Weekly Mortgage and Real Estate Report – Week of May 20, 2019


The Ugly Word Arises

So, we had declared that everything was in place for a fantastic economic ride. Low interest rates, a moderately expanding economy and rising stock prices. Then the ugly word was uttered — tariffs. It took one word to put a bump in the road of our goldilocks economy. As soon as the word was spoken (or Tweeted) — the markets immediately showed their dismay.

Now, this word had been bandied about before as part of the many trade discussions which have taken place in the past few years. Sometimes the word just turns out just to be part of negotiating tactics. Or, the tariffs implemented are not as extensive as threatened. In these cases, the markets have quieted down, and the economy has moved along its merry way. It has been about two weeks since the word was presented recently, and in this case the drama has continued.

However, the initial reaction we have witnessed reminds us that it only takes one little — or big — thing or event to upset the apple cart. Natural disasters, political events, international tensions, and more, have the ability to put a charge into the economy and the markets. Thus, the word tariff can be very ugly, or it can just be a gentle reminder. Only time will tell. 


 First American Financial Corp., Santa Ana, Calif., said rising home affordability is benefiting home buyers at a key point of the spring home buying season. “The interest rate-driven affordability surge arrived just in time for the spring home-buying season,” said Odeta Kushi, First American Senior Economist. “Home buyers have reacted positively to lower rates. When rates dipped just before springtime, applications for residential loans surged nearly 19 percent for the week. While many of those applications were for refinances, there was also renewed interest in home buying. Rising affordability has already benefited home buyers and, if the lower rate environment persists, we’re in for a great spring home-buying season.” Kushi added: “Combined with higher incomes, the good news for home buyers and the housing market is house-buying power is at its second highest point in over two decades. Source: First American

Baby Boomer homebuyers must have a laundry, but they would rather do without an elevator or a wine cellar in their home according to a recent study by the National Association of Home Builders (NAHB). The study, which is part of its What Homebuyers Really Want Report, revealed that while their top home feature likes and dislikes are in sync with other generations, baby boomers are more likely to have strong opinions about what they want, and don’t want, in their homes. While a laundry room topped the list of must-have features with 94 percent of baby boomers listing it as an essential feature, 91 percent of this generation would also like energy efficient windows. At 89 percent, a patio also rated high among home features desired or essential for baby boomers, followed by a ceiling fan, garage storage, and exterior lighting, with 88 percent of boomers listing these features as essential or desirable in a home. A full bath on the main level, walk-in pantry, hardwood flooring, and a fully energy efficient home rounded off the top 10 home features that baby boomers desired. The report noted that the only feature listed by baby boomers that was different from other generations was the desire to have a full bath on the main level. Among community features that were ranked as most desirable by baby boomers, having a home near a retail space ranked first, followed by walking/jogging trails, suburban homes, walkable communities, and homes close to a park area. Source: NAMB

Baby boomers are the fastest growing segment of roommate seekers, growing twice as fast as any other group. SpareRoom reports that, according to date from Harvard University’s Joint Center for Housing Studies, people over the age of 50 living with roommates has grown by 27 percent in the past year, with a total number of 2.6 million older people living with non-relative roommates. “People think of apartment sharing as a young person’s game, but that’s no longer the case,” says Tom MacThomas, SpareRoom’s US General Manager. “The over 50s might not be the biggest group of roommates but they’re definitely the fastest growing.” Rising cost of living across the U.S. as well as inflation means that many older Americans are seeking roommates as a financially-sound alternative to living alone. Additionally, life changes such as divorce means that many are seeking roommates for the first time in their lives. For renters, having a roommate could save those 50 and older over $25,000 a year. MacThomas cites the financial benefit as one of the reasons for the growth among older roommate-seekers. Source: MReport


Weekly Mortgage and Real Estate Report – Week of April 29, 2019


Have Rates Hit Their Lows?

