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    REALTORS® CONFIDENCE INDEX SURVEY

    Report on the October 2015 Survey

    The REALTORS ® Confidence Index ( RCI ) report provides monthly information about real estatemarket conditions and expectations, buyer/seller traffic, price trends, buyers’ characteristics, andissues affecting real estate based on a monthly survey of REALTORS®.

    The October 2015 report is based on the responses of 2,969 REALTORS® about local marketconditions experienced in October and the characteristics of their most recent sale for the month.The data collected f r om a random sample of REALTORS® is viewed to be representative of thesales for the month.1 The online survey was conducted from November 1-11, 2015. All realestate is local: conditions in specific markets may vary from the overall national trends presentedin this report. REALTORS® may be interested in comparing their markets against the nationalsummary.

    The RCI repor t is an output of the Research Division of the NATIONAL ASSOCIATION of  REALTORS®.2 For questions or information about this report, please email [email protected].

    Lawrence Yun, Senior Vice President and Chief EconomistDanielle Hale, Managing Director, Housing ResearchGay Cororaton, Research EconomistMeredith Dunn, Research Communications Manager

    Research Division NATIONAL ASSOCIATION of  REALTORS® 

    500 New Jersey Avenue, NWWashington, DC 20001202.383.1000

    1 The survey is sent to 50,000 REALTORS® who are 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 responsesto a specific question varies because the question may not be applicable to the respondent or because of non-response. Toencourage survey participation, eight REALTORS® are randomly selected to receive a gift card.2 Thanks to Jessica Lautz, Managing Director, Survey Research and Communications, and Amanda Riggs, Research SurveyAnalyst, for their comments in improving the survey and in editing the report.  

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    Table of Contents

    Summary  .................................................................................................................................................... 3

    I. Market Conditions  .................................................................................................................................. 4

    REALTORS® Broadly Reported an Improving Market Compared to a Year Ago ................................. 4 

    REALTORS® Still Broadly Optimistic Over the Next Six Months ........................................................ 5 

    REALTORS® Reported Stronger Buyer and Seller Traffic Compared to a Year Ago............................ 7 

    REALTORS® Expect Prices to Increase Modestly in Next 12 Months ................................................... 9 

    Properties On the Market at 57 Days ...................................................................................................... 10  

    II. Buyer and Seller Characteristics  ......................................................................................................... 13

    Sales to First-Time Buyers: 31 Percent of Sales ..................................................................................... 13 

    Sales for Investment Purposes: 13 Percent of Sales ............................................................................... 13  

    Distressed Sales: Six Percent of Sales .................................................................................................... 14  

    Cash Sales: 24 Percent of Sales .............................................................................................................. 16 

    Age, Previous Residence, and Type of Property Purchased ................................................................... 18 

    III. Current Issues  .................................................................................................................................... 20

    Contract Settlement Issues: Financing and Appraisals are Major Issues ................................................ 20 

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    Summary

    Market conditions vary across local markets and states, but REALTORS® generally reportedimproved housing market conditions in October 2015 compared to a year ago. The confidenceindices for current conditions and the six-month outlook for single-family, townhome, and

    condominium properties all increased compared to a year ago. The buyer and seller trafficindices also increased compared to a year ago, although the below 50 reading of the seller trafficindex indicates continued tight supply across many local markets. Compared to September 2015,market activity eased, in part due to the seasonal slowdown across many local markets at thistime of the year. Sustained job creation, the low interest rate environment, measuresimplemented by government-sponsored enterprises (Fannie Mae and Freddie Mac) to makecredit more accessible through the availability of three percent downpayment mortgages, and theFederal Housing Authority reduction in the annual mortgage insurance premium rate that lowersthe cost of borrowing are likely sustaining the housing market recovery.

    First-time home buyers accounted for 31 percent of sales, essentially unchanged from the

     previous months’ figures. Cash sales made up 24 percent of sales, purchases for investment purposes accounted for 13 percent of sales, and distressed properties dropped to six percent ofsales. Properties typically sold within 57 days nationally compared to 63 days a year ago. Ittypically took another 40 days to close a sale.

    Tight inventories, decreasing affordability, continued tight mortgage availability, andslow/excessively conservative appraisals were the main issues reported by respondents.Respondents in states with large oil-related industries reported weakening demand given thecontinuing slump in oil prices. When asked about the “Know Before You Owe”/TRIDregulations that took effect on October 3, 2015, respondents reported that it is still too early toassess the rules’ impact as it takes at least a month for contracts to go into settlement.

