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Economist Sara Zervos shares some excellent news for the U.S. housing market – and anyone who’s planning to sell or purchase a home – in this Forbes article.
If you live in Coastal California, you don’t need national housing statistics to tell you that the housing market is in good shape – stick a “For Sale” sign in the yard and there are dozens of offers within a few days. If you are a seller or homeowner in the some of the less-than-hot spots, you can still take some comfort from the majority of indicators that suggest that the market is not only solid, but still improving. Worries about the state of the economy and the stock market justifiably create some jitters. However, the factors that positively influence real estate, such as employment, interest rates, and low inventory, are likely to trump the detractors looking ahead into 2016.
The most closely watched index on home prices is the S&P/Case Shiller index, which showed home values improved by over 5% at the end of 2015 compared to a year earlier. The 20 large city index they track showed a higher climb in prices, closer to 6%. Inventories have been somewhat smaller than normal so buyers have been chasing fewer houses and driving prices up. More sellers are likely to emerge in the coming months to take advantage of these higher home prices.
The housing crisis that was the epicenter of the 2008 crisis has almost finished healing. The massive overhang of foreclosures has nearly cleared, and new foreclosures are back to a long run average. There is also less debt in the system, as distressed homeowners had to sell, and also since many have shifted to renting given tighter lending standards. With less leverage in the system, we can expect less turmoil induced by a cyclical slowdown in the economy.
The largest positives for the housing sector remain the ongoing gains in employment (and income) and very low mortgage rates. Despite the overall recovery in the economy that has induced the Federal Reserve to hike interest rates, long term rates remain very low, dragging mortgage rates back down to historic lows.
There are five common mistakes that millennials often make with credit cards, mistakes that could greatly affect their credit scores and future financial situations. In this U.S. News article, Gregory Go highlights some of the biggest credit card mistakes, with tips on how to avoid them.
Carrying balances and paying just the minimum. A common belief is that to build a positive credit rating, you have to get a credit card and also carry a balance from month to month. The problem, however, is that credit cards designed for new cardholders generally carry high APRs – as high as 25 percent. If you carry a balance from month to month and only pay your minimum monthly payment due, you are paying considerable cash in interest on purchases, which can potentially create a mountain of debt you can’t pay down. Build your credit rating and save on interest by paying your balance in full each month, instead.
Maxing out credit lines. A new line of credit can be exciting and provide an opportunity to make a large purchase you’ve had your eye on for a while. At first, it can seem like a simple plan – make the purchase and slowly pay it off. Maxing out credit lines, however, can signal to creditors that you’re at risk of defaulting on your balances. Spending too much or maxing out your credit lines also affects your utilization ratio, an important factor in your credit score. Utilization ratio is the percentage of the total available credit the cardholder has used, and a high ratio indicates a higher credit risk. It is often recommended that you keep your total debt-to-credit ratio below 30 percent, which means you may have to put off that large purchase you’ve been dreaming of for a bit longer.
Not taking due dates seriously. Although it’s common for most companies, such as your cellphone provider, to impose late fees when a payment is late, ignoring due dates on credit cards can become far costlier. Late payments not only significantly affect your credit rating but usually come with late fees as well as penalty APRs. One late payment can end up in an APR that’s well over 20 percent. That penalty APR combined with a late fee of approximately $30 (and the effect on your credit rating) can cost you hundreds – even thousands – in the end.
The U.S. Green Building Council and Dodge Data and Analytics recently released the World Green Building Trends 2016 report, which predicts a significant increase in U.S. green building activity by 2018. Here are some of the details of the report, as reported by the Hanley Wood Data Studio.
The World Green Building Trends 2016 report, conducted in nearly 70 countries over the world, outlines the big picture of global green building, and highlights a handful of countries including the United States.
In 2015, approximately 24% of U.S. building firms reported that over 60% of their projects were green projects, second only to South Africa (27%) and Australia (27%).
Builders in the U.S. have demonstrated an increasingly strong shift to green construction over the past three years. By 2018 however, 39% of respondents expect that green projects completed by their company will account for 60% or more of their total projects annually, a 15-percentage point growth compared to this year’s responses.
Millennials’ growing desire to live near a city’s top theaters, music venues, bars and gyms are the source of the latest urban revival trends, according to a recent analysis by economics scholars from UC-Berkeley and the University of Pennsylvania. Here’s the story from Eric Jaffe of CityLab.
Something strange happened in U.S. cities circa 2000: people started to move downtown. Not all people. If you look at the top 100 metro areas between 2000 and 2010, only two downtowns grew faster than their outlying suburbs in terms of total population. Two. But among young college graduates – a key indicator of an area’s growth potential, in the eyes of urban economists – moving downtown became more the rule than the exception.
From 2000 to 2010, more college-educated professionals age 25 to 34 moved downtown than to the suburbs in 39 of the 50 largest U.S. metros. For 35 to 44 year olds it was 28 of 50, and nine of the top 10. This revival was true in the places you might expect, like New York City or San Francisco, and in places you might not, like Cleveland. It was true despite historical trend lines showing that, for the better part of a century, the wealthy typically moved one way when it came to cities: out of them.
“This is a huge reversal from decades of suburbanization of college graduates,” says urban economics scholar Victor Couture of UC-Berkeley. “Most large American cities experienced something this rebound between 2000 to 2010. Over the last decade, broadly speaking.”
Couture and Jessie Handbury of the University of Pennsylvania think they’ve settled on an explanation in a new working paper that tracks America’s urban revival as meticulously as any analysis to date. And it’s not one of the usual suspects.
