Will Millennials reinvigorate the U.S. housing recovery?

The San Diego Union-Tribune - Wednesday, February 9, 2011

Millennials, those between 18-34, will drive America's housing recovery as prices have generally become more affordable and mortgage rates are still historically low, said Pete Flint, CEO of real estate website Trulia.com on Wednesday.

A recent Trulia survey of 2,000 Americans shows that 26 percent of adults in that age range say their views on homeownership has become more positive in the last six months and almost a quarter say they plan to buy a home by the end of 2012.

"I think they will play a crucial role in the stabilization of today's somewhat uncertain real estate market," said Flint during Trulia's biannual phone conference with the media. The topic was consumer attitudes and trends related to the American Dream.

More affordable home prices and mortgage rates are the likely factors fueling Millennials' interest in homeownership, he added. That's also fueled by their need to find answers quickly, especially online.

"The 18-34 group absolutely wants to be in charge," Flint said. "...Real estate agents are definitely changing their tune, from being perceived as information hoarder to being an adviser."

Flint said that while the American Dream for Millennials and others is still alive, it may not be in their immediate plans.

The survey found that 50 percent of overall respondents don't plan to buy until after 2013, waiting on improvements in the job and housing sectors.

Jonathan Miller, president and CEO of appraisal and consulting firm Miller Samuel, also was present at the phone conference. He reviewed the 2010 housing overview and a 2011 outlook.

Some highlights and insights:

--The homebuyer tax credits that ended in April "artificially stimulated" the economy, leading to an overactive first half and an inordinately sluggish second half in home sales. Miller said that "created a lot of confusion on the consumer side."

--On lending: The good news is, the guidelines aren't getting tighter but that's only because they're already pretty stringent, he said.

--The U.S. homeownership rate, which has historically been 63-66 percent, peaked at 69.2 percent in 2004 and has dropped to 66.6 percent during the last quarter. He expects that rate to decrease "a few more percentage points" this year. Miller said this could be a good sign because the U.S. can "get back to establishing a balance" of homeowners and renters.
--What the U.S. government will ultimately do with Fannie Mae and Freddie Mac will play a crucial role in shaping housing trends in 2011. A report with that decision is expected as early as Friday.

The Moersch Team - 2011 FIVE STAR Real Estate Agent Award

My real estate team received the 2011 FIVE STAR Real Estate Agent Award (published in the March issue of San Diego Magazine). Thank you to all that voted!

Map: How San Diego housing fared in 2010

San Diego Union-Tribune - January 29, 2011

San Diego County housing in 2010 paused on the way to recovery, as sales dipped and prices rose by almost exactly the same percentage for the second year in a row. The overall median for the year stood at $330,750, 6.7 percent higher than in 2009, as sales dropped by 6.3 percent to 36,829.

--Breaking down 2010 home prices, sales by geography

--Breaking down 2010 home prices, sales by key neighborhoods

But the trend wasn’t uniform across the region or by price category.

Two out of three ZIP codes in San Diego County last year saw increases in median-home prices, up from about half last year, show numbers from DataQuick Information Systems, a San Diego-based research firm.

Homes at both ends of the price spectrum were winners and losers last year. Less-expensive inventory generally experienced the biggest jumps in median price from 2009 to 2010 but dipped in sales, while pricier homes were hot sells but fell in median price.

Homes in Logan Heights, Escondido South (92025) and Spring Valley — priced between $156,000 to $265,000 — increased the most in median price from the year-earlier period in combined sales probably because prices in those areas have bottomed out, some industry experts say.

On the flip side, total sales in those neighborhoods fell between 8 percent to 27 percent year-over-year, likely because of declining inventory, an ongoing struggle for the county.

The inverse dynamic was evident among higher-end homes. Coronado, Solana Beach and Rancho Santa Fe — in the $1 million to $1.9 million range — were among the top ZIP codes with the largest increases in combined home sales.

Experts suspect they were hot zones because sellers finally gave in and cut prices.

In Rancho Santa Fe, single-family resale median prices dropped 11 percent in 2010 from 2009; Solana Beach’s single-family median price slipped 2.2 percent. Coronado actually posted an 8.4 percent gain.

Interpretations of last year’s figures vary. The region’s market is either slowly emerging from the worst downturn in the post-World War II period or it is facing a mild “double dip” in prices on the horizon, experts say.

So far, 2010’s median price has bounced up from its overall low of $310,000 in 2009 but remains 33.9 percent below the all-time peak of $500,000 in both 2005 and 2006 for all homes combined.

Most forecasters expect prices to stay flat this year, as the overall economy and job market struggle to grow. Interest rates also are expected to play a part in the housing picture. If they rise unexpectedly, that could choke off buying and lead to lower prices.

Concurrently, many experts expect a new wave of distressed properties to enter the market and drive down prices. If that occurs, it could prompt a double dip on a national level.

IHS Global Insight, a Massachusetts economic analysis firm, expects a 5 percent to 8 percent decline in prices nationally this year.

The Union-Tribune’s EconoMeter panel of eight economists predicts that San Diego prices will end the year as much as 5.1 percent up or as much as 2.1 percent down from the December 2010 median.

Given this uncertainty, home builders continue to show reluctance to start many new projects, and homeowners who don’t have to sell remain on the sidelines.

“We created over 20,000 jobs and built less than 3,300 housing units,” said Sherman D. Harmer Jr., president of Urban Housing Partners. “We underbuilt the market … That will create future price pressures. It’s Economics 101.”

However, the latest household job survey still showed county employment at nearly 60,000 below the pre-recession level, meaning housing demand remains weak, at least for now.

Market update & advice from our brokerage

Detached Homes: There are currently 7,612 homes on the market vs. 7,182 last month and 5,339 in January 2010. 1,458 new escrows opened in January vs. 1187 in December and 1,562 a year ago. This gives us a 5.2 month supply of homes which puts pricing in the neutral range. There were an additional 1,889 homes that went under contract awaiting lender approval in short sales. Those could close anytime from this month to 6-8 months out.

Attached Homes: There are now 3,863 condos on the market vs. 3,673 last month and 2,591 a year ago. 749 units went into escrow in January vs. 613 the month prior and 839 a year ago. We now show a supply of 5.16 months which means prices are neutral.

The criteria we use to determine the market type are:

< 5 months of inventory = Seller's favor, prices rising to neutral
5-7 months of inventory = Neutral
> 7 months of inventory = Buyer's favor, prices soft

The numbers above are for all of San Diego county and could look very different for specific zip codes or neighborhoods, so this is very general information that should be supplemented with that local filter for anyone thinking of buying or selling a home.


R. Ungar, Associate Broker – Keller Williams Realty