Discussing the homeownership rate, good economic news from the Philly Fed, affordability decreases but buying still beats renting, the problems with getting a mortgage for a less expensive home, many home owners are staying put and what this means for the housing market!
Homeownership Rate Steady
From Census Bureau:
The homeownership rate of 64.2 percent was not statistically different from the rate in the first quarter 2017 (63.6 percent) and virtually unchanged from the rate in the fourth quarter 2017 (64.2 percent).
While not “statistically different”, the good news is that the homeownership rate did not decrease. However it also did not increase.
The homeownership rate is trending upward but as I have asked many times in the past, what is a healthy sustainable level? We may want more people to enjoy the benefits of owning a home but what can or should be done to help more people own a home?
State Coincident Indexes Increased in 47 States
From the Philly Fed:
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for March 2018. Over the past three months, the indexes increased in 49 states and decreased in one, for a three-month diffusion index of 96. In the past month, the indexes increased in 47 states, decreased in one, and remained stable in two, for a one-month diffusion index of 92.
For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index rose 0.7 percent over the past three months and 0.2 percent in March.
So what is the Philly Fed’s coincident index? They explain:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
In other words, the Philly Fed’s coincident index is a way to measure the economy. And with it increasing in 47 states and for the entire US, this is good news for the economy.
At the national level, housing affordability is down from last month and down from a year ago. Mortgage rates fell to 4.42 percent this February, down 0.2 percent compared to 4.43 percent a year ago.
Housing affordability declined from a year ago in February moving the index down 2.7 percent from 164.0 to 159.6. The median sales price for a single family home sold in February in the US was $243,400 up 5.9 percent from a year ago.
Not good news but remember this is a somewhat vague indicator. What is affordable and whether or not it is a good time to buy is different for each person.
I just shared the other day that Attom reported that buying beats renting in 54% of the counties in the US. And about a week ago, I shared how buying beats renting according to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index.
Despite this decrease in affordability, buying beats renting right now. Every indivudal must decide what is best for them, what is affordable for them and what suits their long range goals and current financial situation.
The Limited Options for Small-Dollar Mortgages
From Urban Institute:
There is a significant lack of financing available for low-cost homes, which many first-time homebuyers and low- and middle-income families rely on to move from renting to homeownership. This brief examines the availability of small-dollar mortgages (up to $70,000) for home purchases, refinances, and improvements, presenting a wealth of information on borrower and loan characteristics, production channels, and the geographic distribution of low-cost homes. We find that there is limited mortgage availability for the small loans needed to support the significant number of low-cost property sales and determine that low-cost properties could be a larger source of affordable housing if credit access for purchasing and rehabilitating these properties was expanded and improved.
This is a must read and the lack of mortgages for less expensive homes is and has been a serious issue for far too long. I wish there were more ways for credit worthy people to get a mortgage, even if it is a less expensive home.
62% Of Homeowners Don’t Plan To Ever Move
A new survey by Bankrate finds that 62 percent of homeowners don’t plan on moving at all, while just 30 percent expect to leave in the next decade.
Homeowners were almost twice as likely to remodel than move into a new home: 35 percent said they are more likely to remodel, upgrade or add to their current home in the next five years, while just 19 percent said they are planning to move to a new home in the same time frame.
With the limited number of homes for sale, this is not good news. It is a seller’s market in many areas of the country today.
But this does not mean that every home owner wants to sell their home. This is why we really need more new homes being built, especially affordable entry-level homes.
While there are plenty of affordable homes in the Anderson SC area, the competition is stiff. Buyers must be prepared to compete with other buyers, already have a Pre-Approval and work with a local experienced Realtor in today’s fast paced market.