Culture Clash: Why Boomers Are Moving Back to Big Cities

December 19, 2019 by

Culture Clash Why Boomers Are Moving Back to Big Cities“Baby Boomers,” defined as people who were born between 1946-1964, are the wealthiest generation to ever retire, as well as the largest. According to U.S. Census Bureau projections, the population of people 65 and older will increase by 36% between 2013-2023 and is expected to outnumber children by 2034 — for the first time in U.S. history.

Interestingly, in the decade since the Great Recession,people aged 50-59 are increasingly bucking tradition and moving to urban areas. As Boomers retire en masse, they are headed for major cities, favoring amenities-loaded condos over large single-family homes with manicured lawns. What is responsible for this change in older adults?

Home Maintenance Considerations

One of the largest factors causing boomers to migrate to cities is home maintenance. Once adult children are out of the home, many people downsize into more manageable houses. Larger suburban homes take a lot of work between routine home maintenance, not to mention larger emergency repairs. 

It makes sense then, that people 55 and older accounted for the largest increase in the rental home segment from 2007-2017, with a 38% rise in those older than 55 and a 43% increase in people older than 65. In stark contrast, the increase in rentals in people aged 54 and under in the same time period was less than 10%. 

Creature Comforts

Another thing responsible for older adults moving away from the suburbs and into more urban areas is the abundance of amenities large cities can offer them. Exceptionally walkable cities such as those where universities are located tend to cluster upscale condos and apartments near major shopping outlets and public transportation lines, as well as a multitude of options for shopping, dining, cultural experiences, and medical services. 

Cities like Lawrence, Kansas and Bloomington, Indiana have taken note of the trend — and the fact that boomers have about 70% of all disposable income in the United States — and have taken steps to lure retirees in, offering recreation opportunities specific to seniors and making public transportation and preventive healthcare more accessible.

This trend of boomers moving back into large cities, while fascinating, makes perfect sense and is expected to continue for the foreseeable future as cities make themselves more and more appealing, as well as accessible.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.

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How Growing, Multi-Generational Families Impact Home Design And Financing

December 17, 2019 by

How Growing, Multi-Generational Families Impact Home Design And FinancingThere has been a surge in families who have multiple generations living together. In many cultures, children take care of their parents as they age. This is done in an effort to repay the parents for raising them during their childhood.

At the same time, when there are multiple generations living together in the same home, there are some changes in both home design and financing.

Financing a Multi-Generation Home

Anyone who is looking to finance a multigeneration home will need to detail their financing plan to the mortgage lender. The lender always wants to know how the loan is going to be repaid. The more details someone can supply, the better the chances are that the application will be approved.

A common arrangement is having the grandparents supply the down-payment. They are more likely to have a ready supply of cash-on-hand, often in the home of equity from their prior home.

Then, parents typically supply monthly payments. They are more likely to a stable source of income given that they are likely still employed. 

The Home Design of a Multi-Gen Home

Given that more and more people are indicating their willingness to live in a multi-gen home, this is having an impact on home design as well. Many of these homes have a first-floor bedroom. While these were unusual before, having first-floor bedrooms is important for older relatives. This allows them to avoid having to take the stairs, reducing the risk of falls.

In addition, many people want to provide their older relatives with a feeling of independence while living in the home. This can be accomplished by providing a small kitchenette in the first-floor bedroom. There is often a separate entrance as well. Some families are even interested in having a separate guest house on their property.

Investing in a Multi-Gen Home in the Future

As multiple generation housing arrangements continue to increase throughout society, the financing and home design will continue to evolve. For this reason, it is important for everyone considering this living arrangement to stay up to date on the trends in this industry. It might impact how they design and finance their home for their elderly family members in the future.

Talk with your trusted real estate and mortgage financing professionals to get the best advice on your personal situation. They are experienced in designing solutions for every possible scenario.

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FOMC Statement: Fed Holds Steady On Its Interest Rate Range

December 12, 2019 by

FOMC Statement: Fed Holds Steady On Its Interest Rate RangeThe Federal Open Market Committee of the Federal Reserve announced its unanimous decision not to change to the current target federal funds range of 1.50 to 1.75 percent. The committee’s customary post-meeting statement said the decision not to change the Fed’s target range for federal funds was based on factors including a strong labor market, moderate economic growth, continued job growth, and low unemployment.

Economic readings reviewed prior to the FOMC meeting held Tuesday and Wednesday supported the achievement of the committee’s dual mandate to achieve maximum employment and maintain price stability.

