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The National Association of Home Builders (NAHB) recently released the results of its “Housing Preferences of the Boomer Generation” study, highlighting the home and community features that are most important to homebuyers of the Baby Boom generation, along with the housing preferences of other generations. This NAHB Eye On Housing article by Paul Emrath outlines some of the findings of the study.
NAHB’s recently published Housing Preferences of the Boomer Generation shows that homebuyers in the Baby Boom Generation want a suburban neighborhood consisting of all single-family detached homes more often than any other community feature (of the 19 listed), and nearly 80 percent prefer a cul de sac over efficient traffic flow when given the choice.
These results are based on a survey conducted by NAHB in September 2015 that collected data from 4,326 recent and prospective homebuyers, stratified and weighted to be representative of the age, geography, income, and race and ethnicity of homeowners in the U.S. Although the published study emphasizes housing preferences of Boomers (those born from 1946 to 1964), for comparison purposes the survey also captured buyers in other generations (including Millennials born in 1980 or later, Gen X’ers born 1965 to 1979, and Seniors born in 1945 or earlier).
For home buyers in the Boomer generation, the most desired of these features is a “typically suburban” community (defined as consisting of all single-family detached homes) rated desirable or essential by 70 percent of Boomer respondents. After that comes a group of three community features rated essential or desirable by 61 to 64 percent of Boomers: being near retail space, a park area and walking/jogging trails.
Compared to buyers in other generations there are many similarities in the way Boomers rank the top community features. Seven community features (typically suburban, park area, near retail space, walking/jogging trails, a lake, swimming pool, and exercise room) make the top eight irrespective of the home buyer’s age.
Forbes recently released its new list of Building Boom Towns, ranking the metro areas in the U.S. with the most new construction. New York topped the list, with other cities in the top ten including Dallas, Houston, Los Angeles, Chicago, Washington, D.C., Miami, Boston, Atlanta and Seattle. Here’s the story from Erin Carlyle of Forbes.
To compile Forbes’ list of Building Boom Towns, the folks at Dodge Data sorted through building data for the nation’s largest Metropolitan Statistical Areas – major cities and their surrounding suburbs – to find the 20 places where the most money was spent on new construction in 2015.
Dallas, the No. 2 Boom Town on the list, is benefiting from a stronger national economy: one in which unemployment is down and wages finally rising, with construction a continued bright spot in the economic news. “Vacancy rates continue to decline, and we’re seeing continued increases in rents, which sets the stage for construction growth,” explains Robert Murray, Chief Economist and Vice President at Dodge Data & Analytics.
Dallas is tracking the national uptick in residential construction: $11.3 billion, or two-thirds of new construction spending in the greater metro, was for residential projects, primarily single-family homes. Notably, seven of the 20 biggest projects started last year in Dallas were mixed-use – meaning combinations of commercial space (whether hotel, retail, or in one case a parking garage) with residences.
In 2015 construction spending for ongoing projects across the nation hit its highest annual level since 2008. Construction began on projects worth a total value of $469.5 billion, a 4% increase over 2014, according to Dodge Data. Spending on residential construction starts was up 14% in 2015, led by multi-family (an 18% annual increase) and with a strong showing for single-family (up 14%). “One of the positive elements about 2015 is that single-family housing picked up some momentum,” Murray notes. In four of the last five years multi-family starts have been strong relative to single-family (in 2014 they increased 32% and 3%, respectively). Last year’s strengthening in the single-family housing market is seen as a positive sign that people who lost their homes after the financial crisis might finally be recovering, and that young adults living with their parents might finally be moving out.
[View the full article, and see all of the top 20 cities that made the list]
This Spring will be “a fairly strong buying season” for the housing market, according to Zillow’s Chief Economist, Dr. Svenja Gudell. Here are some of the highlights of a recent DS News interview with Dr. Gudell by Brian Honea.
For the future, I think it would be good to see more investment in housing come through. Economic progress usually leads the housing market. We’ve seen a lot of housing lead the economy lately. It’s nice to have a strong housing market to help with the economy as a whole, because housing is a huge part of GDP growth and the overall welfare of the economy.
We’ve been in a tough spot because a lot of household formation has come through as rentals. We have many fewer people buying homes than they have in the past and many more making the choice to rent. We’re seeing a bunch of headwinds on the side of renters wanting to become homeowners such as saving for a down payment amid very high rent, being able to qualify for a mortgage, and actually finding inventory.
