Tandy On Real Estate

Category

Housing – Resale

Smaller Homes are on the Rise

The average square footage of homes has been on the rise for a decade. We are seeing a shift in this as builders begin to cater more to the first-time homebuyer market. The U.S. Census Bureau reports show that the average new home size is now decreasing. According to Rob Chrisman, the average square footage has decreased slightly due the rise in first-time homebuyers and empty nesters and the rise in townhome and condo popularity.

Lew Sichelman of The Housing Scene describes this new trend in “The Shrinking House”. The average size of all completed single-family dwellings in 2018 was 2,588 square feet. But that figure is on a downward trajectory. In 2017, the average size was 2,631 square feet. Lew reports that builders are still building monster houses too. Last year, three out of every ten new houses were at least 3,000 square feet, and of those, 10 percent were at least 4,000 square feet, according to the U.S. Census Bureau.

This decrease in the average home size, as is all real estate, seems to be cyclical the National Association of Homes Builders (NAHB) Chief Economist Robert Dietz explains. “Typical new-home sizes fall prior to and during a recession, as homebuyers tighten budgets, and then rise as high-end buyers … return to the market in relatively greater proportions.”

For ten years we have reduced our construction of single-family and multifamily homes, but our population growth continues. The Nation’s Homebuilding Forecast panel at the National Association of Real Estate Editors Conference, explained that “this has been a crazy experiment. Builders are just now getting back into full swing years after the financial crisis.” There are intense constraints, including labor shortages, rigorous regulations, and more expensive building materials, placed on the builder market. With these pressures, builders are trying to navigate the waters to build what will sell profitably. The National Association of Home Builders (NAHB) believes their members will be adding more entry-level homes to their inventory, and potentially cutting square footage to reduce costs, which is indicative of the most recent reports.

Millennials are getting priced out of the market, yet prefer amenity-rich homes

There is a big demand for housing, a low supply of inventory, and the end result is artificially increased home prices due to the scarcity. This demand is causing starter-home buyers and lower-income families to be priced out of the market. The solution is to build more, build smaller, and build cheaper with fewer amenities. This is not exactly what the millennial buyer prefers over other generations as they continue to seek out more lifestyle features like whirlpool tubs and specialty rooms (exercise, media and game rooms).

I grew up in a three-bedroom, one-bath home with formica countertops, shag carpeting and wood paneling. No granite counters, tile floors, twelve-foot ceilings, or storage. And, I did not feel I missed out. We may need to bring this type of home product back or a reimagined version of it to create affordable homes for the first-time home buyer. A starter is just that, a start.

Certainly, the housing market will continue the trend to build smaller. The evidence is already pointing to this happening. We will also need to utilize land more efficiently opting for more multifamily development which we here in Austin, TX are certainly seeing.

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SOURCES:

Mortgage News Daily – http://www.mortgagenewsdaily.com/channels/pipelinepress/08132019-mortgage-rates.aspx

RobChrisman.com – https://www.robchrisman.com/aug-13-ops-cap-mkts-ae-lo-jobs-broker-dpa-products-aug-events-mortgage-rates-slow-to-drop-why/

UExpress – https://www.uexpress.com/housing-scene/2019/8/9/the-slowly-shrinking-house

The National Association of Home Builders – https://www.nahb.org/

The National Associations of Home Builders – http://eyeonhousing.org/2019/08/homebuyer-preferences-millennials-vs-other-generations/

Worldometers – https://www.worldometers.info/world-population/

The Impact of Investors on Single-Family Homes

Last year the number of home sales bought by investors was at a two-decade high. Interestingly, this growth was not from large institutional investors according to CoreLogic, but by small investors getting into the real estate investment game purchasing starter homes.

We are in a new era of investors being a bigger player in the US housing market. As we enter 121st month of an expansion, it’s reasonable to project we may be nearing the end before we have some type of economic correction. Normally investors begin to pull back their activity but instead, we see they are buying 1 in 5 starter homes.

