REALTORS® help turn housing market knowledge into power
REALTORS® help turn housing market knowledge into power
By GWEN LILLEY
There's a buzz these days that the American Dream of homeownership is an antiquated idea that doesn't work anymore. It feeds on stories about record numbers of foreclosures and homeowners with underwater mortgages who can't see getting their heads above financial water for a decade. There's no doubt about it, the housing bubble crash and Great Recession left many tragic and sad stories in their wakes.
The situation brings to mind something President John F. Kenney said. “In a time of turbulence and change, it is more true than ever that knowledge is power.”
In today's age of 24-hour news cycles and the avalanche of information on the Web it can be a daunting task to figure out what's good information and what isn't. It's all about trusted sources.
For instance, there's a strong rebuttal to the ‘homeownership doesn't work anymore’ buzz. You don't have to look any further than the National Association of REALTORS'® (NAR) 2010 Profile of Home Buyers and Sellers. It's a wealth of information evaluating demographics, preferences, marketing and experiences of recent buyers and sellers.
NAR has a strong consumer and professional brand with a good history as a reliable information source. But the real quality of information in the profile goes beyond that. It has to do with the fact that the information came only from people who bought or sold homes between July 2009 and 2010. And, the survey was a big sample. A total of 111,004 questionnaires were sent out. It resulted in 8,449 usable responses. Compare that with the 1,500 samples many surveys use to get a plus/minus 3% result.
For this column let's look at just one issue gleaned from the report.
Here it is in a nutshell: Even with several years of weak prices, a typical seller who bought a home eight years ago had a median equity gain of $33,000, a 24% increase. Sellers who were in their homes for 11-15 years saw a median gain of 40%.
NAR 2010 President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said while it is true that sellers who bought at the top of the market then sold during the crunch suffered from price corrections. But the majority who stayed for a normal period of ownership usually had enough equity to make a trade-up purchase. "Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property,” she told a RISMedia writer.
Bottom line: The longer a person owns, the better their investment.
There's another metric that can be used and it has a local flavor. It's the five-year price appreciation in the Federal Housing Finance Agency's Home Price Index.
FHFA’s all-transaction HPI tracks average house price changes in repeat sales or refinancing of the same single-family properties. The all-transactions index includes more
than 41 million repeat transactions. It's based on data obtained from Fannie Mae and Freddie Mac.
Fourth quarter numbers are not out yet, but here's what the third quarter looked like in several Tennessee MSAs.
Cleveland - up 22.61%.
Johnson City - up 16.48%
Kingsport-Bristol - up 16.17%.
Clarksville - up 15.24 %.
Franklin - up 15.24%.
Knoxville - up 10.6%.
In today's investment climate, those are pretty good five-year returns. Of course it's an index and while the appreciation numbers are the norm for Fannie and Freddie mortgages it doesn't mean every property appreciated at that rate. Some probably did better, some likely did worse.
Whether you're considering buying or selling, the best way to get the inside scoop on the local real estate market is to partner with a professional REALTOR®. Their goal is to turn their market knowledge into their clients' buying or selling power.
