Washington, D.C. – May 23, 2013 (Realtor.org) Realtors® who practice commercial real estate have reported an increase in annual gross income for the third year in a row, signaling the market is on the road to recovery. According to the National Association of Realtors® 2013 Commercial Member Profile, transactions and sales volume have also increased since last year.

The study shows median annual gross income for 2012 was $90,200, an increase from $86,000 in 2011 and is at its highest level since 2008. Brokers and appraisers reported the highest annual gross income while sales agents reported the lowest. The study’s results represent Realtors® who practice commercial real estate; these NAR members conduct all or part of their activity in commercial sales, leasing, brokerage and development for land, office and industrial space, multifamily and retail buildings, as well as property management.

“The commercial market is showing signs of improvement, which is reflected in the positive trends in income, transactions and sales volume reported by our Realtor® commercial members,” said NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif. “This is a hopeful sign for the future. Realtors® who practice commercial real estate build communities by facilitating investment and promoting the sale and lease of commercial space. There’s no doubt that commercial market improvements will help spur economic recovery and growth for our nation.”

Commercial members completed a median of eight transactions in 2012, up from last year. The median sales volume also increased from last year and was $2,507,700. Brokers typically had higher sales transaction volumes than agents. The median dollar value of sales transactions was $433,600 and the median square footage was 10,400.

Similar to the median sales volume, the median lease transaction volume increased this year by more than $70,000. In 2012 commercial members reported a median lease transaction volume of $476,400. Twenty-one percent of commercial members did not have a leasing transaction in 2012. The median dollar value of lease transactions was $169,100 and the median square footage was 4,200.

Commercial members who manage properties typically managed 40,000 square feet, representing 15 total spaces. They also typically managed 16,000 total office square feet, representing six total offices.

A majority of commercial members, 63 percent, reported they derive more than half of their annual income from the real estate industry. Thirty percent of respondents did not derive any income from commercial real estate leasing in 2012. Only 32 percent derived at least half to all of their income from leasing property. A large percentage, 85 percent, of commercial members earned at least some personal income from commercial real estate investments.

Sixty percent of NAR’s commercial members are brokers. Licensed sales agents were the next largest segment at 25 percent. Most commercial members reported working in a firm that is local and 58 percent work within an office that has a mix of commercial and residential brokers and agents.

Investment sales proved to be the most popular business specialty among commercial members. Identified by the highest proportion of members as their primary business specialty, investment sales was also the top ranked secondary specialty area. Land sales and retail leasing followed closely behind.

The typical commercial member has been in commercial real estate for 15 years and involved in real estate in some capacity for 25 years. The median length of membership in NAR among commercial members was 17 years. With a median age of 59, commercial members are also predominately male. However, women are slowly coming into the business; 33 percent of those with two or fewer years’ experience are female, and sales agents have the largest representation of women with 29 percent.

The NAR 2013 Commercial Member Profile was based on a survey of 1,796 commercial practitioners. Income and transaction data are for 2012, while other data represent member characteristics in 2013.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Leanne Jernigan
(202) 383-1290
Email

Let’s be honest, most real estate videos aren’t big productions. In fact way too many are nothing more than blurred virtual tours with mechanical voice overs that do more harm than good (yes I’m a bit of a cynic…) but not the one on this single property Website:

Created by Matt Davidson of ‘Davidson Creative’ I found myself captivated and lost in this beautiful production. How can you not end up wanting to own this 10,000 square foot, 190 acre Athens, Texas estate? Yes, I’m ignoring the price tag….

How was it created? Matt states:

“I used a remote quadrocopter with a GoPro attached to it to film all of the aerial shots”

The listings broker, Daryl Weems, added:

“We collaborated with Matt, he is the one with the video background, and are excited about the video!”

If you are a Texas REALTOR and want to use Matt’s services you can contact him via his Website. In the interim here’s the video. Nice job Matt!

If you enjoyed this post you’ll certainly enjoy these other ‘Just For Fun’ posts!

Based on a random sampling of NAR’s membership, the Member Profile strives to answer the question: Who are REALTORS®? It looks at a variety of economic and demographic characteristics, and business practices.

To read the report highlights click here.

