Houses are selling fast. Millennials are in their prime home-buying years. And there’s a severe drought in housing supply in much of the country. Those are some of the trends identified by the National Association of Realtors in its 2017 “Profile of Home Buyers and Sellers.”
Among the findings:
- The number of weeks on market dropped to an all-time low of 3 weeks;
- Age for first-time buyers remains flat, but the age of repeat buyers continues to climb—now at an all-time high of 54;
- Married couples continue at 3-year decline, while single females increased for the 3rd year;
- The median purchase price was $235,000.
Read the NAR’s full report here.
“The dreams of many aspiring first-time buyers were unfortunately dimmed over the past year by persistent inventory shortages, which undercut their ability to become homeowners,” said Lawrence Yun, NAR chief economist. “With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home. Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked homeownership out of reach for countless would-be buyers.”
There’s also the challenge of consumer debt – specifically in the form of student loans.
Here are the number: 41% of first-time buyers indicated they have student debt (40 % in 2016). The typical debt balance also increased ($29,000 from $26,000 in 2016), and over half owe at least $25,000. Additionally, of the 25% who said saving for a down payment was the most difficult task in the buying process, 55% said student debt delayed saving for their home purchase.
Post via NAR
Gordon, VP of planning and development for a Boston real estate firm, has been counting down the days until a new high-end apartment and condo complex opens. The 92-unit projects boasts the kinds of amenities common in the current spree of high-end rentals going up in American cities: walk-in closets, full kitchens, more spacious layouts, numerous communal areas, concierge services, chauffeured car service, even an on-site movie theatre and two restaurants.
The key difference between Waterstone at the Circle and other expensive high-rises is the demographic of its clientele. The average move-in age of future Waterstone residents is 82.
“We’ve found that most seniors want to remain in the city,” Gordon says. “You’re seeing a trend where empty-nesters are downsizing and lots of new product are being built for them. They’ll want additional services when they’re 80.”
Read more Via Patrick Sisson
By CHRISTOPHER RUGABER, Associated Press
WASHINGTON — Sales of new U.S. homes jumped last month to the highest level since October 2007, a sign that Americans — unable to find existing homes — are turning to new construction. Damage from last month’s hurricanes may have also inflated the data.
New home sales leapt 18.9% in September to a seasonally adjusted annual rate of 667,000, the most in a decade, the Commerce Department said Tuesday. Sales rose in all regions including the South, where they increased nearly 26%.
The government said it couldn’t estimate what impact, if any, last month’s hurricanes had on the data. But the measure of new home sales is based on contract signings, so the number was likely lifted by those looking to replace homes destroyed or damaged by Hurricanes Harvey and Irma.
“This is yet another sign that, as we first saw with the initial jobless claims data, the recovery from Harvey was very fast and the disruption from Irma in Florida was far less than initially feared,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Still, sales of new homes also jumped outside hurricane-affected areas, including in the Northeast, where they rose 33%, and the Midwest, where they rose nearly 11%. Sales in West ticked up 3%.
A supply crunch of existing homes has frustrated many would-be buyers and hobbled the housing market this year. September’s figures suggest that Americans are increasingly looking to new homes instead, which could encourage more construction.
Yet developers have struggled to keep up with demand. Many construction firms say they have difficulty finding the workers they need to start new projects.
Construction of single-family homes slipped nearly 5% last month. Still, thanks to large increases over the summer, single-family homebuilding remains 5.9% higher than a year ago. Builders also obtained more permits for new building last month. That suggests home building could accelerate in the coming months.
Developers are feeling optimistic. A survey by the National Association of Home Builders and Wells Fargo found that their outlook is the brightest it has been since May.
Homebuilders are increasingly focused on higher-priced housing, potentially freezing out potential buyers of more modest incomes. The average price of a new home rose to $385,200 in September, the highest on records dating back to 1963.
Last month, 19,000 homes were sold for $500,000 or higher, more than the 13,000 that were sold for $200,000 or less.
