News

NAR Director’s Report28 May

At this year’s NAR Mid-Year Meeting we saw a change in focus from “legislative meetings” with NAR and our representatives in DC, to a name and content change. This meeting will now be known as the REALTOR® PARTY CONVENTION AND TRADE SHOW. The initial general meeting which occurs on Tuesday afternoon, concentrated entirely on the political landscape, the importance of the REALTOR® PAC and our continuing contributions, and what NAR members needed to do when they went to the Hill.

Later in the week NAR held two general informational meetings to discuss two reports coming from Presidential Advisory Groups (PAGs).  These items would come to the Board of Directors for a vote Saturday.

NAR Director David Somers will discuss AAR’s meetings on the hill with our representatives and I will discuss other issues of importance.

The most important issue to Alaska REALTORS® was the Organizational Alignment PAG Report; a process designed to improve the professionalism of our REALTOR® associations across the country and the level of service provided to members. The NAR Board of Directors passed this set of mandatory standards that touch on every aspect of association operations without dissent.

NAR considers this an issue of professionalism. NAR wants to ensure unity within—and the long-term viability of— our REALTOR® associations. They want all three levels of the organization to thrive together as a true and strong association, rather than acting as group of independent but associated organizations.

Specifically, each local and state association will be required to meet standards in six areas: 1) Code of Ethics education and enforcement, 2) advocacy, 3) consumer outreach, 4) organizational unification, 5) technology, and 6) financial solvency.

Among other things, each board and state association must:

  • Provide Code of Ethics training
  • Participate in Calls for Action
  • Make an effort to collect fair-share contributions to the REALTORS® Political Action Committee, or write a check to cover the fair share
  • Promote the value proposition of using a REALTOR®
  • Maintain a strategic or business plan
  • Maintain a website with links to other levels of the association
  • Meet minimum financial performance

NAR has agreed to provide up to $20 million to help associations meet these new responsibilities. NAR has allocated $5 million to help associations create or update their strategic plan; $3 million helps states implement the standards; and $12 million to facilitate association (board) mergers or dissolutions.

During the informational meetings, the PAG members pledged their time and expertise to help us through this process. Starting right now, our state and each local board must determine its level of compliance. Next, we must work through any reorganization to comply with these new standards. Boards, which find themselves unable or unwilling to meet these new requirements, have the opportunity to have these services delivered to their members through the state or possibly a board in closer proximity (obviously this is difficult, but not impossible in Alaska). In this instance the board could become a “council of” or a “charter” organization of the state or another board. In either instance each member will receive all core services in each of the areas above.

Each local association should read the specifics and start to work towards compliance or, look to a path in which each REALTOR® receives the services a member of NAR deserves. Chelsea Westerberg, our State Executive Officer, will be there to work with each and every board and its members to insure we find the best way to be compliant with these new standards.

I believe when all is said and done, our members will receive an excellent Code of Ethics education, a better system for Code of Ethics enforcement, successful advocacy, a high-level of consumer outreach, and we will have up to date technology. Another benefit is that we will be financially solvent.

For the compliance reporting process go here: http://goo.gl/06Z0e4

For the full report go here: http://goo.gl/vfbgsn

MLS policy:
With the increased use of automated valuation methods (AVMs) for valuing property, the Board amended MLS Policy Statement 7.79, Reproduction of MLS Information, to clarify that AVMs are to be included among the valuations participants can develop for clients and customers, and that MLSs must make information available to participants in a manner that makes development of fully-automated AVMs possible. Participants are subject to payment of the costs of adding or enhancing the systems needed to meet this requirement.

Professional standards:
The Board made several changes to the NAR Code of Ethics and Arbitration Manual.

  • Clarification that the chairs of hearing panels may convene pre-meetings to resolve administration questions.
  • Authorization of the CALIFORNIA ASSOCIATION OF REALTORS®, in a pilot program, to publish names and photographs of Code of Ethics violators on a broader basis than permitted under existing NAR policy.
  • Clarification that “probation” is not a form a discipline but can be coupled with an authorized form of discipline, which is held in abeyance during the probationary period.
  • Expansion of the disciplinary measures available to associations to require disciplined members to cease or refrain from continuing conduct found to violate the Code, and/or to take affirmative steps to ensure compliance with the Code.

Tax policy:
With Congress considering legislation to modify the Foreign Investment in Real Property Tax Act (FIRPTA), encouraging foreign investment, the Board adopted a policy that supports the legislation but stipulates that Congress should not do away with laws subjecting foreign and U.S. real estate investors to similar tax rules.

Issue mobilization and legal assistance:
The Board approved $1.2 million in issue mobilization funds to three associations: $777,000 to the North Dakota Association of REALTORS® for its effort to constitutionally prohibit transfer taxes; $233,000 and additional funds carried over from last year to the North Carolina Association of REALTORS® for a tax reform effort; and $176,000 to the Minnesota Association of REALTORS® for its tax reform effort.

The Board also provided $435,000 in legal assistance funds for six cases. The cases include issues over transportation utility fees, patent infringement, developer permits, MLS copyright infringement, and recognition of licensees as independent contractors.

Leadership election process:
The Board approved an overhaul of the association’s process leading to the election of candidates for NAR leadership. The changes are intended to shorten and increase the transparency of the process. Under the changes, the Nominating Committee is changed to the Credentials and Campaign Rules Committee. The committee will no longer nominate candidates but will review candidates against objective criteria and qualify them based on the criteria.

