RAC member Jonathan Miller, CRE, CRP was interviewed on the ABC World News Tonight broadcast for May 2nd to talk about the potential urban to suburban housing shift post-pandemic, particularly in NYC.
RAC member Jonathan Miller, CRE, CRP was interviewed on the ABC World News Tonight broadcast for May 2nd to talk about the potential urban to suburban housing shift post-pandemic, particularly in NYC.
Tom Reynolds, SRPA, CRP, has written about his home state of Delaware, the Diamond State. Learn more about the real estate market in the first state to ratify the U.S. constitution (in 1787) and the corporate home or place of incorporation for more companies than any other state. See the entire article here.
Paul M. Lewis uses his 25 years of residential appraisal experience to offer some perspectives on the fundamental differences between a relocation appraisal and other residential appraisal types. Don’t miss the feature on the annual Report Writing Contest, which will kick off this summer. This contest is a joint effort between Worldwide ERC and RAC to find and recognize the best relocation appraisal report writer. Paul Lewis won the contest last year and the 2019 winner will be announced at the RAC conference in Plano, TX, held September 19-20th. See the full article here.
Mobility Magazine of the Worldwide ERC, November 2018
By Lori Noble
In West Virginia, geography and rugged terrain pose physical limitations that simply can’t be changed, but the mountain highlands and low river valleys are the character and charm that make Appalachia unique. The nickname “the Mountain State” and the state motto Motani Semper Liberi (“Mountaineers are always free”) are most appropriate, and the characteristics of the region prove the statement true.
West Virginia is not unique, as it shares similar demographic and market nuances with other natural-resource economies. It is true that nearly all rural counties across the U.S. face challenges with slow to no long-term economic relief. Historically, most economic growth has occurred in larger metropolitan areas, in contrast to the West Virginia economy. The constraints observed over time are best served in the long term by fiscal responsibility and a deep understanding of the economic differences that make up the Mountain State.
West Virginia has received considerable press about the perils of coal and population declines. Coal exports were down a reported 40 percent by 2013 and nearly one-half between 2008 and 2016. Although the losses affected the state’s southern coal fields most, the energy sector is a main driver of West Virginia’s economy, and the downturn put significant strains on the economy and municipal governments. Steep declines in severance tax collections from the coal and gas industries created significant problems for government operations. On the commercial side, office buildings in major metropolitan statistical areas (MSAs) such as Charleston, the state capital, saw record-high vacancies due to big corporate bankruptcies and failures. It is also true, however, that economic performance varies extremely from county to county. The Northern and Eastern panhandles were not as affected by the downturn.
West Virginia has lost more than 25,000 residents since 2012; this is the largest percentage of loss in population since the late 1980s. According to the U.S. Census, 47 of the state’s 55 counties lost residents between 2015 and 2016. The largest decline was in Kanawha County, home of the state capital. Charleston is addressing the gray cloud with optimism, however. The capital city is the second-largest MSA in the state, behind Huntington, and the decline wasn’t the fault of the city, but a commercial downturn brought on by the collapse of coal and many companies going out of business at once. To offset the woes, Charleston is laying the groundwork for a rebranding and expansion. The development strategy is long-term planning with a time frame most likely in 2020 to 2025 in the downtown area.
Although an economic uptick is showing, the downward population trends in certain regions can’t be denied. Additionally, the population losses and exits from the labor force have helped drive the decline in unemployment rather than actual job gains. Overall, total population trends for the state will continue to contract slightly, with most losses occurring over the next couple of years. An anticipated improvement in the state’s economic performance is likely to at least help slow the decline observed in recent years.
The seasonally adjusted pace of homebuilding has been volatile over the past several years, but residential construction activity shows an upward trend since bottoming out a couple of years after the Great Recession ended. The average rate observed in the first two quarters of 2017 is 11 percent ahead of the prior year’s and marks the best read on new single-family home starts since 2008. Multifamily homes are a smaller share of the overall residential market in West Virginia, due to low population density and a high homeownership rate. Overall, apartment construction peaked in 2007 and was relatively limited in recent years. Monongalia County saw the most notable increases in recent years due to several West Virginia University (WVU) housing projects.
The rate of home price deflation was much smaller in West Virginia than in most other U.S. states after the housing bubble. Since bottoming out in 2011, prices for single-family homes have rebounded about 13 percent. Given the deep population declines and slow recovery status, the state housing sector is about equal to pre-crash conditions and values.