By Jackie Stone , Columnist,
When you conjure up a memory of your grandparents’ home, what springs to mind? Is it the sweet smell of cookies in your grandmother’s kitchen? Perhaps it’s the sound of the radio in the garage as you helped your grandfather work on one of his projects. Eventually, the family grew older. Grandma and Grandpa moved out of their house and went to Florida or took up residence in a retirement community.
For the children of today, the experience of their grandparents’ house has changed in one significant way — Grandma and Grandpa are living in that house longer than ever before. Rather than move to a new residence as they age, Boomers and seniors are opting to stay in their own homes as long as they can. With the advent of in-home medical devices, home health aides and other visiting nurse services, individuals are now able to remain in their homes for many more years than was previously possible. Childhood memories are now teenage memories, and in some cases, even 20- and 30-something memories!
Because of this trend, Boomers and seniors are impacting the economy in several ways. The first, and probably most obvious, is that Boomers and seniors aren’t selling their homes. This has had major consequences in the real estate sector, as younger generations are being forced to stay in long-term rental agreements or turn to newly constructed homes, which usually cost more.
Related to this trend are the changes in the construction trade, where Boomers are actively engaging in upgrading and remodeling their homes later in life. At this stage, they find themselves having better financial resources to improve their living space instead of moving to an all-new home. This becomes a contributing factor for retirement community marketers as well. Their biggest competition isn’t a competitor offering the same services they do; rather, they are competing directly with the home a potential customer is already in — a tough prospect, indeed.
In response to these trends, retirement marketing operators are changing and adapting their models. Rather than just offering a new home or apartment, they’ve begun building resort-like campuses, filled to the brim with amenities, such as pools, fitness centers, performing arts spaces, bars and more. Comparisons are quickly being drawn to the modern college recruitment process. No longer is a good education (or, in this case, a nice apartment), enough to entice someone to a campus. Now customers (whether students or Boomers) are demanding additional services and opportunities as part of the package — pushing marketers into a war of amenities in both cases.
Marketing professionals specializing in Baby Boomers are being forced to adapt at an incredible speed. Where the tastes and desires of young people have always tasked marketers to change and adapt quickly, the Boomer/senior marketer has been slow to adapt, mirroring how its target demographic often reacts. However, Boomers and seniors are now becoming just as — if not more— demanding than their younger counterparts. How is your industry going to be impacted by the growing and changing tastes of the mature market?
Source Via Michael J. Berens at MultiBriefs
At last, the large influx of millennials into the housing market has arrived. Unfortunately, the housing market at present isn’t ready for them.
As with the cost of education and post-recession job prospects, the nation’s largest age cohort find themselves yet again thwarted by ill timing. Housing inventories are at historic lows, and prices are at their highest levels since before the recession. Millennials with the means and motivation are ready to give the industry the boost it’s been waiting for, but face a number of hurdles to homeownership.
Now that the oldest millennials have reached their mid-30s, more are leaving home, getting married and starting families. Especially for those with children, a college education and a good income, purchasing a home has become a priority. While only a portion of the total cohort, millennials seeking to purchase a home now make up the largest segment of all present homebuyers (42 percent) and of all first-time buyers (71 percent).
According to the Zillow Group’s recently released “Consumer Housing Trends Report 2017,” however, millennials are the most frustrated generation among current homebuyers and sellers. Those looking to buy complain of having trouble finding a desirable home in their price range, and those looking to buy up say they have a hard time selling at the price they want and in the time frame they need in order to snag their next home in today’s fast-paced market.
Findings from the National Association of Realtors’ “Homeownership Opportunities and Market Experience (HOME) Survey” for the third quarter 2017 reveal the source of millennials’ frustrations:
· 65 percent say they have seen housing prices increase in the past 12 months
· 57 percent believe they will continue to increase in the next six months
· 62 percent are less confident that now is a good time to buy
· 38 percent believe now is definitely not a good time to buy a home
Increased prices make it even more difficult for millennials not only to afford a home, but also to qualify for financing. Zillow reports that millennials are more likely to obtain a mortgage in order to buy a home.
