What Are Americans’ Top Housing Concerns?

Posted on July 27, 2016 by Erin Johnston

Daily Real Estate News | Wednesday, July 27, 2016

It might not be all low inventory and high prices. It seems Americans have a confidence problem when it comes to the housing market. They’re increasingly apprehensive to move forward, citing concerns over the economy and job security, according to the latest ValueInsured Modern Homebuyer Survey, a measure of confidence in the health of the housing market among more than 1,000 home owners and buyers.

Americans also still express lingering concerns from the housing crisis of 2008, particularly millennials. Sixty-three percent of Americans and 72 percent of millennials say the crash worried them and impacted their decision to either purchase their first home or upgrade to a new one, according to the survey.

Cleve Bellar, chief marketing officer of ValueInsured says that though the results demonstrate “renewed confidence that housing is a smart investment,” he adds that it is “tempered by thoughtful consideration of the undeniable risks, especially given the recent uptick in security and economic events in the U.S. and abroad.”

And confidence could be the key to increasing the low rate of home ownership. Sixty-eight percent of Americans and 81 percent of millennials who say they want to buy a home add that they would do so sooner if they had more confidence in the housing market, the survey found.

The top concerns Americans’ expressed in the survey are:

  • Global economy: 59% of Americans and 68% of millennials say that the global economic climate has them worried.
  • American economy: 63% of Americans and 70% of millennials say that the current U.S. economy has them concerned about the risks of buying a home.
  • National security: 48% of Americans and 61% of millennials say that national security is taking a toll on their home-buying decisions.
  • Job security/mobility: 55% of Americans and 71% of millennials say that the possibility of a job change or loss has them concerned.

Source: ValueInsured

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How Long Does It Take to Build a New Home?

Posted on July 25, 2016 by Erin Johnston

Daily Real Estate News | Monday, July 25, 2016

The average time it takes to complete a new single-family home is seven months, according to recent Census Bureau data. That completion time includes nearly a month for getting the permit to start the project and then another 6 months to complete the construction.

Houses built for sale took the shortest amount of time – 6 months to complete after obtaining building permits. On the other hand, homes built by owners averaged the longest time at nearly a year. Homes built for rent averaged about 9 months from permit to completion, the data shows.

Home buyers will likely have the longest waits for their new home in the New England area, which had the longest time from permit to completion at 10 months. On the other hand, the Mountain region had the shortest amount of time at 6 months. The region also has the shortest waiting period from permit to construction start.

Here’s a breakdown by region of the average months from permit to completion of single-family new homes:

  • Pacific: 8 months
  • Mountain: 6 months
  • West north Central: 8 months
  • West South Central: 7 months
  • East North Central: 8 months
  • New England: 10 months
  • Middle Atlantic: 10 months
  • South Atlantic: 6 months

The Census data also reveals the average days by region from permit to start on the new home:

  • Pacific: 31 days
  • Mountain: 15 days
  • West North Central: 20 days
  • West South Central: 35 days
  • East North Central: 23 days
  • East South Central: 25 days
  • New England: 28 days
  • Middle Atlantic: 27 days
  • South Atlantic: 27 days

Homes in metro areas took, on average, nearly 7.5 months to complete, about 2 months shorter than homes started in non-metro areas.

The data also shows that in 2015 the share of single-family homes sold while under construction was 66 percent. Thirty-two percent of those homes sold before the construction started and 12 percent sold during the same month of completion, according to the Census data. The percentage of single-family homes completed last year that were unsold was only 6 percent, as of the first quarter of 2016.

Source: “Time to Build a Single-Family Home in 2015,” National Association of Home Builders’ Eye on Housing blog (July 20, 2016)

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3 Ways to Keep Cool Without AC

Posted on July 22, 2016 by Erin Johnston

Daily Real Estate News | Friday, July 22, 2016

Over 100 million Americans are expected to face a massive heat wave this weekend, and it’s always a good idea to remind people living in older housing stock without air conditioning that there are easy ways they can stay cool even during the peak of summer temperatures.

Houselogic recently shared some tips on how to beat the heat:

Say no to sunlight. The first thing to do when temperatures rise is to limit the amount of sunlight into the home. Closing all of your home’s blinds and drapes is an easy and effective fix to stay cool without AC. You can also buy high-reflectivity window film and put it on the home’s east and west-facing windows.