    October 2015 REALTORS® Confidence Index Survey HighlightsOct 2015 Sep 2015 Oct 2014

    RCI Current Conditions: Single-Family Sales 57 61 50

    RCI Six-Month Outlook: Single-Family Sales 63 62 56

    RCI Buyer Traffic Index 52 53 43

    RCI Seller Traffic Index 40 41 38

    First-Time Home buyers, as Percent of Sales1  31 29 29

    Sales to Investors, as Percent of Sales 13 13 15

    Cash Sales, as Percent of Sales 24 24 27

    Distressed Sales, as Percent of Sales 6 7 9

    Median Days on Market 57 49 63

    Median Expected Price Growth in Next 12 Months (%) 3.2 3.2 3.0

    1 - NAR’s 2015 Profile of Home Buyer and Sellers (HBS ) reports that among primary residence home buyers, 32 percent

    were first-time home buyers. The HBS surveys primary residence home buyers, while the monthly RCI Survey  surveys

    REALTORS® and also captures purchases for investment purposes and vacation/second homes.

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    I.  Market Conditions

    REALTORS® Broadly Reported Stronger Markets Compared to a Year Ago

    Market conditions vary across local markets and states, but REALTORS® generally reportedstronger housing market conditions across all property types in October 2015 compared to a yearago.3 Compared to September 2015, REALTORS® reported a seasonal slowdown which isnormal at this time of the year. Sustained job creation, the low interest rate environment, andmeasures implemented by government-sponsored enterprises (Fannie Mae and Freddie Mac) andFHA to make credit more accessible / affordable through the availability of three percentdownpayment mortgages and lower mortgage insurance premiums are likely sustaining thehousing market recovery.

    The REALTORS ® Confidence Index - Current Conditions chart below shows the single-family

    homes index was 61, a level consistent with more respondents citing “strong” market conditions.The current reading is better than one year ago in spite of the slip from last month (61 inSeptember 2015; 50 in October 2014). The indices for townhomes and condominiums were bothup from a year ago; however, they were both below 50, which indicates that more respondentsviewed their markets as “weak” rather than “strong.” REALTORS® continued to report on thedifficulty of obtaining financing for condominium unit purchases because many condominiumsare not FHA or GSE eligible.4 

    3 This is a diffusion index which measures the direction of and broadness of the respondents’ market conditions or confidence.An index of 50 indicates a balance of respondents having “weak” (index=0) and “strong” (index=100) expectations or allrespondents having moderate (=50) expectations. The index is not adjusted for seasonality effects.4 FHA and the GSEs have financing eligibility criteria relating to ownership occupancy requirements, delinquent dues, projectapproval process, and use for commercial space. See the Statement of the National Association of REALTORS® Submitted for the

     Record to the Senate Committee on Banking Housing and Urban Affairs on December 9, 2014 athttp://www.ksefocus.com/billdatabase/clientfiles/172/1/2180.pdf  

    57

    41

    39

    0

    20

    40

    60

    80

         2     0     0     8     0     1

         2     0     0     8     0     5

         2     0     0     8     0     9

         2     0     0     9     0     1

         2     0     0     9     0     5

         2     0     0     9     0     9

         2     0     1     0     0     1

         2     0     1     0     0     5

         2     0     1     0     0     9

         2     0     1     1     0     1

         2     0     1     1     0     5

         2     0     1     1     0     9

         2     0     1     2     0     1

         2     0     1     2     0     5

         2     0     1     2     0     9

         2     0     1     3     0     1

         2     0     1     3     0     5

         2     0     1     3     0     9

         2     0     1     4     0     1

         2     0     1     4     0     5

         2     0     1     4     0     9

         2     0     1     5     0     1

         2     0     1     5     0     5

         2     0     1     5     0     9

    REALTORS® Confidence Index: Current Conditions

    as of October 2015

    (50 = "Moderate" Conditions)

    Single-family Townhome Condominium

    4

    http://www.ksefocus.com/billdatabase/clientfiles/172/1/2180.pdfhttp://www.ksefocus.com/billdatabase/clientfiles/172/1/2180.pdfhttp://www.ksefocus.com/billdatabase/clientfiles/172/1/2180.pdf

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    REALTORS® Still Broadly Optimistic Over the Next Six Months

    Local market conditions vary, but REALTORS® remained by and large “strongly” confidentabout the outlook over the next six months for single-family homes.5 The REALTORS ® 

    Confidence Index - Six-Month Outlook  registered at 63 (62 in September 2015; 56 in October2014). Confidence indices for townhomes and condominiums also rose, but stayed below 50,indicating that more respondents viewed their markets as “weak” than “strong.”

