This weekly feature is a real estate news roundup from a millennial’s point of view. When a young professional moves from Indianapolis (median home price $125K) to San Francisco (median price $1 million), you can expect an adventure. Nneka Madus, a Bank of the West analyst in our Mortgage Division, did just that and has plenty to share in her quest to own a home in San Francisco.
In the age of the Internet, many potential homebuyers may think they can forego real estate agents and still land in their dream home. Let me tell you, I personally wouldn’t go that route. I mean you need every potential advantage you can get, especially in a highly competitive real estate market.
Teresa Mears from US News gives readers 12 negotiating tips you should know before buying a home. One tip: Use an agent. They know the market and should be able to help get you the research and stats to make a stronger offer. Another good tip: Get your finances in shape a few months before you start shopping. Mears’ piece may help you avoid mistakes and up your chances of success.
Would you be interested in a new home buying tool that could possibly help you make more informed decisions? Kenneth Harney in the Washington Post reports on a new service that is intended to forecast local property values. With inventory tight in many markets, it couldn’t have come at a better time. The new service may help homebuyers get a leg up in buying a home at the right price.
Here’s a bit of good news for homebuyers who weren’t able to land their dream home in the spring. Ben van der Meer from the Sacramento Business Journal has some optimistic insights and tips for summer and fall home shopping — like revisiting homes that may have been overpriced in the spring.
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.
The numbers: Millennials in the cellar
The number of U.S. households headed by millennials (defined as 18- to 29-year-olds) will balloon 62% to 21.6 million by 2018, and these households will spend more than $2 trillion on home purchases and rent — more on a per-household basis than any other generation over the next five years, according to a new study released Sept. 16 by The Demand Institute. The report finds that many millennials hunkered down with parents during the economic downturn, but as the economy improves will “emerge from their parents’ basements.” Three-quarters of millennials intend to move in the next five years, and 48% of those respondents said they plan to buy a place when they move, according to the research.
What counts: A 62% increase in millennial households in five years is nothing to sneeze at. Despite talk in the media that the younger generation has different aspirations than their parents, this new research suggests the American Dream is alive and well, and could be for some time to come. These new households represent a huge wave of potential first-time buyers.
For real estate professionals and buyers and sellers, some of the questions to ask will be: Will millennials be city-dwellers or suburbanites? What amenities will they want in their homes? Will they be more interested in existing homes or new homes? I guess we will have to wait to see once they “emerge from their parents’ basements,” as the report says.
The numbers: Mortgage defaults edge higher
After nine consecutive months of decline, the default rate on first mortgages rose to 0.91% in August from a historic low in July of 0.88%, according to the S&P/Experian Consumer Credit Default Indices published Sept. 16. Meanwhile, the second mortgage default rate dropped one basis point to a new historical low of 0.51%. Default rates remain below year-ago levels and at or close to the lowest points in the indices’ five-year history, S&P and Experian said in the announcement.
What counts: A 0.91% default rate is still close to the low point for the first mortgage index, so I don’t think there is much cause for concern. As S&P points out the uptick may simply reflect more borrowing occurring as the economy improves.
Whenever I talk about default or foreclosure data, I like to remind borrowers that if you are struggling to make mortgage payments, contacting your lender early can be helpful. Sometimes borrowers avoid contacting their lender about financial difficulties and fall further and further behind on their loan payments. This may ultimately make it more difficult to find a solution that works for all parties. Lenders usually have a range of options to try to help borrowers avoid foreclosure depending on the circumstances.