Real Estate Outlook: Ever-changing Housing Market

Next, first-time buyers rush to take advantage of the home buyer tax credit in April 2010.

In a recent session at the 2012 Realtors Conference and Expo, "Changing Dynamics of Recent Home Buyers and Sellers," we heard from the experts on what changes they see happening across the nation.

"We've seen a tremendous increase in cash buyers since the housing downturn that we haven't seen before in history," said Lawrence Yun, chief economist of the National Association of Realtors®. Yun said a decade ago, all-cash home purchases were less than 10 percent of the market but have increased steadily since 2008, to as much as 30 percent of sales.

Yun said the increase in more buyers paying cash for real estate reflected tight lending conditions and an increase in investor sales, which account for the bulk of cash sales. Increases in the number of international buyers, who often have financing difficulties when purchasing a home in the U.S., are also adding to the rise in cash sales.

NAR research shows that 62 percent of international purchases were all cash; the percentage has continually increased since 2007.  

In recent index reports from the NAR, we've seen a subtle decrease in the number of all-cash purchasers and a resurgence again of first-time buyers.

All of these factors are impacting builder confidence, rated by the National Association of Home Builders (NAHB) according to builders' feelings on sales now and future sales.

The most recent Housing Market Index (HMI) release indicates that builder confidence in the 55+ housing market for single-family homes is on a significant rise.

The NAHB reports that "the index more than tripled year over year from a level of 12 to 36, which is the highest third-quarter reading since the inception of the index in 2008."

"Many builders and developers in the 55+ housing segment are reporting an increase in demand from consumers," said NAHB 50+ Housing Council Chairman W. Don Whyte. "We are seeing improvement in certain parts of the country where people are moving off the fence and either purchasing a home or renting an apartment that is designed to more specifically suit their lifestyle."

While components of the 55+ single-family HMI are still below 50 on the scale (the point of balance in the market,) they are twice the levels seen a year ago.

"Like other segments of the housing industry, the market for 55+ housing is continuing on a steady upward path, driven by improving conditions in additional markets around some parts of the country" said NAHB Chief Economist David Crowe.

He continued that, "While we expect the upward trend to continue as the recovery broadens, the speed of the recovery is being constrained by factors such as tight mortgage credit, making it difficult for potential 55+ customers to sell their current homes, and shortages of inputs to construction such as buildable lots that are beginning to emerge in some market areas."



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