Market Update: Is Renting Cheaper Than Buying?

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According to a recent survey done by Freddie Mac, 82% of renters think renting is more affordable than owning a home. But according to the actual data, renters spend more of their income than homeowners. Up to 36% of renters are spending a whopping 1/3 of income monthly! Even with these facts, renters still think it’s cheaper to rent due to the misconceptions of the amount of money needed for a down payment, as well as looming student loan debt.

Big contributor, over-deliverer.

Big contributor, over-deliverer.

Both are descriptions of someone who is successful. But you wouldn’t waste these descriptions on the mundane, and that’s the whole point isn’t it?

To be a big contributor and an over-deliverer you can’t rest on your laurels. You must always be striving to do more, to BE more. Personally, I think to be either of these you must also be the other. You become a big contributor by consistently over-delivering. By continuously going the extra mile and thinking ahead.

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Start to ask yourself: was my work today satisfactory, or did I put forth my best effort and use every bit of my talent? Am I meeting deadlines, or am I BEATING deadlines? If this is what you strive to be, you can no longer accept on time. You must be early. That’s being a big contributor. Solving problems before they arise. Triple checking your to do list. Making sure it’s never empty. That’s over-delivering.

Think of the most successful people in your life. I bet they fit these descriptions. They aren’t striving to be typical or mediocre.  They have an uncommon desire to do more, be better and always find new ways to improve. Over-achieving doesn’t happen by accident.

I don’t strive to be ordinary. Ordinary gets forgotten and over looked. I strive to be EXTRAORDINARY day in and day out.

Cash-Out Refinancing Made Easier for Furloughed Workers During a Government Shutdown?

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Cash-out refinancing will be easier for furloughed workers, in the event of another government shutdown in February. Fannie Mae, Freddie Mac, and Better Mortgage have all announced plans to help furloughed workers who own a home more easily qualify for a cash-out refinance. The three have done so by modifying proof of income rules and removing the verification of employment. However, the borrower must have enough cash or assets to cover at least two months of mortgage payments, including taxes and insurance. Why might these workers want to refinance? Think fresh cash towards bills, expenses, and any other costs they’ve incurred.

Multifamily real estate just had its best year since 2000! Any way you look at it, 2018 was the best year for multifamily real estate this century: Renters paid more for housing than they ever have before, Freddie Mac and Fannie Mae had banner years, and commercial and multifamily debt hit an all-time high, all while delinquencies remained at historic lows.

Is student loan debt reducing the number of homeowners? Three analysts from the Federal Reserve Board’s Division of Research and Statistics have now drawn a correlation between their 9-percentage point decline in homeownership and student loan debt.

What’s Delaying Home Buyers?

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Photo Source: Instagram via @homebunch

Millennials are the one generation with student loans as the number one expense delaying saving for a home purchase, followed by credit cards and car loans. Those aged 53 and older had an “other” expense as the top delay, as in not student loans, credit cards, car loans, child care, or health care.

Kids’ opinions matter when buying a home and what do they want? Their own bedroom, a big backyard, to be close to parks, and near their friends and school. Parents on the other hand are more specific about a backyard with a patio and a privacy fence, and prefer a big interior layout.

“All Digital” mortgage experiences have made headlines multiple times over the last year and we’ve read the articles recommending using digital sources to only enhance the process not replace it, but what do we know about direct mail and millennials? Surprisingly, millennials spend more time than any other generation going through their mail. In fact, 54 percent said “businesses in their neighborhood need to do a better job of using mail to keep them informed.” Another fun fact: 57 percent homeowners fully “applied for and completed” their mortgage in person. Seems people like that human touch.

If you’re looking to invest in real estate by flipping homes, like everything else real estate it’s locational. It also helps to know the industry. Pennsylvania might be the place to be for home flippers—the average house flip brings a 162.4 percent ROI, nets owners more than $105K in profits, and takes about 199 days to complete. That’s insane. Colorado, Maryland, Tennessee, and Florida also make the top list.

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.

Happy Housing….unless you’re renting maybe.

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Photo Source: Instagram via @lakegenevaarchitects

The Federal Reserve concluded their two-day meeting this afternoon and left rates unchanged (expected) but did say inflation has moved close to their 2 percent target, the labor market is strong, unemployment low, and consumer spending moderate. This points toward more rate hikes this year as expected. While we didn’t see a rate hike this month, next month will likely hold a different outcome after their meeting.

The ADP Employment Report showed 204K jobs created in April, exceeding expectations of 190K. This marks six months of consecutive job gains above 200K.

Renting is expensive and it’s showing rapid growth, especially in California where three cities showed 10 percent or more price growth year over year. Las Vegas and Houston are seeing the highest rent growth at 15.6 percent. CRAZY.

Towns faced with retiring works and a primarily aging population are providing incentives to fill open jobs. The offers on the plate: cash, student-debt relief, and home purchase assistance. These are primarily small towns and communities, where the number of people at the prime working age have declined. It’s why major cities like San Francisco and Miami aren’t offering these incentives—they have an influx of millennials to fulfill those jobs.