    The following maps show the REALTORS ® Confidence Index - Six-Month Outlook across property types by state. All states, except for Vermont and Connecticut had broadly “strong” to

    “very strong” markets.6 States with large oil-related sectors such as Texas, North Dakota, andLouisiana still had a broadly “strong” housing market. In the townhomes market, only 13 stateshad broadly “strong” markets, which included California, Oregon, Washington, Colorado, Texas,Florida, Maryland, and the District of Columbia. The condominium market remains broadly“weak” except in nine states such as California, Washington, North Dakota, Colorado,Wyoming, Michigan, and Florida. REALTORS® have reported difficulty in accessingcondominium unit purchase financing for both FHA-insured and GSE-backed loans. Only 20 percent of condominiums are eligible for FHA condominium unit financing because of strict eligibility criteria such as those pertaining to occupancy requirements and delinquency dues.7 

    5 Respondents were asked “What are your expectations for the housing market over the next six months compared to the currentstate of the market in the neighborhood(s) or area(s) where you make most of your sales?”6 The market outlook for each state is based on data for the last three months to increase the observations for each state. Smallstates such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have less than 30 observations. Respondents rated conditionsor expectations as “Strong (100)”, “Moderate (50)”, and “Weak (0).” The responses are compiled into a diffusion index. Values25 and lower are considered “very weak”, values greater than 25 to 49 are considered “weak”, a value of 50 is considered“moderate”, values greater than 50 to 75 are considered “strong”, and values greater than 76 are considered “very strong”.7 http://www.realtor.org/topics/condominiums/condominium-resource-book  

    63

    47

    44

    0

    10

    20

    30

    40

    50

    60

    70

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         2     0     0     8     0     1

         2     0     0     8     0     5

         2     0     0     8     0     9

         2     0     0     9     0     1

         2     0     0     9     0     5

         2     0     0     9     0     9

         2     0     1     0     0     1

         2     0     1     0     0     5

         2     0     1     0     0     9

         2     0     1     1     0     1

         2     0     1     1     0     5

         2     0     1     1     0     9

         2     0     1     2     0     1

         2     0     1     2     0     5

         2     0     1     2     0     9

         2     0     1     3     0     1

         2     0     1     3     0     5

         2     0     1     3     0     9

         2     0     1     4     0     1

         2     0     1     4     0     5

         2     0     1     4     0     9

         2     0     1     5     0     1

         2     0     1     5     0     5

         2     0     1     5     0     9

    REALTORS® Confidence Index: Six-Month Outlook

    as of October 2015

    (50 = "Moderate" Outlook)

    Single-family Townhome Condominium

    5

    http://www.realtor.org/topics/condominiums/condominium-resource-bookhttp://www.realtor.org/topics/condominiums/condominium-resource-bookhttp://www.realtor.org/topics/condominiums/condominium-resource-bookhttp://www.realtor.org/topics/condominiums/condominium-resource-book

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    REALTORS® Confidence Index Six-Month Outlook for Single-Family Homes

    Aug–Oct 2015

    REALTORS® Confidence Index Six-Month Outlook for Townhomes

    Aug–Oct 2015

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    REALTORS® Confidence Index Six-Month Outlook for Condominiums

    Aug–Oct 2015

    REALTORS® Reported Stronger Buyer and Seller Traffic Compared to a Year Ago

    While local conditions vary, buyer traffic was broadly “strong” compared to a year ago. The REALTORS 

    ® Buyer Traffic Index registered at 52 (53 in September 2015; 43 in October 2014).

    Buyer traffic was stronger compared to a year ago, but was seasonally slower after the strong

    spring and summer months.

    Meanwhile, supply remains tight. The REALTORS ® Seller Traffic  Index registered at 40 (41 inSeptember 2015 and 38 in October 2014). While the construction of new privately ownedhousing units has been improving, reaching 1.2 million units in the second quarter of 2015,roughly 40 percent of recent new construction has been multi-family structures which aretypically for rental occupancy. Historically, multi-family structures accounted for only 20 percent of new construction, so the availability of single-units for purchase among recentlyconstructed properties is lower than is historically normal. REALTORS® reported low inventoryof properties in the lower price range and for those that are move-in ready.