Here is an investor snapshot provided by CoreLogic:

  • By the end of 2018, the investment rate in the U.S. housing market reached 11.3% – the highest rate since CoreLogic started tracking these data in 1999. 
  • Smaller investors are responsible for increasing investor homebuying activity. This is in sharp contrast to the rise in large institutional investors in the years following the recession. These so-called “mom-and-pop” investors grew from 48% of all investor-purchased homes in 2013 to more than 60% in 2018.
  • Large investors – those who purchased more than 101 homes – nearly doubled their activity between 2000 and 2013 but have pulled back since the foreclosure crisis and now sit at 15.8% of purchases. 
  • Real estate investment heads east. Investor homebuying rates vary sharply across the country, with the highest rates east of the Mississippi River and the lowest rates to its west. Each of the top 10 metros with the highest investor purchase rates is in the eastern half of the country, with Detroit, Philadelphia and Memphis, Tennessee leading the pack at 27%, 23.3%, and 19.7%, respectively. Just two of the top 10 are western markets, with Des Moines, Iowa and Oklahoma City, Oklahoma at 18.7% and 17.2%, respectively.
  • The five markets with the least amount of investor activity are all west of the Rockies, including Ventura, California, Boise, Idaho, Oakland, California, San Jose, California and Sacramento, California at 4.8%, 4.8%, 5.1%, 5.2% and 5.3%, respectively.
  • Not surprisingly, Investors are attracted to high-rent markets.
  • Markets that witnessed an increase in the share of active investors also experienced a similar increase in how fast homes were selling. Does this mean investors snapped up supply that would have otherwise been bought by owner-occupiers? Maybe, but the evidence isn’t conclusive because there’s a possible chicken-or-egg relationship between the two. While an uptick in investors into a market perhaps increases competition and lowers supply relative to demand, the opposite is also possible: markets with tightening supply could draw investors as they perceive markets with a dwindling supply to be safer bets than those with more plentiful supply.

As investors continue to purchase more properties, home prices increase. In May, the median price of existing homes was $277,700, up 4.8% from a year earlier, the National Associations of Realtors reported. For single-family homes, the median price was $280,200, up 4.6%.

NPR recently reported, “The pool of smaller, affordable starter houses is low. And increasingly, first-time homebuyers are competing with investors who are buying up these homes. Investors tend to buy cheap homes with the goal of renovating them and putting them back on the market at a higher price, or renting them out.”

At the National Association of Real Estate Editors Conference in Austin, TX, Ralph McLaughlin of CoreLogic explained that Investors are targeting the starter homes. CoreLogic cannot determine from the analysis they did if Investors are in fact displacing first-time homebuyers as many news outlets are reporting. Investors may be taking the homes that the first-time homebuyer wouldn’t actually buy. They may require too much work. The only time there would be competition with first-time homebuyers would be on a turnkey home, and for those that are buying and holding the home. If they are putting a property in circulation for rental, that is still putting a home in the supply and increasing the supply, which is a good thing for the housing market. Detroit and Philadelphia, Baltimore and Memphis have seen the biggest increase in real estate investment.

Do you see your home as an investment?

For most of my career, I have said that a home purchase is the largest investment you will make in your life, and here in Texas, for the most part this remains true as we have a relatively stable market with continuing, reasonable home value increases. MoneyUnder30.com gives us 7 reasons we should consider our homes as their primary function, shelter, versus an investment. Here are their reasons why a home is not an investment:

  1. It’s not an investment just because it appreciates. A true investment requires more than the prospect of an increase in value.
  2. A house has a more primary purpose – shelter. With a true investment you can generally control the timing of your sell, but with a home as an investment you have many factors to consider and often have no control over your timing of buying and selling. Life happens.
  3. A house cannot be an investment if you never plan to sell it. The most effective and efficient way is to sell the house after it has experienced a significant amount of price appreciation. However, selling a house is highly disruptive because it means you have to move. More significantly, when you do sell, you will most likely have to use the equity from the sale to purchase the next house. After all, you will be moving from one residence to another. This means that in a real way, home equity is trapped equity.
  4. Thinking of your house as an investment can lead to equity stripping. Many borrow money out their homes in the form of HELOCS, taking equity out of their home/investment.  This is a great tool for leveraging your equity, but as many saw in the housing decline, when home values are flat or decline, homeowners will no longer have equity in their homes. Placing them in a negative position.
  5. The carrying costs of a house are too high for it to be an investment.
  6. Your house won’t generate cash flow, unless it is a rental or multi-family.
  7. Appreciation is the magic ingredient, but it’s not guaranteed.

