Len and Leslie Marma | Marshfield Real Estate, Scituate Real Estate, Pembroke Real Estate


Millennials, first-time buyers hit the hardest


house case

Existing home sales dropped in June as housing inventory was unable to keep up with the increasing demand for homes.

Housing demand continues to increase, one expert explained, suggesting existing home sales could increase once again later this year.

“There are several factors that are helping to boost housing demand, including: solid job gains, faster household formations, and low mortgage rates, and these suggest that existing home sales should move higher as the year progresses,” Nationwide Chief Economist David Berson said.

One expert put the amount of housing demand into perspective, and explained two possible outcomes for homebuyers due to low inventory levels and high demand.

“There are about as many homes for sale now as there were in 1994, except there are about 63 million more people in this country now than there were then,” Zillow Chief Economist Svenja Gudell said. “A combination of very low inventory and very high demand leads to two main outcomes, neither of which is particularly favorable for stressed home buyers desperate to make a deal.”

“First, those homes that are available to buy are often on and then off the market in a flash, in many cases staying on the market for only a few short days before going pending,” Gudell said. “High demand and low inventory also serves to push prices higher at a rapid clip, as bidding wars break out for those scant few homes available.”

The chart below from Trulia shows how existing home sales in June compare to the pre-recession average.

Click to Enlarge

existing home sales

(Source: Trulia)

“The quickening pace of existing homes sales indicates a robust demand for homes,” Trulia Senior Economist Cheryl Young said. “Steady mortgage rates will continue to encourage demand even in an environment of high prices and little supply. As a result, home buyers are snatching up inventory at rates near equal to the pre-recession peak.”

One economist explained first time homebuyers and other groups looking for affordable housing are the most effected by the inventory shortage.

“This situation primarily affects low to moderate priced home buyers, including millennials, first-time buyers and people of modest means,” realtor.com Senior Economist Joseph Kirchner said. “These groups have had extreme difficulty finding homes and the plummeting sales we have seen for months isn’t showing signs of slowing soon.”


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Americans spend a little more than 25 minutes a day commuting to work. Add in the time that it takes to get home and Americans are spending nearly an hour a day getting to and from work. To improve your commute, you could join city transportation committees and push for roadway upgrades and public transportation expansion. But, it takes time to see the results of those efforts.

Measurable big city residence savings

Moving into a house in a big city is a quicker path to a shorter work commute. Time and auto maintenance savings aren't the only ways that you can save money if you move to a big city. Other money savings that you could enjoy after you take up residence in a big city are:

  • Auto expenses - It's not just auto maintenance costs that you can save if you rent or buy a house in a big city. You can forego a car in many big cities. Instead of paying monthly auto payments and auto insurance, you can pocket that money. You can also use the money to build your savings.
  • College tuition - Respected colleges and universities are located in major towns. As a big city dweller, you can save on college tuition, because you'll qualify for the lower in-state tuition rates.
  • Thrift shops and consignment stores - Forget shopping at upscale stores, designer shops and malls. Take advantage of lower prices at thrift shops and consignment stores.
  • Roommates - Split the cost of renting an apartment or renting a house in a big city. Take in a reliable and a safe roommate. College students living in a big cities regularly take advantage of this housing savings.
  • Exterior house costs - Yards are often smaller in big cities. Save on yard equipment if you take up residence in a big city. For example, you can save on fertilizer, snow blowers and hedge cutters.
  • Higher paying jobs - Fortune 500 companies are often headquartered in big cities. You could earn thousands more a year if you work in a big city.
  • Work from home - Open a home business. Reserve space at a temporary office to conduct meetings with potential clients. Attend networking and social events in the city to find new clients. There are plenty of opportunities to network with financially successful prospects in big cities.

Don't rule out moving to a big city during your house search. Ask colleagues, friends and relatives to recommend realtors that charge reasonable commissions. You could also try out big city living by closing on a rent-to-own home. Try to get it written into your rent-to-own contract that you'll be refunded a certain portion of your rent should you decide not to buy the house. Also, put the price you agree to pay for the house, should you decide to buy, into the written contract.

Continue to save for a down payment while you rent. Another thing to do if you rent,instead of buy a house, in a big city is to take actions that strengthen your credit. Do this and not only can you save by living in a big city, you'll position yourself for greater savings when you do buy a house.


Fall below 4% mark once again

As the market becomes less certain about the current state of the economy, mortgage rates inched lower, once again falling below the 4% mark.

“Continued economic uncertainty and weak inflation data pushed rates lower this week,” Freddie Mac Chief Economist Sean Becketti said. “The 10-year Treasury yield fell five basis points this week.”

Click to Enlarge

7-20-17

(Source: Freddie Mac)

The 30-year fixed-rate mortgage decreased to 3.96% for the week ending July 20, 2017. This is down from last week when it averaged 4.03%, but still up from last year’s 3.45%.

The 15-year FRM also decreased, falling to 3.23% from last week’s 3.29%. The 15-year mortgage was also up from last year’s level of 2.75%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage also decreased, falling seven basis points from last week’s 3.28% to 3.21% this week. This is up from 2.78% last year.

“The 30-year mortgage rate moved with Treasury yields, dropping seven basis points to 3.96%,” Becketti said.




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