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    Buyer traffic was “moderate” to “very strong” across most states, measured by the REALTORS ®  Buyer Traffic Index.

    8 States with the strongest buyer traffic were Washington, Oregon, andWyoming.

    REALTORS® Buyer Traffic Index

    Aug–Oct 2015

    8 Respondents were asked “How do you rate the past month's buyer traffic in the neighborhood(s) or area(s) where you makemost of your sales?” The responses were “Strong (100)”, “Moderate (50),” and “Weak (0).” Respondents rated conditions orexpectations as “Strong (100)”, “Moderate (50)”, and “Weak (0).” The responses are compiled into a diffusion index. Values 25and lower are considered “very weak”, values greater than 25 to 49 are considered “weak”, a value of 50 is considered“moderate”, values greater than 50 to 75 are considered “strong”, and values greater than 76 are considered “very strong”.

    52

    40

    20

    30

    40

    50

    60

    70

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         2     0     0     8     0     1

         2     0     0     8     0     5

         2     0     0     8     0     9

         2     0     0     9     0     1

         2     0     0     9     0     5

         2     0     0     9     0     9

         2     0     1     0     0     1

         2     0     1     0     0     5

         2     0     1     0     0     9

         2     0     1     1     0     1

         2     0     1     1     0     5

         2     0     1     1     0     9

         2     0     1     2     0     1

         2     0     1     2     0     5

         2     0     1     2     0     9

         2     0     1     3     0     1

         2     0     1     3     0     5

         2     0     1     3     0     9

         2     0     1     4     0     1

         2     0     1     4     0     5

         2     0     1     4     0     9

         2     0     1     5     0     1

         2     0     1     5     0     5

         2     0     1     5     0     9

    REALTORS® Buyer and Seller Traffic Indexes

    as of October 2015

    (50 = "Moderate" Conditions)

    Buyer Traffic Index Seller Traffic Index

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    Meanwhile, seller traffic was was broadly “weak” across most states, measured by the REALTORS 

    ® Seller Traffic Index.

    9 Seller traffic was “strong” in Montana, Wyoming, NorthDakota, Texas, Maine, and Alaska.

    REALTORS® Seller Traffic Index

    Aug–Oct 2015

    REALTORS® Expect Prices to Increase Modestly in Next 12 Months

    REALTORS® who responded to the October 2015 survey expected prices to increase by 3.2 percent over the next 12 months (3.2 percent in September 2015; 3.0 percent in October 2014).9 REALTORS® expect the recent strong price growth to moderate as rising prices have madehomes “unaffordable” for many, with home prices almost at par with their levels prior to thehousing downturn. Home prices have started to rise at a more modest pace: in September 2015,the median price of all existing homes in the U.S. was up by six percent compared to the level ayear ago, a deceleration from the nine percent year-over-year growth in April 2015.

    The map shows the median expected price change in the next 12 months for each state based onthe August – October 2015 RCI surveys.10 REALTOR ® respondents from Florida were the most

    9 Respondents were asked “How do you rate the past month's seller traffic in the neighborhood(s) or area(s) where you makemost of your sales?” The responses were “Strong (100)”, “Moderate (50),” and “Weak (0).” Respondents rated conditions orexpectations as “Strong (100)”, “Moderate (50)”, and “Weak (0).” The responses are compiled into a diffusion index. Values 25and lower are considered “very weak”, values greater than 25 to 49 are considered “weak”, a value of 50 is considered“moderate”, values greater than 50 to 75 are considered “strong”, and values greater than 76 are considered “very strong”.

    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 generally headed in the same direction.10 In generating the median price expectation at the state level, we use data for the last three surveys to have close to 30observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have less than 30 observations.  

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    upbeat, with a median expected price growth in the range of five to six percent. In Washington, Nevada, and Colorado, the median expected price growth among respondents was four to five percent.

    Median Expected Price Change of REALTORS® in Next 12 Months, By State

    Aug–Oct 2015

    Properties on the Market at 57 Days

    Properties that closed in October 2015 were typically on the market for a shorter time comparedto a year  ago, staying on the market for 57 days (49 days in September 2015; 63 days in October2014).11 Days on market usually increase after the spring and summer months due to theseasonal slowing down in demand. Respondents reported that it typically took another 40 days toclose the sale.

    Short sales were on the market for the longest time at 90 days, while foreclosed properties

    generally stayed on the market for 67 days. Non-distressed properties were on the market for 57days.

