Weekly Housing Trends View — Data Week May 2, 2020

Our research team releases regular monthly housing trends reports. These reports break down inventory metrics like the number of active listings and the pace of the market. In light of the developing COVID-19 situation affecting the industry, we want to give readers more timely weekly updates. You can look forward to a Weekly Housing Trends View near the end of each week. Here’s what the housing market looked like last week.

Weekly Housing Trends Key Findings

  • Total inventory was down 19%. If new listing inflow remains constricted and delistings remain common, we could see overall inventory decline even more rapidly next week.
  • Time on market was 11 days slower than last year, the biggest increase in time on market since 2013.
  • New listings were down 39%. Declines persist but seem to have roughly stabilized nationwide.

Data Summary

Week ending May 2Week ending April 25Week ending April 18First Two Weeks March
Total Listings -19% YOY-17% YOY-15% YOY-16% YOY
Time on Market11 days slower YOY9 days slower YOY6 days slower YOY-4 days faster YOY
Median Listing Prices1.6% YOY1.6% YOY0.3% YOY+4% YOY
New Listings -39% YOY-43% YOY-42% YOY+5% YOY

Weekly Housing Trends View

  • Total Active ListingsCountervailing forces continue to pull total listings in opposite directions, but so far the momentum limiting homes for sale is winning out. Total active listings are declining from a year ago at a faster rate than observed in previous weeks.
    Weekly data show total active listings declined 19 percent compared to a year ago as the lack of sellers is currently outweighing the extra time homes spend on the market. Total active listings are pulled in two directions: 1) downward by the sharp drop in new listings, increase in delistings and decrease in the previous momentum of buyer appetite outpacing housing supply; and 2) upward by properties spending more time on the market as buyers who once avidly pounced on for-sale homes now hesitate to make major purchases in an uncertain economy. On balance, if new listing inflow remains constricted and delistings remain common, we could see overall inventory decline even more rapidly next week.
  • Time on market: Time on market continues to show the impact of fewer new home listings coming to market and properties sitting for-sale longer, as fewer buyers submit offers. Time on market rose by double-digit percent growth nationwide and in three-quarters of large metros. In the first two weeks in March (our pre-COVID-19 base), days on market were 4 days faster than last year on average. The trend in time on market began to slow in mid-March, but the indicator didn’t register an increase until April. Data for the week ending May 2 showed that time on market was 11 days or 19percent greater than last year, the biggest increase in time on market since 2013. This is further confirmation of for-sale homes sitting on the market longer, waiting for buyers. It’s visible in local data as well as the national figures, with 75 of the largest 99 metros showing similar double-digit percent increases in time on market from one year ago.
  • New listings: Flattening the curve? Declines in newly listed for-sale homes persist but seem to have roughly stabilized nationwide with the size of declines remaining roughly the same in the last three weeks. Drops in newly listed homes are widespread, with all (98 of 98) large metros registering a smaller number of new listings than this time last year. Persistent declines still show that many sellers are reevaluating or postponing sales rather than wading into the current uncertain housing market.In the first two weeks in March (our pre-COVID-19 base), new listings were increasing 5 percent year-over-year on average. In the most recent three weeks ending April 18, and April 25, and May 2, the volume of newly listed properties decreased by 42 percent, 43 percent and 39 percent year-over-year, respectively. Near steady declines in newly listed properties in the last few weeks suggest we’ve yet to see supply turn back to normal. However, some improvement could be on the horizon as more than two thirds (70 of 98) of large metros are seeing smaller declines, including large markets like Dallas, Chicago and Atlanta. 
  • Asking prices: Sellers look for minimal home price growth, and the mix of homes for-sale continues to be shifted toward more lower-priced homes. In the first two weeks of March (our pre-COVID-19 base), median listing prices were increasing 4.4% year-over-year on average. In the most recent three weeks ending April 18, and April 25, and May 2, the median U.S. listing price posted an increase of just 0.3, 1.6 and 1.6 percent year-over-year, respectively, registering some of the slowest pace of growth since 2013. This slight reacceleration suggests listing prices may regain momentum in the weeks to come as sellers regain confidence and buyers slowly resume activity. Locally, 65 of 99 metros saw asking prices increase over last year.
    So far we’re seeing a smaller share of asking price reductions compared to this time last year in the U.S. and most (92 of 100) of top metro areas, suggesting that while sellers aren’t pushing asking prices, they aren’t quick to reduce them. Additionally, high-cost areas such as the northeast have seen some strong seller reactions–de-listings and fewer new listings–which has shifted the distribution of homes for sale nationwide toward a lower price point. 