With the rise and fall of future home valuations, when the homes values increase people see their homes as investments, but as we remember from the past housing crisis, those areas that saw significant home value declines, the homeowners saw their home as more of a liability than an investment.

No matter, how you see your home, as a wonderful home to raise your family or as an investment, or if you see yourself as a potential real estate investor, it is important to understand the market and the economics of the house, and to approach home ownership from a place of understanding. To receive more posts like this from Tandy on Real Estate updates direct to your inbox, please subscribe.

SOURCES:

CoreLogic – https://www.corelogic.com/blog/2019/06/special-report-investor-home-buying.aspx

NPR – https://www.npr.org/2019/06/21/734357279/1st-time-homebuyers-are-getting-squeezed-out-by-investors

National Association of Realtors – https://www.nar.realtor/newsroom/existing-home-sales-ascend-2-5-in-may

The Week – https://theweek.com/articles/848222/making-house-investment-social-poison

CNBC – https://www.cnbc.com/video/2019/06/24/are-investors-pricing-out-first-time-home-buyers.html

Wall Street Journal – https://www.wsj.com/articles/investors-are-buying-more-of-the-u-s-housing-market-than-ever-before-11561023120

MoneyUnder30.com – https://www.moneyunder30.com/why-your-house-is-not-an-investment

Now Is The Time To Buy In Austin

The time to buy a home in Austin is right now. With low interest rates and potentially climbing home prices, there is a limited window of opportunity in our hometown to capture a great deal, whether you are buying or refinancing.

Low rates

Interest rates will NEVER be lower than they are now. The 3.5% historically low interest rates we have been experiencing were artificially created by the Fed’s quantitative easing, and this has been terminated. According to Freddie Mac, they expect to see the 30-year fixed-rate mortgage to continue its downward trend, averaging 4.3% in 2019, before increasing to 4.5% in 2020.

With this, we are projecting a steadily growing housing market. Freddie Mac reports, “After increasing throughout April, mortgage rates declined at the start of May. The combined positive impact of low mortgage rates, a strong labor market, low unemployment, and modest wage growth supports our forecast for a steadily growing housing market in 2019.”

Lower rates should give a boost to the housing market, as seen with an upswing in both existing and new home sales. 

Rising demand

Austin typically has a high home demand, but we will be seeing an even bigger increase in housing demand as tech companies continue to increase their hiring over the next three years. With Austin’s unemployment rate at an all-time low of 2.3%, job postings continuing at their historic high and the many announcements of relocations and expansions including Apple’s 15,000 employee expansion and Google’s 5,000 employee expansion, demand for housing and therefore the home prices will continue to increase over the long term. 

According to AustinHomeSearch.com, “Central Texas REALTORS® remained busy after strong first-quarter sales, with the number of April home sales skyrocketing almost 15% in the Austin-Round Rock Metropolitan Statistical Area (MSA) over the same period last year. However, because the median sales price increased by a much narrower margin, results signal market prices stabilizing, according to the Austin Board of REALTORS® April 2019 Central Texas Housing Market Report. In April, the median home price in the five-county Austin-Round Rock MSA increased 1.6% to $320,000. Home sales increased year over year by 14.9% to 3,035 sales; sales dollar volume increased 14.1% to $1,207,238,711. During the same period, new listings decreased 1.8% to 4,018 new listings, while active listings increased 1% to 6,217 active listings. Pending sales jumped 14.3% to 3,588 pending sales. Housing inventory in April remained unchanged at 2.4 months of inventory.”

If you are sitting on the fence, now is the time to make the move.

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SOURCES:

Freddie Mac – http://www.freddiemac.com/pmms/

Freddie Mac – http://www.freddiemac.com/research/forecast/20190515_steady_growth.page?

Austin Chamber of Commerce – https://www.austinchamber.com/economic-development/business-climate/relocation-expansions

AustinHomeSearch.com – https://www.austinhomesearch.com/pages/austin-market-update

Finally, More Millennials Are Buying Homes

According to Housingwire Millennials are finally buying homes. Ben Lane reported, “Back in September, after existing home sales fell to a three-year low, it appeared that many younger would-be buyers were turning to renting instead of buying. But things look much different just a few months later.”