    11 Respondents were asked “For the last house that you closed in the past month, how long was it on the market from listing time

    to the time the seller accepted the buyer’s offer?” The median is the number of days at which half of the properties stayed on themarket.

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    Approximately 33 percent of properties were on the market for less than a month when sold.About 11 percent were on the market for longer than six months, a decrease from 30 percent inJanuary 2012. Properties that stay on the market for longer are more likely to sell at a discount.

    0

    50

    100

    150

    200

         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

         2     0     1     5     0     8

    Median Days on Market of Sales Reported By REALTOR®

    Respondents as of October 2015

    All Foreclosed Short sale Not distressed

    All: 57 Foreclosed: 67 Short sale: 90 Not distressed: 57

    33%

    18% 17%

    11%

    5% 4% 4% 3%4%

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    40%

    Less than

    1 month

    1 to less

    than 2

    months

    2 to less

    than 3

    months

    3 to less

    than 4

    months

    4 to less

    than 5

    months

    5 to less

    than 6

    months

    6 to less

    than 9

    months

    9 to less

    than 12

    months

    12

    months or

    more

    Percentage Distribution of Time on Market of Sales Reported by

    REALTOR® Respondents as of October 2015

    201410 201509 201510

    11

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    Properties typically sold within a month in California, Utah, Colorado, North Dakota, SouthDakota, Nebraska, and the District of Columbia. In Vermont, properties were typically on themarket for longer than 90 days when sold. All real estate is local. State-level data is provided forREALTORS® who may want to compare local markets against the state and national summary.

    Median Days on Market for Sales Reported by REALTORS®, By State

    Aug–Oct 2015

    4% 6%23%

    37%17% 25%

    41%34%

    26%27%

    19%

    12%

    30% 25%

    10% 12%

    0%

    20%

    40%

    60%

    80%

    100%

    Less than 1

    months

    Less than 3

    months

    6 to less than 9

    months

    12 months or

    more

       P   e   r   c   e   n   t   o    f   s   a    l   e   s ,

        b   y    d   a   y   s   o   n   m

       a   r    k   e   t

    Days on Market

    Properties That Stay Longer on the Market are More Likely

    to Be Sold at a Discount, Jan-Oct 2015

    Net discount of 12% or higher Net discount of 4% to 11%

    Net discount of less than 4% No discount or premium

    Net premium of up to 4% Net premium of 4% to 11%Net premium of 12% or higher

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    II. Buyer and Seller Characteristics

    Sales to First-Time Buyers: 31 Percent of Sales

    The share of first-time home buyers has remained essentially unchanged for the last five years.First-time home buyers accounted for 31 percent of existing home sales in October 2015 (29 percent in September 2015; 29 percent in October 2014).12 REALTOR ® respondents reportedthat tight inventory, increasingly unaffordable prices, and credit profiles that fail to meet tighterunderwriting standards are conditions that continue to work against first-time home buyers.

    Sales for Investment Purposes: 13 Percent of Sales

    Approximately 13 percent of REALTORS® reported that their last sale was for investment purposes (13 percent in September 2015; 15 percent in October 2014). Purchases for investment purposes have been on the decline with fewer distressed sales on the market. At their peak in2012-2013, investment sales were approximately 20 percent of sales.

    12 First-time buyers accounted for about 33 percent of all home buyers based on data from NAR’s 2014  Profile of Home Buyers

    and Sellers (HBS). The HBS is a survey of primary residence home buyers and does not capture investor purchases but doescover 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.

    31%

    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

         2     0     1     5     0     6

         2     0     1     5     1     0

    First-time Buyers as Percent of Market as of October 2015

    13

    http://www.realtor.org/reports/highlights-from-the-2014-profile-of-home-buyers-and-sellershttp://www.realtor.org/reports/highlights-from-the-2014-profile-of-home-buyers-and-sellershttp://www.realtor.org/reports/highlights-from-the-2014-profile-of-home-buyers-and-sellershttp://www.realtor.org/reports/highlights-from-the-2014-profile-of-home-buyers-and-sellershttp://www.realtor.org/reports/highlights-from-the-2014-profile-of-home-buyers-and-sellershttp://www.realtor.org/reports/highlights-from-the-2014-profile-of-home-buyers-and-sellers

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    Distressed Sales: Six Percent of Sales

    With rising home values and fewer foreclosures, the share of sales of distressed propertiescontinued to decline. In October 2015, distressed sales accounted for six percent of sales (seven percent in September 2015; nine percent in October 2014). About f ive percent of reported saleswere foreclosed properties, and about one percent were short sales.13 Distressed sales accountedfor about a third to a half of sales until 2011. Distressed properties sold at a discount of ten to 19 percent, depending on the condition of the property.

