Category: Real Estate

The Share of Single Homeowners Is at Record High | Realtor Magazine

Even as home prices rise, more Americans are heading into homeownership alone. The share of U.S. homeowners who are single reached a record 38.4% in 2018, the latest data available from the U.S. Census Bureau. A separate report says 48.5% of singles aged 18 to 34 owned a home in 2018, the highest level since 2009.

The numbers are higher because more Americans are single, analysts say. Also, an improving economy and strong job market is fueling more Americans to step out on their own in homeownership, even as home prices escalate, USA Today reports.

The share of 18- to 34-year-old Americans who are single reached a record in 2018 at 72.3%. “People are getting married later in life,” Ralph McLaughlin, chief economist for Haus, a company that partners with individuals to buy homes to reduce their costs, told USA Today. Women are increasingly entering the workforce and are rising to higher-level positions, delaying marriage and having children, he says. Older millennials who were delayed by the Great Recession in 2007 through 2009 also may have delayed marriage to put their careers first.

Also adding singles to the housing market: the rising number of Americans who have divorced later in life. In 2018, a record 16.1% of people 55 and older were divorced, up from 5% in 1980. A divorce can produce two single homeowners, McLaughlin notes.

But being single isn’t curbing appetite for homeownership. “Owning a home is a better deal than renting” in the majority of the country, McLaughlin told USA Today. Homeowners—no matter single or married—are realizing that and taking the plunge.

Builders are starting to gradually respond by ramping up entry-level homes. From 2015 to 2018, the share of homes less than 2,400 square feet increased to 51% from 47%, according to an analysis from the National Association of Home Builders.

But buying a home solo can pose challenges. The national median home price has increased 54% since 2012. However, the growth in average wages in that time has increased only by 20%, according to data from the National Association of REALTORS®.

Single homeowners tend to be more common in markets that are less expensive. For example, Des Moines, Iowa, tops the nation with nearly a quarter of all young adults who are single homeowners. On the other hand, less than 10% of young people are single homeowners in pricier markets like New York or San Francisco.

Investors Find Pet-Friendly Properties More Profitable | Realtor Magazine

Today, American households are more likely to include pets than children under the age of 18, according to the U.S. Census Bureau’s American Housing Survey. The share of households with kids stands at 27%, while the share of households with pets is at 68%. As a result, investors in residential real estate are targeting this large demographic of pet owners by making their rental properties more appealing and pet-friendly.

Pet-friendly rentals can also increase investors’ profits, suggests a study conducted by FIREPAW Inc., an animal welfare nonprofit research firm. Also, vacancy rates for rentals that allow pets tend to be lower than those that don’t allow pets. Furthermore, landlords spent less than half as much money on advertising their pet-friendly units, and were able to increase their profit by charging separate pet deposits.

This has made more investors want to make their properties appeal to pet-owning tenants. So, they’re taking on a variety of upgrades, such as swapping out carpet for ceramic tile, using pet-safe lawn products, and adding features like cat and dog doors or adjustable shower heads to bathe pets.

Pets also appear to be heavily on the minds of home shoppers. A survey by realtor.com® showed that 87% of home buyers with pets say they take their pets’ needs into account when searching for a home.

“To target the pet parents themselves, investors can provide information about local services such as pet sitters and dog walkers, plus leave pet-centric gifts such as toys and treats upon move-in,” Christopher Long, founder and chief executive at Radius Realty, wrote in a column for Forbes.com.

Certainly, damage to a property from pets is a chief concern among landlords. The FIREPAW study, however, found that tenants with pets tended to cause less damage than tenants with children. Further, even the worst of damages caused by pets tended to be “far less than the average rent or the average pet deposit,” the report notes.

Improve a Home’s Lighting Without an Electrician | Realtor Magazine

Lighting can set the right mood in a home and make it feel more welcoming, and achieving that doesn’t always require an electrician. Curbed.com asked three designers to provide their best tips for improving the lighting in a home. Here are a few of their suggestions.