It may be worth it to install awnings on your home. According to Houselogic, awnings will “reduce solar heat gain by up to 77 percent.” You can also DIY an awning by putting up sheets outside your windows, which may not be aesthetically pleasing but it is effective.

Get that air circulating. When living without air conditioning in the peak of summer heat, fans will be your best friend. An easy quick fix is to buy portable fans of all sizes and place them in the windows at night and wherever you need them the most during the day. You can add to the fun by putting bowls of ice water directly in front of the fan, which will give the blowing air a nice chill.

If you need long-term fan solutions, consider buying ceiling fans or even a whole house fan, which will set you back  $1,000 to $1,600, including the installation. When using a whole house fan, keep in mind you have to keep your windows open.

Turn off appliances. It sounds simple, but it’s true: even powering-down the appliances you’re not using can cut the heat in a home. You’ll also want to refrain from using appliances that generate the most heat during the time of day when its the hottest.

Source: “How to Keep Your House Cool Without AC,” Houselogic.

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First-Time Buyers Not Picking “Starter Homes”

Posted on July 20, 2016 by Erin Johnston

Daily Real Estate News | Tuesday, July 19, 2016

The “starter home” trend may be fading in real estate. Prior to the housing bubble, first-time buyers with average incomes would shop for a more affordable, smaller house with the idea of moving on to a larger home in a few years.

Today’s first-time buyers want a home that meets their needs now and in the future. Seventy-five percent of first-time buyers say they prefer to skip the starter home and find a house that meets their long-term needs, according to a survey commissioned by Bank of America in early 2016. Thirty-five percent say they even intend to stay in that home until they retire.

First-time buyers nowadays tend to be higher earners, and due to rising home prices and tighter housing inventories they are wanting to buy a home where they can stay put for a long time.

In 2013, first-time buyers purchased homes with an average of 1,845 square feet. The average home in the U.S., meanwhile, is just 1,819 square feet, according to BuildZoom, a real estate construction firm’s analysis of data from the Census Bureau.

“So those home buyers who probably would have been looking for the lowest-end homes 10 years ago during the housing boom are today just not able to buy. And those that are able to buy are looking further upmarket,” says Issi Romem, chief economist for BuildZoom.

Many first-time buyers aren’t planning to upgrade and move on in five years, like they once did. They plan to stay put.

“When they do purchase, they’re planning on living there longer than buyers that we’ve seen in the past,” says Jessica Lautz, NAR’s managing director of survey research. “They’re expecting to live there 10 years.”

Source: “More First-Time Buyers Skip Starter Home Stage for Bigger, Better,” USA Today (July 17, 2016)

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How to Avoid Identity Theft When Moving

Posted on July 18, 2016 by Erin Johnston

Daily Real Estate News | Monday, July 18, 2016

The moving process can make your clients more vulnerable to identity theft and other forms of fraud, since often personal financial information isn’t adequately protected. As if moving wasn’t stressful enough on its own, it can take nearly six months for a person to recover from identity theft during a move.

People can do a few things to protect themselves from identity theft during a move, says writer Adam Levine, author of  “Swiped: How to Protect Yourself in a World Full of Scammers, Phishers, and Identity Thieves.” He says to focus on the 3 M’s: 1. Minimize your exposure 2. Monitor your accounts 3. Manage the damage.

Here are some of Levine’s other tips:

  • Don’t share too much: Before, during, and after a move, avoid sharing too much information with those you don’t know, whether in person, on the phone, or via social media, Levine writes.
  • Secure electronics: Set long, strong passwords, and use two-factor authentication whenever possible. Secure computers, smartphones, and tablets.
  • Protect documents: Shred sensitive documents you no longer need. During a move, carry your personally identifiable information with you and in one box.
  • Monitor for fraud: Check your credit score and consider enrolling in transactional notification programs. You also might consider subscribing to various credit and fraud monitoring services to alert you to any sudden changes on your credit report.
  • Watch your mail: Your mail will be influx when moving so look into doing more online billing and autopay to prevent lost or forgotten bills.
  • Make address notification a priority: Notify federal agencies that send you mail of your new address. Compile a list of places to inform of your new address, such as the Social Security Administration, IRS, and Department of Motor Vehicles.

