Millennials Gridlocked in Congested Market
Millennials Gridlocked in Congested Market
Housing market inventory shortages are no new story. Last year, the total stock of homes on the market hit record lows, and 2018 is continuing that trend. According to the most recent data, the total inventory on the market represents a 3.6-month supply, much lower than the six-month supply benchmark seen during healthy market conditions.“Millennials are bearing the brunt of the consequences with seemingly nowhere to turn but rental options,” said Tim Rood, Chairman of The Collingwood Group.
First-time homebuyers are being driven to the sidelines in this competitive environment. With bidding wars often ending in above asking prices and waived contingencies, millennials simply can’t compete for a shrinking share of affordable entry-level homes. The National Association of Realtors reported that sales of homes under $100,000 dropped more than 20% year-over-year last month.
In the absence of newly constructed entry-level homes, first-time homebuyers would traditionally move into the existing stock of affordable homes as the next generation moves onto larger, more expensive options. “The inventory issue has halted the natural churn of generational movement in the housing market,” said Rood.
Baby Boomers are choosing to “age in place” until roughly 80 years old, and the average age of that generation today is only 65 years old. Many Generation X homeowners remain “equity challenged” and lack the savings to cover the costs of a move and new home purchase. Even the prospective buyers who can afford to move have concerns about overvalued home prices.
“Don’t expect millennials to wait around forever,” said Rood. “Investors and builders have made it clear that they welcome lower homeownership rates with more households renting.” Single-family rentals have risen 30% over the last three years and offer an increasingly attractive alternative. With more rental options and an austere housing market, “homeownership at any cost is a gamble fewer millennials will be willing to take,” said Rood.
“We only have a few more years to get this right, as the bulk of millennials reach peak buying age. If the starter-home market doesn’t open up by then, we could see the first-time home buying age reach new heights as younger generations skip the starter home entirely and focus on saving for their ‘second home’ first.”
Builder Confidence Drops for 55+ Housing Market
Builders expressed a lower degree of confidence in the single-family 55+ housing market during the first quarter, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI). The first quarter saw a five-point drop to a reading of 66, down from the record peak of 71 set in the previous quarter.
Within the three single-family components that make up the HMI, present sales fell by nine points to 70 while expected sales for the next six months increased by seven points to 80 and traffic of prospective buyers remained unchanged at 51. The 55+ multifamily condo HMI increased 10 points to 64, a record since the index began 10 years ago. All three components within the multifamily condo HMI broke records: Present sales rose eight points to 67, expected sales for the next six months jumped 10 points to 70 and traffic of prospective buyers soared 15 points to 55.
However, three of the four components of the 55+ multifamily rental market went down from the previous quarter: Present production declined three points to 59, expected future production fell four points to 57 and present demand for existing units decreased three points to 68. The one component that showed upward movement was future expected demand, and that was up only one point to 68.
Read more: National Mortgage Professional
Entry-Level Homes with ‘Farmhouse Sinks,’ ‘Wainscoting,’ or ‘Exposed Beams’ Sell for Nearly 30% More than Expected
Homebuyers – especially first-time buyers shopping for entry-level homes – can expect to pay a significant premium for houses with listings that tout popular farmhouse or craftsman-inspired features, according to a new report from RealEstate.com, a Zillow Group® brand tailored to helping first-time buyers find and budget for their first home.
RealEstate.com® analyzed listing descriptions from millions of entry-level homes – defined as those priced within the bottom third of the market – to see how certain home features, amenities and design styles affected sale price.
Starter homes mentioning “coffered ceilings,” “claw foot tubs” or “farmhouse sinks” in their listing descriptions saw some of the highest sale premiums of the keywords analyzed – selling for as much as 29 percent above expected values. Furthermore, homes described as “craftsman” performed better than any other design style analyzed. Even though Chip and Joanna Gaines’ “Fixer Upper” TV show may be over, their farmhouse chic style has certainly had an impact on home trends, especially among entry-level homes or first-time buyers.
Read more: PR Newswire
Montreal Is Canada’s Next Hot Housing Market
Montreal’s housing market is finally getting on the map.
An economic revival in Canada’s second-biggest city is fueling a real-estate renaissance, speeding up sales, shrinking inventories, and luring foreign buyers. More stringent lending rules have curbed transactions and slowed price growth in Toronto but have had little effect on Montreal, where buyers are flocking to new condos and sellers are gaining the upper hand.
The trend continued in April, as home sales rose 10 percent from a year earlier. By contrast, Toronto posted its weakest sales for the month in 15 years, while activity in Vancouver fell 27 percent, even as prices in both markets were stable.
Montreal’s rebirth is showing in ways big and small. Devimco Immobilier Inc., a developer that sold a record 1,180 condos downtown last year, is moving up two towers because of high demand, with calls coming in from as far away as China, special adviser Marco Fontaine said in a phone interview. Montreal, long the “neglected child” at Canadian real-estate conferences, is now a topic of discussion, he said.
Read more: Bloomberg
Mortgage Tech Helps Millennial Closing Times Shrink to All-Time Low
As the mortgage industry makes more strides with technology, the time it took millennials to close loans for new-home purchases shrank to its fastest time yet, according to Ellie Mae’s Millennial Tracker.
Since the start of the year, the closing time for millennial new-home purchase loans fell from 44 days in January to an all-time low of 39 days in March.
Overall, the time it took millennials to close all loan types dropped from 45 days in January to 41 in March. Refinance closing times for millennials fell one day from 45 at the start of the year, while Federal Housing Administration loan closing times fell six days to 41 days.
Read more: National Mortgage News
FEMA Approves Final Extension of Housing Program for Puerto Rican Evacuees
The hotel voucher program for Puerto Rican evacuees on the mainland was extended for the last time to June 30, the Puerto Rican government announced Thursday.
“We thank FEMA for listening to our petition and granting this extension that is so necessary for the Puerto Ricans who are staying in other jurisdictions in the United States through the TSA program,” Puerto Rico Gov. Ricardo Rosselló said in a statement.
He requested the unconditional extension two days before Transitional Sheltering Assistance program vouchers had been set to expire April 20 — as 600 families in Florida were at risk of losing their temporary aid — prompting FEMA to grant a last-minute extension until May 14.
Rosselló also announced Thursday that FEMA will be paying for the airplane tickets of TSA recipients who wish to return to the island.
Read more: Orlando Sentinel