Investor Home Purchases Plateau Across U.S.

 U.S. investor home purchases fell 2% year over year in the third quarter, a much smaller change than the swings of the last several years.

SEATTLE — Real estate investors purchased 2.3% fewer homes in the third quarter than they did a year earlier, according to a new report from the real estate brokerage Redfin. The small size of the change is notable because it comes after four years of huge swings driven by the wild pandemic-era housing market. For instance, investor purchases surged as much as 144% year over year in 2021, then dropped as much as 47% last year.

Investor home purchases have settled near pre-pandemic levels of around 50,000 per quarter, with typical seasonal ups and downs. Investors bought 49,380 homes in the third quarter, compared with 50,535 last year. By comparison, investors were buying nearly 100,000 homes per quarter during the 2021 homebuying frenzy.

In dollar terms, investors purchased $38.8 billion worth of homes in the third quarter. That’s up 3.4% from a year earlier, similar to the increase in home-sale prices over the same period.

In September, 8.3% of home listings were from investors, down marginally from 8.7% a year earlier but up slightly from the pre-pandemic share.

“Investors are finding a balance after several years of whiplash: They bought up homes at a frenzied pace in 2021 and the beginning of 2022, then quickly backed off when the housing market slowed as mortgage rates rose,” said Redfin Senior Economist Sheharyar Bokhari. “Now there’s a middle ground. It’s less appealing to buy homes to flip or rent out than it was at the start of the pandemic, when demand from both homebuyers and renters was robust. But it’s more appealing than it was last year, when soaring home prices and borrowing costs put a big damper on demand.”

There are a few key reasons investor activity is settling back to pre-pandemic levels:

• It’s harder for investors to buy homes, then sell them for a big profit than it was during the pandemic because home prices and loan costs are high. The typical home sold by an investor in October went for 55% more ($181,567) than the investor bought it for. That’s down from a 64% gain a year earlier. But interest rates are lower than a year ago and homebuying demand has improved a bit over the last few months. Investors who flip homes are still reaping bigger gains than they were before the pandemic, when homes bought by investors were selling for roughly 45% more. Just 7% of homes bought by investors sold for a loss in October; shortly before the pandemic, the norm was about 10%.
• A glut of new apartment supply hitting the market has put a lid on rent growth, meaning it’s less lucrative to buy a rental property than it was during the pandemic. But there is strong demand for rentals, largely because it’s hard for individuals to afford to buy a home. In fact, the number of renter households is growing three times faster than that of homeowner households. Rents have stabilized over the last year, but they’re still much higher than they were before the pandemic–and rents are rising quickly on the East Coast and in the Midwest.

Investors bought 16% of homes that sold in the third quarter, the lowest share in 4 years

Real estate investors purchased 15.9% of U.S. homes that sold in the third quarter. That’s the lowest share since the end of 2020, though it’s down just incrementally from 16.2% a year earlier.

Investors’ market share has fallen to near pre-pandemic levels: In the third quarters of both 2018 and 2019, investors bought roughly 14% of homes that sold.

Investor market share hit a record high of 20.9% at the start of 2022, when investors were taking advantage of low mortgage rates to buy up properties during the pandemic-driven moving boom. Market share is evening out now because the number of homes investors are buying has returned to around pre-pandemic levels.

Investor purchases are falling in Florida

While investor purchases are stabilizing nationwide, they are falling fast in some metros and rising quickly in others.

Investor purchases fell most in Fort Lauderdale where they declined 23.8% year over year. Next come Newark, NJ and Miami, which each posted 19.4% declines.

In Las Vegas, investor purchases rose 27.6% year over year in the third quarter–the biggest increase of any metro in this analysis. Next come Seattle, where investor purchases rose 21.8%, and San Jose, CA, where they rose 19.5%.

Investor purchases of condos fell 11.4% year over year

Investor purchases of condos fell 11.4% year over year during the third quarter, the biggest decline in a year. That’s compared to a 3.5% decline in purchases of townhouses, a 2.1% decline for multifamily properties, and a 0.5% uptick for single-family homes.

Investors bought far more single-family homes in the third quarter than any other property type. Single-family homes made up 69.9% of investor purchases, up from 68% a year earlier. Condos made up 18.2% of their purchases in the third quarter, down from 20.1% a year earlier. Townhouses made up 6.7% and multi-family properties made up 5.2%, both equal to the shares a year earlier.

In terms of market share, investors bought 16% of U.S. condos that sold in the third quarter, the lowest share in three years but down just marginally from 16.8% a year earlier. Investors bought 31.1% of multi-family properties that sold in the third quarter, 15.4% of single-family homes, and 14.9% of townhouses, all roughly unchanged year over year.

Other metro-level highlights

Investor market share: Q3 2024

• In Miami, investors bought 28.2% of all homes that sold in the third quarter, the biggest share of any metro in this analysis.
• Investors bought 7.8% of homes that sold in Providence, RI in the third quarter, the smallest share of the metros in this analysis.
• Investor market share increased most in Anaheim, CA, rising to 24.3% from 22.2%.
• Even though investors still have the highest market share in Miami, it has fallen the most from a year ago, dropping to 28.2% from 31.2%.

Investor capital gains: October 2024

• In Detroit, the typical home sold by an investor went for 135% more than they bought it for, the biggest gain among the metros in this analysis.
• The smallest capital gains were in Phoenix (32%), Las Vegas (34%) and Sacramento, CA (39%).
• In Milwaukee, the typical home sold by an investor went for 97% more than they bought it for, up from a 31% gain a year earlier. That’s the biggest gain among the metros Redfin analyzed.
• In roughly half of the metros in this analysis, investors’ median capital gain declined year over year. In Washington, D.C., the typical home sold by an investor went for a 45% premium, down from a 74% premium.

