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REALTORS® Confidence Index

REALTORS® Confidence Index

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Published by REALTORS®
REALTORS'® confidence about current conditions and the outlook for the next six months remains high but declined in August. REALTORS® reported experiencing weakening demand in the face of higher mortgage rates. Low inventory, stringent credit standards, and appraisal problems were also mentioned as causing sales to be lower than they would have otherwise been. REALTORS® reported that the adjustment in flood insurance rates was too steep, eliminating some buyers from the market. REALTORS® expected modest price increases in the coming months.
REALTORS'® confidence about current conditions and the outlook for the next six months remains high but declined in August. REALTORS® reported experiencing weakening demand in the face of higher mortgage rates. Low inventory, stringent credit standards, and appraisal problems were also mentioned as causing sales to be lower than they would have otherwise been. REALTORS® reported that the adjustment in flood insurance rates was too steep, eliminating some buyers from the market. REALTORS® expected modest price increases in the coming months.

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The REALTORS® Confidence Index (RCI) Report provides monthly

information about real estate market conditions and expectations, buyer/seller traffic,
price trends, buyer profiles, and issues affecting real estate based on a monthly survey
of REALTORS®. The May 2015 report is based on the responses of 3,805
REALTORS® about local market conditions in May. Of these, 2,247 respondents
closed a sale and were asked information about the characteristics of their last closed
transaction in May. The data collected from a random sample of REALTORS® is
viewed to be representative of the sales for the month
1
. Responses were received
from June 1-8, 2015. All real estate is local: conditions in specific markets may vary
from the overall national trends presented in this report. REALTORS® may be
interested in comparing their markets against the national summary.
Lawrence Yun, Senior Vice President and Chief Economist
Jed Smith, Managing Director, Quantitative Research
Gay Cororaton, Research Economist
Meredith Dunn, Research Communications Manager
1
The survey was sent to 50,000 REALTORS® who were selected through simple random sampling. To increase the response
rate, the survey is also sent to respondents in the previous three surveys who provided their email addresses. The number of
responses to a specific question varies because the question is not applicable to the respondent or because of non-response. To
encourage survey participation, eight REALTORS® are randomly selected to receive a gift card.
Table of Contents
Summary .................................................................................................................................................... 1
I. Market Conditions ................................................................................................................................. 2
REALTORS’® Reported Strong Markets in May 2015 ........................................................................... 2
REALTORS’® Confidence About the 6-Month Outlook Eased in May 2015 ........................................ 2
REALTORS® Generally Reported Improving Buyer and Seller Traffic in May 2015 .......................... 5
Most REALTORS® Reported Higher Prices from a Year Ago ............................................................... 7
REALTORS® Expect Prices to Increase Modestly in Next 12 Months ................................................... 9
Properties Stayed on the Market for Less Time at 40 Days in May 2015 .............................................. 10
II. Buyer and Seller Characteristics ......................................................................................................... 12
Sales to First Time Buyers: 32 Percent of Sales ..................................................................................... 12
Sales for Investment Purposes: 14 Percent of Sales ............................................................................... 14
Distressed Sales: 10 Percent of Sales ...................................................................................................... 14
Cash Sales: 24 Percent of Sales .............................................................................................................. 16
International Transactions: About Two Percent of Residential Market .................................................. 17
Rents Continue to Increase ..................................................................................................................... 18
III. Current Issues .................................................................................................................................... 19
Credit Conditions .................................................................................................................................... 19
Contract Settlement Issues ...................................................................................................................... 20
Summary
The information provided by REALTORS® based on their client interactions indicates
that the real estate market strengthened in many local markets in May. In general, REALTORS®
continued to be “strongly confident” about the outlook for all property types in the next six
months. Sustained job creation, the 0.5 percentage reduction in FHA’s monthly mortgage
insurance premium rate, and the availability of three- percent downpayment conventional loans
starting in December 2014 were reported to positively impact residential markets and bolster
first-time homebuying demand.
For the fifth month in a row, the REALTORS® Confidence Index-Six-Month Outlook was
above 50 across all property types (single family townhomes, condominiums), indicating that the
number of respondents who viewed the market as “strong” outnumbered those who viewed the
market as “weak.” First-time homebuyers accounted for 32 percent of sales, up from 27 percent a
year ago and 30 percent in April 2015. Inventory, though improving, remained tight relative to
demand, so properties typically sold within 40 days nationally. Distressed properties remained at
10 percent of sales, purchases for investment purposes at 14 percent of sales, and cash sales at
24 percent of sales.
Respondents noted several issues weighing down the market’s momentum:
o Tight inventory
o Financing issues: difficulty in qualifying for a mortgage due to higher FICO credit score
and downpayment standards, protracted mortgage approval process
o Appraisal issues: conservative estimates, use of “out-of-town appraisers,” slow turn-
around
o TRID regulations that may delay closing/settlement of transactions
o Dampening effect of higher interest rates in the future (although anticipation of higher
rates can spur demand in the short-term)
o Declining demand from international buyers due to a strong U.S. dollar
o Lack of FHA-approved condominiums
May 2015 REALTORS® Confidence Index Survey Highlights
May 2015 Apr 2015 May 2014
RCI –Current Conditions: Single Family Sales
1
73 71 64
RCI –6 Month Outlook: Single Family Sales
1
74 76 66
RCI –Buyer Traffic Index
1
68 69 60
RCI –Seller Traffic Index
1
48 48 43
First-time Buyers, as Percent of Sales (%)
2
32 30 27
Sales to Investors, as Percent of Sales (%) 14 14 16
Cash Sales, as Percent of Sales (%) 24 24 32
Distressed Sales, as Percent of Sales (%) 10 10 11
Median Days on Market 40 39 47
Median Expected price growth in next 12 months (%) 3.6 3.9 4.0
1 An index of 50 indicates a balance of respondents having “weak”(index=0) and “strong” (index=100) expectations. An index above 50 means
there are more respondents with “strong” than “weak” expectations. The index is not adjusted for seasonality effects.
2 - NAR’s 2014 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 33 percent were first-time
homebuyers. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys REALTORS® and captures purchases for
investment purposes and vacation/second homes.
Page | 1

