Looking at millennials and home ownership, how homes could actually be affordable today, the premium for a waterfront home could be decreasing, Wall Street buying more rental homes and more!
Home Ownership and Millennials
Highlights from Urban Institute’s report on Millennial Homeownership:
Millennials, born between 1981 and 1997, make up the largest generation in US history. Compared with earlier generations, millennials are tech-savvy, are racially and ethnically diverse, are more educated, and marry later in life. Millennials also become homeowners later. Because homeownership is an important channel for building long-term wealth, a failure or a delay of homeownership might exacerbate already-growing inequalities among millennials.
Please note that the Urban Institute points out one of the reasons that I believe in home ownership: wealth building!
They go on to discuss the different reasons for the low level of millennial home owners. 3 reasons that stick out to me:
- High levels of student debt
- High rental costs making it hard to save money to buy a home
- Lack of affordable homes for sale
What can or should be done to help more millennials become home owners? We do not want to repeat the mistakes that lead to the housing boom and bust…
If nothing is done, we could see the biggest generation in history face extreme difficulty in building wealth and financial freedom. I am not a fan of doing anything about student debt but…
More affordable rentals and more affordable homes for sale could help. How to achieve this is a trillion dollar question…
Something else this report brings up is whether or not the desire to own a home is different for millennials. After going through the Great Recession and seeing the housing market crash, it is very possible that millennials attitudes are different.
But this does not change the fact that home ownership is a great way to build wealth and a more secure financial future. And the fact is…
Home Buying Power Today
All the reports about rising home prices and mortgage rates could make you think that affordability is really bad. But as with most statistics, it depends on how you look at things.
According to First American’s most recent Real House Price Index, house buying power is at near historic levels! First American looks at home prices, mortgage rates and median household incomes to determine home buying power.
Check out this chart showing First American’s house buying power (blue line) and the median home price from NAR (yellow line):
According to First American’s calculations, home buying power has been greater than the actual price of a home since 1991. Every person needs to look at their finances and goals to decide if buying a home makes sense for them.
All the reports about homes being unaffordable may not apply for every person in every housing market. Talking to a mortgage lender and an experienced local Realtor is the best way to determine what is possible for you!
Paying Less for a Waterfront Home?
While waterfront homes nationally are worth a total $134 billion, the price premium for single-family homes on the water has fallen to 36 percent in April 2018, down from 54 percent in 2012 and an average of 41 percent over the past 22 years.
Oh boy! Zillow is talking about home values across the entire country so please do NOT let this fool you about homes in our area. Because a home on Hartwell Lake or any of the other lakes in our area that have “good water” can still fetch top dollar.
There are only so many waterfront homes with “good water” but there are also only so many buyers looking for these types of homes. Your best bet is to rely on the local market expertise of an experienced Realtor whether you are buying or selling a waterfront home.
Big Investors Buying More Rental Homes
From Realtor Magazine:
Investors are bullish that more Americans will choose to be renters, and they’re buying up even more single-family homes to make sure they are ahead of the trend. The number of homes purchased by major investors in 2017 was about 29,000, up 60 percent from the previous year, according to Amherst Capital Management LLC, a real estate investment firm. That is also the first time since 2013 that investors purchased more homes on an annual basis.
Investors are increasingly eyeing single-family homes over apartments. A rising number of apartments in recent years have increased vacancies and driven down rental yields. That has prompted investors to turn back to single-family homes for rentals.
As if there wasn’t already a shortage of homes for sale! Now home buyers in some areas may have to compete with investors.
The good news is that some of these investors are actually building single family homes solely for the purpose of turning them into rentals. Which could help with the high cost of rent in some areas.
But you have to ask yourself, if investors see money in owning rental homes, could it work for me too? If owning your home is a good wealth builder, owning a portfolio of rental homes can be a GREAT wealth builder.
55% Think Country Headed in Wrong Direction
Thirty-nine percent (39%) of Likely U.S. Voters now think the country is heading in the right direction, according to a new Rasmussen Reports national telephone and online survey for the week ending July 5.
So if 55% think we are going the wrong way and 39% think we are going the right way, that leaves 6% that are unsure? If the economy is doing as well as reported and unemployment numbers are as good as the government says, why aren’t more people happy about the country’s direction?
It does make you wonder…
A Negative Consequence of Killing Dodd-Frank?
From Matt Taibbi at Rolling Stone:
Ostensibly passed to address the causes of the 2008 crash, the Dodd-Frank Act has instead spent more than half a decade now as a hostage to a payola Congress, with both parties taking turns cutting it down and delaying its implementation. The latest indignity is S.2155, a.k.a. the “Economic Growth, Regulatory Relief, and Consumer Protection Act.” Supposedly designed to help some banks by reducing capital requirements and ending regular “stress tests,” the act is really more like helping ships steam faster by allowing them to ditch their lifeboats.
But the bill isn’t just unnecessary – the banking sector smashed records with $56 billion in profits in this year’s first quarter – it’s also a Wall Street handout disguised as an aid to “Main Street” banks.
An excellent example of why I am not a fan of politicians from either party since both parties voted for this…