The increase is being driven by younger buyers under the age of 44, and yes, that includes the older portion of Millennials. Homeownership among buyers age 35 and under rose from 36% to 36.5% in the last year, while homeownership for those from age 35-44 rose from 58.9% to 61.1% in the same time frame. According to CoreLogic’s Ralph McLaughlin, young households, which represent the largest pool of potential homebuyers in the United States, are starting to enter the homeownership game.

Millennials may have been slow to start, but that seems to be changing. Historically, Millennials have been reported to:

  • Have delayed marriage having kids, but that is finally happening.
  • Wanted to enjoy more experiences than traditional activities of buying a home – but that’s changing.
  • Been happy/content living at home, but they are finally getting tired of that or getting kicked out.
  • Have had student debt challenges, but are finally making enough to be able to handle a home debt. 

By the end of 2018, Millennials represented 45% of all new mortgages, compared to 36% for Generation X, and 17% for Baby Boomers, Realtor.com reported to Housingwire. Millennials have now surpassed older generations in the total dollar amount of mortgages, and represent the largest dollar volume by age group. Javier Vivas of Realtor.com says Millennials are getting older, and have better jobs and deeper pockets, allowing them to get into home ownership. They are, however, focused on home affordability, and shocker, are not always picking the large metros as many may think. Instead, they are looking for strong job markets and lower cost options in more non-traditional areas, i.e. Buffalo, NY. In addition, Millennials consistently made lower down payments than other generations since 2015, which is not surprising as a first-time homebuyer.

More Positive News

In Q1 2019, the U.S. Census Bureau reports a flattening in homeownership at 64.2% year over year, breaking an eight quarter streak of gains. CoreLogic attributes this flattening to an uptick in renters, although owner household growth continues to outpace renters. Ralph McLaughlin of CoreLogic brings us a very positive trend change to watch in his April 25th article:

  • The first quarter of 2019 was the sixth consecutive quarter that owner-occupied households grew by more than a million, at nearly 1.1 million new owner households.  
  • The number of new renter households jumped by close to half a million. This is a significant change in trend, as renter households previously fell six out of seven quarters.
  • Total household growth remains remain strong, topping 1 percent for six straight quarters, and continues the most significant streak of household growth in more than 12 years.

McLaughlin reports that data shows increasing evidence that not only are young homebuyers indeed pursuing the American dream of homeownership, but solid household growth overall should continue to support healthy demand over the next two decades. An estimated 46 million new households under the age of 30 will push up demand for both owner and renter-occupied homes over the next two decades. Despite recent headwinds and signs of a market cooldown, these demographic fundamentals should lead to a healthy housing demand through at least 2040.

This is great news for the housing market.

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SOURCES:

Housingwire – https://www.housingwire.com/articles/48317-homeownership-rate-rises-to-four-year-high-as-millennials-are-finally-buying-homes 

CoreLogic – https://www.corelogic.com/blog/2019/04/homeownership-rate-flat-but-household-growth-booming.aspx

Pew Research – https://www.pewresearch.org/fact-tank/2017/05/05/its-becoming-more-common-for-young-adults-to-live-at-home-and-for-longer-stretches/

Housingwire – https://www.housingwire.com/articles/48259-millennials-have-officially-entered-the-housing-market

Realtor.com – https://www.realtor.com/homemade/fact-or-fiction-millennials-are-the-rent-generation/

U.S. Census – https://www.census.gov/housing/hvs/index.html

Spring Buying Season Is Here

Spring is here. Finally, after a long, cloudy and wet winter we have had a couple sunny days, the bluebonnets are starting to boom, allergies are on high alert, and the Spring buying season is starting. To help you prepare, here is a snapshot of the housing market forecast.

Freddie Mac recently reported, “Mortgage interest rates have been steadily declining since the start of 2019. These lower mortgage interest rates combined with a strong labor market should attract prospective homebuyers this spring and could help the housing sector regain its momentum later in the year.” This is great news as we approach our typical Homebuying Season.