    13 The survey asks respondents to report on the characteristics of the most recent sale for the month.

    13%

    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

         2     0     1     5     0     6

         2     0     1     5     1     0

    Sales to Investors as Percent of Market as of October 2015

    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

         2     0     1     5

         0     6

         2     0     1     5

         1     0

    Distressed Sales, As Percent of Sales Reported by REALTOR®

    Respondents as of October 2015

    Foreclosed Short sale

    Foreclosed: 5% Short sale: 1%

    14

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    Distressed sales have fallen, with fewer properties in foreclosure (840,217 properties in theforeclosure inventory as of the second quarter of 2015 from a peak of two million properties in2009-2010).14 Fewer distressed sales and foreclosures improve home values, creating more homeequity for the homeowner. As of the second quarter of 2015, the equity of all households in realestate was valued at $12.2 trillion, or 56 percent of the value of households’ real estate assets.Household equity peaked at $13.3 trillion in the first quarter of 2006.

    14 Mortgage Bankers Association, seasonally adjusted data. 

    11%13%

    19%

    10%12%

    18%

    0%

    5%

    10%

    15%

    20%

    Below average Above average Average

    Mean Percent Price Discount by Property Condition

    of Distressed Sales Reported by REALTOR® Respondents

    Average for Nov 2014 - Oct 2015

    Foreclosed Short sale

    0.00

    0.50

    1.00

    1.50

    2.00

    2.50

    0.0

    1.0

    2.0

    3.0

    4.0

    5.0

         Q     1      /     1     9     9     0

         Q     3      /     1     9     9     1

         Q     1      /     1     9     9     3

         Q     3      /     1     9     9     4

         Q     1      /     1     9     9     6

         Q     3      /     1     9     9     7

         Q     1      /     1     9     9     9

         Q     3      /     2     0     0     0

         Q     1      /     2     0     0     2

         Q     3      /     2     0     0     3

         Q     1      /     2     0     0     5

         Q     3      /     2     0     0     6

         Q     1      /     2     0     0     8

         Q     3      /     2     0     0     9

         Q     1      /     2     0     1     1

         Q     3      /     2     0     1     2

         Q     1      /     2     0     1     4

       F   o   r   e   c    l   o   s   u   r   e   i   n   v   e   n   t   o   r   y ,

       i   n

       m   i    l    l   i   o   n   s

       A   s   p   e   r   c   e   n   t   o    f   m   o

       r   t   g   a   g   e   s

    Mortgage Foreclosure Inventory

    Foreclosure Inventory As percent of mortgages

    Source: Mortgage Bankers Association, downloaded from Haver Analytics

    15

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    Cash Sales: 24 Percent of Sales

    The share of cash sales to the market has declined compared to the levels in 2010-2014, but theshare remains elevated compared to levels before the housing downturn. Approximately 24 percent of sales were all-cash (24 percent in September 2015; 27 percent in October 2014).Buyers of homes for investment purposes, 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.

    0.00

    10.00

    20.00

    30.00

    40.00

    50.00

    60.00

    70.00

    80.00

    0.000

    2000.000

    4000.000

    6000.000

    8000.00010000.000

    12000.000

    14000.000

         Q     1      /     1     9     8     0

         Q     1      /     1     9     8     2

         Q     1      /     1     9     8     4

         Q     1      /     1     9     8     6

         Q     1      /     1     9     8     8

         Q     1      /     1     9     9     0

         Q     1      /     1     9     9     2

         Q     1      /     1     9     9     4

         Q     1      /     1     9     9     6

         Q     1      /     1     9     9     8

         Q     1      /     2     0     0     0

         Q     1      /     2     0     0     2

         Q     1      /     2     0     0     4

         Q     1      /     2     0     0     6

         Q     1      /     2     0     0     8

         Q     1      /     2     0     1     0

         Q     1      /     2     0     1     2

         Q     1      /     2     0     1     4

    Owner's Equity,

    as % of RE assetsOwner's Equity,

    $ bn

    Household Owner's Equity in Real Estate

    Households: Owners' Equity in Real Estate (NSA, Bil $)

