U.S. homebuilders are feeling more optimistic about their sales prospects than they have been since the high-flying days of the housing boom.
The National Association of Home Builders/Wells Fargo builder sentiment index released Wednesday jumped to 71 this month. That’s up six points from 65 in February and the highest reading since June 2005.
Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September.
The March number exceeded analyst predictions. They expected the index to hold steady at 65, according to FactSet.
Builders’ view of sales now and over the next six months also surged, as did a gauge of traffic by prospective buyers.
The increased confidence reflects heightened expectations as the spring home-selling season, which typically sets the pattern for residential hiring and building construction in the ensuing months, gets underway.
Low mortgage rates and a solid job market have helped drive home sales steadily higher. Sales of new U.S. homes rebounded in January after a steep fall-off the previous month, reaching a seasonally-adjusted annual rate of 555,000. That’s 5.5 percent higher than a year earlier. February new home sales data are due out next week.
Sales of existing homes surged in January to the fastest pace in a decade.
The pickup in home sales has occurred despite, or perhaps because of, a jump in mortgage rates since the fall. Many buyers could be accelerating purchases to get ahead of any further rate increases.
Financial markets expect faster growth and higher inflation will flow from President Donald Trump’s tax cuts and deregulation initiatives. That has pushed up interest rates on both the 10-year Treasury note and mortgages.
The average 30-year fixed mortgage rate was 4.21 percent last week, up from 4.10 percent the previous week. That’s up sharply from an average of 3.65 percent all last year.
Even with the surge in optimism this month, homebuilders continue to grapple with a shortage of skilled workers and land parcels cleared for home construction.
“While builders are clearly confident, we expect some moderation in the index moving forward,” said Robert Dietz, the NAHB’s chief economist.
This month’s builder index was based on 313 respondents.
A measure of current sales conditions for single-family homes jumped seven points to 78, while a gauge of traffic by prospective buyers gained eight points to 54. Builders’ view of sales over the next six months climbed five points to 78.
Study Shows Which Demographics are Choosing Homeownership
WASHINGTON — Generation X households are buying more homes, a growing number of Millennial and younger Baby Boomer households have children living at home, and more Millennials are buying outside of the city, according to the 2017 Home Buyer and Seller Generational Trends study published by the National Association of Realtors.
Citing an improving economy, multiple years of strong job growth and a notable increase in home values in many markets that fueled a greater share of purchases from Generation X households over the past year, NAR officials said that while the challenges faced by Millennials with regard to buying a home have been well documented, it is worthwhile to pay attention to shifts in Gen-X’s home purchasing power.
“Lost in this discussion are the numerous Generation X households who bought their first home, started a family and entered the middle part of their careers only to be rattled by job losses, falling home values and overall economic uncertainty during and after the Great Recession,” said Lawrence Yun, NAR chief economist. “This year’s survey reveals that debt and little or no equity in their home slowed many Gen X households from buying sooner.”
Yun noted that recent Gen X buyers delayed buying longer than Millennials because of debt, were the most likely generation to have previously sold a distressed property and were the generation most likely to want to sell earlier but couldn’t because their home was worth less than their mortgage. Additionally, Gen X buyers indicated they had the most student loan debt ($30,000).
“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” Yun said. “Fortunately, the much stronger job market and 41% cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year and are definitely needed to ease the inventory shortages in much of the country.”
Gen-X uptick & the impact of kids moving back in
According to the NAR survey, the increase in purchases from Gen X buyers this year (28%) was the highest since 2014 and up from 26% in 2016. Millennials were the largest group of recent buyers for the fourth consecutive year (34%), but their overall share was down slightly from a year ago (35%). Baby boomers were 30% of buyers, and the Silent Generation made up 8%.
Survey responses also show that younger boomers increasingly consider adult children when buying with increases in the cost of rent in many areas is prompting many middle-aged parents to buy a home with their young adult children in mind. Younger boomers were the most likely to purchase a multi-generational home (20%; 16% in 2016), and the top reason for doing so was that children over 18 years old either moved back home or never left (30%; 27% in 2016).
“The job market is very healthy for young adults with a college education, but repaying student debt and dealing with ever-increasing rents on an entry-level salary are forcing many to either shack-up with several roommates or move back home,” Yun said. “This growing trend of delayed household formation is one of the main contributors to the nation’s low homeownership rate.” Continue reading →
Yardwork That Pays for Itself
When homeowners start working on their yards this spring, many of them will likely tackle projects they hope will improve the resale values of their homes.
