Home Prices Boom 10 Years After Housing Crisis

New report reveals surprising data as prices return to bubble levels

Santa Clara, CA – November 13, 2017 (PRNewswire) Home prices have returned to the boom levels of a decade ago — which foreshadowed the bursting of the real estate “bubble” and the onset of The Great Recession — but today’s housing market is starkly different, according to data released today from realtor.com®, a leading online real estate destination. Backed by tighter lending standards and more solid economic fundamentals, current price appreciation is being driven by strong supply-and-demand dynamics with no signs of boom era flipping or over-construction.

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On the surface, today’s housing market looks suspiciously similar to the pre-recession years with rising home prices and feverish buyer demand. However, a deeper analytical assessment reveals material differences — historically low inventory levels, much tighter lending standards and significant job and household growth — and a strong housing market backed by economic fundamentals.

Home Prices are Soaring
The U.S. median home sales price in 2016 was $236,000, 2 percent higher than in 2006.1 In fact, 31 of the 50 largest U.S. metros are back to pre-recession price levels. Austin, Texas, has seen the largest price growth in the last decade with a 63 percent increase.(1) It’s followed by Denver, at 54 percent and Dallas at 52 percent. Three markets — Las Vegas, Tucson, Ariz., and Riverside, Calif., — remained more than 20 percent below 2006 price levels at the end of 2016, at 25 percent, 22 percent and 22 percent, respectively.1 Additionally, realtor.com® national data shows that listing prices have been up double-digits for the majority of 2017.

“As we compare today’s market dynamics to those of a decade ago, it’s important to remember rising prices didn’t cause the housing crash,” said Danielle Hale, chief economist for realtor.com®. “It was rising prices stoked by subprime and low documentation mortgages, as well as people looking for short term gains — versus today’s truer market vitality — that created the environment for the crash.”

Lending Standards are Tight
The largest difference in the last decade is that lending standards are the tightest they have been in almost 20 years. Today, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires loan originators to show verified documentation that a borrower is able to repay the loan. As a result, the median 2017 home loan FICO score was 734, significantly up from 700 in 2006, on a scale of 330 – 830.(2)

The bottom 10 percent of borrowers also have much higher credit scores with a FICO of 649 in 2017, from 602 in 2006.2 While veterans and others with specialized mortgages can still put zero percent down, these mortgages include additional restrictions to ensure they can be paid back.

“Lending standards are critical to the health of the market,” added Hale. “Unlike today, the boom’s under-regulated lending environment allowed borrowing beyond repayable amounts and atypical mortgage products, which pushed up home prices without the backing of income and equity.”

Flipping and Over-Building Are in Check
A decade ago, the widespread belief that prices could never go down spurred rampant home flipping and building. Today, tight lending standards have kept flipping and over-building in check, but are contributing to severely constrained construction levels.

Prior to the crash, flipping became increasingly mainstream with amateur flippers taking on multiple loans. In 2006, the share of flipped homes reached 8.6 percent of all sales, exceeding 20 percent in some metros such as Washington, D.C. and Chicago.(3) With today’s tight lending environment limiting borrowing power, flipping accounted for 5 percent of sales in 2016, a more restrained level.(3)

Over-building was another indicator of the unhealthy market conditions in the early 2000s. As prices rose, builders kept building, regardless of demand. In 2006, there were 1.4 single-family housing starts for every household formed, well above the healthy level of one necessary to keep up with the market.4 Today’s market is well below normal construction levels at only 0.7 single-family household starts per household formation.4 While the lack of over-building is generally positive for the market, the current environment of under-building is having a material impact on supply and escalating prices.

Today’s Home Prices Driven by Economic Fundamentals
Strong employment and demand paired with severely limited supply is driving price escalation today. Employment was also strong in 2006, but years of over-building put an oversupply drag on the market.

