Market Matters

Number of First-Time Home Buyers Falls to Lowest Level in Three Decades Source: Wall St. Journal Concerns continue to grow that young people are being left out of an otherwise strong housing-market recovery due to the fact that the share of U.S. homes sold to first-time buyers this year declined to its lowest level in almost three decades. First-time buyers fell to 32 percent of all purchasers in 2015 from 33 percent last year, the third straight annual decline and the lowest percentage since 1987, according to the National Association of REALTORS®. Typically, first-time buyers comprise 40 percent of purchasers. As home prices continue to rise, it will become even more difficult for new buyers to enter the market. Read the full story   Home buyers are hitting record credit scores  Source: CNBC   High-credit borrowers, those with FICO scores above 700, are almost entirely behind the surge in purchase applications, with some experts stating that loan performance is arguably the best in history. Since credit is favoring a smaller segment of borrowers, activity among borrowers with lower scores is flat to slightly lower from a year ago, according to Black Knight. For example, just 20 percent of purchase originations over the past three months have come from borrowers with credit scores below 700, the lowest level in more than a decade. Read the full story Median Home buyer Age Has Remained ‘Remarkably Steady’ Over the Years Source: DSNews.com   The rising share of home buyers age 50 and over and the shrinking percentages of homeowners ages 35 to 50 and under 30 have been major trends in housing as of late, but the median age of home buyers has remained “remarkably steady” in the last decade. The median home buyer age was 39 years old from 2005 to 2010 and 41 years old from 2011 to 2014, according to government data in the recently released American Community Survey (ACS). While the data showed that most states mirrored the trend of the rising share of older home buyers from 2005 to 2014, the median home buyer age actually declined in nine states and the District of Columbia during that period. Read the full story     Grown and still at home: Why young adults are moving back home and staying longer Source: Yahoo! Finance   A third of 18- to 34-year-olds are living with their families, which is more than during the Great Recession, according to a recent analysis from the Pew Research Center. So despite an improving job market, why are more millennials moving back home with their parents and staying longer? Many young Americans feel financially unprepared to live on their own because of their education debt, and in many instances, parents are welcoming their adult kids back home with open arms. Many recent grads are saving thousands of dollars each month, money that would’ve gone to rent and food if they lived on their own. Read the full story

Credit, Mortgages, and Your Ability to Buy a Home: It Doesn't Have to Be Scary Source: U.S. NewsAfter the effects of the recession, many Americans are still leery of entering the housing market for fear of another bubble, and a lack of education about mortgages has made some consumers still a little gun-shy to close on a home. But financial advisors caution that buying a home doesn’t have to be scary. Find a REALTOR® who can advise you through the process, and develop an understanding of your financial situation and what you are able to afford, as well as the kind of lending you sign on for. For instance, potential home buyers should know their credit score and any problem areas in their credit history. Also, meet with multiple loan representatives to get the best deal. Read the full story

People Slept Outside Overnight Just to Buy a House

Source: Dallas Morning News

 

Buyers want a piece of real estate in the town of McKinney, Texas, so badly that roughly a dozen people camped out overnight to secure first dibs on home lots in a new subdivision. Reportedly, the supply of houses in the north Dallas area is at the lowest point in generations. There has been a surge of new jobs in the region, which has affected the supply of homes. Quite notably, the area is also experiencing one of the largest year-over-year home price gains in the country, currently only behind San Francisco and Denver. One local real estate agent, who was eight months pregnant, was among the people camped out to get first dibs on a home in a region that is sure to see more growth.
Read the full story

Millennials Are Buying Homes in Droves—Just Not Where You’d Expect

Source: Time

While there has been plenty of media attention about the lack of home-buying activity among the millennial generation, a recent analysis of home sale data performed by Realtor.com® and reported by Bloomberg shows that in many U.S. cities, millennials make up half or more of home purchasers and a large number of them are first-time buyers. They are just buying homes in less glamorous places than where the media has asserted the younger generation wants to live. For example, millennials—those between the ages of 25 and 34—accounted for nearly 60 percent those who took out a mortgage to buy a home in the first half of 2015 in Des Moines, Iowa. They accounted for 45 percent or more in places like Provo, Utah; Madison, Wisc.; Grand Rapids, Mich.; and New Orleans.
Read the full story

