The Kallhoff Team

Friday, July 19, 2013

Are Young Home Buyers Being Left Behind?

DAILY REAL ESTATE NEWS | FRIDAY, JULY 19, 2013

Young, first-time buyers are struggling to purchase a home. With low inventories of homes for sale, young first-timers are finding themselves competing against other bidders who are willing to pay cash. Meanwhile, many young buyers are having trouble qualifying for a loan, often due to high student loan debt.

Overall, young buyers have been left out of the housing recovery more than any other age group, according to a new USA Today analysis. The home ownership rate for 25 to 34 year olds has gone from 46.7 percent in 2006 to 29.7 percent in 2011 — a decline of 7 percentage points. As comparison, the 45-54 age group has seen home ownership rates fall 3.8 percent.

National home ownership rates during the same timeframe has fallen 2.7 percentage points — from 67.3 percent to 64.6 percent, USA Today reports.

"There's been no situation as devastating as this, and it's probably taken a greater toll on the younger generation," says Budge Huskey, CEO of residential brokerage Coldwell Banker. "They've seen other friends or acquaintances that may have even gone through a foreclosure. There's a psychological aspect of the impact of the recession that goes beyond the mere finances."

The median age of first-time home buyers was 31 in 2012, according to National Association of REALTORS® data. First-time home buyers are viewed as critical to a healthy housing market, allowing older Americans to purchase their next home and helping to stimulate new-home construction.

But the number of first-time home buyers has been steadily falling in recent years. In May, first-time buyers accounted for 28 percent of existing-home purchases — a drop from 34 percent a year ago, according to NAR.

"Giving people the opportunity to buy a home is a way to provide them a vehicle of accumulating wealth," says Chris Hebert, research director for the Joint Center for Housing Studies of Harvard University. "Making sure this next generation has this opportunity will be important for their well-being."

Source: “Housing recovery leaves Millennials behind,” USA Today (July 17, 2013)

Generational Home Buying Trends

http://realtormag.realtor.org/daily-news/2013/07/19/are-young-home-buyers-being-left-behind

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Thursday, July 18, 2013

Fed: Housing Helping Economic Growth

DAILY REAL ESTATE NEWS | THURSDAY, JULY 18, 2013

The recovering housing market is partially responsible for spurring economic growth, according to a recent Federal Reserve report. Eleven of the 12 districts included in the Fed survey say they are experiencing “modest to moderate” economic growth, while the 12th district, Dallas, reports “strong” growth.

“Residential real estate and construction activity increased at a moderate to strong pace in all reporting districts,” the Fed said in its Beige Book, which is based on anecdotal reports from 12 regional banks. “Manufacturing expanded in most districts since the previous report.”

Housing construction and home prices have shown improvement in the past year, the Fed notes. Consumer spending also has increased, and hiring is holding steady in most areas. The housing recovery has also led to a rise in the production of lumber, materials, and construction equipment, the Fed notes.

"Housing activity and prices seem likely to continue to recover, notwithstanding the recent increases in mortgage rates, but it will be important to monitor developments in this sector carefully," said Fed Chairman Ben Bernanke in testimony Wednesday before lawmakers. The Fed has made moves in recent years through a bond purchases program that has helped to keep mortgage rates near historical lows. Rates have been rising in recent weeks as the Fed announced that it would be scaling back its program later this year.

Source: “Fed Survey Shows Growth Mostly Modest Across U.S.,” The Associated Press (July 17, 2013) and “Housing Starts Fall to 10-Month Low,” Reuters (July 17, 2013)

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Wednesday, July 17, 2013

Did Cash Buyers Save the Housing Market?

DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 17, 2013

Cash real estate sales have risen the last few years to some of the highest levels on record, and a new report by CoreLogic suggests that these sales heavily helped to contribute to stabilizing the residential housing market and leading it into recovery.

In the early 2000s, cash sales averaged 25 percent of home sales. But in 2007 and 2008, cash sales began to rise as foreclosures started to increase. By 2012, cash sales were making up 40 percent of sales and have since inched down to 39 percent as of May 2013.

“Without cash sales overall, sales today would be much lower and the price declines would have been worse,” Mortgage News Daily reports about CoreLogic’s findings. “More recently, cash sales have helped fuel price increases dramatically in several boom and bust markets. Median prices for cash sales are up 24 percent from a year ago while prices of sales generally have increased 15 percent.”

