Most Americans Aspire to Homeownership

  • About 80 percent of non-homeowners hope to eventually purchase property and think it is a crucial part of the American dream.
  • Two-thirds of Americans say that they would have some level of difficulty saving for a down payment.
  • More than half of non-homeowners point to an inability to afford one as the primary reason they do not own property.

More than eight in 10 renters hope to become homeowners at some point in the future, though a lack of affordability and saving for a down payment present considerable challenges.

The National Association of Realtors’ 2018 Aspiring Home Buyers Profile found that 82 percent of non-homeowners surveyed in the fourth quarter want to someday purchase property, up on both a quarterly and annual basis. A nearly equal amount, 80 percent, said that homeownership is key to realizing the American dream.

Non-homeowners said that the largest motivator to buy would be a change in lifestyle, such as getting married or having children, cited by 32 percent of respondents. An improvement in non-owners’ financial situations placed a close second, at 30 percent.

Two-thirds of those polled believe that saving for a down payment is very or somewhat difficult given their current financial situations and the fact that 51 percent expect their rents to increase in 2018. Seventy-five percent of younger baby boomers would have some level of difficulty amassing a down payment, compared with 66 percent of Gen Xers and 62 percent of millennials.

Rising home prices and deteriorating affordability conditions are also a barrier to homeownership. In every quarter of 2017, non-homeowners pointed to the inability to afford a home as the primary reason that they do not own, ranging from 51 percent in the first quarter to 56 percent in the fourth quarter.

“A tug-of-war continues to take place in many markets throughout the country, where consistently solid job creation is fueling demand, but the lack of supply is creating affordability constraints that are ultimately pulling aspiring buyers further away from owning,” NAR Chief Economist Lawrence Yun said. “These extremely frustrating conditions continue to be most apparent at the lower end of the market, which is why the overall share of first-time buyers remains well below where it should be given the strength of the job market and economy.”

NAR’s most recent home sales report says that first-time buyers represented 32 percent of all U.S. residential real estate purchases in December. In that report, Yun said that 2018 should see an increase in first-time buyer activity but noted that an uptick hinges on more new homes hitting the market.

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Real Estate Roundup: Bay Area Home Price Growth Hits Historic Run

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

Double-digit percent home price growth persisted across the Bay Area in the final month of 2017, matching the appreciation streak seen leading up to the last housing boom.

Citing CoreLogic data, The Mercury News reports that the median sales price for a single-family home in the nine-county Bay Area was $765,000 in December, a year-over-year gain of 13.8 percent. December marked the 69th consecutive month of annual Bay Area price gains, which CoreLogic Analyst Andrew LePage says compares with the appreciation recorded between late 2001 and late 2007.

‘We still have an inventory-starved market where demand is outpacing supply,” LePage said. “It’s bad news for first-time buyers and others looking for a foothold.”

According to CoreLogic, home prices in Santa Clara County rose by 35 percent on an annual basis, reaching $1.17 million in December. Although Silicon Valley home prices experienced a similar run-up following the dot-com era, one San Jose real estate broker crystalized the reason that this housing boom is unlikely to end the same way.

“These are real companies, with real numbers behind them,” Gustavo Gonzalez told The Mercury News. “Google isn’t going anywhere.”

California’s aforementioned housing inventory crisis did not improve much last year, with nearly 100 percent of cities and counties failing to meet market-rate or affordable mandates.

A new report from the California Department of Housing Development says that almost 98 percent of the state’s jurisdictions are have not met the necessary guidelines for creating adequate housing units to satisfy demand under Senate Bill 35. That legislation, introduced by San Francisco Sen. Scott Wiener, aims to prod cities and counties that do not build enough new housing to streamline the permit process, thus keeping price appreciation in check over time.

Only 13 California and cities met housing goals last years. In the Bay Area, that short list includes Napa and Sonoma counties, as well as the cities of Corte Madera, Foster City, and Hillsborough.

While San Francisco remains the nation’s most expensive rental market, prices have at least not worsened thus far in 2018.

Zumper’s latest monthly rent report puts the median February rent for a one-bedroom apartment in San Francisco at $3,400, still the highest in country but unchanged from the previous month. Rents in San Jose, the No. 3 most expensive U.S. rental market, held steady at $2,460 for a one-bedroom unit, also static from January but up by 9.8 percent on an annual basis.

Rent prices softened across the board in Oakland, America’s seventh most expensive place for tenants. February’s median $2,100 one-bedroom rent dropped by 2.8 percent from January and inched down 0.5 percent year over year. Prices for a two-bedroom unit were down by exactly 5.0 percent on both a monthly and yearly basis.

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The Average U.S. Credit Score Keeps Climbing — Along With Debt

  • The average American had a VantageScore of 675 in 2017, the highest in five years.
  • Total U.S. credit-card debt reached $1.021 trillion in June, an all-time high.
  • Though San Francisco residents have among the most credit cards in the country, they also have the lowest average late payments in the U.S.

Having excellent credit is a key factor in obtaining a mortgage, so it comes as welcome news for the economy and the housing market that Americans’ credit scores rose again in 2017, though the fact that debt has reached a record high somewhat tempers the picture.