How to hire a contractor

Realtor.com® Uses Humor in Celebrity Video Series to Teach Home Buyers

Source: Inman   A clever five-part, first-time home buyer video series is targeting consumers – especially millennials – and real estate agents to teach important aspects of the home-buying process. The portal’s celebrity spokeswoman, Elizabeth Banks, stars in the humorous videos, which launched this spring as part of its revamped marketing campaign. The videos cover how to know when you’re ready for a home, mortgage lending, searching for a home, making an offer, and the sale. Smartly targeting millennials is the strategy behind the videos, as this demographic makes up the nation's largest generation of home buyers. Read the full story

C.A.R. Chief Economist Convenes Roundtable on Housing, Economy

Source: C.A.R. C.A.R. Chief Economist Leslie Appleton-Young brought clarity to the economic and policy challenges that will shape the future of housing in a roundtable event with four leading economists, who shared their insights on housing’s importance to the growing momentum behind a healthier U.S. economy. The discussion covered macroeconomic analysis of current conditions in the market, housing prices and affordability, the reasons behind persistently low inventory, the declining homeownership rate, credit availability, and policy solutions to strengthen the market. The roundtable was convened by C.A.R.’s Center for California Real Estate. Appleton-Young was joined by Nela Richardson, Redfin Chief Economist; Jonathan Smoke, realtor.com® Chief Economist; Christopher Thornberg, founding partner of Beacon Economics; and Laurie Goodman, Director of Housing Policy Center at the Urban Institute. Read the report here

The Affordability Squeeze

Benefits for Veterans!

Owners Overvalue Homes

For the seventh straight month, the gap has widened between what owners say their home is worth compared to what appraisers say, reports Quicken Loans. Owner estimates now stand 2.65% higher than appraiser opinions, the largest gap in more than a year. See owners' versus appraisers' value perceptions by metro area here.

Prices on the Uptick

13 Tips to Make Moving Slightly Less Hellish

Source: The Atlantic   Buying a new home is an opportunity to celebrate, but the thought of moving boxes and packing up one’s belongings can put a damper on the experience. After all, moving is never fun. But the Atlantic consulted some experts for their advice on how to make the process more bearable. For instance, it’s recommended that you designate a “first night” box so you have the essentials you need readily available when you finally get your possessions to their new home. Tips are categorized by pre-moving, packing, and unpacking. Read the full story

Homeowners Caught in Affordability Squeeze

Even with rising home prices over the past few years, many homeowners who have considered selling are deciding not to because they are caught in an affordability squeeze that is compounded by a lack of inventory, according to findings from C.A.R.’s “2015 Survey of California Homeowners.” More than one-third (35 percent) of homeowners have considered selling their home in the past year, and of that share, about two-thirds (64 percent) are reluctant to sell because they are finding they can’t afford the home they really want, the survey found. C.A.R.’s inaugural Survey of California Homeowners also found that more than half (59 percent) of homeowners have not seriously considered selling their home in the past year, with more than half (60 percent) saying their current home will be their retirement residence. For those who have been in their home 15 years or more, that figure rises to 70 percent who indicated they have not considered selling because their current residence will be their retirement home.  More info

Attracting Young, Diverse Mortgage Bankers

Source: New York Times

 Is the mortgage industry prepared for a younger, more diverse market? Not according to Dan Stevens, CEO of the Mortgage Bankers Association. However, just getting young people interested in the business is a challenge, because of the stigma around mortgage bankers from the recent housing market collapse. Some firms are offering opportunities for younger Americans via training programs, which for many participants is a welcome opportunity to develop new skills. More companies will have to prepare for the coming shift in demographics among home buyers.
Read the full story

Four Homeownership Myths to Avoid

Source: CNN Money

Buying a home is one of the biggest decisions you’ll ever make, so you might want to talk to your REALTOR® for advice and also consider whether or not you’re getting stuck on one of these common real estate myths before signing on the dotted line. For instance, remember that you’re buying a home to suit both your future needs and your current ones, so if you want to travel in the future, a home with a lot of outdoor upkeep may not be wise. In addition, it may be best to purchase a home based on your family’s budget and needs, not your guesses about what the future may or may not hold regarding the market.
Read the full story

LA on track to build 100K new homes by 2021, mayor says

Source: KPCC

The city of Los Angeles is on its way to meeting the goal of producing 100,000 new housing units between 2013 and 2021, according to Mayor Eric Garcetti. In the last two years, the city has permitted nearly 26,000 new housing units, and during the last year alone, the city approved $7 billion in new construction. Additionally, in 2017, the city will unveil an online portal that’ll serve as one-stop shopping for developers, where they can deal with everything from building safety to street lights and sanitation. 
Read the full story

