Game-Changing Real Estate Trends in 2018

From housing inventory to price appreciation to generational shifts, look for real estate markets to “reshape” in 2018, according to the National Association of REALTORS®.

Game-changer #1: Supply finally catching up with demand

After three years of a shrinking supply of homes for sale, the realtor.com economists predict that the shortfall will finally ease up win the second half of 2018.

“The majority of the year should be challenging for most buyers. But we do expect growth in inventory in the fall,” says Danielle Hale, chief economist for realtor.com.

If housing inventory increases as predicted by fall, that will be the first net inventory gain since 2015.

Bullish construction is the engine that’s turning this ship around, bringing new home inventory to the market and creating opportunity for people to trade up into new homes.

But first time buyers may have to be patient for a while longer.

“Overall, prices are expected to increase, and we’re expecting to see more of that in lower-priced homes,” Hale says.

Along the Front Range, appreciation for homes priced above $750,000 will slow down while homes priced less than $500,000 will continue to see appreciation but not at the rate seen in recent years. This is due to the lack of supply (many builders are focusing on higher price point properties) and a large demand for real estate as a result of continued net migration.

Game-changer #2: Millennials starting to come into their own

The housing market in 2018 will continue to present challenges for millennials but there are some bright spots on the horizon.

Because of the strengthening economy and their developing careers, millennials are taking on larger mortgages and bypassing entry level homes.

As millennials reach their 20s to 30s when they’re settling down and starting families, they’re particularly motivated to buy. Millennials could make up 43% of home buyers taking out a mortgage by the end of 2018, up from an estimated 40% in 2017.

With mortgage rates expected to increase during 2018 due to stronger economic growth, millennials would be wise to buy sooner than later.

Game-changer #3: Tax reform

The new tax plan will change things up, in a nutshell causing short-term rates to rise more rapidly than anticipated as the Federal Reserve seeks to “get ahead” of possible inflation. The tax plan will also flood the market with a little more liquidity, keeping the economy moving at least another year.

Sources: Glen Weinberg, www.cobizmag.com, Cicely Wedgeworth, www.realtor.com

Give our office a call to discuss your real estate plans for 2018!

 

Millennials Want Homes, but Lack the Down Payment

Most millennials dream of becoming homeowners one day. But a recent report shows that a majority of them haven’t saved anywhere near the amount necessary for a down payment, putting their homeownership dreams far into the future–and possibly out of reach.

About 80% of the younger generation hope to buy a home, according to the study from rental website Apartment List. But 36% of these wannabe homeowners plan to wait more than five years to take the plunge into homeownership.

That’s because home prices keep rising and most millennials simply don’t have the money for an onerous down payment. More than two-thirds of respondents don’t even have $1,000 in down payment savings.

The Survey

Apartment List surveyed 24,000 millennial renters, born between 1982 and 2004, for the report. It was conducted from October 2016 through April 2017.

The percentage of millennials planning to wait at least a half-decade spiked this year. In 2016, only 27% said they planned to wait more than five years. In 2015, the figure was 23%.

And in the latest survey, 67% believe it will take them at least three years to become homeowners while only 16% believe they’ll close on a home within two years.

“Millennials’ plans to purchase a home are being pushed further and further into the future,” says Apartment List data analyst Chris Salviati, one of the authors of the report. “That could have serious impacts on their long-term financial stability.”

Decades to Save Up for a Down Payment

In the priciest parts of the country, it might take aspiring homeowners two decades–or more– to come up with a 20% down payment.

Take San Jose, CA. Young buyers are expected to need at least 24 years to come up with 20% for a condo in the metro area. Twenty-four years!

The grim reality of sizable down payments isn’t much better in the metros of Austin, TX, and Los Angeles, where millennials will need nearly 21 years to save. The calculations include home price, income, and savings growth projections.

“A lot of college-educated millennials are still carrying a lot of student debt,” Salviati says. “To move to some of the best-paying jobs, millennials have to live in some of the most expensive cities. And throughout the country, increases in home prices are outpacing wage growth.”

When the hurdle of an initial down payment was reduced to 10%, just 1 in 3 millennials said they could come up with the needed down payment in five years or less.

However, it’s worth noting that many younger and first-time buyers put down considerably less than 20% or even 10%. Certain Federal Housing Administration–insured loans require only a 3.5% down payment.

Why are Millennials Waiting to Buy?

About 72% of aspiring millennial buyers said they’re waiting because they can’t afford to buy. 45% said they weren’t ready to settle down yet. And 36% said they’re waiting to be married first.

Coming up with the down payment was the biggest obstacle, at 53% followed by monthly payments (at 36%) and low credit scores (at 29%).

“They’ll continue renting longer into adulthood than we’ve seen in previous generations,” Salvaiti says. They might buy smaller homes or “migrate to areas where prices are more affordable.”