The rise in home prices will lead to a lower presence of cash sales as investor activity returns to more traditional levels, CoreLogic notes. With cash sales receding in recent months, first-time and trade-up home buyers will need to step in to keep the recovery expanding, CoreLogic notes.

Source: “Cash Sales Saved Housing Market -CoreLogic,” Mortgage News Daily (July 16, 2013)

http://realtormag.realtor.org/daily-news/2013/07/17/did-cash-buyers-save-housing-market

Tuesday, July 16, 2013

'Boomerang Buyers' Are Staging a Comeback

DAILY REAL ESTATE NEWS | TUESDAY, JULY 16, 2013

“Boomerang buyers”—former home owners who have gone through a short sale, foreclosure, or bankruptcy in the past few years and are saving up for a down payment to purchase a home again—are coming back. They're expected to flood markets in some of the hardest hit areas for short sales and foreclosures in the coming years. For example, boomerang buyers are predicted to account for nearly one in every five home sales in the metro Phoenix area this year—double the projected U.S. rate.

Rising rents and the desire to own again now that the economy is more stable are driving many boomerang buyers to re-enter the market. They also want to jump in before interest rates and home prices climb too much higher.

But how soon they can jump back in will depend on the type of loan they had as a previous home owner. For example, boomerang buyers who had FHA loans may need to wait only three years if they can prove that a hardship, such as job loss or death of a wage earner, led to their foreclosure or short sale.

Borrowers have typically been required to wait five to seven years to qualify for another loan, but mortgage giants have begun to change their rules to allow home owners who underwent a foreclosure or short sale to qualify sooner. Those who underwent a short sale will likely qualify the soonest. However, not all lenders are participating, so borrowers will need to shop around.

Freddie Mac’s wait time is usually four years following a short sale or deed-in-lieu, and seven years after a foreclosure. Fannie Mae may require a seven-year wait for a foreclosure, but only a two-year wait following a short sale as long as the borrower can provide a 20 percent down payment.

The following markets have the highest share of boomerang buyers, according to John Burns Real Estate Consulting:

Riverside-San Bernardino, Calif.: 4.1% (percentage of all U.S. boomerang buyers in 2013)
Los Angeles: 3.7%
Phoenix: 3.6%
Chicago: 2.5%
Atlanta: 2.4%
Las Vegas: 2.12%
Washington, D.C.: 2.1%

Source: “New Wave of Buyers Ready to Hit the Real Estate Market,” The Examiner (July 15, 2013) and“Phoenix housing market sees 'boomerang buyers' sooner than expected,” The Arizona Republic (July 14, 2013)

http://realtormag.realtor.org/daily-news/2013/07/16/boomerang-buyers-are-staging-comeback

Monday, July 15, 2013

5 Cities Where Salaries Are Rising Most

DAILY REAL ESTATE NEWS | MONDAY, JULY 15, 2013

On average, U.S. employees saw a 2.5 percent rise in their wages in the past year. But in some places of the country, workers are seeing even larger increases to their pay. These are the five cities seeing the largest pay hikes:

San Francisco: a 4.3 percent pay increase in one year

San Francisco is known for its high-salary tech jobs. And those high salaries are needed: The city is among one of the most expensive in the nation in terms of cost of living—about 70 percent higher than a city such as Indianapolis, according to PayScale.

Baltimore: +3.5%

The area has added 1,600 financial services jobs in the last year and it’s known as a hub for health care jobs—being the home to Johns Hopkins and other research hotspots.

Chicago: +3.1%

Chicago offers lots of jobs centered around the financial markets, since it’s the home to the Chicago Mercantile Exchange, Chicago Board of Trade, and the Chicago Board Options Exchange.

Phoenix: +3.1%

The pick-up in the housing market has led to a big increase in construction jobs in Phoenix—more pronounced here than in other parts of the country. Phoenix is attracting more residents from California; the cost of housing there is nearly 70 percent lower than in San Francisco and 56 percent lower than in Los Angeles.

Atlanta: +3%

Atlanta serves as the headquarters for many major companies, such as Coca-Cola and Home Depot, but it also has a bustling healthcare information industry that has helped salaries grow.