    Households: Owners' Equity in Real Estate as a % of Household Real…

    Source: FRB, Flow of Funds , Table B.101, from Haver Analytics

    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

         2     0     1     5     0     6

         2     0     1     5     1     0

    Cash Sales as Percent of Market as of October 2015

    16

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    Among financed home purchases, respondents reported that 38 percent made a downpayment ofat least 20 percent, about the same since 2011 when NAR started collecting this data. Amongfinanced purchases by first-time home buyers, 69 percent had downpayment terms of zero to six percent, a decrease from 77 percent of first-time buyers in 2009. Low downpayment loans have ahigher monthly mortgage payment and typically require a mortgage insurance, but are an optionfor home buyers who do not have large savings and are willing to pay the higher monthly payment. The decreased share of low downpayment loans is one indicator that access to credithas become more difficult for borrowers who cannot make higher downpayments. In 2015,Fannie Mae and Freddie Mac started purchasing three percent downpayment mortgages of borrowers who meet underwriting guidelines.

    71%

    62%

    49%

    42%

    13%8%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    International Investor Second

    home

    Distressed

    sale

    Relocation First-time

    buyer

    Percent of Sales That are All-Cash By Type of Buyer

    in October 2015

    38%

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    40%

    45%

    50%

         2     0     1     1     0     4

         2     0     1     1     0     7

         2     0     1     1     1     0

         2     0     1     2     0     1

         2     0     1     2     0     4

         2     0     1     2     0     7

         2     0     1     2     1     0

         2     0     1     3     0     1

         2     0     1     3     0     4

         2     0     1     3     0     7

         2     0     1     3     1     0

         2     0     1     4     0     1

         2     0     1     4     0     4

         2     0     1     4     0     7

         2     0     1     4     1     0

         2     0     1     5     0     1

         2     0     1     5     0     4

         2     0     1     5     0     7

         2     0     1     5     1     0

    Percent of Mortgage Sales With Downpayment of

    At Least 20 Percent as of October 2015

    17

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    Age, Previous Residence, and Type of Property Purchased

    Buyers age 34 and under accounted for 28 percent of home sales reported by the respondents. Nearly half of buyers were in the age group 35 to 55 years.

    Slightly more than half of all reported buyers lived in homes they owned immediately prior totheir recent home purchase. These buyers include trade-up or trade-down buyers and those whoare purchasing a second home or one for investment purpose. Home buyers who were rentingimmediately prior to their recent home purchase accounted for 35 percent of sales, essentiallyunchanged compared to past months.

    69%

    50%55%60%65%70%75%

    80%85%90%

         2     0     0     9     0     6

         2     0     0     9     0     9

         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

         2     0     1     5     0     8

    Percent of First-time Buyers Obtaining a Mortgage Who Made

    a Downpayment of 0% to 6% as of October 2015*

    *The data reported for the month is a rolling three-month figure.

    0%10%20%30%40%50%60%70%

    80%90%

    100%

         2     0     1     3     0     7

         2     0     1     3     0     9

         2     0     1     3     1     1

         2     0     1     4     0     4

         2     0     1     4     0     7

         2     0     1     4     0     8

         2     0     1     4     0     9

         2     0     1     4     1     0

         2     0     1     4     1     1

         2     0     1     4     1     2

         2     0     1     5     0     1

         2     0     1     5     0     2

         2     0     1     5     0     3

         2     0     1     5     0     4

         2     0     1     5     0     5

         2     0     1     5     0     6

         2     0     1     5     0     7

         2     0     1     5     0     8

         2     0     1     5     0     9

         2     0     1     5     1     0

    Age Distribution of Buyers for Sales Reported by REALTOR®

    Respondents as of October 2015

    Age 34 and under Age 35 to 55 Age 56 and over

    18

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    Sales data compiled for the November 2014-October 2015 timeframe showed that among buyers34 years and under, 86 percent purchased single-family homes, compared to the 77 percent ratefor buyers 56 years and older. Buyers of ages 56 and over are about twice as likely to purchase acondominium as other buyers. REALTORS® have also reported a demand for 55 and oldercommunity housing as the large baby boomer population continues to move into retirement.

