The fact that young Americans aren’t buying homes at the rate they used to isn’t news. Ever since the housing crash, Millennial homeownership rates have been lower than historically normal. In fact, homeownership rates among buyers between the ages of 18 and 34 dropped 8 percent between 2006 and 2015. There are, of course, many factors that have made it difficult for younger Americans to buy in recent years – including student loan debt, a challenging job market, rising rent, and higher home prices. However, though overall numbers show fewer first-time buyers active in the market, in some cities Millennial home buyers are actually quite well represented. Take Elk Grove, CA, for example. In Elk Grove, the homeownership rate among people under the age of 35 was just over 60 percent in 2015, mostly due to its proximity to major metropolitan areas and a median home value around $350,000. Other cities that have an above average number of Millennial home buyers include Sioux Falls, SD, Bakersfield, CA, Peoria, IL, Cary, NC, and Chattanooga, TN. And, though they all have a different mix of factors, the most common thread among all the top cities for younger buyers are affordable homes for sale and a growing economy. More here.
For a lot of people, buying a home is both exciting and a little bit intimidating. On the one hand, it’s seen as a vital part of achieving the American dream and, on the other, it’s a major financial undertaking that comes with some real risks. So what are some of the top fears of potential home buyers? Well, according to one recent article, the biggest fear is that their new house will fall in value. Considering recent history, this isn’t a surprising concern, but it is one that can be addressed. With the help of a knowledgable real-estate agent, you can pinpoint the dangers of a particular property and weigh them against potential positives like good schools and nearby amenities. Sure, you can’t be 100 percent sure about what the future holds, but you can protect yourself by buying in a good neighborhood with a history of holding its value. The costs of homeownership are another big concern among prospective buyers. Not only do buyers worry about being able to handle their mortgage payment but they also worry about potential maintenance costs. One way to protect yourself is to make sure you know what you’re getting. Look for a property that has had some of its major features – such as the roof or furnace – recently upgraded or replaced. Another fear is buyer’s remorse. This is natural. The best way to handle it is to be sure you know what you’re looking for, what you will compromise on, and what you won’t consider. Also, lean on the experienced professionals you’ve hired to help you along the way. The best insurance against any future regrets is doing your homework and heeding the advice of your agent and mortgage lender. More here.
For many years now, the average size of a newly built home has been going up. In fact, by 2015, the typical new home was 2,689 square feet – by comparison, the average was 1,660 square feet in 1974. That longtime trend took a step back last year, however. In 2016, the average new home fell 55 square feet. And, though that doesn’t sound like much, it is the first time in eight years new homes were smaller than the year before, according to Rose Quint, the National Association of Home Builders assistant vice president for survey research. “The data on new home characteristics show a pattern,” Quint said. “2016 marked the end of an era that began in 2009 when homes got bigger and bigger with more amenities. I expect the size of homes to continue to decline as demand increases from first-time buyers.” But though Quint believes home size will continue to fall as more first-time buyers enter the market, she doesn’t expect added features and amenities to become less popular. In fact, Quint says a majority of home buyers would prefer amenities and features over square footage. “More than two-thirds are willing to trade size for high quality products and features,” Quint said. Among the most coveted home features, a separate laundry room, energy-efficient windows and appliances, outdoor living space, exterior lighting, and a full bath on the main floor rank high. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The drop marks the second-straight week-over-week decline and follows a period, after the election, when mortgage rates rose for several consecutive weeks. Lynn Fisher, MBA’s vice president of research and economics, says markets are still adjusting. “Ten-year Treasury yields fell the week following New Year’s Day as markets continue to adjust their expectations about the incoming administration and Federal Reserve policy,” Fisher told CNBC. Typically, mortgage rates follow the yield on the U.S. 10-year Treasury. Despite the recent volatility, though, mortgage rates are still just slightly higher than they were at the same time last year. Also in the report, as a result of mortgage rates moving lower, both refinance and purchase activity was up from one week earlier – with the Purchase Index up 6 percent from the previous week. The MBA’s weekly applications survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Naturally, affordability is a concern for anyone deciding whether they’ll rent or buy their next home. Buying a house is a significant undertaking and involves a number of costs and responsibilities that renters don’t have to worry about. That, however, doesn’t necessarily mean that renting is always going to be the more affordable option. In fact, rent has been climbing for years and continues to increase, according to a recent analysis from ABODO. The analysis determined that the average renter last year paid $1,001 per month for a one-bedroom home and the average month-over-month increase was .67 percent. In short, the average rent rose about $85 from where it was at the beginning of last year to where it ended up at the end of the year. Still, when looked at on a state-by-state basis, rental prices vary greatly. For example, the average rent in states like Georgia, Tennessee, and North Carolina is far lower than it is in areas like the District of Columbia, California, and New York. However, that doesn’t mean rents aren’t rising in metropolitan areas within states with lower overall averages. A look at the cities with the largest average monthly increase in rental costs shows Columbus, GA, Raleigh, NC, and Nashville, TN among the top 10, while San Francisco, Oakland, and Las Vegas experienced some of the largest declines in monthly rent. More here.