Source:  Clare Trapasso | www.realtor.com

Read More…

5 Surprising (and Useful!) Ways to Save for a Down Payment | houselogic.com

How to Best Save for a Down Payment on a House | moneyunder30.com

A College Grad’s Guide to Home Buying

The College Graduate's
Many millennials are open to moving back to their parents’ houses after college. But for some, moving home may not be a viable option. This is leading recent college grads to a fork in the road: should I rent or should I buy? With renting costs continuing to rise, many recent graduates are deciding on the latter. Here is your unofficial guide to home buying!

What does the future hold?

It can be very daunting to map out the next 10 years of your life just as your tassel has been moved to the left. Impulsive decisions should be left in the dorm room and recent grads need to plan where and what they will be doing before considering buying property. Thinking like a real estate investor rather than making emotional or rash decisions can help guide the thought process.

Before college grads think about buying a home, they should have both a stable job and firm plans to live in the neighborhood for at least the next five years. If a recent grad is cemented and secure in their current location then they should talk to several mortgage lenders (starting with their bank) about their loan qualifications.

Buying your first home is a huge decision, so all the factors together can become overwhelming. However, if you are mentally prepared to take the journey then you need to be certain that your wallet can handle the weight as well.

Plan, Plan, Plan

Before you even think of picking up a pen and inking a deal for a mortgage, it’s important to be aware of your financial standing. With technology, budgeting has never been easier. There are a slew of apps for smart phones that are tailor-made for budgeting and planning your finances.

In addition to knowing the precise state of your finances, it is important to know your credit score — visit AnnualCreditReport.com. This is the only site that’s federally mandated and an authorized source for a free credit report.

Once you know your score you can decide what next steps. If it’s too low to even apply for a home loan (anything below 580), it’s time to get your credit in order. You should open up a credit card and pay it on time and stay on top of your student loans. Your mortgage lender can also help determine a course of action.

Many new buyers also don’t factor in the hidden costs of buying their first home. As well as the down payment on the property, there are also appraisal charges, closing costs, taxes, insurance and property inspection fees.

Much like school itself, the best thing a recent college graduate can do is their homework. As long as you think with a clear head and have a healthy financial standing, you could soon be hanging that fancy diploma in your very own home.

Give one of our agents a call if you or someone you know is contemplating their first home purchase!

Courtesy of RISMedia 2016

 

Big Expectations for Housing in 2016

Housing

Do signs point to another housing boom? Perhaps — home sales are poised to zoom to the highest levels since 2006 next year, according to a 2016 housing forecast issued by REALTOR.com.

Gains in new-home construction and existing home sales are both expected to push total home sales to the highest levels in years. The new-home construction market is expected to see the most gains in 2016, with REALTOR.com forecasting a 12 percent year-over-year increase in housing starts and a 16 percent year-over-year growth in new home sales. The gains in existing-home sales are expected to be more moderate, with expectations of a 3 percent year-over-year gain.

“Next year’s moderate gains in existing prices and sales, versus the accelerated growth we’ve seen in previous years, indicate that we are entering a normal, but healthy housing market,” says Jonathan Smoke, REALTOR.com’s chief economist. “The improvements we’ve seen over the last few years have enabled a recovery in the existing-home market, but we still need to make up ground in new construction, which we could begin to see in 2016. New home sales and starts will bring overall sales to levels we have not seen since 2006 and will help set the stage for a healthy new home market.”

Total sales for existing and new homes are expected to reach 6 million for the first time since 2006 next year.

2016’s Buying Force

Fueling the increase in total sales, REALTOR.com predicts three distinct segments of home buyers to dominate: older millennials (25 to 34 years old); younger Generation Xers (35 to 44 years old), and retirees (65 to 74 years old), Smoke says. 

Millennials:

Millennials are expected to make up the largest advanced notice demographic of buyers in the coming year at 30 percent of the existing home market. “Driven by increasing income, millennials will seek out homes that meet the needs of their growing families – putting the most weight on the safety of the  neighborhood and the quality of the home,” according to REALTOR.com’s forecast. “Commute time and a preference for older homes have these buyers looking in city centers and closer-in suburbs.” 

Young Generation Xers:

Buyers between the ages of 35 to 44 years old are likely to make up the second largest population of buyers in 2016. “These buyers have rebounded from the financial crisis and are entering their prime family-raising and earning years,” REALTOR.com’s report notes. “More than two-thirds of the buyers in this age group already own a home. They will be moving out of a starter home into a larger home or a more desirable neighborhood.” The markets expected to see the most upticks from these growing families are: 1. Atlanta-Sandy Springs-Roswell, Ga. 2. Denver-Aurora-Lakewood, Colo. 

Retirees:

The third largest segment of home buyers in 2016 are expected to be individuals or couples who are looking to relocate or retire between the ages of 65 and 74. New retirees are expected to fuel a trend in downsizing and seeking out ways to lower their cost of living. “They will likely put their home up for sale at the start of the home-buying season in March or April, and aim to make a home purchase following the sale of their home,” REALTOR.com®’s report notes. “This age cohort has a very strong preference for newly constructed homes and put the most weight on their ability to customize their home.”

Source: realtor.com

Read More…

Homebuyers in 2016 | ftcollinshomes.com

Potential Housing Bubble? | ftcollinshomes.com

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