Redfin’s report is based on its analysis of county-level home purchase records across 39 of the most populous U.S. metropolitan areas going back through 2000. Redfin defines an investor as any institution or business that purchases residential real estate, meaning the report covers both institutional and mom-and-pop investors.

Source: Redfin

© 2024 Florida Realtors®

Family Ties, Costs Shape 2024 Moving Trends

 In 2024, 46% of Realtors’ clients moved to the South, 25% moved to the West, 18% moved to the Midwest and 11% moved to the Northeast.

WASHINGTON – In 2024, Realtors® reported that their recent clients chose to move to a specific area primarily to be closer to family and friends (30%) and to get more home for the money (21%), according to a new report from the National Association of Realtors®.

While available U.S. Census Bureau data provides information surrounding where and in what volumes Americans are moving, NAR's 2024 Migration Trends report analyzes the drivers and motivators of Realtors' clients who move to different areas nationwide to understand and measure why people are moving to certain areas. The report also breaks down regional differences by movers to the Midwest, Northeast, South and West.

U.S. Census Bureau data finds the top 20 states with the highest net migration in 2023 include Florida (372,870), Texas (315,301), North Carolina (126,712), South Carolina (91,853), Georgia (88,325), Tennessee (76,471), Arizona (57,814), Alabama (36,128), Oklahoma (31,967), Ohio (28,718), Indiana (22,468), Arkansas (22,202), Virginia (21,132), Idaho (20,053), Wisconsin (19,301), Colorado (19,167), Missouri (19,023), Kentucky (16,592), Washington (13,643) and Nevada (12,908).

Forty-six percent of Realtors’ clients moved to the South in 2024, followed by 25% to the West, 18% to the Midwest and 11% to the Northeast. Conversely, 33% of respondents' clients moved from the South, 30% from the West, 22% from the Midwest and 15% from the Northeast.

Movers to the West were driven more than others by getting more house for the money (24%), movers to the South were more driven than others by lower or more favorable tax rates (19%) and movers to the Northeast were more motivated than others to move closer to their job location (22%).

"It is no surprise that the Sun Belt states continue to attract movers within the U.S., but this report helps to highlight just how much the draw to be close to one's friends and family drives a relocation," said Jessica Lautz, NAR deputy chief economist and vice president of research. "Home buyers continue to seek areas where their support systems are around them."

After stating that being closer to family and friends (30%) and to get more home for the money (21%) were at the top among all reasons for choosing a specific area, the secondary reasons Realtors' recent clients cited for moving to a specific area include the area having lower or more favorable taxes (16%), it being a safer area with less crime (16%) and being closer to their work location (15%). When asked to identify the one primary reason for choosing to move to a specific area, the most common driver among Realtors' recent clients was to be closer to family and friends at 23%, followed by getting more house for the money (12%) and being closer to work (9%).

"Home buyers are placing a priority on getting more bang for their buck, looking to areas with not only more space within their home but also favorable taxes," said Lautz. "This migration flow will likely continue as retirees and remote workers relocate."

Realtors' recent clients generally moved to a similar type of area; however, those moving from central city/urban areas (41%) and resort areas (44%) most often moved to a suburban area.

In 2024, Realtors reported that 36% of their clients moved to a different state. However, the majority of Realtors' clients moved intrastate: 21% moved within the same city, 21% moved to a different city in the same area and 21% moved to a different area within their state. Those relocating to the South and West were most likely moving from a different state, while movers in the Northeast were most likely moving within the same state.

Consistent with general seasonal market trends, respondents' clients were most likely to have begun their home purchase transaction in June (21%), May (18%) or April (15%).

Among repeat buyers, 74% sold their previous residence when making their recent purchase, while 20% kept their previous residence as an investment, rental or vacation property. Repeat buyers who moved to the West and Northeast were more likely than others to keep their previous residence.

Of Realtors' recent clients, 94% made a permanent move to a new area, while 6% now split their time between their new and previous locations. Nearly one in five (18%) moved back to an area where they had previously lived, a trend more common in the Midwest (24%) and West (20%).

Realtors' recent clients are most likely to have chosen a specific home based on its outdoor space (42%), additional square footage (31%) and because it's in a quieter area (24%). Outdoor space was especially important to movers to the Midwest, while movers to the Northeast were particularly driven by the need for more square footage and a better work commute.

Job location did not play a role in the purchase decision for 43% of Realtors' recent clients, as they continue to work remotely, while job location did influence 37% of movers who work at least some of their time in the office. Movers to the West and South were most likely to report that job location did not play a role in their decision due to remote work.

Only 2% of Realtors' recent clients made their move due to a return-to-office in their jobs. This was slightly more common among movers to the Midwest at 4%.

Methodology

The 2024 Migration Trends survey was sent via email to a random sample of 143,514 Realtors nationwide in August 2024. The survey received 1,572 responses, 1,061 of which had represented a primary home purchase in 2024, for an overall response rate of 1.1%. The confidence interval at a 95% level of confidence is +/-3.0%. The regional breakdown used throughout the report is defined as follows: Midwest – Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, North Dakota, Nebraska, South Dakota and Wisconsin; Northeast – Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont; South – Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia; West – Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.

© 2024 National Association of Realtors® (NAR)

Agents, Buyers and Sellers: Navigating HOA Rules

 By Melissa Dittmann Tracey

About 30% of the U.S. housing stock falls under an HOA. Agent should consider promoting an HOA with strong attributes in their property marketing.

CHICAGO – The number of homes that fall under a homeowners association is rapidly growing, and real estate professionals play an important role in educating their clients about the pros and cons of HOAs.