I. Market Conditions
REALTORS® Reported Strong Markets in May 2015

REALTORS® broadly reported “strong” growth across many markets in May 2015,
with the confidence indices settling at higher levels compared to the same period last year. The
confidence index for single-family homes rose to 73 (71 in April 2015; 64 in May 2014). The
index for townhomes was substantially unchanged at 52 (53 in March 2015; 46 in May 2014).
The index for condominiums was also essentially unchanged at 47 (48 in April 2015; 41 in May
2014). A confidence index above 50 indicates that the number of respondents who viewed their
markets as “strong” outnumbered those who viewed their markets as “weak.”
2




REALTORS® Remain Generally Confident About the Outlook in the Next Six Months

In May 2015, REALTORS® were by and large “strongly confident” about the outlook
for all property types in the next six months compared to a year ago, although confidence tapered
compared to the expectation in April 2015.
3
For the fourth month in a row, the indices rose
above 50 for all property types. In the single family market, the REALTORS® Confidence Index -
Six-Month Outlook registered at 74 (76 in April 2015; 66 in May 2014). The index for
townhomes registered at 55 (58 in April 2015; 48 in May 2014). The index for condominiums
also dipped to 50 (52 in March 2015; 43 in April 2014). An index greater than 50 indicates that
the number of respondents with a “strong” outlook outnumbered those with a “weak” outlook.

Sustained job creation at a pace of 220 thousand jobs per month in 2015, lower FHA
monthly mortgage insurance premium rates (resulting in a 0.5 percentage point reduction since
2
An index of 50 delineates “moderate” conditions and indicates a balance of respondents having “weak”(index=0) and “strong”
(index=100) expectations or all respondents having moderate (=50) expectations. The index is not adjusted for seasonality
effects.
3
Respondents were asked “What are your expectations for the housing market over the next six months compared to the current
state of the market in the neighborhood(s) or area(s) where you make most of your sales?”
73
52
47
0
10
20
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40
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80
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5
REALTORS® Confidence Index - Current Conditions--
as of May 2015
(50="Moderate" Conditions)
SF Townhouse Condo
Page | 2



January 2015), and the availability of three percent downpayment for loans backed by Fannie
Mae and Freddie Mac since early this year are likely underpinning the improved market
confidence. However, REALTOR® respondents expressed concern that the TILA-RESPA
Integrated Disclosure (TRID) regulations may delay closings. TRID prescribes simplified
disclosure forms that the lender needs to deliver to the loan applicant after a loan application is
received (Loan Estimate) and before a loan is consummated (Disclosure Form) within prescribed
business days and waiting periods.
4
The objective is to help consumers understand the key
features, costs, and risks of the mortgage loan for which they are applying. However,
REALTOR® respondents reported that the TRID regulations may lead to delayed closings. In
another NAR survey of mortgage originators, 67 percent of respondents reported that TRID will
lead to delays while 27 percent reported it will lead to either delays or non-closings.