New living habits of Millennials and Baby Boomers, delays in starting a family, a tougher home-buying market, a hatred of long commutes – those social factors have all altered cities in recent years. But Couture and Handbury pin the return of downtown on a new fondness for service amenities: music venues, theaters, bars, gyms, and the like. Not the growth of these things but a fresh taste for living near them, a broad cultural shift that could make urban revival more durable.
When you apply for a loan, your credit score will be just one piece of the information lenders will need to review to approve your loan – according to this Bankrate article by Dr. Don Taylor, a personal finance advisor.
Your credit score is based on the information in your credit report. Lenders can give you an idea of the interest rate you’ll pay on a personal loan from doing what’s called a “soft pull” on your credit report and score, but lenders will want other information as well before deciding whether to approve your personal loan.
Income and employment history. Employment and income verification are important. The lender wants to know you’ve got money coming in to cover the loan payments. If you’re self-employed, income verification may include you providing the lender with copies of your past years’ income tax returns. With online lending, there’s also a need to protect the lender (and the borrower) from identity theft.
Banking relationships. How much money you have in checking or savings can be a point of interest, too. A lender may want to review your bank statements to check on your cash flow. If you’ve got a lot of money in the bank, a loan secured by a certificate of deposit could be an alternative to an unsecured personal loan. If you’ve lived at your current address for awhile, that’s a good sign. If you’ve got a mortgage, that can be something the lender considers in the decision to approve a personal loan.
Construction of townhomes increased last year, and is expected to continue increasing, according to this NAHB Eye On Housing article from Robert Dietz.
According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction starts totaled 86,000 units in 2015, an almost 18% increase over the total for 2014. Single-family attached starts totaled 21,000 for the fourth quarter of 2015, up 5% from the final quarter of 2014.
The long-run prospects for townhouse construction are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.
Inefficient use of your home’s heating system can be a costly mistake. This BrightNest article highlights five of the most common home heating mistakes, with tips on how to avoid them.
Abusing your thermostat. During a winter chill, it’s tempting to turn the inside of your home into a tropical oasis as soon you step inside, but cranking up your thermostat to warm up faster won’t do anything! Most furnaces pump out heat at a consistent rate, no matter how high the temperature is set.
Closing heating vents in unused rooms. It may seem like the logical thing to do, but blocking heat access by closing vents is actually less efficient than heating unused rooms and won’t save you any money. Plus, doing this can imbalance your home’s entire heating system, which strains your furnace and creates the “cold room” effect. Generally, it’s better to leave vents and doors open and allow your home’s HVAC system to circulate evenly.
Using a dirty air filter. Dirty air filters will reduce the airflow in your home, forcing your furnace to work harder. Plus, it creates more dust and increases indoor air pollution in your home. Check and replace your air filters regularly so your furnace can heat your home as efficiently as possible.
[Read the full article for more home heating tips.]
The recent rise of multi-generational living, along with several other factors, have led to a decreasing number of older women who are living alone in their homes. This article from Laura Bliss of CityLab looks into some of the reasons.
The aging widow, alone in her home, has been a cultural trope for centuries. But such women are becoming less common in the U.S., as social expectations, economic realities and life expectancies shift.
A new Pew Research Center analysis of U.S. Census Bureau data finds that the share of older adults (ages 65 and up) living alone is falling. The change has been most dramatic among women aged 65 to 84: 30 percent lived alone in 2014, compared to 38 percent in 1990. The share of older men living alone has actually increased slightly: In 2014, 18 percent lived alone, up from 15 percent in 1990.
These shifts come after nearly a century in which the share of older people living on their own rose steadily, from 6 percent in 1900 to 29 percent in 1990. Improvements in health, longevity, and economic security, thanks to programs like Social Security and Medicare, largely drove this increase.
Now, thanks to an uptick in life expectancy, particularly among men, women between the ages of 65 and 84 are increasingly likely to live with their spouse. Older, unmarried women are also more likely to live with their children. And as a growing share of older men are living longer, living arrangements for them are becoming more diverse. Here’s a chart that shows how, for both genders, home lives are changing among the oldest Americans:
The increase in older unmarried adults living with their children is part of a rise in multi-generational households. Young adults living with their parents, largely for economic reasons, are the most significant driver of that trend.
If you’d like to find a way to spend less for things in and around your home, but aren’t sure how to begin, this U.S. News article by Mel Bondar provides a simple roadmap to help you start making it happen – with 7 frugal steps you can take in just 7 days.
Sometimes the trick to tackling one giant goal – like becoming frugal – is to break it into small, actionable steps. If one of your New Year’s Resolutions was to save more money or pay off your debts, here are seven frugal steps you can take over the next week to start making a dent in your spending.
Meal planning & prep. Meal planning is tedious, but it’s also one of the quickest ways to slash your spending. Even if you plan meals you love that have higher quality ingredients, if you chronically eat out this is going to save you money. Sort out a plan for seven days of breakfast, lunch, dinner and snacks. Make sure you buy all the groceries on a day when you have a little extra time, and prep everything for the week rather than just throwing it in the refrigerator.
Call to negotiate one of your fixed bills. Whether it’s cable, water, lawn care, insurance premiums or Internet providers, pick one and call to see if the company can offer you a better deal. Tell them you’ve started price comparing with other companies and just want to know you’ve got the best offer you can get with them.
Find one thing to substitute with a cheaper alternative. Look around at your usual purchases and see if there’s something you can start substituting to save a little money. If you go through K-Cups like it’s nobodies business, could you get a reusable one and start filling it with coffee grounds instead? Can you switch to the generic brand of something you usually buy name brand?