Mortgage interest rates continue to decline

According to Primary Mortgage Market Weekly Survey mortgage rates have steadily declined after reaching a high of 4.94 percent in November of 2018. As of late-March, the 30-year fixed mortgage rate was 4.28 percent, its lowest level since February 2018.

Home sales to slowly regain momentum

Existing home sales nationally fell by 7 percent, to 5.32 million homes, in November compared with November 2017, according to the National Assoc­iation of Realtors. Lawrence Yun, chief economist for the National Association of Realtors, expects sales to be flat in 2019. This spring will be the best measure of whether the housing market is returning from very tight to normal, Yun says.

Freddie Mac reports, “existing home sales slumped to start the year, likely in part due to exceptionally cold weather in January and the temporary effects of the government shutdown. With mortgage rates down significantly from last fall, we expect to see existing home sales bounce back and trend higher for the rest of the year. However, our forecast indicates that total home sales (new and existing) will remain down at 5.94 million in 2019 since home sales are starting the year at such a slow rate, before increasing to 6.14 million in 2020.”

However, home sales for the Austin MSA increased 1.5 percent for 2018 vs 2017. Median home price increased 3.7 percent to $305,900. 

Housing starts
Freddie Mac reports, “Housing starts averaged 1.25 million in 2018. Due to the recent increases in building permits, we anticipate that total housing starts will gradually increase over the next two years with most of the growth coming from single-family housing starts. We forecast that total housing starts will increase to 1.27 million units in 2019 and to 1.33 million units in 2020.”

According to Moody’s Analytics, “homebuilders have been underbuilding for more than a decade. Builders have been hindered by labor shortages, community opposition to high-density projects and growing costs of land, labor and materials. Plus, they’ve been building at the mid-to-high end of the market, not at the entry level. But it’s not all bad news. Builders are offering in­centives to buyers, and they’re slowly starting to build smaller, lower-price homes that are more affordable.”

Locally, Austin single family building permits increased 4.6 percent in 2018 over the previous year. 

Home equity

CoreLogic Homeowner Equity Insights 4th Quarter Report continues to see a rise in home equity. “U.S. homeowners with mortgages (roughly 63 percent of all properties*) have seen their equity increase by a total of nearly $678.4 billion since the fourth quarter 2017, an increase of 8.1 percent, year over year.”

A look at home prices

Home prices started to soften in mid-2018. Kiplinger’s Personal Finance recently reported, “Prices will continue rising, but more slowly, as the housing market regains some balance between buyers and sellers.”

Freddie Mac similarly reports, “After accelerating in recent years, home price growth in the United States has continued to moderate. In line with recent trends, we have lowered our home price growth forecasts to annual increases of 3.5 percent and 2.5 percent in 2019 and 2020, respectively.”

To receive more posts like this from Tandy on Real Estate updates direct to your inbox, please subscribe.

SOURCES:

Freddie Mac – http://www.freddiemac.com/research/forecast/20190322_economic_growth.page?

Freddie Mac – http://www.freddiemac.com/pmms/

National Association of Realtors – https://www.nar.realtor/

Real Estate Center Texas A&M University – https://www.recenter.tamu.edu/data/housing-activity/#!/activity/MSA/Austin-Round_Rock

Moody’s Analytics – https://www.moodysanalytics.com/

Real Estate Center Texas A&M University – https://www.recenter.tamu.edu/data/building-permits/#!/msa/Austin-Round_Rock%2C_TX 

CoreLogic – https://www.corelogic.com/insights-download/homeowner-equity-report.aspx

Homeownership mortgage source: 2016 American Community Survey – https://www.census.gov/acs/www/data/data-tables-and-tools/data-profiles/2016/

MReport – https://themreport.com/daily-dose/03-25-2019/important-drivers-home-sales

Kiplinger – https://www.kiplinger.com/article/real-estate/T010-C000-S002-where-home-prices-are-headed-2019.html

The Student Loan Bubble and Path Forward for Graduates

America’s total household debt increased by $193 billion (1.5%) to $13.15 trillion in the fourth quarter of 2017 according to the Federal Reserve. Student loan debt ranks as the second largest household debt falling behind mortgage, and in front of auto loans, credit cards and home equity loans.