Local house prices vary greatly throughout the state’s regions relative to local supply and demand. According to the Federal Housing Finance Agency, the Beckley and Charleston metro areas have seen price declines in the past two years, while the Morgantown, Hagerstown-Martinsburg, and Huntington MSAs recorded cumulative price gains of just 2 to 3 percent since 2015. These low rates reflect a slowdown in appreciation after significant increases in house prices in those regions from 2011. West Virginia counties in the Washington, D.C., metro area experience consistent and fast growth in house prices. Southern counties are in a different submarket where home values are expected to remain relatively flat, with no major trends anticipated.
West Virginia shows one of the smallest annual appreciation rates nationally. Residential permits are up from the previous year, mostly in metro areas. Home prices depreciated in the spring but are up year over year. Mortgage delinquencies are down from the previous year. Overall, small but distinctive positive shifts are occurring, with trends expected to proceed at a slow pace.
Expectations for the U.S. and global economies will directly influence West Virginia’s economic performance. If global demand for the state’s energy commodities and manufactured goods deviates from the expected path, growth could exceed or underperform expectations. Natural resources are expected to see jobs increase 9.6 percent per year during the outlook period.
West Virginia’s construction sectors are expected to slowly recover from lackluster performance in the past several years. Activity is expected to grow at the fastest pace between now and 2020. The energy sector will drive most of the growth with several pipeline projects and natural gas-fired power plant that are expected to wrap up in the short term. Infrastructure has been depressed for an extended period due to budget challenges. Manufacturing is expected to show job growth of about 0.9 percent per year. The largest sources of job creation are expected in the chemical industry and general manufacturing sector. Income projections forecast an increase in annual wages of almost 2 percent per year through 2022 but still lag behind the national average.
There has been an upturn in recent coal production and job levels as the industry enters a period of relative stability. However, risks exist, as observed between 2008 and 2014. West Virginia’s population has declined significantly, and although a stabilization is anticipated, more loss is likely over the long term due to a larger share of elderly residents. A positive shock of inward migration would be highly beneficial, as would economic strategies to improve education and business retention in the state. Southern counties are expected to see some job growth during the next few years.
Commercial expansion outside the energy sector will bolster performance going forward. The $500 million Procter & Gamble facility in Martinsburg will continue to develop. The expansion by WVU Medicine as well as a buildings and athletic facility upgrade will help the Monongalia County region. WVU Institute of Technology also opened a campus this fall in the Beckley MSA, putting the university back on the map and making a great addition to the city’s landscape.
Lori A. Noble is a professional appraiser and consultant in southern West Virginia and member of RAC (Relocation Appraisers and Consultants). She can be reached at +1 304 573 2357.
Mobility Magazine of Worldwide ERC, June 2016
By Kevin P. Maloney
The northeastern Illinois market is made up of Cook County, which contains the city of Chicago, and five surrounding “collar counties” of Lake, McHenry, DuPage, Kane and Will. The city of Chicago, with a population of around 2.7 million, is the area’s primary economic engine. This report focuses on Cook and DuPage counties, as they are the most populous counties and see the greatest amount of relocation activity. These two counties contain more than 6 million residents and account for around 80 percent of the population in the northeastern Illinois market.
Housing prices in the northeastern Illinois market increased from 1997 through 2007. Some areas saw market peaks in 2007, while others continued to see appreciation through the third quarter of 2008. The Great Recession hit in earnest in September 2008 and brought value declines to all markets. However, the magnitude of the decline varied significantly. The greatest percentage losses were typically seen in communities that entered the recession with a median home value that was below average for the region. Some communities began to see values move upward in 2012. However the most severely impacted areas did not see an upward trend in value until early 2014.
The rate of recovery in Cook County for detached home values varies dramatically from one area to another. High-demand areas in the city of Chicago have seen the strongest recovery. For example, the Lincoln Park neighborhood had a median detached home value of $1,425,000 in 2007. The median value in this neighborhood dropped 11 percent by 2011. However, by 2015 the median value was more than 11 percent above the prior peak in 2007. Median detached home values above the prior peak in 2007 can also be seen in other areas of the city of Chicago, such as West Town and Lincoln Square. These locations all have strong transportation links to the central business district, and residents have rising levels of disposable income. The availability of vacant land in the high-demand areas of the city of Chicago has kept additions to the detached home supply at a relatively low level, and most building is on an infill basis. The city of Chicago is seeing the greatest competition from new construction in the upper end of the market (homes priced above $1.5 million).
None of the suburban areas of Cook County have seen median home values push back up to the prior peak levels. The highest-demand areas in suburban Cook County typically remain approximately 8 percent down from the peak. The worst-hit communities often still have median home values down more than 40 percent from the peak. An example of a community that continues to be profoundly impacted by the great recession is the town of Cicero, which had a median detached home value for the year of 2015 that was 45 percent below the median value in 2007.
