Real Estate Roundup: Most Americans Like Their Neighbors

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

Here is some promising news for anyone who is planning a move: There’s a better-than-average change that you’ll like your new neighbors.’s 2018 Good Neighbors Report found that 77 percent of Americans think that they have good neighbors, compared with just 7 percent who believe the opposite. Males are more likely (82 percent) to say they like their neighbors than females (72 percent), and those age 55 and older have slightly better neighborly relations than other generations.

What makes a good neighbor? The No. 1 attribute is trust, cited by 59 percent of respondents and the top good-neighbor quality across both genders and all age groups. Trustworthy neighbors are followed by those who are quiet (50 percent), friendly (46 percent), and respectful (43 percent). By comparison, building a friendship with neighbors is the least important factor (14 percent).

Anyone who strives to be the best neighbor possible should respect their fellow residents’ privacy, as nosiness is the top neighbor annoyance according to a survey conducted by Porch earlier this year. That poll also underscored the importance of minimizing household noise, which comes in as the No. 2 gripe that Americans have with their neighbors.

Although most economists and housing experts agree that California’s shortage of affordable housing stems from insufficient construction to meet demand, residents of the state point to a different scapegoat

A poll conducted by the Los Angeles Times and University of Southern California, Dornsife found that 28 percent of Golden State residents think that a lack of rent control is the root of the housing-affordability problem, followed by 24 percent who say that there is not enough funding to build residences for low-income citizens. Just 13 percent of those surveyed pointed to inadequate construction, the sixth lowest out of eight proposed reasons.

Currently, only 4 percent of nearly 550 California cities and counties are on pace to meet their housing-supply goals. And although the state government is attempting to remove hurdles to more new developments, 69 percent of Californians believe that such decisions should be left to local governments.

A recent analysis ranked California as America’s most diverse state, so it’s no real surprise that four of the nation’s top five cities with the most foreign-born homeowners are located here.

That’s according to a LendingTree report, which found that 24.8 percent of homeowners in the San Jose metropolitan area were born outside of the U.S., second in the country to only Miami. Los Angeles ranks No. 3 for most immigrant homeowners (18.3 percent), followed by No. 4 San Francisco (17.9 percent), and No. 5 Riverside (17.3 percent).

LendingTree Chief Economist Tendayi Kapfidze explains why people born outside of the U.S. tend to own homes in higher-priced regions of the country. “This is not to say that immigrants raise home prices — rather, it’s likely that immigrants gravitate towards these cities which have higher home prices, as they also have more dynamic economies and thus more employment opportunities,” he says.

A San Bernardino County man, himself a big lottery winner, hopes to get a call from the lucky $1.5 billion Mega Millions ticket holder from South Carolina.

As The Wall Street Journal reports, a former roofing-products manager named Rick Knudsen is listing his palatial, 16,000-square-foot home near the city of Yucaipa for $26 million. Four years ago, Knudsen won $180 million in the California Mega Millions lottery, quit his job, and purchased a home that was under construction on the side of a mountain near his home for $5.5 million. In addition, Knudsen picked up a 155-acre buffalo ranch, 640 more acres of land, a steakhouse, and a bar, eventually spending a total of $11.5 million.

The estate features a laundry list of luxury amenities, including a 17-seat cinema, an elevator, a gym, and a stocked fishing pond. So why does Knudsen, who is represented by Pacific Union real estate professional Craig Strong, want to unload his piece of Southern California paradise after completing it just six months ago?

“I’m actually a little bit bored because I’m done here,” he told The Wall Street Journal.

(Photo: iStock/monkeybusinessimages)

Americans’ Credit Scores Improve as They Age

  • Millennials have the lowest average credit score of any age group (634) while members of the silent generation have the highest (734).
  • Homebuyers with fair credit scores will pay nearly $30,000 more over the life of a mortgage than those with very good ratings.
  • Older Americans have better credit scores in part because of lower child-care costs and student debt, and many may not have such expenses at all.

Older couple walking in a parkBack in the summer, an Experian study found that 61 percent of millennials lack a prime homebuying credit score, and now another report highlights how less-than-stellar credit ratings may be hindering more members of that generation from purchasing real estate.

In an analysis of its user data, LendingTree found that the older a person is, the better their credit rating tends to be. Millennials have the lowest average credit score of all generations at 634, rated as fair. Though Gen Xers fare better, with average credit scores of 653, they too fall into the fair bucket.

With scores that average 696, baby boomers are categorized as having good credit. Members of the silent generation — defined as those born between 1928 and 1945 — boast credit scores of 734, making them the only group of Americans who can claim a very good rating.