Much has been made of the fact that interest rates are lower this year than those “high paid” market analysts predicted. These lower rates have contributed to a rebound in the stock market during the first third of the year. Lower rates have also contributed to a rebound in the housing markets. We have witnessed higher oil and gas prices this year as well. This has led some to speculate that the economy might be self-correcting.

What do we mean by that? The same prognosticators who said rates would rise were also predicting an economic slowdown this year. And the most recent overall measures of the economy have shown that the economy indeed is slowing down. But we have also speculated that the boost which comes from lower interest rates could also cause the economy to rebound a bit, or at least not slow down as much as predicted. If this hypothetical comes to fruition, it is quite possible that interest rates have already reached their low for the year.

We have already seen a small rise in rates. Might interest rates start rising from here? We don’t know, but the jobs report coming this week might give us a major hint. A stronger than expected showing would strengthen the theory that rates are contributing to an economic rebound and we could see rates start rising from here. A moderate or weak report could keep rates at their present welcome lows. 


 Despite the fact that most homeowners believe that the U.S. will enter a recession in the next three years, potential buyers are still looking to close on homes. According to realtor.com, 70 percent of homeowners predict a recession within the next three years, while around 30 percent of those surveyed expect the next recession to begin even sooner, sometime in 2020. Realtor.com also notes that 56 percent of shoppers believe home prices have hit their peak, despite 63 percent of shoppers reporting that home prices are increasing compared to last year. “The U.S. economy has been on a hot streak for the last seven years, producing steady economic growth and low unemployment rates. Historically, this type of growth hasn’t continued indefinitely, and U.S. home shoppers think it will come to an end sooner rather than later,” said Danielle Hale, realtor.com’s Chief Economist. Less than half of respondents, 41 percent, say that the U.S. housing market would fare better than it did in 2008, while another 36 percent said it would be worse, and 23 percent expect it to be the same. “When the U.S. enters its next recession, it is unlikely that the housing market will see a sharp nationwide downturn,” Hale added. “The same record low inventory levels that have made buying a home so difficult recently, will likely protect home prices in the next recession.” Homeowners are feeling optimistic: slightly under half, or 45 percent, of home shoppers report feeling slightly more optimistic about homeownership after the 2008 recession, while another 33 percent reported no change in their feelings on homeownership. Just 22 percent report a pessimistic outlook on homeownership. Source: DS News

The share of single female home buyers in the last three years has increased from 15 percent to 18 percent, according to the National Association of Realtors®. Single women outpace single men when it comes to home purchases, Jessica Lautz, NAR’s vice president of demographics and behavioral insights and research, told ABC News. “When I tell people, they are surprised,” she says about the data. Women are “feeling confident you don’t need a wedding ring to purchase a home. They want the stability of purchasing a home but don’t need the marriage.” While single women purchase homes more often than single men, they tend to buy multigenerational properties that are less expensive, Lautz said. Source: ABC News

Roommates aren’t just for college days anymore, the number of married couples who are sharing their homes has increased significantly since the 1990s. Trulia decided to investigate this phenomenon by comparing data between 1995 and 2016 and came up with some telling numbers. In 2018, 3.28 percent of all U.S. households, or nearly 4.2 million, lived with a roommate. But among married couples, that rate was just 0.46 percent (just over 280,000 married households) which is double the rate observed in 1995. Among all married householders, 0.46 percent live with roommates, up from a historical average of 0.36 percent. This increase is mostly from married homeowners, 0.34 percent of whom live with roommates, or nearly 40 percent higher than the historical average. The increase is higher in the nation’s most expensive markets, proving high housing costs are forcing some married couples to offset the financial burden. Source: Trulia 

Weekly Mortgage and Real Estate Report – Week of April 22, 2019


The Market Reacts

Last week we spoke about how wrong the prognosticators were when they said interest rates were going up this year. Lower rates typically represent good news for consumers. But lower rates when we were expecting the worst actually translates into great news for consumers. And there is evidence that consumers are noticing and reacting to this great news.

For example, the latest Fannie Mae Home Sentiment Index showed a substantial gain in optimism. Thus, it is expected that we will have a brighter spring homebuying season than originally forecasted. This seems to be happening even as most analysts believe that economic growth will slow this year. Previously, a weaker real estate market was expected to be a contributor to this slow growth.