Post-COVID Trends in Mortgage-Financed Primary Home Purchases

  • As dissected by my colleague, Sabrina Speianu, in the first month post-COVID-19, mortgage data** shows little change in trends by age group despite the major shifts in the housing market. Primary home purchases by Gen Z and Millennials are on the rise while Gen X, Boomers, and the Silent Generation are purchasing a smaller share of homes with mortgages. Similar trends are observed when looking at the generational shares of mortgage dollar volume.
  • Home purchase prices are rising the most for younger generations with Millennials seeing a 9 percent increase and Gen Z seeing purchase prices rise 13 percent. For the first-time, the median purchase price for Millennials ($280,800) is approximately equal to that of Baby Boomers ($282,000).
  • Perhaps as a result of low mortgage rates which may have caused younger buyers to pursue homes with higher purchase prices, average down payments have slid for Millennial and Gen-Z buyers in 2020, down to 7.8 percent for Millennials. Along with higher purchase prices and lower down payments, loan amounts are rising fastest for younger borrowers, with Gen Z seeing an 11 percent increase in median loan amount and Millennials seeing a nearly 15 percent increase.  
  • Shares of home purchasing by generation show warmer areas gaining purchase share, especially among Boomers and Gen-Xers, and Charlotte, Denver, and Phoenix metro areas saw gains across generations.
  • Dense metros in the Northeast and Midwest, especially New York and Detroit that have been hard-hit by COVID, saw decreasing shares of home buyers across generations.
Metro Areas Seeing Gains in Home Purchase Shares, by Generation
Baby BoomersGen XMillennials
Phoenix-Mesa-Scottsdale, AZPhoenix-Mesa-Scottsdale, AZCharlotte-Concord-Gastonia, NC-SC
Charlotte-Concord-Gastonia, NC-SCAtlanta-Sandy Springs-Roswell, GADenver-Aurora-Lakewood, CO
Riverside-San Bernardino-Ontario, CAWashington-Arlington-Alexandria, DC-VA-MD-WVChicago-Naperville-Elgin, IL-IN-WI
Tampa-St. Petersburg-Clearwater, FLCharlotte-Concord-Gastonia, NC-SCVirginia Beach-Norfolk-Newport News, VA-NC
Orlando-Kissimmee-Sanford, FLDenver-Aurora-Lakewood, COBuffalo-Cheektowaga-Niagara Falls, NY
Metro Areas Seeing Declines in Home Purchase Shares, by Generation
Baby BoomersGen XMillennials
New York-Newark-Jersey City, NY-NJ-PA New York-Newark-Jersey City, NY-NJ-PA New York-Newark-Jersey City, NY-NJ-PA 
Chicago-Naperville-Elgin, IL-IN-WI Detroit-Warren-Dearborn, MI Detroit-Warren-Dearborn, MI 
Detroit-Warren-Dearborn, MI St. Louis, MO-IL Los-Angeles-Long Beach-Anaheim, CA 
Kansas City, MO-KS Cincinnati, OH-KY-IN Albany-Schenectady-Troy, NY 
St. Louis, MO-ILSan Francisco-Oakland-Hayward, CAKansas City, MO-KS

*Some data points for Los Angeles and Virginia Beach have been excluded due to data unavailability.

** Note: This report does not have a view of changes in generational trends among the cash-buying segment of home purchasers since its primary data source is loan origination data.

You can download weekly housing market data from our data page.

There’s a Rental Crisis Coming. Here’s How to Avoid It.