Experian’s State of Credit: 2017 report puts the average U.S. VantageScore at 675 in 2017, up from 673 the previous year and the highest since 2012. California residents had average credit scores of 680, somewhere in the middle of the pack when compared with the other 49 states.

While Americans have improved their credit scores since the country recovered from the Great Recession, they are also racking up more credit-card debt than ever before. In June of last year, total U.S. credit-card debt rose to $1.021 trillion, an all-time high.

The average American has 3.1 credit cards, on which they carry $6,354 in debt, a gain of 2.7 percent from 2016. Californians have both more credit cards and debt than the U.S. average, a respective 3.23 and $6,481. San Francisco residents have among the most credit cards in the U.S. but also the lowest average late payment in the country.

Americans’ rising credit-card debt can be perceived in both a positive and a negative light, Experian says. On one hand, it reflects increased consumer spending and confidence in the economy, but it can also be a sign that sluggish wage growth is forcing Americans to use credit cards to cover basic living expenses.

Besides credit-card debt, the study again underscores one of the obstacles preventing millennials from entering the housing market: student debt. In 2017, the average student-loan balance was $34,144, an all-time high. Student-loan obligations may help explain why the average millennial carries just $4,315 in credit-card debt, significantly lower than baby boomers or Gen Xers.

One of millennials other big challenges to homeownership — fast-rising prices — is reflected in that generation’s rising mortgage debt. In 2017, the average millennial carried $198,302 in mortgage debt, a year-over-year increase of 6.8 percent. Across all generations, Americans owed $201,811 on mortgages at the end of 2017, up by 3 percent from the previous year.

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Real Estate Roundup: San Francisco Begins 2018 as the Hottest U.S. Housing Market

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

Demand for Bay Area real estate remains intense as 2018 begins, with three local markets once again ranked as the country’s hottest.

That’s according to’s latest monthly list of the 20 hottest U.S. real estate markets as gauged by listing views on its website and the fastest pace of sales. San Francisco has unseated San Jose as the nation’s hottest market in January, returning to a spot it held for multiple months in 2016 and 2017. San Jose fell to the No. 2 position, while Vallejo held steady at No. 3. All three Bay Area cities had stints at the top of the hot-markets list last year.

As has become typical, California markets took most of the spots on’s January list, with a total of 13 representatives. The other Golden State cities to make the cut: San Diego (No. 6), Santa Rosa (No. 7), Sacramento (No. 8), Stockton (No. 10), Modesto (No. 11), Fresno (No. 13), Los Angeles (No. 14), Chico (No. 16), Oxnard (No. 17), and Santa Cruz (No. 18). The latter three cities returned to the hot list after dropping off in December.

While many millennials are priced out of the Bay Area’s most expensive real estate markets, Santa Rosa has seen a notable influx of younger homebuyers over the past decade.

An analysis by SmartAsset ranks the 25 most popular U.S. housing markets for millennials on a scale of 100 based on homeownership rate in 2016 and change in the number of younger owners since 2007. Based on those criteria, Santa Rosa ranks. No. 7 for millennial homebuyers, tying three other cities with a score of 88.68.

As of 2016, 31.19 percent of Santa Rosa residents under the age of 35 owned a home, which is still lower than the national millennial homeownership rate of 34.7 percent. However, between 2009 and 2016, the Sonoma County city saw its millennial homeownership rate increase by 11 percent, the highest of any market included in the study.

While it can be difficult to discern where exactly you picked up that nasty cold or flu bug, one builder is trying to make sure that sickness does not come from a doorknob in your home.

KB Home has announced that it has partnered with door hardware manufacture Kwikset to introduce a new line of products designed to fight household germs. The health-conscious hardware will incorporate Microban protection, a coating designed to repel bacteria on doorknobs, locks, and latches. KB Home says that the protection will last for the products’ lifetimes.

The new door components are part of KB Home’s Healthy Homes program, which has previously introduced products such as environmentally friendly paint and high-efficiency home-ventilation systems.

Mortgage rates rose to the highest level in 10 months last week, though they are still lower than they were at the same time last year.

The latest Freddie Mac data says that 30-year, fixed-rate mortgages averaged 4.15 percent for the week ended Jan. 25, up from 4.04 percent the previous week and down from 4.19 percent on an annual basis. Fifteen-year, fixed-rate mortgages rose to 3.62 percent, up both week over week and year over year.

“The 10-year Treasury yield reached its highest point since 2014 reflecting expectations of broad-based economic growth,” Freddie Mac Deputy Chief Economist Len Kiefer said. “Mortgage rates, in turn, followed the surge in Treasury yields.”

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Will Increased Savings Drive Millennial Homebuyer Activity in 2018?

  • The National Association of Realtors believes that first-time homebuyers may be more active in 2018, thanks to a thriving economy and growing wages.
  • Nearly half of millennials report having at least $15,000 in the bank, while just one-third had saved that much in 2015.
  • Nearly 60 percent of millennials have a savings plans, compared with about 40 percent of Gen Xers.

A new report forecasts that first-time homebuyer activity will increase this year, and if that comes to pass, one reason may be because millennials’ financial-planning habits have notably improved over the past few years.