The question which follows is — will a stronger home purchase market be enough to bolster economic growth in the coming quarters? It is quite possible if the lower rates spur consumers to purchase more houses, cars, furniture and even refinance their present loans, then we will see better growth than we expected. While this scenario is purely hypothetical–it will be interesting to see if the theory pans out in reality. 


 Investors have been so focused on how the Fed’s dovish stance on interest rates led to a rebound in stock prices that they haven’t yet digested how much this development could stimulate the housing market, particularly in the back half of the year. Last month’s strong numbers on existing home sales – up nearly 12 percent compared to January – might get their attention. With the decline in interest rates over the past three months, the housing market now has three tailwinds all lined up for the first time in this cycle. The first is demographics. After declining for 12 years from 2004 through 2016, the homeownership rate has been increasing ever since. Entry-level housing demand should be robust for years as younger buyers start to shift from renting to owning. The second is the labor market. On just about any measure — from the unemployment rate, labor market sentiment, the percentage of prime-age people who are employed, and increasingly wage growth — the labor market is as good as it’s been in a generation. And the third, thanks to the recent drop in interest rates, is affordability. Source: Bloomberg

Millennial homeowners with access to home equity lines of credit (HELOCs) have plans for their money that stray from the traditional home improvement projects, according to a new survey released by Citizens Bank. In a poll of 1,003 homeowners, 87 percent of respondents with HELOCs stated they were optimistic about their property’s current value, with 74 percent claiming to be interested in starting a home improvement project within the next 12 months. However, not all HELOC funding is going into the property, especially with Millennial homeowners – many members of this youthful demographic are planning nontraditional uses for HELOC money including financing a new business venture (45 percent), big-ticket purchases (44 percent), taking time off work to support or care for family (44 percent) and taking a vacation (36 percent vs. 17 percent). Source: National Mortgage Professional

When it comes to the top reasons that Americans decide to pack up and move, job and commute considerations fail to make the cut. Data from the 2017 American Housing Survey (AHS) show that over half of recent home buyers – 55% – move for a better home. This was followed by a desire to move to a better neighborhood (46%) and to form a household (39%). In contrast, smaller shares of home buyers report moving for a job (14%) and to reduce their commute (12%). NAHB analyzed the data to provide insight on why first-time buyers move compared to trade-up buyers (defined as those who previously owned a home). For example, first-time home buyers are more likely to move for a better home (65%) than trade-up buyers (49%). Unsurprisingly, first-time buyers are much more likely to move to in order to form a household (61%) than trade-up buyers (25%). About the same shares of first-time buyers and trade-up buyers – 49% and 45%, respectively – report moving for a better neighborhood. Source: National Association of Home Builders 

Weekly Mortgage and Real Estate Report – Week of April 15, 2019


Yes, They Were Wrong

At the first of the year we published a range of forecasts. This included the predictions for interest rates in 2019. These predictions were summarized by MarketWatch — For 2019, Market Watch reviewed the predictions of rates on home loans by several major economists. The range was an annual average of between 4.8% to 5.3% for 30-year fixed rates. In general, that means the economists believe that rates will rise some more.

Basically, at this point we can say that these forecasts were wrong. Rates have actually come down so far this year, with 30-year fixed rates averaging more than one-half of one percent below this range. We all know that predictions are often wrong, which is why we don’t place bets on the markets. We are not here to place blame. We are here to point out an important opportunity. If you are looking to make a large purchase such as a home or refinancing, this is certainly a great time to take advantage of these low rates.

We must also point out that there is plenty of time left in the year. That means that the original predictions may still turn out to be true. We know that rates, like any markets, can turn at any time. For that reason, we can’t say how long this opportunity will last. It may last a few more weeks or for a much longer period of time. Our advice would be to act on what is beneficial to you today, rather than waiting for the other shoe to drop later on. 