Rent hikes have sparked bidding wars and sent tenants scrambling

Source: OC Register

 

Bidding wars have become more frequent in hot housing markets like Orange County, particularly for rentals amid short supply. Desperate applicants have had to resort to offering to pay a year’s rent in advance; several others have offered to pay at least $50 a month over the landlord’s asking rent. Jane Lewis, property management director for Seven Gables Real Estate, commented, “The rental market is so crazy now, it’s almost like you’re buying a place.” Tenants complain the search process has grown longer and increasingly frustrating, if not financially painful.
Read the full story

U.S. Construction Spending Hits a New Post-Recession High

Source: Wall St. Journal

According to the Commerce Department, total construction spending climbed 0.7 percent from the prior month to a seasonally adjusted annual rate of $1.083 trillion, which is the highest level since May 2008. Since U.S. construction spending rose to the highest level in more than seven years in July, it appears that the construction sector overall is one of the strongest parts of the economy and could help fuel growth. Private building led the way, with both residential and nonresidential construction hitting new post-recession highs.
Read the full story

Millennials' Obstacles to Buying a Home

Happy Labor Day!

Home Buyer Characteristics

What a rate hike may mean for housing

Source: Union-Tribune   The Federal Reserve’s Open Market Committee is expected to raise a key interest rate that has played a significant part in keeping mortgage rates at historic lows in the wake of the biggest economic downturn since the depression. If the rate hike transpires, it would be the first since June 2006. As for the effect on housing, interest rate increases will be gradual, and there are too many other forces pushing prices upward in the state, such as low supply and high demand. Read the full story

Economic and Forecast Update (July 1, 2015)

The Economy

• GDP growth was slightly negative in the first quarter but will pick up in the second half.  For the year as whole, GDP will expand at 2.1 percent.  Not bad but not great.  A slow hum.
• Consumer spending will open up because of lower gasoline prices.  Personal consumption expenditure grew at 2.1 percent rate in the first quarter.  Look for 3 percent growth rate in the second half.
  • Auto sales dropped a bit in the first quarter because of heavy snow, but will ramp up nicely in the second half.
  • Spending for household furnishing and equipment has been solid, growing 6 percent in the first quarter after clocking 6 percent in the prior.  Recovering housing sector is the big reason for the nice numbers.
  • Spending at restaurants was flat.  That is why retail vacancy rates are not notching down.
  • Online shopping is up solidly.  That is why industrial and warehouse vacancy rates are coming down.
  • Spending for health care grew at 5 percent in the first quarter, marking two consecutive quarters of fast growth.  The Affordable Care Act has expanded health care demand.  The important question for the future is will the supply of new doctors and nurses expand to meet this rising demand or will it lead to medical care shortage?
• Business spending was flat in the first quarter but will surely rise because of large cash holdings and high profits.
  • Spending for business equipment rose by 3 percent in the first quarter.  Positive and good, but nothing to shout about.
  • Spending for business structures (building of office and retail shops, for example) fell by 18 percent.  The freezing first-quarter weather halted some construction.  This just means pent-up construction activity in the second half.
  • In the past small business start-ups spent and invested.  It was not uncommon to experience double-digit growth rates for 3 years running for business equipment.  Not happening now.  But business spending will inevitably grow because of much improved business financial conditions of lower debt and more profits and rising GDP.
  • What has been missing is the “animal spirit” of entrepreneurship.  The number of small business start-ups remains surprisingly low at this phase of economic expansion.
• Residential construction spending increased 6 percent in the first quarter.  Housing starts are rising and therefore this component will pick up even at a faster pace in the second half.
• Government spending fell by 1 percent.  At the federal level, non-defense spending grew by 2 percent, while national defense spending fell by 1 percent.  At the state and local level, spending fell by 1 percent.
  • The federal government is still running a deficit.  Even though it is spending more than what it takes in from tax revenue, the overall deficit level has been falling to a sustainable level.  It would be ideal to run a surplus, but a falling deficit nonetheless does provide the possibility of less severe sequestration.
  • U.S. government finances are ugly.  Interestingly though, they are less ugly than other countries.  That is why the U.S. dollar has been strengthening against most other major currencies.  It’s like finding the least dirty shirt from a laundry basket.
• Imports have been rising while exports have been falling.  The strong dollar makes it so.   Imports grew by 7 percent while exports fell by 6 percent.  The net exports (at minus $548 billion) were the worst in seven years.  Fortunately, with the West Coast longshoremen back at work, the foreign trade situation will not worsen, which means it will help GDP growth.
• All in all, GDP will grow by 2.5 to 3 percent in the second half.  That translates into jobs.  A total of 2.5 million net new jobs are likely to be created this year.
  • Unemployment insurance filings have been rising in oil-producing states of Texas and North Dakota.
  • Unemployment insurance filings for the country as a whole have been falling, which implies a lower level of fresh layoffs and factory closings.  That assures continuing solid job growth in the second half of the year.
• We have to acknowledge that not all is fine with the labor market.  The part-time jobs remain elevated and wage growth remains sluggish with only 2 percent annual growth.  There are signs of tightening labor supply and the bidding up of wages.  Wages are to rise by 3 percent by early next year.  The total income of the country and the total number of jobs are on the rise.

