Following the housing crash and financial crisis, there was talk that Americans may stop aspiring to homeownership and would no longer see the housing market as a sound investment and reliable creator of wealth. After all, homeowners who saw the values of their homes plummet might become leery and those who hadn’t yet bought a home may’ve considered themselves lucky. And yet, a decade down the road, the market has largely recovered and demand from buyers is running high. Lawrence Yun, the National Association of Realtors’ chief economist, says that is thanks to reforms enacted after the crash. “Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher than normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession,” Yun says. And it’s true. Today, market conditions are fueled, not by a lack of a demand, but by a lack of enough homes to meet the high level of demand. Fortunately, Yun sees even more improvement on the horizon. In fact, his forecast for the next year includes rising inventory, moderating price growth, and more home sales as affordability conditions ease and make homeownership even more attractive to prospective buyers. More here.
Why You Should Be Optimistic About Homeownership
Home buyers this year have faced higher prices, more competition, and rising mortgage rates. In short, it’s been a challenging year. But that’s not to say it isn’t a good time to buy a house. There are many reasons to be optimistic about homeownership, in fact – and a few that put current conditions in perspective. Take mortgage rates, for example. According to Freddie Mac, the long term average is 8.16 percent, which means today’s rates are still low historically. Also, home equity is increasing. In fact, it’s up 13% year-over-year. And rising home equity means today’s homeowners are seeing their investment grow. There is also evidence that market conditions may begin to improve. For one, new home construction has been making gains and that means more homes for buyers to choose from. It also means buyers should begin to see prices moderate and competition wane, as more new homes are built to meet today’s high level of buyer demand. In short, there are a lot of good reasons to be optimistic about buying a house this year, despite market challenges. More here.
Buyers Come Out Despite Market Challenges
For the second straight month, sales of previously owned homes increased from one month earlier, according to new numbers from the National Association of Realtors. In fact, sales of single-family homes, townhomes, condos, and co-ops, rose 1.1 percent to an annual rate of 5.60 million in March. Lawrence Yun, NAR’s chief economist, says warmer weather may have had something to do with the sales pickup. “Robust gains last month in the Northeast and Midwest – a reversal from the weather-impacted declines seen in February – helped overall sales activity rise to its strongest pace since last November at 5.72 million,” Yun said. Put simply, low inventory and higher prices have made the housing market more challenging for buyers in some markets but overall demand is running high and, as the weather improves, may even see further gains. For interested buyers, that means available homes are selling fast this spring. The NAR reports that the typical property was on the market for just 30 days in March and half of the homes that sold were purchased in less than a month. More here.
August Newsletter
America’s Homes Are Growing Older
You can tell a lot about the way an area grew by the age of its homes. The pace of suburban sprawl, for example, can be mapped just by observing the way homes get newer as you get further from the city’s center. Houses built in the 1920s give way to homes from the ’50s and ’60s and so on. But that’s not all you can learn from paying attention to the collective age of the country’s housing stock. You can also tell a lot about the housing market’s ups-and-downs. One example can be found in a recent analysis from the National Association of Home Builders. According to the NAHB, the median age of owner-occupied homes is now 37 years, which is up from 31 years in 2005. In fact, more than half of our homes were built before 1980 and 38 percent were built before 1970. In other words, America’s homes are getting older. But why? One reason is that there have been fewer new homes built over the past decade, mostly due to the housing crash and financial crisis. That has caused an increase in the median age of the housing stock. It also has caused a boost to the remodeling industry, as older homes require more renovations to keep up with new technology and features desired by home buyers. More here.
Head Vs. Heart: Why Buyers Need To Be Careful
Log And Timber Homes Increasing In Popularity
If you were asked to name a hot home design trend, you probably wouldn’t guess log homes. And yet, new data from the National Association of Home Builders shows last year’s sales of log and timber homes were 56% higher than in 2012. That’s a big jump. So what’s behind the increase? Well, for one thing, today’s log and timber homes don’t resemble what might come to mind when thinking of an old-fashioned “log cabin.” According to the NAHB, “Revenues from log and timber frame homes have risen at a faster pace than units sold over the past six years as floorplans for the homes have expanded and offerings more extravagant.” In other words, today’s log homes are bigger and more luxurious than in the past. In fact, the average log home is 2,031 square feet. Still, the popularity of the homes is impressive when considering the fact that sales last year were only 7.8 percent below the number sold in 2006, while the rest of the single-family construction industry is down 42 percent. In short, log homes have been around forever and, based on their current popularity, they aren’t going anywhere any time soon. More here.
Majority Say They Want To Own A Home In Retirement
The vast majority of surveyed Americans say that homeownership is among their retirement goals, according to a recent survey. In fact, 85 percent of non-retiree respondents said they want to own their own home in retirement and believe they can pay off their mortgage before they retire. But, though non-retiree participants feel like they’ll have their mortgage paid off in time, more than 25 percent of retired respondents said they’re still paying off a mortgage and over half of those had a balance of more than $50,000. In short, Americans may be a bit too optimistic. But regardless of whether or not they make it, the debate about homeownership and retirement will continue. On the one hand, tax breaks and equity make a good case for the wealth-building benefits of owning a home. But, on the other hand, property tax, maintenance and potential renovation costs can add unpredictability to a household budget that may largely be fixed. In the end, which situation is the right one for you will ultimately depend on your personal finances, assets, and outlook – as there is no one-size fits all strategy for meeting your retirement goals. More here.
The Advantages Of Buying New
Generation Z May Become Homeowners Earlier
Generation Z – which is defined as people born between the mid-1990s and early 2000s – is quickly approaching adulthood and will soon face the decision of where to live and whether to rent or buy. But, according to a recent analysis, they may be facing challenges past generations didn’t. For example, the results of one study show that they will spend less time renting but will pay more than young people have in the past. With current median rent at $1,418 per month and rising, generation Z is expected to spend $226,000 on rent in their lifetime. That’s a lot. And it’s more than baby boomers or millennials spent. But despite that, generation Z is expected to become homeowners earlier than millennials have. One reason is the cyclical nature of the economy. Another is the fact that more than half say they considered buying before renting their current place. Also, they are just as likely as older generations to say they consider owning a home to be part of achieving the American Dream. In other words, if long-term economic trends hold up, the next generation of home buyers will have a better economy and job market to help fuel their dreams of homeownership. More here.