The Covid-19 pandemic is wreaking havoc on the U.S. rental market. Approximately 9 million households have so far failed to pay their May rent, according to industry data. Last month, 1.4 million fewer households paid their rent compared with this time last year.

The country’s 44 million rental households are uniquely vulnerable amid the current public health and economic crises. Renters often lack financial security and legal protections, not to mention bargaining power vis-a-vis their landlords. Worse, many are now being hit by the worst economic downturn since the Great Depression. Low-income renters, especially, work in industries crippled by Covid-related job loss: retail, hospitality and leisure, restaurants, and construction. Data suggests that 16.5 million renter households have already lost income because of the economic shutdown.

Faced with the specter of massive housing loss, policymakers have taken some steps to keep tenants in their homes, not only to help the renters but also as a critical public health measure — after all, it’s hard to comply with a “stay at home” order if you don’t have a home, or to socially distance if you’re forced to move into tight quarters with family or friends. The CARES Act has temporarily protected many renters by providing billions of dollars for emergency housing assistance, significantly expanded unemployment benefits and halted some evictions through July. Dozens of states and cities have also temporarily halted evictions, and citiessuch as Los Angeles, Chicago and Philadelphia are providing emergency funding for tenants.

It appears these stopgaps are working, at least for now: We have not seen as severe a spike in nonpayment of rent as might otherwise be expected, and early rent payment figures from May look a bit more encouraging than April’s numbers.

But these remedies focus on the short term. Because of the scale of this downturn, many if not most unemployed renters will not have new jobs by the end of July. The federal government needs a long-term plan to prevent millions of unemployed renters from losing their homes when eviction moratoriums and unemployment sweeteners run out.

More shutdowns coming

Indeed, public health experts are predicting that the Covid-19 crisis will last well beyond the summer, and some government officials are bracing for waves of shutdowns that could continue for 12 to 18 months. It’s also likely that the U.S. will get hit with another, perhaps more deadly, wave of the virus next winter. When the economy does reopen, it will be in the throes of a deep recession during which millions of middle-income tenants will likely be unemployed and require housing assistance for the first time. Without smart, proactive policies to help millions of unemployed renters, we will be facing billions of dollars in rental debt, chaos at the eviction courts and overcrowded shelters primed for another outbreak.

Renters were struggling before the Covid-19 outbreak amid a well-documented affordable housing crunch. Nearly 40 percent of renter households are rent-burdened — meaning that they spend more than a third of their salary on rent — and two-thirds of renter households can’t afford an unexpected $400 expense.

On top of that, renters have few of the legal and financial protections offered to homeowners. Many states forbid renters from withholding rent even if their unit is in disrepair, most renters have no right to legal counsel during eviction proceedings, and once eviction judgments are handed down, renters can be evicted in a matter of days. And, partly as a result of the subprime mortgage crisis of 2008, federal housing policy heavily favors homeowners over renters. Congress spends approximately three times as much on mortgage-interest reduction as it spends on rental housing vouchers each year. Whereas mortgage holders are protected by the provisions of the Dodd-Frank Act, notably through creation of the Consumer Financial Protection Bureau, no analogue exists for renters.

For the moment, these renters are being kept afloat through a combination of short-term emergency cash, unemployment benefits and eviction bans. But it won’t last past the summer. On top of the one-time $1,200 stimulus check, the extra $600 per week added to unemployment insurance checks expires in July. Unemployment doesn’t cover everyone, notably our 10 million to 12 million taxpaying undocumented immigrants — many of whom are renters — and those working in the informal economy providing child care, cleaning and other services. Another 8 million to 12 million unemployed Americans haven’t even bothered to apply, due to a well-documented backlog of claims and the difficult application process.

It’s not clear what appetite Congress has for extending the current short-term stimulus measures. Lawmakers might choose to extend the $600 per week unemployment sweetener past July. An extra $2,400 per month is more than enough to cover rent for most Americans, and once unemployment offices dig out from the initial crush of claims, delivering this assistance would be an efficient and direct way to keep more people in their homes. Yet Republicans are concerned that these expanded benefits are discouraging people from returning to work, and any such proposal would have to survive tough negotiations.

