U.S Home Sales Projected to Reach Decade High in 2016

U.S. home sales should climb in 2016 to levels we haven’t seen since the last housing boom — with millennials leading the charge — as continued economic prosperity appears to be on the horizon.cb

In its 2016 Housing Forecast, Realtor.com projects that new and existing home sales will reach 6 million in 2016, the highest level since 2006. According to the report, home starts will see a 12 percent annual uptick, while sales of new homes will grow by 16 percent year over year. Home price appreciation will moderate to 3 percent next year, which Realtor.com Chief Economist Jonathan Smoke says signifies that the housing market is normalizing.

Millennials — defined here as those ages 25-34 — are expected to make up the largest percentage of homebuyers in 2016, spurred on in part by growing incomes. Generation Y buyers are most concerned with neighborhood safety and home-construction quality, and they also want a reasonable commute.

Having rebounded from the recession, Gen Xers on the younger side of the spectrum (ages 35-44) will account for the second-largest pool of buyers. Two-thirds of this demographic are move-up buyers and will be trading up for a larger property or a nicer neighborhood.

Older Americans ages 65-74, the third-largest projected buyer demographic, will look to do the exact opposite, selling their spacious homes for smaller, newly constructed ones. These homeowners are expected to put their properties on the market in March or April and will place an emphasis on customization when searching for their next home.

Realtor.com predicts the U.S. economy’s health to hold in 2016, with the GDP increasing by 2.5 percent, up from 2.1 percent growth in 2015. Unemployment will decline from 5 percent at the end of 2015 to 4.8 percent by the end of 2016, while the number of jobs created — 2.5 million — will remain roughly unchanged. The forecast warns that tougher access to credit and rising home prices could ultimately stifle demand for housing and temper the benefits of the thriving economy.

(Photo: Flickr/Sean Creamer)

Source: Pacific Union

Different Housing Needs as U.S Population is Aging

Much has been written recently about the housing needs of millennials. But what about the housing needs of their grandparents? Aging baby boomers present new challenges to urban planners, developers, and home builders — hurdles that make millennials’ problems look like kids’ stuff.

Senior citizensBy 2030, one-quarter of the U.S. population will be age 50 or older, according to a recent study by the Joint Center for Housing Studies at Harvard University. Close to 39 million adults will be between 65 and 74 years old by then, almost twice the number as in 2010. By 2035, the number of households aged 80 or older will have doubled since 2010.

As the population ages, housing will need to to change to meet specific needs, such as adding accessibility features and support services and providing affordable options for seniors on a budget.

“Even with the recent uptick in seniors housing construction, vacancies remain relatively stable and rents keep climbing in most markets,” David Brickman, executive vice president for multifamily business at Freddie Mac, said in a recent statement on housing trends. “Much of the building has focused on high-end properties in top-tier markets. These don’t directly benefit households outside of higher-income brackets or in smaller markets, although any new supply is beneficial because it helps increase vacancies and drive down rents locally.”

“Still,” he said, “most markets could absorb more seniors housing – particularly for the middle- and lower-income levels.”

The home-improvement industry needs to adapt as well, with a new focus on altering existing homes so they are accessible to the aging population. Features like extra-wide hallways and doors, first-level bathrooms and bedrooms, and home elevators will become more common in the years ahead.

“Being properly housed and cared for is vital to overall well-being, but can be harder to achieve as we age,” Brickman said, noting that the urgency will increase in coming years as millennials move into their 50s.

Modern housing for seniors doesn’t have to be the cold institutions of decades past. “We’re not talking about our grandparents’ nursing homes,” Brickman said. The main property types include:

  • Independent living, where adults live on their own but also get help with certain activities and services, including food.
  • Assisted living, where adults still live on their own but also get help with basic daily activities. These facilities also provide meals.
  • Memory care, which addresses the needs of seniors suffering from dementia. Demand for this type of care is rising as the overall population ages.
  • Skilled nursing, which delivers specialized care to seniors who cannot care for themselves.
  • Continuing-care retirement communities, which provide multiple care levels in a single property.

“Importantly, seniors housing also offers the sense of community that people crave,” Brickman concluded. “But costs run high, varying by the location and level of care and service. That said, seniors housing – in particular, independent living, assisted living, and memory care – can be much less expensive than full-time in-home or skilled nursing care.”

