Student Debt Crushes Homeownership Dreams

Survey reveals women and Millennials are most impacted

piggy bank

Student loan debt has racked up a collective $1.5 trillion bill for 44 million Americans, and its crushing people’s homeownership dreams.

According to a recent survey by NeighborWorks America, people with student loans to pay off are delaying purchasing a home and many worry about this debt most or all of the time.

Student loan debt has ballooned 130% since 2008, according to the survey, and that’s why Millennials are taking the biggest hit.

Millennials are shouldering most of this debt, with 57% of them saying they are still paying bills for their education and 59% saying that they or someone they know has delayed purchasing a home because of their loans.

While 56% said they worry about this debt all or most of the time, 46% said they were unaware of local nonprofits offering free or low-cost counseling on how to best handle it.

The study also found that women are more likely to carry student debt than men, and that women of color were particularly impacted.

It also revealed that 38% of women said they knew someone who had delayed buying a home because of this debt.

“It’s important for people to have the tools and resources they need to be informed consumers from the moment they consider owning a home,” says Karen Hoskins, acting vice president of homeownership programs and lending at NeighborWorks America.

“A housing counselor can guide them through what often seems a daunting, confusing process,” Hoskins added. “They also will benefit by thinking about nonprofits as helpful sources of services and information. Down-payment assistance is especially helpful for homebuyers who struggle because of student loan debt.”

#Homeownership #STudentDebt #Millennials #LenandLeslieMara

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Home Prices: The Difference 5 Years Makes

KCM Crew, September 18th, 2018

Home Prices: The Difference 5 Years Makes | MyKCMCoreLogic recently released their Home Price Index ReportOne of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from July 2013 to July 2018 to show how prices over the last five years have fared.

The graph below was created to show the 5-year change in price from July 2013 to July 2018 by price range.

Home Prices: The Difference 5 Years Makes | MyKCM

As you can see in the graph, the highest price appreciation occurred in the lowest price range with 48% growth, while the highest priced homes appreciated by 25%. This has been greatly fueled by the lack of inventory of homes available at the lower price ranges and high demand from first-time buyers looking to enter the market.

Where were prices expected to go?

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

According to the Q3 2014 survey results, national homes prices were projected to increase cumulatively by 19.5% by December 2018. The bulls of the group predicted home prices to rise by 27.8%, while the more cautious bears predicted an appreciation of 11.2%.

Where are prices headed in the next 5 years?

Data from the most recent HPES shows that home prices are expected to increase by 20.0% over the next 5 years. The bulls of the group predict home prices to rise by 31.2%, while the more cautious bears predict an appreciation of 9.3%.

Bottom Line

Every day, thousands of homeowners regain positive equity in their homes. Some homeowners are now experiencing values even greater than those before the Great Recession. If you’re wondering if you have enough equity to sell your house and move on to your dream home, let’s get together to discuss conditions in our neighborhood!

#HomePrice #LenandLeslieMarma #HousingMarket

 


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Baby Boomers are Holding onto their Homess as they Head into Retirement

by MORGAN MEREDAY

As baby boomers gracefully round the corner into their golden years, Trulia found that the already strained housing market tightens a bit further as they hold onto their homes into retirement.

Defined as the population born between the years of 1945 and 1964, aging them between 54 to 73 today, baby boomers will be the largest generation of retirees in United States history. Although baby boomers are delaying downsizing at practically the same rate as in the past, their sizable population holds possible disadvantages for the younger generation entering the housing market.  

While some believe that the boomers’ reluctance to move has reinforced the current housing market’s inventory crunch, others speculate that they are timing the pace of the market, presaging a large sell-off.  

Trulia focused on senior housing preferences over the past decade and found that: 

  • The number of seniors in the labor force has increased from 15.9 percent in 2005 to 19.3 percent in 2016. 
  • The amount of senior households living alone has decreased from 85.2 percent in 2005 to 83.4 percent in 2016. 
  • The population of senior households living with younger generations has increased from 14.4 percent in 2005 to 16.1 percent in 2016.  

Alexandra Lee, housing data analyst for Trulia’s Housing Economics Research Team, summarized in a post that baby boomers are working and parenting longer, as their kids are living with them more than in previous generations. Trulia also found that the population of empty nesters — senior households without younger generations living with them — hold an average of two more bedrooms than people in the home while households under the age of 65 average have only one extra bedroom.

Further, Trulia recorded that households that own their single-family home and are without live-in kids are in the most affordable metros in the country and that boomers are not holding properties in low inventory metro areas, preferring instead places with higher rates to accommodate their kids.  

“While some observers think Baby Boomers are contributing to the inventory crunch by staying in place, others believe Boomers are holding on to their homes to time the market and that a massive sell-off is on the horizon,” Lee said. However, this prediction will most likely exclude more expensive metros. “The higher the income required to purchase the median home, the lower the proportion of senior households that could downsize.”

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Home Prices Have Appreciated 6.9% in 2018

KCM Crew, September 13th, 2018

Home Prices Have Appreciated 6.9% in 2018 | MyKCMBetween 1987 and 1999, which is often referred to as the ‘Pre-Bubble Period,’ home prices grew at an average of 3.6% according to the Home Price Expectation Survey.