Household Debt and Credit Developments as of Q4 2017

*Change from Q3 2017 to Q4 2017

**Change from Q4 2016 to Q4 2017

A closer look at student loan debt.

44.5 million student loan borrowers in the U.S. owe a total of $1.5 trillion as of March 2018 according to the Federal Reserve. And, the average college graduate with a bachelor’s degree left school with $28,446 in student debt in 2016 according to Institute of College Access & Success. In 2018, the Federal Reserve Bank of New York, reports 37.5% of Americans with student loan debt are under the age of 30. Compared to 62.5% of Americans with student loan debt are 30 years old or older.

CNBC recently reported “average debt at graduation is currently around $30,000, up from $10,000 in the early 1990s. The country’s outstanding student loan balance is projected to swell to $2 trillion by 2022, and experts say a large portion of it is unlikely to ever be repaid; nearly a quarter of student loan borrowers are currently in a state of delinquency or default.”

Although outstanding student loan balances have increased, student loan delinquency flows declined slightly but remain at a high level, according to the Federal Reserve. NerdWallet reports the following status on student loan repayments, painting a grim picture for some borrowers.

  • 3.3 million federal loan borrowers have loans in deferment.
  • 2.6 million federal loan borrowers have loans in forbearance.
  • 4.7 million federal loan borrowers have loans in default.

Will the student loan bubble burst?

Robert Farrington with Forbes explains how the student loan bubble will not burst, but instead will cause a slow market stagnation that we will see over time. “Student loans are a collateral on earnings, as long as there is earning potential, the ability to have the loans quickly “pop” via any financial mechanism is rare. Yes, bankruptcy for student loan debt is possible, but once again – rare… The net effect of this student loan crisis won’t be a bubble popping – it will be slow drag on the economy.” Discretionary income that would traditionally go to consumer goods and household spending stimulated by homeownership will instead be going to student debt repayment because there simply is not a discretionary income. This could cause a decline for some industries.

How student loans effects home ownership.

Student debt significantly cuts into future homeowners’ budgets and for many, making it difficult to buy a home. According to the Federal Reserve for every 10 percent in student loan debt a person holds, their chance of home ownership drops 1 to 2 percentage points during their first five years after school. According to the National Association of REALTORS more than 80 percent of non-homeowner younger millennials (born between 1990-1998) cite student loan debt as delaying a home purchase, compared to 86% of older millennials (born between 1980-1989).

What does this mean for graduates today?

NerdWallet recently analyzed the most recent numbers and issues concerning graduates, and conducted a survey by The Harris Poll in May 2018. In analyzing the data, Brianna McGurran, NerdWallet Student Loans Expert, believes the outlook for graduates is not gloom and doom stating, “New grads are in the best position of all: They have the chance to save smart from the beginning.”

Here is what they found for the Class of 2018 Money Outlook:

  • Percentage of recent graduates with student debt: 45%
  • Percentage of recent graduates with student debt who believe they’ll be able to pay it off in 10 years: 39%
  • Age at which graduates of the Class of 2018 can expect to retire: 72
  • Age at which the Class of 2018 can expect to purchase their first home with a 20% down payment: 36

As with any loan, whether for a student loan or a home, approach it as an educated consumer, here are some tips for paying off student loans for future graduates.

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SOURCE:
https://research.stlouisfed.org/publications/page1-econ/2018/10/01/get-an-education-even-if-it-means-borrowing
https://www.nerdwallet.com/blog/loans/student-loans/student-loan-debt/
https://www.newyorkfed.org/microeconomics/databank.html
https://studentaid.ed.gov/sa/about/data-center/student/portfolio
https://www.nerdwallet.com/blog/2018-new-grad-money-outlook/
https://www.cnbc.com/2018/09/21/the-student-loan-bubble.html
https://www.federalreserve.gov/econresdata/feds/2016/files/2016010pap.pdf
https://www.federalreserve.gov/econresdata/feds/2016/files/2016010pap.pdf
https://www.forbes.com/sites/robertfarrington/2018/12/12/student-loan-bubble-wont-burst/#3f9bf00f6768
https://www.newyorkfed.org/newsevents/news/research/2018/rp180213
https://www.forbes.com/sites/robertfarrington/2018/11/27/student-loans-and-bankruptcy/#41ee1633f45d
https://thecollegeinvestor.com/9664/student-loan-bubble-looks-like/
https://www.bankrate.com/loans/student-loans/repay-college-loans-fast/

