Generation Zs Determined to Own a Home.

11.02.2018

Photo Source: Unknown via Instagram.

Four-in-five Generation Zs (those aged 18 to 24) want to own a home and are actively saving for a downpayment “like no generation before them.” Twenty percent of this young generation wants to own their home before they’re 25. Their overwhelming desire and adamancy to save, coupled with the timing of them “graduating into one of the best labor markets in generations”, could give them a leg up.

Renters face more financial uncertainty than homeowners, with over 25 percent of the nation’s renters not confident they could cover a $400 emergency and over 30 percent feeling insecure about food.

Independent females are on the rise. One-in-five homebuyers are single females, outnumbering single male homebuyers two to one.

Zillow has officially entered the mortgage industry, acquiring Mortgage Lenders of America with plans to rebrand the company in 2019. They hope to streamline, shorten, and simplify the homebuyer process. Can’t say we disagree. Good philosophy to have—we find it not only necessary but essential.

Initial Jobless Claims for last week were reported at 214K. It might not be new news but it’s always good news for the economy—and housing—when employers are keeping their employees. More importantly, the BLS Jobs report showed 250K jobs created in October, greatly beating the almost 190K expected. Unemployment remained flat at 3.7 percent—the lowest level in nearly 50 years—and the average Weekly Earnings remained stable at a 3.4 percent annual increase, an 11-year high.

Affordable Downpayment.

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Photo Source: Home Bunch via Pinterest.

The Case-Shiller Home Price Index showed a deceleration in home prices and let’s be clear: this is good for home appreciation and housing affordability. It’s good news that it’s cooling off some for homebuyers while still remaining positive for homeowners. Detroit saw a healthy annual 6 percent gain. Las Vegas and San Fran are still seeing double digit annual increase in home prices. Insane.

The economy is booming thanks to unemployment at its lowest since 1969, encouraging consumers to invest and purchase. After a spectacular second quarter, analysts expected a slow down during the third quarter but the economy remained on track to grow 3 percent or more this year and expectation remains for the Federal Reserve to hike rates in December.

The ADP Employment Report showed 227K jobs created in October, greatly exceeding expectations of only 178K.

The average downpayment on a 30-year fixed rate mortgage dropped nearly 10 percent in the third quarter of 2018, along with the average mortgage loan amount falling almost $28K. It’s all about location. We’re still seeing many borrowers who are able to purchase a home by putting down only 5 percent or less.

Homeownership is on the rise, jumping a half percent in the third quarter of 2018 from a year ago, thanks to a healthy economy, affordable housing, low mortgage rates, and increased wages. The hurdle: inventory—that’s not a bad hurdle to face; folks are staying in their homes longer. How long? The average homeowner is opting to stay in their home longer these days: 8.23 years to be exact according to homes sold in the third quarter of 2018. That’s double that of homes sold in 2000.

Financing Home Improvements.

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Mortgage Applications increased almost 5 percent last week, with purchase applications up 2 percent and refinance applications up 10 percent. Last week we saw mortgage rates rise slightly, highlighting how obtaining a mortgage is often due to lifestyle circumstances.

Speaking of refinances, more homeowners should be utilizing the equity in their home. A third of homeowners used credit cards to finance home improvements last year, with millennials the most likely to do so. The unfortunate: 62 percent plan to pay it off “over time.” However long that means. How much are homeowners charging? $1,500 to $4,800 on the median $10K home renovation cost. Highlight: median not mean. Those who did $50K or more of home renovations typically charged 28 percent of the costs.

Pending Home Sales—measuring signed contracts on existing single-family homes, condos, and co-ops, and typically a good indicator for the Existing Home Sales report—were up half a percent in September, stronger than expectations of an unchanged report.