The National Association of Realtors’ December home sales report projects that first-time homebuyer activity should see an uptick in 2018. As of December, first-time buyers represented 32 percent of all transactions, unchanged from one year earlier. That number increases slightly when viewed on an annual basis, with first-time buyers representing 34 percent of all home purchases in 2017.

“Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers,” NAR Chief Economist Lawrence Yun said. “However, if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners.”

Besides a lack of available starter home and mortgage rate increases, millennials and other first-time buyers face additional challenges, including rising home prices and student debt. And although previous studies have reported that millennials are failing to establish savings plans, new survey results show that they are getting better about socking away money.

Bank of America’s 2018 Better Money Habits Millennial Report found that 47 percent of 23-to-37-year-olds have at least $15,000 in the bank, while 16 percent have managed to amass $100,000 or more. That’s a significant improvement from 2015, when just one-third of millennials had saved $15,000 and only 8 percent had socked away $100,000.

The report also reveals that millennials are at least as good than Gen Xers when it comes to financial planning. Roughly two-thirds of both generations are saving money each month, and 54 percent of millennials and Gen Xers report that they stick to a budget.

In some cases, millennials are doing even better with their finances than the generation before them. Fifty-seven percent of millennials report having a savings goal, compared with 42 percent of Gen Xers. Fifty-nine percent of millennials say that they are financially secure, while 54 percent of Gen Xers agree with that sentiment.

Although millennials’ money-management habits have clearly improved over the past few years, it remains to be seen whether that will help more of them enter the housing market. Just one-third of millennials say that their nest eggs are specifically earmarked for a down payment, and 20 percent are concerned that they cannot afford a home given the current challenging market conditions.

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Real Estate Roundup: Bay Area Starting Salaries Are the Highest in the U.S.

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

The year 2017 brought plenty of sunny economic news to the Bay Area, and 2018 begins with a report that workers in the Bay Area take home the biggest bucks in the U.S. when they start a new job.

That’s according to a WalletHub analysis of the best U.S. places to find a job in 2018, which ranks nearly 200 cities on a 100-point scale using 26 metrics, including highest starting salary. Four Bay Area cities lead the nation for the aforementioned measure, along with Seattle and Washington, D.C.: San Jose, San Francisco, Oakland, and Fremont. (WalletHub did not specify what starting salaries workers are projected to earn in any of those cities.)

Overall, San Francisco ranks as the country’s third best job market in 2018, with an overall score of 66.06, though employees in the city face some of the longest commutes and highest housing costs in the nation. Fremont also cracks the top 20, coming in at No. 19 with a 60.04.

San Jose does not appear on the list until No. 32, which could be due to a combination of the region’s high cost of living and slowing job growth. A recent blog post from that focuses on Silicon Valley’s employment market says that technology job postings in the region dropped by more than 18 percent between September 2015 and September 2017.

America’s tight housing supply conditions dictate that only the most qualified buyers are purchasing homes, leading foreclosure activity to drop to the lowest level since 2005.

ATTOM Data Solutions’ Year-End 2017 U.S. Foreclosure Market Report says that there were a total of 676,535 default notices, scheduled auctions, and bank repossessions last year, representing 0.51 percent of all housing units. Foreclosure activity declined 27 percent year over year and is down 76 percent from its 2010 peak, when nearly 3 million properties were in some state of distress.

Foreclosure activity was also down significantly in California, with scheduled auctions dropping by 39 percent from 2016 to 2017. Bank repossessions and foreclosure starts were also down in the Golden State, declining by a respective 34 percent and 17 percent on an annual basis.

Last fall, an analysis by SmartAsset named the Alameda County city of Fremont one of the nation’s most livable, and now the same company has bestowed a similar honor on a Solano County suburb.

SmartAsset’s list of the most livable small cities in the U.S. ranks Vacaville in the No. 10 spot, with an overall score of 83.34 out of 100. Vacaville earns livability accolades for its low unemployment rate of 3.2 percent, as well as for its plentiful entertainment options. However, Vacaville is still in the Bay Area and thus scores below par for housing costs, with the average household spending 24.3 percent of its median income on a place to live.

The only other California city to make the cut on SmartAsset’s list is Folsom, which ranks No. 15 with a score of 81.71. Folsom gets a boost from its 2.1 percent unemployment rate, the third lowest of any of the 25 cities included in the study.

Although the economy and real estate market appear to be on positive ground as 2018 gets underway, rising home prices and stagnant wage growth are cause for some concern.

Freddie Mac’s January 2018 Outlook projects that home sales, home prices, and construction activity will increase modestly this year. Economic growth should remain in positive territory at 2.5 percent, a very slight decrease from 2017. While Freddie Mac does not necessarily sense a looming downturn, Deputy Chief Economist Len Kiefer will be monitoring a couple of key market indicators this year.

“There are factors worth keeping an eye on in 2018, namely, is another recession on the horizon, how will housing markets respond to declining housing affordability and how will young adults move the housing market — more are living at home with their parents today than in 2000,” he said.

(Photo: iStock/Tolga TEZCAN)