Housing Affordability

A dramatic shift has taken place over the last 7 years in housing affordability.  Home prices in Travis County under $150,000 have dropped from 27% to 2.6% of all sales.  In Williamson County, the drop has been more dramatic going from 36.5% to 2.2%.  And in Hays County, still more so, A dramatic shift has taken place over the last 7 years in housing affordability.  Home prices in Travis County under $150,000 have dropped from 27% to 2.6% of all sales.  In Williamson County, the drop has been more dramatic going from 36.5% to 2.2%.  And in Hays County, still more so, going from 42.3% to 3.2%.
In the $150,000 to $250,000 range, home prices also decreased 30.2% to 24.2% and 43% to 37.4% in Travis and Williamson respectively.  The percentage of homes in this price range increased in Hays County going from 31.1% to 44.7%.

Travis County Stats

Travis County Stats

Williamson County Stats

Williamson County Stats

Hays Stats

Hays Stats

Source: Real Estate Center at Texas A&M

Austin Ranks No. 1 on Nation’s Best Places to Live

Two years running Austin is number one on the nation’s Best Places to Live according to U.S. News and World Report. For those of us who are Austinites and who are working in real estate, we know this to be true.

Austin took the lead again in the magazine’s 2018 edition of its Best Places to Live in the U.S. list, which ranks 125 major metro areas in four categories including desirability, value, job market, quality of life and net migration.

Check out the Top 10 cities.

2018 Top 10 “Best Places to Live”

  1. Austin
  2. Colorado Springs, Colorado
  3. Denver
  4. Des Moines, Iowa
  5. Fayetteville, Arkansas
  6. Portland, Oregon
  7. Huntsville, Alabama
  8. Washington, D.C.
  9. Minneapolis-St. Paul, Minnesota
  10. Seattle

“When deciding on a place to settle down, it’s important to understand that where a person lives can impact their well-being,” said Kim Castro, executive editor at U.S. News. “U.S. News created the Best Places to Live to highlight areas across the country that have the characteristics residents are looking for, including steady job growth and affordability. The top-ranked places are areas where citizens can feel the most fulfilled socially, physically and financially.”

And, Austin is not stopping it’s growth, according to the Austin Business Journal Austin’s population keeps growing. In fact, there were 151 additions to the population a day in 2017, down only slightly from 159 in 2016.

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SOURCE:
https://www.cnbc.com/2018/04/10/us-news-world-report-the-10-best-places-to-live-in-the-us-in-2018.html
https://realestate.usnews.com/places/texas/austin
https://www.bizjournals.com/austin/news/2018/04/10/austin-no-1-again-on-revered-best-places-to-live.html?ana=e_ae_set1&s=article_du&ed=2018-04-10&u=CuOUKGCJY978Qy2wnhw9SA0f338830&t=1523397950&j=80955401
https://www.bizjournals.com/austin/news/2018/03/22/austins-population-keeps-popping-heres-how-many.html

Millennials dive into home ownership

I believe that there are many misconceptions when it comes to Millennials. We have all heard that Millennials are renting longer or live with their parents for a longer amount of time than previous generations, and that they have issues with student debt. These factors, to the general eye, would make it appear that Millennials are not interested in home ownership. But, from my research and experience, this is only part of the story.

So, what gives? According to NerdWallet and their review of recent industry surveys and data from government agencies and corporations “a majority of millennials would prefer owning to renting, but they appear to be postponing homeownership because of real and perceived difficulties in affording it. In fact, our analysis found that millennials, those born from 1981 to 1997, look upon owning a home just as favorably as previous generations.”

Here are a few facts on Millennials and homebuying from NerdWallet:

  • U.S. millennials total 66 million individuals and 24 million independent households.
  • The median age for first-time homebuyers has remained virtually unchanged for the past 40 years: In 2015 it was 31 years old, compared with 30.6 in 1970-74.
  • Two-thirds of millennials haven’t reached that homebuying age of 31, and 22% are under 25 years old.
  • Millennials are renting for a median of six years before buying, compared with a median of five years for renters in 1980.
  • Millennials are expected to form 20 million new households by 2025.
  • The median income for a millennial older than 25 is $38,220.
  • Meanwhile, the number of millennials living with their parents has increased nearly 15% from 2006 to 2013.