Match the lightbulbs. Change the mismatched types of lightbulbs, particularly old compact fluorescent bulbs, Jenny Guggenheim, owner of Guggenheim Architecture and Design Studio in Portland, Ore., told Curbed. Replace them with one type of LED bulb. “In old homes, there are sometimes three or four different types of lightbulbs—each with its own color temperature,” says Guggenheim. “This easy fix can go a long way towards elevating your lighting.” Try using 2,500K to 2,700K warmth LED bulbs. “That range mimics daylight, but a little on the warmer side,” Guggenheim told Curbed.

Layer the light. By layering the light in your space, you can create a more welcoming atmosphere. Have at least two layers of light, designers say. The first layer will likely be an overhead, brighter light. For the second layer, use a light on a table or a floor lamp. Make sure to offset the brighter light with a layer of more diffused lighting. “You’ll immediately recognize how expansive the light is—it’s softer, warmer, and more flattering,” she says. Diffusion can take many forms, including the opaque glass of a bulb and the fabric, glass, or paper of the shade,” Alex Kalita, founder of Common Bond Design in Brooklyn, N.Y., told Curbed.

Watch the scale. Avoid using too small a light source for the space it’s in, Guggenheim suggests. For example, don’t use a tiny table lamp in a large entryway.

Place lamps throughout. “I love putting lamps on shelves mixed in with books or on the open shelving in the kitchen,” Megan Pflug, designer and owner of the Woodhouse Lodge in Greenville, N.Y., told Curbed. “You can even put one on top of the fridge.”

6 Design Trends Already Shaping 2020 | Realtor Magazine

From bold, bright colors to statement wall art, several design trends are heating up in 2020. “Look for daring color statements and unexpected uses of natural elements to accessorize and help transform home designs,” says Angela Nuessle, national vice president of interior design at PulteGroup. The PulteGroup design team is calling out these six home design trends for 2020.

• Curvilinear forms. Arched lines with smooth transitions can help soften the look of a home, designers say. “From couches and chairs to tables and ottomans, curves add a retro vibe that spans from midcentury to high glam,” design forecasters from PulteGroup note.
• Natural texture. More home elements are taking their raw form. “From household accessories to furnishings and textiles to home decor, natural texture will add visual significance, intensity, and depth to interiors,” the designers say.
• Unique adornments. For example, leather accents and belts are being added to chairs and beds. Gilded hardware is popping up on cabinets and furniture. Ornamentation is creating more unique spaces, designers say.
• Different wall art. “This year will move beyond traditional design to focus on wall applications that incorporate mixed-media and abstract elements with natural elements, including yarn, wood, woven fibers, and stone,” the designers say. “The key is to achieve texture, depth, and intensity with unique pieces that will make a lasting impression.”
• Bold patterns. Large graphic florals and botanicals continue to be popular in home design. “Embracing the wild side comes with color palettes reminiscent of camouflage and a pronounced focus on alluring moments in nature coming into play with design,” the PulteGroup designers note.
• Color statements. The trend goes beyond just one accent wall. “More distinct elements, such as upholstery, case pieces, and large statement art, will embrace this impressive trend,” PulteGroup designers say. “They key is to strike balance between incorporating bold color statement pieces with subtle, layered neutrals.”

Cobuying Gains Traction Among Young Adults | Realtor Magazine

Faced with rising home prices and student loan debt, some cash-strapped millennials who don’t have family support are teaming up with friends to carve out a path toward homeownership. About 4% of first-time buyers purchased homes with housemates from July 2018 through June 2019, according to data from the National Association of REALTORS®. That is double the percentage from a year ago.

“There’s a lot of people who are looking at homes today and saying, ‘I can’t afford this by myself. I’m [on a] single income. How can I get into a house?’” Jessica Lautz, NAR’s vice president of research, told realtor.com®. “Finding someone who’s renting currently and matches your ideal [co-buyer profile] sounds like a great idea. Why not have a stable home and gain equity at the same time?”

