- April home sales data show that about 40 percent of all existing homes in the US are sold in the South. At the current seasonally adjusted sales rate, that’s more than 2 million a year.
- For decades, the South has had the largest number of housing units and owner-occupied housing units. As the South’s share of population has increased over the last decade, so too has its contribution to home sales nationally.
- While all regions showed year over year sales growth in the data released today, the South showed the strongest growth at around 15% which helped boost national sales growth to nearly 10 percent above one year ago.
- By price, the South is the 3rd most expensive compared to other regions with an April 2013 median price of $168,700. From one year ago, the median price of homes sold in the South has jumped more than 10 percent, but affordability remains high. According to March data, the median income family earns nearly twice what is needed to qualify to purchase the median priced home[1].
- The South can be broken down further into 3 Census divisions which include the South Atlantic, East South Central, and West South Central.
[1] For details see NAR’s Housing Affordability Index Release: http://www.realtor.org/topics/housing-affordability-index
- Among recent home buyers, 41 percent had children under 18 in the home. Eighteen percent of buyer households had one child, 16 percent had two children, and 7 percent had three or more children.
- Buyers who had children in the home are more likely than those without children to be purchasing a home because of the desire for a larger home, due to a job-related relocation, or a change in a family situation.
- Buyers who had children in the home had slightly different priorities than buyers without children. The quality of the school district and convenience to parks and recreational facilities were much more important to those with children.
- Buyers with children in the home also place higher importance on a home with a basement, a family room, a kitchen island and an eat-in kitchen.
- For more information on the Profile of Home Buyers and Sellers, click here. And for more info on the Profile of Buyers’ Home Feature Preferences, visit here.
- In a previous post, we examined the impact of mortgage rates and house prices on the number of renters qualified to buy to show that lower mortgage rates, rising incomes and changes in house prices have affected the number of renters who could qualify to purchase a median-priced home over time.
- In this post, we look at the impact of mortgage rates ceteris paribus, a latin term used in economics that means “holding everything else constant.” In this case, we’re going to use the same income distribution, home price, and down payment requirement, but we’re going to change the mortgage rates to see what happens to the number of renter households who qualify to purchase the median priced home.
- The table below shows the results of our thought experiment. While 20 million renter households qualify based on income to purchase the median-priced home in 2012 at prevailing mortgage rates, that figure would decline if interest rates were to rise.
- If rates were to return to 5 percent, only 17.6 million renter households would have income sufficient to qualify to purchase the median-priced existing home. A rate increase to 7 percent causes increased monthly payments of $280 per month, and an additional $13,400 is needed to qualify to purchase this home. That type of rate increase would knock nearly 6 million currently qualified renter-households out of the market
- What is the likelihood of increasing mortgage rates? In our current forecast, NAR Research expects mortgage rates to begin to creep up but still remain below 5 percent through the 2014 forecast horizon. Mortgage rates bottomed in November/December 2012 at 3.4 percent for 30-year fixed-rate mortgages. Over the most recent 15 years, rates have ranged from 3.4 to 8.5 percent and averaged 6 percent as seen in the chart below.
- One note about the above calculations. They assume that potential buyers meet credit qualifications and have sufficient cash on hand to close a transaction. Lending standards, credit quality, and access to funds will affect the number of households who will ultimately be able to buy a home.
- As we look forward to Memorial Day Weekend and the official start to summer here are a few vacation home owner statistics from a recent report.
- The median vacation home purchase price was higher in 2012 than in 2011–$150,000.
- The share of vacation buyers who did not use a mortgage rose slightly to 46 percent from 42 percent in 2011.
- Since there were fewer distressed properties on the market in 2012, there were fewer that could be purchased. The share of vacation buyers who purchased a vacation property dropped to 35 percent from 39 percent in 2011.
- However, the share does remain high—20 percent of vacation buyers purchased a home in foreclosure, while 15 percent purchased a short sale.
- Vacation buyers expect to own their vacation home for 10 years.
Click chart to view larger version.
- The typical home recently purchased was 1,860 square feet in size. Repeat buyers, buyers of new homes, married buyers and those with children under the age of 18 in the home typically purchased larger homes.
- The typical home purchased was built in 1996. First-time home buyers and single female buyers tended to buy older homes, while buyers who purchased in the South and buyers who purchased higher priced homes tended to buy newer homes.
- The typical buyer bought a home with three bedrooms and two full bathrooms.
- About half of homes purchased were on a single level, while two-fifths were on two levels.
- For more information on home characteristics that buyers want, read the 2013 Home Features Survey.
Click chart to view larger version.
