In this week’s Real Estate News in Brief… we have a GDP surprise, optimism among landlords, and a new winner for the best rental market.
We begin with economic news from this past week that shows a burst of new energy for the U.S. economy. The government reported first-quarter gross domestic product at 3.2%. That beat expectations by Dow Jones economists. They anticipated a reading of just 2.5%. CNBC says the new GDP reading is the best first-quarter reading since 2015.
We also have some good numbers for new home sales. According to the Commerce Department, they were up 4.5% compared to February to a seasonally adjusted annual rate of 692,000. That’s the fastest sales pace since November 2017. It was also a surprise for MarketWatch economists, who expected a much smaller increase.
Existing home sales did not perform as well. The National Association of Realtors says they fell 4.9%, but, as MarketWatch reports, the Association says they had also surged in February so the drop may be more of a “return to normalcy.”
According to another report from ATTOM Data Solutions, people who sold their homes during the first quarter enjoyed a 31.5% return. The average gain for sellers was $57,500. That’s down slightly from the fourth quarter of last year when the average gain was $60,000. ATTOM’s Todd Teta says, home prices are softening a bit but they are “still above pre-recession peaks in 59% of local markets.” (1)
The homeownership rate hasn’t changed much this year. The Census Bureau reports that the first quarter homeownership rate was 64.2%. That’s the same as it was a year ago. For people younger than age 35, the rate dropped about one percent for several reasons, including affordability. According to MarketWatch, many younger buyers are choosing to rent because it’s cheaper. That’s pushing up demand for rentals. The Census Bureau says, new renter households were up by about a half a million year-over-year for the first quarter.
Mortgage rates are creeping higher once again. Freddie Mac says, the average 30-year fixed-rate mortgage rose 3 basis points this last week to 4.2%. They are still much lower than they were last November when they came very close to that 5% level.
In other news making headlines…
Landlords Say the Stress is Worth It
A new survey by home remodeling website Porch.com shows that 4 out of 5 landlords say the money they get from renting their property is worth the stress. The survey found that almost 90% of landlords experience some kind of stress. (2)
They cited many reasons — from late rent payments and evictions to tenants who don’t take good care of the property. One landlord said, “A tenant moved out leaving 18 bags of garbage and reported me to the fire department for the garbage hazard.” Another said, the tenant “flooded the entire bathroom by trying to change out the toilet themselves.” And then there’s the evicted tenant who sabotaged the plumbing, and the drunk tenant who drove right through the garage. Despite the issues that many have encountered, a majority of landlords say, they trust their tenants to maintain their properties.
The survey revealed that the most common thing tenants fail to disclose is a forbidden pet. Many tenants also fail to tell their landlords about things they broke when they’re moving out, or the existence of a roommate who’s not named on the lease. Landlords says about 10% of tenants lie about having mailed their rent payments.
Most Sought-After Rental Markets
A new report on where renters want to live puts Chicago at the top of the list. HotPads analyzed 50 metros based on two factors: the number of people searching locally for rentals, and the areas targeted by people looking to move out of their current metros. The results show a high number of Chicago searches were done locally, but the city was also tenth on the list for people searching for new cities. Los Angeles was second on the list for local searches, and third on the list for renters looking to relocate. (3)
When you put all the factors together, you get Chicago, Los Angeles, and Atlanta in the top three positions. Seattle, Denver, and Philadelphia are next followed by San Diego, Tampa, Phoenix, and Miami. HotPads says, the top 10 all have strong job markets, and that many of them are affordable.
3D Tours for All Zillow Listings
3D home tours are now available for all listings on Zillow. The real estate giant announced that the trial period went well, and said that it will allow free 3D tours for all listings so long agents record the tour using a special app made for an iPhone.
3D home tours were previously available for more expensive homes because of the cost of making the virtual tour. Zillow says the process is much easier now with this special app.
Electric Vehicle Charging Stations = Higher Home Prices
We’ve all heard that having a Starbucks in the neighborhood usually equates with higher home values. A new Realtor.com analysis shows, that’s also true for electric vehicle charging stations. It found that home prices were 1.5 times higher for the top 20 neighborhoods that are most accommodating to electric vehicles. Nine of those top 20 areas are in California.
Realtor.com economist, Danielle Hale, says the existence of those charging stations isn’t adding value to those homes. She says the trend is probably because wealthier homeowners are more likely to buy electric vehicles.
(1) Q1 Home Pricing: ATTOM Data Solutions
(2) Landlord Stress: porch.com Survey