Millennials want to own their own homes and rank it the most important priority apart from being able to retire. A new survey from Bank of America shows that 72% of 23 to 40 -year-olds say homeownership is their top priority, with retirement at 80%. Marriage (50%) and having children (44%) are far lower on the list. Millennials see owning a home as a sign of personal success (53%), financial success (45%), maturity and acting like an adult (47%), and independence (36%). Among renters, there’s an almost even split between those who think renting will be more expensive than homeownership long term, even though 69% believe their rent will increase each year or every other year. However, the dream of homeownership is being challenged by saving for a down payment (44%) or affording the home they want (23%). Almost half think they need a 20% down payment and almost a quarter think they need a perfect credit score to qualify. Almost two in five respondents plan to buy in the next 2-5 years with 57% of all first-time buyers planning to buy with a spouse or partner and 37% saying they plan to purchase their first home solo. Ninety percent of first-time buyers would rather pay more for their preferred location than be in a less desirable location with lower home prices and 45% are looking to stay within their current neighborhood, city, county or township/school district, while just one in five is planning to buy out of state. Source: MPA -- Note: The average down payment for first time homebuyers is closer to 6.0%!
It’s official, the housing market has cooled off, but it will take some time for it to become a buyers’ market. “Now we have seen several months of data that tells me the housing market is softening,” said Cheryl Young, a senior economist at Trulia. Existing home sales have peaked, according to Michelle Meyer, an economist at BAML, and a number of experts have adjusted their forecasts downward for key housing indicators, including home sales and single-family housing starts. Even home prices, which have been heading north, are rising at a slower clip. Last month, Freddie Mac said it expects home sales (existing and new) this year to come in below 2017. It projects total home sales to decline 0.9% to 6.07 million. “The spring and summer home buying and selling season ultimately ended up being a letdown, despite a faster growing economy and healthy demand for buying a home,” said Freddie Mac Chief Economist Sam Khater in a press statement. Meyer recently noted that existing home sales peaked in November 2017 at 5.72 million. Existing home sales remained unchanged in August, as rising rates and stagnant wage growth held back sales. New homes sales, a smaller portion of the market, recorded a small uptick of 3.5% but are still well below levels prior to the Great Recession. In previous housing cycles, a peak in existing home sales is usually followed by a peak in home price growth, according to Meyer, referencing the peak in existing home sales and home price growth in September 2005. But this time around that’s probably not going to be the case. “An outright contraction in home prices seems unlikely,” said Meyer, adding that she does think the rate of home price appreciation will slow. “Remember, this is not a normal market. The supply of homes on the market for sale has been quite low.” The number of homes for sale in the U.S. has fallen for three straight years, eight of the past 10 years, according to the National Association of Realtors. But relief may be on the way. Last month, the NAR said inventory appears to finally be leveling off — declining only 0.2% from a year ago. Source: Yahoo Finance
An analysis of data from the American Housing Survey by the Urban Institute has revealed some interesting information. Pets play a big part in home choices and with the millennial generation delaying marriage and having fewer children, pet ownership may become a bigger factor in the US housing market. The choices that people will make if they have pets – and if they have pets rather than children – may be different to traditional choices made at certain stages of life. The researchers uncovered trends from their research, including the fact that Americans are increasingly choosing pets over children. They found that only those households headed by 30-44 year olds were more likely to have children than pets. Pet ownership is 40-60% for households in their 20s through to 70s and peaks in their 40s. Plus, homeowners are more likely than renters to have pets – 57% vs. 37%. Source: The Urban Institute