Dubbed the great American "Rural-Urban Divide", or an "Urban-Rural Divide" sometimes when reported by writers from urban areas, there has been a lot of talk about the differences that set Americans from different locales apart. Our analysts and writers are less interested in politics, but we are curious about differences in ideals and motivations that drive American homebuyers, so we can learn to better serve and empower them.
Credit risk transfer (CRT) or sharing is the process in which the government-sponsored enterprises bundle up the mortgages they buy from lenders and sell a portion of the risk to private investors. Instead of the GSEs shouldering the loan risk alone, selected investors help offset any potential risk from loan defaults. CRT began as a test in 2012 and is now quickly ramping up as investor interest and governmental oversight grows. Governmental oversight makes sense—we don’t want another 2007. But why are more investors becoming so interested in CRT?
It has been said that when it comes to housing, the West leads the way. California has been ahead of the recent years’ real estate market run-up, and has garnered international attention for its jaw-dropping home prices. The Golden State enjoys the trifecta of being the most populated state in the nation, one of the most affluent with robust growth industries, and having the unique climate and geographical advantages that continue to make the state appealing to potential homeowners.
In the latest ValueInsured Modern Homebuyer Survey, conducted in April 2017, California homeowners and buyers seem to express apprehension and caution concerning the housing market..
According to NAR, over 65% of all U.S. homes sold in 2016 went to repeat homebuyers. So why do we constantly see more spotlights on first-time homebuyers? For starters (no pun intended), the decline in overall homeownership rate has been largely attributed to first-time homebuyers, whose share of total buyers dropped to a near-30 year low in 2014. Secondly, it is presumed, rightly so, that the entrance of first-time buyers helps expand the overall U.S. housing market, as buyers typically don’t go back to renting by choice once they have owned their first home.
However, as the industry encourages more first-time buyers to convert to homeownership, it is important to remember that without repeat homebuyers who upgrade to bigger, more expensive homes, starter home inventory cannot be freed up for first-time buyers, and the market size would stay stagnant. It has been reported that home sales this Spring has been slowed by low inventory; and one key reason for the shortage is would-be sellers holding onto their current homes, concerned that they may not be able to find desirable homes to upgrade to. In other words, it is not far-fetched to say that not only are repeat buyers responsible for two-thirds of all home sales, they have a hand in helping close the other one-third as well.
Americans remained as confident in the U.S. housing market as they have been, but this cautious optimism may be on shaky ground. That, at least, is the conclusion of ValueInsured’s quarterly Modern Homebuyer Survey, released Thursday.
The survey index ended Q1 at 67.7 out of 100, which was down less than 1 percentage point from Q4. According to the index, the so-called Trump bump “has plateaued after two interest rate increases in three months.”
Americans Still Value Homeownership and Want to Buy, According to ValueInsured’s Modern Homebuyer Survey
DALLAS, May 3, 2017 – Americans remain generally confident in the country’s housing market and the value of homeownership despite recent interest rate hikes, according to ValueInsured’s quarterly Modern Homebuyer Survey.
The survey produced an overall ValueInsured Housing Confidence Index score of 67.7 on a hundred-point scale, down less than one percentage point from January. The index is the aggregate mean of seven multidimensional confidence measures collected through the survey.
Don’t believe the hype: contrary to popular belief, the vast majority of Generation Y, better known as millennials, want to own a home — and most actually do, new data suggests. That’s good news for boomerang parents whose twenty-something-aged offspring moved back home in recent years due to the economic downturn.
Loan officers see Mortgage +Plus℠ with down payment protection as key differentiator.
DALLAS, TX (PRWEB) APRIL 28, 2017
After a launching in January, First Heritage Mortgage’s new Mortgage +Plus℠ program is seeing significant growth heading into the Spring buying season. As the only mortgage company to offer loans with down payment protection in the Maryland, Virginia and North Carolina markets, First Heritage Mortgage remains focused on delivering positive, pro-homebuyer down payment protection solutions within its fast-paced mortgage service area.
“As home prices and competition across the Mid-Atlantic continue to heat up, we find that many potential borrowers are seeking greater confidence in the home buying process,” said Scott Kinne, Vice President, First Heritage Mortgage. “If home prices do become volatile, having peace of mind in knowing that their down payment can be protected is a game changer.”
America is famously youth-obsessed. Every few decades, we obsess over the next wave of young people, the new “it” generation. We talk about how they will change the world, drive trends, buy lots of stuff, and propel the economy. Take a look at the daily news headlines: “how Millennials spend their money”, “where Millennials want to work”, “what will Millennials watch this fall”…it goes on.
But how about Gen-Xers? They used to be the media darling. Sandwiched between Baby Boomers and Millennials, and with a smaller head count, are Gen-Xers the forgotten generation? We thought we would devote this week’s trend post to the former “slacker generation” that is making positive waves in housing today.
Millennials do not want to live in the same white picket-fence house for 40 years – it’s fair to say this is something that has been safely established. But a few recent reports and the latest ValueInsured Modern Homebuyer Survey provided new insights that shed more lights on this next-generation cohorts, their priorities, and how that may affect their plans to become homeowners.
