Real Estate Roundup: Millennials Prioritize Homeownership Over Marriage and Children

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

Although millennials face numerous obstacles to homeownership, it is still one of the biggest priorities for that generation.

That’s according to Bank of America’s 2018 Fall Homebuyer Insights Report, which says that 72 percent of millennials say that owning a home is a top priority, with the ability to retire the only other major life event cited as more important. By comparison just half of millennials say that getting married is a major priority, and even less — 44 percent — think that having kids is of great importance.

About half of all millennials say that they feel like mature, responsible adults when pondering the prospect of homeownership, while more than one-third say it makes them feel independent and established. Nearly 40 percent plan to purchase a home within the next two years, while 36 percent will for three to five years before entering the housing market.

The amount of time it takes millennials to buy a home could largely depend on how much student debt they carry. Survey results released last month from NeighborWorks America found that 59 percent of millennials knew someone who delayed purchasing real estate because of student debt.

Nationwide, foreclosure activity reached the lowest level since 2005 in the third quarter, with natural disasters currently posing more of a risk than poor-quality mortgages.

ATTOM Data Solutions’ Q3 2018 U.S. Foreclosure Market Report says that there were 177,146 homes in some state of foreclosure in the most recently completed quarter, the lowest in nearly 13 years. For the eighth straight quarter, foreclosure activity was below its prerecession average, this time by 36 percent.

Foreclosure starts were down by 6 percent from one year ago to 91,849 properties. In Northern California, starts dropped by 21 percent in the San Jose metropolitan area, 17 percent in Vallejo, and 10 percent in San Francisco. By contrast, foreclosure starts in Santa Rosa shot up by 61 percent from the third quarter of last year.

The spike in foreclosure starts in the Wine Country is very likely a result of last October’s devastating wildfires. In a statement accompanying the report, ATTOM Data Solutions Senior Vice President Daren Blomquist points out that third-quarter foreclosure starts jumped sharply in housing market that were impacted by last fall’s major hurricanes.

Buying a home is likely the biggest financial decision a person can make, so it comes as somewhat of a surprise that most Americans don’t do much research when applying for a mortgage.

A survey from PenFed Credit Union found that 65 percent of homebuyers did not shop around when applying for a mortgage. Nearly half of those polled believe that a mortgage with the lowest rate is the best one, but PenFed points other factors to consider, including calculating closing costs and working with a trustworthy lender.

Another mortgage misconception: Nearly 60 percent of Americans think that adjustable-rate mortgages are inherently risky, but they could actually be an ideal option for homebuyers who don’t plan to stay in their properties very long. For instance, a 5-year, adjustable-rate mortgage has a fixed rate for the first five years and will probably translate to lower payments than a 30-year, fixed-rate mortgage.

Shopping around for the best mortgage will become even more important as rates tick up, which they did last week, once again climbing to a seven-year high.

The latest numbers from Freddie Mac put 30-year, fixed-rate mortgages at 4.90 percent for the week ended Oct. 11, the highest since April 2011. Fifteen-year, fixed-rate mortgage rates also increased on both a weekly and annual basis, moving up to 4.29 percent. In a statement accompanying the report, Freddie Mac Chief Economist Sam Khater said that higher rates coupled with rising home prices is causing demand for mortgages to cool.

In its annual housing forecast released last week, the California Association of Realtors said that it expects mortgage rates to end 2018 at 4.7 percent and increase to 5.2 percent by the end of 2019.

(Photo: iStock/Zinkevych)

California Home Price Growth to Moderate in 2019, Forecast Says

  • California’s median single-family home sales price is expected to hit $593,400 by the end of next year, an annual gain of 3.1 percent.
  • More than one-third of homebuyers in the Bay Area and Southern California are forecast to leave the county in which they resided this year.
  • In 2019, California’s gross domestic product is projected to grow by 2.4 percent, with the unemployment rate holding steady at 4.3 percent.

Golden State home price appreciation is projected to slow to a six-year low in 2019, although rising mortgage rates will reduce affordability even further.

The California Association of Realtors’ 2019 Housing Market Forecast expects that the median single-family home price will end this year at $575,800, up by 7.0 percent on an annual basis. Mortgage rates are forecast to end 2018 at 4.7 percent, reducing the number of Californians who can afford a home to 28 percent.

