Why millennials aren’t rushing to buy homes

As the economy continues to recover, the millennial generation is still feeling the longer-term effects of the recession due to underemployment and low salaries combined with high student debt and uncertainty about the future. These factors have affected the housing market, and the renter status of this generation was examined in a new survey by LendingTree. Source: CBS Money Watch

Making sense of the story

  • Only 43.4 percent of college-educated millennials ages 24 to 35 own a home. When asked “What would allow you to consider purchasing your first home?” 67.4 percent said they’d need more income.
  • Roughly a third want to move somewhere they like better before buying, 28.7 percent want to pay off student loans before becoming homeowners, and 25.7 percent want to put off owning a home until they’ve traveled or invested.
  • However, only 4.4 percent of non-homeowner millennials have no interest in ever owning a home, thereby showing that homeownership remains an aspiration.
  • Many millennials are ignoring financial issues. For example, 21.2 percent of millennials said they do not know their current credit score, and another 11 percent said they have never even checked it.
  • The survey found that 4.8 percent of millennials have less than $5,000 in savings, short of the three to six months of living expenses that financial institutions advise.
  • Roughly 9.5 percent of millennials cited said they do not have or maintain a savings account, which perhaps reflects their distrust of banks following the recession.
  • Median household income in the U.S. hit roughly $52,000 last year, according to the Census Bureau, which is well below the $56,400 those households were making in pre-recession 2007 and similarly distant from the all-time high of $57,000 last seen in 1997.

Read the full story

Talking Points …

  • The real estate equity position of U.S. households (the difference between assets and liabilities) increased nearly 1.6 percent for the third quarter, according to tabulations from the National Association of Home Builders.
  • The market value of real estate held by U.S. households increased $180 billion dollars during the quarter, while liabilities (home mortgages) remained virtually unchanged. The value household-owned real estate, including owner-occupied and second homes, totaled $20.4 trillion for the quarter.
  • Total home mortgage debt outstanding stands at $9.4 trillion. Recent developments in terms of housing values and mortgage debt outstanding have been largely driven by tight lending conditions and steadily increasing home prices.

From C.A.R. ~ C.A.R. Market Matters is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide.

The Basics of Marketing Your Home

Your REALTOR®’s marketing efforts and considerations will include advertising, showing the property, how long the house has been on the market and whether you’re buying another home. Your home should be listed, whenever possible, through a Multiple Listing Service (MLS). [Read More]

  

Dave Thurman Real Estate

Posted in Real Estate | Tagged , , , , , | Leave a comment

Foreclosure Activity Decreases 9 Percent in November

Search Listings

RealtyTrac recently released its U.S. Foreclosure Market Report for November 2014, which shows foreclosure filings were reported on 112,498 U.S. properties in November, a decrease of 9 percent from the previous month and down 1 percent from a year ago. The report also shows one in every 1,170 U.S. housing units with a foreclosure filing during the month.

A total of 55,906 U.S. properties started the foreclosure process in November, a decrease of 1 percent from the previous month but a 6 percent increase from a year ago, the first year-over-year increase following 27 consecutive months of year-over-year decreases.

In the U.S., 50,102 properties were scheduled for foreclosure auction during the month, down 16 percent from an 18-month high in the previous month but up 5 percent from a year ago.
More info

Mortgage Delinquency Rate Expected to Reach Pre-Recession Levels

TransUnion released its annual forecast for two key consumer credit statistics – mortgage and credit card delinquency rates. The national mortgage loan delinquency rate (the ratio of borrowers 60 or more days past due) is projected to decline to 3.12 percent to close 2014, and reach 2.51 percent by the end of 2015. That would end next year at the lowest level since hitting 2.61 percent in Q3 2007, prior to the Great Recession. As of Q3 2014, the mortgage delinquency rate stands at 3.36 percent.

National mortgage delinquency peaked at 6.93 percent in Q1 2010. Since that peak, the delinquency rate has dropped almost every quarter, with minor bumps occurring in Q3 and Q4 2011.

The last time mortgage delinquency rates were near 2.5 percent was in Q3 2007, when there were 62.4 million mortgage accounts on the books. Of those accounts, 10.3 percent (6.4 million) belonged to subprime borrowers. Seven years later, there are nearly 10 million fewer mortgage accounts active overall; and of the 52.8 million mortgage accounts on record in Q3 2014, only 7.4 percent (3.9 million) are loans to subprime borrowers.
More info

Fast Facts

Calif. median home price: October 2014:

  • California: $450,620
  • Calif. highest median home price by region/county October 2014:
    San Mateo, $1.07 million
  • Calif. lowest median home price by region/county October 2014:
    Tehama, $160,000

 Calif. Pending Home Sales Index: October 2014: Increased 2 percent from 102.6 in September to 104.6 in October.

Calif. Traditional Housing Affordability Index: Second Quarter 2014: 30 percent (Source: C.A.R.)

Mortgage rates: Week ending 12/11/2014 (Source: Freddie Mac)

30-yr. fixed: 3.93 % fees/points: 0.5%
15-yr. fixed: 3.20% fees/points: 0.5%
1-yr. adjustable: 2.40% Fees/points: 0.4%

From C.A.R. ~ C.A.R. Newsline is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide.