Yet more than half (58 percent) of those participating in the NAR HOME survey said it would be very difficult or somewhat difficult for them to qualify for a mortgage, and with rents and other expenses increasing at the same time, almost two-thirds (62 percent) said it was very difficult or somewhat difficult for them to save for the necessary down payment.
Availability of desirable properties is another challenge for millennial buyers. Although younger millennials are the most likely to buy in urban areas, the majority of millennial homebuyers are moving to the suburbs, especially those with children. Zillow’s study finds they are looking for a single-family home and place a high priority on purchasing a home in a safe neighborhood and with good schools.
But with nearly 9 in 10 current homeowners (86 percent) planning to remain in their current home, such housing is scarce and sells rapidly and usually at a premium when it does come on the market. Unlike previous generations who relocated to newer communities, millennials are more likely to purchase a home in the city or town where they now live, which reduces their choices even further.
On the face of it, millennials are quite active in the housing market. The latest data from the Ellie Mae Millennial Tracker shows loan activity for millennial homebuyers remained fairly constant in August, with the cost of borrowing only slightly more than it was a year ago.
Their sheer numbers, though, disguise the fact that a larger portion wishes to buy a home than are able. Market analysts point out that bodes well for future growth for some years to come, but that will only happen if the industry can solve the problem of how to address the demand for affordable, desirable housing.
- The number of adjustable-rate mortgage originations jumped just over 40 percent from the first quarter of this year to the second.
- Mortgage rates are still very low, historically speaking, but they have been inching up.
- Buyers this year are struggling with affordability and opting for a lower-rate product.
Home prices are heating up yet again, and that is sending more potential buyers looking for ways to afford a monthly mortgage payment.
The number of adjustable-rate mortgage originations jumped just over 40 percent from the first quarter of this year to the second, according to analysis by Inside Mortgage Finance. ARMs offer lower interest rates than fixed-rate loans, and today’s ARMs usually have a fixed period of at least five years. That means the rate can change after five years. Still ARMs are considered riskier than the classic 30-year fixed mortgage.
The average contract interest rate on 30-year-fixed mortgages with conforming balances was 4.11 percent last week, according to the Mortgage Bankers Association. Compare that with the rate on a five-year ARM, which was 3.38 percent. The rate on an adjustable-rate loan, by definition, will change after the fixed period, moving higher or lower, depending on the broader market rate.
ARM demand usually rises from the first quarter to the second quarter, because spring is the busiest season for homebuying, and it’s when families dominate the market, searching for bigger, higher-priced homes. Still, the jump in ARMs in the spring of 2016 was 15 percent compared with this year’s 40 percent jump. This makes the case that buyers this year are struggling with affordability and opting for a lower-rate product.
While mortgage rates remain very low, historically speaking, they have been inching up. The vast majority of homebuyers favored the safety of the 30-year-fixed rate mortgage since the housing crash, but weakening affordability is now changing that.
Home prices have been rising steadily for the past three years, and while it looked like the gains were flattening recently, they appear to be heating up again. Prices nationally jumped 6.9 percent in August compared with August of 2016, the biggest gain in three years. The annual gain in July was 6.7 percent, according to CoreLogic.
“One thing that’s helped to fuel demand, and certainly home price growth, as much as the lean inventory of for-sale homes is that mortgage rates have really cooperated,” said Frank Nothaft, chief economist at CoreLogic.
Home prices have been rising far faster than inflation, but Nothaft predicts the gains will actually ease next year, if, as he expects, mortgage rates rise. That will be the tipping point, he said, although others argue that tight supply of homes for sale, especially on the low end, will keep prices lofty despite higher mortgage rates.
Already, close to half of the nation’s top 50 housing markets are overvalued, in relation to income and employment growth.
“Prices are being driven up by very tight market conditions,” noted Matthew Pointon, property economist at Capital Economics. “On a per capita basis, the number of existing homes for sale is at a record low, and buyers are therefore having to up their offers to secure a home.”
Pointon said home prices should actually be rising by more than 10 percent, given the tight supply, but tight mortgage lending standards are restricting that growth.