Meanwhile, the $300 billion recently provided in the most recent stimulus package to keep small business workers on payroll is likely already gone. Temporary rental assistance remains underfunded by tens of billions of dollars, and need is only growing as layoffs continue.

Mom-and-pop landlords

While landlords should be encouraged to reduce payments or implement repayment plans, canceling rent isn’t a viable option for many of them. The prototypical rental unit might be inside a high-rise apartment building owned by a real estate giant, but in fact the overwhelming majority of rental properties in this country are single-unit homes owned by mom-and-pop landlords. These property owners rely on rent to pay their own mortgages, to finance repairs and upkeep of rental properties, and to pay property taxes.

So, protecting tens of millions of renters in the midst of a deep recession won’t be easy. But Congress needs to recognize the importance of keeping rent checks flowing. Delinquent rents could easily spiral into foreclosed units and a consolidation of rental stock similar to Wall Street buy-ups after the Great Recession. That means an increase in substandard housing, worse property management and more marginalized Americans. What’s more, evictions cost U.S. cities hundreds of million of dollars per year. That money should be helping to prop up a struggling economy instead.

But while difficult, it’s not impossible to prevent a rental-housing crisis. Congress needs to expand direct rental assistance. That means cash for rent, sent either directly to landlords or renters.

The National Low Income Housing Coalition estimates that $100 billion in rental assistance would support 15.5 million low-income households over the next year. The Urban Institute’s estimate is about twice that, and accounts for renters of all incomes. That line item’s a drop in the bucket compared to the total stimulus funding Congress anticipates pushing through this year, and will stabilize millions of Americans’ largest household expenditure.

Several mechanisms

There are several mechanisms Congress could chose for this. Cash could be directly provided for rent through the Department of Housing and Urban Development’s existing Emergency Solutions Grant network, in which local services providers administer funds to those at risk of homelessness, or through temporary expansion of the department’s Housing Choice Voucher program, through which local housing agencies pay landlords a portion of low-income tenants’ rent. While some housing agencies might face a flurry of new applications, most unemployed American renter households with zero income would easily qualify.

Alternatively, Congress could attempt to funnel money more directly to landlords. The benefit of this approach is that there are fewer landlords than tenants, and they’re easier to track down. The drawback is that this approach would involve creating an entirely new program. If Congress goes this route, it could model a program on the Treasury Department’s Home Affordable Modification Program (HAMP), focused on landlords’ non-owner occupied homes, or expand the Federal Reserve’s Main Street Lending program to allow lending to the rental industry.

The bottom line is that Congress needs to find a way to inject funding into the rental ecosystem — whether through unemployment insurance, rental assistance or direct payment to landlords. Protecting our renters won’t be cheap, and it won’t be easy. But ignoring the coming crisis will cost billions more down the line in the form of rental debt and landlord foreclosures, and could keep millions of Americans from safely sheltering in place. That’s something we truly can’t afford.

https://www.yahoo.com/news/rental-crisis-coming-avoid-163959843.html

Weekly Housing Trends View–Data Week April 18, 2020

Our research team releases regular monthly housing trends reports which break down inventory metrics like the number of active listings and the pace of the market. In light of the developing COVID-19 situation affecting the industry, we want to give readers more timely weekly updates. You can look forward to a Weekly Housing Trends View near the end of each week. Here’s what the housing market looked like last week.

Weekly Housing Trends View

  • Time on market: Slower to react, time on market now clearly shows the impact of fewer new home listings coming to market and properties sitting for-sale longer, as fewer buyers submit offers nationwide and in half of large metros. In the first two weeks in March (our pre-COVID-19 base), days on market were 4 days faster than last year on average. Last week, median days on market were one day greater than the year ago level, and we expected time on market to rise. This week’s data showed that time on market was 6 days or 10 percent greater than last year, the biggest increase in time on market since 2013. This is the first clear sign of for-sale homes sitting on the market longer, waiting for buyers.  It’s visible in local data as well as the national figures, with 54 of the largest 99 metros showing similar double-digit percent increases in time on market from one year ago. Importantly, analysis of metro data from last week shows a strong link between the prevalence of COVID-19 in a market and increasing time on market.  In the 10 worst-hit metros, time on market was up 15 percent, compared to just a 2 percent increase among the 10 least-affected metro areas, analysis detailed here
  • New listings: Past the peak? Declines in newly listed for-sale homes persist nationwide and in nearly all (97 of 99) large metros, but the size of declines shrank compared to last week. Persistent declines still show that many sellers are reevaluating or postponing sales rather than wading into the current uncertain housing market.