Washington, D.C. – May 22, 2013 (Realtor.org) Existing-home sales rose in April but remain below underlying demand because of limited inventory and tight credit, according to the National Association of Realtors®. All regions are showing strong price gains from a year ago.

Total existing-home sales(1), which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from an upwardly revised 4.94 million in March. Resale activity is 9.7 percent above the 4.53 million-unit level in April 2012.

Lawrence Yun, NAR chief economist, said the market is solidly recovering. “The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing-home sales easily would be well above the 5-million unit pace,” he said. “Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher. It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.”

Existing-home sales are at the highest pace since November 2009 when the market spiked to 5.44 million in response to the home buyer tax credit. Total sales have been above year-ago levels for 22 consecutive months, while prices show 14 consecutive months of year-over-year price increases.

Total housing inventory at the end of April rose 11.9 percent, a seasonal increase to 2.16 million existing homes available for sale, which represents a 5.2-month supply(2) at the current sales pace, compared with 4.7 months in March. Listed inventory is 13.6 percent below a year ago, when there was a 6.6-month supply, with current availability tighter in the lower price ranges.

The national median existing-home price(3) for all housing types was $192,800 in April, up 11.0 percent from April 2012. The last time there were 14 consecutive months of year-over-year price increases was from April 2005 to May 2006.

Distressed homes(4) – foreclosures and short sales – accounted for 18 percent of April sales, down from 21 percent in March and 28 percent in April 2012. Eleven percent of April sales were foreclosures, and 7 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 14 percent.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 3.45 percent in April from 3.57 percent in March; it was 3.91 percent in April 2012.

The median time on market for all homes was 46 days in April, down sharply from 62 days in March, and is 45 percent faster than the 83 days on market in April 2012.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said market conditions have flipped in the past year. “With homes selling in half the time it took to sell a year ago, buyers must be both decisive and prudent,” he said. “Advice with contract terms and negotiations is where the expertise of a Realtor® shines for both buyers and sellers.”

Short sales were on the market for a median of 73 days, while foreclosures typically sold in 43 days and non-distressed homes took 44 days. Forty-four percent of all homes sold in April were on the market for less than a month, while only 8 percent were on the market for a year or longer.

First-time buyers accounted for 29 percent of purchases in April, compared with 30 percent in March and 35 percent in April 2012.

All-cash sales were at 32 percent of transactions in April, up from 30 percent in March; they were 29 percent in April 2012. Individual investors, who account for most cash sales, purchased 19 percent of homes in April, unchanged from March; they were 20 percent in April 2012.

Single-family home sales rose 1.2 percent to a seasonally adjusted annual rate of 4.38 million in April from 4.33 million in March, and are 9.0 percent above the 4.02 million-unit level in April 2012. The median existing single-family home price was $193,300 in April, which is 11.0 percent above a year ago.

Existing condominium and co-op sales declined 3.3 percent to an annualized rate of 590,000 units in April from 610,000 in March, but are 15.7 percent above the 510,000-unit pace a year ago. The median existing condo price was $189,500 in April, up 11.3 percent from April 2012.

Regionally, existing-home sales in the Northeast rose 1.6 percent to an annual rate of 640,000 in April and are 4.9 percent above April 2012. The median price in the Northeast was $245,100, up 5.1 percent from a year ago.

Existing-home sales in the Midwest fell 3.4 percent in April to a pace of 1.12 million but are 9.8 percent above a year ago. The median price in the Midwest was $149,300, up 6.7 percent from April 2012.

In the South, existing-home sales rose 2.0 percent to an annual level of 2.01 million in April and are 14.9 percent above April 2012. The median price in the South was $168,700, which is 10.6 percent above a year ago.

Existing-home sales in the West increased 1.7 percent to a pace of 1.20 million in April and are 4.3 percent above a year ago. Given limited choices and multiple bidding, the median price in the West was $263,600, up 17.5 percent from April 2012.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries. For additional commentary and consumer information, visit www.houselogic.com and www.retradio.com.

NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1. Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2. Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

3. The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to a seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

4. Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

The Pending Home Sales Index for April will be released May 30 and existing-home sales for May is scheduled for June 20; release times are 10:00 a.m. EDT.

Media Contact:

Walter Molony
(202) 383-1177
Email

Be warned – this contains some adult language, well sort of……

If you enjoyed this post you’ll certainly enjoy these other ‘Just For Fun’ posts!