“Cautious appraisals are preventing desperate buyers from bidding too much for a home, as are strict debt-to-income ratios,” he said.
While ARM loans are often blamed for the epic housing crash in the late 2000s, the current ARMs are nothing like those of the past. Products like negative amortization loans, which offered very low rates up front but then tacked that initial savings amount onto the loan itself, no longer exist.
Loans must now be fully documented and underwritten to the full length of the loan in order to make sure borrowers can pay even if the rate goes up. Lenders must also make it very clear to borrowers that their rate is only fixed for a certain term, and that it will likely go up after that term, given the current trajectory of rates overall. That, again, was not the case in the past.
Inventory peaks and prices drop most in October
The fall brings beautiful foliage, cooler weather, pumpkin spice flavored everything and an abundance of starter homes.
The inventory for starter homes, which are defined as homes in the lower third of a market’s valuation and affordable for median-income earning workers, increases by about 7% in the fall months compared with the spring, according to real estate site Trulia. As a result, listing prices are about 4.8% lower in the winter and 3.1% lower in the spring than in the summer. Of the largest 100 metro areas, 70 of them find October to be the peak time to buy a starter homes, followed by November and December.
Wait, they’re old enough to buy homes??
In its most recent study, Zillow Group examined the newest generation to enter the housing market – Generation Z.
Wait, what? Already? Aren’t they even old enough to enter the housing market?
As it turns out, yes, they are. Generation Z is considered to be those born from 1995 to 2010, meaning the oldest in the generation are now 22 years old.
The Zillow Group Report on Consumer and Housing Trends 2017 shows this new generation now makes up more than 21% of the U.S. population, and is the most ethnically and racially diverse generation in our history. And they are beginning to enter the housing market – as renters.
However, this generation is just as likely as older generations to say owning a home is a key component of the American Dream. In fact, 57% responded that they already considered buying a home while looking for their last rental.
So, what defines this new generation? What makes them tick? The report showed they work hard to win a home, and even submitted more applications than any other generation at 3.1 versus 2.5 applications for all renters.
But despite the higher number of applications submitted, they also move more quickly through the process and spend the least amount of time searching. Generation Z typically spent less than one month searching for a place to live.
“It’s encouraging to see that Generation Z is inheriting the same notion of what home means as their parents and Millennial siblings,” Zillow Chief Marketing Officer Jeremy Wacksman said.
“These tech-savvy, yet risk adverse renters are bringing their social personalities home, desiring communal amenities geared toward bringing people together,” Wacksman said. “They prefer living with others to living alone, and they put their vast social networks to work during every step of the rental search process. As they mature and look toward homeownership, it will be interesting to see how their aspirations and preferences will shape the housing market.”
Currently, the housing market is still focused on Millennials, realizing they don’t all live at home with their parents, and are actually less likely to live at home than Baby Boomers were at that age.
And while some studies show factors such as student debt could delay some Millennials from homeownership for up to seven years, more and more they are becoming the driving force behind housing demand.
In fact, a study late last year from Ellie Mae shows that not only are Millennials buying homes, but they are also refinancing.
Zillow’s study shows Millennials poured about $514 billion into the U.S. housing market over the past year, and became the largest generation of homebuyers. However, they do continue to struggle with affordability constraints.
More than half of young first-time buyers, about 53%, make multiple offers to buy their home, and only 39% of Millennials can give a down payment that’s 20% or higher. Many of them, about 21%, put down 5% or less in order to secure a mortgage.
The study shows that even as Millennials are looking for a home, 62% of them accept that finding one is not a sure thing, and look for rental homes at the same time. In order to find their home, 37% answered they were forced to go over budget, compared to 29% of all homebuyers.
“In many cities across the US, the housing market is extremely competitive, especially for first-time buyers who are looking to purchase a starter home. Young buyers often start their careers in fast-growing cities in which the market is particularly tough, and they’re trying to save for a down payment while making record-high rent payments,” Zillow Chief Economist Svenja Gudell said.