The DuPage County market shows the same broader pattern as Cook. Communities that entered the recession with high median home values typically saw a lower percentage drop during the recession. For example, the city of Naperville had a median detached home value of $452,000 in 2007. The median value fell 16 percent below the 2007 number by 2011 but recovered to only 9 percent below the prior peak by 2015. The village of Hanover Park, on the other hand, had a median home value of $238,000 in 2007. The median value was 46 percent below the peak by 2011 and by 2015 the median value remained 27 percent below that of 2007.
The condominium market in DuPage and Cook counties has seen appreciation flatten over the past year. Condominium construction remains limited throughout the entire market area. A large number of rental units are being built in the city of Chicago, and these units may ultimately be converted to condominiums. However, any major addition to supply will be at least three years down the road. The limited levels of new supply in most market segments should keep values stable to moderately increasing over the next 12 months. Higher-priced attached properties face the greatest downside risk, as much of the impending supply is focused at the upper end of the market.
In Cook County, distressed sales (short sales, foreclosures, and bank-owned properties) made up 42 percent of the total sales volume reported in the MLS for the year 2011. Distressed sales in Cook County for 2015 fell to 22 percent of the total sales volume. In DuPage County, 34 percent of the total sales volume consisted of distressed transactions in 2011. The number slipped to 15 percent for 2015. While the numbers above clearly show that the Chicago region is heading in the right direction, the number of distressed sales still remains drastically higher than normal.
The hope is that the dynamic growth seen in some areas of the region will exert a positive secondary impact on communities that continue to struggle. While major political and economic challenges still occur, the city of Chicago clearly remains the Midwest’s cultural and economic hub.
Kevin P. Maloney is a certified general appraiser with Maloney Appraisal, Inc., in Chicago and is a member of RAC (Relocation Appraisers & Consultants). He can be reached at +1 773 281 6013 or firstname.lastname@example.org.
Mobility Magazine of Worldwide ERC, April 2016
By Don Mueller, CRP, RAC Member
Northern Utah, aka the Wasatch Front, is a metropolitan region in the north-central part of the state, consisting of a chain of cities and towns stretched along the Wasatch Range from approximately Nephi in the south to Brigham City in the north. Roughly 80 percent of Utah’s population resides in this region, as it contains the major cities of Salt Lake City, Provo-Orem, West Valley City, West Jordan, and Ogden.
The Wasatch Front is long and narrow. To the east, the Wasatch Mountains rise abruptly several thousand feet above the valley floor, climbing to their highest elevation of 11,928 feet (3,620 m) at Mount Nebo. The area’s western boundary is formed by Utah Lake in Utah County, the Oquirrh Mountains in Salt Lake County, and the Great Salt Lake in northwestern Salt Lake, Davis, Weber and southeastern Box Elder counties. The combined population of the five Wasatch Front counties totals approximately 2,125,000 according to the 2008 census estimate.
Although most residents of the area live between Ogden and Provo – a distance of 80 miles – which includes Salt Lake City proper, the fullest built-out extend of the Wasatch Front is 120 miles long and an average of five miles wide. Along its length, the Wasatch Front never exceeds a width of approximately 18 miles because of the natural barriers of lakes and mountains.
The region on the other side of the Wasatch Range, including cities such as Park City, Morgan, Heber City, and Midway, sometimes referred to as the Wasatch Back, has recently shared in the rapid growth of the region.
Utah’s first settlers of European decent were the Mormon pioneers, who migrated from the Midwest in 1847, led by Brigham Young, the prophet and president of the Church of Jesus Christ of Latter-Day-Saints. Upon entering the Salt Lake Valley, Young made this declaration: “This is the place.” (Some say he said, “This is the right place.”) The famous statement still holds true today in regard to real estate values and investment in the Wasatch Front.
The trends noted here are for Salt Lake County but also reflect the adjoining Wasatch Front area. A report in February by the Salt Lake Board of Realtors notes that real estate agents in Salt Lake County sold 13,323 existing single-family homes last year. This is a nine-year high surpassed only before the Great Recession with 15,317 homes sold in 2005 and 15,283 the following year. The combined value of single-family homes sold in 2015 rose 22 percent over the previous year, to $4.1 billion. The upward trend in housing prices persisted last year, logging an increase of almost 7 percent over 2014 for a single-family home, to a $272,000 median sales price, and 8 percent for a multifamily unit, to $189,000.
