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Workforce Migration and Affordability: A Closer Look

The workforce is moving to less affordable areas.

– In the last 12 months, more than 1.7 million LinkedIn members who lived in the 20 largest metropolitan areas moved from a more affordable place to a less affordable place.

– Denver, San Francisco and Seattle were the top destinations for LinkedIn members.

Although housing affordability is still weakening in many local areas, particularly in the West, as a result of the ongoing supply and demand imbalances, a NAR analysis shows that many workers are actually moving to less affordable areas such as San Francisco and Seattle. According to LinkedIn migration data[1], more than 1.7 million LinkedIn members[2] moved to a less affordable area in the last 12 months. In 13 of the largest 20 areas, a majority of the workforce moved from a less expensive place to a more expensive place.

For instance, the San Francisco area was the most popular destination for workers moving from Detroit. More than 36,000 LinkedIn members from Detroit moved to the San Francisco area in the last 12 months. Based on the REALTORS® Affordability Distribution Curve and Score (RADCS), the affordability score for Detroit was 0.95 in September 2018 while the affordability score for the San Francisco area was 0.48. But what does this mean? The higher the score, the more affordable the area is. For example, a household earning $100,000 in Detroit can afford to buy 72% of homes currently listed for sale while the same household can afford to buy only 8% of homes for sale in San Francisco area.

San Francisco was also the top destination for workers from Philadelphia. Although Philadelphia is more affordable than San Francisco, nearly 27,000 LinkedIn members moved from Philadelphia to San Francisco in the last 12 months. The visualization below allows you to compare the affordability of the area of origin with the affordability of the destination area. Among the 20 largest areas, see in which areas workers decided to move to a less affordable place. Please bear in mind that the higher the score, the more affordable the area is.

While people in general are moving less these days, we also see that fewer people move for an employment-related reason. However, due to a strong economy, it seems that people get better jobs and decide to move to the most attractive areas across the United States.  The good news is that new construction is increasing even in areas with serious housing supply issues. For example, the three-year issuance of single-family permits increased 2 percent in the San Francisco metro area. Based on the NAR Housing Shortage Tracker, when we compare permit issuance with employment growth, we see that in November 2018 a single-family permit was issued for every 12 new jobs compared to 15 jobs in November 2017.


[1] LinkedIn Workforce Report (October 2018).

[2] From the 20 largest areas as far as LinkedIn membership.

In Which States Did Properties Sell Quickly in September 2018?

In a monthly survey of REALTORS®, respondents reported that properties were typically on the market for 32 days (34 days on year ago), according to the  September 2018 REALTORS® Confidence Index Survey.[1]  However, the difference in median days in the current month compared to the same month last year has started to narrow as homebuying demand has eased and the inventory of homes for sale has slightly increased. In January and February of this year, properties were selling about one week less compared to the length of time in the same period one year ago.

During the July–September 2018, properties typically sold within one month in 27 states (32 states in August 2018).  Properties sold most quickly in South Dakota (20 days), Idaho (21), Washington (21 days), Rhode Island (21 days), Indianapolis (22 days), Kansas (23), Massachusetts (23), Ohio (23), Utah (23), Colorado (24), Nevada (24), Nebraska (24), Maine (24), and Michigan (24).  

That properties are still selling faster compared to one year ago is an indication that the supply of homes for sale is still inadequate compared to the demand for homes. Based on the REALTORS® Seller Traffic Index[2], home selling conditions were “weak” during July, August, and September 2018 compared to one year ago in the District of Columbia and in 28 states including California, Oregon, Colorado, New York, New Jersey, Massachusetts, Virginia, North Carolina, South Carolina, Georgia, Tennessee, and Florida.

 


[1] In generating the median days on market at the state level, NAR uses data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations.

[2] An index greater than 50 means that more respondents reported conditions relative to one year ago as “strong” than those that reported “weak.” Due to sampling, we categorize the index as “very weak” for 0 to 25; “weak” for values 25+ to 45; “stable” for values 45+ to 55; “strong” for values 55+ to 75; and “very strong” for values 75+.

September 2018 Housing Affordability Index

At the national level, housing affordability is up from last month but down from a year ago. Mortgage rates rose to 4.77 percent this September, up 14.9 percent compared to 4.15 percent a year ago.

  • Housing affordability declined from a year ago in September moving the index down 8.4 percent from 160.1 to 146.7. The median sales price for a single family home sold in September in the US was $260,500 up 4.6 percent from a year ago.
  • Nationally, mortgage rates were up 62 basis point from one year ago (one percentage point equals 100 basis points).