This is from 1974 – amazing!

(Realtor.org) Realtors® who specialize in commercial real estate expressed optimism and confidence in the market during a forum at the Realtors® Midyear Legislative Meetings & Trade Expo. Despite a slow turning economy, commercial practitioners believe the market is not only better off than it was a year ago, but also will continue to improve.

National Association of Realtors® chief economist Lawrence Yun joined several Realtor® commercial practitioners on a panel to discuss the economy and regulatory issues and their impact on the commercial real estate market. Through a live polling of the audience, a majority of members expressed that their local economy is either a little better or showing a major improvement from a year ago. “Right now we are experiencing a unique recovery phase,” said Yun. “Those in the high income brackets are seeing much improvement in the economy, particularly related to stock market wealth. However, those in lower income brackets are not seeing any growth in their income. Commercial real estate is dependent on the American economy and with an uneven recovery the market still has a way to go before a full recovery.”

Yun reported overall transaction volume in the commercial real estate market is slowly improving and that property sales are rising. In terms of markets, New York City continues to top the list in sales volume; however, Yun pointed out smaller markets like Seattle and Austin are also experiencing significant year-over -year improvements. This indicates that large investors are more willing to purchase in midsize markets. NAR commercial members typically handle small transactions of one million or less and Yun reported that these sales are starting to improve. “While the prices for deal sizes most frequently handled by Realtors® have not yet stabilized, we have recently seen a positive upturn in sales volume,” said Yun.

In an audience poll, a majority of members reported credit availability for commercial deals is still not good, but better than a year ago. “There’s capital available out there,” said panelist Daniel Sight, vice president and broker for Reece Commercial. “My feeling is that credit has opened up, but it still helps to have a healthy down payment and good credit history.”

According to NAR data, commercial members receive their financing from mostly regional and local banks, as well as credit unions. Many have reported that it’s still difficult to receive credit because of regulatory conditions and uncertainty. A majority of members say recent legislative and regulatory impacts, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, have decreased the flow of capital in the U.S. real estate market.

Yun said the multifamily sector has continued to rapidly gain market share at over $84 billion, while the office space sector remains closely behind with over $77 billion. Yun also suggested the apartment sector might be facing a potential mini-bubble. “A bubble for the apartment sector is not out of question,” said Yun. “Apartments are in high demand and multifamily financing is easier to obtain.” Fifty-eight percent of the polled audience reported they believed the commercial real estate would improve in 2014.

“I believe the market will be a little bit better,” said Realtor® Linda St. Peter, Prudential Connecticut Realty. “I don’t think it’s ready for a big improvement, but that fear that paralyzed people is starting to fade and confidence is returning.” Yun echoed that sentiment and said that improved confidence among business owners could help improve the economy. “What is lacking for a stronger economic growth is confidence,” said Yun. “Our Realtor® members are feeling a little better and that sentiment will hopefully translate to a better market soon.”

Additional panelists for the session were Randy Scheidt, president of Don R. Scheidt & Co., and H. Blaine Walker, president & CEO of Walker & Co. Real Estate. The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Leanne Jernigan
(202) 383-1290
Email

So last week we highlighted what seems to be the worst real estate rap video on the planet (see: ‘The Best or Worst Real Estate Video You Have Ever Seen? You Decide…‘); here’s a better one

It’s not exactly real estate but hopefully you’ll see (and forgive us for) the link!

If you enjoyed this post you’ll certainly enjoy these other ‘Just For Fun’ posts!

In the following video Katie Lance, chief strategist at Inman News, talks about Facebook Graph Search (announced January 2013) and how real estate agents can make the best use out it.

I don’t agree with Katie on how great Facebook search is, personally I think Facebook has an enormous way to go if it really wants to provide valuable search functionality, but there is definitely value hence the share.

Washington, D.C. – May 17, 2013 (Realtor.org) The shape of homeownership and housing markets has changed dramatically over time and will continue to change in the face of new housing opportunities and challenges. That’s according to panelists at the “Challenges and Opportunities in Housing and Homeownership” session during the Realtors® 2013 Midyear Legislative Meetings & Trade Expo.