New Home Sales decreased 5.5 percent in September, greatly missing expectations of only a 0.6 percent decrease. What’s odd: September saw the highest level of inventory in 7.5 years with 327K new homes for sale, making this a very weak and disappointing report regarding the new home construction market. We would have hoped for more. Given the size of the new construction market in the Southeast, some argue the storms faced in the Southeast played a contributing role to this disappointment. However, they’re not the sole reason. It’s more likely builders noted a cooling market—happens every fall—and have tapered off their efforts before winter comes.

The FHFA (Federal Housing Finance Agency) released their House Price Index, showing home prices rose 0.3 percent in August but were down to 6.1 percent annual change—note this is a decrease in rate and not a negative change in home appreciation, there’s a difference. Home price appreciation is still very strong and healthy.

Initial Jobless Claims for last week were reported at 215K claims. The Bureau of Labor Statistics Job Report for October will be released November 2nd and expectations are for a strong report.

Strong Housing.

10.10.2018Thanks to the unemployment rate falling to the lowest level in nearly 50 years and home prices continuing to rise but at a slower pace, when it comes to loan performance, housing is very strong. In every category of CoreLogic’s Loan Performance Insights report for July, rates dropped. Seriously delinquent loans in foreclosure were the lone sailor remaining stable. Even better: with the unemployment rate remaining below 4 percent since July, we are hopeful to see delinquency rates continue to drop in the future. However, natural disasters and any unemployment rises could impact delinquency rates at a local level not a national level.

A record of 77 percent of homeowners believe now is a good time to sell. It might be a seller’s market for most locations but for some millennials, homes aren’t selling fast enough, leaving the generation “the most likely to make concessions, change the date of their closing, and have an offer fall through.” If you didn’t catch our latest Live on Real Estate podcast, we’re talking about this sudden cool off compared to traffic we saw four months ago.

Mortgage rates have hit the 5 percent level but this isn’t terrible news. With home prices cooling off slightly and the historical average between 8 to 9 percent, those 5s are still looking good for homebuyers, especially in a market that is thriving with little percent down.

The dreaded lack of inventory has seen some slight relief, with September’s new listings up 8 percent year over year according to Realtor.com’s housing report. This is the highest annual jump since 2013. Unfortunately, this was driven by condos and townhomes.

A hundred years ago, kit homes allowed many Americans to become homeowners and now, they might be making a comeback. Fortunately, this time, we’re talking rooms and additions; you don’t need to buy the whole house. Unfortunately, with today’s regulations, depending on the kit a contractor or expert might need to be hired to assemble the kit.

Home Investment, Dream Home, & More.

09.25.2018Rent is not friendly on the wallet. With rent overall rising 3 percent year over year, it was the lower end market value (equivalent to $100K – $300K homes) that rose nearly 4 percent. Right now is a good time to make a move and see if buying is right for you before rent prices continue to rise. Why pay a landlord when you can invest in a home?

The average homeowner gained over $16K in home equity from Q2 of July 2017 to Q2 of July 2018. Last week, CoreLogic released their Equity report, highlighting homeowners with a mortgage (which CoreLogic estimates about 63 percent of homes have a mortgage) have seen their equity increase by 12.3 percent since last year. Less than 3 percent of all homes are under water; housing remains healthy.

Home appreciation is still going strong but thankfully, at a slower rate. The Case-Shiller Home Price Index showed a 6 percent annual gain in July. The media might dramatize this cool off but it’s healthy and let’s be honest, we want it. We want homes to appreciate but to remain affordable for buyers. Las Vegas, Seattle, and San Francisco still saw double-digit annual gains.

The Federal Housing Finance Agency also released their House Price Index for July today, also showing a deceleration in home price appreciation on single-family homes with conforming loan amounts. Home prices rose 0.2 percent in July, missing expectations of a 0.3 percent rise, but are still up 6.4 percent from a year prior.

Loan officer employment from 2016 to 2026 is expected to grow faster than the average for all occupations and is ranked No. 57 on the 100 Best Jobs in 2018. (Yes, we are hiring.)