“The Zillow Group Report gives us a behind-the-scenes look at how young buyers, in particular, are finding resourceful ways to cope with high home prices and fierce competition,” Gudell said. “Whether it’s searching for a rental as a Plan B, looking outside their preferred neighborhood, or cobbling together a down payment from multiple sources, these buyers are willing to try every trick in the book in order to find a place to call home.”
Overall, for every generation, homeownership is out of reach for many, according to the study. More Americans are renting now than at any point in history, and 40% of families with children at home are renters.
Renters typically face higher monthly payments than those that own their home, and 79% of renters who moved in the last year responded that their rent increased before they moved. In fact, 57% of those that moved said this increase was the reason they moved.
What’s more, about 37% of renters who have not moved in the past year answered they can’t afford to go anywhere else.
At a recent black tie gala in the Los Angeles area, one panelist for the I Survived Real Estate event commented that rent prices are becoming unmanageable.
“Home prices may not be at an all-time high compared to incomes, but rents are,” said John Burns, John Burns Real Estate Consulting CEO.
The 2017 Zillow Group Report is the second annual survey of U.S. home buyers, sellers, owners and renters, and asked more than 13,000 U.S. residents aged 18 to 75 about their homes – how they search for them, pay for them, maintain and improve them and what frustrations and aspirations color their decisions.
Post via Housingwire.com
U.S. homebuilders bounced back in August from a recent funk, as current sales and sales expectations leaped forward.
A monthly index of builder sentiment rose 4 points to the highest level since May. The National Association of Home Builders/Wells Fargo Housing Market Index now stands at 68. Anything above 50 is considered
positive sentiment. The index was at 59 last August.
Builder sentiment had jumped to a cyclical high in March, following a move by the Trump administration to ease water regulations. Builders say over-regulation at the federal, state and local levels have hampered production and driven up the cost of new construction. Sentiment had dropped more recently due to rising material costs, especially lumber. The Trump administration imposed a tariff on Canadian lumber, causing the price to spike.
Builders say over-regulation at the federal, state and local levels have hampered production and driven up the cost of new construction. Sentiment had dropped more recently due to rising material costs, especially lumber. The Trump administration imposed a tariff on Canadian lumber, causing the price to spike.
Now it appears builders are less concerned with policy and more enthused about the economy. They say they are seeing rising demand from buyers, who seem ready to pay a premium for new construction. New home sales in June were 9 percent higher compared with a year ago, according to the latest reading from the U.S. Census.
“This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence,” said NAHB Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas.
The index’s three components all saw gains in August. Current sales conditions rose 4 points to 74. Sales expectations over the next six months jumped 5 points to 78, and buyer traffic increased 1 point to 49 — the only component still in negative territory.
The new-home industry is also benefiting from a severe shortage of existing homes for sale. Most buyer demand, however, is on the lower end of the market, where builders have trouble meeting margins.
Construction is still running well behind even normal levels, never mind the strong, pent-up demand. Most builders are also still concentrating on the move-up market, rather than entry-level.
“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” said Home Builders Chief Economist Robert Dietz.
“GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”
Regionally, on a three-month moving average, builder sentiment in the Northeast rose 1 point to 48. The West, South and Midwest were unchanged at 75, 67 and 66, respectively.
By Maryalene LaPonsie, Contributor |June 23, 2017, at 11:22 a.m.
If you’re thinking about putting a “for sale” sign in front of your house, you may also have home renovations in mind. It seems logical that replacing outdated features, dingy appliances and worn carpeting should increase the value of your home, but don’t be too sure. Some renovations have a poor return on investment, while others will do little to impress buyers with their own vision for the property.
“Buyers in New York are very picky, and they want what they want,” says Steven Kopstein, a licensed real estate associate broker with Triplemint in New York City. He cautions people not to pour a lot of money into projects that are too personalized.
However, that doesn’t mean you shouldn’t make any updates. If you think you’ll be in the home for a while, go ahead and renovate so you can better enjoy the property. Otherwise, if you’re renovating for resale value, focus on these projects that offer the best return on investment.