The National Association of Realtors surveyed 2,000 real estate agents, who ranked the top remodeling projects for outdoor elements based on the resale value those features add to a home.
An overall landscape upgrade, including shrubs, planters and a stone walkway, is the No. 1 project for helping close a home sale, according to survey respondents.
However, the survey shows that seeding lawns and standard lawn care, with fertilizer and weed control, provide the highest return on investment. In fact, homeowners could get back triple what they spend for standard lawn care.
Post via Hardware Retailing
Almost 15 percent of all young homebuyers are unmarried couples, up from 11 percent prior to the recession. The percentage of homebuyers who are single has been declining since 2010.
SEATTLE, Feb. 8, 2017 /PRNewswire/ — The share of young unmarried couples buying homes together has been on the rise over the past decade, according to a new Zillow® analysis[i]. Across the country, almost 15 percent of all homebuyers age 24-35 are unmarried couples, up from 11 percent in 2005.
Of the markets analyzed[ii], Washington, D.C. had the greatest increase in the share of unmarried homebuyer couples — almost 16 percent of all young homebuyers in D.C. are unmarried couples, up from 7.5 percent in 2005. Philadelphia and Miami also had large increases in the share of young unmarried couples buying homes together.
The majority of homebuyers have long been married couples, but as home values continue to rise, more unmarried couples are buying homes together since it’s more affordable with two incomes.
Home values across the country are rising at their fastest pace since 2006, and some of the nation’s hottest housing markets — like Seattle, Denver and Portland, Ore. — have surpassed peak home values reached during the housing bubble. The median home value in the U.S. is now $193,800 — up 7 percent over the past year. As homes become increasingly expensive, the need to purchase a home with someone else becomes a necessity — almost 75 percent of all buyers are married or in a relationship.
“Buying a home is a big part of The American Dream – equally shared by millennials and Baby Boomers alike – but it’s becoming extremely difficult to make it work on a single income,” said Zillow Chief Economist Dr. Svenja Gudell. “Many singles looking to purchase a home on their own may not make enough money to afford or qualify for a mortgage on their dream home. That makes buying a home with a significant other even more appealing, even if marriage isn’t quite part of the picture. Simply put, buying a home is much easier with two incomes. Assuming home value growth continues to outpace income growth, I imagine this trend will continue.”
While more unmarried couples are buying homes together, fewer singles are purchasing homes on their own. About 25 percent of all homebuyers age 24-35 are single, down from 28 percent in 2005[iii].
Columbus, Ohio had the greatest drop in the share of single homebuyers, followed by Las Vegas. In 2005, almost 40 percent of all young Columbus homebuyers were single. Now, it’s less than 20 percent. Portland, Ore., which has the fastest home value growth in the country, has also had a large drop in the share of young singles buying homes — there’s been a 10 percentage point decline since 2005.
The median age of today’s homebuyer is 36 years old, and the majority shop with a significant other, according to the 2016 Zillow Group Report on Consumer Housing Trends. Millennials, age 18-34, make up 42 percent of all buyers today — the largest share of all generational groups.
U.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, signaling rising confidence in the economy and bolstering expectations of a pickup in growth in the first quarter.
The National Association of Realtors’ report on Wednesday came as the labor market nears full employment and investors wait for the Trump administration to act on its promises to cut taxes, increase infrastructure spending and reduce regulations.
“Existing home sales continue to shine and this bodes well for consumer spending which helps the economy go. Team Trump is trying to boost economic growth and today’s existing home sales will make the job a little easier,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
Existing home sales jumped 3.3 percent to a seasonally adjusted annual rate of 5.69 million units last month, the highest level since February 2007, the NAR said.
Economists had forecast sales rising only 1.1 percent to a pace of 5.54 million units in January. Home resales were up 3.8 percent from January 2016. Read more via Reuters
They were the baby boomers at birth, and today as they “grow up” and eye retirement, some builders expect them to jumpstart an affordable housing boom.
According to a report Opens a New Window. by the Harvard Joint Center for Housing, by 2035 more than one in five people in the U.S. will be aged 65 and older, and one in three households will be headed by someone in that age group. The Projections and Implications for Housing a Growing Population: Older Adults 2015-2035 report notes the growth will increase the demand for affordable, accessible housing that is well connected to services beyond what the current supply can meet.
