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.

SPRING USHERS IN ROBUST HOME MARKET

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Spring-Ushers-in-Robust-Home-Market-240x170This spring’s real estate market is coming in strong. New data released by realtor.com shows that homes in May are moving off the market at the fastest pace seen since the housing recovery began, despite record-high asking prices.

Based on realtor.com’s preliminary findings, homes spent a median of 65 days on the market in May—the same length of time as a year ago and three days quicker than April. The median home was listed at $250,000—9 percent higher than a year ago and 2 percent higher than the past month. For-sale housing inventory also has continued to increase on a monthly basis, but remains lower than a year ago.

Meanwhile, more than 550,000 listings have been added to the market to date in May (a 4 percent increase), but the level of inventory remains 4 percent lower than a year ago. Site traffic data on realtor.com shows a 30 percent growth in searches for homes for sale, compared with May 2015.

“Pent-up demand and low mortgage rates are driving consumers into the market with urgency,” says realtor.com Chief Economist Jonathan Smoke in a statement. “However, the recurring issue of limited supply is leading to higher prices.”

Thankfully, Smoke adds, gains in new single-family construction and new home sales are providing a pressure release. “Potential buyers are finding they can avoid a competitive bid situation if they elect to sign a contract on a home to be built,” he says. “As the share of new homes sold goes up, we should eventually see signs of more balance in the existing home market, like lower price appreciation. However, we clearly aren’t there yet.”

Here is a snapshot of the realtor.com’s May data:

• Median age of inventory is estimated to end at 65 days, the same as May 2015 and down 4 percent from April.

• Median listing price for May should reach a record high of $250,000—a 9 percent increase year over year and a 2 percent increase month over month.

• Listing inventory in May is showing a 4 percent increase over April. However, inventory decreased 4 percent year over year.

WILL ZERO-ENERGY HOMES ALTER THE FUTURE OF REAL ESTATE?

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Zero-Energy-Homes-240x170There’s been a lot of buzz recently about the zero-energy building trend, especially in California, which recently mandated that all new residential buildings must be built to zero-net energy specifications by 2020. If you’re not up-to-speed with the zero-energy building concept — relying on a home’s extraordinary energy conservation and on-site renewable energy to meet heating, cooling and energy needs — here is some info from RIS Media on what you can expect to see when builders start taking green homes to a whole new level:

• These high-performance homes will produce as much energy as they consume by incorporating a photovoltaic system (a linked collection of solar panels) — or other renewables — into the mix. With the majority of these homes still connected to the grid, any excess energy that’s accumulated throughout the day is fed back to the grid, so it can be used at night or on cloudy days.

• Not only are zero-energy homes designed and built as energy-efficiently as possible, residents can look forward to zero energy bills — other than the monthly fee required to connect to the grid — and zero carbon emissions.

• While zero-energy homes look like any other home from the outside, their exterior walls tend to be thicker than those found in traditional homes. They also incorporate heating and cooling systems that are a lot more efficient than typical systems, affording homeowners the luxuries they would expect in a home today.

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.

THE NEW DEFINITION OF SUBURBS

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newsuburbs-240x170A generation ago, the American dream was based in the suburbs. After an economic downturn and a housing crash, the upcoming generations have their own version of the American dream, and it looks decidedly more urban.

In fact, while more people are moving back to cities in search of better jobs and more conveniences, suburbs have been struggling to survive. That is why more suburbs are turning to urbanization to revitalize their communities.

This process of urbanization is taking place across the country from New Rochelle, New York, to San Ramon, California. These suburbs have lost a lot of residents in recent years, leading to structural decay and economic stagnancy. To combat dwindling population numbers, these suburbs have changed the community focus. Shopping malls are being exchanged for office buildings. High rise buildings are replacing empty storefronts, combining commercial space with apartments.

More commercial development attracts businesses, which is critical in a time when workers are in desperate need of jobs. By including downtown living space, these communities can appeal to younger workers, who have an interest in keeping their lives simple. Smaller apartments are not only more affordable, but they give these young people more flexibility while they get their financial standing.

This urbanization is still a relatively new phenomenon so it is impossible to say how long it will last or how successful it will be. However, as society continues to evolve, this new definition of the suburb may still be part of the American dream after all.

SIX THINGS TO CONSIDER WHEN BUYING AN INSURANCE POLICY FOR YOUR HOME

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6thingstoconsider-240x170As you begin the journey of homeownership, you’ll need to take steps to insure it as buying a home is a major investment. To make sure that you get the best protection for your home, consider the following six policy suggestions.

Your Home’s Location

Before agreeing to an insurance policy, assess your home’s surrounding area for potential discounts. For instance, if your house is near a constantly staffed fire department that is also highly rated, you could negotiate a policy discount with your insurance company.

When to Get Extra Protection 

If your new home comes with awesome amenities like a swimming pool and a hot tub, then consider kicking your liability insurance up a notch. This will protect you if someone suffers a serious injury on your property.

Claim History 

Check your home’s claim history because it could affect your homeowner’s insurance rates. When you buy a home that has had a claim filed for it during the past five years, your policy rates will probably be a little higher.

Embrace Earthquake Coverage 

California residents aren’t alone in their need for earthquake insurance. Other states also suffer from the natural disaster. In fact, at least 39 states experience earthquake tremors. Traditional home insurance policies generally don’t cover earthquake damage. Upgrade your policy to include it.

Is Flooding a Possibility?

Even if you don’t live in a flood zone, consider adding protection for it to your policy. According to reports, 90 percent of the nation’s natural disasters involve flooding, so protect your investment.

Take on a High Deductible 

If you take on a higher deductible, then your insurance company will reward you for it with lower policy rates. Since most people only file an insurance claim once every eight to 10 years, you’ll likely save more in the long run with lower yearly rates.

Insuring a Valuable Asset 

Homeowner’s insurance provides protection for one of your most valuable assets. When choosing a policy, be sure to compare the rates, coverage options and deductibles of several different insurers.

THE BEST MONTH — AND DAY — TO LIST YOUR HOME

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bestmonthbestdaytosell-240x170March is now the advent of the spring home-buying season. As the supply of available properties continues to lag demand in most areas of the country, competition between buyers is growing. This situation is changing many of the longstanding rules of real estate. Where the spring buying season once started in early May, more buyers are beginning their search earlier in places like Miami and Washington, D.C. due to the tight housing markets. Despite the extended buying season, a home must be listed for sale at the right time and price to generate multiple offers and a quick sale.

Even in today’s tight market, homebuyers are becoming more knowledgeable and do not want to overpay. As a result, selling a home in today’s dynamic market still requires a well-planned and orchestrated listing strategy. For most sellers, early May is still the optimum time to sell a home. Listing in early May results in selling a home 18 days faster for approximately 1 percent more than other times of the year in 18 of the country’s 25 largest housing markets. Buyers are more eager as their earlier offers fell through and they may be willing to pay a bit more. To increase the odds of selling your home even faster, list it for sale on a Thursday. Because many potential buyers tour homes over the weekend, they begin their search preparations the previous Thursday and Friday. Thursday listings are more likely to sell faster at above list price than those listed over the weekend.

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