In October 2017, unemployment is now at 4.1 percent — a 17-year low, with more than 150,000 jobs created on average each month in 2017.(5) In 30 of the 50 largest U.S. metros, unemployment is less than half of 2010 levels.5 In 2016, there were 8 million more workers on payrolls than in 2006 and 10 million more households.(5) At the same time, there are 600,000 fewer total housing starts and nearly 700,000 fewer single-family housing starts.(4)

Hale added, “The healthy economy is creating more jobs and households, but not giving these people enough places to live. Rapid price increases will not last forever. We expect a gradual tapering as buyers are priced out of the market – not a market correction, but an easing of demand and price growth as renting or adding roommates becomes a more affordable alternative.”

Millennial job growth has also contributed to rising demand. In September, employment reached 79 percent in the 25-34 age group, back up to 2006 levels and 5 percent higher than 2010. In fact, millennials made up 52 percent of home shoppers this past spring and with the largest cohort of millennials expected to turn 30 in 2020, their demand for homes is only expected to increase.

On top of escalating demand, the supply of homes available also is significantly constrained. In 2016, single-family inventory reached a 22-year historic low at 1.45 million homes for sale.(6) October 2017 marked the 26th consecutive month of year-over-year declines in realtor.com inventory. The market is currently averaging 4.2 months supply, which is significantly faster than 2007’s 6.4 months supply.(6) Vacancies also are very tight with for-sale vacancies dropping to 1.3 million in 2016, compared to 1.9 million in 2006. Rental vacancies hit 3.2 million in 2016, compared to 3.7 in 2006.(7)

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Largest 50 Markets Price Appreciation Since 2006

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About realtor.com®
Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit realtor.com®.

(1) Single-family home price sales – NAR/Moody’s Analytics Estimates
(2) Urban Institute
(3) Corelogic
(4) U.S. Census Bureau – Moody’s Analytics Estimates
(5) Bureau of Labor Statistics
(6) National Association of Realtors
(7) Census, Housing Vacancy Survey

Media Contact:
Realtor.com®
Lexie Puckett Holbert
lexie.puckett@move.com

Realtor.com® Launches Fantasy Real Estate Game, Property Tycoon

Players are entered in random drawings to win up to $1,000

Santa Clara, CA – June 8, 2017 (PRNewswire) Realtor.com®, a leading online real estate destination operated by News Corp [NASDAQ: NWS, NWSA]; [ASX: NWS, NWSLV] subsidiary Move, Inc., today announced the launch of Property Tycoon, a new real estate listings game, that allows participants to test their market knowledge by selecting homes they think sold over asking price from a selection of homes.

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“At realtor.com®, our goal is to help demystify the home-buying journey and Property Tycoon puts a fun spin on helping people understand how factors such as square footage and location impact home values,” said Nate Johnson, chief marketing officer for realtor.com®. “Whether you’re a real estate veteran or just starting out, Property Tycoon is an enjoyable way to test your real estate knowledge and learn more about different local markets.”

Players are given a game budget of $5 million to “purchase” as many properties as they think sold for more than their asking price from a group of 60 properties in a specific city. All featured properties are real realtor.com® listings sold in the last 60 to 90 days. Players can check their score using the Property Tycoon game results board and earn game badges for things like their placement in the competition.

Property Tycoon sweepstakes prizes are awarded after the end of the week, are based on random drawings, not based on game scores or results, and consist of a grand prize of $1,000 and five secondary prizes of $100 each.

To help players establish a better understanding of the real estate market, Property Tycoon also features economic insights that players can use to learn more about the selected city and get a leg up on the competition.

The Property Tycoon Fantasy Real Estate Sweepstakes Game I promotion starts 6/4/2017 and ends 6/10/2017. Open only to residents of the United States. Void where prohibited. No purchase necessary. Prizes to be awarded based on random drawings. Prizes: a Grand Prize of US $1,000 and five (5) Secondary Prizes of US $100 each. (Total value of all six (6) prizes is $1,500.) Important details apply: for eligibility, how to enter, how the Property Tycoon game experience works, how prizes are awarded, odds of winning and important dates, restrictions, requirements and other details, please see the Official Rules, at: http://www.realtor.com/property-tycoon/rules. There is no guarantee that additional Property Tycoon sweepstakes will be offered. Sponsor: realtor.com® division of Move Sales, Inc. 3315 Scott Blvd., Santa Clara, CA 95054.