The following maps show the REALTOR® Confidence Index-Six-Month-Outlook across
property types by state.
5
In the case of single family homes, all states registered an index greater
than 50 for the third month in a row, which means that the number of respondents who had a
“strong” outlook outnumbered those with “weak” outlook. Despite the slump in oil prices, the
real estate market remained broadly “strong” in North Dakota, Texas, and Oklahoma where the
indices were above 50.

In the case of townhomes and condominiums, Colorado is the hottest market.
Homebuying activity for condos and townhomes is also broadly strong in California, Oregon,
and Washington where a technology boom is fueling demand. Texas, Florida, New York, and
Massachusetts also had generally “strong” markets. REALTORS® have reported that FHA’s and
the GSE’s (Fannie Mae and Freddie Mac) financing eligibility regulations make condominium
financing difficult to obtain.
6

4
See Consumer Financial Protection Bureau. http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
5
The market outlook for each state is based on data for the last three months to increase the observations for each state. Small
states such as AK, ND, SD, MT, VT, WY, WV, DE, and the D.C. may have less than 30 observations.
6
These regulations pertain to ownership occupancy requirements, delinquent dues, project approval process, and use
for commercial space. Read the Statement of NAR Submitted for the Record to the Senate Committee Housing and
Banking Affairs on December 9, 2014 at http://www.ksefocus.com/billdatabase/clientfiles/172/1/2180.pdf
74
55
50
0
10
20
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40
50
60
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80
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REALTORS® Confidence Index - Six - Month Outlook--
as of May 2015
(50="Moderate" Outlook)
SF Townhouse Condo
Page | 3



REALTORS® Confidence Index: Outlook in Next Six Months for Single-Family Homes
Based on Mar 2015-May 2015 RCI Surveys


REALTORS ® Confidence Index: Outlook in Next Six Months for Townhouses
Based on Mar 2015-May 2015 RCI Surveys

Page | 4


REALTORS® Confidence Index: Outlook in Next Six Months for CondominiumsBased on Mar
2015-May 2015 RCI Surveys


REALTORS® Generally Reported Improving Buyer and Seller Traffic in May 2015

REALTORS® reported “strong” buyer traffic in their local markets in May 2015.
7
The
Buyer Traffic Index was essentially unchanged at 68 (69 in April 2015; 60 in May 2014). An
index greater than 50 indicates that more respondents viewed traffic as “strong” than those who
viewed traffic as “weak.” REALTORS® have reported that the 0.5 percentage point reduction in
FHA mortgage insurance premiums in January 2015 and the availability of three percent
downpayment conventional loans were helping homebuyers.

Supply remains tight, although improving in states such as Texas, Virginia, South
Carolina, Maine, Montana, Wyoming, Utah, and South Dakota. The Seller Traffic Index was
unchanged at 48 (48 in April 2015 and 43 in May 2014). Construction of new homes is below
the normal annual pace of 1.5 million units arising from household formation and the
replenishment of depreciated housing. REALTORS® reported a severe inventory shortage in
most areas, especially for properties in the lower price range and for those that are move-in
ready.

7
Respondents were asked “How do you rate the past month's traffic in the neighborhood(s) or area(s) where you make most of
your sales?” The responses were “Strong”, “Moderate,” and “Weak.”
Page | 5






REALTORS® Seller Traffic Index
Based on Mar 2015-May 2015 RCI Surveys


NAR also tracks data on the number of properties shown by REALTORS® using
Sentrilock, LLC data. Foot traffic continued to show strength in May, the sixth consecutive
month of expansion. The strong late spring foot traffic bodes well for an equally robust summer
for home sales, although tight inventories and rising rates may put a brake on growth. Showings
68
48
20
30
40
50
60
70
80
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REALTORS® Buyer and Seller Traffic Indexes-- as of May 2015
(50="Moderate" Conditions)
Buyer Traffic Index Seller Traffic Index
Page | 6


need not necessarily translate to sales, but foot traffic has a strong correlation with future
contracts and home sales.
8





Most REALTORS® Reported Higher Prices from a Year Ago

Approximately 60 percent of respondents reported rising prices (58 in April 2015; 68 in
May 2014). Strong demand amid tight supply has pushed up prices. The median price of all
existing homes sold in the U.S. as of April 2015 was $219,400, an increase of nine percent from
the levels one year ago. Nationally, prices are still below the peak level of $224,408 in July
2006. Strong price gains amid modest growth in incomes has eroded affordability although NAR
estimates that the median family income of $66,483 is still higher than the qualifying income to
purchase a house of $40,320.