There are an endless number of reasons you might decide to buy a home at any particular time in your life. Whether you just got a new job on the other side of town or are looking for a place closer to family, the motivation behind a move is usually very personal. But there are economic factors at play, as well. Your financial situation, optimism about the future, and perception of the market can also influence a decision to stay where you are or pack your belongings. Fannie Mae’s monthly Home Purchase Sentiment Index looks at how Americans are feeling about buying a home, the real estate market, and their personal economic outlook. In December, the overall index fell slightly from the month before, though the number of Americans who said they thought it was a good time to buy a house was up from November. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says there’s been an increase in economic optimism recently but whether it carries through the rest of the year is uncertain. “A spike in economic optimism in the immediate aftermath of an election is typical,” Duncan said. “Whether consumers will sustain this level of optimism into 2017 remains unclear … If this optimism comes to fruition, it should translate into stronger income growth and increased job security for consumers – the two HPSI components that could help support housing sentiment this year.” More here.
Selling a home can be challenging in any year. Even if market conditions are perfect for homeowners who want to sell, just the act of finding a buyer, shopping for a new place, and organizing a move can be overwhelming. Add in lower for-sale inventory, higher mortgage rates, and economic uncertainty and it may seem like too much to take on. Fortunately, there’s no shortage of help available to guide you through this year’s real estate market. A recent article on Trulia breaks down some of the top tips for selling a home in the new year. First on their list is hiring the right agent. Having a professional who knows the local market and your needs can reduce your stress level and make everything else run more smoothly. You’re also going to want to prepare for competition. Analysts expect inventory to rise this year and that means an increasing number of homes for buyers to choose from. Making your house stand out from the pack might mean staging it according to the demographic most likely to be moving to your neighborhood. In other words, if you live somewhere popular with young families, think about staging an extra bedroom as a nursery. You should also be sure to keep up with technology. These days, everything from virtual tours to drone photography can be used to set your listing apart. Ultimately, though, nothing works better than pricing your home correctly from the start. With a good agent and the right price, you shouldn’t have any trouble selling your house in 2017. More here.
The real-estate market is constantly evolving and there are a lot of moving parts. So, whether you’re buying or selling a home, it’s good to have some awareness of your local market, average mortgage rates, home prices, inventory, etc. That way, you aren’t approaching a major financial transaction totally in the dark. So what should you be watching if you’re looking to buy or sell this year? Well, according to a recent survey of real-estate agents, there are a few trends you should keep an eye on. Mortgage rates rank high on the list. With home prices still rising, if mortgage rates continue to increase, it could have a negative influence on home buyers. Surprisingly, though, when asked what effect a 1 percent increase in rates would have on the market, survey participants said probably not much. In fact, 49 percent of agents said home buyers would just look for less expensive homes, while nearly 20 percent said it would have no effect at all. Survey respondents did say, however, that a rate increase could have an impact on current homeowners who may be looking to sell. According to responding agents, fewer homes available to buy – and the fact that many of these homeowners now have locked in favorable rates – could mean homeowners remain in their current home, despite a desire to move. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell over the two-week holiday season. Rates were down for 30-year fixed-rate loans with both conforming and jumbo balances, as well as 15-year fixed-rate loans. Rates for mortgages backed by the Federal Housing Administration were unchanged. But despite the fact that it was the first time in weeks that rates moved lower, demand for mortgage applications still fell. In fact, refinance activity was down 22 percent and the seasonally adjusted Purchase Index dropped 2 percent from two weeks earlier. Naturally, the numbers are adjusted to account for the Christmas holiday but, according to the MBA’s chief economist Michael Fratantoni, the slowdown was even more than is usual for the holidays. “Mortgage application volume typically drops sharply over the holidays,” Fratantoni told CNBC. “However, this year, as mortgage rates continued their upward climb reaching the highest levels in more than two years, overall application volume fell even more than the holiday slowdown would suggest.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
With the recent rise in mortgage rates, many Americans who were thinking of buying a home this year may be feeling concerned about how much house they’ll be able to afford. If that describes you, there are a couple of things to remember. First off, even though rates have moved higher over the past several weeks, they still remain low by historical standards. In other words, you’re still getting a better rate than you would have 10 or 15 years ago and locking it in now with a fixed-rate mortgage means you’ll be protected should they move closer toward their historical norm in the future. There are also things you can do to ensure that, when you apply for a loan, you are getting the best rate possible. Number one on that list is doing whatever you can to raise your credit score. Your credit history plays a large role in determining the rate you will end up paying. So it is always a good idea to check your score before beginning the buying process. If possible, fix any errors, pay down any debts, and – as always – make sure to pay your bills on time each month. Though you don’t have to have perfect credit to be qualified for a loan, the higher your score, the better. More here.