For more information, please visit: http://www.realtor.com/property-tycoon.

About realtor.com®

Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit realtor.com®.

Media Contact:

Realtor.com®
Lexie Puckett Holbert
lexie.puckett@move.com

Realtor.com Presents “My Home Court”: Draymond Green Like You’ve Never Seen Him Before

Realtor.com sent Warriors All-Star Draymond Green undercover, disguised as a trainee Realtor with Teresa Baum from Pacific Union International. Through hidden cameras around the home, watch the hilarity that ensues when “Ray” takes a group of unsuspecting home buyers on an open house tour in Oakland, CA.

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

Realtor.com® Consumer Survey Identifies Home Shoppers’ Preferences in 2017

Topping Buyers’ Lists: Three-Bedroom, Two-Bathroom, Ranch-style Homes with a Large Backyard, Updated Kitchen and Garage

Santa Clara, CA – April 12, 2017 (PRNewswire) Ranch-style homes, large backyards and updated kitchens top shoppers’ wish lists this spring, according to realtor.com®’s home buyer survey. More than half of home seekers are looking for a three-bedroom home, while 75 percent of shoppers are considering a two-bathroom home. Realtor.com® is a leading online real estate destination operated by News Corp [NASDAQ: NWS, NWSA]; [ASX: NWS, NWSLV] subsidiary Move, Inc.

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The survey, based on March data from shoppers on realtor.com®, provides insight into home buying trends in 2017 by analyzing what features shoppers are looking for this spring and summer – the peak home buying seasons.

“The insights from our most recent consumer survey provide a glimpse into what buyers are looking at today,” said Sarah Staley, housing expert for realtor.com®. “While we often think of dream homes as being big and bold, that’s not what we’re hearing from potential buyers today. These insights can help guide potential sellers in deciding which rooms or features to invest in before listing their homes.”

Following are key findings of the realtor.com® home buyer survey. Complete survey findings can be viewed at research.realtor.com.

Large backyards, garages and updated kitchens top list of most searched attributes

All age groups are looking for some combination of a backyard, garage and updated kitchen. Unsurprisingly younger homebuyers who are more likely to have young children in the house are particularly excited about finding a large yard. These age groups are also most interested in living in a good school district. The least-searched features were a guesthouse, mother-in-law suite, solar panels and a “man cave.”

Ranch-style homes and kitchens rule in 2017

Ranch homes led shoppers’ rankings of desired home styles by far, with 42 percent of shoppers looking for a ranch home. No other style of home broke 29 percent, although contemporary came close with 28 percent, followed by Craftsman and Colonial styles.

Eighty percent of shoppers ranked the kitchen as one of their three favorite rooms in their home. Kitchens were followed by master bedroom (49 percent) and living room (42 percent) among most age groups. Although, shoppers over 55 years old preferred garages over living rooms.

Privacy ranks as shoppers’ top goal for buying, largely driven by buyers over age 45

Most shoppers cite privacy as their top goal when searching for a home. Shoppers want to have a space that is solely their own. This preference can be attributed to mostly buyers between 45 and 64 years old, for whom privacy tends to beat out other preferences such as stability, family needs and financial investment.

Millennial shoppers cite family needs as the primary reason for entering the housing market

As millennial buyers prioritize family needs, it is no surprise that most millennials cited life events like increasing family size and getting married or moving in with a partner as their primary triggers for finding a new home. Shoppers age 35-44 are also focused on family needs. Most of this group cited better school districts or changing family circumstances as their primary reasons for purchasing a new home. Shoppers over age 45 are looking to downsize, as all age groups above 45 cited planning for retirement as their primary motive for finding a new house.

