In a quarterly survey of more than 100 real estate experts and economists, real estate data firm Zillow found 40 percent of respondents believe it will take another three to five years for the housing market to normalize, based on current home price trends and homebuyer activity.
Nearly a third of panelists took a more optimistic view, predicting the market will stabilize one to two years from now, while one in five responded that housing has either already returned to normal or will within the next 12 months.
When asked about headwinds facing the market right now, respondents pointed to low household formation rates, which have been stymied in part by a challenged economy. According to another recent study from Zillow, more than a third of adults living in the U.S. were living with at least one roommate as of 2012, up from a quarter in 2000.
While those renters represent millions of potential new formations in the years to come, they remain stuck where they are as jobs and wages slowly grow.
Demographic issues are also at play, Zillow reported. While more millennials seem to be holding off on major commitments—including homeownership, marriage, and parenthood—a growing number of Americans nearing retirement age are also opting to stay in their homes longer, keeping the nation's housing inventory from making any meaningful recovery.
"We've reached a point in the recovery where the only real cure-all is time," Zillow Chief Economist Dr. Stan Humphries said. "[T]he landscape is slowly changing, as incomes begin to grow, negative equity fades and new households start to form. These shifts won't occur overnight, but they are happening. Patience will be a virtue over the next few years as we wait for these traditional fundamentals to more fully take hold in the market."
Millennials still grapple with first-time homebuying
Realtors: Demographics still weighing on housing
Trey Garrison
November 10, 2014 3:28PM
Realtors from across the country gathered today to discuss the effects of changing homebuyer demographics on the housing market during the Realtor University Richard J. Rosenthal Center for Real Estate Studies forum at the 2014 Realtors Conference & Expo.
“Among primary residence homebuyers, the demographics have shifted dramatically, especially among first-time homebuyers, whose share of the market has dropped to its lowest level in decades,” said Jessica Lautz, director of member and consumer survey research for theNational Association of Realtors. “We have also seen an increase in the median age and income of the average buyer, as well as in multigenerational household formations as adult children and elderly family members move back in with their families.”
Adult millennials, those aged 18 to 33, were a popular topic of discussion for the panel.
In 2014, millennials saw 60% better job growth than the U.S. overall and a drop in unemployment to 6%. This growth, along with improved economic opportunities, should encourage millennials to form households and buy homes in the coming years.
"Millennials are the largest generation of people in the U.S. and represent 60% of first-time homebuyers,” said Jonathan Smoke, chief economist for realtor.com. “They are also more likely than any other group to purchase a home in the next year."
Tightened inventory, difficulty receiving credit and lower-than-average salaries have kept many of these buyers out of the market, but most economists see that as a temporary setback.
"It's not that young people don’t want to purchase homes, it’s that they are delaying the purchase," said Lisa Sturtevant, vice president of research for the National Housing Conference. "Many of the reasons millennials are not forming households or making purchases are economic, so as the economy improves, we should see this group become more of a force in the housing market."
Smoke said it’s a misperception that millennials are not already participating in the market.
“They represented 37% of home shoppers this summer, and over the next five years this generation will make up two-thirds of household formations," he said. "Between June and September 2014, over half of adults aged 21-34 visited real estate websites or mobile apps. And this is the cusp—get ready for the millennial wave to drive the housing market for decades."
Another group that will be competing with millennials for dominance in the housing market is baby boomers. Sturtevant said, "With millennials searching for new homes, baby boomers downsizing, and groups with historically lower incomes all entering the market, an increased demand for smaller, less expensive homes will begin to emerge."
California home sales remained steady in September, as home price gains eased back from an unusually high increase in August, according to the CALIFORNIA ASSOCIATION OF REALTORS®.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 396,440 units in September, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. Sales in September inched up 0.4 percent from a revised 394,700 in August and were down 4.2 percent from 413,850 in September 2013. September marked the 11th straight month that sales were below the 400,000 level and the 14th straight month that sales have declined on a year-over-year basis.
The median price of an existing, single-family detached California home fell 4 percent from August’s median price of $480,280 to $460,940 in September but was up 7.6 percent from the revised $428,290 recorded in September 2013. The statewide median home price has been higher on a year-over-year basis for more than two years.