About 16 percent of homes sold at a premium over the list price. Strong buyer demand
and staging a home can increase price. According to NAR’s 2015 Profile of Home Staging, 32
percent of buyers’ agents believe staged homes increases the dollar value buyers are willing to
offer by one to five percent.

Although prices are on the uptrend, 63 percent of properties sold at a discount compared
to the listing price, with the price discount typically in the range of 1 to 11 percent. Distressed
properties are discounted more steeply.

8
For more information on the Foot Traffic Index based on Sentrilock data, please visit: http://www.realtor.org/infographics/foot-
traffic

Page | 7
















60%
9%
31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2
0
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Percentage Distribution of Price Change from a Year Ago
Reported by REALTOR® Respondents --as of May 2015
Higher Lower Unchanged
4%
6%
29%
24%
21%
9%
6%
2%
net discount of 20% or more
net discount of 12% to19%
net discount of 4% to 11%
net discount of greater than 0% to 3%
no discount or premium
net premium of 0% to 3%
net premium of 4% to 11%
net premium of 11 % or more
Percentage Distribution of Net discount or Net Premium From the Listing
Price of Sales Reported By REALTOR® Respondents --May 2015
Page | 8


REALTORS® Expect Prices to Increase Modestly in Next 12 Months
REALTORS® who responded to the May 2015 survey expect prices to increase at a
slightly faster pace in the next 12 months compared to the expectation a month ago. The median
expected price growth in the next 12 months is 3.9 percent (3.5 percent in March 2015; 4.0
percent in April 2014).
9

Since all real estate is local, price expectation varies across local markets and states. The
map below shows the median expected price change in the next 12 months for each state based
on the March 2015–May 2015 RCI surveys.
9
REALTOR® respondents from Colorado had the
most upbeat price expectations, with a median expected price growth at nearly seven percent.
REALTOR® respondents from Oregon, Florida, and the District of Columbia expected prices to
increase in most areas byfive percent within the next 12 months. With oil prices still treading at
below historical levels, REALTORS® expected prices to typically increase by two to three
percent in North Dakota, Oklahoma, Wyoming, and Louisiana. In Texas, where the economy is
more diversified, the median expected price change in the next 12 months is about four percent.
Median Expected Price Change of REALTORS® in Next 12 Months, By State
Based on Mar 2015-May 2015 RCI Surveys



9
A comparison of the expected price growth for the next 12 months compared to the actual price growth shows the expected
price growth to be more conservative than the actual price growth, but both are headed in the same direction.
9
In generating the median price expectation at the state level, we use data for the last three surveys to have close to 30
observations. Small states such as AK,ND, SD, MT, VT, WY, WV, DE, and the D.C. may have less than 30 observations.

Page | 9



Properties Stayed on the Market for Less Time at 40 Days in May 2015

With tight inventory, properties that closed in May 2015 were typically on the market for
a relatively short period of time at 40 days, about the same days as in May but shorter compared
to last year’s (49 days in April 2015; 47 days in May 2014).
10


Short sales were on the market for the longest time at 131 days, while foreclosed
properties typically stayed on the market at 56 days. Non-distressed properties were on the
market at 38 days.



Approximately 45 percent of properties were on the market for less than a month when
sold (46 percent in April; 41 percent in May 2014).

10
Respondents were asked “For the last house that you closed in the past month, how long was it on the market from listing to
the time the seller accepted buyer's offer?” The median days is the number of days such that half of the properties were on the
market for those days and another half of properties were on the market for more than those days.
0
50
100
150
200
2
0
1
1
0
5
2
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Median Days on Market of Sales Reported By REALTOR®
Respondents--as of May 2015

All Foreclosed Short Sales Not distressed
All: 40 Foreclosed: 56 Shortsale: 131 Not distressed: 38
Page | 10





Properties sold within a month in Colorado, the District of Columbia, California, Texas,
Oregon, Washington, Idaho, North Dakota, Kansas, and Texas. All real estate is local. State-level
data is provided for REALTORS® who may want to compare local markets against the state and
national summary.