The American dream home defined: over 10 acres of land, almost 5,000 square feet, swimming pool, four bedrooms, three bathrooms, waterfront (or at least with a view to a cost, city, or hills), suburban area, ranch- or farmhouse-style made of brick, covered front porch, wood flooring (except for bedrooms and kitchen), central air conditioning, fireplace, finished basement, skylights, vaulted ceilings, and granite countertops in the kitchen. Oh yes, the recent survey results from Porch.com got that specific and Europeans have something completely different in mind for their ideal home: 1,589 square feet and less than an acre of land—now that’s more realistic. When we factor in maintenance, we wonder how many Americans would actually choose to live in their dream home or if it’s just a fantasy.

Hot: Single Older Women, Hispanic Homeownership, & More.

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Photo Source: Instagram via unknown.

When comparing many categories of demographics of homebuyers, single women over the age of 55 have been the fastest growing since 1981. Last year, the percentage of single older women nearly doubled from 20 years ago, making up 8.2 percent of all homebuyers. Also on the rise: Hispanic homeownership, up for the third consecutive year and rising to 46.2 percent in 2017.

Homes with central air conditioning sell for a 2.5 percent greater profit than homes without it. With the heat wave we’re facing in Michigan this week, we can’t say this is a surprise. It’s a common feature many homeowners prefer and was a requirement for 62 percent of homebuyers last year—we’re surprised that percent wasn’t higher.

Two Michigan cities made the top 20 hottest markets list again: Detroit and Grand Rapids. Midland, Texas topped the list, holding onto it’s No. 1 spot for the third month in a row, thanks to homebuyers’ ability to obtain a decent-size home for an attractive price in the area. California only holds five of the top 20 spots, no longer dominating the list, and signaling a shift in interest and money away from the overheated markets and into the less expensive secondary markets.

The Bureau of Labor Statistics reported 213K jobs created in June, beating expectations of 190K but last month’s number was revised lower by 22K and the unemployment rate increased to 4 percent. The Average Hourly Earnings also moved slightly higher. The ADP Employment Report released yesterday showed 177K jobs created in June.

Moms Make For Good Housing.

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Photo Source: Instagram via @homebunch

If it weren’t for the hurricanes and natural disasters we saw last year, the national delinquency rates would be much stronger (performing better) than they are. As it is, loans 30 days or more past due decreased slightly and seriously delinquent loans remained stable overall. Despite Houston being hit with a record-breaking hurricane last year, though, their housing market can’t be stopped. The city ranked second for highest volume for new home market and over 27.5K housing starts in the first quarter of this year. Hurricanes can’t stop Houston home buyers and builders.

One-in-four millennials live with their mother and 12 percent of them are unemployed. In 2005, only 13.5 percent of millennials lived with dear old mom. Rising rents and slow income growth are the two commonly quoted reasons for such but it’s much more than that. Living with the parents has become a safety net to pursue other dreams and passions that might not be lucrative. It also allows for some to save for a larger downpayment on a house. Nearly 86 percent of millennials plan to buy a home, most of whom plan to do so in the next one or two years. The slow down: 17 percent of them don’t have a stable job and 15 percent still have student debt.

We knew single women were purchasing homes and condos at a larger share but how much? More than double that of single men. Homebuilders are taking notice and starting to design homes to appeal more to women, who typically view homeownership as more of an investment and who will typically pay more for their home than men.

Best states for working moms were located in the Northeast, with Vermont ranking No. 1 thanks to a lower gender pay gap and the lowest female unemployment rate. Idaho, on the other, is not so great, with some of the worst-ranked daycare systems and a larger-than-normal gender pay gap.

Strong Confidence & Smart Wallpaper.