That last point will be a key point as we move into the selling season this year. There’s just very little inventory out there, and without having more inventory, it’s really hard to have a very strong season. Limited inventory will surely mean that prices will go up, and we will once again see fairly good home value appreciation with solid demand for housing. However, if you don’t have enough homes available to buy, then the existing-home sales won’t pick up as much, and eventually that will filter through into the GDP numbers as well.
I do think from the numbers we had last year that it will be a fairly strong buying season. We have a lot of leftover demand. We are continually undoubling households that doubled up during the housing bust, where students moved in together, or young professionals moved in together, or people moved back in with their parents. As those people move out of their parents’ basement and get jobs, those households will then decide that it’s a good time to buy because financially it makes a lot of sense for them to buy. Given the still-low inventory levels we’re seeing, that will continue to drive prices up. We’d like to see more sales than we will see, but I think price appreciation will be quite good going into the season.
If you’re thinking of adding some new accents to refresh a particular room in your home, this BrightNest article from Kara Bennett highlights two simple and inexpensive ways to make it happen.
There are two big accents in your home that you may be ignoring. When’s the last time you took a look at your interior doors and trim? For an easy, inexpensive room refresh, consider painting an interior door or trim. A quick paint job for both will totally transform a room, making this area of your home kinda like the dark horse of decor accents.
When painting interior doors, choose a paint color that’s the same tone as your walls. For example, if you have a lighter, pastel color on your walls, keep it the same for your door. A bright, contrasting color will make the room feel small and choppy.
When choosing a color to paint your trim, use a stark white to brighten up a room and a cream or off-white to create warmth.
[View the full article for a complete list of tips]
If you’re single and thinking of relocating to a new town, this article from Cicely Wedgeworth of Realtor.com offers some advice, highlighting cities that attract singles based on employment, housing costs and social factors. Minneapolis tops the list, followed by cities including Raleigh, Atlanta, Denver, Nashville and Orlando.
Sure, the Internet is littered with lists of the U.S. cities where you’re most likely to find a date. But that’s keeping things pretty simplistic. After all, if you’re looking to settle down with a mate, you’d better do it where the two of you have decent job prospects and can afford a house to live in. Otherwise, well, we’re not sure you crazy kids are going to make this thing work.
Realtor.com’s crack economic data team set out to find cities that attract singles with low unemployment, affordable housing, and – of course – awesomely fun things to do if you should have a date.
“These markets are not simply places with a high number of singles; in fact, the raw share of singles in these markets combined is about the same as the U.S. average,” says Javier Vivas, a realtor.com economic research analyst.
“What really distinguishes this set are the more favorable conditions singles face when it comes to homeownership,” Vivas adds. “Some of those right ingredients include solid job creation, rational price appreciation, and varied amounts of affordable inventory.”
A millennial from Atlanta, who’s still paying off student loans, asks CNN Money whether or not it’s a good time for him to buy a home. “I am currently renting and feel like I may be throwing my money down the drain when I could be building equity. Should I consider a low down payment option or put off buying a home until I can afford the recommend 20% down payment?” Here’s the response from CNN Money’s Kathryn Vasel.
The decision to become a homeowner is likely to be the biggest financial commitment you’ll make, and many factors should be taken into account.
First, let’s tackle whether it makes sense to become a homeowner. Writing a monthly rent check can seem like throwing away money, but piling mortgage debt on top of student loans can create a long-term budget crunch.
“With student loan debt, your asset is your education and no one can take that anyway,” said Certified Financial Planner Travis Sollinger at Fort Pitt Capital Group. “But if you buy a house and you can’t afford the payments, they will take the house.”
Along with your credit score, your debt-to-income ratio is one of the most important numbers banks look at when issuing a loan. This number helps lenders determine your ability to repay.
To determine your ratio, add up all your monthly debts, including car, student loan and credit card expenses and the potential mortgage payment, and divide it by your gross monthly income. In order for a mortgage to be backed by the government, this number can’t be higher than 43%.
Low mortgage rates and high rents make buying an attractive option, but you should be ready to put some roots down. If you’re planning to stay in a home for at least two years, buying is more financially advantageous than renting in 70% of housing markets, according to a recent report from Zillow.
Now let’s weigh your down payment options.
Down payment size impacts the total cost of a loan. A bigger down payment means you’re borrowing less from the bank, which lowers monthly payments. It can also lower your loan’s interest rate, reducing how much you’ll pay in interest over the life of the mortgage.
The average down payment on a conventional 30-year mortgage was 17.5% in the fourth quarter of 2015, according to LendingTree.