The state’s median home price is projected to rise by another 3.1 percent in 2019 to $593,400, a far cry from the 27.5 percent growth recorded in 2013. Assuming that mortgage rates move up to 5.2 percent by the end of 2019, just one-quarter of Californians will be able to afford a home purchase. Next year, home sales are projected to decline by 3.3 percent, almost identical to 2018’s projected decrease.

“While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues,” CAR President Steve White said in a statement. “Would-be buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back housing demand and hamper home sales in 2019.”

Housing affordability challenges are expected to drive out-migration trends next year, as Californians move to less expensive counties or out of the state entirely. This year, 28 percent of homebuyers are projected to leave the county in which they currently reside. In the Bay Area and Southern California, that number ticks up to 35 percent.

While worsening affordability is unwelcome news for California home shoppers, the state’s economy should remain on solid footing next year. CAR projects that the state’s gross domestic product will grow by 2.4 percent, down slightly from 2018 expectations. The job market should continue to thrive, with the unemployment rate holding steady at 4.3 percent by the end of next year.

Shared with permission from the Pacific Union Blog

Real Estate Roundup: U.S. Housing Inventory Sees Biggest Annual Increase in Five Years

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

The U.S. housing market got a much-needed inventory boost in September, though there are still not enough properties for sale to meet demand.

That’s according to a report, which says that new listings on its website rose by 8 percent from September 2017, the biggest such increase since 2013. The increased supply is helping to slow appreciation, with the median-priced $295,000 home up by 7 percent from one year ago. Last September, home prices were up by 10 percent on an annual basis.

San Jose saw the biggest increase in new listings of the 45 major U.S. metropolitan areas included in the report, and there are currently 1,909 homes there listed for sale on San Francisco also ranks among the five housing markets with the largest September supply gains, with 1,683 current listings.

According to the latest analysis of Bay Area home sales by Pacific Union Chief Economist Selma Hepp, inventory across the region improved by 5 percent year over year in August, the second consecutive month of gains.

Although the U.S. economy created fewer jobs in September than it has in any other month in 2018, the unemployment rate fell to the lowest level since the late 1960s.

As CNBC reports, the U.S. Bureau of Labor Statistics says that the country added 134,000 jobs last month, down from a revised 270,000 in August. The professional and business service sector created 54,000 jobs, followed by the health care (26,000 jobs), transportation and warehousing (24,000 jobs), and construction (23,000 jobs) industries.

The national unemployment rate dropped to 3.7 percent, the lowest since 1969. Of the 38 largest U.S. metropolitan divisions, San Francisco had the lowest unemployment rate, at 2.3 percent, followed by San Rafael at 2.4 percent.

The Bay Area’s exceptionally high cost of living is driving out lower-income residents, leaving some businesses struggling to fill minimum-wage jobs.

Citing a study from BuildZoom and the University of California, Berkeley, The Mercury News reports that between 2010 and 2016, more than half of the people who moved to the Bay Area earned annual incomes higher than $100,000, and 20 percent made more than $200,000. But for every one of those $200,000-plus earners moving in, six people who made less than $100,000 moved out.

The exodus of lower-earning residents from the Bay Area means that restaurants, hotels, schools, and public-safety agencies are having a difficult time filling open positions. Mountain View city council member John McAlister, who owns a pair of ice-cream shops, told The Mercury News that retaining full-time employees at the city’s minimum wage of $15 is a constant problem.

All three major Bay Area rental markets are more expensive than they were last October, with Oakland seeing a significant annual increase.

Zumper’s latest monthly rent report puts the median rent for a one-bedroom apartment in San Francisco at $3,650, still the highest in the country and $800 more than New York City. Rents for a one-bedroom unit are up by 4.9 percent year-over-year, while two-bedroom units have increased by 6.7 percent to $4,800.

In San Jose, the country’s third most expensive city for renters, one-bedroom unit prices rose by 3.3 percent year over year to $2,470, and two-bedroom apartments increased by 9.1 percent to 3,010. Oakland saw the largest annual rent increase in the Bay Area, with the median $2,170 one-bedroom unit up by 12.4 percent, making the sixth-priciest place in America to rent an apartment.