According to the post-meeting statement issued on December 11, FOMC members consistently review incoming global and domestic economic news to determine if the Fed’s monetary policy should be adjusted. Chair Powell signaled that the federal funds rate may not change in 2020, but repeated the FOMC’s frequently-repeated caveat that monetary policy is subject to change as world news and economic conditions may warrant.

Expected And Realized Economic Conditions Contribute To Fed’s Monetary Policy

FOMC members reviewed their expectations of economic performance and compared them with actual readings in evaluating economic performance as connected to the Federal Reserve’s dual mandates of maximum employment and price stability. Low unemployment and overall inflation readings near two percent supported the Committee’s decision not to change the target range for the federal funds rate.

Fed Chair Expects Strong Economy To Continue

Federal Reserve Chair Jerome Powell said in a scheduled press conference that he and his colleagues in the Federal Open Market Committee are confident that strong economic conditions will prevail over the next few years. Mr. Powell said that the Fed expects the national unemployment rate to remain near a 50-year low at approximately four percent; he said that the national unemployment rate is expected to remain low in the near-term. Chair Powell said that the economy has remained strong for 11 years; this is the record for the longest run of positive economic conditions.

Inflation remains below the Fed’s objective of 2.00 percent; Chair Powell said that the overall inflation rate averaged 1.30 percent, but core inflation, which excludes volatile food and energy sectors averaged 1.60 percent. Chair Powell said that the core inflation reading was a more reliable indicator of long-term inflation.

Jobs and wages increased in lower to middle-income communities, but the business and manufacturing sectors weakened. Mr. Powell suggested that the Fed would leave interest rates unchanged in 2020 unless economic and news events indicate that a change in the current monetary policy becomes necessary.

 

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Case Shiller, FHFA Report Uptick In Home Price Growth In September

December 4, 2019 by

Case Shiller, FHFA Report Uptick In Home Price Growth In SeptemberCase-Shiller’s National Home Price Index showed 3.20 percent national home price growth in September, which was 0.10 percent higher than August’s reading of 3.10 percent. The 20-City Home Price Index showed the continued impact of exorbitant home prices on both coasts as home price growth slowed in high-cost areas and smaller markets experienced upward pressure on home prices as home buyers were seeking affordable homes.

Phoenix, Arizona led the 20-City Home Price Index with 6.00 percent year-over-year growth in September. Charlotte, North Caroline had 4.60 percent growth in home prices and Tampa, Florida rounded out the three cities with highest year-over-year home price growth with 4.50 percent growth. The 20-City Home Price Index has documented migration of home buyers away from prime metro areas to interior and southern states. Analysts said that lower mortgage rates helped affordability in some cases, but home price growth outpaced stagnant wage growth and inflation.

FHFA Data Shows Home Buyers Leaving High Priced Areas

Federal Housing Finance Agency reporting for the third quarter of 2019 supported Case-Shiller’s trends. Home prices in mid-sized cities are rising as buyers relocate to areas where home prices are accessible to moderate-income buyers. FHFA reported year-over-year price growth for homes owned or financed by Fannie Mae and Freddie Mac slipped to 4.90 percent. This was the first time home price growth dipped below 5.00 percent growth since 2015.

FHFA reported home prices in Boise, Idaho grew by 11.10 percent year-over-year; home prices in Tucson, Arizona grew by 10.30 percent year-over-year in the third quarter. Lynn Fisher, a senior economic advisor for FHFA, said that home price growth rates in California and New York were lower than the national average.

The top three states with the largest year-over-year home price growth rates in the FHFA 20-City HPI were Idaho with 11.60 percent; Maine and Arizona tied with Utah with 7.90 percent home price growth. States with the lowest rates of home price growth were Illinois with 1.90 percent year-over-year growth, Connecticut reported 2.20 percent home price growth and Maryland home prices rose by 2.40 percent. FHFA reported that home prices have risen for 33 consecutive quarters; this is good news for homeowners, but also creates affordability challenges for would-be buyers facing high home prices and strict mortgage qualification standards.

Be sure to consult with your trusted Realtor and home mortgage professionals regarding your real estate concerns and transactions.

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3 Pros And Cons Of Renting Or Owning A Home

April 2, 2019 by

3 Pros And Cons Of Renting Or Owning A HomeHome ownership is highly valued in our culture. However, buying a home isn’t the best decision for everyone. Examine the differences between owning and renting your home to help you decide if now is the time to buy.