Census data shows that income drops significantly after the age of 75, falling from an average of $54K to $36K. With data also showing that these citizens spend more than 1/3 of their income on housing, the average single family residence is not affordable.
“Right now, more than 19 million older adults live in unaffordable or inadequate housing, and that problem will only grow worse in the next two decades as our population ages,” said Lisa Marsh Ryerson, president of AARP Foundation, which provided funding for the housing report.
The CEO of Real Property Management, Lukas Krause, discussed with FOXBusiness.com what this means for seniors and the real estate industry.
Boomer: What does the government need to do to rethink the types of housing needed for baby boomers?
Krause: Most housing regulations are controlled at the local level and range from zoning restrictions to building codes, which can become impediments to building new housing for seniors. San Francisco and Portland, for example, restrict and regulate new construction, which has led to a shortage of housing and run-away inflation in housing costs. City plans, zoning regulations and building codes should be reviewed to address the growing elderly population, in addition to transportation, healthcare, and financial assistance/incentives.
The number of older households with disabilities related to mobility, self-care, or household activity is also projected to increase by 2035. Many seniors want to ‘age in place’ and stay in their homes. To do so, partnerships between health care and housing are needed to support the trend of providing long-term care in the home.
Governments may need to consider offering financial assistance to low-income older adult renters, and incentive programs for safe and senior-friendly renovations, energy efficient home upgrades, and property tax relief. Affordability will be key, since more than half of all boomers have less than $100,000 saved for retirement. Public awareness and education is needed to encourage older adults to consider their future housing needs earlier in life.
Boomer: What does this mean for the real estate industry as a whole?
Krause: People currently over the age of 55 have saved only $150,000 for retirement, per Fidelity and Vanguard estimates. This savings amount will generate only $500 per month in income, if the recommended 4% withdrawal standard is followed. Social Security pays an average of $1,294 in benefits to retirees, so average monthly income will be $1,794 or $21,528 per year. If 34% – 38% is spent on housing, the average retiree will have a housing budget of $610 – $682 per month – half of today’s average apartment rental cost of $1,100 per month. This means cohabitation and new forms of housing will be needed in the future. It also means that retirees who have not already purchased a home, will be unlikely to afford one.
Boomer: Should boomers be looking at renting instead of buying houses in retirement?
Krause: Home prices are increasing more rapidly than the cost of rent, though both renters and homeowners pay relatively the same amount over a long span of time.
If a boomer has the financial resources, buying with a fixed mortgage rate would lock their monthly mortgage payment until the house is paid off. However, the costs of maintenance, insurance, lawn care, utilities, taxes, etc., are likely to increase at the rate of inflation, so buying is not a hedge against inflation. Buying opens the door to a reverse mortgage in the future, or down-sizing to free up cash.
Renting puts the cost and responsibility for maintenance, taxes, floor, hurricane or earthquake insurance onto the landlord. It gives the tenant greater flexibility to move for health or financial reasons. Renting in a community specifically designed for boomers can provide the amenities, services and technology needed by boomers, though the cost may be prohibitive.
Boomer: With the impending growth of boomer retirees, how, in your opinion, should builders be incorporating into plans?
Krause: Accessibility is crucial. Design elements should include: single-floor living without stairs, doorways and hallways at least 36” wide, non-slip flooring with smooth thresholds between rooms, handrails, adequate lighting, lever-style door/faucet handles, higher toilets with extra space around for easier assistance, showers equipped with a bench, and multi-height kitchen countertops. For the exterior of the home, zero-step entrances, level driveways, weather-protected walkway and entrance, and low-maintenance landscaping should be considered.
Saving for a down payment is the most pressing concern of one in five home-buyers; here’s where a 20 percent down payment hurts the most.
News provided by: Zillow, Inc. Jan 13, 2017, 08:00 ET
Set to go big: Satin brass, voice assistants, vanity conversions, spring green and moreMitchell Parker December 17, 2016 – Houzz Editorial Staff. Home design journalist writing about cool spaces, innovative trends, breaking news, industry analysis and humor.
Looking for some great ideas for your home? How about a voice-activated assistant that will give you a weather update while you pour coffee into a preheated mug from a warming drawer? Not your style? No worries — there’s something for everyone in this preview of 2017 design trends. We plowed into Houzz data, sifted through popular photos and articles, and talked to industry leaders for this look at 28 things we think you’ll be seeing more of in the home in 2017.