    0%

    20%

    40%

    60%

    80%

    100%

         2     0     1     4     0     8

         2     0     1     4     0     9

         2     0     1     4     1     0

         2     0     1     4     1     1

         2     0     1     4     1     2

         2     0     1     5     0     1

         2     0     1     5     0     2

         2     0     1     5     0     3

         2     0     1     5     0     4

         2     0     1     5     0     5

         2     0     1     5     0     6

         2     0     1     5     0     7

         2     0     1     5     0     8

         2     0     1     5     0     9

         2     0     1     5     1     0

    Living Status of Home Buyers at Time of Home Purchase of

    Sales Reported by REALTORS® as of October 2015

    Lives with parents, relatives, or friends

    Lives in own home

    Rents an apartment or house

    86% 86%77% 84%

    7% 6%7%

    7%7% 8%

    16% 10%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    Age 34 and under Age 35 to 55 Age 56 and over All

    Type of Residential Property Purchased by Age Group

    Nov 2014 - Oct 2015

    Single-family Townhome Condominium

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    III. Current Issues

    Contract Settlement Issues: Financing and Appraisals are Major Issues

    In reporting on their last contract that went into settlement or was terminated over the periodAugust – October 2015, REALTORS® reported that 64 percent of contracts were settled on time,29 percent had delayed settlement, and seven percent were terminated. On the impact of the“Know Before You Owe”/TRID regulations that took effect on October 3, 2015, respondentsreported that it is still too early to assess the impact as it takes at least a month for contracts to gointo settlement.

    Of all contracts settled or terminated, financing, appraisal, and home inspection issues were themajor problems: 18 percent had financing issues, 13 percent had home inspection issues, and 11 percent had appraisal issues.

    Among contracts that had a delayed settlement (29 percent), 46 percent had financing issues.

    Among contracts that were terminated (seven percent), 32 percent had home inspection issues,while 27 percent had financing issues.

    65% 64% 63% 63% 65% 65% 64% 64%

    26% 26% 28% 29% 29% 29% 30% 29%

    9% 10% 9% 7% 6% 7% 6% 7%

    0%

    20%

    40%

    60%80%

    100%

    How Sales Contracts Were Settled in Aug - Oct 2015*

    Contract was terminated

    Contract was delayed but eventually went into settlement

    Contract was settled on time

    * Based on the most recent contract that went into settlement or was terminated during

    this period.

    20

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    49%

    18%

    13%

    11%

    5%

    4%

    3%

    1%

    1%

    9%

    No problems encountered

    Issues related to obtaining financing

    Home inspection/environmental issues

    Appraisal issues

    Contingencies stated in the contract

    Titling/deed issues

    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 August - October 2015 *

    *Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer or

    seller backing out, price disagreement, non-price disagreement, HOA issues, builder delays, etc.

    46%

    21%

    17%

    10%

    9%

    6%

    2%

    1%

    18%

    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 Were Delayed But Eventually

    Went Into Settlement in August - October 2015

    (Delayed Contracts Represent 29 Percent of Closed or Terminated Contracts)

    *Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer or seller

    backing out, price disagreement, non-price disagreement, HOA issues, builder delays, etc. 

    21

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    32%27%

    16%

    10%

    7%

    4%

    2%

    1%

    15%

    Home inspection/environmental issuesIssues related to obtaining financing

    Appraisal issues

    Contingencies stated in the contract

    Issues in buy/sell distressed property

    Titling/deed issues

     Buyer lost job

    Home/hazard/flood insurance issues

    Other

    Problems Encountered for Contracts That Were Terminated

    in August - October 2015

    (Terminated Contracts Represent Seven Percent of

    Closed or Terminated Contracts)

    *Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer or seller backing

    out, price disagreement, non-price disagreement, HOA issues, builder delays, etc. 

    22

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    The NATIONAL ASSOCIATION of  REALTORS®

    , “The Voice for Real Estate,” isAmerica’s largest trade association, representing over 1 million members, including NAR’sinstitutes, societies, and councils, involved in all aspects of the real estate industry. NARmembership includes brokers, salespeople, property managers, appraisers, counselors andothers engaged in both residential and commercial real estate. The term REALTOR ® is aregistered collective membership mark that identifies a real estate professional who is amember of the National Association of REALTORS® and subscribes to its strict Code ofEthics. Working for America's property owners, the National Association provides a facilityfor professional development, research, and exchange of information among its members,and to the public and government for the purpose of preserving the free enterprise system andthe right to own real property.

    The Mission of the NATIONAL ASSOCIATION of  REALTORS® Research Division is tocollect and disseminate timely, accurate, and comprehensive real estate data and to conducteconomic analysis in order to inform and engage members, consumers, policy makers, andthe media in a professional and accessible manner.

    To find out about other products from NAR’s Research Division, visitwww.REALTOR.org/research-and-statistics  

    Also follow NAR Research on

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