The Housing Market

• Existing-home sales in May hit the highest mark since 2009, when there had been a homebuyer tax credit … remember, buy a home and get $8,000 from Uncle Sam.  This tax credit is no longer available but the improving economy is providing the necessary incentive and financial capacity to buy.  Meanwhile new home sales hit a seven-year high and housing permits to build new homes hit an eight-year high.  Pending contracts to buy existing homes hit a nine-year high.
• Buyers are coming back in force.  One factor for the recent surge could have been due to the rising mortgage rates.  As nearly always happens, the initial phase of rising rates nudges people to make decision now rather than wait later when the rates could be higher still.
  • The first-time buyers are scooping up properties with 32 percent of all buyers being as such compared to only 27 percent one year ago.  A lower fee on FHA mortgages is helping.
  • Investors are slowly stepping out.  The high home prices are making the rate of return numbers less attractive.
• Buyers are back.  What about sellers?  Inventory remains low by historical standards in most markets.  In places like Denver and Seattle, where a very strong job growth is the norm, the inventory condition is unreal – less than one month supply.
• The principal reason for the inventory shortage is the cumulative impact of homebuilders not being in the market for well over five years.  Homebuilders typically put up 1.5 million new homes annually.  Here’s what they did from 2009 to 2014:
  • 2009: 550,000
  • 2010: 590,000
  • 2011: 610,000
  • 2012: 780,000
  • 2013: 930,000
  • 2014: 1.0 million
  • Where is 1.5 million?  Maybe by 2017.
• Building activity for apartments has largely come back to normal.  The cumulative shortage is on the ownership side.
• Builders will construct more homes.  By 1.1 million in 2015 and 1.4 million in 2016.  New home sales will follow this trend.  This rising trend will steadily relieve housing shortage.
• There is no massive shadow inventory that can disrupt the market.  The number of distressed home sales has been steadily falling – now accounting for only 10 percent of all transactions.  It will fall further in the upcoming months.  There is simply far fewer mortgages in the serious delinquent stage (of not being current for 3 or more months).  In fact, if one specializes in foreclosure or short sales, it is time to change the business model.
• In the meantime, there is still a housing shortage.  The consequence is a stronger than normal home price growth.  Home price gains are beating wage-income growths by at least three or four times in most markets.  Few things in the world could be more frustrating and demoralizing than for renters to start a savings program but only to witness home prices and down payment requirements blowing by past them.
• Housing affordability is falling.  Home prices rising too fast are one reason.  The other reason is due to rising mortgage rates.  Cash-buys have been coming down so rates will count for more in the future.
• The Federal Reserve will be raising short-term rates soon.  September is a maybe, but it’s more likely to be in October.  The Fed will also signal the continual raising of rates over the next two years.  This sentiment has already pushed up mortgage rates.  They are bound to rise further, particularly if inflation surprises on the upside.
• Inflation is likely to surprise on the upside.  The influence of low gasoline prices has been bringing down the overall consumer price inflation to essentially zero in recent months will be short-lasting.  By November, the influence of low gasoline prices will no longer be there because it was in November of last year when the oil prices began their plunge.  That is, by November, the year-over-year change in gasoline price will be neutral (and no longer a big negative).  Other items will then make their mark on inflation.  Watch the rents.  It’s already rising at near 8-year high with a 3.5 percent growth rate.  The overall CPI inflation could cross the red line of above 3 percent by early next year.  The bond market will not like it and the yields on all long-term borrowing will rise.
• Mortgage rates at 4.3% to 4.5% by the year end and easily surpassing 5% by the year end of 2016.
• The rising mortgage rates initially rush buyers to decide but a sustained rise will choke off as to who can qualify for a mortgage.  Fortunately, there are few compensating factors to rising rates.
  • Credit scores are not properly aligned with expected default rate.  New scoring methodology is being tested and will be implemented.  In short, credit scores will get boosted for many individuals after the new change.
  • FHA mortgage premium has come down a notch thereby saving money for consumers.  By the end of the year, FHA program will show healthier finances.  That means, there could be additional reduction to premiums in 2016.  Not certain, but plausible.
  • Fannie and Freddie are owned by the taxpayers.  And they are raking-in huge profits as mortgages have not been defaulting over the past several years.  The very high profit is partly reflecting too-tight credit with no risk taking.  There is a possibility to back a greater number of lower down payment mortgages to credit worthy borrowers without taking on much risk.  In short, mortgage approvals should modestly improve next year.
  • Portfolio lending and private mortgage-backed securities are slowly reviving.  Why not?  Mortgages are not defaulting and there is fat cash reserves held by financial institutions.  Less conventional mortgages will therefore be more widely available.
• Improving credit available at a time of likely rising interest rates is highly welcome.  Many would-be first-time buyers who have been more focused about getting a mortgage (even at a higher rate) than with low rates.
• All in all, existing and new home sales will be rising.  Combined, there will be 5.8 million home sales in 2015, up 7 percent from last year.  Note the sales total will still be 25 percent below the decade ago level during the bubble year.  Home prices will be rising at 7 percent.  For the industry, the business revenue will be rising by 14 percent in 2015.  The revenue growth in 2016 will be additional 7 to 10 percent.