It’s National Home Remodeling Month! The bathroom (81%) and kitchen (78%) continue to compete for the top spot. Other popular projects include the entire house, room additions, window door replacements, decks, repairing damage, and finished basement. We’re still seeing a number of folks taking advantage of their home equity to update their homes and complete home projects.

Top neighborhoods for green homes in 2018: Ohio holds 3 of the top 10 spots, along with Pennsylvania and California. Who knew Ohio would lead the way in sustainability? Offering programs and access to financing helps.

Rental Housing & More.

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Apartments might still dominate the rental housing inventory but single-family rentals have greatly increased from 2007 to 2016, expanding faster than apartments in 22 of the 30 largest U.S. cities analyzed in the study. Detroit showed a 24 percent increase in single-family rentals compared to only a 1 percent increase in multi-family rentals. Detroit is ranked at No. 3 for cities with the largest share of single-family rentals, at 44 percent. These single-family rentals are popular for folks who aren’t quite ready to purchase a home or for young folks who want to live with friends, multiple roommates.

Multigenerational households rose to an all-time high of 20 percent of the U.S. population in 2016. Thirty-three percent of millennials aged 25 to 29 live with their parents—millennials are the most likely to live in a multigenerational household. Not surprised, as we also know they’re the most debt-ridden generation thanks to student loans but also determined to own a home—why pay rent when you can live with the parents and save for a downpayment while paying off those student loans sooner? Though, there’s a lot of low down options today.

Grand Rapids, MI makes list for U.S. News & World Report’s 2018 Best Places to Live, coming in at No. 12. The top place for the second year in a row: Austin, TX. These standings are based on where folks “can feel the most fulfilled socially, physically, and financially.”

Of course, Niche.com had other thoughts, ranking Ann Arbor, MI as the top place to live in America in 2018, thanks to its public schools, family-friendliness, nightlife, diversity, and housing.

Homebuyers Get Motivated.

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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.

Hot Detroit, Hotter 2017.

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Photo Source: Instagram via @bhg.homeservices

2017 saw the best existing home sales year since 2006. Existing Home Sales for the month of December were down slightly more than expected but November’s figure was the best in 11 years so this pullback—any pullback, really—was expected. Despite the decline and the low inventory, 2017 finished with sales up 1.1% from 2016—the high demand is still there. First-time homebuyers made up 32% of these sales in December.

New Home Sales for December were down 9.3% but this also came off November’s strong month that had the best number in a decade. This slowdown in pace did allow for the inventory of new homes on the market to increase 3.9%.

The Federal Housing Finance Agency (FHFA) Housing Price Index was up 0.4% in November. Shocker, home prices continue to rise.

Are factory-built homes the answer to low inventory? The Smart Home Company LLC has developed a few of these homes and planted them along West Michigan. They’re built to be energy-efficient with smart design features and 2 or 3 bedrooms to target millennials. They’ve become a popular choice for investors and there’s been a demand increase from such developers.

Millennials, the generation of avocado toast and craft beer, are big money savers—much more than in 2015. Sixteen percent of millennials have at least $100K in savings and 47% have a savings of $15K. Student loans aren’t holding them back. Why the focus on savings? In case of an emergency, retirement, and to buy a home are the top three given but many still believe they aren’t saving enough.

Detroit listed among cities with highest percentage of millennial homeowners. Detroit also remained on the list for 20 Hottest Markets in America for January 2018. However, California was the popular choice owning 13 of the 20 spots.

Mortgage Applications for last week were up 4.5% overall, with both purchases and refinances posting increases.

Initial Jobless Claims for last week reported at 233K. January is expected to show a strong Jobs Report.

Determined Millennials. [#DHallTheINSIDER]

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Photo Source: Home Bunch

If a buyer wants to buy a home, they are going to buy a home. Rising home prices or very moderately increased mortgage rates can’t hold them back. Millennials are hitting the market and the first-time homebuyers refuse to be put out. In the face of tight inventory and an average student loan debt of $29K, the average first-time homebuyer is 32 years old with a household income of $75K, and typically putting down only 5%. Owosso, Michigan was one of the more popular metro areas millennials are purchasing homes.

Zillow released their predictions for 2018 and these three trends are the highlights:

  1. Ongoing inventory shortage.
  2. Home prices will grow 4.1%.
  3. Builders will “finally” respond to the inventory crisis by building more entry-level homes.

It’ll be interesting to see if builders build such homes for sale or for rent next year if this prediction rings true.

Calling all loan officers! The recent J.D. Power’s Primary Mortgage Origination Satisfaction Study showed top factors influencing a borrower’s trust in the lender were:

  1. Loan officers returning calls when promised.
  2. Ability to work with same loan officer throughout process.
  3. Lenders taking the initiative and being proactive in updating the borrower.

Good to know we’re ahead of the game here–More Personal Attention isn’t just a tagline, it’s a trend at Hall Financial.

For 11 million households in America, 50% of their income is going to rent.

Mortgage Applications for last week were up 3.1% overall with refinances posting a 6% increase. As for purchase applications, those are up 17% from a year ago.

CFPB Director Richard Cordray is leaving on his own terms, telling the bureau he plans to step down before the end of November.