Effect On Flexibility

Renters enjoy more freedom than homeowners. After the leasing period ends, renters are free to walk away and find a new place to live. Homeowners, on the other hand, are at the mercy of the market. Depending on the conditions, owners might have a hard time selling their property quickly. It also takes a lot more paperwork to sell a home than it does to end a lease.

Those who don’t have plans to stay settled for at least a few years might be better off renting their homes. If circumstances suddenly change, they have more options than heavily-invested homeowners.

Financial Concerns

Home equity is a huge perk of ownership. A home equity line of credit gives homeowners a source of quick cash for emergencies or to take advantage of investment opportunities. These loans come with friendly options that make them ideal funding for a variety of situations. 

It’s a myth that renting is more expensive than owning without taking home value appreciation into account. When monthly expenses are compared side-by-side, owners invest more of their income into their living space than renters.

Beyond monthly mortgage payments, homeowners are responsible for insurance, property taxes, and utilities like garbage and water that are generally included in rental prices. In addition, homeowners bear the full cost of maintenance and repairs.

Owning a home can be a safeguard against harsh financial circumstances and give the opportunity for the appreciation of home value. However, for those who are currently cash-strapped, renting may be the more wallet-friendly choice.

Your Lifestyle

When things go wrong, renters can rely on their landlord or management company to coordinate and facilitate repairs. Homeowners, however, are solely responsible for handling the condition of their property. Besides the financial costs, it can take hours of research and dirty work to preserve your residential property.

If you enjoy handiwork, the chores associated with home ownership aren’t such a big deal. For the more technically challenged, however, taking care of a home could become a hassle.

Be honest about your abilities, interests, and resources before you commit to a home purchase.

If you are considering a new home purchase, be sure to contact your trusted home mortgage professional to find out about your financing options and to get pre-approved.

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Are Multi-Unit Properties the Right Move for You?

March 27, 2019 by

Are Multi-Unit Properties the Right Move for YouReal estate isn’t a one-size-fits-all pursuit. Buying and renting multi-unit properties is one of the ways investors build residual income while increasing their property portfolios. However, multi-unit rentals come with some unique challenges. Are you ready to manage a multi-unit rental property?

Ask yourself these questions to help you decide which path best fits your resources, goals, and interests.

Do You Plan To Live On The Property?

Living in one of your rental units offers a myriad of benefits. First, you get to keep a close eye on building conditions and the actions of your renters. Next, you’ll be able to respond quickly to an emergency. Last, you won’t have to pay extra for your own living quarters. You won’t have this option with single-occupancy properties.

Will You Work With A Property Management Company?

If you are more of a hands-off investor, a property management company makes owning properties simple. Their staff will collect the rents, respond to requests for maintenance and repairs, and take care of all the paperwork that comes along with rental units.

All you need to do is collect your portion of the payments and keep up with your bank loans. You can still work with a property management company if you opt for single-family properties. However, it may not be the most cost-effective solution in that situation.

Are Market Conditions In Your Area Changing Quickly?

When rental prices go up, it can be difficult for investors to take advantage. Long-term occupants may balk at the idea of paying more for the same property. With multi-unit buildings, you can raise prices as tenants vacate. In this way, you can keep your current occupants happy without sacrificing potential profits.

Are You Looking For More Ways To Increase Your Income?

Multi-unit properties are a unique opportunity for enterprising investors. Rent out space under stairways or in common areas to vending machine companies. Your residents get convenient snacks and you earn a little extra cash each month. A coin-operated laundry room is another addition that adds value for your residents while increasing your own payouts.

Managing a multi-unit building means more paperwork, maintenance, and marketing. However, the potential profits might be worth it. Take some time to review your own goals and abilities before committing to a purchase.

Be sure to consult with your trusted real estate and mortgage professionals to find out more information about purchasing multi-unit rentals.

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Case-Shiller: Home Price Growth Slows to 20-Month Low

October 31, 2018 by

Case-Shiller Home Price Growth Slows to 20-Month LowHome price growth slowed to its lowest rate in 20 months according to the 20-City Home Price Index issued by Case-Shiller. After years of dismal readings, Las Vegas, Nevada led the cities included in the index.

Top three cities for August included Las Vegas, Nevada where year-over-year home prices grew by 13.90 percent. San Francisco, California saw home prices increase by 10.60 percent year-over-year and Seattle, Washington home prices rose by 9.60 percent year-over-year. August’s 20-City Home Price Index overall reading fell below six percent for the first time in a year.

