The National Association of REALTORS projected the following for 2017:
As of September, existing home sales were at 5.39 million, which is below the yearly projection but is an increase of 0.7% above this August. National reports show that existing home sales have fluctuated monthly since a strong start in January. The median home price of $245,100 was up 4.2% over last year, which is 0.2% better than predicted. September’s price increase is the 67th straight month of year-over-year gains. Interest rates rose through the winter and spring and fell through the summer months. According to Freddie Mac, the 30-year mortgage rate is currently 3.94%, up 0.47% from last year. It does not appear to be able to reach the predicted rate of 4.6% by year’s end. This is good news since the Federal Reserve has threatened to increase interest rates over the past two years. As of September, employment rates look relatively stable year to year.
Hampton Roads Market
It has been a good year for the Hampton Roads economy. According to Old Dominion University Economics Professor, Robert McNab, Hampton Roads has seen positive signs of growth in all the major areas. Defense spending has increased slightly, and Congress is expected to pass a bigger defense budget which will increase jobs in 2018. The port has seen an increase in volume along with the housing market and ongoing developments in Downtown Norfolk. These are all positive factors that will continue to grow our economy.
Active listings for the Hampton Roads area, as of September, were down 4.74% to 12,879. The limited supply increased the median list price by 6.62% year-to-year. Year-to-date sales for 2017 are up 3.22% over last year-to-date, while the median sale price is up 2.27% and days on market are down 7.5% year-to-year.
New construction can be seen throughout Hampton Roads. In September, new construction listings were up 8.33% over last year, and the median list price was up 4.08%. Sales are continuing to remain strong compared to last year. The change in units is less than a 1% increase, and the median sale price is less than a 1% decrease. Therefore, the number of sales and sale prices are relatively stable year-to-year.
Hot Real Estate Topics
Flood insurance was a big topic this year with the aftermath of Hurricane Matthew and the impact of rising sea levels. After Hurricane Matthew, many neighborhoods that had never seen flooding before were severely damaged and are still recovering one year later. This year Hurricanes Jose and Maria impacted the area. According to CoreLogic, Hampton Roads is among the top five areas in the country at a high risk for storm surge. You would think that with all the recent damage and emphasis on flooding in the area that flood insurance policies would be the norm for most homeowners; however, this is not the case. Over the past five years, fewer homes in the area are covered. Homeowners with federally insured mortgages must carry at least a national flood insurance plan if they are in a flood zone. The homeowners without a federally backed mortgage are the ones letting their policies lapse because of the increasing premium rates. As more people drop their policies, fewer are paying into the fund to cover losses like what we have just seen in Texas and Florida. The large losses and fewer policies will create a burden for those currently paying into the fund. December will determine the future of FEMA since the government must decide how the agency will be funded.
This year was a strong year for the local economy and real estate market. Housing inventory is low, which increased sale prices. Changing interest rates had no impact, and new construction is a player in the market but has remained stable over the past three years. Looking at the trends since 2016, I would predict that 2018 will be similar to the past two years with low inventory, short market times, and stable to increasing sale prices.
This year the housing market was different than what was
forecasted. A review of Rein’s monthly market reports show that inventory has
steadily declined since the beginning of the year which started at the lowest
point since 2013. Sales have remained strong throughout the year with the best
months being February and May while July had a large drop year-over-year. The
drop in July was not in Hampton Roads alone, in fact the Hampton Roads market
has followed the national market with low inventory and low sales in July. Redfin
is attributing the July sales to a month of fewer business days due to five
full weekends and a national holiday. New construction has continued to be
strong since May with double digit growth and the median sale price has
remained relatively stable since April which had a 4% increase year-to-year.
The mild winter may have helped the spring market and May had the lowest state
unemployment rate since 2008.
Although the Federal Reserve threatened to raise mortgage
rates this year, we have actually seen a decline of approximately 0.5% since
January with rates below 4%. Many of the foreign economies are experiencing
slow growth which is keeping our rates low. If China, Japan, and Europe’s
economies turnaround, our rates may rise a noticeable level but until that
happens, economists don’t expect to see a significant change. We may continue
to see rates near 4% for a while.
While the market has remained strong and rates low, the
homebuyer market has seen a change in homebuyers. According to NAR, in this
past year, 17% of homebuyers were single women, which was twice the rate of
single men. Many female buyers of single family homes are in their 40’s or
older and are divorced or widowed. The report also showed that single
millennial women are buying condominiums.
This July REIN implemented single sign-on technology to
allow easy access to all the necessary transaction tools. You no longer have to
recall numerous websites and passwords to process a single transaction. This
should speed up and simplify the transaction process. In October zipLogix
Products were replaced by Instanet Solutions to also simplify the transaction
Matrix is now the sole MLS system. This decision was made by
the product vendor who is no longer going to support the technology behind
Fusion. The REIN staff was busy working with the vendor to create reports and
functional processes to make the transition seamless while offering all the
tools that we need to run our businesses. Change can be painful for some, but
in a world of changing technology and data access it is important that we stay
up-to-date to effectively service our clients.