About 75.5 million Americans reside in a community that’s governed by a homeowners association, representing more than 30% of the U.S. housing stock, according to the Foundation for Community Association Research, an affiliate of the Community Associations Institute. Newer communities may be more likely to have an HOA: About 84% of newly built single-family homes sold in 2022 belonged to a homeowners association, according to Census Bureau data. Plus, the number of HOAs is expected to grow, with predictions from the foundation for more than 3,000 new associations in 2024 alone.

Community associations — which include homeowners and condo associations as well as housing co-ops — are self-governing organizations that create and enforce rules for a group of residents in a subdivision, community or residential building. These associations collect fees that go toward the upkeep of the neighborhood, services like trash collection or snow removal, and maintenance of common areas, such as walking trails, playgrounds and swimming pools.

Homes in communities with HOAs may command a 5% to 6% higher sale price than similar homes in communities without an HOA, according to data from the Cato Institute, a public policy research think tank. “Community associations work to maintain and enforce rules that protect the overall appearance and quality of the community,” says Dawn Bauman, chief strategy officer with the Community Associations Institute and the executive director of the Foundation for Community Association Research. “Well-maintained properties and common areas often lead to higher property values, as the neighborhood remains attractive to prospective buyers.” Community associations also can “foster a sense of community” through organized social events, neighborhood gatherings, volunteer opportunities and committee appointments.

But homeowners aren’t always satisfied living under HOA rules, which can be strict. This is an important consideration for consumers when shopping for a home.

Real estate professionals often find that the way an HOA operates can alter a prospective buyer’s opinion of a home. Therefore, listing agents may want to consider promoting an HOA with strong attributes in their property marketing. Listing agents also want to ensure home sellers are in compliance with HOA rules and current on fees to avoid potential closing delays.

Snapshot of homeowners associations

What is an HOA? An organization that governs a housing community composed of individual houses, townhouses, high-rises or condos. The HOA collects fees from homeowners to cover the costs of maintaining common areas and shared amenities and services as well as enforcing community rules for items such as exterior property upkeep.

Homeowners agree to abide by HOA rules or else …

They could face fines or have a lien placed on their property for noncompliance.

$291 — Average monthly HOA fee in the U.S.

$3,500 — Average annual HOA fee

3 states with the most homes under HOAs:

• California: 4.9 million (37% of all homes in the state)
• Florida: 3.9 million (45%)
• Texas: 2.1 million (20%)

Most common services provided by HOAs:

• Neighborhood landscaping
• Security
• Personal landscaping
• Sports and leisure amenities (e.g. pools)

Most common HOA violations:

• Landscaping-related issues
• Design changes to the exterior
• Fencing complaints
• Trash pickup violations

HOA rules and regulations

HOAs implement rules and regulations to protect a neighborhood or building’s property values, maintain a high standard of living and keep the community safe. However, the types of rules and how they’re enforced can vary drastically from association to association. Homeowners may find some rules overly restrictive, like limits on landscaping, rental use or number of pets per home.

But like it or not, homeowners who live in a community with an HOA must agree to abide by the rules; they can face financial penalties and even legal action for noncompliance. An HOA has the authority to place a lien on a home if the homeowner fails to comply with HOA rules or falls behind on their dues. In extreme cases, HOAs can even initiate a foreclosure.

So, reviewing HOA governing documents is important for homeowners and prospective buyers. HOA governing documents may consist of the following:

Covenants, conditions and restrictions: Consider CC&Rs to be the community’s constitution—a legal document that outlines the association’s obligations, including maintenance responsibilities, architectural standards and how common areas can be used. CC&Rs cover homeowner responsibilities and restrictions on property modifications. CC&Rs can be difficult to change, requiring a vote of the homeowners, who are members of the association.

Rules and regulations: These are rules for homeowners to abide by on a day-to-day basis, covering items like landscaping standards, noise levels, parking restrictions and pet policies. These can be changed more easily than CC&Rs, often with just a vote of the HOA board.

Bylaws: These provide operational guidance for how the organization will function, such as election rules, board member responsibilities and meeting protocols. The bylaws offer insight into how homeowners can participate in community decisions.

Articles of incorporation: This legal document establishes the association as a nonprofit corporation and must be filed with the state or local government where the HOA operates.

Plat: This is a line drawing filed in local land records that shows the physical layout of the community, identifying the location of individual units, common areas, roads and open spaces. It helps to clarify boundaries and property divisions.

Examples of common HOA rules

Elected HOA board members typically have the authority to adopt new rules for the community. Homeowners can attend board meetings and offer input.

Some of the most common HOA regulations will address:

• Landscaping, such as mowing expectations, weed control, acceptable plants or trees, and fertilizer or pesticide usage
• Home exteriors, such as limitations on paint colors, yard signs, fencing, deck or patio construction, sheds and mailboxes
• Decorations, such as holiday displays, lawn ornaments and flags
• Vehicles and parking, such as how many vehicles are allowed, types of vehicles permitted (e.g. RVs or commercial vehicles), street parking allowances and guest parking
• Pets, such as size, weight, breed, number per home and pet waste management
• Noise complaints, such as quiet hours and crowd size restrictions
• Home occupancy limits, such as the number of people who can reside in a property
• Trash pickup, such as when trash cans must be placed on the curb and removed
• Rental restrictions, such as policies on long- or short-term rentals
• Policies for common areas regarding crowd size, hours of operation, visitor policies, and code of conduct

Unenforceable HOA rules

More than 30% of homeowners nationwide say their HOA has too much power, and 10% say they want to sell their home because of their HOA, according to a 2024 survey conducted by Rocket Mortgage.

Some HOAs may overstep their authority, leading to homeowner complaints and even lawsuits. HOA rules do not supersede local, state or federal law. In order to have legal standing, HOA regulations must be adopted by the board and included within the association’s governing documents, and enforcement must comply with fair housing and other local, state and federal laws.