Desire for single-family home rises with age

Among younger buyers, many of whom are buying starter homes, 40 percent of shoppers were looking for townhouses and row houses. As shoppers age, however, that number declines and single-family homes are a clear preference. The older the age group is, the less likely they are to consider a townhouse and the more likely they are to prefer a single-family home.

About realtor.com®

Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS.® For more information, visit realtor.com®.

Media Contact:

Realtor.com®
Lexie Puckett Holbert
lexie.puckett@move.com

Realtor.com® Names Top Cities for Millennials

Salt Lake City, Miami and Orlando rank No. 1, No. 2, and No. 3

Santa Clara, CA March 22, 2017 (PRNewswire) Realtor.com®, a leading online real estate destination operated by News Corp [NASDAQ: NWS, NWSA]; [ASX: NWS, NWSLV] subsidiary Move, Inc., today announced realtor.com®’s Top Cities for Millennials. Led by Salt Lake City, the list includes some of the usual millennial hot spots – Seattle and Los Angeles – along with a few surprises such as Buffalo, N.Y. and Albany, N.Y.

In rank order, realtor.com®’s Top Cities for Millennials include: Salt Lake City, Miami, Orlando, Fla., Seattle, Houston, Los Angeles, Buffalo, Albany, San Francisco, and San Jose, Calif.

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“High job growth in markets such as Orlando, Seattle, and Miami, and the power of affordability in places like Albany and Buffalo are making these markets magnets for millennials.” said Javier Vivas, manager of economic research for realtor.com®. “But what really stands out is that all these markets already have large numbers of millennials, which translates into strong populations of millennial home buyers.”

The average share of the 25-34 year old population in the U.S. is 13 percent, but in these top markets, the average share is 14 percent. Salt Lake City, No. 1 on the list, happens to also have the highest share of milllennials, comprising 15.8 percent of its total population. Seattle is close behind with a millennial population at 15.2 percent, Los Angeles and San Francisco tie for third with 15.0 percent.

Economic growth and relative affordability make these markets really attractive to first-time home buyers. Salt Lake City has the lowest unemployment rate of all the markets on the list at 2.9 percent, which is well below the national unemployment rate of 4.7 percent. The job market is also a factor in San Francisco and San Jose, with the unemployment rate at 3.7 percent. When it comes to affordability, Buffalo is No. 1 with the most affordable home prices relative to salary, at 22.7 percent. It’s followed by Albany where people only use 27.3 percent of their income on a home and Salt Lake City where buyers use 30 percent.

Realtor.com® analyzed the 60 largest markets in the U.S. and compared the share of millennial page views in each area to the national average. Markets were ranked based on their comparison to the national average. Page view data included in this analysis covers the period from August 2016 to February 2017.

Realtor.com®’s Top Cities for Millennials

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1. Salt Lake City

The draw: The excitement of an urban city with the relaxed vibes of a mountain town. Large tech companies such as Adobe are attracting the millennial generation to this area by offering innovative workspaces, large salaries and an overall high quality of life.

Millennial hotspot: Sugar House, located southeast of downtown Salt Lake City, offers hip bars and trendy restaurants.

The stats: Millennials make up 15.8 percent of the population. Homeowners spend 30 percent of their income on their home and the unemployment rate is 2.9 percent

2. Miami

The draw: An international mecca for tourism and entrepreneurship.

Millennial hotspots: Wynwood, located just north of downtown, offers a strong art community. South Beach is a strong draw for business and fashion oriented millennials looking to make it big in their careers.

The stats: The millennial population makes up 13.1 percent of the population. Affordability is tough, requiring the average buyer to spend 49 percent of their income on a home. Its unemployment rate is 5.1 percent, slightly above the national average.

3. Orlando

The draw: Downtown Orlando is becoming a hot area and offers easy access to public transportation, shopping and dining, as well as a proximity to many jobs.

Millennial hotspots: Thornton Park, located just east of downtown has also become popular among millennials who are looking to live in a unique historic neighborhood with cobbled streets and lined with bungalows.