Lawrence Yun, PhD., Chief Economist 

Interest Rate Update

Interest Rate Update

Interest rates are still looking good. The experts feel the Federal Reserve will hold off any in-terest rate raise until next year

New Home Price Numbers Just Out

I have been saying for years that the best way to get (and keep) the housing market moving up-wards is to get the media involved as a cheerleader. For almost a year now the Orange County Register has been reporting how real estate is back and booming in the Orange County area. Another example is in today’s Register. The front page has a blip about the median home price and the Business section has a big article. The median priced home in Orange County is now back up to $629,500!! That is just below the record high of $645,000 reached in June of 2007.

How Does This Affect You ?

I have talked to several buyers who are "waiting" for prices to ease. I don’t see that happening anytime soon. Prices should begin to level off a bit but I would bet that prices continue to move upwards for several years. The Federal Reserve was set to start increasing interest rates but re-cent economic data and world events have caused a change in tone from the Feds who now see an increase either late this year or possibly into 2016. All good news. Pass this along and lets all have fun while the ride lasts.

30 Year Fixed up to $417,000	3.75% to 4.125%
30 Year Fixed "Agency" up to $625,500	3.875% to 4.25%
30 Year Fixed FHA up to $417,000	3.50% to 3.75%
30 Year Fixed FHA "Jumbo" up to $729,500	3.625% to 3.875%

Market Matters

MBA's Stevens: We are in the middle of a housing crisis Source: HousingWire The word “crisis” can sound alarmist, but Mortgage Bankers Association President and CEO David Stevens has used that term to describe the current state of housing, or better put, the lack of focus on housing as an opportunity by Washington policy makers. He places the blame at the top of the ladder, opining that President Barack Obama has not built enough confidence in consumers' views about homeownership. Due to the lack of focus, Stevens notes that “Today's environment is not encouraging credit expansion. It's forcing lenders to be overly conservative - ultimately failing entry-level homeowners on every front.” Read the full story   Real estate experts weigh in on SoCal housing market Source: KPCC   Want to hear from two top academic experts on the housing market? KPCC interviewed Raphael Bostic, Judith and John Bedrosian Chair in Governance and the Public Enterprise at USC’s Price School of Public Policy, and Stuart Gabriel, professor of finance and director of the UCLA Ziman Center for Real Estate. The experts discussed state of housing, including a report from the CALIFORNIA ASSOCIATION OF REALTORS® noting that low supply has a lot to do with homeowners choosing to stay up rather than start over as buyers. Read the full story The subprime mortgage crisis wasn't about subprime mortgages? Source: Fortune   The media, in explaining the causes of the financial crisis, has frequently painted the narrative that once subprime borrowers began to default, falling dominoes sent the entire mortgage market, U.S. financial system, and global economy into crisis. Consequently, subprime borrowers and lenders have received a great deal of attention and blame in analysis of the crisis, but new research suggests this is misguided. The study notes that the vast majority of mortgages in the U.S. were still given to prime borrowers, which means that the real estate bubble was a phenomenon fueled mostly by creditworthy borrowers buying and selling homes they simply thought wouldn’t ever decrease in value. Simply put, the foreclosure crisis would have happened even in the absence of such risky lending. Read the full story

