There has been a lot of discussion recently about Millennials – young adults between the ages of 18 and 34 – and when they will begin forming households of their own. For the past few years, the number of first-time home buyers active in the market has been lower than the historical average and many experts believe this is the final piece holding back the housing market’s recovery. As these young Americans become homeowners, residential real estate will become more stable and balanced, reducing the volatility now seen in the month-to-month fluctuations of the market. Jonathan Smoke, Realtor.com’s chief economist, said Millennials are a critical component of the first-time home buyer market and getting that segment of the market functioning again is a necessity for bringing the housing ecosystem back to full health. And, according to new data from Realtor.com, there is growing reason for optimism. In fact, the most recent National Housing Trend Report found that half of all Millennials viewed real estate websites in the last month, indicating high levels of demand. And though tight inventory, rising prices, and saving for a down payment can be a hurdle for young home buyers, many local markets offer affordable opportunities for first-time buyers. More here.
For the past two years, the size of newly-built single-family homes has been rising. In fact, the most recent data from the Commerce Department shows the median size of homes that began construction during the second quarter of this year was 2,478 square feet. That is just shy of the all-time high of 2,491 square feet, set last fall. This trend, however, may be coming to an end. Homebuilders have reported an increase in entry-level and first-time buyers entering the market, which may help level off the square footage of new homes being built. The increases – largely driven by luxury and move-up buyers, who dominated the market during the early part of the recovery – should begin to slow as prospective buyers looking for their first home search for smaller, more modestly priced houses. With more diversity among buyers, the trend toward larger homes with bigger garages, basements, and bedrooms should begin to reverse and reflect the reemergence of entry-level buyers who, mostly likely, will be searching for a home that better fits their needs and budget. More here.
Since the middle of the last century, Americans have generally been moving from city centers into suburban homes. But though the suburbs have grown at a faster pace than cities have over the past 50 years or so, there has been a lot written lately about Americans abandoning the suburbs and moving back downtown. The trend, according to a recent article on RealtyTrac, can be looked at from a number of angles. For example, a recent reading of Census data showed 19 of the 51 largest metropolitan areas saw their urban core growing faster than the surrounding suburbs between 2012 and 2013. This has been used to illustrate the resurgent popularity of city living. But, read a different way, it proves exactly the opposite. After all, those same numbers mean 63 percent of the largest metro areas had suburbs that grew faster than their cities. Some analysts believe that – though there has been an increasing trend among certain demographics toward city living – the general patterns have remained the same, with formerly city-loving 20 somethings eventually moving to the suburbs as they start families and begin to settle down. More here.
According to new data from the Mortgage Bankers Association’s Weekly Applications Survey, the size of the average loan to purchase a home has reached the highest level in the history of the survey. The average loan is now $280,500. This is due, in part, to the fact that interest rates on mortgages with jumbo balances are low by historical standards. In fact, they are even lower than rates on loans with conforming balances, which is not typically the case. But it is also consistent with a trend toward rising purchase activity for larger loan amounts, the release said. Also, the MBA’s survey found that overall demand for mortgage applications fell 3.3 percent last week. The Refinance Index was down 4 percent from the previous week and purchase activity dropped 3 percent. The decline follows a 4.3 percent increase in demand the week before. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all U.S. retail residential mortgage applications. More here.
The National Association of Realtors 2014 Profile of Home Buyers and Sellers is an annual survey that looks at the way the typical home buyer experiences the process of buying a home. For example, this year’s survey found 43 percent of home buyers began the home-buying process by searching online for properties, while 12 percent started looking for information about the process itself. The vast majority of buyers used the Internet in some way or another, however, with 92 percent of buyers reporting they used the web in some fashion. A rising number are also using apps to help them find their house. In fact, 50 percent of buyers said they used a mobile or website application during their home search. But though the home search is increasingly aided by the Internet, real-estate agents still prove to be invaluable to buyers. Among buyers who used an agent, 98 percent said they were a useful source of information during the process. Overall, the typical buyer’s search lasted 10 weeks and they viewed 10 homes. More here.
All across the country rent prices are skyrocketing, and according to a Zillow report, are even higher than some costs of home ownership. It’s no different here in the Inland Empire. In fact, the Riverside-San Bernardino –Ontario metro area is ranked Number 5 for all rent gains, with a 4.2% increase in the first quarter of 2015. This is shocking news, but why is it the case?