 Home inspections are often a major bone of contention between buyers and sellers. Buyers tend to demand that sellers fix every little thing that their examiners find wrong with the house, and sellers sometimes hold firm that they won’t mend items that they believe amount to nothing less than nitpicking. Worse, though, buyers tend to ascribe the cost to repair everything the inspector discovers at two or even three times what it really might set them back. So, they prune their offers by that amount. That leaves sellers stuck having to decide whether to accept a lowball offer or bite the bullet. Let more hard bargaining ensue. But now there are several ways both sides can obtain accurate repair estimates quickly. If you are familiar with inspection reports, you know they can be lengthy and detailed — and therefore difficult to decipher. They also offer little, if any, insight into what it might cost to repair what the inspector says needs to be fixed. These companies provide options, which do not guarantee pricing because “there are too many variables and potential underlying issues” of which it may not be aware — RepairPricer, Punchlist and HouseMaster. Estimates are not contracts and are subject to change based upon actual conditions. Source: Lew Sichelman, uexpress

People are staying in their homes longer and making repairs or renovations according to a new survey. The sixth annual LightStream Home Improvement Survey conducted by The Harris Poll found that 73% of owners are planning home improvements in 2019, a rise of 26% from last year. They are also planning to spend more – $9,000 on average – a record high for the survey, while the share planning to spend $25,000 or more rose by 83% year-over-year. “The majority of homeowners are planning on staying in their homes for at least 10 years—or never move,” said Todd Nelson, senior vice president of strategic partnerships at LightStream. “Regardless of their age, we found that most consumers are focusing their home improvement projects to reflect their personal lifestyle, comfort and interests.” But the reason for renovations is less about adding value than it is about creating a perfect space. Personalization is the top motivator for 27% of respondents while just 14% are driven by increasing value. Improving their home ahead of sale was the priority for just 7% while 4% were preparing for a major life event such as having a baby. Source: MPA

While modular construction makes up only a small minority of today’s construction, it is gaining notice as a potential solution to today’s housing shortage and high housing and construction costs. Modular housing makes up just 2 percent of single-family home construction and 3 percent of multifamily construction today, according to an article in the National Review. Rising construction costs and a diminished construction labor force have contributed to the low housing supply. According to the article, “Last year alone, the United States fell 400,000 homes short of the total needed to keep up with population growth.” Modular housing could help reduce construction time by half and construction costs by 10 to 20 percent. Instead of the nearly 22 separate types of professionals that contribute to traditional home construction, a smaller force of workers can build housing in a climate-controlled facility. “As housing prices grow farther out of reach for millions of Americans, the smaller budgets and faster building times of modular housing could be an affordability game-changer,” Hendrix stated in his article. However, modular construction companies face several challenges in creating and distributing their buildings. Unionized labor forces have not embraced modular housing construction. Acquiring the large upfront funds from lenders can be a challenge as well. Another major challenge comes in the form of regulations. Across the country, there are about 93,000 different building codes, which vary by city and county, according to the National Review. Source: DS News

Weekly Mortgage and Real Estate Report – Week of April 8, 2019


The Inverted Yield Curve

A few weeks ago, we had a one-day precipitous drop in the stock market which was blamed on the appearance of an inverted yield curve, which for some analysts signals that a recession can be on the horizon. This begs two questions. First, what is an inverted yield curve? Simply, an inversion occurs when long-term rates become lower than short-term rates. Typically, long-term interest rates are higher than short-term rates. When you go to the bank and you tie up your money in a CD for a longer period of time, you expect the bank to pay you a higher rate for the longer term.

Second, why is an inversion seen as a harbinger of bad times? Inverted yield curves typically occur some time before recessions because the markets see slower growth ahead, which causes long-term rates to fall. Short-term rates will fall only when the Federal Reserve Board trims their benchmark rates. Thus, today the markets are predicting a slowdown in growth, but the Fed has not lowered short-term rates as they have only just declared that they are just about done raising short-term rates. We have actually seen a flat yield curve for the past several months, and the Feds more recent statements about ending their increases has helped bring long-term rates down even further.

