The general consensus is that interest rates are going up this year - perhaps quite a bit. Interestingly, this appears to be something existing homeowners are a lot more in tune with. One would think homeowner hopefuls – Americans who are in the market for a home and desire to buy in the near future – would also be more aware of upcoming rate increases, after all it could have certain implications on their budget and buying timeline. However, according to ValueInsured’s latest quarterly Modern Homebuyer Survey, non-homeowners who wish to buy in the next three year report to have a lower awareness of upcoming rate hikes, or they are more optimistic that a rate hike way not happen.
In the latest ValueInsured Modern Homebuyer Survey, majority of Americans and Millennials believe more people will relocate to less expensive housing areas if home prices in their hometown continue to go up. Other factors are also causing them to consider fleeing hot markets.
While both have been effective wealth builders for Americans over the long term, neither stock nor home prices has historically gone up in an ascending straight line. The events in the past week were once again a reminder. As if flipping a switch, a strong equities market turned into a volatile, uncertain market overnight.
The same could happen to the housing industry. Up until now, the bullish stock and housing market were both in large part propelled by historically low interest rates. With more rate hikes on the horizon, the stock market got spooked. One could argue rising interest rates should have even stronger effects on the real estate market, after all, home prices are already high and considered "overvalued" in many major markets; rising interest rates could further strain affordability issues already plaguing homebuyers.
Most of us have heard this data point: more Millennials are now living at home with their parents than in any other living arrangements, or in any other time in modern history. Last year, the US Census estimated that one in three Millennials – or 24 million 18- to 34-year-olds – live in their parents’ home.
It’s fair to say Millennials’ parents have been generous with them. And that generosity extends beyond sharing their home well into a child’s adulthood. Sometimes, parents help their adult child buy a home by providing financial assistance. In ValueInsured’s latest (Q4 2017) Modern Homebuyer Survey, 17% of all surveyed Millennial homebuyers say they plan to rely on a loan or a gift from family member(s) to fund the majority of their down payment. It was recently reported that nearly 1 in 4 (23%) of all purchase loan originations in the U.S. now require a non-spouse co-borrower(s)’ – in most cases a parent’s – credit to afford the loan approved.
Earlier this week, a “rare bear” who caught national attention by accurately predicting the last housing crash in 2005 returned to the headlines. The famed money manager sounded the alarm that current housing "valuation extreme" looks a lot like it is 2005 all over. And he used the b-word, cautioning homebuyers are again in denial of a bubble just as they did before 2007.
There are no doubt both many bear and bull economists right now, each with their own opinions on the subject. But, to the non-economist homebuyers, this is all just more conflicting noise that impacts their confidence and decision making.
Last month, Fannie Mae – a perennially reliable source we trust – found a 5 percent-point drop in Americans’ home buying confidence from a month prior, and an 8 percent-point drop from a year ago. At the same time, reported sentiment of “now as a good time to sell a home” shot up 21 percentage points year-over-year.
We are also hearing more about emerging housing trends that some might consider unconventional: dramatic increase in second units of housing built in a relative’s backyard, rising desirability of living in a trailer park. These – along with tiny homes, among other new home-buying trends – may be results of decreasing housing affordability, but do they indicate the market is unhealthy?
It’s a popular time for new year resolution, so how about a little self-assessment of the mortgage industry? We have always wondered what homebuyers think of mortgage lending, so we asked 1,019 of them for some feedback in the latest ValueInsured Modern Homebuyer Survey.
Spoiler alert: it’s not unilaterally glowing, but when homebuyers speak up, and when we listen, it could help inform the long-term success of any lender.
What a fantastic year we had in housing for 2017 (unless you were a buyer). Interest rates stayed low (then began to rise toward the end), home prices broke record for many major markets (but according to CoreLogic, many are overvalued), and the mortgage industry had a good year in spite of lower refinance activities (however, profit margins are narrowing)…So, it was a good housing year, but not without many caveats.
This week we have interesting new data on Millennial first-time homeownership that has not been frequently addressed in the press. We all know about Millennials who live in their parents home well into their thirties as byproduct of today’s unaffordable home prices and back-breaking student loan debts. In fact, at last count, 4 in 10 American Millennials now live in their parents’ home, the highest rate in 75 years and 10% higher than a decade ago. In some state, e.g, New Jersey, nearly half (47%) of all Millennials live in their parents’ home at the end of 2016.
It would appear then the ultimate goal for many Millennials would be to own their own home, and to finally obtain their much craved freedom, privacy and autonomy. New data shows this statement may only be half true.