Contrary to popular belief, millennials still highly value homeownership, and a majority expects to buy a home in the next five years, according to a CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) survey of young adults age 18-34. C.A.R. President Kevin Brown commented, “Despite recent news reports of young adults moving back home to live with Mom and Dad, millennials haven’t completely written off home buying and still aspire to owning a home.”
Making sense of the story
The survey found that of the millennial renters, the majority (67 percent) rent because they can’t afford to purchase a home.
More than half (54 percent) gave homeownership an importance rating of “8” or higher on a scale of 1-10, with 1 being “not at all important” and 10 being “extremely important.”
Millennials are optimistic about future home prices, with 59 percent saying they expect home prices will increase in a year, and 63 percent believing home prices will be higher in five years.
Of those currently renting, more than one-third (36 percent) would be motivated by affordable home prices to buy now. Sixteen percent claimed they would be motivated by having the down-payment required to purchase, and 15 percent by an improvement in their finances.
One in two millennial renters has student debt, but most don’t feel it is preventing them from qualifying for a mortgage. Additionally, more than four in 10 (43 percent) don’t have debt that would prevent them from buying a home.
Even though many millennials saw their parents struggle through the recession, more than half (59 percent) said the housing crisis didn’t affect their attitude toward homeownership being a good investment.
While they aspire toward homeownership, the majority was uncertain or doubtful they could obtain a mortgage now, with 45 percent saying they were not sure, and 33 percent saying they would not be able to obtain a mortgage now.
Why do people move? Is it for jobs or is it for housing?
It’s often assumed that people move to get better jobs. But Census data show the main people reason move is to gain access to better housing. The issue is sometimes posed as a chicken-and-egg question: What comes first, people or jobs?
A new study published in the journal Urban Studies takes a close look at the connection between these two types of moves – moving for jobs versus moving for housing. The study, by University of California, Irvine, social ecologist Jae Hong Kim, used American Community Survey (ACS) data and data from the Longitudinal Employer-Household Dynamics (LEHD) to get at the interplay between the two. His data cover 342 metropolitan areas and span two periods, before the Great Recession (2005-2007) and during (2008-2010), to deal with the effects of the economic crisis on mobility. Kim ran a series of statistical analyses to sort out the relationships between job and residential mobility.
The upshot: the two are more closely related than we might think. Moving for a job is associated with moving to find new housing, though the reverse is less common.
The first chart below shows the connection between job and residential mobility for the 2005-2007 period, before the recession. The line slopes upward and to the right, indicating a linear relationship, and the correlation is .322. According to Kim’s more detailed statistical analysis for this period before the Great Recession, residential mobility was influenced by a region’s job mobility, but job mobility was not as affected by residential mobility. (Kim)Kim’s analysis further found demographics to play a role in determining residential mobility in this 2005-2007 pre-recession period. Not surprisingly, younger cohorts 15 to 34 years old, more highly educated people and white people were more likely to move during this period. The price and age of housing also had an effect on mobility, with lower rates of mobility in metros with pricier and older housing. Regions with larger businesses and more low paying, less skilled jobs in construction and service businesses experienced higher rates of mobility before the recession. Interestingly, Kim finds commuting time to have no statistically significant relationship to mobility during this period.
Kim finds the effect of residential mobility on job mobility to be less significant. As he writes: “Job mobility during the 2005–2007 period (i.e. before the recession) is also found to be affected by residential mobility, although the significance and the magnitude of this effect are much weaker than those in the opposite direction.”
The second chart shows the relationship between job and residential mobility during the recession years, 2008-2010. Again the relationship is positive and statistically significant, though not quite as strong, with a correlation of .274. (Kim)Residential mobility in this recession period was again influenced by job mobility and also by the age and cost of housing, according to Kim’s analysis. But it was not statistically associated with younger age groups. This is likely the consequence of the economic downturn. According to Pew Research, 21.6 percent of adults ages 25 to 34 lived in multi-generational households in 2010, up from 15.8 percent at the turn of the millennium, indicating that fewer young people had the means to move during that period.
In an even more significant shift from the previous years, Kim finds the effect of residential mobility on job mobility to disappear during this 2008-2010 period. This is a likely result of the recession, when, as Kim writes, “workers tried to hold their jobs during these years given the extraordinarily tough job market situation, even when they needed to or wanted to change their living places.” This could also be the result of workers in these places being unable to sell their homes.
