Last week, the housing industry celebrated a latest NAR report that Millennials are finally making a move into housing, surpassing Baby Boomers as the largest generational segment of homebuyers, and responsible for 36% of home purchases in 2017.
But upon further inspection, and as both NAR and National Mortgage News astutely called out, Millennials are still underperforming as homebuyers to their full potential. After all, when you represent the largest population segment in the country and are in prime life stage for marriage and family formation, it is not too hard to overtake Baby Boomers, many of whom are downsizing, shifting to rentals, or moving in with their family. Homeownership rate among Americans under age 35 is currently at 36% (not to be confused with Millennials’ home purchase share, which is also 36%) according to the latest U.S. Census report. It is a substantial drop from the same age group’s homeownership rate pre-2008 housing crisis, at 43%. In other words, the housing industry has lost 1 out of every 6 under-35 homebuyers in the past decade.
The good news: Millennials’ desire to become homeowners remains high. In the latest ValueInsured Modern Homebuyer Survey, conducted in February, 77% of all American Millennials who do not currently own a home want to become homeowners, and 72% who don’t own a home believe owning is better than renting. The less good news: as home prices heat up, Millennials’ enthusiasm to buy now and their confidence in buying as a smart investment have gradually dropped over the past year.
A new banking bill won’t just impact the big banks like Chase and Wells Fargo — if it becomes law, it will impact most Americans too.
The Senate approved a bill last week that will roll back some aspects of the Dodd-Frank banking reform bill, which was passed in 2010 after the financial crisis. It will make many small and midsize banks exempt from parts of Dodd-Frank. The bill was sponsored by Mike Crapo, a Republican senator from Idaho. It will now move to the House, where it could be amended further.
While they worry about affording the down payment, a survey of homeowners and buyers finds Millennial first-timers more eager to buy a house. The homeowners they might buy from, however, aren't so sure they can themselves.
According to ValueInsured’s latest quarterly results, 7% of all millennials first-time homebuyers, if given the option to choose, hope to put down zero percent down; another 26% ideally wish to put down 3-5%. In other words, 1 in 3 (33%) believe their ideal down payment is up to 5%. Most cite the eagerness to buy immediately as their motive, and express an understanding that they could potentially be paying a higher interest rate and will pay higher monthly mortgage payment after having a lower down payment commitment. To 1 in 3 next-gen homebuyers, that is considered the ideal trade off.
American Financial Network, Inc. (AFN) today introduced AFN Protection+, an innovative mortgage product that protects a homebuyer’s down payment and is available immediately on all applicable AFN mortgages. AFN Protection+ will include +Plus SM down payment protection by ValueInsured SM embedded directly into homebuyers’ mortgages.
More than one-third of Millennials looking to purchase their first home say they plan to rely on a loan or a gift from a relative to cover a key portion of their down payment, according to a recent survey.
DALLAS, March 6, 2018 – On the heels of the most recent Case-Shiller report, which again showed home prices on an upswing, ValueInsured’s latest quarterly Modern Homebuyer Survey finds that confidence among current American homeowners has decreased for two consecutive quarters and is starkly juxtaposed by an increase in new homebuyer confidence.
On the heels of the latest Case-Shiller report which once again showed home prices on an upswing, our latest housing sentiment survey - the quarterly ValueInsured Modern Homebuyer Survey - indicates homeowners’ and homebuyers’ housing confidence are trending in opposite directions, but the patterns may surprise many.
Most homeowners believe that low mortgage rates are a thing of the past. The ValueInsured survey indicated that 72 percent of existing homeowners believed the era of historically low rates and affordable mortgages was coming to an end. This sentiment was particularly acute among homeowners of expensive homes, with 95 percent of those who reported owning a home valued at $1 million or more expecting the end of low mortgage rates in their lifetime.
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