National mortgage company, American Financial Resources, recently published information on the the growing size of the typical American home. Pulling from statistics and reports from the U.S. Census Bureau and the National Association of Home Builders, AFR’s blog attests that continued improvements in the housing market have inspired developers to build larger homes.
While the so-called “McMansions” of the late ’90s and early 2000s were wildly popular, after the housing crash and economic downturn, buyers began rethinking their housing needs and opting for smaller, more efficient homes. Now, official sources say the interest in big homes is beginning to grow once again.
According to the U.S. Census Bureau, average home sizes have grown steadily over the past three years, with 2012 seeing an all-time record of 2,306 square feet. This figure represented an 8% rise from 2009. A survey from the National Association of Home Builders provided further evidence that buyers are beginning to gravitate back to larger homes, as they found the preferred median home size is around 2,226 square feet.
“One explanation for shift to larger homes is that finally, the economy is getting back on track,” AFR’s blog states. “Lending guidelines have been revamped and there is just more confidence on both sides of the table.”
On the other hand, some industry pros claim the desire for bigger, better homes is always there, regardless of the economy. Fred Cooper, of Toll Brothers, a luxury home developer, recently observed, “In the downturns, in upturns, whenever, our customers typically added another 18% to 20% of floor space onto what already was a very nice house to begin with.”
Oklahoma tornado expected to be one of the costliest storms in history
In other news, the devastating tornado that raged through Moore, Oklahoma on May 20, 2013 is now being considered one of the costliest storms in history. Early analyses estimate the total financial damage of the storm to be somewhere between $1.2 and $2 billion.
According to information from the National Weather Service, the EF4 twister had winds at close to 200 miles per hour. To earn an EF5 status (the highest storm rating), storms must have winds of 200+ mph. In addition to the storm’s intensity, the sheer size of the funnel contributed to its deadly impact.
“Data collected and reviewed from the National Severe Storms Laboratory indicate that this particular tornado expanded in size from one mile wide to 2.6 miles wide in an astonishing 30 seconds,” a recent blog post on AFRMortgage.com states.
At the time of this writing, the Moore tornado ranked #3 on Wikipedia’s list of 10 costliest tornadoes in history, with estimated damage of $2 billion.
Twenty-five people lost their lives as a result of this terrifying storm and many others lost their homes. Thankfully, most of the people who had damage to their homes, or who lost their homes entirely, could receive aid from FEMA and their insurance policies.
There was no shortage of heartbreaking news stories in the aftermath of the Moore, OK tornado; however, there were a few positive stories that came out of the devastation, such as the one of the elderly woman who miraculously found her missing dog during a live television interview (see video below). Unfortunately, not everyone was as lucky as she was, but since the storm, the community of Moore has been working to rebuild their homes, schools, and their lives.
Foreclosure Sales Fall
Since the housing crisis, the U.S. real estate market has had more than its fair share of distressed inventory. Foreclosures plagued once-thriving neighborhoods, bringing down home values and forcing a number of Americans to lose the roof over their heads. Fortunately, the economy is getting back on track and thanks to improvements in the market and government incentives, foreclosures have now dropped to manageable levels.
According to a recent blog post from American Financial Resources, a national mortgage lender, foreclosures have fallen back to 2008 levels – a huge improvement from 2009, when foreclosures were reported to be at an all-time high. The blog, which cited data from official sources such as RealtyTrac, also stated that the number of short sales has also decreased.
“Since 2012’s first quarter compared to that of 2013, the number of short sales was down by 35 percent,” AFR states.
Daren Blomquist, spokesman for RealtyTrac, commented that “The decrease in short sales was a bit of a surprise given that 11 million homeowners nationwide still owe more on their homes than they’re worth. Rising home prices are taking away the incentive for short sales on the part of both homeowners and lenders.”
Not so long ago, the number of short sales was pretty high. This was instrumental in the clearing out of distressed inventory, as lenders worked harder to prevent mortgage holders from going into default, but now it seems the short sale craze is waning. Unfortunately, the number of underwater homeowners is still relatively high, which means those who are struggling to make their mortgage payments may need to look into alternative solutions to avoid foreclosure. HARP refinancing is one such outlet, but for now that option is only available to homeowners with mortgages held by Freddie Mac or Fannie Mae.
While there are obviously still hurdles to clear, it’s evident that the market is once again gaining strength.
Vacation Home Prices Rise
In other industry news, the demand for second homes has started to improve. The median sale price for vacation homes in 2012 was reported at $150,000 – a 24% increase from 2011. This information comes from the National Association of Realtors, who also reported that the number of vacation home sales shot up to 553,000 in 2012 from 502,000 in 2011.
So what does this say about the state of the U.S. second home market? Apparently, it says that more Americans are finding themselves in better positions to buy vacation homes – a significant piece of evidence that suggests the economy as a whole has improved.
While many Americans may still consider a vacation house to be an unlikely purchase in their future, the combination of improved economic conditions, historically low mortgage rates and affordable home prices have created optimal conditions for a vacation home boom.
Regionally, some states are faring better than others in the vacation home market.
“Hot spots for vacation home sales have been in some of the states that were the hardest hit during the housing crisis,” a recent blog on AFRMortgage.com states. “Business has been especially booming in Florida, California, Arizona, and Virginia. In some areas, sales have been so brisk that sellers have had no choice but to conduct lotteries.”