The third chart looks at the relationship between the change in job and residential mobility over the entire 2005-2010 period. It indicates a positive, though relatively weak relationship, between the two. (Kim)The big takeaway: Changing your job appears to influence whether you move more than changing where you live influences changing your job. This makes sense after all. In many cases, you can change jobs without changing where you live. And finding a new place to live is, in most cases, a far more expensive proposition than finding a new job. The pattern is affected by economic circumstance, with people less likely to leave jobs or be trapped in place by their housing during economic downturns.
Instead of trying to shore up or bailout the housing market during downturns, say by keeping mortgage rates low, it may make more sense to help people move to places with better job opportunities.
Whoever first said, “You can’t go home again,” probably wasn’t considering the 38 million home-based businesses in the United States, or the approximately 37 million households that have active home offices. This is especially evident among real estate professionals.
It’s not just small business owners or lucky full-time employees who are working from home, either; the Bureau of Labor Statistics says 24 percent of people employed outside the home work at home at least some of the time. If you’re poised to become home-based, here are some things to consider as you’re putting your home office in order: Location is key
Without the need to fight rush-hour traffic during a twice-daily commute, you may think the location of your home office isn’t that important. Actually, it is. Where your office is located in your home can affect your productivity and even your personal life.
Choose a room that’s in your home’s heavy traffic lanes, and you could face frequent interruptions. Park your desk in the game room over the garage and you may feel isolated from the rest of the house. Try to stuff a desk in a corner of your bedroom and you’ll spend most of your life stuck in the same room – you may even feel less inclined to sleep there if you’re always working in your bedroom.
You’ll need to balance personal and professional priorities in order to decide which room in the house makes the most sense for your home office.
Good lighting sets the stage for success
The harshness of artificial lighting is a common complaint among people working in offices outside the home. A window in one’s office has long been a sign of prestige in cities across the country, and having abundant natural light in a home office is one of the many advantages of working from home. Natural lighting has a mood-boosting impact that’s been well-documented, making office workers feel happier, healthier and more productive. What’s more, use of natural light can help reduce reliance on artificial lighting and trim utility bills accordingly.
Considering how much time you’ll spend in your home office, it’s important to invest in furnishings that will be functional, comfortable, inspiring and in step with your lifestyle.
If you prefer to sit while you work on a computer, the comfort of your office chair will be key. Prefer to get in a bit of healthful exercise while you work? Consider an ergonomic desk that allows you to stand while you type. Many versions of standing desks also can be lowered for use while seated.
Desks should incorporate storage and easy access to electronic components. Be sure your furniture choices not only fit your needs, but the room’s needs too. A huge desk may make you feel like a Wall Street CEO, but your enjoyment will evaporate if you don’t have space to walk around the desk in a small office. It’s important to keep office furniture appropriate to the scale of the room you’ll be working in.
Ensuring your home office is set up to inspire can help you achieve greater productivity and satisfaction as you work from home.
It can be difficult to keep up with the latest changes in decorating styles at home, but an increasingly popular design trend may ease the burden, especially if you’ve kept some family treasures around. Designers are now focused on keeping those traditional accents, furniture pieces or wallpaper and blending them with clean, bright, contemporary elements.
You, too, can incorporate this style in any room of the home, allowing you to display grandmother’s mirror or repurpose aged marble countertops. Use these tips to get the most out of the old and usher in the new:
Accent with white
A great way to give an outdated room a contemporary balance is to accent with white on trim, molding, doors or decorative linens. Blending the soft wood tones of older furniture or dark wood floors with fresh white accents will make the room pop, breathing new life into a treasured heirloom piece you’ve had in your family for years. You can achieve a similar effect in your kitchen with stainless steel finishes.
Add small, vintage touches
Think of ways to repurpose older items. An old six-paned window with cracked and worn wood can become a frame for family photos. Wood from an old barn can be used for a coffee table or fireplace mantel. Mix up the chairs around your dining room table by blending both modern and contemporary styles. These small changes showcase two distinctive styles that work seamlessly together.