Here is the point. While an inverted yield curve can be a predictor of recessions and slower growth, predictions are never guaranteed. To see real evidence, we should look at the economic indicators. A very important indicator was released Friday. The jobs report showed 196,000 jobs added in March. Following a weak February report, this has relieved many analysts who thought February was a harbinger that the slowdown was already here. For the first quarter we added an average of 180,000 jobs per month, subject to two future revisions. Again, no guarantee that even a mild recession is on the horizon, but an indication that employment growth has slowed from the brisk pace of last year. 


 Buying a home is likely to get more affordable this spring as declining prices and interest rates give 6.0 percent more purchasing power while keeping monthly payments the same or a decrease of $62 per month in principal and interest on the average home, according to Black Knight’s latest Mortgage Monitor Report. The report indicated that annual home price growth has slowed for 10 consecutive months falling from 6.8 percent year-over-year in February 2018 to 4.6 percent at the end of the year. As a result, the average value of a home has also decreased by $850 in December. The declining values also indicate that it would now take 22.2 percent of median income to purchase a home with a 20 percent down payment and a 30-year fixed-rate loan. The report indicated that declining rates are also boosting refinancing of loans — with 3.27 million homeowners likely to qualify for a refinance and reduce their current interest rate at least by 0.75 percent by doing so. The report noted that the recent rate declines could also result in increased cash out lending, which had softened last year as “equity utilization became more expensive in 2018.” “While this is all welcome news for consumers heading into the spring home buying season, it remains to be seen whether recent rate declines and easing affordability will be enough to halt the deceleration in home price growth,” said Ben Graboske, President of Black Knight’s Data and Analytics Division. Source: MReport

Recent data from RentCafé shows that the number of seniors renting has taken off, seeing stunning growth in a 10-year period. RentCafé’s data shows that renters aged 60 and over grew by 43% over 10 years, from 6.55 million in 2007 to 9.37 million in 2017, outpacing their younger counterparts in renter growth. RentCafé pointed out that the median age for renters is still younger than their owner counterparts, but that’s to be expected. Their blog explained, as expected, renter householders tend to be younger, with a median age of 42 in 2017, compared to owner householders that had a median age of 56 in the same year. But the median age of renters has been slowly closing the gap over the last decade. RentCafé’s analysis notes that older renter households increased at a faster rate than older owner households. Older owner households grew just 31% compared with older renters increasing by 43%. Source: HousingWire

Laundry rooms and energy-saving features such as Energy Star appliances, windows and whole house certification are among the most wanted home features, according to survey results from NAHB released during a press conference at the NAHB International Builders’ Show in Las Vegas. NAHB surveyed nearly 4,000 home buyers — those who have either recently purchased a home or plan to purchase a home within the next three years — ranking 175 features based on how essential they are to a home-purchasing decision. The top 10 features also included home-storage needs, such as garage storage and walk-in pantries, as well as hardwood flooring, a patio and exterior lighting. Housing trends across the board include a continued decline in the average home size and decreased demand for upscale features such as three-plus-car garages. In 2018, according to information from the U.S. Census Bureau, the average new home declined to 2,576 square feet — down from its peak at 2,689 square feet in 2015 — driven in part by increased production in townhouses, which comprised 14% of new home starts. Source: NAMB

Weekly Mortgage and Real Estate Report – Week of April 1, 2019


Here Comes Proof

At the end of this week, the job numbers for March will be released. With these numbers we will see proof of one of two directions. The first could be that the dismal jobs numbers in February were just an anomaly. January’s job growth was reported as very strong and when you take January’s numbers together with February, one can see that the average growth per month was not far below average. Therefore, we don’t need a huge bounce back month in March to even things out — just an average month.

On the other hand, a weak report for March could be seen as the start of a trend of slower jobs growth and thus slower overall economic growth. This means that this week’s jobs report is more significant than the others we have witnessed over the past several years. In the aftermath of the recession, the United States has witnessed a record of over 100 months of positive jobs growth, and the past few years have been very strong. So, it would not be surprising to see somewhat of a slowdown in the months ahead.