(Photo: iStock/Steve Debenport)

California Projected to Post the Largest Home Price Gains in the U.S. by Next Summer

  • California home prices are expected to increase by 9.1 percent by July 2019.
  • Golden State homeowners gained an average of $49,000 in home equity between the second quarter of 2017 and the second quarter of 2018.
  • The San Francisco metropolitan area has the lowest number of underwater homes in the U.S., accounting for only 0.5 percent of properties.

A palm-tree-lined street in CaliforniaGolden State homeowners once again enjoyed the largest equity gains in the country in the second quarter, and that trend appears poised to continue, as California’s is projected to lead the U.S. for annual home price appreciation by the summer of 2019.

That’s according to CoreLogic’s latest Home Price Index, which says that California home prices increased by 8.2 percent year over year in July and by 11.0 percent in the San Francisco metropolitan area. Although four other states had larger annual price gains, California is expected to lead the nation by July of next year, with forecast growth of 9.1 percent

Continued price growth over the past few years has helped line the pockets of California homeowners. CoreLogic says that the average Californian with a mortgage gained $49,000 in home equity between the second quarter of 2017 and the second quarter of this year.

In a statement accompanying CoreLogic’s latest The MarketPulse report, company CEO Frank Martell said that the number of underwater homes continues to drop nationwide, with the biggest declines in areas with strong price growth. That certainly applies to the Bay Area; according to CoreLogic’s most recent Homeowner Equity report, only 0.5 percent of properties in the San Francisco metro area had negative equity in the second quarter, the lowest of the 10 major cities for which the company tracks data.

Homeowners in San Francisco are also doing quite well when it comes to handling their mortgages, with 1.5 percent 30 days or more delinquent on their payments as of June, the lowest of the 10 metro areas. Just 0.5 percent of San Francisco homeowners with a mortgage are considered seriously delinquent, tied with Denver for the lowest in the country. Those two cities also have the country’s smallest foreclosure rates: 0.1 percent.

Even with California projected to put up significant home price gains by next summer, the party is not likely to last forever. CoreLogic Chief Economist Frank Nothaft notes that while some Western states continue to see rapid appreciation, many of them are overvalued and will probably see slowdowns soon. That echoes findings from a recent Union Bank of Switzerland report, which calls San Francisco and Los Angeles the nation’s most overvalued housing markets.

(Photo: iStock/Ryan Herron)

Shared with permission from the Pacific Union Blog

Real Estate Roundup: East Bay ZIP Code Named Among the Nation’s 5 Hottest Real Estate Markets

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

Lake Chabot as seen from Castro Valley

Lake Chabot as seen from Castro Valley

Relative affordability is helping to draw homebuyers to the quiet Alameda County city of Castro Valley, making it one of the hottest ZIP codes in the country this year.

That’s according to an analysis by Chief Economist Danielle Hale, which ranks the country’s 10 hottest real estate markets based on most views on its website and the fastest pace of sales. Of the 30,000 ZIP codes included in the study, Castro Valley’s 94546 ranks as America’s fourth hottest real estate market in 2018, with homes selling in an average of 16 days, 50 days faster than the nationwide pace of sales.

Homes in that Castro Valley ZIP code list for $784,238, up by 7.6 percent from 2017. And while that makes it the most expensive community included in’s list of America’s 10 hottest housing markets, it is still relatively affordable when compared with San Francisco, where the median list price is $944,000, and Silicon Valley, where homes list for $1.2 million.

Castro Valley’s unemployment rate of 3.0 percent is below the national average of 3.9 percent, with job growth at 0.5 percent from last year. The report also cites the city’s top-quality school, access to BART, and community activities as reasons for its growing popularity with Bay Area home shoppers.

Silicon Valley’s big-ticket real estate prices are not stopping residents from being philanthropic, with more than one-third of the population donating to worthy causes.

A SmartAsset report ranks the top 25 places where Americans donate the most to charities on a 100-point scale based on the percentage of tax returns that report such donations and the percentage of income spent on contributions. The San Jose metropolitan area ranks No. 2 in the country for philanthropy, narrowly missing the top spot with a score of 98.98. The study says that 34.1 percent of San Jose residents gave to charities in 2015, with donations amounting to 3.9 percent of the region’s total income. Nationwide, 24 percent of Amreicans donated to charities that year.