The stats: Millennials account for 14.6 percent of the total population in Orlando. Homes are affordable here and only require 34 percent of income. The unemployment rate is below the national average at 4.4 percent.

4. Seattle

The draw: With big company names such as Starbucks, Amazon, Filson, K2 and REI, it’s not hard to imagine why so many millennials want to live and work in Seattle.

Millennial hotspots: Capitol Hill and Belltown are popular neighborhoods for creative millennials who want access to boutique shopping, craft breweries and unique dining experiences.

The stats: Seattle has the second largest millennial population, at 15.2 percent, of all the towns on the list. It offers affordability of 35.6 percent and an unemployment rate of 4.2 percent.

5. Houston

The draw: A booming job market is drawing many young millennials looking to jump-start their careers.

Millennial hotspots: The Heights, Oak Forest, and Timbergrove attract millennials with their close proximity to downtown, boutique shops, trendy restaurants and craft breweries.

The stats: Houston’s population is made up of 14.5 percent millennials. While people spend 36.1 percent of their income on homes, the unemployment rate in Houston is slightly higher than the national average at 5.4 percent.

6. Los Angeles

The draw: Companies such as Snap Inc. and Airbnb draw tech driven millennials to what is now being referred to as “Silicon Beach,” while actors, comedians and music artists are still drawn to the area for a chance at fame.

Millennial hotspots: Silver Lake is a hotbed for millennials looking for a young and creative community.

The stats: Millennials make up 15.0 percent of the population. While the unemployment rate is in line with the national average at 4.7 percent, affordability is difficult in Los Angeles with people spending 64.1 percent of their income on a home.

7. Buffalo

The draw: Money is flowing into the area as a tech scene begins to expand from incubation competitions such as 43 North, which awards $5 million in prizes yearly.

Millennial hotspots: With a revitalized waterfront, downtown Buffalo and North Buffalo are becoming hot real estate for trendy millennials who are looking for easy access to shopping and dining as well as a family oriented community.

The stats: For those millennials looking to spend more time outdoors, Buffalo has a millennial population of 13.4 and an unemployment rate of 5.6 percent. It is the most affordable market on the list, where people only spend 22.7 percent of their salary on their home.

8. Albany

The draw: Albany is slowly becoming what is referred to as the “Silicon Valley of the East Coast,” with companies such as GE putting up headquarters and employing over 7,000 people. The large tech scene popping up is attracting many young millennials who want to be in tech, but don’t want to pay for real Silicon Valley housing prices.

Millennial hotspot: Specialty cocktail bars, Biergartens, and craft coffee houses make downtown Albany the place to be for millennials.

The stats: Millennials make up 12.7 percent of Albany’s population. It offers both affordable housing at 27.3 percent of income and a low unemployment rate at 4.5 percent.

9. San Francisco

The draw: San Francisco’s tech fueled job market is pumping millennials into the area left and right, however, sky-high housing prices are pushing many of the newcomers to the outer neighborhoods and forcing them to rent.

Millennial hotspots: North Beach and the Mission have become popular for the young tech generation that have established themselves and earned a large paycheck, while the Sunset District and Daly City offer more affordable housing options – relative to the rest of the city.

The stats: In San Francisco, millennials make up 15 percent of the total population. While the unemployment rate is really low at 3.7 percent, affordability is a concern with people spending 56.2 percent of their income on a home.

10. San Jose

The draw: Opportunity to work in some of the most innovative companies in the U.S. as well as the infamous Silicon Valley paycheck, are major drivers drawing millennials to the area.

Millennial hotspots: Centrally located downtown San Jose is attracting many millennials because of its public transportation as well as trendy shops and unique dining experiences.

The stats: Millennials make up 14.2 percent of the total population in San Jose. Similar to San Francisco, the unemployment rate is low at 3.7 percent but homes cost 53 percent of income.

About realtor.com®

Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit realtor.com®.

Media Contact:

Realtor.com®
Lexie Puckett Holbert
lexie.puckett@move.com