Source: “Moving: A Dangerous Time for Your Identity,” Credit.com (June 9, 2016)

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The Pros and Cons of Low Mortgage Rates

Posted on July 13, 2016 by Erin Johnston

Daily Real Estate News | Tuesday, July 12, 2016

Many economists saw their predictions of higher interest rates and stronger economic growth shattered this year, mainly due to global economic uncertainty which was then heightened by June’s Brexit vote in the U.K.

Instead, the U.S is currently experiencing low interest rates and mortgage rates that are the lowest since 2013. While these low rates are boosting the purchasing power of buyers, “A look at the pros and cons of this recent drop in mortgage rates shows that they may not be as unambiguously beneficial to the housing market as previous low rates have been,” says Danielle Hale, NAR’s Director of Housing Statistics.

She listed a few of these pros and cons in a recent blog post:

Pros

  • This year has seen a mortgage rate reduction of more than 50 basis points, which gives potential buyers more purchasing power. As Hale points out, a 50 basis point reduction cuts down monthly payments by nearly $50 per $100,000 in home price.
  • Income needed to qualify is also reduced by around $1,000 due to this type of mortgage rate reduction.
  • Using recent median home price data, this also comes out to a $2,500 reduction in the income needed to finance a home with a 20 percent down payment.

Cons

  • While the Brexit vote in June caused mortgage rates to decline, as well as escalated the overall economic uncertainty, most of the mortgage rate decline actually occurred in the first quarter of 2016, a sign that many people had prior concerns about the global economy stagnating.
  • This unpredictable global financial news is already causing many consumers to be less optimistic about the state of the housing market, and slowing global growth could also make consumers nervous about its effect on the U.S. labor market.
  • Many potential first-time buyers are having trouble finding affordable housing options due to a lack of inventory, and others are struggling to save up for a down payment due to the burden of student loan debt and high rental prices. As Hale points out, this means that the overall benefits of low rates are only being felt by people who already own a home, which adds to the growing wealth gap in the U.S.

Still, “Thus far, the U.S. economy has proven resilient to the weaker global economic environment,” says Hale. “A stronger U.S. consumer, who benefits from lower financing costs, may help ensure that trend continues.”

Source: “Low Mortgage Rates and the Housing Market: Pros and Cons,” Economists’ Outlook Blog (July 7, 2016)

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The Luxury Deck Becomes Latest Must-Have

Posted on July 11, 2016 by Erin Johnston

Daily Real Estate News | Monday, July 11, 2016

The average size of decks and patios is expanding, as luxury home buyers even in cold-weather markets are paying more attention to these outdoor spaces.

For example, a home for sale along the shores of Lake Michigan boasts a 6,000-square-foot deck, which includes an outdoor kitchen, resistance-swimming pool, spa, fireplace, lounge areas, and even a traffic lane. The 8,114-square-foot home in Montague, Mich., is for sale at $10 million and the owners say the lavish deck is the main selling point.

Crown Pointe Estates, a developer in Malibu, Calif., is selling a 13,814-square-foot contemporary home for $22.0 million that features a 10,000-square-foot deck and patio. The deck includes an infinity-edge pool as well as two heated cabanas with TVs. The upstairs also offers a deck off the master bedroom with a six-hole putting green.

Nearly 70 percent of more than 500 residential architecture firms surveyed in the first quarter of this year say they saw an increase in demand for outdoor living space, according to the American Institute of Architects.

“It seems to be coming back stronger than in the boom,” says Kermit Baker, the AIA’s chief economist. Baker attributes the higher demand for outdoor space to a cultural shift away from formal living spaces.

A survey of 1,300 builders by the Home Innovation Research Labs shows the average size of decks on luxury homes is growing. Notably, the biggest growth in size was in the Northeast. The average deck there measured 406 square feet, which is up 53 percent from 2014.

Indeed, decks aren’t just for areas that boast year-round warm weather either. Toll Brothers, based in Pennsylvania, is offering new options for decks and patios in all 19 of the states were it builds, including in Colorado and Minnesota. Home owners in colder locales are adding fire pits, heated floors, snowmelt decks, and even infrared heating fixtures so they can use the deck all yearlong.