Pacific Union Financial LLC today introduced PacificPlus, an innovative new mortgage program that protects a homebuyer’s down payment. PacificPlus has +Plus down payment protection by ValueInsured embedded directly into the mortgage loan, and is now available nationwide through Pacific Union Financial. Purchasing a home with PacificPlus gives the homebuyer a sense of safety and security that their down payment investment is protected should the home be sold in a declining real estate market.
We have all read the headlines: Millennials feel pessimistic about their future; Millennials are the gloomy generation. But according to the latest quarterly Modern Homebuyer Survey by ValueInsured, Millennials reported to be rather upbeat, at least when it comes to their outlook on the American housing market and their prospects of achieving the American Dream.
The results are rather jarring. In all measures, except one – more on that later – Millennials surveyed in the research appear more optimistic than their Gen-X and Baby Boomer counterparts. In the survey conducted in January 2017, Millennials were more likely to think the current American housing market is healthy, and more likely to believe buying a home today is a good investment (even when they are less likely to currently own a home compared to the Gen-Xers and Baby Boomers surveyed). Interestingly, despite more likely to be renters and to prefer a more nomadic lifestyle, Millennials in the survey are more likely to believe buying a home is financially more beneficial than renting. Here are samples of Millennials’ relative optimism regarding our current housing market
According to a pair of new studies, Millennials’ disinterest in owning a home is a myth
By Erik J. Martin CTW Features
Don’t believe the hype. Contrary to popular belief, the vast majority of Generation Y, better known as Millennials, want to own a home, and most actually do, new data suggests. That’s good news for boomerang parents whose twentysomething-aged offspring moved back home in recent years due to the economic downturn.
It has been 10 years since the great American housing crisis that began in 2006 and came to a halt in 2008. In the past decade, best-selling books, Academy Award-nominated film and countless business school lectures have been devoted to dissecting what happened and how to avoid a repeat of history. During this period, 10 million families who lost their homes due to foreclosures and many more affected by the crisis struggled to rebuild their life and their financial credits. It has not been an easy recovery for the housing industry and for many homebuyers.
Since 2008, federal regulations were put in place, mortgage practices – especially but not limited to subprime lending – have been tightened considerably, and home prices came back closer to earth in many markets. Well, prices were closer to earth, until recently.
By Rachel Williams - We sat down with industry veteran Joseph Melendez to learn how changing buyer demographics, technology, and the new administration are shaking things up. Melendez is the CEO of ValueInsured, a down payment protection provider based in Dallas. He has more than three decades in the insurance and financial services industry.
Forecasts on their massive influence aside, is the housing industry ready for this next generation of homebuyers? Just as Millennials are different moviegoers than their parents, they will be different homebuyers. One of the starkest differences: Millennials shop for their homes differently. According to the National Association of Realtors, 99% of Millennials search online when shopping for a home. They are twice as likely as their parents’ generation to use a mobile device to look for a home. In fact, nearly 6 in 10 Millennials (58%) reported to have first found the home they eventually bought on a mobile device.
Millennials also live and plan to own their homes differently than their parents. The average Millennial job tenure is 2.8 years. They make up 43% of all movers. But, many young people have moved throughout history. Do Millennials plan to settle down once they buy a home? One can expect they should, but they aren’t likely to own the same home for 30+ years as many in their previous generations do. According to the ValueInsured Survey, while “owning my own home” remains – just like for their parents – the top personal definition of the American Dream for Millennials, two other popular answers are “having the freedom to pursue opportunities wherever they are” and “being able to move and live wherever I want”.
Other latest findings that indicate Millennials may be a generation on the move include..
This may be what the gold rush felt like, except it is now a rush to buy homes. We keep hearing housing demand is high, inventory is tight. Some headlines even describe homebuyers as "panicking" to rush to buy homes, or rushing to lock in low rates. Yes, if you have been paying attention to recent reports, you may have seen the word “rush” used frequently when describing today’s home buying activities.
However, while many first-time home buying hopefuls wonder how they can save enough to buy at today’s sky-high prices, some may at the same time notice their own parents are selling. Baby Boomers are downsizing, and many are making bank. And they can help...
What has been somewhat over-shadowed by the red-hot housing headlines are reports of unsustainable home prices, often by the same industry experts and forecasting models. According to the latest report by Fitch Ratings, home prices in Dallas are 10% –14% higher than what the market can sustain based on its economic fundamentals including population growth and inflation-adjusted income growth. Many of the largest and hottest real estate markets in the country are also over-heated by estimated 5% to double-digit percentage levels.
In ValueInsured’s latest quarterly Modern Homebuyer Survey, 3 out of 4 interested homebuyers– prospective homebuyers who plan to buy within the next 24 months – said they would buy a home sooner if they could have more confidence they would not lose their down payment after they buy, in the event home prices go down and they need to sell their recently purchased home resulting in a loss.
Thinking hard about buying a home? You’re likely keeping a close eye on mortgage rates, which in part determine how much home you can afford. After all, when rates go up, purchasing power goes down.