During the session, academics from DePaul University, George Mason University, University of North Carolina and the University of Maryland presented various research and data illustrating the impact of shifting demographics, new mobility patterns and an uncertain interest rate environment on future housing prices, availability and affordability. Funding for some of the research was provided by the REALTOR® University Center for Real Estate Studies.

“The residential mobility rate in the U.S. has been falling steadily since the 1990s, when it was approximately 20 percent, to its current level of 12 percent,” said National Association of Realtors® Chief Economist Lawrence Yun. “The decline is unwelcome news since it may imply a reduction in economic mobility. Mobility is currently being impacted by the lack of housing inventory since fewer homes are available. In the future, proposed regulations requiring larger down payments could also significantly reduce mobility since fewer homeowners may be able to afford a home.”

Lisa Sturtevant from George Mason University’s Center for Regional Analysis said recent trends in residential mobility are most likely the result of changes in the age distribution of the population. She said the two largest segments of the population – baby boomers and millennials – are delaying many major lifecycle events that have been traditional for their respective life stages, like marriage, children and retirement. That also means they are not moving as much as members of previous generations at the same life stages, which could be dragging down the overall residential mobility rate.

“Homeownership rates have declined fastest for millennials, most likely the result of fewer job opportunities and higher student debt; however, I believe they still want to become owners and will eventually make their way into the housing market,” said Sturtevant. “When they do enter the market they’ll care about different things than previous generations too; I foresee more single people buying smaller homes in urban areas.”

Yun agreed that the recent housing downturn hasn’t change younger buyers’ attitudes about homeownership, despite many of them delaying their entrance into the market. “Rather, reduced home prices and lower interest rates have provided an opportunity for younger buyers to affordably enter the housing market,” he said.

James D. Shilling from DePaul University’s Institute for Housing Studies shared his insights into recent trends in household mobility and its future impact on the single-family housing market.

“Higher home prices will unlock a large number of households with negative or low equity and incentivize them to get off the sidelines and into the housing market. However, combined with future increases in interest rates, the net effect is likely an overall reduction in residential real estate transactions and household mobility,” said Shilling.

He anticipates the Federal Reserve will keep mortgage rates low through 2013 and most likely into 2014; consequently the majority of current homeowners will have mortgages with loans rates near record lows, and when rates start to rise they will not be incentivized to give up those low-rate loans to buy a new home with a higher rate mortgage.

Lucy Gorham from the Center for Community Capital at the University of North Carolina offered her perspective into housing policy implications for homeowners, including proposed regulations requiring higher down payments from home buyers. She said while restrictive underwriting helps lower loan defaults, it disenfranchises a higher percentage of creditworthy borrowers; if 20 percent down payments were required, as many as 60 percent of current buyers could be outside of the qualified mortgage criteria and potentially face higher interest rates or fees.

“Despite the recent housing crisis, homeownership continues to help build wealth for lower to middle-income households. A safe mortgage product with good underwriting helps lower loan defaults; requiring greater down payments simply closes off access to a greater percentage of borrowers,” said Gorham.

Imposing higher down payment requirements would negatively affect low- and moderate-income households and disproportionately impact minority homebuyers, she said. Gorham said minority families tend to have lower wealth and greater need for access to mainstream sustainable loan products, and that more will need to be done to meet their credit requirements since minority families are expected to be the greatest source of future housing demand.

Margaret McFarland, Colvin Institute of Real Estate Development at the University of Maryland, agreed that excessive risk reductions requiring higher down payments and credit scores exclude too many well performing loans from the market.

“Federal Housing Administration loans are an important financing option for affordable homeownership,” she said. “Veterans Affairs home loans also perform very well in relation to other mortgage products, even with a zero down payment.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Sara Wiskerchen
(202) 383-1013
Email

If you enjoyed this post you’ll certainly enjoy these other ‘Just For Fun’ posts!

Washington, D.C. – May 16, 2013 (Realtor.org) Technology plays a vital role in today’s society and is transforming the way Realtors® do business. That’s according to Curt Beardsley, vice president of product marketing for realtor.com®, who shared his perspective on the growing mobile technology environment at the “Industry, Technology and Vision” forum during the Realtors® Midyear Legislative Meetings & Trade Expo.

