Millennials plan to make more of a move in the housing market, particularly within the next five years. Thirty-two percent of 18-34 year olds say they plan to buy a home in the next 12 months. What’s more, three quarters of Millennials plan to buy a home in the next five years, according to a survey of 2,500 adults released by BMO Harris Bank that compared the timelines for likely home purchases among age groups. For comparison, 62 percent of the 35 to 44 age group says they plan to move within the next five years; 35 percent of 45 to 54 age group; 31 percent of ages 55 to 64; and 19 percent of those older than 65. “We’re seeing a fair amount of confidence in the housing market, which is encouraging news,” says Kevin Christopher at BMO Harris Bank. “For many in the under 35 age range, this may be their first home.” But home ownership is still out of reach for some. About one-third of renters surveyed say they would like to buy a home but they’re unable to afford it. High student loan debt continues to be a big obstacle for Millennials in qualifying for a home loan to purchase a home. “While the housing market is on the upswing, the record level of student debt carried by young Americans does pose a challenge to many in their 20s and 30s hoping to purchase their first home,” says Michael Gregory, head of U.S. Economics at BMO Capital Markets. “Student debt levels have more than doubled in the last seven years to $1.1 trillion. The financial burden means renters are delaying entering the purchasing market, which has a trickle-down effect on the overall housing recovery.” Source: BMO Harris Bank
Staging may not be important and may not raise residential sales prices, according to researchers at the College of William & Mary. The study polled 820 home buyers who were shown a series of six virtual tours of a single property, each focusing either on wall color or furnishings. The tours showed the property without furniture, with “ugly” furniture, with “good” furniture, and with wall colors such as neutral beige and an “unattractive” shade of purple. The researchers determined that buyers would pay the same price for the home, no matter how it was staged. “These results stand in stark contrast to the conscious opinion of both buyers and real estate agents that staging conditions significantly impact willingness to pay for a home,” the researchers concluded. Study co-author Michael Seiler, professor of real estate and finance at the College of William & Mary, speculates that today’s buyers are savvy and recognize that staging involves cosmetic changes that are not expensive. However, because these buyers thought others would spend more on the property, Seiler says, “I am definitely not ready to say spending money on staging would be a waste.” Source: Bankrate.com
Low rates and soaring rents have convinced a growing number of homeowners to hang onto their former homes and become landlords instead. “Clients tell us all the time, ‘We’re never going to sell our home, even after we buy a new one,'” said Glenn Kelman, CEO of the brokerage, Redfin. The math works in most landlords’ favor these days. Rents have risen by about 20% nationwide since mid-2006, the housing bubble peak, while home prices are still about 21% below what they were at that time. For people who are still underwater on their loans and unable to profit from a sale, renting helps soften the blow. The surge in landlords is working out well for most owners, but it is taking a toll on the housing market, according to Kelman. Every home converted into a rental property is one less that goes on the market. And in hot real estate markets these days, very few homes are up for sale. “It’s a major reason we have low inventory and limited sales growth,” said Kelman. Source: CNN/Money
Information provided by Carrie Stidham, Franklin American Mortgage Real Estate Newsletter.