The good news is that mortgage rates remain close to historical lows. The not-so-good news is that many expect rates to be higher by the end of 2017. But it’s impossible to accurately predict rates. And a lot can change between now and the end of the year. Government policies, market conditions, world events and other issues can cause rates to rise or fall.
To get a better feel for where rates may be headed over the next nine months, I asked a group of industry experts to assess the current rate climate and chime in with their predictions.
Homebuyer sentiment has always been a very interesting, dynamic and often unpredictable factor in the housing market. Take home prices, for example. According to the recently released S&P/Case-Shiller U.S National Home Price Index, home prices in December 2016 continued a record-breaking streak, having risen to a 30-month high. Previous all-time highs were smashed in seven major cities, including Boston, Charlotte, Dallas, Denver, Portland, San Francisco and Seattle. By all account, inventory has been tight, and there is the looming threat of imminent interest rate hikes. You would think homebuyers would be deterred; some might even throw in their towels and decide to stay life-long renters.
However, homebuyer psychology is a funny thing....
Is mortgage lending too tight, or too loose? That seems to be a question the FHFA has been trying to answer since the housing crisis in 2008. Many factors led to the housing collapse, but no doubt the overly lenient mortgage lending practices were the biggest culprits. To make sure history does not repeat itself, mortgage-lending rules are now noticeably more restrictive compared to those in 2006, at the height of the housing bubble. On the other hand, there are indications lending standards might now be too strict, preventing further recovery of the housing market.
In January 2017, ValueInsured asked American homebuyers in its quarterly Modern Homebuyer Survey what benefits they valued in a home mortgage lender. The results may challenge conventional assumptions but are consistent with housing industry and consumer trends in that homebuyers are moving away from big-brand names, and demanding more innovative solutions
Next Generation Home Mortgage Product Can Reimburse Homebuyers If They Need To Sell At A Loss In The Future
FAIRFAX, Va., Feb. 9, 2017 – First Heritage Mortgage today introduced Mortgage +Plus, an innovative mortgage product that protects a homebuyer’s down payment, available immediately on all applicable First Heritage mortgages. Mortgage +Plus will include +Plus down payment protection by ValueInsured embedded directly into buyers’ mortgages. With exclusivity in Washington, D.C., Maryland, Virginia and North Carolina, First Heritage Mortgage is the first mortgage lender to offer this protection to homebuyers in the region.
In January 2017, ValueInsured released its latest Housing Confidence Index that reported a slight decline in Americans’ overall housing confidence. The drop was driven by existing homeowners, who are not as confident now as they were in Fall 2016 that their home would be worth as much as what they paid for. This makes sense, since ValueInsured’s fall index was reported in early September, some of the country’s most overheated markets have stabilized and there were steady reports of cooling home prices throughout the remainder of 2016. This was partly driven by the fall 2016 interest rates hike, election uncertainty, and by buyers’ pricing fatigue.
Dissecting the January Modern Homebuyer Survey data further, what’s particularly interesting is that more affluent American households – typically more confident in housing given their stronger purchasing power – are not reporting the highest housing confidence
Despite higher mortgage rates and President Trump’s generally negative impact on the nation’s housing market, there are a few rays of sunlight filtering through for Chicago’s young first-time home buyers.
In the past two years, as the economy improved and home mortgage interest rates stayed in record lows, one key factor that had kept housing growth from kicking up to the next gear was the stagnation of entrance by Millennial first-time homebuyers. American homeownership rate in 2016 was lowest in five decades. The primary cause was attributed to Millennials – an age group that traditionally supplied a steady stream of first-time homebuyers – whose homeownership rate dropped to the lowest recorded at 34.1%. Well-documented explanations for this historically low rate include heavy student-loan debts, growing trend to boomerang back to parents’ homes, delay of marriage, increased career mobility and other factors that delay homeownership.
However, Millennials have not lost their desire to own a home...
Optimism Driven by First-Time Homebuyers Reports ValueInsured’s Quarterly Index
DALLAS, January 25, 2017 – Americans are starting off 2017 cautiously optimistic about the housing market, reports ValueInsured Modern Homebuyer Survey. The first consumer confidence survey conducted in January and released post-inauguration reveals nearly seven-in-10 Americans (69 percent) believe 2017 will be a better year for the housing market than 2016, despite rising interest rates and a new administration.
In our latest ValueInsured Modern Homebuyer Survey, we learned that most prospective first-time and upgrade homebuyers will buy sooner, if they could be given more confidence about the housing market, and about their odds of preserving their down payment savings. We interviewed 1,013 Americans who were interested in buying a home, and this is what they told us
In a recent interview with CNBC regarding the current housing market and homeownership rate, a self-made millionaire and published financial author made the claim that an average homeowner in American today is 38 times wealthier than the average renter. This has what many often call the American Dream – if you have made it in this greatest country in the world, you get to own a piece of its land.
But in recent years, since the housing crisis, this notion has been challenged, and some of the people who have fared most poorly and had the toughest time surviving the financial crisis were Americans who owned homes in 2007-2008. We wanted to know how today’s Americans feel about their wellbeing and how it relates to homeownership, and designed part of our latest ValueInsured Modern Homebuyer Survey to explore exactly that.