For example, an HOA cannot prevent a buyer from purchasing a home in the neighborhood because of the buyer’s race, sex, religion, familial status and other protected classes. Some states also ban discrimination based on sexual orientation and gender identity.

Further, an HOA cannot selectively enforce rules that target only specific individuals or groups of people. HOAs also cannot penalize a homeowner for a violation that isn’t explicitly outlines in the HOA rules or CC&Rs. HOAs must have supporting justification for any regulation violation.

HOAs are not allowed to ban satellite dishes and TV antennas due to the Federal Communications Commission’s Over-the-Air Reception Devices Rule. However, HOAs can limit the size or placement of a satellite dish.

It can be tricky to determine whether an HOA rule is legally unenforceable. These three “hot button” issues, for example, may depend on state laws:

• Political signs: HOA disputes over political signs on a homeowner’s property are common around election time. HOAs may try to impose limits on political signs, which could conflict with the First Amendment right to free speech. State and local laws may determine the extent to which HOAs can enforce such rules. For example, Texas and Arizona have laws that prevent HOAs from prohibiting political signs, although they can regulate how the signs are displayed. On the other hand, states like Kansas and Pennsylvania allow HOAs to prohibit political signs.
• Outdoor clotheslines: HOAs may seek to prevent homeowners from stringing their laundry outside to dry. However, states like Florida, Maryland and Colorado have “right to dry” laws that prevent HOAs from enacting such rules. Associations can still limit the size and location of clotheslines.
• Solar panels: Many HOAs regulate the installation of solar panel systems on homeowners’ roofs. Some HOAs ban them altogether while others restrict where and how they’re installed. A handful of states, including Michigan, Florida, Indiana and Minnesota, have enacted laws to protect a homeowner’s right to install solar panels. These laws, known as solar access laws or solar easements, prevent HOAs from banning solar panels. In most cases, HOAs can still place “reasonable restrictions,” such as requiring board approval and submitting project plans for review.

What real estate agents should know about HOA rules

Real estate professionals should encourage prospective home buyers to carefully consider what they’re buying into when they purchase a home in an HOA community. Experts offer best practices for agents when addressing HOA matters with clients:

• Disclose: Listing agents and buyer’s agents should disclose if a home is in an HOA community, as this is considered a “material fact” under the Realtor® Code of Ethics. Agents who are REALTORS® must ensure that buyers and sellers are aware of any facts that could affect their decision to buy, sell or lease, says Deanne Rymarowicz, senior counsel of legal affairs at the National Association of REALTORS®. During the due diligence period of a real estate transaction, if not before, real estate professionals should advise their buyer clients about the existence of a homeowners association and stress the importance of obtaining and reviewing HOA governing documents, she adds. Listing agents should ask their sellers if an HOA exists in their community, as certain information, like monthly or annual fees and shared amenities, can be included on the MLS.
• Don’t interpret: Agents should be careful not to engage in “unauthorized practice of law,” which violates Article 13 of the Realtor Code of Ethics. For example, agents should not interpret an HOA’s CC&Rs, bylaws or budget, Rymarowicz cautions. Instead, agents should advise their clients to consult an attorney with any questions. “As with anything contract-related, we must be cautious in responding to buyers or sellers, never giving the impression that any legal advice is being provided,” says Harry Disbrow Jr., a broker-associate with Coldwell Banker Riviera Realty in Little Egg Harbor, N.J. “We don’t make it a practice of reading the HOA docs for our buyers or sellers.”
• Be an information source: Real estate professionals can help clients gather HOA documentation and facilitate answers to their questions from sellers, the HOA board or HOA management company. Also, agents should make sure that HOA disclosures and information packets are delivered and received in a timely fashion, as some states allow buyers to terminate a purchase contract within a certain period. “It’s incumbent on agents to make sure the buyer is aware of any deadline to review information packets so they can make the right determination for them,” Rymarowicz says.

Tips for agents representing sellers

A listing agreement should include information about the existence of an HOA, which means listing agents should inquire about pertinent HOA details with their sellers.

Here are a few best practices for listing agents:

• Highlight on the MLS: Real estate professionals will want to collect basic HOA information to include on the MLS listing, such as assessment amounts and shared amenities and services, like security features, snow removal or trash services, if applicable. An MLS could contain specific HOA-related fields to complete when listing a home. An agent also may decide to highlight certain shared amenities (e.g. walking trails, swimming pools, playgrounds and fitness centers) as a selling point when marketing the home.
• Compile information packets: In some states, like California, home buyers must receive HOA governing documents prior to a home sale. However, “the seller should not be the source of the HOA documents but always the HOA,” Rymarowicz says. The seller may have older or incomplete information, and HOA rules may have changed. Home buyers may request some of the following HOA documents:

• • Governing documents, including the CC&Rs, bylaws, operating rules and articles of incorporation
  • Recent financial statements and reports, such as annual budgets, reserves, outstanding loans and certificates of insurance
  • HOA assessments that homeowners are required to pay, including a schedule of payments and any recent special assessments

• Verify sale details: Agents should encourage homeowners to check with their HOA to determine if there are any extra requirements prior to selling their home. For example, some HOAs may require:

• • Transfer fees. HOAs may add a transfer fee whenever ownership changes occur. The seller can negotiate the fee with the buyer or pay it at closing. The fee covers distributing new documents, amenity passes and administrative costs, among others.
  • Compliance or resale inspections. Some HOAs may require homeowners to schedule a compliance inspection with the HOA management company prior to moving out. This ensures the home currently complies with all of the community’s rules and regulations. An HOA could potentially delay a home sale if violations are found and not corrected promptly.
  • Paid up: Selling a home does not erase outstanding debts the seller may owe to the HOA. Sellers who have any unpaid fees may not be able to close on the sale until the debt is paid. HOAs can place a lien on a property for unpaid dues or fines, which could affect transferring the home’s title to the buyer.