The National Association of Home Builders (NAHB) Housing Market Index for April was reported at 69, a very strong figure, with buyer traffic remaining at 51, still showing a strong demand. What’s constraining availability and building? The lack of buildable lots and increasing construction material costs. Confidence remains strong thanks to rising wages, millennials and first-time homebuyers continuing to enter the market, and low unemployment continuing to fuel demand. Folks are wanting to invest in their own home and we can’t blame them in today’s market and economy.

Sorry parents, you’re not out of the woods yet when it comes to paying for your millennial kid. Almost 17 percent of millennials expect their parents to help them with their first downpayment on a home, according to a recent report. For the renting millennial, 8 percent of those who are not students receive financial help from their parents, with one-in-three of those renters’ rent paid in full by their parents.

There’s always a list, even for the business professional. For many, profession dictates location. So where are the most affordable cities for the nation’s fastest-growing professions? Physical therapist assistants might want to think about Springfield, MO while software developers check out Austin, TX. For women and looking more general, the city that shows the most success is the nation’s capital, where women were the highest paid and comprised almost 40 percent of the area’s business owners.

fastest growing careers

Could smart wallpaper be the next trend for the home or just a nice thought? Researchers are working to develop a smart fire-resistant and fire alarm wallpaper that is electrically insulated and can be used to close a circuit and activate an alarm if heat rises above a certain temperature and before the fire spreads. Question remains: will homeowners use it? Wallpaper hasn’t been the most popular choice as of late.

Outdoor Livability.

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Photo Source: unknown.

The outdoor space matters. More homeowners are dedicating time and money to sprucing up the backyard space for entertainment, investing in landscaping projects to make the outdoor space livable. Think furniture, fire pits, patio heaters, lighting, and speakers. Why? For many homeowners, the outdoor space is used significantly more, and don’t forget about the front yard. Homeowners are also focusing on that curb appeal.

Not quite ready to buy a house but want to stop paying a landlord? Try looking into purchasing a condo. Home prices aren’t the only housing prices on the rise, rent prices have been steadily and drastically increasing, too. Owning a home can “fix” that price, and it’s something akin to “forced” savings. With condos, there are typically homeowners association (HOA) fees but for many first-time homeowners, these can take the stress out of maintaining a yard. Some condos provide fitness rooms, pools, golf courses, assigned parking, extra security, and the inclusion of some utilities. It’s a good idea to contact other owners within the condominium to assess if it’s a good HOA or one you’ll be regretting entering into; if it’s worth the fee.

Two points for the good, healthy economy we’re seeing:

  • The Federal Reserve minutes were released this week, hinting to three more rate hikes this year instead of two.
  • The job market remains strong with only 233K Jobless Claims reported last week.

Homebuyers Get Motivated.

04_09_2018

Photo Source: Instagram via unknown.

Buyer traffic continues to rise despite low housing inventory and marginally higher mortgage rates. Though, the threat of rising mortgage rates has forced homebuyers off the fence to take a more active role in purchasing a home sooner rather than later.

Rent prices are also on the rise, tipping the scale for some to purchase a home. Millennials are putting 45 percent of their total income toward rent and will pay out close to $100K for rent before they are 30. They might be earning more compared to other generations when it comes to income, but they’re also spending more on rent. The struggle with owning a home: almost half of millennials who have student debt, according to the recent study, are uncomfortable obtaining a mortgage in addition to their student loans. The real obstacle: downpayment perceptions.

The BLS Jobs Report for March was a miss, coming in 72K short of the 175K expected jobs created. It was the worst reported gain in the last six months but came after February’s major gain that was the best in two-and-a-half years. The lag in construction jobs created could likely be due to the fabulously intense winter taking place across much of the country still. Construction job openings still remain at a historic high, it’s just about filling them at this point. That’s comforting.

Speaking of construction, the percentage of builders using drones have doubled in the last two years, especially popular with single-family builders, from 22 percent to 46 percent. Makes sense, they provide a great perspective for preliminary surveying and monitoring a project. That’s one way to add some eyes onto the jobsite; now about adding some hands.