Median Days on Market for Sales Reported by REALTORS®, By State
Based on Mar 2015-May 2015 RCI Surveys


45%
16%
11%
8%
4%
3%
5%
4%
5%
0%
10%
20%
30%
40%
50%
<1 mo 1 to < 2
mos
2 to < 3
mos
3 to < 4
mos
4 to < 5
mos
5 to < 6
mos
6 to < 9
mos
9 to <
12 mos
>=12
mos
Percentage Distribution of Time on Market of Sales Reported
by REALTOR® Respondents -as of May 2015
201405 201504 201505
Page | 11


II. Buyer and Seller Characteristics

Sales to First Time Buyers: 32 Percent of Sales
First-time home buyers are increasingly returning to the market based on several
indicators reported by respondents. First-time homebuyers made up 32 percent of existing home
sales in May 2015, (30 percent in April 2015; 27 percent in May 2014 ).
11
Strong job growth
(about 3.5 million in 2014), the reduction in the FHA mortgage insurance premium since January
2015 (from 1.35 percent to 0.85 percent), and the availability of three percent downpayment
conventional loans backed by Fannie Mae and Freddie Mac at the beginning of the year appear
to be positively impacting first-time homebuyers.


Among sales to first-time home buyers only, buyers age 34 and under accounted for 65
percent of the sales, up from 61 percent in 2013.

11
First time buyers accounted for about 33 percent of all homebuyers based on data from NAR’s 2014 Profile of Home
Buyers and Sellers (HBS). The HBS is a survey of primary residence homebuyers and does not capture investor purchases but
does cover both existing and new home sales. The RCI Survey is a survey of REALTORS® about their transactions and captures
purchases for investment purposes and second homes for existing homes.
32%
0%
10%
20%
30%
40%
50%
60%
2
0
0
8
1
0
2
0
0
9
0
2
2
0
0
9
0
6
2
0
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9
1
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2
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1
0
0
2
2
0
1
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0
6
2
0
1
0
1
0
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1
1
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1
1
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6
2
0
1
1
1
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6
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2
2
0
1
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0
6
2
0
1
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1
0
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0
1
4
0
2
2
0
1
4
0
6
2
0
1
4
1
0
2
0
1
5
0
2
First Time Buyers as Percent of Market-- as of May 2015
Page | 12





Renters accounted for 40 percent of sales, up from 36 percent in August 2014 when the
question was first asked in the RCI Survey. Although rents are rising faster than mortgage
payments, the rentership rate has remained elevated, likely due to a mix of factors related to
lifestyle choice, household formation, financial constraints for younger households, and tighter
underwriting standards.


In reporting on their last sales for Mar-May 2015, REALTORS® reported that among
buyers 34 years and under, 86 percent purchased single-family homes, slightly above the overall
rate of 84 percent. First-time home buyers have typically tended to purchase condominiums as
starter homes. The shift towards single-family detached homes may be due to the difficulties
associated with obtaining a mortgage for condominium properties. REALTORS® have reported
the lack of FHA-approved condominiums for which an FHA mortgage can obtained.

61%
64%
65%
35%
32%
31%
4% 4% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015
Age of First-time Buyers Reported by REALTORS® --
as of May 2015
Age 34 and under Age 35 - 55 Age 56+
86% 86%
77%
84%
7% 6%
7%
6%
7% 8%
16%
10%
0%
20%
40%
60%
80%
100%
Age 34 and under Age 35 - 55 Age 56+ All
Type of Residential Property Purchased by Age Group of
Sales Reported by REALTORS®-- Jan - May 2015
Single Family-Detached Townhouse/Duplex Condominium
Page | 13




Sales for Investment Purposes: 14 Percent of Sales

Approximately 14 percent of REALTORS® reported that their last sale was for
investment purposes (14 percent in April 2015; 16 percent in May 2014). Purchases for
investment purposes have been on the decline with fewer distressed sales on the market.


Distressed Sales: 10 Percent of Sales

With rising home values and fewer foreclosures, the share of sales of distressed
properties continued to decline. In May 2015, distressed sales accounted for 10 percent of sales
(10 percent in April 2015; 11 percent in May 2014). Distressed sales have trended at this level
86% 86%
77%
84%
7% 6%
7%
6%
7% 8%
16%
10%
0%
20%
40%
60%
80%
100%
Age 34 and under Age 35 - 55 Age 56+ All
Type of Residential Property Purchased by Age Group of Sales
Reported by REALTORS®-- Jan - May 2015
Single Family-Detached Townhouse/Duplex Condominium
14%
0%
5%
10%
15%
20%
25%
30%
2
0
0
8
1
0
2
0
0
9
0
2
2
0
0
9
0
6
2
0
0
9
1
0
2
0
1
0
0
2
2
0
1
0
0
6
2
0
1
0
1
0
2
0
1
1
0
2
2
0
1
1
0
6
2
0
1
1
1
0
2
0
1
2
0
2
2
0
1
2
0
6
2
0
1
2
1
0
2
0
1
3
0
2
2
0
1
3
0
6
2
0
1
3
1
0
2
0
1
4
0
2
2
0
1
4
0
6
2
0
1
4
1
0
2
0
1
5
0
2
Sales to Investors as Percent of Market-- as of May 2015
Page | 14


