National news bodes well
It is rare that we put much stock in what happens nationally with real estate. We choose instead to focus on local activity to give you a perspective which benefits you directly. The news this past week however has given us cause to reflect on how the national trends can have a local impact.
From the National Association of Realtors, (www.realtor.org/bios/lawrence-yun) Lawrence Yun, NAR chief economist, said sales activity remains stronger than earlier in the year, but fell last month as investors stepped away. "There was a marked decline in all-cash sales from investors," he said. "On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country."
This is good news for local buyers as well. Too many have been disappointed when their offer to purchase was pushed aside in favor of a cash buyer willing to close the sale quickly. As the stock market performs, many investors - though not abandoning real estate - are perhaps a bit less anxious to plow capital into housing. Even so, we continue to see those who perceive the strong rental market as opportunity, but are less likely to compete for family homes, opting instead for multi-family properties.
From Realtor Magazine we notice more encouraging news with the report that more homeowners have regained their equity lost in the latest recession. "The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction," said Sam Khater, deputy chief economist for CoreLogic. "Borrower equity is important because home equity constitutes borrowers' largest investment segment and, as a result, is driving forward the rise in wealth for the typical home owner."
That is the goal of most people buying homes. They are weary of spending money to rent their housing and look at home ownership as a way to eventually get a return on their investment. Not able to pay cash, they have historically relied on real estate as a wealth-building vehicle which would appreciate at a faster rate than their mortgage giving them a profit when they sell. The anomaly of the recession put many buyers underwater. At least now it seems that what we have noticed in North Idaho is also becoming apparent across the country as homeowners once again can feel their money is protected by the homes in which they live.
The article goes on to say, "About 5.3 million homes - or 10.7 percent of all residential properties with a mortgage - remained in negative equity as of the second quarter. The number is falling. A year ago, 7.2 million homes - or 14.9 percent - were in negative equity. Negative equity is when borrowers owe more on their mortgages than their homes are currently worth. If home prices rise by just 5 percent, an additional 1 million homeowners currently in negative equity could regain equity, according to CoreLogic's analysis."
We don't anticipate the continued rapid appreciation seen early this year will continue the same pace but our figures do indicate that home prices will continue to rise. Taking even some of the competition out of the market from investors will be good for the stable families looking for homes and will be good for our neighborhoods and our local economy.
Trust an expert ... call a Realtor. Call your REALTOR or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a REALTOR member who will represent your best interests.
Kim Cooper is a real estate Broker and the spokesman for the Coeur d'Alene Association of REALTORS. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of REALTORS, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 208-667-0664