Talking about the increasing preference for renting and why it may not be in your best interest, mortgage credit availability, housing market activity increases and much more!
Increasing Preference for Renting
From Freddie Mac:
New research by Freddie Mac reveals that despite growing economic confidence among renters, affordability remains dominant in driving renter behavior. The spring “Profile of Today’s Renter” finds a total of 67 percent of renters view renting as more affordable than owning a home, including 73 percent of Baby Boomers (aged 53-71). Similarly, 67 percent of renters who will continue renting say they will do so for financial reasons—up from 59 percent just two years ago.
David Brickman, executive vice president and head of Freddie Mac Multifamily, said:
Perceptions of affordability and cost continue to play an outsized role in the choices of America’s renters, as they overwhelmingly see renting as more affordable and the right choice for them – right now. Remarkably, half of baby boomers who rent do not anticipate owning a home in the future, with a growing number of Generation Xers following suit. Indeed, we are witnessing an historic shift in preference among older Americans, as they increasingly are choosing the size, convenience and affordability that renting offers over ownership.
Check out some of the findings from the research:
Freddie also found out the reasons people are renting instead of buying:
Interesting but is renting a better choice? Is it truly a better financial decision than owning when you look at your financial goals over the long run?
Owning a home has great financial benefits and is a great wealth builder. A recent Realtor.com article said:
Buying remains the more attractive option in the long term – that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option… as people get more savings in their pockets, buying becomes the better option.
I strongly suggest that you consider that according to research from the Federal Reserve, a homeowner’s net worth is 36X greater than a renter! I suggest that you read Home Ownership and Building Wealth and Should You Rent or Buy a Home
Dodge Momentum Index Climbs in March
From Dodge Data & Analytics:
The Dodge Momentum Index moved 6.1% higher in March, rising to 155.0 from the revised February reading of 146.0. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
March’s gain was the result of a 9.6% increase in the commercial component – more than erasing the 5.1% decline it had seen the previous month. The gain in the institutional sector meanwhile was milder, moving 1.6% higher, following an 8.1% gain in February.
During the first nine months of 2017, the overall Momentum Index made little progress. However, planning activity shot up in the fourth quarter, with that impetus continuing into the first three months of 2018.
In the latest quarter the Momentum Index gained 5.1%. This may be a sign that planners are reacting in a positive fashion to the Tax Cuts and Jobs Act that President Trump signed at the end of December.
The Dodge Momentum Index is the big boy when it comes to tracking commercial real estate investment (except for manufacturing). This suggests more growth in 2018 and is a very good sign for the economy.
Mortgage Credit Availability Decreases
From the Mortgage Bankers Association:
Mortgage credit availability decreased in March according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool. The MCAI decreased 1.5 percent to 177.9 in March.
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit.
Please please please do not freak out about this! If you have any interest in buying a home the ONLY way to truly find out what is possible for you is to talk to a mortgage lender!
CFPB Looking to Get Record Fine Against Wells Fargo
The top U.S. watchdog for consumer finance is seeking a record fine against Wells Fargo & Co that could exceed several hundred million dollars for auto insurance and mortgage lending abuses, according to three sources with knowledge of the plans.
The penalty would be the first issued by Mick Mulvaney, whom President Donald Trump tapped in November to head the Consumer Financial Protection Bureau (CFPB).
Damn! This totally shocked me based on the way that Mulvaney appeared to be shifting the CFPB into a friend of big business instead of an agency that protects consumers.
Or maybe the competitors of Well Fargo are encouraging Mulvaney to do this? There are many ways to hurt a competitor…
Housing Market Activity Index Up YoY
From the latest LegalShield Housing Activity Index:
The LegalShield Housing Activity Index, a leading indicator of housing starts and a component of the broader LegalShield Law Index, ticked down in March, but remains up 2.8 percent compared to a year ago, suggesting there is reason for optimism regarding housing construction momentum in 2018. While housing starts declined in February after surging to their highest level in a decade the previous month, they remain near post-recession highs. At the same time, new housing unit authorizations expanded 18 percent and housing permits are up 6.5 percent over the last 12 months.
James Rosseau, LegalShield’s chief commercial officer, said:
While rising interest rates may constrain new home construction to some extent, the combination of low inventories and high prices of existing homes for sale and the underlying strength of the U.S. economy point to stronger building activity in the near term. However, a key development to monitor is the growing likelihood of trade actions by the United States and its trading partners, particularly China, that could raise the prices of steel, aluminum, and lumber. If this occurs, it could lead to weaker construction investment and cause the LegalShield Housing Activity Index to stagnate or decline.
Overall, consumers are in a good position right now. Although rising consumer debt levels are a potentially worrisome trend in the medium term, LegalShield data, which are based on actual consumer behavior rather than perception, indicate that consumer financial health should remain robust in the months ahead.
I am optimistic about the housing market other than the possibility of a trade war causing the economy to hit the skids. Or a war in Syria.
We never know what the future holds. As I always say, hope for the best but plan for the worst. Do not let fear stop you from doing what is best for you or stop you from achieving your dreams.
That is all I have time for today! Be sure to hit the share buttons and subscribe so you never miss another post!