Keep in mind that it is not just the jobs growth for March that is important. In the past several months, we have seen some pretty significant revisions to previously released numbers. Thus, an upward revision in February’s numbers is also a possibility. The analysts will also be looking at the labor participation rate to see how many of the long-term unemployed or retired are re-entering the workforce, because the low unemployment rate tells us that we need more workers to become available in order for the labor force to keep growing. Overall, this will be a very interesting jobs report, and the results may give us a clue as to the direction of the economy and especially interest rates.  


 The majority of Americans—79 percent recently surveyed—still believe that owning a home is a vital component of achieving the American dream, according to a Bankrate.com survey of more than 2,000 consumers. Americans placed achieving homeownership ahead of retirement (68 percent), having a successful career (63 percent), and owning an automobile (58 percent), according to the survey. While the majority of respondents rated ownership high, they do see several challenges to overcome to achieve it. About half of the survey’s respondents say they don’t own a home because they can’t afford it on their income. Four in 10 Americans say they don’t own because they can’t afford a down payment and closing costs, while one-third cite high home prices as the major obstacle. But a rigid savings plan could put more consumers into homeownership. “Put yourself on financial lockdown for at least six months before purchasing a home,” says Dana Scanlon, a real estate pro with Keller Williams Capital Properties in Bethesda, Md. “Don’t buy new furniture, keep your old car running, and check your spending habits.” Luis Rosa, a financial planner in Henderson, Nev., suggests a two-year plan to save up for closing costs and a down payment and to boost credit scores. Source: Realtor®.com

The number one way younger millennials and Generation Zers learn about brands is from friends and family, outpacing Google, social media, Amazon, retail stores, and television in descending order, according to a recent study of 18- to 29-year-olds by Swift Prepaid Solutions, a payments technology provider. As digital natives, members of this group of emerging buyers are highly tech-savvy, and, like their older counterparts, prefer to browse online before making a purchase. However, because brand loyalty among these buyers is largely driven by opinions of people they know and trust, it’s crucial for real estate pros to build strong, lasting relationships with their clients in order to attract more business. Here are three ways to provide high quality customer service to strengthen your brand reputation and build loyalty among your clientele: (1) Reply to all emails and phone calls immediately; (2) Exercise unparalleled transparency; and (3) Focus solely on your clients. Customer service consultant, speaker, and trainer Micah Solomon suggests getting to know clients on a personal level, like a bartender, doorman, or hairstylist would. Work on remembering details like the names of their children or pets. True personal service will differentiate your brand. Source: REALTOR® Magazine

Some homeowners bypass the permit process when they remodel their home. They may find the process too expensive or cumbersome. Permitting fees can sometimes cost hundreds of dollars or more. Some homeowners may believe that if they go ahead with a kitchen or bath remodel without a permit, they’ll likely never get caught. But failing to get a permit could be troublesome when they go to sell the home. Most states require homeowners to fill out a disclosure statement when they go to sell. In that form, sellers are usually asked if they completed work to the home without a required permit. Lying about it can also backfire—the sellers could be sued later by the new homeowner for making false statements. “You can personally become liable for work carried out without permits,” writes Bill Gassett, a real estate professional with RE/MAX in New England, for The Washington Post. “Maybe the finished basement built by the previous homeowner with the fancy kitchen that sold the home has to be ripped out, or you’ll have to pay a penalty.” Also, if there’s any incident that was caused by the lack of permits, the homeowner may face a denial of their insurance claim. Source: RIS Media 

Weekly Mortgage and Real Estate Report – Week of March 11, 2019


Fed Looking at the Data

This does not always happen, but Friday’s job report came just in time for the Federal Reserve Board to analyze the data and act on it during their next meeting which starts one-week from today. Before the data was released, most analysts were predicting no action to be taken at this meeting. As a matter of fact, most predictions are ranging from no rate increases this year to perhaps one rate increase towards the end of the year.