since the middle of 2014. About seven percent of reported sales were foreclosed properties, and
about three percent were short sales.
12
Distressed sales have fallen as the share of loans that are
past due and in the foreclosure process has declined to about five percent of all mortgages from
nearly 10 percent in 2009.
13
Fewer distressed sales and foreclosures improves home values,
creating more home equity for the homeowner.



Foreclosed property sold at a 15 percent average discount, while short sales sold at an
average of 16 percent discount. For the past 12 months, distressed properties in “above average”
condition were discounted by an average of 9-11 percent, while properties in “below average”
condition were discounted at an average of 16-20 percent.


12
The survey asks respondents to report on the characteristics of the most recent sale for the month.
13
Mortgage Bankers Association, seasonally adjusted data.
0%
10%
20%
30%
40%
50%
60%
2
0
0
8
1
0
2
0
0
9
0
2
2
0
0
9
0
6
2
0
0
9
1
0
2
0
1
0
0
2
2
0
1
0
0
6
2
0
1
0
1
0
2
0
1
1
0
2
2
0
1
1
0
6
2
0
1
1
1
0
2
0
1
2
0
2
2
0
1
2
0
6
2
0
1
2
1
0
2
0
1
3
0
2
2
0
1
3
0
6
2
0
1
3
1
0
2
0
1
4
0
2
2
0
1
4
0
6
2
0
1
4
1
0
2
0
1
5
0
2
Distressed Sales, As Percent of Sales Reported by REALTOR®
Respondents-- as of May 2015
Foreclosed Short Sale
Foreclosed: 7% Shortsale: 3%
15%
16%
0%
5%
10%
15%
20%
25%
2
0
0
9
0
2
2
0
0
9
0
5
2
0
0
9
0
8
2
0
0
9
1
1
2
0
1
0
0
2
2
0
1
0
0
5
2
0
1
0
0
8
2
0
1
0
1
1
2
0
1
1
0
2
2
0
1
1
0
5
2
0
1
1
0
8
2
0
1
1
1
1
2
0
1
2
0
2
2
0
1
2
0
5
2
0
1
2
0
8
2
0
1
2
1
1
2
0
1
3
0
2
2
0
1
3
0
5
2
0
1
3
0
8
2
0
1
3
1
1
2
0
1
4
0
2
2
0
1
4
0
5
2
0
1
4
0
8
2
0
1
4
1
1
2
0
1
5
0
2
2
0
1
5
0
5
Mean Percentage Price Discount of Distressed Sales Reported
by REALTOR® Respondents --as of May 2015
Foreclosed Shortsale
Page | 15






Cash Sales: 24 Percent of Sales

The share of cash sales to the market has declined compared to the levels seen in 2010-
2014. Approximately 24 percent of REALTOR® respondents reported that their last transaction
was a cash sale (24 percent in April 2015; 32 percent in May 2014). Buyers of homes for
investment purposes and second homes and foreign clients are more likely to pay cash than first-
time home buyers. As sales to investors and distressed properties have fallen, the share of cash
sales has declined as well.



11%
12%
20%
9%
11%
16%
0%
5%
10%
15%
20%
25%
Mean Percent Price Discount by Property Condition
of Distressed Sales Reported by REALTOR® Respondents --
Average for June 2014 - May 2015
Foreclosed Short sale
24%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2
0
0
8
1
0
2
0
0
9
0
2
2
0
0
9
0
6
2
0
0
9
1
0
2
0
1
0
0
2
2
0
1
0
0
6
2
0
1
0
1
0
2
0
1
1
0
2
2
0
1
1
0
6
2
0
1
1
1
0
2
0
1
2
0
2
2
0
1
2
0
6
2
0
1
2
1
0
2
0
1
3
0
2
2
0
1
3
0
6
2
0
1
3
1
0
2
0
1
4
0
2
2
0
1
4
0
6
2
0
1
4
1
0
2
0
1
5
0
2
Cash Sales as Percent of Market-- as of May 2015
Page | 16




International Transactions: About Two Percent of Residential Market

Nearly two percent percent of REALTOR® respondents reported their last sale was a
purchase by a foreigner not residing in the U.S. International buyers frequently pay cash and
have typically purchased properties above the market median price. Based on NAR’s 2015
Profile of Homebuying Activity of International Clients, Florida, California, Texas, and Arizona
are the major destinations.