Tips for agents representing buyers

When reviewing listings with home buyers, real estate agents will want to alert them if a home is part of an HOA. An addendum is often added to the purchase contract when an HOA is involved, and some states require that certain HOA documents or disclosures be provided to home buyers for their review within a certain time period prior to closing.

Here are a few best practices for buyer’s agents:

• Factor in HOA fees: Help home buyers understand what fees they will be required to pay the homeowners association and when they’re due. HOA fees are often collected monthly or quarterly. These fees could affect what buyers can afford. Also, HOAs may occasionally collect a one-time special assessment fee to cover any unexpected costs when reserve funds are inadequate. Home buyers may want to ask the HOA for details about any previous special assessments, including the amount and the purpose, suggests Bauman.
• Research the HOA: Buyers will be required to sign legal paperwork agreeing to follow the community’s rules, so it’s important to encourage them to review CC&Rs, bylaws and the rules and regulations. Home buyers also may want to gauge the financial health of the HOA. After all, lenders likely will scrutinize the association’s finances and deny a mortgage if they feel the HOA is on shaky financial ground. Home buyers can request to see the HOA’s latest reserve study, which could give them an overview of potential upcoming repairs and special assessments.

Questions to ask the HOA

The Foundation for Community Association Research offers the following questions that prospective home buyers can ask a community association to learn more about how they operate:

• How much are the assessments, and when are payments due?
• What do the assessments cover and not cover?
• What are my individual responsibilities as a homeowner?
• What procedures are in place to collect delinquent assessments?
• How often can assessments increase and by how much?
• Does the community have a healthy reserve to fund major, long-term maintenance and repairs?
• Are there restrictions on renting a property?
• Is the community age-restricted? If so, what’s the policy on underage residents?
• Are there any communication issues between homeowners and the elected board?
• What are the rules related to pets, flags, outside antennas, satellite dishes, solar panels, electrical vehicles, clotheslines, fences, patios, parking and home businesses?
• How often does the association communicate with residents?

Make sure they can live with it: Encourage buyers to carefully review the CC&Rs and pay attention to any restrictions that may affect their intended use of the property, such as rental restrictions, parking regulations and architectural guidelines. Some states, like Nevada, allow home buyers to cancel a purchase agreement within a specified period after reviewing HOA documents. “Buyers often have specific ideas of how they want to use a property, but they may not always share that with their agent,” Rymarowicz says. “Then, they later find out about a dog breed restriction by the HOA, fencing restriction, number of rental properties allowed or that they can’t even paint their front door a certain color. There are all kinds of factors or variables that a buyer may have on their mind. It’s incumbent on them that HOA documents meet their expectations and to make sure they can do what they want.”

Don’t overstep: “The buyer’s agent should not interpret any financial statements, bylaws or restrictions of the HOA,” Rymarowicz cautions. “It’s really up to the buyer to go through the documents and make sure they can live with the restrictions, that the amount of the assessment is OK and to make sure the association is not involved in any current litigation.” Always refer buyers to a real estate attorney for more guidance.

The last word on HOA rules

HOAs are growing rapidly across the U.S., and more homeowners are living under one. Community associations can be a selling point for a home, helping to protect property values, ensuring a community is well-maintained and preserving neighborhood aesthetics. But overly stringent HOAs can prove a nightmare for homeowners having to cope with endless rules and regulations that may prevent them from enjoying or using their home as they had intended.

HOAs are becoming a growing discussion point in real estate transactions, and real estate professionals should be prepared.

“Real estate agents can be a valuable information source for home buyers considering properties in community associations by helping them understand both the benefits and responsibilities of living in such communities,” Bauman says. “Agents can facilitate conversations with current residents, board members or community managers, who can provide insight into how the association is managed and what the community atmosphere is like. By addressing important questions about the assessments, amenities, architectural restrictions and overall governance, agents ensure that buyers make informed decisions and enter the community with realistic expectations.”

© 2024 National Association of Realtors® (NAR)

October Rents Fall, More Units Expected in 2025

 Growing supply of multifamily housing suggests a 1.1% increase in rental stock to more than 49 million units by next fall, with the biggest increases in the South and West.

SANTA CLARA, Calif. – Rents fell by -0.8% to $1,720 in October, marking their fifteenth consecutive month of year-over-year declines and falling the most for smaller-sized units, according to the Realtor.com’s October Rental Report. Looking ahead, new rental properties coming onto the market are expected to put continued downward pressure on rents next year.

"New multifamily construction projects started in the last two years have hit the market in 2024, with a greater supply of units helping to soften rents and bring renters some relief," said Danielle Hale, chief economist at Realtor.com. "While we expect fewer multifamily homes to be finished in 2025, we still anticipate enough to increase supply, which will keep downward pressure on rents."

Growing rental supply remains key for 2024 and 2025 rental market

More completed multi-family homes made their way to the market in 2024 as projects begun in 2022 and 2023 were finished. Between January and September 2024, the average seasonally adjusted annual rate of multi-family completions reached 606,000 units, up from 445,000 units in the same period in 2023, and higher than the 2017-19 pre-pandemic average of 359,000 units. While a lower rate of completions is anticipated for next year, rental housing stock is still expected to rise by 1.1% to more than 49 million units by fall 2025, which would be 6.7% higher than in the fall of 2019, before the pandemic.