San Francisco is the only other California metro area to make the list, coming in at No. 18 with an 83.16. About one-third of residents donated money to charities, which translates to 2.2 percent of the area’s total income.

Although National Association of Realtors’ Chief Economist Lawrence Yun recently said that there was little reason to fear an imminent housing downturn, another report postulates that some expensive U.S. markets may be heading toward bubble territory.

Citing a study from Union Bank of Switzerland, reports that San Francisco is currently America’s most overvalued housing market. Home prices in the region are now 20 percent above their 2006 peak, which is pushing San Francisco to the verge of a housing bubble. Los Angeles and New York City round out the top three most overheated U.S. housing markets.

Still, as UBS Americas Real Estate Analyist Jonathan Woloshin points out, those U.S cities are less at risk for a bubble than other global cities, and while prices are showing signs of slowing, they are not collapsing as they did a decade ago as the recession began.

Mortgage rates have reached the highest level since April 2011 after the Federal Reserve’s decision last week to raise interest rates.

The latest numbers from Freddie Mac put 30-year, fixed-rate mortgages at 4.72 percent for the week ended Sept. 27, up from 3.83 percent at the same time last year. Fifteen-year, fixed rate mortgages also rose on a weekly and monthly basis to 4.16 percent.

Even with rising rates, mortgage purchase applications increased for the sixth straight week on an annual basis, which Freddie Mac Chief Economist Sam Khater attributes in part to relaxing home prices and improving inventory. He added that although demand for homes remains strong due to a high level of consumer confidence and a thriving job market, buyers should expect rates to move higher in the coming months, which will further exacerbate affordability.

The Number of Americans Who Think Now Is a Good Time to Sell a Home Climbs to Record High

  • More than three-quarters of respondents to a new National Association of Realtors’ poll believe that now is a good time to sell a home.
  • Sixty percent of Americans think that the economy is improving, also an all-time high.
  • Seventy percent of Americans say that top-performing schools are either somewhat or very important when purchasing a home.

Older couple in front of home for-sale signBoth the number of Americans who believe that the time is right to sell a home and those who think that the economy is headed in the right direction are at all-time highs as the third quarter ends, though qualifying for a mortgage worries a substantial portion of the population.

The National Association of Realtors’ latest Housing Opportunity and Market Experience survey found that 77 percent of Americans either strongly or moderately think that now is a good time to sell a home. Respondents in Western states, where prices are high, are the most likely to view the housing market as favorable to sellers, with 85 percent believing that it is a good time to list a home.

Americans appear to be bullish on selling a home because of both the strong U.S. economy and home prices that have been rising for 78 consecutive months on an annual basis. Sixty percent of households think that the economy is getting better, also a record high. Seventy percent of consumers believe that home prices in their neighborhood have increased over the past year, and 53 percent project that appreciation will continue for the next six months.

“Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end,” NAR Chief Economist Lawrence Yun said. “Therefore, more are indicating that it is a good time to sell, which is a healthy shift in the market.”

Meanwhile, the number of Americans who perceive that now is a good time to buy a home continues to shrink, which Yun says is likely a by-product of rising prices and therefore, down payments. Nearly 60 percent of nonhomeowners believe that they would have a very or somewhat difficult time qualifying for a mortgage, and that number could increase in future surveys. Yesterday, the Federal Open Market Committee increased interest rates again, with the expectation of one more hike in 2018 and three next year.

A final point from the survey once again highlights the importance of good schools in the homebuying process. Seventy percent of Americans said that top-performing schools were or would be important in a home-purchase decision, which lines up with results from two other recent studies. A separate NAR survey released earlier this month found that 50 percent of homebuyers with children under the age of 18 said that high-quality schools are important when purchasing a property, and a near equal amount prioritized convenience to schools when making a decision. And in July, almost 80 percent of successful buyers told that they sacrificed some amenities to land a home in their desired school district.

(Photo: iStock/Feverpitched)

Shared with permission from the Pacific Union Blog