Friday’s job report certainly supports this thinking. For the month, the economy created 20,000 jobs, which was much less than expected, even considering the large gain in January and snowy weather in February. We have been subject to significant revisions of the previous months of job data recently and this time there was not much of an adjustment, as the numbers from the last two months were revised upward by only 12,000 jobs. The headline number is the unemployment rate, and this came in at 3.8%, reversing the increase of the previous month. For Fed watchers, the headline number typically is wage growth. Wages grew 3.4% from the previous year — higher than forecasts.

What does this all mean for next week? Certainly, the jobs report will be seen as weak, but as we pointed out the reports have been volatile lately. One thing we can say is that, no matter what the Fed does, spring will still be coming next week, and it will also be Saint Patrick’s Day. For those of us who don’t like winter weather, we will be celebrating regardless of the Fed. Some nice language concerning how they like low interest rates could also be a cause for celebration as the spring real estate market should be heating up as well.  


 Home price growth is slowing down and that could spell good news for buyers who were previously priced out of the market. According to CoreLogic’s Home Price Index (HPI) and HPI Forecast for December 2018, though home prices increased by 4.7 percent year-over-year, they’re projected to grow at a slightly lower rate of 4.6 percent year-over-year through December 2019. Comparing the annual average HPI and HPI forecast for 2018 and 2019, price growth is forecasted to slow from 5.8 percent to 3.4 percent, the report indicated. Prices are expected to decrease by 1.0 percent on a month-over-month basis between December 2018 and January 2019. These trends are likely to represent good news for potential homeowners. In 2018, CoreLogic together with RTi Research of Norwalk, Connecticut, conducted a survey measuring consumer-housing sentiment, assessing attitudes toward homeownership and the driving force behind the decision to buy or rent a home. According to this survey, when renters were asked how interested they were in owning a home or residence, 36 percent felt homeownership would allow them to fulfill a dream and provide a place to raise a family. On the other hand, 45 percent of those surveyed claimed they could not afford to buy or take on the responsibility of ownership at this time. However, the latest HPI report indicated that as home-price growth cooled and incomes rose, buyer affordability was likely to improve and help “home sales to pick up.” Source: MReport

Seniors who were born after 1931 are less likely to sell their homes than were previous generations —and it’s a significant cause of the housing shortage, according to the “February Insight” report from Freddie Mac. The result is around 1.6 million houses were not for sale through 2018, representing about one year’s supply of new construction, or more than 50 percent of the shortfall of 2.5 million housing units—that the market faces. The scarcity factor serves to increase housing prices and make renting more attractive to younger generations. However, a shortfall of new construction increases house prices and rental rates. “We believe the additional demand for homeownership from seniors aging in place will increase the relative price of owning versus renting,” said Sam Khater, chief economist at Freddie Mac. “This further highlights the importance of addressing barriers to the production of new housing supply to help accommodate long-term housing demand.” Improved health and higher levels of education are causes of the trend. And it’s likely to increase over time as improvements in health care and technology make aging in place easier. For example, the capability to Skype with a doctor. Source: DS News

Are home prices affected by proximity to hospitals and colleges? That’s what a team of computer scientists from University of California – Riverside wanted to discover as they began an analysis of median home price data from 13,105 ZIP codes over 21 years and rent data from 15,918 ZIP codes over seven years to compare a ZIP code’s appreciation, volatility, and vacancies to the size of a university or hospital within that ZIP code. Their results confirmed that colleges and hospitals are ‘opportunity hubs’ with factors including jobs and high wages, but they also found that homes near these institutions see faster rises and falls of prices, creating a risk for investors. Led by Hristidis and UCR computer science doctoral student Ryan Rivas, the group also determined that homes close to a university did have higher average prices and rents and were highest in ZIP codes with a university of 10,000-20,000 students. Larger hospitals nearby meant higher average prices and rents – especially for one-bedroom homes in smaller ZIP codes – while those with smaller hospitals actually saw prices below the average for ZIP codes with no hospital. Source: Mortgage Professional America