It’s a seller’s market across much of the U.S. thanks to brisk growth in home prices and low for-sale inventory in many areas. While that’s great news for homeowners who want to enjoy the financial benefits of increasing equity—such as refinancing to lower mortgage payments or even take out cash—it’s bad news for buyers, many of whom are afraid to make the largest investment of their lives at what could be the apex of another real estate bubble.
In fact, though the Fall 2017 Modern Homebuyer Survey from ValueInsured revealed that 79 percent of homeowners believe now is a good time to sell, only 57 percent of the 66 percent who are interested in selling think they’ll actually be able to do so within the next three years.
“This dichotomy is caused by greed and fear,” Joe Melendez, founder and CEO of ValueInsured, explained to Reward Expert. “On the greed side of the equation, people realize that prices have recovered, and in some markets, are at all-time highs. However, they also realize that if they want to buy a new house, it’s going to cost them more than the one they just sold. So, they decide to just stay put. That’s the fear element.”
Coming out of the last housing crisis – can you believe we’re at the 10-year mark? – an urgent priority for the housing industry was to expand the market by getting more Millennials to buy homes. For the first nine years, that vision has not exactly panned out. Last year, Millennial homeownership rate dropped to the lowest level recorded in over 5 decades. As the economy improved and as Millennials continue to age, earn more, and start their own families, that dismal figure has rebounded to the current 35.3%, but it is still near 10 percent points lower than a decade ago. Here are reasons we found based on our latest research.
After weeks of resistance from the nation’s realtors, builders and mortgage lenders, our policy makers voted to proceed with a tax reform bill that some say would fuel economic growth, while others say could trigger a housing crash. At ValueInsured, we are not political pundits or policy lobbyists; but what we devote ourselves to everyday is homebuyers’ confidence – how we can help them buy their dream home, build memories with their family, while sleeping soundly at night.
Anecdotally, we have heard homebuyers are giving up commute time, extra outdoor space, or even privacy by mean of taking on extra roommates in order to buy a home that doesn’t break the bank. In the latest ValueInsured Modern Homebuyer Survey conducted in the last week of October 2017, we asked interested homebuyers what they are least willing to give up in a new home.
Overall, Americans are least willing to give up the following home attributes, even if their home purchase budget is strained
It's a seller's market thanks to low inventory, but ValueInsured, Dallas, said many would-be sellers are hesitating to sell because of the high price they'd have to pay for their next home.
The company's quarterly Modern Homebuyer Survey reported 79 percent of homeowners believe now is a good time to sell a home. Two-thirds of homeowners are interested in actually selling their home "in the near future," up 8 percentage points from last quarter.
But many aren't selling, said ValueInsured CEO Joe Melendez. "Homeowners in many cases are eager to sell but don't want to become buyers," he said. "These homeowners have experienced a lot of home value volatility and see more uncertainties looming--tax reform, for example. By hesitating, these homeowners are actually controlling the market on both sides. Reassuring these individuals is the key to unlocking inventory."
As you and your families gather to celebrate Thanksgiving, we would like to express our thanks to our partners and friends that have helped us deliver down payment protection to homebuyers across the United States. As we look back on 2017 and ahead to 2018, we are left with great optimism that we can sincerely help today's homebuyers - and the industry as a whole - by reducing the risk of home buying and motivating buyers to get into the homes they want. We have some great new data to share with you next week from our recent ValueInsured Modern Homebuyer Survey. Until then, Happy Thanksgiving!
Home buyers say tight inventory and rising home prices are causing several negative trends in the housing market. According to ValueInsured’s latest Modern Homebuyer Survey, a quarterly report based on more than 1,000 responses, buyers say the following trends will leave the housing market in a weaker position:
The “no inspection” trend: 58 percent
The “offer sight unseen” trend: 57 percent
The “co-buying with strangers” trend: 54 percent
The “cashing out from retirement savings” trend: 37 percent
With a seller’s market in many places across the country, why are so many homeowners reluctant to sell? Nearly 80 percent of more than 1,000 homeowners recently surveyed say they believe now is a good time to sell a home, but many don’t plan to list their homes anytime soon.
Numerous would-be sellers say they’re holding off because of the high price they’d have to pay for their next home, according to ValueInsured’s latest quarterly Modern Homebuyer Survey.
It is seen as a seller's market in many parts of the country because of low inventory but those high prices are a double-edged sword when it comes to selling and then buying a home. People believe they can get an exceptional value for selling their home but then they're afraid to buy into a new property at these new market prices. Joe Melendez is CEO at ValueInsured.