According to data from the 2012 National Association of Realtors® Profile of Home Buyers and Sellers, more than eight out of 10 home buyers who used the Internet in their search reported that online photos and detailed property information were very useful. Forty-five percent of buyers found virtual tours very useful, and 41 percent liked interactive maps and neighborhood information. Realtor.com® offers potential home buyers all of these features on the site.

“Realtor.com®, NAR’s official property listing website, is one of the most visited real estate sites on the Internet, attracting an average of 44 million total visits every month from more than 10 million unique visitors. The online world is continuing to blossom; lead generation has gone up 60 percent on realtor.com® and a lot of that is being driven by mobile,” said Beardsley. “Mobile is helping change consumer expectations; smartphones are the backbone of our daily media use and should be the starting point for designing consumer experiences with clients.”

Beardsley highlighted some new technology trends on the rise, including smart watches, a wearable watch device with enhanced technology features; Facebook Home, software for your phone that offers a more seamless version of the social media site; and geo-fencing, a new technology that alerts consumers when they are in close proximity to something they may have researched online.

“Given the Internet’s convenience and round-the-clock accessibility, it’s not surprising that many home buyers first look online for properties and information when beginning their search. Most buyers rely on Realtor®-supported online resources like multiple listing service websites and realtor.com®,” said National Association of Realtors® President Gary Thomas, broker-owner of Evergreen Realty, in Villa Park, Calif.

“After they’ve done their own real estate research, consumers can then turn to realtor.com® for the Internet’s most comprehensive directory of Realtors® who can help home buyers and sellers achieve their goals,” said Beardsley.

As the adoption of mobile smart phone devices has exploded, Beardsley said realtor.com® has positioned itself as the top-rated real estate app on all of the major platforms, including iPhone/iPad, Android and Windows 7. Mobile visits now account for 20 percent of realtor.com® traffic. Beardsley urged the audience of Realtors® to stay abreast of technology trends and the many mobile tools available now to help them build their business.

“Netflix is a great example of a business effectively leveraging customer trends. The company researched consumer content preferences and commissioned an original TV series based on what that data revealed; the resulting series is now the most watched on Netflix,” he said. “What this means for real estate is that it’s become vital to ensure that consumers can access information how and when they want – and if they can’t, then their experience becomes frustrating. You must design the experience to match what consumers are trying to do,” said Beardsley.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Michelle Wardlaw
(202) 383-1042
Email

Where do we begin….the lack of rhyming, the ‘dancing’, the typos, the ‘rapping’….?

There’s no doubting it’s getting attention and San Diego’s Rafael Perez is not the first real estate rapper (see: “Real Estate Rap: Houses Gettin’ Sold!“) but is this particular real estate video comedy genius or so bad it’s like seeing a car accident; you can’t turn away?

If you enjoyed this post you’ll certainly enjoy these other ‘Just For Fun’ posts!

In this How To Minute, Bill Lublin, CEO of Social Media Marketing Institute and Century 21 Advantage Gold in Philadelphia, explains how Evernote can save the day when you’re in a jam.

Evernote allows you to clip images from Web pages, snap a photo with your phone, or jot down notes, then save it all into a single, trackable system that can sync files between your computer, smartphone, and tablet.

(Realtor.org) Growth in home sales and prices is contributing to a broader improvement in the overall economy, aided in part by current homeownership tax treatment, according to presentations at a residential real estate forum during the Realtors® Midyear Legislative Meetings & Trade Expo.

Lawrence Yun, NAR chief economist, said a multiyear housing recovery is likely. “Steady job creation and household formation have been helping to unleash a pent-up demand in the housing market,” he said. “Lagging housing starts and a continuing housing shortage mean home prices are primed to rise further, by 13 percent cumulatively in 2013 and 2014, which will add more than $2 trillion to household wealth over this period.”

Existing-home sales continue to improve, although Yun said inventory constraints are preventing stronger growth. After four years of relatively flat activity from 2008 through 2011, existing home sales rose 9.4 percent to almost 4.3 million in 2012 and are forecast to increase to nearly 5.0 million this year; he projects 5.3 million sales for 2014 and 5.7 million in 2015.

Investment home sales jumped to elevated levels in 2011 and 2012, and are holding up this year, while vacation home sales slowly recovered in the past two years. “Growth in household wealth will help vacation home purchases moving forward,” Yun said.