But there are other options if you don’t have that much cash sitting around. The Federal Housing Administration backs mortgages that require as little as 3.5% down.
Putting less down will likely lead to higher interest rates on the loan, but with interest rates still so low, now could be the time to pounce.
When figuring out how much money to put down, don’t wipe out your savings account, advised Bill Van Sant, certified financial planner at Girard Partners. It’s a good idea to keep a cushion to cover things like closing costs, moving expenses, home insurance and furniture shopping.
According to a January survey by Redfin, more home sellers are pricing their homes in a middle range – and fewer sellers are pricing high – than the results showed in a similar survey from October of last year. This article from Redfin’s Jon Whitely highlights the shift in pricing strategy.
Home sellers this season are taking a more grounded approach to pricing than they did in the fall, as buyers grow more selective and less willing to overpay.
In a Redfin survey last month, 57 percent of home sellers said their strategy was to price their property in a middle range, an increase of 7 points from our October survey. Thirty-two percent said they would price high, down from 34 percent.
“We’ve seen a shift in the right direction toward pricing in the middle range to better encourage multiple offers,” said Will Fassinger, a Redfin agent in Atlanta. “There’s always the fear of becoming a stale listing that scares buyers off or pricing so low that you don’t attract the right buyers. We advise sellers that we don’t have to negotiate a ton to get the preferred price.”
Sixty-seven percent of sellers think prices will increase a little in 2016. Seven percent think home prices will increase a lot, only a slight change from our October survey.
A greater share of survey respondents, 48 percent, said now is an OK time to sell in their neighborhood. Ten percent said now is a bad time to sell, down from 13 percent in our prior survey.
On Monday morning, the Federal Reserve Bank of New York released the results of its monthly Survey of Consumer Expectations, showing that consumers feel more positive about the housing market in the next 12 months. Here are some of the details from the results, reported by Builder.
Median expected home price change dropped slightly to 3.00% in January, according to the monthly Survey of Consumer Expectations released by the Federal Reserve Bank of New York.
This is a two basis-point change compared to last December’s 3.02%, and 42 basis-point decrease from January 2015. An upward housing market in 2015 has given consumers more reason to believe in a strong 2016 market. Consumer predictions of home price volatility have gone down in recent years, but have stayed fairly stable since August 2015.
Consumers in the Northeast region have the most faith in the housing market, expecting a moderate 2.59% change in future home prices. People in the South region came in second with a 2.90% expected home price change, followed by the Midwest and West, with a 3.00% and 3.27% median point prediction, respectively.
Younger consumers under 40 years-old are the most optimistic among all age groups, with a median prediction of 2.82%, while consumers over age 60 see the most volatility in the market, with an expected home price change of 3.00%.
According to a recent survey of non-homeowning consumers, commissioned by Bankrate.com, nearly half of the respondents said they would like to buy a home now – but can’t afford a down payment or think that their credit isn’t good enough to qualify. Here’s the story from Bankrate’s Crissinda Ponder.
According to the recent Bankrate Money Pulse Survey, nearly half of respondents say they’re not homeowners right now because they either can’t afford a down payment (29%) or they believe their credit isn’t good enough to qualify for a mortgage (16%).
“A lot of people make assumptions that they can’t afford to buy based on just some perceptions, and many have not taken the step to figure out how mortgage-ready they are,” says Marietta Rodriguez, vice president of national homeownership programs at NeighborWorks America in Washington, D.C.
The share of non-homeowners who have counted themselves out of homeownership for the time being is somewhat expected, considering the lasting effects of the housing meltdown, says Pava Leyrer, chief operating officer for Northern Mortgage Services in Grandville, Michigan.
“A lot of people went through some deep pains in the past 10 years or less,” she says, citing foreclosures, job losses and bankruptcy filings. “All of those things are traumatic in your life.”
The survey also asked non-homeowners what percentage of the total cost they would contribute as a down payment on a hypothetical home purchase. Nearly 2 in 10 said somewhere between 11% and 20% down, and another 17% of respondents would put down 6%-10%.
The most popular response, however, was “don’t know” – almost a quarter of non-owners report they don’t have a clue how much they would put down to buy a home.
Although it appears to be a substantial percentage of people, Rob Chrane, president and CEO at Atlanta-based Down Payment Resource, says it’s consistent with what his company has encountered.
The survey underscores the fact that many aren’t aware that down payment assistance is available, which could be keeping them on the sidelines.
“The biggest single issue is that consumers just don’t know these programs even exist,” Chrane says. “If you don’t know of the possibility then you don’t know to ask people for help with it.”
