5 Ways Trump’s Presidency Affects the Real Estate Market

It’s no secret that the real estate market has been on a tear in the early part of 2017. But does President Trump have anything to do with it?

First, let’s take a look at the numbers. The supply of homes on the market is incredibly lean, according to Realtor.com, which has forced home prices higher. In February, homes sold 5% faster than they did in the same month a year ago, and five days faster than they did in January. The median list price remains at $250,000 – 9% higher than one year ago.

Although demand is higher, interest rates are rising. During the final week of February, the average contract rate for a 30-year fixed mortgage with conforming loan balances below $424,100 sat at 4.3% – still a bargain when compared to historical rates over time, but significantly higher than February 2016, when rates averaged 3.66%.

Against this landscape, experts say that Trump's presidency has already had an effect and will continue to influence real estate markets. Here is a look at five ways in which the president's influence is being felt – for good and for bad.

1. Higher Interest Rates
President Trump has made it clear that he’s not a fan of the Federal Reserve’s decision to keep interest rates low. The Fed has indicated that rates will continue to rise as the economy strengthens. Higher interest rates are great for investors, but for home buyers it means larger mortgage payments, and that will almost certainly slow the growth of the housing market. (For more, read: Can President Donald Trump Impact Mortgage Interest Rates?)

Thanks to a drop in interest rates during the last week of February, mortgage applications rose 5.8%, but that is expected to be short lived, say economists. And although the housing market is full-speed-ahead, the number of mortgage applications is still 45% lower now than it was at this time last year. There’s no doubt that as interest rates rise, mortgage applications fall.

2. Not Enough Workers
The demand for new homes is high, in part, because the nation’s home builders can’t find enough workers. Trump’s crackdown on undocumented immigrants could be making the problem worse. That’s because the construction industry has a large number of undocumented workers, according to Lawrence Yun, chief economist of the National Association of Realtors.

As the border tightens, the problem may only get worse, unless America can quickly train people with these construction skills.

3. Less Immigrant Demand
It may be surprising to learn that a 2013 study estimates that immigrants will account for 32.2% of household growth and 35.7% of growth in homeowners. What happens if the borders tighten and the immigrant population is smaller? Some experts believe that while this is a long-term effect, removing even a portion of this market could have a negative effect on home prices.

4. Freer Market – Higher Demand 
If President Trump gets his way, Americans will pay less in taxes. That’s a lofty goal and one that could come in any number of forms. But if it were to happen, that would certainly create higher demand in the housing market. Paying less in taxes means more discretionary income and more money to commit to a mortgage payment.

Although every personal finance guru will beg consumers to save and invest the extra money, the housing market will be a large beneficiary of it.

5. A Rising Stock Market Equals Higher Demand 
There’s no doubt that Trump has had a giant-size effect on the stock market, which has experienced more than double-digit percentage gains since the election. Most investors would be happy to see a fraction of that in a given year. Along with a rising stock market comes rising optimism. And that can translate to increased home buying. Whether the stock market is an accurate barometer of economic health has been the subject of a host of financial talk show debates. Either way, consumers may feel (what may turn out to be) a false sense of security while the bull market rages on. What goes up on Wall Street will eventually correct itself, potentially leaving some consumers overextended.

The Bottom Line
Since taking office, President Trump has made a lot of people a lot of money, and the real estate market can count itself as one of the recipients. But experts believe that some of his policies might serve to slow that market over time.

No stock market can keep up this growth pace forever. Whether it is President Trump, Clinton, Bush or anybody else, the Wall Street bull market will eventually come to an end, and solely blaming the person occupying the White House wouldn’t be fair or accurate.

By Tim Parker, Investopedia

Zillow ranks U.S. cities where people want to live - or leave

Residents of Washington, D.C., Miami, Detroit, Columbus, & Cincinnati want out — and not many house-hunters want in.

Meanwhile, Seattle, Tampa and Portland are popular targets for homebuyers who live elsewhere as well as residents who already live in those cities.

That's according to Seattle-based Zillow, which has analyzed searches from house-hunters to figure out which U.S. cities residents want to leave and where they want to stay.

By comparing the locations of its users with the cities that they're searching, Zillow has charted cities based on popularity with outsiders and popularity with current residents.

Here in Orlando, the study shows that more than 55 percent of Zillow page views from the metro area are for homes within the local market, according to the data. Explore the map below.

"Florida markets including West Palm Beach, Orlando, and Tampa are popular not only for searchers from Florida, but also from the Northeastern part of the country, likely because Florida is a common retirement destination for people in the Northeast," the report said.

Housing markets in Minneapolis and New York City show faint interest from outsiders but a strong majority of Zillow traffic coming from inside the city limits, showing residents want to stay in town with their next home purchase.

Casey Coombs, Staff Writer - Business Journal

Orlando among top cities for millennials

Orlando is one of the top three cities for millennials, according to a new report from Realtor.com.

The average share of the 25- to 34-year-old population in the U.S. is 13 percent, but in the top markets, the average share is 14 percent. Salt Lake City came in at No. 1 on the list, followed by Miami and Orlando. No other Florida metros made the top 10.

“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.”

Here's what Realtor.com had to say about 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. To come up with its rankings, 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.

Here are the top 10 markets:

Salt Lake City
Miami
Orlando
Seattle
Houston
Los Angeles
Buffalo, N.Y.
Albany, N.Y.
San Francisco
San Jose

Cindy Barth - Editor, Orlando Business Journal

Pending Home Sales in U.S. Spike 5.5 Percent in February

According to the National Association of Realtors, pending home sales rebounded sharply in February to their highest level in nearly a year and second-highest level in over a decade. All major regions saw a notable hike in contract activity last month.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, jumped 5.5 percent to 112.3 in February 2017 from 106.4 in January 2017. Last month's index reading is 2.6 percent above a year ago, is the highest since last April (113.6) and the second highest since May 2006 (112.5).

Lawrence Yun, NAR chief economist, says February's convincing bump in pending sales is proof that demand is rising with spring on the doorstep. "Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country," he said. "The stock market's continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year."

Added Yun, "Last month being the warmest February in decades also played a role in kick-starting prospective buyers' house hunt."

Looking ahead to the busy spring months, Yun expects to see continued ebbs and flows in activity as new supply struggles to replace listings that are going under contract at a very quick pace. This is especially the case at the lower- and mid-market price ranges, where choices are minimal and prices are being bid higher by multiple offers.

"The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy," said Yun. "The country's healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply. How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation's low homeownership rate."

Existing-home sales are forecast to be around 5.57 million this year, an increase of 2.3 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 4 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

The PHSI in the Northeast rose 3.4 percent to 102.1 in February, and is now 6.6 percent above a year ago. In the Midwest the index jumped 11.4 percent to 110.8 in February, but is still 0.6 percent lower than February 2016.

Pending home sales in the South climbed 4.3 percent to an index of 127.8 in February and are now 4.2 percent above last February. The index in the West increased 3.1 percent in February to 97.5, but is still 0.2 percent higher than a year ago.

Monsef Rachid - World Property Journal