There’s a shortage of available Rentals.
It’s plain and simple case of supply and demand; vacancy rates are at a very low level, which continues to push rents higher. People are renting longer, as the housing crash undoubtedly scared some would be homeowners, and many others are downsizing. This puts a lot of pressure on the rental market, as more and more people are choosing to rent.
What should you do?
Low Mortgage rates really do make buying a house a more attractive option. On a national level, the average homeowner spends 15.3% of total income a month on their mortgage, as opposed to the 30% renters pay. Sometimes, in higher rent areas, a tenant will pay closer to 50% of their monthly income on their rent. That’s rough. So what’s the short answer? Buy a house while you still can.
Following the financial crisis and housing crash, home prices fell and mortgage rates dropped to historic lows. This, of course, boosted affordability conditions and led to a very attractive market for potential home buyers. Since then, however, prices have rebounded. In fact, according to recent data, the median home price for a single-family home is now $220,600, up from $160,000 a few years ago. But, despite the rise in home prices, mortgage rates have remained low and, because of this, buying a home is still quite affordable for prospective home buyers. The National Association of Realtors says the typical monthly mortgage payment for home buyers purchasing a middle-priced home with a 20 percent down payment is $867. This is 15.9 percent of monthly gross family income, which is a significant drop compared to the 21.3 percent average over the past three decades. In short, this means that the typical monthly mortgage payment is more affordable now than it has been for most of the past 30 years, making now an excellent time to buy a house. More here.
A lot of people “accidentally” become a landlord, and finding reliable tenants can be a challenge. A tenant credit report can help — getting a sense of an applicant’s financial situation can help you determine whether or not they’ll be able to pay rent on time every month.
There are a few things to look for when reading a credit report:
First, the score. While the scale varies based on the service, the higher the better. Cozy uses Experian’s VantageScore, which ranges from 501-990.
Second, take a look at the credit summary, which includes data about outstanding debt and the monthly payments the applicant is making.
After that, take a look at the payment history, so you can be sure the tenant has a history of making the required payments every month.
Then there’s the account history, which gives you a detailed look at each account, the timeliness of payments, and the type of debt. (For example, student loans are common, sometimes quite large, and probably not a major factor for most landlords looking for a reliable tenant.)
Finally, take a look at the score factors, which summarizes the different reasons an applicant’s credit score might be less than perfect.
With all that information, you should have a more complete picture of your potential tenants.
Over the past few years, housing quickly shifted from a buyers’ bonanza to a sellers’ market due to rapidly rising home prices. Home values – which experienced double-digit drops during the financial crisis – rebounded significantly and made the market more attractive to homeowners who wanted to sell. But, as more owners put their homes up for sale, the increase in available inventory slowed price gains and, once again, tipped the scales toward prospective buyers. Now, according to a new survey of real-estate agents, the question of whether it’s a buyers’ or sellers’ market is a difficult one to answer. It typically takes awhile before the market can adjust to recent changes in prices and buyer demand. That means, though today’s potential home buyer may have confidence that they can hold out for a good deal because there are plenty of homes to choose from, today’s seller may also be confident and feel that they can get the price they want because recent increases in inventory have yet to affect asking prices. This disconnect should be temporary, however, as sellers adjust their asking prices and the market continues to normalize after many years of volatility. More here.
According to the U.S. Department of Housing and Urban Development’s July Housing Scorecard, the housing market remains on the path to recovery, though some unexpected weakness remains. The Scorecard – which collects key housing market data and tracks the impact of the government’s foreclosure prevention programs – details many signs of positive progress. Among them, rebounding sales of previously owned homes, the continued downward trend in foreclosure starts, and the stabilization of home prices are all signs of an increasingly healthy residential real-estate market. Still, new home sales remain weaker than expected. Katherine O’Regan, HUD’s assistant secretary for policy development and research, said indications are that continued improvements in the economy, such as the July employment report which marked the sixth straight month of more than 200,000 jobs having been added, along with slowly easing mortgage credit, will keep the housing market on the path to recovery. Despite the largely optimistic tone of the most recent report, however, officials caution there is still work to be done as the economy recovers from the most recent recession. More here.