  • The payment as a percentage of income was down to 17 percent this September but up from 15.6 percent from a year ago. Regionally, the West has the highest payment at 23.7 percent of income. The South had the second highest payment at 16.5 percent followed by the Northeast at 16.4 percent. The Midwest had the lowest payment as a percentage of income at 13.5 percent.

  • Regionally, the West recorded the biggest increase in home prices at 7.0 percent. The Northeast had an increase of 5.3 percent while the South had a gain of 4.2 percent. The Midwest had the smallest growth in price of 2.2 percent.
  • Regionally, all four regions saw a decline in affordability from a year ago. The Northeast had the biggest drop in affordability of 9.0 percent. The South had a decline of 7.3 percent followed by the West that fell 6.8 percent. The Midwest had the smallest drop of 5.8 percent.
  • On a monthly basis, affordability is up from last month in all of the four regions. The Northeast had biggest gain of 5.5 percent. The Midwest had an incline of 4.2 percent followed by the South with an increase of 2.3 percent. The West had the smallest gain in affordability of 1.9 percent.
  • Despite month-to-month changes, the most affordable region was the Midwest, with an index value of 185.3. The least affordable region remained the West where the index was 105.4. For comparison, the index was 151.4 in the South, and 152.3 in the Northeast.

  • Mortgage applications are currently down. Mortgage rates are rising and home price growth is starting to slow down. Despite higher mortgage rates, lower home prices and increases inventory levels will help renters and potential home buyers enter the housing market. Home prices are up 4.6 percent outpacing median family incomes that are growing 3.1 percent.
  • What does housing affordability look like in your market? View the full data release here.
  • The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.

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Chris D. Hembree - Principal Broker/Owner
Cell Phone: 502-693-2334
Email: chris@optionsrealtyky.com

 

Testimonials Page

Dear Chris, We can't thank you enough for all the hard work you put into selling our house. The process was very easy and a positive experience on our end. You lead us with good advise from your experience which resulted in a quick sell in a short period of time. I can't say enough but obviously would highly recommend your services to the Great People in Carrollton. S Shelton S Shelton
I gave Chris a call when my fiancé and I decided to purchase our first home. We had no clue about some of the things to look for and he was very informative and helpful. He made sure we took the time to look before we settled, and sure enough we found our dream home. He never once made us feel pressured and kept us informed all during the process. Thanks so much Chris, you are amazing. Will definitely recommend your services without hesitation! K Lawrence
We appreciated the friendliness of Chris Hembree when selling our home. He listened to us and was very helpful through the whole process. We honestly would have been lost in the process if we tried to do it alone. We are definitely going to use Chris when we are ready to buy our next home. Thanks for all your help Chris! M Snow
We just wanted to let Chris know that he exceeded all our expectations of a realtor.  He went the extra steps to find us the house we wanted.  Chris was not like any other realtor we have met. He most definitely had our interests in mind and was not out to make a quick buck by pushing us into anything. He was very patient with us and actually listened to what we wanted.  Not only does he understand real estate, but he is also very knowledgeable in construction and was able to tell us a lot about the houses we looked at and how they were built.  Chris also did a lot of research into the area of the house and taxes. He also helped us find the right financing for the house.  He stayed in contact with us and was with us every step of the way through the whole process of buying a house.  We highly recommend Chris Hembree to anyone looking for or selling a house. He is not like any other realtor we have met, more like a friend.  As long as he is in real estate he will always be our realtor. We greatly appreciate all that Chris did for us.  Thank you for everything.  James and Molly Palmer
First and foremost, I am not the type of person that normally writes reviews. However, this was such a great experience for that I can't not write one. Chris turned out to be a great realtor, a positive person, and, most importantly in this situation, a pragmatist. He always shot straight with us, let us know as soon as there was anything to report, and worked diligently under our (I'll admit it) unrealistic timelines. Here is our story as told by my wife: When the house we had always admired came on the market unexpectedly, we sent an email to inquire about the property. We are so fortunate that Chris Hembree replied. Not only did he show us the house within 24 hours, he listed ours and had it under contract within four days. Chris was very accessible to us and answered all questions timely and was very knowledgeable. It was evident that he worked very hard for us throughout the process and paid great attention to detail, always keeping our best interest in the forefront. Having used other realtors in the past as well as selling on our own, working with Chris Hembree proved to be a great decision. We would definitely hired him again and highly recommend him. jared m kelley
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