Bust to Boom

Water Conservation

Water is at a premium throughout drought-stricken California, and home buyers will no longer be able to  “go with the flow” as residents are tasked with conserving more. Typical U.S. households use approximately 260 gallons of water every day, according to the Environmental Protection Agency (EPA).  And as mandatory water restrictions require residents to reduce their water usage by 25 percent, a water-efficient home can help play a large role.  Here are some common features of new construction that can help conserve our “liquid gold": 1. “Green” landscaping:  The average suburban lawn consumes a whopping 10,000 gallons of non-rain water each year.  That’s why some of today’s most coveted gardens utilize the principles of “xeric” or drought-tolerant landscaping. Native plants, such as lavender, ice plant and succulents are well-suited to drought-like conditions and drier soil, thereby helping to reduce water usage. Also, consider a smart “weather-sensing” irrigation system to automatically adjust the water schedule based on weather, seasonality and even zone type. After all, no one wants to see sprinklers running during an unexpected rain. 2. Efficient plumbing lines:  New homes generally employ efficient plumbing lines including pressure-regulating valves, which can limit water usage to 60 pounds per square inch (psi). This reduction helps with leaks, saves water and money, and can lessen the possibility of pipes bursting. New homes may also include well-insulated hot water pipes, which speed hot water to the user, reducing the amount of water wasted in warming it up. 3. Improved water heaters:  New choices including tankless heaters, heat pumps, or solar hot water heaters save both water and energy. 4. Low-flow plumbing fixtures:  Faucets and showers account for 15 and 17 percent of household water use respectively.  Improved low-flow options save water (about 30 percent for sinks and 25 to 60 percent for showerheads) without sacrificing quality, appearance or functionality. 5. Dual-flush toilets:  Toilets are the number one source of water usage in the home, accounting for nearly 30 percent of residential indoor water consumption. Low-flow models are a step in the right direction, but dual-flush options are even better, offering a full flush volume for solids and a reduced flush for liquids. 6. Energy-efficient dishwashers:  On average, dishwashers earning the ENERGY STAR label are 15 percent more water efficient than standard models. These newer-model dishwashers can save up to 1,600 gallons of water over the lifetime of the appliance. 7. Updated washing machines:  Take a brand new washing machine for a spin and save on the second-highest water demand in the house. Models manufactured and sold since March 7 are required to use even less water than previous energy-saving models. Even as capacities have expanded, maximum water usage has decreased, helping to save as much as eight gallons more per cycle than older models.