1. Satin brass. Brass finishes have been making a comeback in recent years, cherished for their ability to bring shiny golden tones to a space without the high price tag. But more recently, designers like Elizabeth Lawson have been turning away from the reflective finish of polished brass and embracing satin or brushed brass, which is more muted and warm.
“I especially like a satin brass finish because it’s transitional and can complement a number of styles,” says Lawson, who used the finish in the kitchen shown here. “It also looks amazing against almost any color of the rainbow. I think we’ll continue to see rooms with satin brass for quite some time and also possibly mixed with other finishes for a more eclectic look.”
2. Voice-activated assistants. There’s been a lot of talk about voice assistants in the home. It’s something Shawn DuBravac, chief economist of the Consumer Technology Association, which puts on the Consumer Electronics Show every year in Las Vegas (Jan. 5 to 8, 2017), says will be big in 2017.
Amazon’s Alexa, which is enabled in the Echo Dot shown on this side table, acts as a voice-activated interface for many smart home devices. Google Home’s voice assistant launched about a month ago.
These devices work through activation phrases like “Alexa” or “OK Google.” The devices, placed throughout your home, are always listening in somewhat of a dormant state. Say the activation phrase, and the device fires up and awaits your command. Ask it to give you the weather or play a song from Spotify or dim your lights or power up the hot tub.
Early last year, Amazon opened its platform to third parties and has since added thousands of integrated features from smart home companies like Lutron, Crestron, Philips Hue, Wemo, Honeywell, Nest, Samsung Smart Home to other services from Uber, Domino’s, NPR and more.
Google Home just launched its voice-activated assistant about a month ago, and DuBravac says he expects the company to open the platform to third-party companies soon.
“What you’re seeing is continued maturing of the smart home ecosystem,” he says. “It’s still a very nascent technology. Maturing isn’t something that happens instantaneously, but over time.”
3. Vanity conversions. If you’re having trouble finding the right premanufactured vanity for your home, try thinking outside the cabinet box. Many savvy homeowners are finding chests of drawers, old file cabinets, vintage consoles and more, and converting them into one-of-a-kind vanities.4. Hardworking kitchen storage walls. In search of more open space, many homeowners and designers are doing away with expanses of upper cabinets and pushing all that storage onto a single hardworking wall. This one-stop hub frees up the rest of the space to create a breezy look.
Nate Lowenstein has been shopping for a home in Los Angeles, on and off, for more than a year.
His search has been stymied by a stubbornly low roster of homes on the market and the hurdles that come with it: multiple competing bids and higher prices.
“It’s not a great market, from a buyer’s perspective,” said Lowenstein, a lawyer. “The one good thing is that interest rates were quite low.”
As recently as this summer, homebuyers had ultra-low mortgage rates on their side. Good news for any borrower, but especially for those in expensive housing markets like Los Angeles, Boston and Seattle.
But that was then. While mortgage rates remain low by historical standards, they’ve risen sharply over the past couple of months, pushing the average rate on a 30-year, fixed-rate mortgage to 4.32 percent this week. That’s the highest level since April 2014 and well above the year’s average of 3.65 percent.
Economists predict mortgage rates will continue to climb next year, just one of the trends that suggest 2017 could be a more challenging year for homebuyers.
“With higher mortgage rates, you’re increasing the cost, challenging the budgets, challenging the ability to qualify and, as a result, likely reducing somewhat the pool of potential buyers,” said Jonathan Smoke, chief economist for Realtor.com. Continue reading →
The national housing market gained $1.6 trillion over the past year, a 5.7 percent increase from 2015
- Los Angeles is the most valuable metro, worth a cumulative $2.5 trillion.
- Portland, Ore. had the biggest increase in value among the largest housing markets, growing 13.4 percent in 2016.
- Renters paid a cumulative $478.5 billion in 2016, a 3.8 percent increase from 2015.
SEATTLE, Dec. 30, 2016 /PRNewswire/ — The total value of the U.S. housing stock grew to a record-high $29.6 trillion in 2016, according to a new Zillow® analysis. The housing market saw a strong year of appreciation, growing 5.7 percent in value, or $1.6 trillion.
The U.S. housing market has regained all the value lost during the housing crisis. The cumulative value of all homes in the U.S. declined by $6.4 trillion between 2006 and 2012 as the housing market collapsed. Read more via Zillow