Incorporate focal points
If the shell of your room has a contemporary look, add a few traditional elements as conversation pieces. An antique lamp, an old trunk that becomes a side table or a church pew in an entryway can all be attention-getting additions. On the flipside, if your home features traditional wooden floors that have aged beautifully, let the floor take center stage with simple, modern decorations.
We all procrastinate from time to time. We start a project and then get distracted by an email, a social media post, or an off-topic conversation. It happens. You may be doing it now.
Most of the time, we put off things because they seem overwhelming. Solving a complex problem at work. Preparing a home to go on the market. Writing a blog post on procrastination. But these tasks are often a piece of a bigger goal and by putting them off, we delay accomplishing the larger objective. Here are some strategies that may help you tackle procrastination and advance your goals.
Make an audacious, big, big goal that will inspire you. For example, someone who wants to sell their home may have to paint, clean out closets, make minor repairs, and stage their home for showings. None of these sound particularly enjoyable. However, if the big, audacious goal is to move into a beautiful new home, embrace a simpler lifestyle, or relocate to a new exciting area, keeping that big goal in mind will make painting and cleaning out clutter more tolerable. Each paint stroke or organized closet is a step toward that bigger goal.
Break the work into smaller, easily completed steps. Write them down. Sometimes the reason we procrastinate is because the tasks ahead of us seem overwhelming. “There is so much to do to prepare my home for sale, I don’t know where to start.” Start by making a list of the tasks to be completed, and then break those tasks down even further.
Cleaning out all closets, drawers and storage areas – (a big task)
Get boxes for carting donations to charity.
Get trash bags for garbage.
Create a staging area where to pile donations.
Take one room at a time. Complete one before moving on to the next.
Drop off donations on way to other errands.
Call waste management vendor and schedule a special pickup for larger items.
By breaking a larger task down into smaller ones, they don’t seem so overwhelming. Picking up boxes and trash bags are steps that can be accomplished in a few minutes, not hours. Clearing some floor space in the garage to pile the donations will not take all day. Start with one room (or one closet or drawer). You can make major progress in a short amount of time.
Allocate time for work and time for play. Mark Twain said “Eat a live frog first thing in the morning and nothing worse will happen to you the rest of the day,” suggesting you face the most unpleasant tasks first. Do you really want to eat a live frog for breakfast? I don’t. I’m not a morning person and no amount of coffee is going to make me productive at 6 a.m. But, you probably know the time of day in which you are most productive. Block out time on your calendar, uninterrupted, to devote to your “live frog.” Treat it like an important meeting and don’t reschedule it. Michael McDevitt, Cofounder and CEO of Tandem Legal Group, wrote in his article, “For Entrepreneurial Success, Eat A Live Frog Every Morning”, that he devotes 2 hours per day to tackling his unpleasant to-do list (although not first thing in the morning). During those 2 hours, everything else can wait.
Conversely, block out time in which you are not going to work. Saturday afternoon, watch the football game with friends. Tuesday, have lunch with a friend. Giving yourself a break, without guilt, will give you a boost of motivation during your productive times.
Set deadlines. Realistic deadlines. If you know that you have nine closets, then cleaning out one per day during the week and four on the weekend will allow you to accomplish your goal in a week. Split the work between two people and the time required is cut in half. Seeing the end in sight makes the work less daunting.
Check things off the list and reward your accomplishments. Finish cleaning out a closet? Relax in a hot bath with a book or go for a walk in the park. Finish cleaning out all your closets? Go to a movie you’ve wanted to see. Ending an unpleasant task with a pleasant one will keep you motivated.
In conclusion, don’t delay! Try these steps today!
IN SOUTHERN CALIFORNIA, NEW HOMES ARE RARE AND COSTLY Source: LA Times
New home prices have soared in recent months in the Southern California region, with the median for the six-county region peaking at $538,000 in June, according to CoreLogic DataQuick. And in affluent ZIP Codes, builders are bidding up already-high land values. Overall, new homes have become all too rare and costly for the average buyer.
Making sense of the story
A surge in higher-end projects has pushed new home prices above their pre-recession peaks, even as prices for existing homes remain one-fifth below their bubble-era highs.
In Orange County, the median new home price has topped $800,000.
Builders have piled in to pricey ZIP Codes — bidding up land costs there in the process — and polished their projects to a high gloss to woo wealthy buyers with cash or good credit.
