Economy — Page 24

Immigrants to Fuel Next Decade of Growth

April 5, 2013 By EmmanuelFonte Leave a Comment

The blossoming housing recovery stands to benefit from efforts to revamp U.S. immigration laws. A Mortgage Bankers Association study projects that the number of foreign-born homeowners will increase by 2.8 million in the 10 years ending in 2020, versus the 2.4 million gain in the previous decade.

Meanwhile, new research by the National Association of Hispanic Real Estate Professionals concludes that the increase could be even bigger if more opportunities for homeownership are made available to undocumented workers.

According to that study, immigrants hold more positive views of homeownership than native-born Americans and, consequently, are more likely to buy a house the longer they live in the country. An immigration bill giving non-citizens legal status could generate more than $100 billion in new mortgages and create 3 million more home buyers over the next several years, NAHREP estimates.

The MBA’s study, which did not take the potential impact of new immigration laws into consideration, projects that by 2020, 61 percent of Hispanic immigrants who arrived here nearly 40 years earlier will own a home.

USC public policy professor Dowell Myers, who penned the MBA study, concludes, “We’ve probably underappreciated this powerful force that is already resident here and is so upwardly mobile that it pushes up the housing market from the bottom. There’s this incremental momentum that’s built up.”

Source: “Immigrant Dreams to Keep Sparking U.S. Housing Recovery,” Business Week

Filed Under: Blog, Economy, Housing Market

GenY is finally in a mood to buy (houses)

April 1, 2013 By EmmanuelFonte Leave a Comment

The Millennial generation is about 90 million strong—forming the largest demographic wave in the country’s history—and some reports suggest they’re readying for home ownership.

Millennials’ entrance into home ownership has been delayed due to the recession, high unemployment, and high student loan debt. They’ve been living in their parents’ homes, as well as delaying marriage and having children, surveys show. But the pent-up demand from this generation is starting to surface, says Fred Ehle, vice president for PulteGroup.

Homebuilders, like PulteGroup and Better Homes and Gardens Real Estate, recently revealed surveys of what Millennials want in their future homes. In general, the surveys reveal that this generation isn’t wowed by luxury and prefers technology and flexible space.

Pulte Homes found in its research that more than half of Millennials who decided to buy a home last year from the homebuilder said their main reason was to invest and build equity.

As for what they’re looking for in a home, they appreciate an efficient use of space, an open layout for entertaining, ample storage space, and outdoor space that extends their living areas, according to the Pulte survey of 531 adult renters between the ages of 18 and 34.

“What may be different about this buyer is that they may have more stuff,” says Fred Ehle, vice president for PulteGroup. “It’s different kind of stuff: technological gadgets, gaming. They also do work from home.”

The Better Homes and Gardens survey of 1,000 adults ages 18 to 35 found that Millennials don’t like traditional floor plans and prefer unique spaces. They like to do home improvements themselves and are “fix-it” types.

One in five said that “home office” is a better suited name for their dining room, according to the Better Homes and Gardens survey. What’s more, 43 percent said they want to transform their living room into a home theater.

The survey also showed they’d rather have extra space in their kitchen for a TV than a second oven. Nearly two-thirds of those surveyed say they wouldn’t purchase a home without up-to-date tech capabilities.

Source: “GenY is finally in a mood to buy (houses),” USA Today

Filed Under: Blog, Economy, Housing Market, real estate financing

Rent or Buy? Which is Better In These 10 Major Cities

April 1, 2013 By EmmanuelFonte Leave a Comment

Figuring out whether it’s better to buy or rent rests on three main factors: where you live, how long you plan to stay and how home prices compare to rents in the area. Real estate website Trulia analyzed data from 100 major metro areas to help determine that last factor.

See where Seattle ranks. Look for homes in Seattle.

While markets vary wildly, prices are so reasonable and interest rates so low that buying is the better option in most major U.S. cities, said Jed Kolko, Trulia’s chief economist. Nationwide, home buyers who remain in their homes for three years will save an average of 19 percent over renting. If they hold onto their homes for 7 years, the savings advantage grows to 44 percent.

That means all of the initial transaction costs of buying — the broker’s commission, title insurance, legal fees and other closing costs — will be offset by benefits, like tax write-offs and price appreciation. And those costs will become cheaper than the total costs of renting, which include insurance and agent commissions.

But the math is changing. Home prices rose 7 percent year-over-year last month while rents went up only 3.2 percent, according to Trulia. “Buying is still cheaper than renting but the gap is closing,” said Kolko.

Filed Under: Blog, Economy, Housing Market, Real Estate Investment

State-Level Mortgage Interest Deduction Statistics

March 29, 2013 By EmmanuelFonte Leave a Comment

The tax benefits of the mortgage interest deduction (MID) are primarily targeted to the middle class. According to 2012 Congressional estimates, 65.4 percent of the tax benefit is collected by households who have economic income of less than $200,000.

