.8 billion

2.2%

83.4%

Providence, RI

$22.6 billion

$2.4 billion

2.0%

31.9%

Milwaukee, WI

$22.3 billion

$2.5 billion

4.0%

35.6%

Jacksonville, FL

$18.6 billion

$2.3 billion

4.9%

55.6%

Memphis, TN

$14.7 billion

$1.6 billion

-2.2%

29.7%

Oklahoma City, OK

$14.1 billion

$1.5 billion

-1.1%

38.3%

Louisville-Jefferson County, KY

$11.9 billion

$1.3 billion

-0.6%

38.4%

Hartford, CT

$16.1 billion

$1.8 billion

-1.5%

38.8%

Richmond, VA

$16.0 billion

$1.8 billion

0.1%

40.7%

New Orleans, LA

$16.6 billion

$1.7 billion

-1.5%

24.2%

Buffalo, NY

$12.1 billion

$1.4 billion

3.3%

38.9%

Raleigh, NC

$16.5 billion

$2.0 billion

3.4%

91.0%

Birmingham, AL

$9.5 billion

$1.1 billion

2.3%

35.8%

Salt Lake City, UT

$13.1 billion

$1.5 billion

1.0%

49.1%

Click here to read the full story at Zillow.com.

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Ellie Mae Says Interest Rates Rose for First Time in 2019

BY  ON DECEMBER 24, 2019

According to EllieMae’s latest Origination Insight Report, interest rates rose for the first time in 2019, increasing to 3.97%, up from 3.94% in October.  In addition, the percentage of adjustable rate mortgages also increased for the first time in 2019, rising from 5.0% in October to 5.3%  in November. The percentage of refinances dropped back below 50%, falling from 51% in October to 49% in November.

“Interest rates rose for the first time in 2019, and as expected we are seeing the percentage of adjustable rate mortgages rise and the percentage of refinances taper off,” said Jonathan Corr, President and CEO of Ellie Mae. “Simultaneously, closing rates have reached the highest point in 2019 at 78.6 percent…”

Click here to read the full release at EllieMae.com.

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Relationship Between Public School Enrollment and Housing Prices

BY  ON DECEMBER 24, 2019

One of the key drivers of a home’s sale price is the quality of the local school system.  Interestingly, recent analysis from the National Association of Realtors illustrates the positive relationship between public school enrollment and rising house prices.  They say that over the last 7 years, counties with increased public school enrollment  experienced higher price appreciation, than those that did not.  The graph below shows the positive relationship between public school enrollment and housing prices.  Indeed…

“Across the country, hallways and classrooms are full of activity. More than three-fourths of the school-aged population, 48.2 million students, were enrolled in a public elementary and secondary school in 2018.”

Click on the graph to make it interactive

Click here to read the full report at the National Association of Realtors.

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Existing-Home Sales Down 1.7% in November

BY  ON DECEMBER 23, 2019

The National Association of Realtors is reporting that existing home sales were down 1.7% in November, however both the Northeast and Midwest regions both reported growth.  The median existing-home price for all housing types was $271,300, up 6.2% from November, 2018 – marking 93 straight months of year-over-year gains.  Total inventory at the end of November was 1.64 million units, down approximately 7.3% from October and down 5.7% from one year ago.  Total unsold inventory was at a 3.7-month supply at the current sales pace. Properties remained on the market for around 38 days in November.

Lawrence Yun, NAR’s chief economist, said the decline in sales for November is not a cause for worry. “Sales will be choppy when inventory levels are low, but the economy is otherwise performing very well with more than 2 million job gains in the past year,” said Yun.

Click here to read the full release at the National Association of Realtors.

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SECURE Act Signed into Law

BY  ON DECEMBER 23, 2019

Just before slipping (slithering?) out of town for their annual Christmas break, Congress passed (and subsequently signed by the President) the $1.4 trillion Further Consolidated Appropriations Act that will fund the federal government for the rest of FY 2020.  However, sneakily tucked into that measure was something that will cause investors to take notice:  the SECURE Act (Setting Every Community Up for Retirement Enhancement).   The bill had already passed the House back in April, 2019 but had been languishing in the Senate until it was amended into this fast-tracked funding bill. National REIA partner Equity Trust pointed out that “the bill will affect IRA Required Minimum Distributions and inherited IRAs, among other aspects.”

Indeed…Yahoo Finance has pointed out some key provisions:

  • Your RMDs Will Start age Age 72, not 70 ½
  • You Can Contribute to Your Traditional IRA After Age 70 ½
  • You’ll Have to Pay Taxes on Inherited IRAs Sooner (eliminates stretch IRAs)
  • You May See a New Annuity Option in Your 401(k)

Click here to read the full story on Yahoo Finance.

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Housing Starts & Building Permits Up in November

BY  ON DECEMBER 23, 2019

The U.S. government is reporting that privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1,365,000.  This figure is 3.2% above October’s revised estimate of and is 13.6% higher than November.  Single‐family housing starts in November were at a rate of 938k, which is 2.4% higher than October’s revised figure.  November’s rate for units in buildings with five units or more was 404k.  Privately‐owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,482,000.  This figure is 1.4% higher than October’s revised rate and is 11.1% higher than November, 2018.  Single‐family authorizations in November were at a rate of 918k, which is 0.8% higher than October’s revised number. Authorizations of units in buildings with five units or more were at a rate of 524k in November.

Click here to read the full report at the U.S. Census Bureau.

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ABODO Says One-Bedroom Rents Rise at Year-End

BY  ON DECEMBER 4, 2019

National apartment listing site ABODO recently reported that the median nationwide rent price for one-bedroom units in November was $1,078 and $1,343 for two-bedrooms.   ABODO uses over 1 million listings across the United States to calculate the median 1-bedroom rent price by city, state, and nation and then track the month-over-month percentage change. To avoid small sample sizes, they restrict their analysis to cities meeting minimum population and property count thresholds. Be sure to check out their extensive city list.

Click here to read the full report at ABODO.com.

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