Source: “Luxury Homes Gain Over-the-Top Decks,” The Wall Street Journal (July 8, 2016)

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3 Mortgage Mistakes Buyers Keep Making

Posted on July 8, 2016 by Erin Johnston

Daily Real Estate News | Friday, July 08, 2016

The mortgage process can be overwhelming to your buyers. David Gunn, mortgage sales effectiveness director for Fifth Third Mortgage, recently shared with HousingWire some of the biggest mistakes buyers make when purchasing a home.

Believing you don’t make enough for a down payment.
Low down payment mortgages are becoming more available. The Freddie Mac Home Possible Advantage Mortgage, for example, allows buyers to put down 3 percent on their home purchase. Mortgage lenders can help identify which programs potential buyers can qualify for. “People tell us they can’t afford a house because of the down payment,” Gunn told HousingWire. “It’s the most common barrier to buying a home. But we find that a buyer needs less money than she thinks to get into a home with a monthly payment that meets her budget.”

Not having closing time patience.
The timeline for settlement has been growing. Since the Consumer Financial Protection Bureau’s Know Before You Owe rule took effect last October, timelines on home closings have lengthened somewhat. The new mortgage disclosure rules can result in three-day delays for reviews if any changes to the mortgage terms arise. “Be patient, and know that all of the changes are made to help you better understand the mortgage terms and help you find the best loan for you,” Gunn says.

Sticking to one type of loan.
The 30-year fixed-rate loan — while the most popular — doesn’t always have to be the go-to. Certain loan types may make more sense, depending on the buyers’ situation. “It might be better to get a lower term loan now to build equity, and then move into something bigger in a few years,” Gunn says. A lender can take a look at a buyers’ financial situation and goals to make a suggestion of whether a longer term or shorter term loan makes the most sense.

Source: “Avoid These 5 Major Mistakes Most People Make When Buying Homes,” HousingWire (July 5, 2016)

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City Living Not Just a Modern Shift

Posted on July 6, 2016 by Erin Johnston

Daily Real Estate News | Wednesday, July 06, 2016

We live in an age of rapid urbanization, with those migrating to city centers largely being rich, college-educated, and childless. But the uptick of urban wealth and decline in rural populations isn’t just a modern phenomenon. A century ago, before the suburbs exploded in the 20th century, the wealthy largely settled in urban areas, a demographic pattern that’s happening in the U.S. again today, according an article from The Washington Post called “What the 1880s Tell Us About Why the Rich are Moving to Cities Today.”

The appeal of today’s downtowns lies in renowned city infrastructure, mixed-use urban property, refurbished parks, and accessible transportation. According to Census Bureau data, 80.7 percent of the U.S. population lived in urban areas in 2010, up from 79 percent in 2000. Compare 2010 with 1990, or even 1980, and it’s clear that the relative socioeconomic status of city dwellers — reflecting both their income and education levels — has been creeping up, according to the Post.

Until the 1990s, the vast majority of U.S. citizens chose to avoid living in the city. But in 1880, the rich lived in the city, and the working class lived on the outskirts, the Post notes. Though people moved toward urban centers in the 1800s for many reasons that are far different than today, some similarities remain between then and now, says Jeffrey Lin, an economist at the Federal Reserve Bank of Philadelphia. For example, downtowns built in 1880 — before the automobile was invented — were designed to easily get around by foot or local transit. That’s a top draw for people today who want to eliminate or shorten their commute. Early downtowns were also designed with parks and amenities in mind — the same desires for today’s urban buyers.

“We’ve spent the last 80 years building car-oriented suburbs. Then when the elites decide they want to go back into the city, there’s not enough city to go around,” says Ben Grant, urban design policy director at San Francisco-based advocacy and research group SPUR. According to the Post article, fluctuations in economic and cultural tastes cause the continuous cycle in city demographics, which directly affect future real estate investments. Today, the rich bid high on city investments while lower classes are pushed back into suburban living in a battle of economic security and profit.

Source: “What the 1880s tell us about why the rich are moving to cities today,” The Washington Post (June 29, 2016)

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