Lennox's Real Estate Blog

sharing my passion for real estate

Transition to a Sustainable Housing Market

housing market large

The residential housing market in the United States has experienced a significant recovery after the housing bubble burst in 2006 – 2007. Leading the way to recovery were the Home Buyer Tax Credit, Residential Investors and Local Home Buyers taking advantage of the historical low interest rates, thanks to the Mortgage Bond Purchase Program by the U.S. Federal Reserve.

This now poses the question of how is the U.S. Housing Market is going to transition from the Recovery Phase to a Sustainable Housing Market. With higher prices and the Federal Reserve starting to back off of Mortgage Bond Purchase Program, (creating higher mortgage interest rates) what will it take to have a strong foundation for a healthy market?

There are many major indicators that make up the environment of a Healthy Housing Market.

RESIDENTIAL HOUSING MARKET

Indicator Condition Sales Activity
Home Prices Appreciation has spiked the last two years, price increases will start to moderate next year Lower Sales Activity
Interest Rates May 2013 appears to be the low point. Interest Rates heading higher Lower Sales Activity
Job Growth #1 Factor to Healthy/Strong Market Healthy Sales Activity
Residential Investors Sales activity headed back down toward normal level Lower Sales Activity
Household Formations Returning back up to normal after 5 Low Years Healthy Sales Activity
Down Payment Requirements #1 Factor for many Home Buyers FHA-VA-USDA-GSE’s Healthy Sales Activity
Underwater Sellers Price Appreciation unlocking many Sellers. Additional Inventory and Sales Activity Healthy Sales Activity
Homeowners who Refinanced Have very low interest rate. Restriction of Housing Supply. Lower Sales Activity
New Construction Selling out of lots. Few new condominiums. Restriction of Housing Supply

The Most Important Factor that will help Transition to a Sustainable Housing Market:

Home Financing

1)    Down Payment Requirements for Credit Worthy Home Buyers

The housing bubble was caused by lax Mortgage Underwriting Standards, not by the amount of down payment. The problem was fixed six years ago in 2007. The new vintage of loan portfolios are performing according to plan.

2) Keep FHA – 3 ½ % Down Program for Credit Worthy Borrowers

This is the #1 item for a Healthy Housing Market.

3) Need credit score requirements to return back to normal

Once QM (Qualified Mortgage) rules are implemented, credit scores should return back to normal for QM Qualified Mortgages.

4) U.S. Government backing of GSE Loans

This is the reason why we have Low Home Mortgage Interest Rates and have the availability of 30 Year Fixed Rate Mortgages. Without this backing, interest rates would fluctuate wildly and put housing on Shorter Term Mortgages. This could cause more frequent boom/bust cycles, with deeper/longer recessions.

Written by Lennox

June 24, 2013 at 2:42 pm

Should I Wait To Sell?

We are hearing this question every day and the answer is; IT DEPENDS!

Scenario One: If you are selling and not purchasing another property, even though market conditions create a positive environment for getting your home sold, you might wait for higher prices. This scenario does depend on your local market area and price range. The months’ supply will indicate the direction and velocity of prices. A low months’ supply equates to increased prices.

Remember: Local job growth is the #1 indicator of a healthy/strong housing market.

Scott Predictive Graph

 

Scenario Two: If you are selling your home and purchasing another property simultaneously.

1) It’s OK to Buy/Sell within the same market timing.

Factor to Watch: What is the months’ supply of inventory for your current home versus your next home. This will give you the base information to make a decision. It could be a situation where both your current home and your next home may both be going up in value.

2) Key Consideration: Interest rates.

Historically low interest rates; if you are going to use home mortgage financing on your next home purchase it may be a good time to move. Interest rates are expected to increase over the next year.

3) Greater Selection: More inventory appears to be coming on the market.

Sellers who have been waiting to sell, to get higher prices, and who are purchasing another home have noticed the interest rate increase. Many are moving forward with their plans to move. With more Sellers putting their home on the market, buyers will have a greater selection of homes for sale; though it will still be a quick action market.