“There is still room for moderate house-price increases, provided mortgage rate increases are gradual,” says Cheryl Acker, president of the Salt Lake Board of Realtors. The board report characterizes real estate in Salt Lake County as “still relatively affordable” for qualified buyers, as a family earning the median household income and devoting 30 percent of its income to a mortgage payment could afford 56 percent of the homes sold in the county in 2015.
The Salt Lake Board of Realtors expects an 11 percent gain in total residential home sales of all types this year in Salt Lake County, to more than 19,000 units. An increase of 5 to 7 percent in the median single-family home price, to $290,000, is predicted as housing demand continues to exceed available inventory.
The number of homeowners with negative equity has now dropped to 2.5 percent of all mortgages. In previous years, homeowners were locked in to their current home and could not move up. Hence, in 2015 the move-up market was again supporting higher levels of sales, which put upward pressure on prices.
Another benefit of improving market conditions is the huge reduction in the sale of distressed homes (short sales and foreclosed properties). For five years, the “fire sale” prices of distressed homes dragged down overall housing prices. In 2011, one-third of all homes sold in Salt Lake County were distressed properties; it’s no coincidence that 2011 was the year of the largest decline in prices, 9.5 percent. The near elimination of short sales and REO sales by 2015 was also a contributing factor to the acceleration of price increases in 2015.
There is no sign of a bubble – both prices and sales are sustainable. There is very little inventory, and prices are increasing. The market is free of REO and short sales. From a market perspective, Utah and Salt Lake County seems to be “the right place” to buy and invest in a single family home.
Don N. Mueller, CRP, is a professional appraiser and real estate consultant based in Ogden, Utah, and a member of RAC (Relocation Appraisers and Consultants). He can be reached at +1 801 479 6123 or email@example.com.
“THIS IS GOOD NEWS FOR THE HOUSING MARKET AND FOR THE SALES OF TRANSFEREE’S HOMES.” Michael Cook, MAI, SRA, RAC Past President
Mortgage News Daily, February 1, 2016
Mortgage rates were in line with the best levels in 8 months as of last Friday. Although they moved slightly higher to begin the new week, today is still the 2nd best day in the past 8 months. Lenders continue quoting conventional 30yr fixed rates of 3.75% for the most part with 3.625% being the next most prevalent rate.
In general, rates are taking cues from the big picture economic considerations and global financial market turmoil. Low oil prices and volatile stock markets have been helping. Most of the more focused economic data has been falling short of its usual potential to move markets. An exception will certainly be made for this Friday’s Employment Situation report, which is the most important economic report of any given month. In the bigger picture, the trend toward lower rates continues, but any day that rates bounce slightly higher (like today) can mark the end of that trend.
View the full article at: Mortgage News Daily
Mobility Magazine of Worldwide ERC, December 2015
By Craig Gilbert, CRP, SRA, RAC Founding Member
Southern California consists of eight counties, from Santa Barbara in the north to San Diego in the south, and from the Pacific Ocean on the west to Nevada and Arizona on the east. This report focuses on the five most prominent counties: Los Angeles, Orange, San Diego, Riverside, and San Bernardino. These are also the five most populous counties in the state, with a total combined population of almost 21 million.
Housing prices increased throughout Southern California from approximately 1997 through mid-2006. The market peaked at varying times geographically and by price range. This peak was followed by a steep decline in prices. The credit crisis of 2008 and lack of credit for potential homebuyers, together with a weakened economic base during the Great Recession, led to a high number of foreclosures and short sales. The Inland Empire (Riverside and San Bernardino counties) was among the hardest hit and experienced the greatest percentage of decline in prices. No areas of Southern California were completely immune from economic problems. Some of the older, lower-priced, lower-income coastal areas also experienced significant price depreciation compared to more affluent areas nearby. Housing prices bottomed between 2009 and 2011, differing by geographic location and price range. The coastal and higher-income areas fared better than the Inland Empire and the lower-income and lower-priced areas. The coastal areas had a lower percentage of decline and recovered more quickly. This was related primarily to employment growth and stability. All counties experienced price appreciation from 2012–13 to 2015. Current prices are still below previous market peak prices, and none of the counties in Southern California has yet achieved median prices equal to or higher than previous market highs.
The annual percentage of change in median housing prices for all counties peaked from 2013 to 2014, with annual increases between 10.3 percent in Orange County and 19.2 percent in San Bernardino County. However, although housing prices have continued to appreciate, the rate of appreciation has decelerated significantly in all counties, from 0.5 percent in San Diego County to 7.8 percent in San Bernardino County for the most recent period.
The California Association of Realtors has been computing a housing affordability index (HAI) for all counties since 1991. The HAI, which represents the percentage of households that can afford to purchase the median-priced home based on traditional assumptions, is a function of median price, income, down payment, mortgage rates, and current underwriting standards.
