Where We Stand: Housing

WHAT’S THE STATE of the property market? Here are the latest statistics:

• Home prices rose 6.4% in the 12 months through May 2018, as measured by S&P CoreLogic Case-Shiller U.S. National Home Price Index. Seattle, Las Vegas and San Francisco had the largest home-price increases over the 12 months, all posting double-digit gains. Meanwhile, Chicago and Washington, DC, notched the smallest gains, climbing just 3%. Nationally, home prices are up 52% since the early 2012 market low, but are just 10% above the mid-2006 peak.
• The national median sales price for an existing home was $250,400 in March 2018, up 5.8% from a year earlier, reports the National Association of Realtors. This average disguises huge variations, with even modest homes in cities on the two coasts often costing three or five times as much.
• At year-end 2017, a 30-year fixed rate mortgage cost 3.92%, down from 4.21% at year-end 2016. But as interest rates climbed in 2018, so too did mortgage rates, with 30-year loans costing 4.8% at the end of the third quarter.
• Housing affordability deteriorated slightly during 2017, calculates the National Association of Realtors. Affordability is assessed by looking at the typical home price, typical family income and current mortgage rates. Home prices rose during 2017, but so too did median incomes, which helped offset the hit to affordability. Indeed, the typical U.S. home continues to be affordable by historical standards.
• Just 21% of homeowners plan to move in the next five years, according to a Bankrate.com report. Meanwhile, 62% say they never plan to move again. The survey also found that 35% of homeowners plan to remodel their homes in the next five years.
• Based on an analysis of 20 remodeling projects, homeowners would recoup an average 56.8% of a project’s cost if they sold their home within a year, according to an analysis by Remodeling magazine. Translation: These homeowners would lose 43 cents out of every $1 spent.
• How much does a good school district add to a home’s value? A 2016 Realtor.com study found that homes within the boundaries of higher rated public school districts are, at an average $400,000, 49% more expensive than the national median and 77% more expensive than homes in lower ranked districts.
• Homeownership has been declining over the past dozen years but remains widespread, with 63.7% of American families owning their home and 13.8% owning a place that isn’t their main residence, according to the Federal Reserve’s 2016 Survey of Consumer Finances. That 13.8% includes second homes, rental properties and time shares. The survey also found that, among homeowners, 65.7% have a mortgage or other debt that’s secured by their home.
• Homes are a major asset for the typical American family—far more significant than stocks, which are owned by just half of all households. As of 2018’s first quarter, the Federal Reserve puts the value of U.S. households’ real estate holdings at $25.1 trillion. For comparison, there’s $7.7 trillion in 401(k) and other employer-sponsored defined contribution plans, and $9.2 trillion in individual retirement accounts, according to the Investment Company Institute.

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