- “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
- The top reason millennials choose to buy is to have control over their living space, at 93%.
- Many millennials who rent a home or apartment prior to buying their own homes dream of the day that they will be able to paint the walls whatever color they’d like, or renovate an outdated part of their living space.
Hearth just released their 2017 State of the American Dream report which showed that Americans still see homeownership as an integral piece of the American Dream. The report confirmed that “all generations–including millennials–agree homeownership is very important to achieving the American Dream.”Americans ranked “owning a home I love” higher than any other options (including “starting a family” and “finding a fulfilling career”) as an important part of the American Dream.Despite some claims that homeownership’s importance to the American Dream is in decline, the report found that the dream of homeownership remains strong.Of Americans who said they think achieving the American Dream is important, 70% think homeownership is important to the dream, and 41% think homeownership is very important to the dream.
What about Millennials?Hearth addresses the desires of millennials by explaining:
“Contrary to popular opinion, millennials who want to achieve the American Dream are 5% more likely than Baby Boomers to think homeownership is important. And two-thirds of millennial renters view homeownership as important to the American Dream. Although millennials are often portrayed as fickle and transient, they actually seek the stability of homeownership even more than their parents.”
Other Key Findings from the Report:
- Homeowners are 126% more likely than non-homeowners to view homeownership as a way to build wealth. Nevertheless, homeowners still overwhelmingly associated homeownership with a family living space.
- Homeowners are 24% more likely than non-homeowners to see homeownership as an achievement that reflects hard work.
- Millennials are 77% more likely than baby boomers to see a home primarily as a way to build wealth.
- Baby boomers are 98% more likely than millennials to see a home as a way to pass wealth down to children or family.
- Millennials are 29% more likely than baby boomers to see a home as an achievement that reflects hard work–an outcome we expected given that many millennials are still working hard to afford their first homes.
Bottom LineThe report concluded:
“This survey revealed a powerful finding: Across demographic groups, homeownership remains a precondition of the American Dream.”
Married Couples Buying HomesMarried couples once again dominated the first-time homebuyer statistics last year at 66% of all buyers, according to the most recent Profile of Home Buyers & Sellers. It is no surprise that having two incomes to save for down payments and contribute to monthly housing costs makes buying a home more attainable.Many couples are deciding to use what would otherwise be their wedding fund as a down payment on their first home, as unmarried couples made up 8% of all first-time buyers last year. If you’re single, don’t fret; you can still buy your dream home! Single women made up 17% of first-time buyers in 2016, while single men accounted for 7% of buyers.According to a survey by the Wedding Report, the average cost of a wedding in the United States at the start of the year was $25,961, which equates to a 10% down payment on a median priced home.A recent article from the New York Times found that many singles are now asking their parents to allow them to use the money they’ve saved up for their wedding day to instead buy a home.In the case of Carrie Graham, a Protestant minister from Austin, TX, her parents had saved a ‘five-figure sum’ for her wedding and were more than willing to give her that money as a down payment on her dream home. Graham told The New York Times,
“Buying the home wasn’t me saying, ‘I’m never going to get married’ or I am going to get married.’ My own home had way more than equity benefits. It was a real gift to have a home in an extremely desirable neighborhood in a city that I love. It’s brought me joy.”
Bottom LineMore and more first-time homebuyers are finding a way to purchase their dream homes, even if that means delaying their dream weddings.
Looking For Your Dream Home?In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.If you’ve been thinking about buying your dream home for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest. They start looking at the countless homes listed for sale through rose-colored glasses.Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?The first step in your home buying process should be getting pre-approved for your mortgage. This allows you to know your budget before you find your dream home that is way outside of it.The next step is to list all the features of a home that you would like, and to qualify them as follows:
- ‘Must-Haves’ – if this property does not have these items, then it shouldn’t even be considered (ex: distance from work or family, number of bedrooms/bathrooms).
- ‘Should-Haves’ – if the property hits all of the ‘must-haves’ and some of the ‘should-haves,’ it stays in contention but does not need to have all of these features.
- ‘Absolute-Wish List’ – if we find a property in our budget that has all of the ‘must-haves,’ most of the ‘should-haves,’ and ANY of these, it’s the winner!
Bottom LineHaving this list fleshed out before starting your search will save you time and frustration. It will also let your agent know what features are most important to you before starting to show you houses in your desired area.
Here are four great reasons to consider buying a home today!
1. Prices Will Continue to RiseCoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.7% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.0% over the next year.The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to IncreaseFreddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by this time next year.An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
3. Either Way, You Are Paying a MortgageThere are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.Are you ready to put your housing cost to work for you?
4. It’s Time to Move on With Your LifeThe ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.But what if they weren’t? Would you wait?Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.
If purchasing a home for you and your family is the right thing for you to do this year, buying sooner rather than later could lead to substantial savings.