For example, Kelsey Perkins, a single mother of two, told realtor.com® she was able to purchase a $470,000 five-bedroom home last year in the Denver area by purchasing with two friends. They live in the house together, and each person pays just under $900 a month to cover the mortgage. Additional expenses are split. “What we could do collectively was much more than we could do individually,” Perkins told realtor.com®.

The cobuying trend is likely to expand beyond urban centers, Lautz predicts. The trend will likely gain momentum as more millennial buyers move to small towns in search of affordability, she adds.

But as these arrangements grow, real estate pros caution that negotiating the living arrangement can be tricky. Michael Soon Lee, a broker-associate with Realty One Group in San Ramon, Calif., says there are many issues to consider when buying a home with housemates, such as whose names go on the title, who’s responsible for collecting and making mortgage payments, and who will oversee maintenance and repairs. Cobuyers will need to have a comprehensive legal agreement to determine each person’s responsibilities and plan an exit strategy in case one or more parties want to end the arrangement, he says. “[Cobuying] is a business transaction, even if it is done among friends,” he told realtor.com®. “Compromise is the ultimate word. You’re looking for people who are flexible and have the greater good in mind. Those are the people who make this work the best.”

Mortgage Rates Inch Up Slightly This Week | Realtor Magazine

© REALTOR® MAGAZINE

 

The 30-year fixed-rate mortgage averaged 3.49% this week, Freddie Mac reports. “The low mortgage rate environment continues to spur homebuying activity, with applications to purchase a home up 15% from a year ago,” says Sam Khater, Freddie Mac’s chief economist. “We’ve seen new residential construction surge over the last few months, on pace to reach the highest level in more than a decade. This is a good sign for the inventory-starved housing market and is a promising indication for the spring homebuying season.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 20:

• 30-year fixed-rate mortgages: averaged 3.49%, with an average 0.7 point, up slightly from last week’s 3.47% average. Last year at this time, 30-year rates averaged 4.35%.
• 15-year fixed-rate mortgages: averaged 2.99%, with an average 0.8 point, up slightly from last week’s 2.97% average. A year ago, 15-year rates averaged 3.78%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.25%, with an average 0.2 point, falling from last week’s 3.28% average. A year ago, 5-year ARMs averaged 3.84%.

Housing Permits Surge to 13-Year High | Realtor Magazine

Total housing starts fell 3.6% in January, but that’s not what housing economists were focused on with the latest data release from the Commerce Department on Wednesday. Instead, it was the gauge on future home building—housing permits—that had them upbeat about what could be coming. Housing permits last month climbed to the highest level since March 2007.

Still, it wasn’t all great news to the industry: Housing starts dipped to a seasonally adjusted annual rate of 1.57 million units in January, the Commerce Department reported Wednesday.

But “the latest month’s decline in housing starts is nothing to be concerned about,” says Lawrence Yun, chief economist at the National Association of REALTORS®. “The housing data is quite jumpy. What is important is the trend line, which is clearly on an upward path. Higher housing permit issuances are also a positive indicator for even greater production in the months ahead.”

Housing markets across the country have been facing ongoing inventory challenges, which some economists predict will only worsen in the months ahead. They have long been calling on builders to ramp up new-home construction to meet demand.

“More construction will mean more housing inventory for consumers in the later months of the year,” Yun says. “Spring months could still be quite tough for buyers, since it takes time to convert housing starts into actual housing completions. As trade-up buyers move into these new completed homes in the near future, their existing homes will be released onto the market.”

Housing permits—including both single-family and multifamily—rose 9.2% in January to an annualized pace of 1.55 million units. Broken out, single-family permits rose 6.4% to a 987,000 rate, while multifamily permits increased 14.6% to a 564,000 pace.

Regionally, housing permits posted the largest increase in the Northeast, surging 34.6% in January month-over-month. The other regions of the U.S. also posted increases, including an 8.2% uptick in the Midwest; 8% higher in the South; and 3.1% higher in the West.

It’s a Better Time to Buy Than 10 Years Ago | Realtor Magazine

A strong economy, low unemployment, low mortgage rates, and alluring mortgage rates are making it a great time to buy a home, according to a newly released report from LendingTree, an online financial services marketplace. The amount of income that buyers spent on their mortgage payments also dropped from 2010 through 2019, despite higher home prices.