Since this year’s market has been so strong it is believed
that it will remain strong into next year. Rates may increase to 4.5% but this
should not have an impact on the market. It will still be difficult for first
time home buyers to qualify for a mortgage. If inventories increase,
appreciation should slow down and keep prices at an affordable level, allowing
many first time home buyers to qualify for a loan.
Energy conservation, high performance homes, and sustainable
products are not a major concern for homeowners in the Hampton Roads area. Most
believe the cost far outweighs the return for these items. That belief could
not be further from the truth. There are simple things that can be done around
your existing house to improve your home’s efficiency and help sustain the
environment. By implementing these features, a homeowner will save money and
have a healthier and more comfortable home.
Energy efficient upgrades that can easily be done include;
High-Performance windows with protective coatings and improved frame
assemblies, also known as thermal or Low-E, allow in light but resist a
temperature transfer. An annual savings of $126 - $465 can be seen when
replacing single pane windows. This is an easy retrofit when it is time for an
Insulation should be installed in the floors, walls, and attics. Most standard
built homes have fiberglass insulation in these areas. Over time the fiberglass
will sag and will no longer be effective. Remove the fiberglass and use spray
foam insulation to seal cracks and holes then replace the old insulation with
new fiberglass or rigid foam insulation, which has the highest R-value and can
be used more effectively than fiberglass. Fiberglass and blown-in insulation
will need to be replaced or added to over time to maintain the efficiency.
HVAC/Energy - All
of the new heat pumps are more energy efficient than the prior models. They are
quieter, can reduce humidity which improves comfort, and require less maintenance.
Upgrading your heat pump when necessary will show an immediate energy savings.
Sealing cracks and holes in the ‘envelope’ of the home and in the duct system,
it will reduce drafts, moisture, dust, pollen, and noise. In a typical home,
about 20% of air is lost in the duct system. Tightly sealed and properly
insulated ducts can save a homeowner $120+/year.
- Water savings can be found by using low flow toilets and faucets. These
fixtures use approximately half the water as standard fixtures and costs about
Air Quality - Good
air quality is a big factor in homes and one that goes unnoticed most times.
Many people suffer from allergies and sinus issues. Have you ever thought that
it was because of your home?
If you are not sure where to start or would like to know how
efficient your home currently is, get a home energy audit. The audit will show
how much energy your home consumes and will tell you what you can do to improve
the efficiency. There are several companies in this area that do energy audits.
To learn more about the audits, go to www.energy.gov/articles/energy-saver-101-infographic-home-energy-audits.
The real estate market is constantly changing, so it is important to stay up-to-date on regulations and procedures. The best way to do this is through education. Failure to take continuing education could cause the loss of your license. Take seminars and classes on relevant topics that can help you grow professionally or personally to earn a designation or certificate or review an area in which you struggle. Locally, the Hampton Roads Realtors Association offers training each month, and each Council offers presentations on relevant topics.
A common concern is there is not enough time to take classes. As busy as we are, it is important to invest in yourself to remain successful. Numerous options are available for continuing education. Most schools and organizations offer webinars, online classes, self-study programs, and live classes, which are usually the most beneficial. Another option is to attend a professional conference in which you are interested. Most professional conferences offer continuing education. VAR’s Annual Convention is September 19 – 21, offering various continuing education seminars and keynote speakers. In November, NAR is hosting the REALTORS Conference & Expo in Orlando. Classes and programs are offered throughout this four-day conference. Also in November, VAR is hosting the Property Management Conference in Charlottesville. This conference has seminars and classes with 25 CE credits offered.
To remain a licensed professional, continuing education is necessary; however, it need not be a hindrance. Use education to your advantage. Learn a new process or review a topic you have not taken in a while, such as contract writing or escrow accounts. Although these are common items in every transaction, a class may point out areas completed incorrectly or left incomplete inadvertently. It is easy to develop a habit, whether good or bad; the bad habits need to be corrected.
A leader leads a group or organization. To be a leader, you need to be willing to take control and direct others. Many agents believe they do not need to be leaders, but they just need to do their jobs well. It is easy to concentrate on your own business and not worry about others. The problem with this philosophy is that if an experienced agent does not lead and train new agents, the industry will not grow. Every experienced agent today had/has a mentor who helped them get to where they are. In the real estate industry, each transaction can be different. An agent grows through their experiences; many of which cannot be taught in a classroom. If an effective leader assists in the process, it can be a successful learning experience.
Being a leader has its benefits. An authentic leader will build meaningful relationships. Your work will reflect your skills and values. Leadership can build strong relationships. The support from others will typically lead to success. A leader will strengthen their self-awareness by knowing their strengths, and weaknesses. When you invest in someone, they will invest in you. It is a win - win situation. Good leadership reaps higher levels of productivity, which creates profits for all involved.
A good leader understands that success is more than themselves and their team. Giving back is a great leadership example. Lead through organizational boards and volunteer positions. Volunteering in the community is rewarding both personally and professionally. A good leader knows when to lead and when to follow. If you make it a habit of surrounding yourself with others who are smarter than you, you will continuously grow, which will give you the ability to be a more effective leader.
Sow into others as you will both reap the harvest and the cycle will continue.