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

First-Time Buyers Help Boost U.S. Home Sales in May

 

Thanks in part to a healthy job market, first-time buyer activity is on the upswing and helped propel U.S. existing home sales to the highest level in five-and-a-half years last month.money fence_sm

In its latest existing home sales report, the National Association of Realtors says that first-time buyers accounted for 32 percent of all U.S. home purchases last month, up from 30 percent in April and 27 percent from one year ago. First-time buyer activity is now at its highest level since September 2012.

“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down-payment programs,” NAR Chief Economist Lawrence Yun said in a statement accompanying the report. “More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

First-time buyer activity helped push U.S. existing home sales – which includes single-family homes, condominiums, townhouses, and co-ops – to 5.35 million in May, the most since November 2009. Home sales rose 5.1 percent from April and 9.2 percent from one year ago.

The median U.S. home price climbed to $228,700, the 39th consecutive month of year-over-year gains. Yun noted that the U.S. housing supply remains constrained and that prices will likely stay high without sufficient levels of new construction. In May, the U.S. months’ supply of inventory (MSI) was 5.1, meaning that the housing market still favors sellers. Tight inventory conditions mean that homes are also selling relatively quickly – an average of 40 days in May, the third fastest pace since NAR began tracking that metric four years ago.

In California and the Bay Area, supply conditions are considerably tighter than they are nationwide, and homes are selling at an even brisker clip. According to the California Association of Realtors’ latest home sales and price report, the statewide MSI for single-family homes was 3.5 in May, unchanged from the previous month. Homes sold in an average of 28.5 days, faster on both a month-over-month and year-over-year basis.

Six Bay Area counties had the fewest homes for sale in California in May, with the MSI ranging from 1.7 inSan Mateo County to 2.3 in Marin County. Across the nine-county Bay Area, homes sold in an average of 20.9 days, with San Mateo (17.1 days), Santa Clara (17.5 days), and San Francisco (19.2 days) counties the state’s quickest-moving real estate markets.

(Photo: Flickr/Tax Credits)

Source: Pacific Union