  

Dave Thurman Real Estate

Posted in Real Estate | Tagged , , , , | Leave a comment

Agent Communication!

Dave Thurman Real Estate

Posted in Real Estate | Tagged , , , | Leave a comment

Fannie, Freddie and FHFA Detail Low Down-Payment Mortgage Programs

In an effort to make homeownership more accessible, mortgage giants Fannie Mae and Freddie Mac announced that once again they will back mortgages with down payments as low as 3 percent. The new low-down payment mortgage programs could reduce costs for first-time and lower-income home buyers. Source: Wall St. Journal

Making sense of the story

  • Under the program, mortgages with low down payments would be available to first-time home buyers, borrowers who haven’t owned a home for at least a few years, and to those who have lower income.
  • FHFA Director Melvin Watt commented, “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practice. To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness.”
  • Private mortgage insurance (PMI) will still be required as borrowers are putting less than 20 percent down, but unlike with FHA loans, the PMI will typically roll off after five years once 20 percent equity has been reached.
  • To address criticism about loose lending standards, borrowers under the new programs would have to meet criteria that offset the increased risk, such as high reserves or lower debt-to-income ratios.
  • The programs could be available to borrowers with credit scores of as low as 620, which is the current Fannie and Freddie minimum for other loans.
  • Some studies have shown that moving from a 5 percent down payment to a 3 percent down payment doesn’t result in many more defaults. About 0.4 percent of borrowers in 2011 who made down payments of 3 percent to 5 percent on loans backed by Fannie Mae have defaulted—no more than borrowers who made down payments of 5 percent to 10 percent.
  • Fannie’s program will go into effect almost immediately, while Freddie’s won’t be available until March.

Read the full story

Talking Points …

  • Mortgage applications increased 7.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Survey.
  • Market Composite Index, a measure of mortgage loan application volume, increased 7.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 52 percent compared with the previous week.
  • The refinance share of mortgage activity increased to 64 percent of total applications from 60 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7 percent of total applications.

From C.A.R. ~ C.A.R. Market Matters is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide. 

Dave Thurman Real Estate

Posted in Real Estate | Tagged , , , , | Leave a comment

Majority of Home Buyers Unaware of Down Payment Assistance Programs

Although there are hundreds of millions of dollars available for down payment assistance, 70 percent of U.S. adults are unaware of these programs for middle-income home buyers in their community, according to findings from the second annual America at Home survey commissioned by NeighborWorks America.

NeighborWorks organizations provided 6,000 people with more than $100 million in such assistance last year, and expect to make even more available this year.

Down payment assistance is especially helpful for home buyers who are unsure about affordability because of student loan debt.

C.A.R. offers a resource to help buyers find down payment assistance programs. In California alone, there are more than 300 homeownership programs available, including direct down payment and closing costs assistance as well as mortgage credits of up to $2,000 for the life of the loan.

C.A.R. applauds Fannie Mae and Freddie Mac’s 3 percent down payment option
C.A.R. recently issued the following statement in response to Fannie Mae and Freddie Mac’s move to lower down payments to as little as 3 percent for first-time home buyers and permit refinancing borrowers to reduce equity to 3 percent to cover closing costs.

“C.A.R. commends Fannie Mae and Freddie Mac for expanding access to credit for well-qualified first-time buyers struggling to enter the housing market,” said C.A.R. President Chris Kutzkey. “Saving enough money for a down payment is the biggest hurdle for most first-time home buyers, but this program will help remove that barrier, and at the same time, lenders can be assured they are providing a safe, affordable loan to creditworthy borrowers.”

Buying Twice as Affordable as Renting
It’s more affordable to buy a home now in most U.S. metros than it was 15 years ago, according to an analysis of third quarter income and home value data by Zillow. Renters, however, continue to pay an increasing share of their income to their landlords as rents soar and incomes remain flat.

On average, U.S. home buyers making the nation’s median income and purchasing the typical U.S. home spend 15.3 percent of their income on their monthly house payment, down from the historical norm of 22.1 percent during the pre-bubble period from 1985 to 1999. On average, U.S. renters spent 29.9 percent of their monthly income on rent in the third quarter of 2014, up from 24.9 percent historically.

Continuously rising rents across the country could drive more people into the home-buying market, but they also make it more difficult for first-time buyers to save for a down payment.
More info

Fast Facts

Calif. median home price: October 2014:

  • California: $450,620
  • Calif. highest median home price by region/county October 2014:
    San Mateo, $1.07 million
  • Calif. lowest median home price by region/county October 2014:
    Tehama, $160,000

 Calif. Pending Home Sales Index: October 2014: Increased 2 percent from 102.6 in September to 104.6 in October.

Calif. Traditional Housing Affordability Index: Second Quarter 2014: 30 percent (Source: C.A.R.)

Mortgage rates: Week ending 12/4/2014 (Source: Freddie Mac)

  • 30-yr. fixed: 3.89 % fees/points: 0.5%
  • 15-yr. fixed: 3.10% fees/points: 0.5%
  • 1-yr. adjustable: 2.41% Fees/points: 0.4%

From C.A.R ~ C.A.R. Newsline is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide. 

  

Dave Thurman Real Estate

Posted in Real Estate | Tagged , , , , , , , | Leave a comment