Of course, the claims for the MID are going to vary state-to-state given differences in house prices and other costs of living, household incomes, and tax items such as property taxes or state income/sales taxes, which in part determine whether a homeowner claims the standard deduction.

Fortunately, the Internal Revenue Service publishes state-level data of tax statistics. And these state level data, for which the income classifier is equal to adjusted gross income (AGI), illustrate the degree to which MID-benefiting taxpayers are concentrated in the middle class.

The map above reports the share of taxpayers who claimed the MID on 2010 federal income tax return (the most recent data available) and who also report less than $200,000 in adjusted gross income. Not surprisingly, the share tends to drop somewhat in high cost states, such as New York and California, for which household incomes tend to be higher. Nationally for 2010, 91 percent of taxpayers claiming the MID has an AGI of less than $200,000.

Of course, income, homeownership status, and tax characteristics are not fixed across one’s life-cycle. For example, interest payments for a fixed rate mortgage are larger in the early years of a mortgage, thus the potential deduction amount for the MID is higher for recent homebuyers.

As a result of this life-cycle effect, many homeowners benefit from the MID for a series of years and then cease claiming the deduction as their interest payments fall and the standard deduction becomes a better deal. For this reason, the often cited statistic that only a quarter of taxpayers benefit from the MID is misleading. In fact, this claim should be qualified as “in a given year,” given the life-cycle impact.

By merging IRS data with Census American Community Survey data (both for 2010), we can estimate the more useful statistic of how many homeowners with a mortgage benefit from the MID in a given year. Nationally, 73 percent of homeowners with a mortgage claimed the MID on their income tax returns for tax year 2010.

It is important to note that this number is not an accounting of the percentage of homeowners who benefit from the MID during their tenure of homeowners. That percentage would be higher given life-cycle effects, but cannot be estimated without panel data of income tax returns.

View this original post on the NAHB blog, Eye on Housing

Filed Under: Blog, Economy, real estate financing

10 Places Where College Grads Can Settle

March 29, 2013 By EmmanuelFonte Leave a Comment

Rent.com, a rental housing listing site, recently ranked the top 25 markets for new college grads, factoring in unemployment, cost of living, and annual mean wages. The following are the top 10 cities on its list (in no particular order), where young grads would most likely find housing, work, and a suitable paycheck.

Atlanta, Ga.

Mean annual income: $46,600

Median price for a one-bedroom apartment: $800

Boston, Mass.

Mean annual income: $57,500

Median price for a one-bedroom apartment: $1,590

Houston, Texas

Mean annual income: $47,500

Median price for a one-bedroom apartment: $800

Denver, Colo.

Mean annual income: $50,300

Median price for a one-bedroom apartment: $970

Minneapolis/St. Paul, Minn.

Mean annual income: $49,800

Median price for a one-bedroom apartment: $900

Seattle, Wash.

Mean annual income: $54,800

Median price for a one-bedroom apartment: $1,300

Dallas, Texas

Mean annual income: $46,200

Median price for a one-bedroom apartment: $900

Raleigh, N.C.

Mean annual income: $45,200

Median price for a one-bedroom apartment: $800

Washington, D.C.

Mean annual income: $62,900

Median price for a one-bedroom apartment: $1,600

St. Louis, Mo.

Mean annual income: $44,200

Median price for a one-bedroom apartment: $960

Source: “The Best Cities for New College Grads in 2013,” Forbes

Filed Under: Blog, Economy, Housing Market, Real Estate Investment

Real Estate Update: Expecting the Healthiest Spring Season Since 2007

March 29, 2013 By EmmanuelFonte Leave a Comment

Freddie Mac recently released its U.S. Economic and Housing Market Outlook through March showing that as we head into the spring home buying season, continued low mortgage rates, increasing house prices, and gradually improving consumer confidence will help support increased home sales. A short preview video and the complete March 2013 U.S. Economic and Housing Market Outlook are available here.

Outlook Highlights

• Compared to 2012, expect home sales to be up 8 to 10 percent for 2013.

• Expect housing starts to increase to 950,000 units for 2013, compared to 780,000 in 2012.

• In 2012, real estate added $1.5 trillion to balance sheets, and residential mortgage debt outstanding increased by 0.1 percent in the fourth quarter of 2012, indicating household deleveraging might be drawing to a close.

• Because of sequestration spending reductions, expect the unemployment rate in 2013 to average about 7.8 percent, essentially flat for the year or about 0.25 percentage points higher than it otherwise would have been.

• Regardless, the housing wealth effect is taking hold in the broader market which should translate into the healthiest spring home buying season since 2007.

“History shows us not all economic recoveries are created equal and consumer confidence mirrors this fact,” says Frank Nothaft, Freddie Mac vice president and chief economist.