Here are a couple positive signs:

  • According to Javier Vivas, manager of economic research for Realtor.com, “Millennials’ home search is on.” Millennials recently became the dominant group of users searching for homes on Realtor.com.
  • Both the National Association of REALTORS® and Gallup Poll surveys of Millennials have shown that Millennials believe real estate is a good long-term investment, that they intend to become homebuyers and are increasingly choosing to buy a home.
  • Americans owe over $1.4 trillion in student loan debt with the average Class of 2016 graduate having $37,172 in student loan debt, up six percent from last year according to com. This can be a contributing factor to delaying home ownership as just released by CNN Money. This, of course, is not good news. The positive side of it is that “with student debt on the rise, there’s been a lot of speculation about whether the cost of a college degree hurts an individual’s ability to buy a home,” says NerdWallet’s Ling. “From what we’ve seen, getting a four-year degree or higher is actually positively associated with homeownership — even when accounting for debt.”
  • CNN Money reports that, “Millennials are the largest group of homebuyers. In January, Millennials represented around 45% of all purchase loans, up from 42% the same month in 2016.” Per CNN Money, Millennials are diving into home ownership, but “the struggle can be real”.

When NerdWallet asked Millennials what they believed were the biggest obstacles to getting a mortgage, millennial renters gave these answers, in order:

  • Insufficient credit score or history
  • Affording the down payment or closing costs
  • Insufficient income for monthly payments
  • Too much existing debt

For many millennials, the data NerdWallet analyzed reveal that these reasons may be more perception than reality. The important thing is to look at your financial position, make positive changes/plans to prepare for responsible home ownership through personal fiscal responsibility.

Millennials have a few things to consider when buying a home:

  • Increasing rents make home ownership more attractive. Money saved was the reason 21% of millennials chose to buy a home per Ellie Mae’s Owners’ Key Insights.
  • This buying season Millennial first-time homebuyers will be up against seasoned repeat homebuyers who have already started their home search last year, so it is good to start the search early and be prepared. Make sure you set your budget and get pre-qualified. Check out the Consumer Financial Protection Bureau(CFPB) Home Loan Toolkit to get started.
  • The home inventory shortage means rising home prices which bring into account home affordability. In response to what is stopping you from buying a home 45% haven’t saved enough for a down payment per Ellie Mae’s 2017 Borrower Insights Survey. CNN Money recommends that Millennials move home for two years to save money, reduce their debt and save for down payments.
  • Lending requirements have tightened. Understand your budget and what you will need to save for your down payment. Click here for Zillow’s Home Affordability Calculator.
  • Interest rates are great for home buying. Rates have gone up 3 times since 2015, but even with these increases rates still make home ownership very attainable.

I am excited to see the rise in home search and ownership in millennials. As with anyone approaching home ownership, it is good to make sure you are an educated buyer, that you understand what you are getting into, and that you have someone you trust to work with as you embark on your journey.

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SOURCE:
http://money.cnn.com/2017/04/03/real_estate/millennial-homebuying/index.html
http://www.gallup.com/poll/190850/americans-say-real-estate-best-long-term-investment.aspx
https://www.nar.realtor/sites/default/files/reports/2017/2017-home-buyer-and-seller-generational-trends-03-07-2017.pdf
https://www.nerdwallet.com/blog/mortgages/millennials-and-homebuying/
http://elliemae.com/millennial-tracker
http://elliemae.com/borrower-insights
http://elliemae.com/about/news-reports/press-releases/homeowners-seeking-both-a-high-tech-and-human-touch-mortgage-experience-ellie-mae-2017-borrower-insights-survey-finds
https://www.zillow.com/mortgage-calculator/house-affordability/
https://s3.amazonaws.com/files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf
http://www.realtor.com/realestateagents
https://studentloanhero.com/student-loan-debt-statistics/
http://money.cnn.com/2017/07/13/pf/college/student-debt-home-ownership/index.html

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