8%
67%
54%
17%
83%
43%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
FTHBuyer Investor Second
home
Relocation International Distressed
Sale
Percent of Sales Reported by REALTOR® Respondents That are
All-Cash By Type of Buyer-- May 2015
1.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2
0
1
0
0
3
2
0
1
0
0
6
2
0
1
0
0
9
2
0
1
0
1
2
2
0
1
1
0
3
2
0
1
1
0
6
2
0
1
1
0
9
2
0
1
1
1
2
2
0
1
2
0
3
2
0
1
2
0
6
2
0
1
2
0
9
2
0
1
2
1
2
2
0
1
3
0
3
2
0
1
3
0
6
2
0
1
3
0
9
2
0
1
3
1
2
2
0
1
4
0
3
2
0
1
4
0
6
2
0
1
4
0
9
2
0
1
4
1
2
2
0
1
5
0
3
Sales to International Clients as Percent of Market--
as of May 2015 RCI Survey
Page | 17


Rents Continue to Increase

About 57 percent of REALTOR® respondents reported rising rent, (53 percent in April
2015; 53 percent in May 2014). Rising rents indicate continued strong demand for rental
properties rather than a house purchase. Although rents are rising faster than mortgage payments,
the rentership rate has remained elevated, likely due to a mix of factors such as lifestyle choice,
financial constraints for younger households, and tighter underwriting standards.






57%
0%
10%
20%
30%
40%
50%
60%
70%
2
0
1
0
1
2
2
0
1
1
0
3
2
0
1
1
0
6
2
0
1
1
0
9
2
0
1
1
1
2
2
0
1
2
0
3
2
0
1
2
0
6
2
0
1
2
0
9
2
0
1
2
1
2
2
0
1
3
0
3
2
0
1
3
0
6
2
0
1
3
0
9
2
0
1
3
1
2
2
0
1
4
0
3
2
0
1
4
0
6
2
0
1
4
0
9
2
0
1
4
1
2
2
0
1
5
0
3
Percent of REALTOR® Respondents Reporting Rising Rent
Levels Compared to 12 Months Ago--as of May 2015
95
143
50
70
90
110
130
150
Q
1
/
2
0
0
0
Q
4
/
2
0
0
0
Q
3
/
2
0
0
1
Q
2
/
2
0
0
2
Q
1
/
2
0
0
3
Q
4
/
2
0
0
3
Q
3
/
2
0
0
4
Q
2
/
2
0
0
5
Q
1
/
2
0
0
6
Q
4
/
2
0
0
6
Q
3
/
2
0
0
7
Q
2
/
2
0
0
8
Q
1
/
2
0
0
9
Q
4
/
2
0
0
9
Q
3
/
2
0
1
0
Q
2
/
2
0
1
1
Q
1
/
2
0
1
2
Q
4
/
2
0
1
2
Q
3
/
2
0
1
3
Q
2
/
2
0
1
4
Q
1
/
2
0
1
5
Rent Growth Has Outpaced Mortgage Payment Growth
Since 2000
Mortgage Payment (2000Q1=100) CPI-Shelter Index (2000Q1=100)
Source: NAR, BLS downloaded on Haver Analytics
Page | 18


III. Current Issues
Credit Conditions
REALTORS® have reported that credit conditions remain generally tight, with
significant loan processing delays. One indicator of credit tightness is the distribution of FICO
scores on approved loans.
About 49 percent of REALTORS® providing transaction credit score information
reported FICO credit scores in the range of 740+. For comparison, in the period 1999-2004, only
37 percent of Fannie Mae’s and 33 percent of Freddie Mac’s 30-year, fixed rate, fully amortizing
loans had FICO scores greater than 750.
14



Surprisingly, although obtaining a mortgage has been generally perceived as “difficult”
for first-time homebuyers, only 31 percent of buyers were reported to have FICO scores of 740
or higher. This indicates that first-time buyers were likely able to avail of FHA loans where
FICO score requirements are lower compared to conventional loan. Among non-first time
homebuyers, 56 percent had FICO scores of 740 or higher.