“If you are in a point in your life where you’re considering buying a home today, it’s a better time to buy than 10 years ago,” Tendayi Kapfidze, LendingTree’s chief economist, told realtor.com®. “If you can get a mortgage, you’re getting much lower interest rates, and it enables you to afford more. But that also means that you’re competing with more buyers, who are bidding up the prices.”

Indeed, median sales prices jumped 53.5% between early 2012 and summer 2019, according to realtor.com®. But a decrease in average mortgage rates—by more than a percentage point from the start of the decade—is helping to offset some of that uptick. Mortgage rates have dropped from 5.09% to 3.74% during that time period. That drop could save borrowers hundreds of dollars a year to tens of thousands over the life of the loan, realtor.com® reports.

Since the Great Recession, borrowers are being more responsible too, Kapfidze says. They’re “much healthier financially than they were 10 years ago,” Kapfidze says. “One reason is because of low mortgage rates. If you refinance, [you can] reduce your monthly mortgage payments.”

Homeowners are also sitting on more equity. In 2012, nationwide equity reached a low of $8.2 trillion. In 2019, it grew to about $18.7 trillion.

Housing Likely to Withstand Future Recessions | Realtor Magazine

The economy has been going at such a robust pace that economists worry some consumers may be waiting for the next recession to hit and drive prices down, just as the Great Recession did.

But a newly released report from First American Financial Services, a title insurance company, predicts that even when the next recession comes—and the predictions are that this will not happen anytime soon—the U.S. housing market is unlikely to take much of a hit.

“While the housing crisis is still fresh on the minds of many, and was the catalyst of the Great Recession, the U.S. housing market has weathered all other recessions since 1980,” writes the report’s author Odeta Kushi, deputy chief economist at First American.

The report culls data from the National Association of REALTORS® and Freddie Mac to show how the housing market has fared during most economic downturn cycles. In many cases, home price appreciation continued at an even pace, Kushi notes. Existing-home sales growth does often experience a slight decrease.

Certainly, the Great Recession was different. But the circumstances were different, the analysis notes. Researchers say that was largely driven by a rapid increase in home building and the expansion of mortgage credit. Buyers were able to obtain mortgages with no documentation of their income and virtually no down payment. “The housing crisis in the Great Recession was fueled heavily by the fact that job loss was paired with a significant share of homeowners who didn’t have much equity in their homes,” Kushi wrote.

However, home price increases lately have been driven by a lack of inventory and high buyer demand. Homebuilding has been sluggish and has been blamed for exacerbating housing shortages across the country. More homeowners are seeing substantial increases in home equity because of the housing shortages and high demand.

“On the whole, homeowners have very high levels of tappable home equity today, providing a cushion to withstand potential price declines,” Kushi writes. “In fact, the housing market may actually aid the economy in recovering from the next recession—a role it has traditionally played in previous economic recoveries.”

Breaking Down the Costs of Building a New Home | Realtor Magazine

A lot of factors go into setting the price for a new home. Buyers may be wondering why costs are so high. The median new home price was $331,400 in December, which is much higher than the median price of $274,500 for an existing home.

Builders are up against labor and lot shortages and the rising costs of materials. Indeed, 87% of builders recently surveyed by the National Association of Home Builders say that cost and availability of labor is a “significant problem” they face. Sixty-six percent called building material prices a “significant problem,” and 63% identified the cost and availability of developed lots as another pressing issue. Builders expect these problems to continue into 2020.

Sixty-one percent of the average home sales price for a new home was comprised of construction costs in 2019, up from 55.6% in 2017, according to a new analysis from the NAHB. Finished lot costs comprised the second largest cost at 18.5% of the sales price.

While costs have risen, the profit margin for builders has decreased slightly, falling from 10.7% of the sales price in 2017 to 9.1% in 2019.

The following is a chart from the National Association of Home Builders that breaks down the costs of constructing a new home.

© National Association of Home Builders