“With the spring home buying season upon us, the recent highs in the stock market are a welcome signal of better times ahead. But it will be the gradually declining unemployment rate and steadily improving housing market that will deliver broad-based economic benefits for Americans and, in turn, support the overall recovery.”

For more information, visit www.FreddieMac.com

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment, Real Estate Updates

3 Financial Reasons to Buy a Home NOW! (Part III)

March 27, 2013 By EmmanuelFonte Leave a Comment

This week, we are going to look at the three financial reasons to buy a home now instead of waiting: prices are rising, interest rates are increasing and rents are skyrocketing. – The KCM Crew

Part III – Rents Are Skyrocketing

Whether you own or rent, you will have a monthly housing expense. The question is how that expense will change in the future. When you purchase a home, for the most part, you lock-in that monthly housing expense for the length of the mortgage you take (15 or 30 years for example). When you rent a home, your housing expense is impacted by movements in the supply and demand for rental properties.

Historically, residential rental rates increase by 3.2% on an annual basis. However, in the current housing environment, there is an increasing demand for residential rental properties. This increase in demand has dramatically impacted rates. Zillow, in their most recent report, revealed that rental rates in the U.S. increased by 4.5% over the last twelve months. Other studies have projected rental rate increases of 4-5% over the next few years.

The only way to have control of your housing expense is to buy.

But Isn’t Buying Much More Expensive Than Renting?

Not right now! As a matter of fact, with prices down and mortgage rates at historic lows, it is LESS EXPENSIVE to buy than rent in most areas. In a recent report, Truliarevealed it is cheaper to buy than rent in ALL of America’s largest regions.

According to Jed Kolko, Trulia’s Chief Economist:

“People who didn’t buy a home last year may have missed the bottom of the market, but they haven’t completely missed the boat. Buying remains cheaper than renting in all 100 large metros. Even buyers who can’t get today’s lowest mortgage rates will still find that buying makes more financial sense than renting in nearly all local markets.”

However, Kolko went on to say that this opportunity may soon disappear:

“Although buying a home is still cheaper than renting, the gap is closing. In 2013, home prices should rise faster than rents, and mortgage rates are likely to rise in the next year as the economy improves. By next year, buying could be more expensive than renting in some housing markets, even for people with the best credit.”

Again, the only way to lock-in your monthly housing expense is to take that decision out of the hands of a landlord by owning. With both prices and interest rates set to increase, the best time to buy is right now.

by THE KCM CREW

Filed Under: Blog, Economy, Housing Market, real estate financing

3 Financial Reasons to Buy a Home NOW! (Part II)

March 26, 2013 By EmmanuelFonte Leave a Comment

This week, we are going to look at the three financial reasons to buy a home now instead of waiting: prices are rising at an accelerated rate, interest rates are increasing and rents are skyrocketing. – The KCM Crew

Part II – Interest Rates Are Increasing

rates dice A big component in the cost of a home is the mortgage interest rate a purchaser pays. Understanding where rates are headed will help in making a decision whether to buy now or wait.

So, Where Are Rates Headed?

No one can know for sure. The Fed has been artificially holding rates down to stimulate the economy. However, as the economy improves, many experts expect rates to creep up. As an example, HSH Associates, the nation’s largest publisher of mortgage and consumer loan information, recently explained:

“The stronger the economy becomes, the higher rates may grind; the Federal Reserve is keeping them low to goose the economy, but an economy responding to the Fed’s medicine will soon see less of a need for it in order to function. If not otherwise manipulated, higher rates are the natural result of a growing economy, as rising demand for available credit supply and concerns about inflation allow costs to rise.”

The Mortgage Bankers Association (MBA) agrees. They were quoted in HousingWire late last year regarding their thoughts on where rates would be headed in 2013.

“After reaching record lows in 2012, mortgage rates are expected to creep up slowly in 2013, the Mortgage Bankers Association predicted.”

In the MBA’s latest Mortgage Finance Forecast they forecast that the 30 year interest rate will be 4.3% by the end of the year. This represents an increase of almost a full percentage point from the 3.4% rate available at the end of 2012.

For example, we show the impact a one percent increase in rate will have on the monthly principal and interest payment on a $200,000 mortgage.

Freddie Mac’s Weekly Primary Mortgage Market Survey reveals that rates have increased by 2/10ths of a percentage point already this year.

As we mentioned, no one knows for sure where rates will be a year from now. But, many experts think they may be as much as a point higher. With rising residential real estate prices and the possibility of higher mortgage rates, waiting to buy a home makes no sense in our opinion.

Tomorrow, we will look at skyrocketing rents.

by THE KCM CREW

Filed Under: Blog, Economy, Housing Market, Real Estate, real estate financing, Real Estate Investment

Washington Unemployment By County

March 26, 2013 By EmmanuelFonte Leave a Comment

King & Snohomish are well under 7%!Source: WASHINGTON STATE EMPLOYMENT SECURITY DEPARTMENT

Filed Under: Blog, Economy