To understand housing demand, it helps to break it down generationally. For example, baby boomers � because they are older and more likely to be settled somewhere � are the least active in the housing market. Generation X, on the other hand, are in the prime of their professional life. Since they are making more money and have growing families, they account for a large share of buyers looking to upgrade from their first home into something more spacious. Finally, there are millennials. Born between 1982 and 2000, millennials are now at, or will soon reach, the age of the typical first-time home buyer. Naturally, they represent an increasing share of the demand for homes. According to Housingwire.com, millennials are now the age group responsible for the most new mortgages. In fact, in 2018, millennials accounted for 45 percent of all new mortgages. By comparison, Generation X home buyers were responsible for 36 percent of new mortgages and baby boomers represented 17 percent of purchase loans. More here.
During times when the housing market has more buyers than homes for sale, the quickest remedy is to build more homes. Adding inventory to the market gives buyers more options, helps balance supply and demand, and keeps home prices in check. Essentially, new home construction plays a vital role in housing market health and affordability conditions. According to recent news, home construction is up. The U.S. Census Bureau and the Department of Housing and Urban Development show a 3.6 percent increase in the number of new homes that began construction in 2018. The year-over-year improvement put the number of completed new homes last year at nearly 1.2 million. Unfortunately, toward the end of the year, stock market volatility slowed the pace of new home construction. However, with buying conditions becoming more favorable and builder confidence on the rise, there is reason to believe new construction of single-family homes will begin to climb again this spring. That’s encouraging, not just for buyers interested in newly built homes, but for all potential home buyers. More here.
When a contract is signed to buy a house, that home’s sale is considered pending. It isn’t final until closing, which typically happens a few weeks later. However, since contract signings usually lead to final sales, they’re a good way of measuring current buyer interest and an indicator of what home purchase activity will look like a month or so down the road. That’s why January’s Pending Home Sales Index from the National Association of Realtors (NAR) is encouraging. The report shows a 4.6 percent increase in the number of signed contracts in January compared to the month before. All four major regions of the country saw growth. Lawrence Yun, NAR’s chief economist, says there are a number of factors that are driving the improvement. A change in Federal Reserve policy and the reopening of the government were very beneficial to the market, Yun said. Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers. According to Yun, there’s reason to believe the gains will continue. Income is rising faster than home prices in many areas and job creation continues to be strong. In short, conditions are […]
There are many individual factors that can sway someone’s decision to buy or sell a house. This makes it difficult to assess perceptions of the real estate market, but Fannie Mae’s monthly Home Purchase Sentiment Index aims to do just that. By asking Americans about their confidence in the economy, personal finances, home prices, etc., the index hopes to give an overview of peoples’ feelings about buying or selling a house. According to the results of their February survey, Americans are generally optimistic about the economy and feel secure in their jobs. However, Doug Duncan, Fannie Mae’s Senior Vice President and Chief Economist, says consumers are feeling cautious about the housing market heading into spring. Job confidence reached a new survey high, but consumers were less optimistic about home buying and selling conditions than they were a year ago, Duncan said. Notably, home price growth expectations have trended significantly downward, with the net share of consumers expecting home prices to rise falling 19 percentage points from its survey high established at the start of 2018. Essentially, fewer consumers are expecting home prices to rise, indicating weakening housing demand. More here.
New home sales data from the end of last year was delayed because of the government shutdown. Now that the numbers have been released, they contain an unexpected surprise. Sales of newly built, single-family homes rose nearly 4 percent in December from the month before. The gains put 2018 new home sales 1.5 percent higher than the year before. It was also a seven-month high. However, though rising sales are an encouraging sign, especially since a healthy new home market leads to better conditions for all homebuyers, new home sales data tends to be volatile and is often revised. For example, part of the reason December numbers increased was that November’s sales were revised downward. This is because new home sales data is based on permits, so it can be unreliable. Still, the fact that there was any improvement at the end of last year is a good sign that buyer demand remains healthy. More here.