Added insulation. Each year, Remodeling Magazine conducts a cost-versus-value analysis to determine which of 29 home projects offers the best return on investment. In 2017, it isn’t a new kitchen or bathroom that tops the list. It’s attic insulation.
It’s an inexpensive project that can be done for less than $1,500 and has an estimated return of 108 percent. Plus, it’s a good investment regardless of whether you plan to sell. “Anything that makes your house cheaper and lowers the cost of owning a home [is smart],” says Jason Shepherd, co-founder of Atlas Real Estate Group in Denver.
New garage door. When it comes to what it considers upscale renovations, Remodeling Magazine says replacing the garage door offers the best return on investment. Sellers can expect to recoup 85 percent of the cost of this project.
Kopstein says that while a new garage door can help sell a house, people should be smart about which one they install. He recently fixed and flipped two houses in New Jersey. On one, he opted for a basic door without an electric opener. “I didn’t think people were expecting that,” he says, based on the other homes in the neighborhood. He was right. The house sold in one day.
Better front door. Don’t stop with the garage door. A new front door can also be a good investment. According to Remodeling Magazine, you’ll recoup almost 91 percent of the cost on a steel entry door and nearly 78 percent on the price of a fiberglass one.
Improved landscaping. The National Association of Realtors and the National Association of Landscape Professionals conducted a survey in 2016 to determine which outside projects offer homeowners the best value. An overall landscape upgrade topped the list with an estimated 105 percent return on investment.
Kitchen remodel. Said to be the heart of the home, the kitchen deserves some extra attention if you’re hoping to sell. “You want to go after the wow factor,” says Michael Foguth, founder of Foguth Financial Group in Brighton, Michigan.
That doesn’t necessarily mean making a complete overhaul, but could include refacing cabinets or updating finishes. A minor kitchen remodel will recoup 80 percent of its cost, according to Remodeling Magazine, while a major midrange kitchen remodel only has a 65 percent return on investment.
Bathroom improvements. The bathroom is another prime place for renovations. On one of the houses Kopstein flipped, he choose to replace the vanity, lighting and toilet. It was an inexpensive way to dramatically improve the look and feel of the room.
Adding a bathroom is a major investment, and it doesn’t have the best return. Reports from both the National Association of Realtors and Remodeling Magazine say homeowners will recoup slightly more than half their investment. However, it may be essential to making a sale, especially if there is only one bathroom in the house. “When you’ve got over three bedrooms and you’re all sharing one shower, that’s really tough in a resale market,” Shepherd says.
New windows. Replacing old windows can brighten a room and resale prospects. There’s no need to splurge though. “You’re not going to get your money back with a top of the line window,” Foguth says. Remodeling Magazine reports vinyl replacement windows have a 74 percent return on investment, giving them a 1 percent edge over wood windows.
More square footage. Refinishing a basement or other space can dramatically boost the value of a house in some areas. “In Denver, we have a high price per square foot,” Shepherd says. “To spend $20,000 to $30,000 to finish [off a space] makes a ton of sense.”
A 2015 National Association of Realtors report considered the value of converting a basement to living space. It estimated homeowners could expect to recoup 69 percent of the project price. The return on investment for converting an attic to living space was estimated at 61 percent.
High efficiency appliances. Like insulation, upgrading to high efficiency appliances, water heaters and furnaces has a dual benefit. These may make the home more attractive, but just as importantly, they reduce living costs for the homeowner. Some states and cities may also have tax incentives or other programs to help offset the cost. “That’s way better than stainless steel appliances or throwing up some granite,” Shepherd says.
Interior paint. It’s hard to calculate the return on investment for a coat of paint, but Kopstein says 25 years as a real estate broker have taught him that buyers like clean lines and airy spaces. “If there is any way you can bring light in, it’s going to affect your price,” he says. For those on a tight budget, fresh paint can go a long way to brightening a room.
While these 10 renovations make the most sense from a dollar and cents perspective, every market is different. Kopstein recommends talking to a broker and understanding the expectations of buyers in your area before sinking too much money into a home renovation.
Original content via USNews