BABY BOOMERS POISED TO INFLUENCE THE HOUSING MARKET

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Baby-Boomers-Poised-to-Influence-the-Housing-Market-240x170Whether they decide to move from their current homes or age in place, the decisions baby boomers and other older homeowners make during the next few years could significantly impact the single-family housing market. Today, baby boomers and other homeowners age 55 and older control almost two-third (or about $8 trillion) of the nation’s home equity. There also are more than 67 million 55-plus homeowners.

The new “Freddie Mac 55+ Survey”—which polled 4,900 homeowners born before 1961 regarding their current housing situations, plans and willingness to help their grown children become homeowners —found that this generation has the potential to generate significant new demand for mortgage credit and to tighten home-buying competition, especially for millennials and other first-time home buyers.

Here are some of the survey’s key findings:

• Consistent majorities said they are “very satisfied” with their current homes (64 percent), their communities (59 percent) and quality of life (54 percent). Nearly 90 percent of the respondents said people their age should own a home.

• Seventy-six percent of homeowners were confident they would have a comfortable retirement. These feelings were echoed across racial lines and shared by 55-plus homeowners who are still working, as well as retirees, and the 44 percent of homeowners surveyed had a mortgage.

• Consistent majorities said homeownership makes financial sense for married people with children (96 percent) and without children (85 percent), as well as single people with children (79 percent) and without children (53 percent). Almost 25 percent of the respondents also said they have offered down payment assistance to someone.

• This works out to an estimated 42 million homeowners who don’t plan to move. About a quarter (23 percent) indicated they would need major renovations to keep their homes accessible and a third (34 percent) would pay for improvements by refinancing their mortgage or taking out a second loan or home equity line of credit.

• Although movers were in the minority, it was a big minority. According to the survey, almost 40 percent of all 55-plus homeowners said they would like to move at least once more if they had complete control over it. This isn’t just about downsizing to a rental or nursing home; 19 million planned to buy a home and nearly 8 million expected to move within the next four years. Half of the 19 million likely movers also expected to buy less expensive homes.

DISPELLING THE MYTH ABOUT MILLENNIALS AND HOMEOWNERSHIP

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mythaboutmillenialsandhomeownership-240x170“The American Dream of homeownership is as strong today as ever.” That’s the belief of HUD Secretary Julián Castro, who in a May 10 address at the National Association of Realtors’ Regulatory Issues Forum said millennials are just as committed to homeownership as their parents and grandparents.

Despite a widespread impression that members of the younger generation are not interested in owning a home, Castro noted a recent survey by TD Bank that found 40 percent of millennials are planning on buying their first homes during the next year.

Student loan debt has been the main obstacle to millennials buying a home, Castro said. About 40 million Americans have some amount of student loan debt and about 70 percent of students graduate with student loan debt, with the average amount of debt at graduation spiking by 56 percent from 2004-2014. The increase has been so great that it has caused many parents and grandparents of millennials to shoulder that debt, with 20 percent of millennials now providing some type of financial assistance to their parents and grandparents.

But things are beginning to improve, Castro said. The number of student-loan delinquencies is declining, and economic improvements have resulted in the creation of 14.5 million jobs during the past 74 months. The average hourly wage also has risen 14 cents in March and April, and the current unemployment rate of 5 percent is the lowest it has been post-recession.

The housing market is a part of the nation’s overall economic strength, he added. “Real residential investment has grown by more than 8 percent for six straight quarters, highlighting the housing sector’s solid, steady recovery,” Castro said. “In fact, growth in residential investment has substantially outpaced growth in overall GDP.”

Castro noted that 1.3 million families have taken advantage of the FHA’s lower mortgage insurance premiums since the association sliced its premium by 50 basis points in January 2015. The immediate result of the mortgage insurance premium cut was a 27-percent increase in the number of home loans endorsed by the FHA from 2014-2015 (up to 753,000), with many of these loans being secured by first-time homebuyers.

CAN A HOMEOWNER ASSOCIATION SHIFT REPAIR COSTS TO OWNERS?

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homeownerassociaton-240x170People who buy condos reap numerous benefits that are not available to traditional homeowners. Condo owners, for example, enjoy professional maintenance and repair services that alleviate much of the upkeep costs that homeowners must tackle on their own.

However, despite many of their maintenance costs being covered by the homeowners’ association or by the property owner, condo owners still may be forced to pay some costs for damages to the property directly outside of their condominiums. These costs can lead to contentious situations between the homeowners’ association and the condo owner.

Thanks to a recent change to the homeowners’ association laws in California, there may be little that condo owners can do to contest these costs in court. It used to be that owners could go to court and challenge the association if the damage could be linked back to common use facilities or fixtures. A court ruled in favor a condo owner by stipulating that there could be no way to distinguish one section of the common use facility or fixture from another and thus no way to prove definitively that the damage was caused by or the responsibility of the condo’s owner.

However, a change to the law now states that homeowners’ associations can in fact pass on these expenses to the owners and escape having to pay for costs like those incurred when fixing a broken gas line or a backed up sewer line. Condominium owners themselves may have to pay for these damages without legal recourse.

 

 

CHALLENGING CURRENT HOUSING TRENDS

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Over the last few years, two disconcerting trends have been rearing their ugly heads in the housing industry. The first is that household formation has been standing still while the second is a dwindling rate of homeownership. However, the first trend may be recovering since the millennial generation is starting to make its way into the world by finishing college and obtaining well-paying jobs. Unfortunately, homeownership rates are still dropping.
Challenging the Trends
A study completed by the Mortgage Bankers Association, or MBA, tracked data from 1975 to 2014. According to the assessment, during the next 10 years, the demand for houses will grow. In the report, the research team said, “By 2024, demographic and economic changes will bring what could be one of the largest expansions in the history of the U.S. housing market.” In fact, the research group estimated that the growth would total more than 15.9 million households.
Societal changes and the Great Recession caused many people to alter key life stages. In a comparison between the early 1990s and now, more of today’s women are going to college to earn a degree. As a result, people are marrying later in life and starting families in their 30s, which is causing them to put off homeownership.
Growth Predictions
According to the MBA study, the recent drop in homeownership is unlikely to remain a permanent condition. In the past, people usually purchased homes based on the country’s economic conditions, federal policies regarding homeownership and the mortgage markets. In addition, an aging population generally signals a boost in the housing market, and the millennials are growing up fast.
Tags: homebuyers, homeowners, market trends, real estate
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AMERICANS THINK HOMEOWNERSHIP IS A SOUND INVESTMENT

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If you are like a majority of Americans, you have faith in home buying and believe you can sell you home for at least the price you paid for it. Many Americans also believe now is a smart time to purchase a new home.
Over the last few years, the reasons behind these opinions have remained the same. You may want to build equity, strive for a safe living environment, and want freedom to select the neighborhood where you live.
Owning a home is a big part of the “American Dream,” which is thriving in many communities. Since 2013, the amount of renters who contemplate home buying has grown. Approximately 61 percent of renters describe home ownership as a top priority. A high number of these people would appreciate the opportunity to participate in pre-purchase counseling programs.
In recent years, attitudes toward real estate have improved. You may have noticed increased activity in the housing market and have lower concerns about foreclosed properties. However, certain obstacles remain, which may hamper your ability to buy a home. If you are like many individuals, you may lack the money for a down payment or are struggling with student loans. With improved market conditions, house prices have increased, and inventory has decreased.
On a high note, millennials under 35 years of age have an upbeat and positive opinion concerning America’s future. Their positive views may brush off onto the rest of the country and contribute to the continuing recovery of the housing market.

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