The least affordable period for all areas (2005–2007) was just before the market peaked. The indices ranged from 8 percent in San Diego County to 19 percent in San Bernardino County. The most affordable period for all areas (2011–2012) occurred just as housing prices bottomed. The indices ranged from 39 percent in Orange County to 78 percent in San Bernardino County. The indices have subsequently decreased significantly and currently range from 21 percent in Orange County to 56 percent in San Bernardino County. All areas have been in a transition from more affordable to less affordable, which is primarily a function of price appreciation.
The most significant economic factor has been a substantial improvement in the economic base. There have been positive changes in both employment and unemployment over the past five years, according to the U.S. Department of Labor. Total number of employed in these five Southern California counties increased by 11 percent. The unemployment rates have declined by approximately 50 percent as employment simultaneously increased. The official unemployment rate in the Los Angeles–Orange County metro area declined from 12.3 percent to 6.4 percent, in the Inland Empire from 13.8 percent to 6.8 percent, and San Diego from 11.1 percent to 5.1 percent.
Household income, however, has been relatively stagnant in most areas, with some exceptions. This factor is quite significant with regard to direction and magnitude of future housing prices. A number of corporations in California have been moving to lower-cost areas of the U.S. or offshoring work, in part due to unaffordable housing and the high cost of living and doing business in the state. Toyota Motor Co., for example, is in the process of moving its U.S. headquarters from Torrance (Los Angeles County) to Plano, Texas, along with about 3,000 medium- to high-value-added marketing and finance jobs.
Mortgage rates were at historic lows around the fourth quarter of 2012 (about 3.3 percent), increased slightly through the third quarter of 2013 (about 4.5 percent), decreased through the second quarter of 2015 (about 3.7 percent), and have subsequently increased slightly to about 4.0 percent. Rates will likely remain within 50 basis points of current levels for the near future. This is a favorable factor for buyers and sellers. The favorable year-round climate also has historically contributed to housing demand and desirability of Southern California.
Housing at or near the median price, and those not more than about 20 percent above the median, will likely continue to appreciate in the foreseeable future in most areas. Higher-priced properties, primarily about 25 percent or more above median, are likely to remain stable at best, with a more probable decrease in price due to current and impending oversupply.
The rate of price appreciation has recently decelerated due to a decline in affordability, especially in the higher-priced areas. Housing inventory of 2.5 months (San Diego) suggests a slightly undersupplied market. Housing supply and demand are more balanced in Los Angeles, Orange, and Riverside counties, at 3.3 to 3.9 months’ supply. San Bernardino appears to be moving from a balanced to an oversupplied market at 4.4 months’ inventory. The availability of mortgage financing is a significant factor in the mortgage market. Underwriting standards are quite tight to avoid the pitfalls that led to the 2008 credit crisis.
Craig Gilbert, CRP, SRA, is a professional appraiser and real estate consultant based in Huntington Beach, California, and a co-founder of RAC (Relocation Appraisers and Consultants). He can be reached at +1 714 847 8087 or firstname.lastname@example.org.
Preowned home prices in the Dallas area ended 2014 with a 7.5 percent gain from 2013, according to the latest Standard & Poor’s/Case-Shiller Home Price Index.
December’s price increase was slightly lower than the 7.7 percent annual rise reported in November. It’s in line with year-over-year price appreciation during the second half of last year.
“As long as we have a tight sellers’ market, it’s going to be in that area,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University. “The good news is it’s not 12 or 15 percent. “We can live with this for a while.”
The Dallas-area price rise was well above the 4.6 percent nationwide appreciation rate in December.
Dallas had the fourth-highest increase among the 20 major markets that Case-Shiller surveys for its monthly report.
“Movements in home prices show clear regional patterns,” said S&P’s David Blitzer. “The western half of the nation plus Miami and Atlanta enjoyed year-over-year increases of 5 percent or more.
“San Francisco and Miami were the strongest,” he said. “Dallas, Denver, Las Vegas and Atlanta also experienced solid gains.”
San Francisco prices were up 9.3 percent from December 2013 levels. Prices in Miami were up 8.4 percent.
Dallas-area home prices are now almost 13 percent higher than they were before the recession and have risen more than 30 percent since early 2012.
“The affordability is coming down,” Gaines said. “It’s particularly hitting the low- to moderate-income groups.”
Case-Shiller’s study tracks over time the prices of specific single-family homes in each metropolitan area. The index survey does not include condominiums and townhouses.
The median price of homes sold in North Texas by real estate agents through their multiple listing service was 11 percent higher in December from a year earlier.
Source: Dallas Morning News