Market Matters

Think California's housing crisis is tough in LA? Try Coachella. Source: KPCC Bob Soloman, head of UC Irvine Law School’s Community and Economic Development Clinic, commented the following about the housing crisis in the Coachella Valley: “Really, the housing shortage is abysmal. It’s worse than anything I’ve seen. […] Mobile home parks are springing up. But they’re springing up in fairly haphazard ways, they’re not well maintained. They’re often un-permitted." Many areas where working class families are living lack adequate electrical systems and waters systems, such as the trailer parks cited by Soloman. Blown fuses and dirty water in115 degree weather has made for poor living conditions for such residents, but due to a lack of housing options, poor families have been forced to make due. Read the full story   Do Home Builders Understand What Buyers Want?  Source: Wall St. Journal   Are home builders doing a good job of determining what home buyers want? Not according to Nela Richardson, chief economist for brokerage Redfin Corp., and Selma Hepp, chief economist for Zillow Group’s Trulia real-estate website. Richardson and Hepp noted that builders aren’t constructing enough entry-level housing to meet demand; instead, they are tailoring construction toward luxury buyers with ample credit. While builders may not be so sure about the financial prospects of entry-level buyers, the economists say this demographic has demand that is adequate and increasing. Read the full story HUD Secretary Op-Ed: Make Sure Every Child in America Can Chase Their Dreams Source: Quartz   Julián Castro, United States Secretary of Housing and Urban Development (HUD), is calling for greater investment in public schools, infrastructure, and housing in order to ensure that every child – no matter where they live or how much they earn – can make it in America. Castro notes, “We must promote smart, inclusive planning in every community. We can’t have one plan for the suburbs and another for cities. Instead, we must view our communities as connected, because they are.” The HUD secretary touts a new initiative that HUD is launching in partnership with the U.S. Departments of Energy and Education called “STEM, Energy, and Economic Development” or “SEED.” SEED will leverage federal investments and partnerships to connect public housing residents to energy-sector training and jobs. Read the full story      Bay Area Housing: Pay $900 a month to live in a tent near Google Source: SF Gate   In a sign of just how bad the housing market has gotten in the Bay Area, a man has offered a tent to rent in his backyard for $900 due to the lack of available rental options in the region. The owner stated, “It kind of is (outrageous). But maybe they should build more affordable housing in Mountain View." As a way to lure a renter for the tent, the owner advertised it as a "safe and friendly" neighborhood, "very close to Caltrain," and "in a beautiful garden."  Read the full story Poll: Housing Scarcity Concerns Surpass Water Worries in San Francisco Source: KQEDSan Francisco is the epicenter of housing concern for the whole Bay Area, as finding an affordable place to live ranked higher than worries about California’s extreme drought in the 2015 Bay Area Council Poll. More than three-quarters of Bay Area residents support building more low- to middle-income housing, and a growing number of people favor greater density in their neighborhoods if it would create more places to live. Bay Area Council President Jim Wunderman commented, “Water isn’t the only thing that’s in short supply in the Bay Area. We need a bold regional response to our historic housing crisis that is on par with the aggressive and immediate action we’re taking to combat the drought.” Read the full story Renting: Awful for just about everyone right now Source: Atlantic  Apartment vacancy rates are very low, thereby pushing up prices. Construction in many cities is still slow, as new tenants move in but few move out, which has resulted in high rental prices. For those who live in major metro areas, it’s become virtually impossible not to have one’s housing costs exceed about one-third of a person’s pay. As prices rise, even those who make median incomes are finding that their rent eats away at a more significant portion of their pay than it once did for those in the middle class. Complicating the problem is the fact that fewer households are making the transition from renting to owning, which means more competition for limited inventory. Read the full story

6 Myths about Credit Scores

The Student Loan Obstacle

Suburban Living

Top 10 Home Projects

Market Matters

New-Home Prices Are on Fire Source: Wall St. Journal The uptrend in resale values is nothing compared to the speedy rise in new-home prices, according to research by economists at TD Securities. New homes generally command a 10 to 20 percent premium over existing houses because new construction tends to be of higher quality and have more up-to-date amenities, the TD economists said. But by 2014, the price gap between new and existing houses had widened to 40 percent. Bargain-seeking plus the flood of existing homes into the market caused the median resale price to plummet by about one third during the bust; meanwhile, the median price for a new home fell only about 25 percent during the bust and surpassed its boom peak way back in early 2013. Read the full story   'Stale' homes are tightening up the housing market Source: CNBC   A lack of listings is the biggest barrier to a more robust spring housing market. Unfortunately, nearly three-quarters of the homes on the market are "stale," which is to say that they have sat on the market for more than a month with little to no interest from buyers, according to a Redfin report. With demand and sales increasing, there is just a 4.6-month supply of listings; a six-month supply is considered to be a healthy market balance between buyers and sellers.  Read the full story Home sales vault to 18-month high as supply improves Source: Reuters   As a sign of strength in the housing market ahead of the spring selling season, U.S. home re-sales surged to their highest level in 18 months in March as more homes came on the market.  Existing home sales increased 6.1 percent to an annual rate of 5.19 million units in March, the highest level since September 2013. The percent rise was the largest since December 2010. Last month's sales outpaced economists' expectations for a 5.03 million-unit rate. Read the full story   These Charts Will Tell You Where the Housing Market Is Headed This Year Source: Bloomberg   The Federal Reserve is preparing to raise its benchmark interest rate for the first time since 2006, but there has not been any evidence of panic in the healing housing industry. After all, housing has been one of the biggest beneficiaries of rock-bottom borrowing costs in this economic recovery. According to analysts, there are several key things to watch this year to determine the performance of the housing market: Inventory, prices, affordability for first-time buyers, credit availability, and wages. Read the full story How to win a bidding war in today’s outrageous housing market Source: HousingWireWith supply tight and demand high, the spring home buying season can be frustrating for Americans looking to purchase a home. One REALTOR® has put together nine tips to succeed in any ensuing bidding wars that stem from a lack of inventory. The tips include financing issues, cash, closing costs, and more. Read the full story If You Want to Buy a Home, Here’s What You Need to Do Now Source: CNN Money  If you’ve been sitting on the sidelines, this may be the time to act—or at least to do some serious number crunching as the housing market continues to improve. While inventory is low in many markets, it is expected to loosen up, with 1.9 million units on the market this year—far below the flooded supply of 4 million we saw in 2008. The number of homes that were “flipped” (bought for a quick-sale investment) has dropped for the second year in a row, while the foreclosure rate is less than half what it was two years ago. Those are healthy signs for everyone. Read the full story