Home price growth is likely to moderate with more new home construction. “Double digit price gains are within reach in 2013 because inventory is bouncing near 13-year lows, but some relief to inventory will occur later in the year,” Yun said. After rising 6.4 percent in 2012, the median existing-home price should increase about 8 percent this year and 5 percent in 2014.

Yun calculates that 51 percent of renters are financially qualified to purchase a home, up from 24 percent in 2005 and 33 percent in 2000, although their credit scores are unknown and not factored. “Just looking at the financial qualifications, this means there about 8 million more renters with the income necessary to buy a home now than in 2000, but they are choosing not to, or are unable to become a home owner,” Yun said.

With the financial industry enjoying high profits, Yun hopes it may be ready to dial down the credit stringency. If the average credit scores of approved loans return to normal, about 720 for conventional loans and 660 for FHA loans, he projects home sale could be 15 to 20 percent higher. During the past four years, the average credit score of approved conventional loans has been in the range of 760 to 770.

Mortgage interest rates are expected to rise gradually this year, with the 30-year fixed rate reaching 4.0 percent in the fourth quarter and averaging 4.6 percent in 2014. Housing starts, which remain below the long-term average of 1.5 million per year, are seen at 1.1 million in 2013, up from only 780,000 last year, and are projected to reach nearly 1.4 million in 2014.

Yun doesn’t expect a recession and said the Gross Domestic Product should grow 2.1 percent this year and about 3.0 percent in 2014.

LaVaughn Henry, vice president and senior regional officer at the Cincinnati branch of the Federal Reserve Bank of Cleveland, noted that all of the housing measures have been showing positive movement. “We are in a solid, sustainable recovery, with an alignment of fundamentals of what makes housing work,” he said. “While lending for residential real estate is increasing, underwriting standards remain tight, thus slowing the rate of recovery.”

The ratio of home prices to rents, considering norms over the past 30 years, indicates that home prices have recovered to a fair value, and builders are responding to higher demand by gradually rebuilding the diminished supply.

Henry noted that housing has always led an economic recovery, but the market is still picking up speed and he hopes it can boost the economy into a stronger recovery. “Growth in the Gross Domestic Product is running at about half speed for this point in the recovery,” he said. Fiscal austerity is a drag on growth in the short term, but it’s important to get control of debt, said Henry.

“Household wealth continues its recovery to pre-financial crisis levels,” he said. Since the economic crisis, consumers have reduced the ratio of household debt to disposable income, reversing a 30-year trend of rising debt, and the debt service ratio is at a 30-year low.

Foreclosure rates continue to decline across all major loan types, and mortgage delinquency rates also are declining. “Banks are becoming better managers of their credit. Lenders remain reticent in loosening tight underwriting standards on mortgage loans, but are selectively increasing lending in response to growth in demand,” Henry said. “Lenders aren’t quick to change their standards, but they will become less restrictive over time.”

The Federal Reserve’s monetary policy has helped to reduce mortgage interest rates to historic lows. It expects to keep the fed funds rate low as long as unemployment remains above 6.5 percent, the inflation outlook for the next year or two is no more than 2.5 percent, and longer-term inflation expectations continue to be well anchored.

Danielle Hale, research economist at the National Association of Realtors®, also spoke at the session and addressed homeownership tax policies. “While U.S. publicly held debt has exceeded 75 percent of the Gross Domestic Product, there are some misconceptions about the mortgage interest deduction that are important to consider when reviewing the tax code,” she said. Approximately three out of four home owners with a mortgage – a quarter of all tax payers – claim the MID, which is about the same number of taxpayers who claim charitable contributions.

Almost all first time home buyers, who are critical to the overall health of the housing industry, finance their purchase. While the MID provides great benefits to owners in the early years of a mortgage, toward the end of a loan the amount of interest paid is so little that the standard deduction becomes a better option.

“At any given time, only half of home owners claim the mortgage interest deduction, but over the course of a lifetime we estimate that roughly 70 percent of households that ever own a home will use the MID,” Hale said.

The typical beneficiary of the mortgage interest deduction is under 45 years old, married, has children and earns less than $200,000.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries. For additional commentary and consumer information, visit www.houselogic.com and www.retradio.com.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Videos” tab on the website.

Media Contact:

Walter Molony
(202) 383-1177
Email

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