Rental stock is expected to increase most in the South by fall 2025

New multifamily completions rose in all regions of the country this year, with the biggest year-over-year gains seen in the South (49.1%) followed by the Midwest (44.9%), West (23.9%) and Northeast (7.4%). That has translated to lower median asking rents. In the South, the biggest annual drops in median asking rent in October were seen in Memphis, Tenn. (-5.4%), and Nashville, Tenn. (-5.2%). In the Midwest, the biggest annual decline was in Chicago (-4.1%) and in the West, rent declines were led by Denver (-5.6%) and Phoenix (-4.5%). Large Northeastern metro areas, such as New York (0.4%), have seen small increases in rent due to relatively slower increases in the supply of new rental homes.

By fall 2025 rental stock is estimated to increase most in the South, with a 1.5% year-over-year increase, followed by the West (1.2%), Midwest (0.9%) and Northeast (0.7%). That will translate to increases in the overall rental stock by 8.9% in the South, 8.6% in the West, 5.0% in the Northeast and 1.7% in the Midwest compared to pre-pandemic levels.

Rents decline across all unit sizes

October saw the fifteenth straight month of year-over-year rent declines for 0-2 bedroom properties. The median asking rent fell by $14, or -0.8%, to $1,720. That's still just $40 (-2.3%) lower than its August 2022 peak and is $272 (18.8%) higher than the same time period in 2019.

All unit sizes saw rent declines in October, with the biggest drops in smaller-sized units. The median rent for studios fell -1.2% year-over-year, to $1,436. That's down -3.6% from its October 2022 peak but is 12.5% higher than five years ago. The median rent for one-bedroom units fell -0.9% to $1,600, 17.1% higher than five years ago. And the median rent for two-bedroom units fell -0.7% to $1,908, which is 21.1% higher than five years ago.

National Rental Data – October 2024

Florida Largest Metropolitan Areas – October 2024

Methodology

Rental data as of October 2024 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

Source: Realtor.com

© 2024 Florida Realtors®

Florida’s Oct. Housing: Inventory Up, Prices Ease

 By Marla Martin

Florida Realtors Chief Economist: New listings of homes for sale in October were impacted by Hurricanes Milton and Helene. Inventory levels rose from one year ago.

ORLANDO, Fla. — Florida’s housing market in October reported higher inventory levels (active listings) and easing statewide median prices compared to a year ago, according to Florida Realtors®’ latest housing data.

“With more inventory available now and home price increases slowing, it’s a positive sign for homebuyers, who are seeing more opportunities to enter the market,” said 2024 Florida Realtors President Gia Arvin, broker-owner with Matchmaker Realty in Gainesville. “Mortgage interest rates are lower than they were a year ago, too, which helps boost affordability.”

Last month, closed sales of existing single-family homes statewide totaled 18,671, down 5.6% year-over-year; existing condo-townhouse sales totaled 6,499, down 19.9% over October 2023, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations.

The statewide median sales price for single-family existing homes in October was $415,000, up 1.2% from $410,000 one year earlier. For condo-townhouse units, the median price was $315,000, down 2.2% from $321,990 in October 2023. The median is the midpoint; half the homes sold for more, half for less.

According to Florida Realtors Chief Economist Dr. Brad O’Connor, Hurricane Milton caused significant coastal damage in Florida, from Tampa Bay down well to the south along the Gulf Coast. While inland areas were spared from catastrophic winds due to Milton’s weakening ahead of making landfall on Oct. 9, the storm still caused widespread power outages throughout the western I-4 corridor, including in the Orlando area.

“Along with a renewed strengthening of the mortgage rate lock-in effect, Hurricanes Milton and Helene likely had a bigger impact on new listings of homes for sale in October,” O’Connor said. “New listings of single-family homes fell by 10.3% year-over-year but were still up 9.5% for the year to date. Meanwhile, new listings of townhouses and condos, were down 9.5% compared to a year ago, but were up 12% for the year.

“While the rate of new listings coming onto the market was already slowing ahead of the storms, the year-over-year declines in October were a sizeable jump – and very likely, related to the unique pattern of events that unfolded throughout the month.”

On the supply side of the market, Florida had a 4.7-month supply of single-family existing homes last month, up 34.3% year-over-year. For condo-townhouse units, the state had a 7.7-month supply in October, up 67.4% year-over-year.

To see the full statewide housing activity reports, go to the Florida Realtors Newsroom and look under Latest Releases or download the October 2024 data report PDFs under Market Data.

© 2024 Florida Realtors®

Builder Confidence Moves Higher

 The National Association of Home Builders said builders expect market conditions to improve even with labor shortages and higher building material prices.

WASHINGTON — Builder sentiment improved for the third straight month and builders expect market conditions will continue to improve with as the new administration takes control of the White House and Congress.

Builder confidence in the market for newly built single-family homes was 46 in November, up three points from October, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.

“With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “This is reflected in a huge jump in builder sales expectations over the next six months.”

“While builder confidence is improving, the industry still faces many headwinds such as an ongoing shortage of labor and buildable lots along with elevated building material prices,” said NAHB Chief Economist Robert Dietz. “Moreover, while the stock market cheered the election result, the bond market has concerns, as indicated by a rise for long-term interest rates. There is also policy uncertainty in front of the business sector and housing market as the executive branch changes hands.”

The latest HMI survey also revealed that 31% of builders cut home prices in November. This share has remained essentially unchanged since July, hovering between 31% and 33%. Meanwhile, the average price reduction was 5%, slightly below the 6% rate posted in October. The use of sales incentives was 60% in November, slightly down from 62% in October.

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI sub-indices were up in November. The index charting current sales conditions rose two points to 49, the component measuring sales expectations in the next six months increased seven points to 64 and the gauge charting traffic of prospective buyers posted a three-point gain to 32.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased four points to 55, the Midwest moved three points higher to 44, the South edged up one point to 42 and the West held steady at 41.

