Brexit HeadwindsLast week we spoke of the Federal Reserve Board quoting “headwinds” faced by our economy, something that Janet Yellen reiterated in her testimony to Congress this week. Now we get to see a prime example of these headwinds in action with regard to the vote on Britain’s exit from the European Union. The uncertainly leading up to this vote was a factor in unsettling the markets, but that is nothing like the uncertainty we now have as the vote to leave is contemplated by the markets.
It would not be unreasonable to expect the volatility to subside when the world realizes that it will take at least two years for Brexit to happen and we don’t know what form that exit will take. There are so many variables — including how some parts of the United Kingdom who supported Bremain will react. We have bounced back from wars, natural disasters and terrorist tragedies again and again. We are certain that these new headwinds will not stop our progress either. However, regardless of our resiliency, our leaders must continue to be vigilant in keeping these factors in mind, and the Fed will continue to do just that.
Certainly the stock market has also been very resilient in the past. From the depths of the recession, it has bounced back magnificently over the better part of the last decade. However, since the end of 2014, the level of 18,000 for the Dow Jones Industrial Average has been a difficult level for the market to maintain. Every foray above that level seems to be accompanied by a pull back. It is interesting that we reached the 18,000 level again the day of the Brexit vote. The good news in all of this? At least temporarily, we will have record low rates again and for those who react quickly, refinancing or purchasing a home will be a great move.
Many within today’s generation of teens, 21 million strong, say they’ll be willing to give up modern luxuries for a more mainstream view of the American dream of homeownership, according to a new study from Better Homes and Gardens Real Estate, which reveals the home ownership wish lists of children ages 13 to 17, part of Generation Z. Eighty-nine percent of Gen Z teens surveyed say owning a home is part of what they believe the American dream is, followed by graduating from college (78%); getting married (71%); and having children (68%). They’re optimistic that they’ll become home owners one day, too. Ninety-seven percent say they’ll own a home one day, and they say they’d even be willing to make some unusual sacrifices in order to put them on the path to home ownership. For example, 53 percent say they’d be willing to give up social media for a year or would be willing to do twice as much homework every night in order to become a home owner one day. Forty-two percent would go to school seven days a week, and 39 percent would even be willing to take their mom or dad to their prom if it meant they could be a home owner one day, the survey showed. Sherry Chris, president and CEO of Better Homes and Gardens Real Estate remarked, “Today’s teens are fiscally literate and realistic when it comes to their future. It’s quite profound that a generation that has never known a world without social media is willing to give up such a staple in their modern lives to achieve their dream home.” Source: Better Homes and Gardens Real EstateClosing costs might come as a surprise to many buyers, especially young adults. Two-thirds of millennials – those between the ages of 18-34 – who plan to buy a home say they were unaware of closing costs, finds a new survey of more than 1,000 adults conducted by ClosingCorp, a provider of residential real estate closing cost data and technology for the mortgage and real estate industries. What’s more, more than one-third of potential home owners – across all age brackets – say they’re “not very” or “not at all” aware of closing costs. Closing costs can come as a big surprise, which can often amount to 2 to 5 percent of the total purchase price of a home. “This study emphasizes the need to better educate millennials, and really all consumers in general, on the real estate closing process,” says Brian Benson, CEO of ClosingCorp. “While interest rates are often the driving force in initiating a real estate transaction, the [real estate agent], lender, title and other settlement fees also have a significant impact on the down payment and cash outflow from the borrower perspective. Not understanding how everything is related can be a real impediment for first-time home buyers who want to get into the market.” Most of the adults surveyed say they learned about closing costs first from their real estate agent or by doing their own research. Indeed, millennial home owners said they were more likely to learn about closing costs from a real estate agent than a lender by a ratio of nearly 2-to-1, according to the survey. “We as an industry should be stepping up our proactive education efforts to ensure home buyers are fully prepared to make the most significant financial transaction of their lives,” Benson says. Source: Realtor Magazine
Parents are increasingly helping their adult children financially purchase a home, finding themselves in a new role going from parent to landlord. College graduates struggling to pay rent or save up for a down payment in high-cost metros are turning to their parents for help. Parents are buying up property and then renting it out to their children, often for an amount that’s well-below market value. “Over the last three or four years, we’ve been seeing more pied-à-terre purchases that involve parents buying a small unit as a home for a child with a first job in the city, and also as an investment,” Jonathan J. Miller, the president of the real estate appraisal firm Miller Samuel, told The New York Times. “They’re adding an asset to their portfolio that they hope will appreciate over time. Meanwhile, that asset is solving a housing problem for their children, and if the parents can defray costs along the way or make a little something, so much the better.” Source: The News York Times