Written by Lennox

June 20, 2013 at 3:38 pm

Hot Seattle residential real estate called ‘surge market’

Lennox PSBJ

Just last week, we here at John L. Scott hosted luxury real estate broker Dolly Lenz, at a breakfast for our top luxury brokers. She gave our group some valuable insights into what it takes to acheive such a hig level of sucess. She was extremely impressed with Alan Pope’s market overview, as well as the energy of the Seattle real estate market. Below is an article published by the Puget Sound Business Journal covering the event and featuring several of my remarks about the state of our local market.

 

 

Hot Seattle residential real estate called ‘surge market’

When Dolly Lenz, called the queen of U.S. real estate, speaks, people listen. And that’s what a select group of John L. Scott Real Estate high-end luxury real estate agents did when Lenz and real estate appraiser and consultant Alan Pope of Alan L. Pope and Associates spoke at a recent breakfast put on by John L. Scott for their top sellers.

As vice chairman of Prudential Douglas Elliman in New York City, Lenz has sold more than $7 billion in real estate, more than double the next top agent in the country. This was her first time in Seattle. She loved it and spoke of increasing opportunities in the real estate market.

Pope says the market in our metro area is up 15 percent and that he is seeing the same kind of buying frenzy that he saw six years ago.

“Yes, it has been a fabulous recovery in the housing market,” says Lennox Scott, chairman and CEO of John L .Scott Real Estate. “I saw it formulating 18 months ago. The confidence of local homebuyers has come back strong,” he says.

READ MORE

  Patti Payne   Columnist- Puget Sound Business Journal   Email  | Twitter

Written by Lennox

May 7, 2013 at 11:00 am

Posted in Uncategorized

February 2013 Market Update

sellers-market

 

 

 

 

 

The Central Puget Sound residential housing market flipped to a seller’s market in February of 2012, for most price ranges and areas throughout the four county area.

Residential investors led the way in creating buyer demand through 2011. Then, in February 2012 we began to see a resurgence of local home buyers, building on the demand of the investors and increasing the need for inventory.

The market has transitioned in favor of the seller. Two key market conditions have contributed to this resurgence of buyers; positive job growth and historically low interest rates. In fact, these conditions have been so strong that we are seeing a surge in sales activity, and an emerging commonality of multiple offer situations. These highly favorable market conditions have cultivated buyer confidence for local home buyers

The surge in sales activity and the restriction of new properties coming on the market, due to underwater sellers and little new construction available, has combined to create a severe lack of inventory. This shortage of homes for sale is prevalent in the price ranges where the majority of sales activity is taking the place, causing prices to rise.

PSRC Graph

Written by Lennox

March 8, 2013 at 12:13 pm

Posted in Uncategorized

How to Succeed in 2013

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How to Succeed in 2013

By Maria Patterson

RISMEDIA, Thursday, February 28, 2013— J. Lennox Scott
CEO & Chairman
John L. Scott Real Estate

Maria Patterson: What will be the most significant difference between 2012 and 2013? 

Lennox Scott: I believe the market will continue to intensify, meaning buyer confidence will continue to increase, and at the same time, we will have a continued shortage of inventory. It’s a continuation of the foundation set in 2012 of the market shifting back toward a seller’s market. This will definitely continue in 2013 where we expect the majority of sales activity taking place in multiple-offer markets. Prices are going to continue to rise and we’re going to continue to see an inventory shortage. At the same time, the local homebuyers have come back into the market—the residential investor. With the feds buying mortgage backed securities to keep interest rates low, it’s created this historic market condition where the economy is rebounding, interest rates are low, and we’re still seeing adjusted lower prices. Prices were coming off the bottom in 2012 and will continue to mature upwards in 2013.

MP: How have you adjusted your operations model for this year?

LS: We’ve repositioned the company for this improving market. Over the last five years, we’ve repositioned the company for the next 5–10 years ahead, understanding that real estate goes in 10-year cycles. We’re expanding our sales force again and recruiting. Productivity has skyrocketed for current associates. Business has gone up with 35 percent fewer brokers in the market. For the veteran agents who stayed the course and put in double efforts, they are now being rewarded.