Many have speculated that low refinance rates have been preventing homeowners from selling, but this factor is less consequential than expected, according to ValueInsured. Only about 18% of consumers interested in selling their home claim they haven't because of their current low mortgage payment.
With record-high home prices fueled by tight inventory and high demand, it's a seller's market, but many would-be sellers are hesitant to sell because of the price they'd have to end up paying for a new home.
About 79% of homeowners reported that it was a good time to sell a home in the third quarter, and two-thirds of homeowners stated they will sell "in the near future," up eight percentage points from the previous quarter.
Three in Five Would-Be Sellers Waiting for Prices to Settle, According to the Latest ValueInsured Modern Homebuyer Survey
It’s a seller’s market thanks to low inventory, but according to ValueInsured’s latest quarterly Modern Homebuyer Survey, many would-be sellers are hesitating to sell because of the high price they’d have to pay for their next home.
The survey, released today, found that 79 percent of homeowners believe now is a good time to sell a home. Two-thirds of homeowners are interested in actually selling their home “in the near future,” up 8 percentage points from last quarter.
There is plenty of noise in housing in the past week: Much of our industry rejects the newly proposed tax reform which includes cutting mortgage tax deduction. Some speculate the pending tax cut could trigger the next housing crisis, others say our industry is in a panic. A couple of days ago, a new report assessed nearly half of the country’s top 50 metro markets are overvalued. On the same day, a growing player in the home mortgage space suddenly threw in the towel, citing over-competition. We decided not to add to the noise this week; instead, we offer two simple thoughts...
A recent August survey by Freddie Mac found 3 in 4 renters (76%) now believe renting is more affordable than owning a home, up from 68% in March. The survey also reported that 63% of young Millennials ages 21-27 said renting fits their current lifestyle.
ValueInsured through its Modern Homebuyer Survey has been asking similar questions quarterly to gauge desire and preference in buying versus renting. While the desire to own a home remains high among all Americans, including Mllennials, ValueInsured’s researchers have noticed a similar drop in positive attitudes toward buying.
To learn more about homebuyers’ priorities, ValueInsured has used its quarterly Modern Homebuyer Survey to explore what types of home-buying related challenges keep them up at night, what they are willing to give us to fit within their budget. In the latest survey, ValueInsured posed this hypothetical question: If you had $10 per month to spend to insure and protect one thing in your new home, what would you choose to spend that $10 on?
Introducing +Plus Equity Protection, Latest Product from ValueInsured to Protect Homeowners
DENVER, Oct. 24, 2017 /PRNewswire/ -- ValueInsured, the only provider of home down payment protection, today announced the availability of +Plus Equity Protection on home refinances at the Mortgage Bankers Annual Convention and Expo in Denver. The new +Plus Equity Protection program allows current homeowners to refinance their current loans and protect their equity for the future - the same way +Plus Down Payment Protection does for homebuyers.
Millennials are living at home longer to avoid paying high rent or to save for their own down payment. This is not news. Millennials are even asking their parents to refinance their own home in order to help with all-cash offers to win bidding wars. You may have already heard about this one also.
But did you know that Millennials are hardly alone, at least when it comes to receiving home-buying assistance from family. In ValueInsured’s latest Modern Homebuyer Survey, it is reported that nearly 1 in 4 interested homebuyers plan to seek down payment help from a family member. What’s more interesting is that the pattern is near universal, across demographic segments.
It is not a surprise that a minority yet still sizeable share of homeowners in ValueInsured’s latest Modern Homebuyer Survey express less than fair level of confidence that they could sell their home for the same or more than what they paid for. Overall, homeowners’ confidence level is high. Nationally, 72% of all homeowners are confident their home has retained or increased in value since they bought it. There are, however, segments of homeowners that show lower level of confidence.
The Only Provider of Down Payment Protection Enables Homebuyers to Close with Confidence
DALLAS, Oct. 11, 2017 /PRNewswire/ -- ValueInsured, the only provider of down payment protection, today announced the closing of $6.5M of funding led by an affiliate of Everest Re Group Ltd. and also Houston International Insurance Group (HIIG). The latest round of funding from Everest Re and HIIG builds on their existing partnerships with ValueInsured, which began in 2014 with an initial $6M seed round. This additional investment provides ValueInsured with the growth capital to continue its aggressive distribution partnership strategy, expanding channel presence and enhancing the features of the +Plus SM down payment protection program.