(Image: Flickr/Chapendra)

Pacific Union Blog

A college degree- an almost must-have to buy a home in Coastal California

A college degree is almost a must-have for millennials who hope to eventually own a home in major Golden State coastal urban centers, but even with a diploma, young Bay Area buyers can expect to save for more than 15 years to meet the traditional down payment amount.grads

In a new study, Trulia examines how student loans affect millennials’ abilities to amass a 20 percent down payment and the length of time needed to do so. The company found that student debt does indeed temporarily impede the ability to save for a down payment and that a diploma is a necessity in expensive housing markets like the Bay Area.

California cities dominate Trulia’s list of the 10 markets where saving for a down payment takes the most years, regardless of whether the hopeful young buyer holds a college degree. San Francisco tops the list for longest savings period, with the average college-educated millennial requiring more than 29 years to squirrel away the $560,590 down payment. If that sounds like a long time, consider that San Franciscans without a college degree will never earn enough to put 20 percent down on a home in the city.

Trulia ranks the San Jose market No. 5 for longest savings period, with the average 25-30-year-old household requiring nearly 18 years to save the $289,072 down payment. San Jose residents without a degree can expect to wait nearly half a century — 45.4 years — to amass a 20 percent down payment.

In Oakland, which ranked No. 7 on Trulia’s list, buyers with a diploma can enter the market nearly twice as fast — 15.6 years to save $193,453 — as those without, who will take 27.3 years to save 20 percent of a home’s price. Other California markets that ranked among the top 10 for longest savings periods for college-educated millennials were Los Angeles (18.8 years), Orange County (18.5 years), San Diego (17.7 years), and Ventura County (15.5 years).

However, Bay Area buyers without college degrees can substantially shorten the savings cycle by cutting the down payment in half. A San Francisco resident who puts down 10 percent of the purchase price goes from never being able to own a home to being able to save the down payment in just under three decades. A 10 percent down payment in San Jose and Oakland can help those without a degree save for a home about three times faster: 15.4 years and 11.3 years, respectively.

A final — and likely far less attractive — option for California buyers without a degree who don’t want to wait a decade to save for a home is to consider relocating to Detroit or Dayton, Ohio, where it takes just over five years to sock away a 20 percent down payment.

(Photo: Flickr/State Farm)

Homebuyers Happiness Study

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Recent homebuyers are overwhelmingly happy with their purchases, according to a recent survey, but the reasons why depend on the age of the buyer.

Most younger buyers consider their homes strong investments, while older buyers view their new homes as a match to their changing lifestyles — typically choosing a smaller house after their children move out on their own.

These are just a few of the findings in agenerational trends study by the National Association of Realtors, based on a survey of more than 8,700 buyers and sellers.

Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger to 74 percent for buyers 68 and older.

The largest group of recent buyers are millennials — those under the age of 34 — who accounted for 31 percent of recent home purchases. Generation X buyers, born between 1965 and 1979, made up 30 percent of recent purchases, and younger baby boomers, born between 1955 and 1964, accounted for 16 percent.

“Given that millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand,” Lawrence Yun, NAR’s chief economist, said in a statement accompanying the survey results.

“Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people. However, the challenges of tight credit, limited inventory, eroding affordability, and high debt loads have limited the capacity of young people to own.”

The median age of millennial homebuyers is 29 and the median income is $73,600, according to the NAR study. They typically purchased an 1,800-square-foot home costing about $180,000.

In comparison, Gen X buyers’ median age is 40 with a median income of $98,200, and they tended to buy a 2,130-square-foot home costing $250,000.

Other findings from the survey:

  • Millennials were more likely to buy in an urban or central city area than older boomers.
  • Younger buyers tended to place higher importance on commuting costs than older generations. Older buyers were likely to place more emphasis on energy efficiency, landscaping, and community features.
  • Millennials planned to stay in the home for 10 years, while those in the baby boom generation planned to stay for 20 years.
  • Younger buyers tended to move to larger, higher-priced homes, but “there is a clear trend of downsizing to smaller homes among both younger and older baby boomers and the Silent Generation (those born between 1925 and 1945),” according to the study.
  • Overall, 88 percent of recent buyers financed their home purchase. Nearly all (97 percent) millennials financed, compared with just 55 percent of Silent Generation buyers.
  • Among the generations, Gen X (29 percent) is the largest group who are recent home sellers, followed by older boomers (22 percent) and younger boomers (21 percent).

(Image: Flickr/Tony Hoffarth)

Pacific Union Blog