    In the first two weeks in March (our pre-COVID-19 base), new listings were increasing 5 percent year-over-year on average. In the most recent three weeks ending April 4, and April 11, and April 18, the volume of newly listed properties decreased by 31 percent, 47 percent and 42 percent year-over-year, respectively. While this improvement is small and only visible in one week of data, far below the threshold we’d need to declare that we’re past the worst in housing, we see a similar trend in nearly three-quarters of the top 100 metros (73 of 99) including several hard-hit areas like Seattle, Boston, and New Orleans. The largest drops in new listings persist in Detroit, New York, and Philadelphia.

    Additionally, analysis of metro data from last week shows a strong link between the prevalence of COVID-19 in a market and fewer new listings. In other words, areas particularly hard-hit by COVID-19 were showing the strongest seller reactions, as detailed here
  • Asking prices: Sellers hold asking prices steady and the mix of homes for-sale shifts toward more lower-priced homes.

    In the first two weeks of March (our pre-COVID-19 base), median listing prices were increasing 4.4% year-over-year on average. In the most recent three weeks ending April 4, and April 11, and April 18, the median U.S. listing price posted an increase of just 1.6, 0.8 and 0.3% year-over-year, respectively, the latter marking the slowest pace of growth since 2013. Viewed another way, asking prices typically increase in the spring. Last year, the median list price rose more than 4 percent from early March to early April whereas this year the median list price has remained flat in that same window.

    Sellers that are choosing to sell now seem to recognize the market challenges and may be pricing homes less aggressively upon listing than they were pre-COVID which is why we are seeing steady asking prices. Majorities of buyers and sellers do not anticipate large-scale price declines. A survey from the National Association of Realtors conducted April 19-20 shows that 53 percent of buyer agent clients expect home prices to increase or decline only mildly (by less than 5 percent). Similarly, 89 percent of agents with seller clients had either not reduced their asking price or had done so by less than 5 percent. These results support trends we’re seeing in the listing data. So far we’re seeing a smaller share of asking price reductions compared to this time last year in the U.S. and three-quarters (74 of 99) of top metro areas.

    Additionally, high-cost areas such as the northeast have seen some strong seller reactions–de-listings and fewer new listings–which has shifted the distribution of homes for sale nationwide toward a lower price point. 
  • Total Active ListingsCountervailing forces continue to pull total listings in opposite directions. Data shows stable declines in total active listings and expect this trend to continue.

    Total active listings are pulled in two directions: 1) downward by the sharp drop in new listings, increase in delistings and decrease in the previous momentum of buyer appetite outpacing housing supply; and 2) upward by properties spending more time on the market as buyers who once avidly pounced on for-sale homes now hesitate to make major purchases in an uncertain economy. On balance, we think total active listings will continue to decline, but at a very gradually slowing pace. Weekly data show total active listings declined 15% compared to a year ago, with the pace of declines remaining nearly constant since mid March.

Buyers and sellers holding back in response to COVID

In addition to it’s weekly listings data, realtor.com conducted a quick survey of its users from April 15-17 and here are a few key findings.

  • 38% of buyers are looking to postpone their home purchase citing the economy and worries about the ability to tour homes.
  • Buyers claim to be spending more time on real estate sites/apps. Floor plans and detailed property information top their list of asks from these providers
  • 77% of the sellers surveyed are also looking to buy a home. More than half of those had neither listed their home yet nor found a home to buy

*Some data points for Los Angeles and Las Vegas have been excluded due to data unavailability.