Source: National Association of Home Builders

© 2024 Florida Realtors®

Redfin: Big Jump in Existing Home Sales

 October existing home sales rose 1.6% month over month and are on track to finish this year higher than last year.

SEATTLE — Existing home sales rose 1.6% month over month in October — the biggest gain since January 2022 — to a seasonally adjusted annual rate of 4,179,346, according to a new report from the real estate brokerage Redfin. They climbed 1.7% year over year — the first annual increase since November 2021—and are on track to finish the year slightly higher than they finished last year (4,093,102).

Overall home sales, which include sales of both existing and newly built homes, also posted a notable increase. They rose 1.6% month over month and 3.4% year over year to the highest level in over a year and a half on a seasonally adjusted basis.

The median home sale price increased 5.2% year over year to $435,313 in October — the biggest annual gain in six months.

Home sales jumped in October because mortgage rates had just hit the lowest level in two years, giving buyers more purchasing power. The Federal Reserve had also just made news by cutting its benchmark interest rate and outlining plans for future cuts. Redfin agents say some buyers entered the market because they assumed the Sep. 18 decision would cause mortgage rates to plunge, though by this point, most of the decline had already happened.

The average interest rate on a 30-year-fixed mortgage bottomed at 6.08% during the week ending September 26. Noticing that rates were falling, many Americans started touring homes and making offers in September, which is why pending home sales jumped that month. Many of those pending transactions were finalized in October, fueling last month’s rise in home sales. But the rise in pending sales didn’t last into October.

Pending sales dipped in October amid jump in mortgage rates, election uncertainty

Pending sales fell 1.1% month over month on a seasonally adjusted basis in October. That’s largely because mortgage rates shot up last month, erasing much of the newfound purchasing power buyers gained over the summer. Mortgage rates now sit at 6.78% — near the highest level since July. Demand was also likely sluggish last month because many prospective buyers decided to hold off until after the presidential election, and others were recovering from hurricanes in the Southeast.

Some homebuyers got cold feet as economic uncertainty and election jitters gripped the country; roughly 53,000 home purchases were canceled in October, equal to 15.5% of homes that went under contract last month. That’s the highest percentage in nearly a year.

“Homebuyers came off the sidelines when mortgage rates dropped, but now that rates spiked back up, things have slowed down again,” said Stayce Mayfield, a Redfin Premier real estate agent in St. Louis. “That’s partly because not all buyers who came off the sidelines actually locked in a rate, so now they’re saying, ‘Well wait, now I’m getting quoted 7% when I thought I was going to get 6%.’ Sellers are grappling with the same issue; those who locked in low rates during the pandemic and were considering selling and buying a new home are now wondering if they missed the boat.”

The mortgage-rate rollercoaster isn’t expected to end anytime soon. Rates will continue to see-saw as investors try to suss out the impact of a Trump presidency, and they’ll likely stay elevated if President Trump moves forward with higher tariffs and tax cuts, according to Redfin Economics Research Lead Chen Zhao.

Early signs that demand is recovering post-election

Redfin is seeing early signs that demand has begun to recover now that the election is over. Demand from homebuyers requesting service through Redfin’s site was about 25% higher this past weekend than the same weekend last year – the largest year-over-year gain since the downturn began in 2022.

While pending sales fell from a month earlier in October, they rose 3.5% from a year earlier – the third consecutive year-over-year gain. That, along with the uptick in existing home sales, is what indicates that existing home sales are on pace to end this year higher than last year.

Typical home took 41 days to sell – the slowest October pace in five years

The typical home that sold in October spent 41 days on the market. That’s one week slower than a year earlier and is the longest of any October since 2019. Just over one-third (35%) of homes that sold last month went under contract within two weeks, down from 40.4% a year earlier and the lowest October share since 2019.

Redfin agents say listings often sit on the market because they’re overpriced, which has led to a pile-up of stale listings; active listings of homes for sale rose to the highest seasonally adjusted level in four years last month.

“Buyers have more information than they’ve ever had about pricing and previous sales, and they want to know that what they’re getting is worth it for the price. That’s why sellers need to price fairly in this market,” said Cory Kirkland, a Redfin Premier agent in Columbus, OH. “Sellers are asking buyers to pay $500,000 for a home they bought in 2020 for $350,000 and didn’t put any work into, and buyers are saying no.”

Just over one-quarter (27.7%) of homes that sold in October went for more than their asking price, down from 31.7% a year earlier and the lowest October share since 2019.

Metro-level highlights: October 2024

• Prices: Median sale prices rose most from a year earlier in Milwaukee (13.6%), Fort Lauderdale, FL (13.3%) and St. Louis (12.2%). They fell in just two metros: Austin, TX (-3.4%) and San Antonio (-1.3%).
• Pending sales: Pending sales rose most in San Jose, CA (32.1%), San Francisco (25.3%) and Oakland, CA (22%). They fell most in Tampa, FL (-24.5%), West Palm Beach, FL (-15.7%) and Fort Lauderdale (-12.3%).
• Closed home sales: Home sales rose most in Seattle (26.9%), Sacramento, CA (20.1%) and Portland, OR (18.3%). They fell most in Fort Lauderdale (-16.3%), Tampa (-15.6%) and Miami (-14.1%).
• New listings: New listings rose most in Seattle (23.5%), Anaheim, CA (17.5%) and Sacramento (17.4%). They fell most in Tampa (-27.3%), Atlanta (-14.5%) and West Palm Beach (-11.7%).
• Active listings: Active listings rose most in Cincinnati (39.7%), Fort Lauderdale (36.6%) and San Diego (36.5%). They fell in two metros: New York (-4.4%) and Atlanta (-1.4%).
• Sold above list price: In San Jose, 64.4% of homes sold above their final list price, the highest share among the metros Redfin analyzed. Next came Newark, NJ (62.5%) and San Francisco (60.8%). The lowest shares were in West Palm Beach (6.2%), Miami (9.2%) and Fort Lauderdale (10%).