Buyer’s remorse is common when making large purchases. After all, if you’ve spent a significant amount on something, you want to be sure you get your money’s worth. Since buying a home is probably the largest purchase you’ll ever make, the risk of remorse runs high. According to a recent survey conducted by Bankrate.com, young homebuyers are particularly vulnerable. In fact, millennial homeowners expressed the most regret of any generation, with 63% saying there were things they’d do differently the next time around. So, what do young homeowners regret most about their home purchase? The top answer was not accounting for the cost of maintenance and repairs. Other complaints included buying a house that was too small, too big, or in an unsafe area. The good news is that there are ways to avoid underestimating the costs of owning a home. It’s best to plan ahead and set aside money in case of emergency repairs. A good way of knowing what you’re getting into is to have the home inspected. It’s essential to know the condition of a home before you buy it. More here.
Finding the perfect home can be tough, especially if there aren’t many homes for sale. That’s why inventory is such a hot topic these days. There’s been a shortage of available homes over the past few years and it’s made buying a house more difficult, especially in the lower price ranges. However, recent numbers from Zillow show that conditions are beginning to swing back in favor of home buyers. Inventory has been rising, and at a good pace in the markets that need it most. In fact, in some of the nation’s most competitive markets like San Jose, Seattle, Denver, Los Angeles, and San Diego, the number of homes for sale has seen double-digit increases year-over-year. This is undoubtedly good news for home shoppers, as it gives them more options and therefore better chances at finding the right house. However, because the previous years’ inventory declines were significant, it’ll take some time to reverse those losses. Home buyers can still expect a competitive market this year, though it’s finally trending in their direction. More here.
While real estate is slowing down nationally, there are still many markets out there that are heating up. Housing is highly dependent on location, and in these locations across the country, price is appreciating. This could make them a good investment in the long run. https://www.realtor.com/news/trends/2019-housing-markets-poised-to-take-off/
A new report from HousingWire shows that homeownership among Americans between the ages of 28 and 31 jumped from 27 percent to 47 percent just two years. Home buying has surged among younger Americans, and that’s an encouraging sign for the housing market – especially since homeownership levels haven’t yet fully recovered from the housing crash. However, that’s not the whole story. Increasing demand from first-time home buyers could also put pressure on home prices if available inventory can’t keep up with the level of demand. Millennials are expected to buy 10 million homes over the next decade, and they will be competing with each other. The balance between new home buyers and new homes will be a key component of the real estate market. If supply continues to lag behind, home prices will keep rising, which will build equity among current homeowners. However, that could cause affordability issues for aspiring homeowners. On the other hand, if supply increases, prices should moderate and lead to booming home sales. Either way, first-time home buyers will have a significant effect on the housing market in the coming years. https://www.housingwire.com/articles/47785-this-is-where-millennials-are-buying-the-most-homes?utm_source=AKZO+Media+Subscribers&utm_campaign=6929038aa7-EMAIL_CAMPAIGN_2018_12_27_07_54&utm_medium=email&utm_term=0_134f701abc-6929038aa7-276542805
Though rent is up about 3 percent from last year, it isn’t increasing quite as rapidly as it was before. There may be evidence that the slowdown is helping aspiring first time home buyers to save money for a house – especially millennials, who make up half of all renters. For one, the number of renters is falling. In fact, there were 43.2 million renter households across the country in 2018, which is about 100,000 fewer than in 2017. Combine that with the fact that millennials are currently buying more homes than any other generation, and it appears that slower rent appreciation may be helping more renters make the leap to homeownership. However, the renter’s market isn’t the same across all locations. For example, the New York metro area has seen rent rise just one percent over the past year, while in Las Vegas rent is up almost seven percent year-over-year. Still, if the overall trend holds, conditions may be getting easier for renters who hope to buy a home in the near future. https://www.prnewswire.com/news-releases/us-renters-spent-504-billion-on-housing-in-2018-300770096.html?utm_source=AKZO+Media+Subscribers&utm_campaign=0d06134231-EMAIL_CAMPAIGN_2018_12_21_07_27&utm_medium=email&utm_term=0_134f701abc-0d06134231-276542805