MP: What will be the most significant driver of business growth in 2013?

LS: We have a mature investor market for residential real estate that will continue. They’re competing with first-time buyers and transferees moving in. Residential investors have helped transition the market—they’re mature, they’re ready to move, the numbers pencil out for positive cash flow. On top of that, we have the local homebuyers that are confident that prices have bottomed out and that they can now move forward. They’ve been waiting five years or longer to act and life events take place and they’re ready to move into the next phase of their lives.

MP: What is the consumer mindset for the year ahead?

LS: It will be very positive, especially in those areas where there is job growth. The economic vitality that’s taking place, the job security, the optimism in the market—these are all very positive things. It seems like every sector is positive.

MP: What product or service—technology or otherwise—stands to become your greatest asset this year?

LS: It’s all about mobile apps. Everything is mobile and everything is video. There has been a huge paradigm shift in terms of the delivery of information. There are more minutes spent on mobile than at our desktops. We really raised up and invested heavily in our mobile apps. They are branded for each individual broker associate, which follows what we’ve done in desktop. It’s all about creating a credible relationship with today’s buyers and sellers.

For more information, visit www.johnlscott.com or http://www.rismedia.com
RREIN welcomes your feedback. For more information, email rrein@rismedia.com.

Copyright© 2013 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission.

Written by Lennox

February 28, 2013 at 10:45 am

Posted in Uncategorized

Lennox Scott – RIS Media Power Broker Strategies

Lennox 2013 Photo - Small

I recently spoke with RISMedia for a piece on Power Brokers Strategies. Below is a nice quote they took from me and a link to the entire article.

“Over the last five years we’ve positioned the company for the next 5-10 years ahead, understanding that real estate goes in 10 year cycles.”

Read the full article

Written by Lennox

February 15, 2013 at 11:05 am

Posted in Uncategorized

Savannah Scott Signs with Georgia Equestrian

I would like to share with you some exciting news, that has brought me great pride and joy. I am thrilled to announce that my daughter Savannah; a dedicated and talented equestrian, has earned the great honor of riding as a member of the Georgia Horsemanship Team. What a proud and momentous occasion!

 

savannah scottSavannah Scott Signs with Georgia Equestrian
Dec. 6, 2012

ATHENS, Ga. – Megan Boenig, head coach of the Georgia equestrian team, announces the
addition of Savannah Scott to the 2012 fall signing class. Scott brings 14 years of experience
and will ride as a member of the Georgia Horsemanship team.

“What a gift it has been watching Savannah Scott begin and grow through her riding career and
now being blessed to have the opportunity to guide her through her college career is wonderful,”
assistant coach Mary Meneely said.

The Seattle, Wash., native is the daughter of Lennox and Deanna Scott and Laurie Scott and
has trained under Sue Cumming Shultz, one of the nation’s top trainers.

Scott comes to Georgia with a wealth of experience and as a highly decorated athlete. Early in
her career, she was named the Youth 12 and Under High Point Champion at the Appaloosa
Youth World Show. She also won the All Around High Point 18 and Under at the Appaloosa
Youth World Show and was the 2010-11 Equestrian Rider 18 and Under High Point Champion at
the Appaloosa Youth World Show.

Scott has also earned World Titles in English Equitation, Western Horsemanship, Bareback
Horsemanship, Western Showmanship, English Showmanship, and Western Riding at the Youth World Show.

Dedicated to her academics, Scott is a member of the Bellevue Christian High School Honor Roll. She also spends time
working with her charity, Unstoppable Kindness, and organizes a yearly auction to benefit homeless individuals in the Seattle area. She also leads her team on many philanthropic and humanitarian endeavors, such as making hundreds of sack lunches, which includes special notes to those individuals in need.

“Savannah has many World Championship titles on several different horses and is well equipped for the transition into the collegiate competition arena,” continued Meneely. “I look forward to the contribution that Savannah will bring to the University of Georgia next fall!”

Written by Lennox

December 11, 2012 at 2:59 pm

Posted in Uncategorized

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