Projects aimed at the middle of the market remain scarce, and overall home building is off about 60 percent from a decade ago. The shortage of new lower-priced product is one factor making Southern California among the toughest housing markets in the country for middle-income families.
While new homes have almost always sold at a premium, that premium has hit new highs this year. In January, the gap between median-priced new and resale homes in Southern California peaked at $151,000, a 41 percent premium for a new house.
Several factors contribute to the widening price gap between new and resale homes, housing economists say. For example, competing bids drove up the cost of land in prime areas in 2012 and 2013, which means higher prices today.
Some builders have made a conscious decision to move upmarket because they see more profit and upside in catering to wealthier consumers. KB Home is among the builders moving upmarket. The Los Angeles builder, long a specialist in entry-level homes, has shifted to more affluent, "land-constrained" neighborhoods.
Who’s more likely to own a home — those in jobs that pay more, right? A new study by Ancestry.com Inc. suggests the answer is more complex.
Getty Images
Roughly 90% of optometrists in the U.S. owned a home in 2012, according to the family-tree website, which analyzed census data going back to 1900. So did 87% of dentists and 81% of pharmacists. By contrast, only 46% of roofers owned homes, and only 27% of waiters and waitresses. Dance instructors? Just 23%.
Presumably this is because pharmacists typically make more than dancers. Yet Ancestry.com found that some jobs that weren’t especially high-paying had higher homeownership rates than occupations with bigger paychecks.
Firefighters, for example, rank very highly; 84% own homes. Some 78% of mail carriers own homes—the same as for lawyers and judges. Teachers (74%) ranked higher than economists (64%).
It’s hard to draw too many conclusions from these figures—especially about how they’ve changed over time.
The data stretch back 112 years, but an electrician today isn’t the same as one in 1950 (73% of electricians own homes, by the way, the same as for stock and bond salesmen).
There are plenty of head-scratchers: While few dancers own, 62% of musicians and music teachers do, along with 63% of artists and art teachers. On the flipside, just 33% of people in the armed forces own, making them one of the lowest-ranking groups. (In case you’re curious, the figure for editors and reporters is 62%.)
Still, the study clearly suggests that factors other than pay go into whether you buy a home—one might be job and financial security. It’s probably not an accident that government jobs tend to have high rates of homeownership.
At the same time, if you’re not paid a lot, it’s probably pretty certain you won’t be buying a home, the study shows.
Here’s a chart you can play with to see how your own profession stacks up in terms of the likelihood of buying a home. (If the categories feel old-fashioned, it’s because they are: Researchers started with Census classifications from 1950, then standardized occupations back to 1900 and forward to 2012. Thus “charwoman” alongside “cleaners.”)
Community opposition, design changes and parking are among the factors driving up the cost of building affordable housing in California, according to a report released this week by several state housing agencies.
A yearlong study by four agencies that finance and oversee affordable housing found that the average apartment built with low-income housing tax credits in California from 2001 through 2011 cost $288,000, with a variety of factors contributing to push that up.
Higher-quality construction and energy-efficiency requirements also added to the cost, the study found, though it noted that in some cases those factors would save money over time. Larger projects, those built by larger developers and apartments for senior citizens tended to have lower costs per unit.
The study did not measure land costs, which can vary widely depending on location, site conditions and how a site is acquired. But it found that costs per unit were highest in San Francisco and lowest in the northern part of the state. The average unit cost $315,000 in Los Angeles County and $249,000 in Orange County. It also found that the cost per unit has fallen since the mid-2000s, when the housing
bubble drove up the cost of financing and construction. But the study ended with buildings launched in 2011, and it's unclear if the recent recovery is driving up prices again.
The report comes as California grapples with a massive affordable housing shortage. Los Angeles County alone needs nearly 500,000 more units to meet the area's need, according to a report earlier this year from the Southern California Assn. of Nonprofit Housing. Meanwhile state and local funding to develop affordable housing has declined in recent years.
The state and federal Low Income Housing Tax Credit Program -- which contributed $160 million to 113 projects around the state last year -- is one of the largest pools of money available to fund affordable housing in California. The study was designed to find ways to make it more efficient.
Accent with white
We all procrastinate from time to time. We start a project and then get distracted by an email, a social media post, or an off-topic conversation. It happens. You may be doing it now.