LendingTree offers logical reasons as to why older Americans own better credit scores that younger people. According to company Senior Research Analyst Kali McFadden, older people tend to be more disciplined about saving money and spending habits. Also, older Americans now lack the costs of raising a family, unlike many of their younger counterparts. Finally, the older someone is, the lower their student loan payments are likely to be, if they indeed carry such debt at all. By contrast, a recent survey by NeighborWorks America found that nearly 60 percent of millennials know someone who postponed purchasing a home because of student debt.

Since borrowers with higher credit scores receive better interest rates than those with lower numbers, Americans with very good credit ratings can save quite a bit of cash when taking out loans. Factoring in five types of debt — credit card, personal loans, student loans, car loans, and mortgages — LendingTree estimates that an individual with a very good credit score would save a total of $45,283 over the life of the loans compared with someone with a fair credit score. The biggest savings comes from mortgages, where a fair credit rating will cost homebuyers an extra $29,106 in payments.

Prospective homebuyers who need to improve their credit scores to secure a prime mortgage rate can take several steps to achieve that goal. LendingTree suggests common-sense tips to a better credit score: pay off loan balances on time, minimize the amount of credit used, keep old cards open and have a mix of accounts, and avoid opening new credit cards.

(Photo: iStock/shapecharge)

Shared with permission from the Pacific Union Blog

Real Estate Roundup: California Homebuyers Can Save the Most Money by Comparing Mortgages

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

SHOPPING AROUND FOR A MORTGAGE SAVES SAN FRANCISCO BUYERS $100,000Businessman juggling multiple percentage signs
A recent survey from PenFed Credit Union uncovered the rather surprising fact that about two-thirds of homebuyers did not comparison shop when obtaining a mortgage, and in major California coastal cities, that could end up being a costly mistake.

That’s according to LendingTree’s Mortgage Competition Index, which determines how much money homebuyers in 50 American cities could save by comparing the lowest and highest mortgage rates offered on its website. San Francisco buyers who shop around for mortgage rates can save up to $280 on their monthly payments, or $3,357 each year. Over the life of the loan on the median-priced $900,000 home, shopping around for a mortgage could save San Francisco homeowners $99,544 over the life of the loan, the most in the U.S.

San Diego and Los Angeles rank a respective No. 2 and No. 3 for savings obtained by mortgage comparison shopping. In San Diego, homeowners could save $75,330 over the life of the loan, while Los Angeles is close behind with a total of $72,558 in mortgage savings.

A tip for hopeful homeowners who plan to shop for a mortgage before rates get too high: Keep your debt-to-income ratio in check. Research from CoreLogic found that one in 10 mortgage applicants were denied in 2017, with too much debt compared with income the No. 1 reason.

The Bay Area’s high cost of living dictates that investing properly is key to enjoying a comfortable retirement, and residents of the region’s two largest cities are doing pretty well in that respect.

A study by SmartAsset ranks the 25 cities in the U.S. where residents earn the most from their investments on a 100-point scale based on four types of income: taxable interest, ordinary dividends, capital gains, and qualified dividends. The San Francisco metropolitan area ranks No. 4 in the country for investment returns, scoring a 94.36. In San Francisco, 26 percent of tax returns have qualified dividends, with the average amount at $11,594.

San Jose ranks No. 8 with a score of 91.28. Nearly 30 percent of San Jose tax returns list qualified dividends, which average $10,661. The other California cities to rank among the country’s top 25 for investment returns: Santa Barbara (No. 13), Santa Rosa (No. 16), Santa Cruz (No. 18), and San Luis Obispo (No. 19).

The Bay Area claims two of the three most expensive cities in America for renters as of October, and a San Francisco-based startup is hoping to help solve that problem through a concept known as co-living.

So exactly what is co-living? As The Wall Street Journal reports, co-living is a situation where residents rent tiny rooms in larger, renovated apartment buildings, with spacious living rooms and kitchens designated as common areas and amenities like cleaning and dog-waling services included. A San Francisco company called Starcity, founded by real estate industry veteran Jon Dishotsky, is already operating a co-living building in the city’s South of Market neighborhood, where rents start as low as $1,600, significantly less than the cost of renting a studio apartment.

Starcity has more plans for co-living properties in the Bay Area, including a 750-unit building in San Jose and 270 more units in South of Market. The company will begin construction on the buildings in early 2019 and hopes to open them to residents within two years.

There are a lot of positive things about owning a home with a spacious yard, but if you don’t have the time or energy to maintain it, California is a pretty good place to be.

The average Golden State yard is 5,575 square feet according to HomeAdvisor data, the second-smallest in the U.S. to only Nevada. California yards are roughly half the size of the average U.S. lot of 10,871 square feet, which translates to about one-quarter of an acre.

On the other hand, homebuyers hoping for a large outdoor space should consider Vermont or Montana, where the average yard clocks in at more than 70,000 square feet. To put that into perspective, homebuyers in Vermont will get nearly 17 times more yard than their counterparts in Nevada.

(Image: iStock/marchmeena29)

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)