Every month, the economists at CoreLogic release the results of their Home Price Insights Report, which includes the actual year-over-year change in prices across the country and their predictions for the following year.

The chart below shows the forecasted year-over-year prices for 2018 (predictions made in 2017). According to their predictions, the average appreciation over the course of 2018 should be 4.8%, which is still greater than the ‘normal’ appreciation of 3.6%.

Home Prices Have Appreciated 6.9% in 2018 | MyKCM

If we layer in the actual price appreciation that has occurred this year, we can see that over the course of 2018, home prices have appreciated by an average of 6.9% and have outpaced projections all year!

Home Prices Have Appreciated 6.9% in 2018 | MyKCM

What does this mean?

The tale of today’s real estate market is one of low inventory, high demand, and rising prices. The forces at work can be simply explained with the theory of supply and demand. That being said, if a large supply of inventory were to come to the market, prices may start to appreciate closer to the forecasted rate which would STILL be greater than the historic norm!

Bottom Line

If you are a homeowner whose house no longer meets your needs, now may be a great time to list your home and capitalize on the equity you have gained over the last year to make a significant down payment on your next home!

 

 

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Americans have the highest amount of tappable equity in history

There is now more than $6 trillion for the taking, but fewer homeowners are touching it

The amount of home equity accessible to America’s 44 million homeowners has surpassed $6 trillion – the highest level in history.

Now, Americans have three times as much equity as they did when the market bottomed out in 2012.

And they have 21% more than they did at before the bubble burst in 2006.

Yet, fewer appear to be taking advantage of this major source of wealth.

According to a study released Monday by Black Knight, equity withdrawals through cash-out refinances and HELOCs were down 3% from last year, marking the lowest share of equity withdrawn since Q1 2014 (when rates were also rising).

Withdrawals using new HELOCs were down 4%.

“This time last year, 1.36% of available equity was being tapped, suggesting rising rates may be suppressing equity utilization by approximately 17%,” Black Knight said.

“Following that logic, homeowners tapped about $13 billion less equity this year than they might have otherwise, including $8 billion in would-be HELOC originations and $5 billion fewer cash-out refinances in Q2 2018 alone.”

The study also revealed that the rate of equity growth has slowed, even though it has reached a record high. In Q1 it grew by $308 billion, but Q2 only saw an increase of $256 billion.

According to the report, slow home price growth in the country’s most equity-rich markets are the culprit.

California’s home price gain was down 43% in Q2, while Seattle dropped 60% according to the report.

 

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CBS: 3 Reasons to Worry about the Housing Market

Article warns looming issues could cause strain

Trouble is brewing in the U.S. housing market, some claim, asserting fear that another housing bubble could be on the horizon.

One main factor: Home values have surpassed their pre-crash high. The most recent Case-Shiller Home Price Index showed that home prices continued to rise across the country, growing more than 6% year-over-year in June.

A CBS article published Monday said “storm clouds are gathering,” pointing to recent indications from Fed Chair Jerome Powell that more interest rate hikes are to come, which could further dampen affordability and suppress demand.

Here are the three factors the article outlined as worrisome for the future of the housing market:

1. Affordability is declining.

The Fed’s current monetary policy may drive up mortgage rates and seriously impact affordability.

Last week, the 30-year fixed-rate mortgage inched higher for the second consecutive week, according to Freddie Mac, averaging 4.45% compared with last year’s 3.78%

“As a result of rising mortgage rates and higher home prices, Gluskin Sheff economists estimate that housing affordability has crashed to lows not seen since 2008, well off the highs seen in 2011 and 2012 when a combination of lower prices and lower rates helped put an end to the housing collapse,” the article stated.

2. Sales activity is faltering.

The latest data from the Census Bureau and the Department of Housing and Urban Development reveals that new home sales fell short of expectations, falling 1.7% in July.

While demand for new construction remains strong, homebuilder confidence is faltering, as August’s housing market index reveals that it reached its lowest level of the year thanks to concerns about material costs due to recent tariffs.

Additionally, a trend toward stagnation in sales activity could be a sign of trouble, according to the article.

3. Demographics indicate potential for trouble.

Burdened by student debt and earning wages that can’t match home prices, Millennials are being shut out of the market.

“The risk is that the longer this generation delays homeownership, the more Baby Boomers looking to downsize will be pressured into lowering their home prices when they enter retirement,” the article stated, pointing to a Fannie Mae report that warned that Millennials would be unable to fill the void left behind by the older generation.

 

 

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4 Reasons Why Fall is a Great Time to Buy a Home!

KCM Crew, September 11th, 2018

4 Reasons Why Fall Is A Great Time to Buy A Home! | MyKCMHere are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insights report reveals that home prices have appreciated by 6.2% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.1% over the next year.

Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have already increased by half of a percentage point, to around 4.5% in 2018. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by half a percentage point to around 5.1% by this time next year.

An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home which you can then tap into later in life. As a renter, you guarantee your landlord is the person building that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

 

 

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