14
Source: Urban Institute Housing Finance Policy Center, “Housing Finance at a Glance”, May 2015 chartbook.
http://www.urban.org/sites/default/files/alfresco/publication-pdfs/2000231-Housing-Finance-At-A-Glance-
Monthly-Chartbook-May-2015.pdf

2%
48%
49%
0%
10%
20%
30%
40%
50%
60%
70%
2
0
1
2
0
2
2
0
1
2
0
4
2
0
1
2
0
6
2
0
1
2
0
8
2
0
1
2
1
0
2
0
1
2
1
2
2
0
1
3
0
2
2
0
1
3
0
4
2
0
1
3
0
6
2
0
1
3
0
8
2
0
1
3
1
0
2
0
1
3
1
2
2
0
1
4
0
2
2
0
1
4
0
4
2
0
1
4
0
6
2
0
1
4
0
8
2
0
1
4
1
0
2
0
1
4
1
2
2
0
1
5
0
2
2
0
1
5
0
4
Percentage Distribution of FICO Scores Reported by REALTOR®
Respondents --as of May 2015
< 620 620-740 740+
Page | 19





Contract Settlement Issues
In reporting on their last contract, REALTORS® reported that most contracts were
settled on time. Among contracts during the three month time period Mar-May 2015, 63 percent
of contracts were settled on time, 28 percent had delayed settlement, and nine percent were
terminated.
Of all contracts that went into settlement (on time or delayed) or were terminated, 49
percent faced some type of issue: 16 percent had financing issues, 11 percent had appraisal
issues, and 10 percent had home inspection issues.
Among the contracts that were delayed (28 percent), financing issues were the primary
cause of contract delays: 41 percent of delayed contracts had financing issues.
Among contracts that were terminated (nine percent), financing and home inspection
issues were the major causes: 26 percent of terminated contracts had a financing issue as well as
a home inspection issue.
3%
17%
24%
25%
31%
1%
7%
15%
21%
56%
0%
10%
20%
30%
40%
50%
60%
below 620 620-659 660-699 700-739 740+
Percentage Distribution of FICO Credit Scores for First-time
and Non-first- time Buyers Reported by REALTORS®--
Jan-May 2015
First-time Non-first-time
Page | 20





65% 67% 65% 64% 63%
26%
27%
26%
26% 28%
8% 7% 9% 10% 9%
201501 201502 201503 201504 201505
0%
20%
40%
60%
80%
100%
Contract Settlement in the Past 3 Months--
as of May 2015
Contract was terminated
Contract was delayed but eventually went into settlement
Contract was settled on time
51%
16%
11%
10%
4%
3%
3%
1%
1%
11%
no problems encountered
issues related to obtaining financing
appraisal issues
home inspection/environmental issues
titling/deed issues
contingencies stated in the contract
issues in buy/sell distressed property
home/hazard/flood insurance issues
buyer lost job
Other
Problems Encountered for Contracts That Went Into Settlement or
Were Terminated in the Past 3 Months* --May 2015
* Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer
or seller backing out, builder delays, HOA issues, pricing issues, issues in buying/selling
distressed property, etc.
Page | 21






41%
21%
11%
10%
7%
6%
4%
1%
1%
22%
issues related to obtaining financing
appraisal issues
home inspection/environmental issues
titling/deed issues
contingencies stated in the contract
issues in buy/sell distressed property
no problems encountered
home/hazard/flood insurance issues
buyer lost job
Other
Problems Encountered for Contracts That Were Delayed But Eventually
Went Into Settlement in the Past 3 Months* --May 2015
(Delayed Contracts Represent 28 Percent of Closed or Terminated Contracts)
* Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer or
seller backing out, builder delays, HOA issues, pricing issues, documentation issues, issues in
buying/selling distressed property,etc.
26%
26%
13%
7%
7%
4%
3%
2%
2%
27%
issues related to obtaining financing
home inspection/environmental issues
appraisal issues
issues in buy/sell distressed property
contingencies stated in the contract
buyer lost job
no problems encountered
titling/deed issues
home/hazard/flood insurance issues
Other
Problems Encountered for Contracts That Terminated in the
Past 3 Months*--May 2015
(Terminated Contracts Represent 9 Percent of Closed or Terminated Contracts)
*Will not sum to 1 00 percent because multiple responses are allowed. "Other" includes buyer or
seller backing out, builder delays, HOA issues, pricing issues, documentation issues, issues in
buying/selling distressed property,etc.
Page | 22

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