Cooling Home Price Growth Helps Balance Housing Markets

Cooling home prices have been forecast for months, but August’s reading indicated that home prices have peaked and that current home price growth rates may ease pressure on overheated real estate markets, where high home prices, limited inventories of homes for sale and rising mortgage rates have limited buying opportunities. Home price growth remained above current rates of wage growth and inflation, but slower appreciation of home values will help balance the housing market from an extreme sellers’ market to more moderate market conditions.

Rising Mortgage Rates Not Sole Cause of Easing Home Prices

Dallas Federal Reserve President Robert Kaplan recently said that rising mortgage rates were not the only cause of slowing growth of home prices. Mr. Kaplan said that multiple factors including rising building costs, labor shortages and rising mortgage rates combined to ease record demand for home; Mr. Kaplan said that the Fed is closely monitoring the economy and housing markets and mentioned that he had previously forecast slower housing markets as 2019 approaches.

Recent stock market sell-offs boosted the 10-year Treasury note price, but this momentum appears to be settling. Fixed mortgage rates are connected to yields on 10-year Treasury notes. Yields rise as note prices decline. Mortgage rates rise as the 10-year Treasury yield rises. While nothing is set in stone, this situation indicates that mortgage rates could continue to rise.

Rising mortgage rates and strict mortgage lending requirements have barred home buyers concerned with affordability and less than perfect credit profiles. As prospective home buyers abandon their home searches, demand for homes should ease and may further reduce gains in home prices.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted mortgage professional to discuss current financing options.

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NAHB: Builder Confidence in Housing Market Ticks Up in October

October 23, 2018 by

NAHB Builder Confidence in Housing Market Ticks Up in OctoberHome builder confidence in national housing market conditions rose one index point for a reading of 68 in October. Readings over 50 indicate that most builders are confident about market conditions. Rolling three-month averages showed mixed results. The Northeastern region gained three points for an index reading of 57; the Midwestern region lost two index points with a reading of 57 and the Southern region posted a gain of one point with a reading of 70. The Western region held steady at 74.

Readings for sub-categories of the Housing Market index showed a one-point gain to 74 for current market conditions, Builder confidence in market conditions over the next six months also gained one point for a reading of 75 index points. Builder confidence in buyer traffic rose four points to 53. This was remarkable as historical readings for buyer traffic rarely rose above the benchmark reading of 50.

Demand for Homes Rises

The National Association of Home Builders reported that demand for homes increased regardless of high home prices, rising mortgage rates and low inventories of available homes. Labor shortages and high cost of buildable lots continued to weigh on builder confidence. Analyst predictions that home prices have peaked did not impact October’s builder confidence readings.

Home Builders Look Toward Affordable Housing

When the current housing boom started, builders concentrated on building high-end homes as cash buyers and investors fueled demand. Home prices rose quickly as inventories of homes for sale dwindled; first-time and moderate-income home buyers were sidelined as affordable homes were quickly snapped up. Strict mortgage qualification requirements presented challenges to buyers with credit problems. Consumers struggle with home price growth that exceeds inflation and wage increases.

As analysts report that home prices may have hit their peak the highest reading for builder confidence in recent months was 74 in December 2017. Slowing increases in home prices have signaled builders that favorable housing market conditions may have reached a tipping point. If another recession occurs, those who bought their homes at the top of the market and who have little equity are most at risk. Analysts cited high priced coastal areas as ripe for this risk. Meanwhile, builders are looking to create more affordable housing in response to signals of slowing growth in residential real estate markets.

Contact your trusted mortgage professional to find out about about the market trends specific to your area and how those conditions may impact your financing options.

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Foreclosure Rates Expected To Dip Below 12-Year Low

October 10, 2018 by

Foreclosure Rates Expected To Dip Below 12-Year LowThe record-setting pace of the U.S. economy continues to positively impact the housing market and home foreclosures now stand at an astonishing 12-year low.

Coming off a GDP growth rate of 4.1 percent and a historic bull stock market run, everyday Americans appear to be benefiting from one of, if not the strongest economies in decades. According to data compiled by CoreLogic, mortgage delinquency rates continue to improve and are already at the lowest levels in 12 years.

Building on last year’s national trend, foreclosures and mortgages more than 30 days past due declined to 4.2 percent in May. Other analytics show that mortgages at some stage in the foreclosure process also dipped by.02 percent from May 2017 to 2018. With a low 5-percent national foreclosure rate, the industry enjoys its best forecast since September 2006.

Some Housing Markets Lag Behind

While the country appears to be immersed in an economic revival, areas impacted by severe weather and hurricanes have not quite shaken off their impact.