The criteria include 1) no personal bankruptcy within the last seven years, 2) no personal foreclosures within the last seven years, 3) a credit score above the baseline required for a mortgage backed by the FHA, and 4) no current delinquent federal, state, and local tax filings or payments.

Candidates not qualified by the committee will be able to appeal. For those cleared to run, the election timeline is shortened to a ten-month timeframe, to begin August 1 and run through the election the following May.

Aspects of the process requiring a constitutional change will go before the NAR Delegate Body at our meeting in November. If they pass, the changes take effect Jan. 1, 2015.

FHA 80-year anniversary:
Board members passed a resolution recognizing the 80-year anniversary of the Federal Housing Administration. The FHA was created in 1934 in the depths of the Great Depression. During the recent economic crisis and recession, the agency was critical in shoring up the housing market.

Submitted by PeggyAnn McConnochie, DSA
NAR Director

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Existing-Home Sales Maintain Solid Growth in July

WASHINGTON (August 20, 2015) — Existing-home sales steadily increased for the third consecutive month in July, while stubbornly low inventory levels and rising prices are likely to blame for sales to first-time buyers falling to their lowest share since January, according to the National Association of Realtors®.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.0 percent to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June. Sales in July remained at the highest pace since February 2007 (5.79 million), have now increased year-over-year for ten consecutive months and are 10.3 percent above a year ago (5.07 million).

Lawrence Yun, NAR chief economist, says the increase in sales in July solidifies what has been an impressive growth in activity during this year’s peak buying season. “The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,” he said. “As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase.”

The median existing-home price2 for all housing types in July was $234,000, which is 5.6 percent above July 2014. July’s price increase marks the 41st consecutive month of year-over-year gains.

“Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand,” adds Yun. “Realtors® in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains.”

Total housing inventory3 at the end of July declined 0.4 percent to 2.24 million existing homes available for sale, and is now 4.7 percent lower than a year ago (2.35 million). Unsold inventory is at a 4.8-month supply at the current sales pace, down from 4.9 months in June.

The percent share of first-time buyers declined in July for the second consecutive month, falling from 30 percent in June to 28 percent — the lowest share since January of this year (also 28 percent). A year ago, first-time buyers represented 29 percent of all buyers.

“The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face,” adds Yun. “Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage climbed to 4.05 percent in July from 3.98 percent in June — the first time above 4 percent since November 2014 (4.00 percent) and the highest since September 2014 (4.16 percent).

Properties typically stayed on the market for 42 days in July, an increase from June (34 days) but below the 48 days in July 2014. Short sales were on the market the longest at a median of 135 days in July, while foreclosures sold in 49 days and non-distressed homes took 41 days. Forty-three percent of homes sold in July were on the market for less than a month.

All-cash sales increased slightly to 23 percent of transactions in July (22 percent in June) but are down from 29 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in July, up from 12 percent in June but down from 16 percent in July 2014. Sixty-four percent of investors paid cash in July.

Representing the lowest share since NAR began tracking in October 2008, distressed sales4 — foreclosures and short sales — declined to 7 percent in July from 8 percent in June; they were 9 percent a year ago. Five percent of July sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in July (15 percent in June), while short sales were discounted 12 percent (18 percent in June).

NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says the housing market is in a much better place and has come a long way since the depths of the recession. “Five years ago, distressed sales represented 33 percent of the market in July,” he said. “For many previously distressed homeowners throughout the country, rising home values in recent years have helped recover equity and the vast improvement in several local job markets means fewer are falling behind on their mortgage payments.”

Single-family and Condo/Co-op Sales

Single-family home sales increased 2.7 percent to a seasonally adjusted annual rate of 4.96 million in July (highest since February 2007 at 5.08 million) from 4.83 million in June, and are now 11.0 percent above the 4.47 million pace a year ago. The median existing single-family home price was $235,500 in July, up 5.8 percent from July 2014.

Existing condominium and co-op sales fell 3.1 percent to a seasonally adjusted annual rate of 630,000 units in July from 650,000 units in June, but are still up 5.0 percent from July 2014 (600,000 units). The median existing condo price was $221,800 in July, which is 3.2 percent above a year ago.

Regional Breakdown

July existing-home sales in the Northeast decreased 2.8 percent to an annual rate of 700,000, but are still 9.4 percent above a year ago. The median price in the Northeast was $277,200, which is 1.3 percent higher than July 2014. In the Midwest, existing-home sales were at an annual rate of 1.32 million in July, unchanged from June and 10.9 percent above July 2014. The median price in the Midwest was $186,500, up 6.6 percent from a year ago.

Existing-home sales in the South increased 4.1 percent to an annual rate of 2.29 million in July, and are 9.6 percent above July 2014. The median price in the South was $203,500, up 7.0 percent from a year ago.

Existing-home sales in the West rose 3.2 percent to an annual rate of 1.28 million in July, and are 11.3 percent above a year ago. The median price in the West was $327,400, which is 8.4 percent above July 2014.

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NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: The Pending Home Sales Index for July will be released August 27, and Existing-Home Sales for August will be released September 21; release times are 10:00 a.m. EDT.

Contact Information

Alaska Association of REALTORS®
4205 Minnesota Drive
Anchorage, Alaska 99503

Phone (907) 563-7133
FAX (907) 561-1779
Toll-Free (800) 478-3763

joinus@alaskarealtors.com

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