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State bill proposes fee to deal with affordable housing issue Source: KPCC A bill addressing affordable housing is going before the State Assembly this week. If passed by legislators, it would add a $75 fee to some real estate transfers and put that money into a fund for development of below-market-rate properties. Assembly Speaker Toni Atkins (D-San Diego), who introduced the bill along with a package of affordable housing proposals, said the bills would produce a combined $300-$500 million annually for low-income developments. After negotiations, the CALIFORNIA ASSOCIATION OF REALTORS® is supporting the bill. C.A.R. lobbied to cap the fees at $225 per transaction, add an oversight board to the fund that includes REALTORS®, and setting aside 20 percent of the fund for owner-occupied developments. Read the full story   2015 SCE Housing Survey Shows Optimism about Housing Market Source: Federal Reserve   Households expect home price growth to continue at a similar pace as they did a year ago, according to the results of the Federal Reserve Bank of New York’s 2015 SCE Housing Survey. Attitudes toward housing as a financial investment remain overwhelmingly positive, and most renters express a preference for owning over renting if they had the necessary financial resources. In addition, the survey finds households expect mortgage rates to increase in coming years, but at a moderate pace. Read the full story Housing Bubble? Despite Rising Prices, Most Economists Still Say No Source: Wall St. Journal   The relentless rise in housing prices has led many economists to question whether another housing bubble is forming. Housing prices have been climbing for 35 consecutive months, according to the latest S&P/Case-Shiller Home Price Index. However, while prices keep rising, the rate of growth has slowed, thereby giving economists reason to believe a bubble is not a concern. Also, far fewer new homes are being built than a decade ago, so oversupply will not be an issue related to a price bubble. Read the full story      Fewer Homes for Sale Makes U.S. Housing Recovery Painstaking Source: Bloomberg   High prices and low inventory have made the recovery of the U.S. housing market painstaking for many potential buyers looking to enter the market. Contract closings on previously owned properties unexpectedly dropped 3.3 percent to a 5.04 million annualized rate in April after a 5.21 million pace that was the strongest in almost two years, according to figures from the National Association of REALTORS®. Bloomberg notes that “The rebound in residential real estate has been stop-and-go as small wage gains and lingering concerns about taking on more debt offset the benefits of historically low mortgage rates.” Read the full story

The Deep Roots of America's Housing Affordability Crisis Source: The AtlanticWharton real estate economist Todd Sinai argues in a new policy brief that the current manifestation of the country’s housing affordability crisis is a long-running trend. His research shows that the roots of the current affordability crisis date back to at least the 1990s. During that era, six cities saw rents dramatically outpace inflation, growing around 3.5 to 4.5 percent per year. Since then, rents have actually grown much more modestly, especially in recent years. Sinai states, “It is true that, in many cities, rental costs are higher now than they were 10 years ago. But 10 years ago, rental costs were higher than they were 10 years before that. Likewise, ownership costs have followed the same pattern.” He adds that buying a home may offer a way to sidestep this cycle of ever-rising housing prices and rents. Read the full story Realtor.com: Waiting to buy a home could cost tens of thousands Source: HousingWire  The financial penalties of delaying or forgoing a home purchase in today’s market have become very steep. After all, interest rates and home prices are expected to climb in the next year, and according to realtor.com, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. National data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of markets, buying a home produces a financial benefit of at least $100,000 over 30 years. Read the full story