“Serious delinquency rates continue to remain lower than a year earlier except in Florida and Texas, the hardest-hit states during last year’s hurricane season, CoreLogic president and CEO Frank Martell reportedly said.

There are also regions unaffected by hurricanes that are also lagging behind the strengthening conditions, according to research by ATTOM Data Solutions.

  • Foreclosures increased in eight states and the District of Columbia through the first half of 2018.
  • The District of Columbia suffered the worst foreclosure rate in the nation with a 60-percent increase over 2017.
  • Foreclosures increased in only 28 of 217 metropolitan housing markets studied. Oklahoma City topped the list with a 22-percent uptick.
  • Through June 2018, New Jersey endured the highest state foreclosure rate, with.99 percent of all properties in foreclosure.

According to ATTOM, Atlantic City, Trenton, Philadelphia and Chicago topped the list of total foreclosures during the first half of 2018.

2019 Foreclosure Predictions

History makes an excellent teacher and the wildfires destroying California communities are expected to negatively impact home ownership.

“While the strong economy has nudged serious delinquency rates to their lowest level in 12 years, areas hit by natural disasters have had increases,” CoreLogic chief economist Frank Nothaft reportedly said. “The tragic wildfires in the West will likely lead to a spike in delinquencies in hard-hit neighborhoods.”

“As an example, the wildfire in Santa Rosa last year destroyed or severely damaged more than 5,000 homes,” Nothaft reportedly said. “Delinquency rates rose in the aftermath, and in the ensuing months we observed home-price growth accelerate and sales decline. We will likely see the same scenario unfold in fire-ravaged communities this year.”

While America’s collective hearts go out to the families displaced by the California wildfires, the positive economic trends are expected to continue in much of the country.

CoreLogic’s Nothaft predicts foreclosure and delinquency rates to decline even further. Heading into 2019, positive numbers could upstage the current 12-year low and reach levels not seen in upwards of 15 years.

Contact your trusted home mortgage professional to find out about the current trends and rates in your area.

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3 Generations Top Housing Market Trends

July 24, 2018 by

3 Generations Top Housing Market TrendsHistorians like to say that those who do not learn the lessons of the past are doomed to repeat them. In the real estate industry, the chances of that happening are slim because agents and other professionals follow market trends closely.

That being said, a careful examination of 2017 market trends and other factors can help highlight where the housing market is headed. Consider these top trends when deciding about whether to buy or sell a property.

Millennials Scooping Up Homes

According to resources such as Zillow, the low inventory and emergence of Millennials in the home-buying market helped break records last year. Millennials comprised upwards of 34 percent of the market and about two-thirds of them were reportedly first-time home buyers.

Given the shortage of entry-level homes for this demographic, 2018 and 2019 should have them in the driver’s seat in terms of buying trends. Although home prices are expected to rise in the single digits during the foreseeable future, the second wave of Millennial home buyers are likely to take a big bite of listed properties.

As this group moves into their mid-30s, expectations are that last year’s 34 percent turns into about 43 percent of homes purchased. Millennials appear to be setting the pace.

Gen Z Home Buyers Expect Smarter Homes

Consider those born between 1995 and 2001 are adults or on the cusp of becoming adults. The front end of Generation Z is graduating college and looking for starter homes. This group is bound and determined to be different and they were basically weaned on technology.

Tech-friendly kitchens, lights and home-integrated devices have been trending and this demographic is likely to make them a priority when buying a home. Homeowners who are considering updating to a so-called “Smart Home” could be rewarded with resale value once Gen Z enters their collective mid-30s. Smart homes are trending and could go vertical with Gen Z buyers.

Generation X Returns From Great Recession

The housing crisis of 2007-09 put upwards of 10 million Americans out of their homes. Forced into foreclosure and bankruptcy, the financial aftermath of that catastrophe is coming to an end.

Those that filed for bankruptcy during the crash are in position to put their rebuilt credit to work. According to reports, approximately 1.5 million people could become eligible to re-enter the housing market in 2019.

A large portion of these potential returning homebuyers fall into the Gen X age group. They are likely to be savvier than the first time out. Many of these 50-somethings are expected to be frugal and cautious value buyers that could target properties that are traditionally considered starter homes. Regardless of how the trend plays out, Gen X is coming to a housing market near you.

If these emerging trends indicate anything, it’s that the shortage of homes on the market will only get tighter. Several large emerging demographics and returning buyers are going to speed an already fast-selling market. The trending idea may be to buy a home in today’s market and save money.

Contact your trusted mortgage professional for a pre-approval and get started looking for the house of your dreams!

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