Source: Redfin

© 2024 Florida Realtors®

First-Time Buyers at 24%, Age Hits Record High

 A record high 26% of buyers paid cash for their home and 17% purchased a multigenerational home, according to NAR’s new 2024 buyers and sellers profile.

WASHINGTON — The first-time homebuyer market share decreased to a historic low of 24% (down from 32% last year), while home buyers’ ages hit all-time highs of 56 years overall (49 last year), 38 years for first-time buyers (35 last year) and 61 years for repeat buyers (58 last year), according to the National Association of Realtors®' 2024 Profile of Home Buyers and Sellers.

This annual survey of recent home buyers and sellers – this year tracking transactions between July 2023 and June 2024 – has been NAR's flagship report since it first published in 1981, providing industry professionals insight into detailed homebuying and selling behavior.

“The U.S. housing market is split into two groups: first-time buyers struggling to enter the market and current homeowners buying with cash,” said Jessica Lautz, NAR deputy chief economist and vice president of research. “First-time buyers face high home prices, high mortgage interest rates and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers. Meanwhile, current homeowners can more easily make housing trades using built-up housing equity for cash purchases or large down payments on dream homes.”

The typical home buyer’s median household income for 2023 rose to $108,800 from $107,000 in 2022. First-time buyers had a median household income of $97,000, up from $95,900 the prior year and an increase of $26,000 in the last two years. Repeat buyers had a median household income of $114,300, up from $111,700 the previous year.

The share of married couples increased to 62% of all buyers, with single female buyers seeing a slight rise to 20%. Conversely, the share of single males decreased to 8% and unmarried couples dropped to 6%. In addition, the share of single female first-time buyers jumped by 5%.

Eighty-three percent of recent home buyers identified their ethnicity as White or Caucasian. Seven percent of recent buyers identified as Black/African American, 6% identified as Hispanic/Latino, 4% identified as Asian/Pacific Islander and 3% as some other ethnicity.

Seventy-three percent of recent home buyers did not have a child under the age of 18 in their home – the highest share recorded.

Seventeen percent of home buyers purchased a multigenerational home, the highest share in the data series. The top reasons cited were cost savings (36%), to take care of aging parents (25%), children over the age of 18 moving back home (21%), and children over the age of 18 who never left home (20%).

“As home buyers encounter an unaffordable housing market, many are choosing to double up as families,” explains Lautz. “Cost savings are a major factor, with young adults returning home – or never leaving – due to prohibitive rental and home prices. Meanwhile, elderly parents and relatives are moving in with family members as home buyers reprioritize what matters most to them.”

Real estate agents played a crucial role in the homebuying process, with 86% of all buyers utilizing their services – the highest of all information sources used. Agents were the most useful information source in the home search process.

Eighty-eight percent of home purchases were made through a real estate agent or broker, demonstrating the continued importance of agents in the homebuying process. Nearly 90% of buyers each expressed satisfaction with their agent’s responsiveness, knowledge of the purchase process, honesty and integrity, knowledge of the real estate market and people skills. Eighty-eight percent of home buyers would use their agent again or recommend to others.

In 2024, the median down payments were 18% for all home buyers, 9% for first-time home buyers and 23% for repeat home buyers – the highest down payments for first-time home buyers since 1997 and repeat home buyers since 2003. First-time buyers continue to rely on savings (69%); however, 25% used loans or gifts from friends and family, 21% used financial assets and an all-time high of 7% used inheritances. A record 26% of home buyers paid cash for their homes.

The typical age of home sellers reached 63 years, the highest ever recorded. The share of married couples selling their homes was 69%, an increase from 65% last year, marking the first increase in four years.

For sellers, the most cited reason for selling their home was the desire to move closer to friends and family (23%), followed by home was too small (12%), home was too large (11%) and neighborhood becoming less desirable (10%).

“Family support systems are influencing buying and selling decisions,” said Lautz. “Being close to friends and family is the top reason to sell, while buying a home convenient to friends and family continues to grow in importance. Today’s buyers are less likely to be concerned with their work locations when purchasing, perhaps because of a higher share of older repeat buyers and remote work flexibility remaining a factor.”

Ninety percent of sellers sold with the assistance of a real estate agent, up from 89% last year, and only 6% were for-sale-by-owner sales, an all-time low. Most sellers (87%) said that they would definitely (72%) or probably (15%) recommend their agent for future services.

“Most home buyers and sellers find it valuable to use an agent who is a Realtor® to help them maneuver through the complicated homebuying and selling processes, especially in a challenging housing market,” said NAR President Kevin Sears, broker-associate of Sears Real Estate/Lamacchia Realty in Springfield, Massachusetts. “Realtors® provide critical knowledge and expertise that ensure a successful transaction.”

Methodology

Data gathered in the report is based on primary residence home buyers. In July 2024, NAR mailed out a 127-question survey using a random sample weighted to be representative of sales on a geographic basis to 167,750 recent home buyers. The buyers must have purchased a primary residence home between July 2023 and June 2024. NAR received 5,390 responses from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 3.2%. Per the Realtor Confidence Index, 83% of home buyers were primary residence buyers in 2023, which accounts for 4,756,000 homes sold in 2023 (among new and existing homes). Using that calculation, the sample at the 95% confidence level has a confidence interval of plus-or-minus 1%.

© 2024 National Association of Realtors® (NAR)