Today, many real estate conversations center on home prices and where they may be headed. That is why we like the Home Price Expectation Survey.Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. Then they average the projections of all 100+ experts into a single number.
The results of their latest survey:Home values will appreciate by 5.0% over the course of 2017, 4.0% in 2018, 3.2% in 2019, 3.0% in 2020, and 3.0% in 2021. That means the average annual home price appreciation will be 3.64% over the next 5 years.The prediction for cumulative appreciation increased from 17.8% to 18.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative home price appreciation of 6.7%.
Bottom LineIndividual opinions make headlines. We believe this survey is a fairer depiction of future home prices. If you are thinking of buying a home, stop thinking and start acting! Call me today.
The results of countless studies have shown that potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market.One such study by the Wharton School of Business at the University of Pennsylvania revealed that many millennials have not yet considered purchasing homes simply because they don’t believe they can qualify for a mortgage.A recent article about millennials by Realtor.com explained that:
“About 72% of aspiring millennial buyers said they’re waiting because they can’t afford to buy…”The article also explained that 29% of millennials believe their credit scores are too low to buy.The problem here is the fact that they think they will be denied a mortgage is keeping them from even attempting to apply.Ellie Mae’s Vice President Jonas Moe encouraged buyers to know their options before assuming that they won’t qualify for a mortgage:
“Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO® Score and a 20% down payment to buy.”
So, what credit score is necessary?Below is a breakdown of the FICO® Score distribution of all closed (approved) loans in July from Ellie Mae’s latest Origination Report.Over 52% of all approved loans had a FICO® Score under 750. Many potential home buyers believe that they need a score over 780 to qualify.
Bottom LineIf owning a home of your own has always been your dream and you are ready and willing to buy, or if you are a homeowner who wants to move up, find out if you are able to! Let’s get together to determine if your dreams can become a reality sooner than you thought!
Homeowners net worthEvery three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400). The latest survey data, covering 2014-2016 will be released later this year. In the meantime, Lawrence Yun, the National Association of Realtors’ Chief Economist estimates that the gap has widened even further, to 45 times greater ($225,000 vs. $5,000)!
Put Your Housing Cost to Work for YouAs we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.The latest National Housing Pulse Survey from NAR reveals that 84% of consumers believe that purchasing a home is a good financial decision. William E. Brown comments:
“Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own. Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home.”
Bottom LineIf you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!
According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.Bankrate asked Americans to answer the following question:
“What is the best way to invest money you wouldn’t need for 10 years or more?”Real Estate came in as the top choice with 28% of all respondents (3% higher than last year), while cash investments – such as savings accounts and CD’s – came in second with 23% (the same as last year). The chart below shows the full results:The article points out several reasons for these results:
“After bottoming out at the end of 2011 following the worst housing collapse in generations, home prices have gone gangbusters recently, climbing back above their record pre-crisis levels. Prices jumped 6.6 percent during the 12 months that ended in May, according to CoreLogic.Toss in persistently low interest rates, tax goodies that come with owning a mortgage, and the psychological payoff from planting your roots, and maybe it’s no wonder real estate remains popular.”The article also revealed that:
“Bankrate’s Financial Security Index — based on survey questions about how people feel about their debt, savings, net worth, job security and overall financial situation — has hit its third-highest level since the poll’s inception in December 2010.”
Bottom LineWe have often written about the financial and non-financial reasons homeownership makes sense. It is nice to see that Americans still believe in homeownership as the best investment.
Recent headlines exclaimed the homeownership rate, as reported by the Census Bureau, rose again in the second quarter of 2017. What didn’t get much attention in the reports is that the millennial homeownership rate for American households under the age of 35 increased a full percentage point from last quarter’s 34.3% to 35.3%. Millennial homeownership proved to have the highest increase of any age group.This came as a surprise to some considering Millennials have come to be known as the “renter” generation. However, a new study by First American, 6 Trends Poised to Reshape Homeownership Demand, revealed reasons why homeownership numbers will continue to increase for Millennials.
Millennials are the most educated generation in the U.S.Why does that matter? First American explains:
“Our model shows that, all other factors being equal, the likelihood of homeownership increases by 3 percent for those that earn a bachelor’s degree over those with a high school degree. The likelihood of homeownership jumps another 3 percent for those that earn a graduate degree.”The more educated, the better the likelihood for homeownership. And, as we mentioned: Millennials are the most educated generation in the U.S.
Homes & marriage go togetherMarriage is a key determinate in homeownership. According to an analysis by First American, the homeownership rate is 30% higher among married couples compared to non-married households.Millennials have put off marriage in the pursuit of higher education. As this group ages, more and more will marry and purchase a home.
Parents buy housesAccording to the study:
“The homeownership rate is 1.7% higher for households with one or two children compared to households with no children, and it is 5.4 percent higher for households with three or more children.”The report goes on to say that as Millennials grow older there may be an increase in not just marriage but also in married couples with children. That will probably also create a “corresponding” increase in homeownership demand.