The Foreclosure Fade, And What It Means For The Housing Market

July 23, 2014

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The U.S. housing market appears to be finding its footing after a sharp rise in mortgage rates last summer. The National Association of Realtors reported that sales of previously owned homes rose 2.6% in June to a seasonally adjusted annual rate of 5.04 million units. That’s the third straight monthly gain and the highest level since last October. Housing became less affordable last summer after rates jumped from around 3.5% in May 2013 to 4.5% by July 2013. Since then, however, rates have drifted a little lower, and buyers and sellers have had time to readjust their expectations. There’s another important factor that explains the housing market dynamic right now: the foreclosure crisis has faded. So-called “distressed” sales accounted for just 11% of sales in June, down from 15% last year, 25% in 2012, and 30% in 2011. The foreclosure fade is great news for the housing market, as it means homeowners don’t have to compete with banks to sell homes – and eventually, builders will have to ramp up construction to satisfy new demand if job growth continues. [Read this article]

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Where 3 Generations Of Americans Are Moving

July 23, 2014

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More and more millennials are settling into the suburbs, while baby boomers and toddlers are enjoying city living. You’d think millennials, the tech-savvy generation roughly ages 20 to 34, would favor big cities. But America’s young adults were actually more drawn to the outer suburban rim of major metropolitan areas in 2013 than the year prior. Whether they’re seeking more affordable housing or more living space, millennials clearly favor commuting to major cities like Houston and Orlando rather than living in the heart of downtown. The number of millennials living in big-city suburbs and small cities grew about 1.3 percent, versus about 1.2 percent in big cities. As for America’s baby boomers, they’re heading to cities with warmer climates as they begin retirement and start downsizing. Their numbers are growing most heavily in both big cities and their dense suburbs, where their population in each area rose about 2.1%. [Read this article]

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Four Reasons The Housing Market Could Improve In The Second Half Of 2014

July 23, 2014

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The housing market’s performance over the first six months of the year left a lot to be desired. But while the Federal Reserve says the housing market has “lost traction,” based in large part on this year’s underperformance in residential construction and low household formation, Redfin expects the market in urban areas to regain its footing over the second half of 2014. The pace of sales, prices, foot traffic and inventory all point to steady progress into late summer. After an abysmal first quarter that drove a disappointing first half, housing will be playing catch-up for the year. It’s true that the market looks stunted compared with last year’s high investor activity, double-digit price appreciation and near-record inventory lows. But there’s a big difference between 2013’s abnormal real estate market and the market now, which is beginning to look more balanced. Though it won’t be a seamless transition, we believe the housing market is positioning itself for a stronger finish in the second half of the year. Here are four reasons. [Read this article]

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Housing Buoyed By 20-Year High For Vet’s Loans

July 23, 2014

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During his third deployment in Afghanistan, Air Force Staff Sgt. Claude Hunter was so eager to return to the U.S. and buy a house that he signed a contract for a property that his agent showed him over Skype. Hunter got back in time to close the deal, paying $219,000 in May for the four-bedroom Waldorf, Maryland, house that he financed with a U.S. Department of Veterans Affairs mortgage. It didn’t require a down payment. “On Facebook, my friends have started posting: ‘I got my VA loan, I got my house,’” said Hunter, 31. “Everybody is just ready. A lot of them have done their jobs overseas and are coming home.” America’s fragile housing recovery is getting a boost from military buyers using VA mortgages as the U.S. draws down troops after more than a decade of combat in Iraq and Afghanistan. About 4.7 million full-time troops and reservists served during the wars and many are now able to take advantage of one of the easiest and cheapest paths to homeownership. The program’s share of new mortgages, at a 20-year high, is also increasing as other types of government-backed loans have grown more costly. [Read this article]

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When It Comes To Housing, Maybe Millennials Aren’t So Different After All

July 23, 2014

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Millennials get flack for postponing marriage, living with parents and shying away from homeownership. But what’s less discussed is how, to some extent, they’re just responding rationally to their local housing markets. Nearly half of Americans between the ages of 23 and 34 who lived in metro areas with “ideal housing conditions” in 2012 were married (46.1%), versus around a third who lived in “unfavorable” housing conditions, according to a new study. In a separate study last week, Jed Kolko, chief economist at Trulia Inc., argued that demographic changes, such as delaying marriage and parenthood, account for nearly all of the declines in homeownership among young adults. But many of these demographic shifts may simply postpone home-buying, rather than eliminate it. Like mom and dad, many millennials, once they finally marry and have kids, may want that white picket-fence, too. “There probably hasn’t been a huge shift in millennials’ attitudes toward homeownership,” Mr. Kolko says. [Read this article]

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A record 57 million Americans, or 18.1% of the population of the United States, lived in multi-generational family households in 2012, double the number who lived in such households in 1980. After three decades of steady but measured growth, the arrangement of having multiple generations together under one roof spiked during the Great Recession of 2007-2009 and has kept on growing in the post-recession period, albeit at a slower pace, according to a new Pew Research Center analysis of U.S. Census Bureau data. Young adults ages 25 to 34 have been a major component of the growth in the population living with multiple generations since 1980 – and especially since 2010. By 2012, roughly one-in-four of these young adults (23.6%) lived in multi-generational households, up from 18.7% in 2007 and 11% in 1980. Historically, the nation’s oldest Americans have been the age group most likely to live in multi-generational households. But in recent years, younger adults have surpassed older adults in this regard. [Read this article]

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Builder Confidence Surpasses Key Benchmark In July

July 20, 2014

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Builder confidence in the market for newly-built single-family homes rose four points to a reading of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Any reading over 50 indicates that more builders view sales conditions as good than poor. The July reading marks the first time since January that the index has been above a level of 50. Better employment data and economic growth for the second quarter have buoyed builder confidence as the summer progresses. Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months. The index gauging current sales conditions increased four points to 57, while the index measuring expectations for future sales rose six points to 64. [Read this article]

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Consumers Expect Economic Improvement

July 20, 2014

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The Federal Reserve Bank of New York released the findings of its June 2014 Survey of Consumer Expectations (SCE), revealing a slight uptick in economic hopes among Americans. According to the New York Fed, the median earnings growth expectation among consumers polled in its June survey was 2.5 percent over the next year, up half a percentage point from May. Employment hopes also firmed up. The mean perceived probability of job loss fell to 14.7, matching a low first seen in June 2013. At the same time, consumers put their probability of finding a new job within three months (if they lost their current one) at an average 51.8 percent, a new high. On the housing front, the West topped all other census regions in expected price gains, as it has since February. Prices one year out are expected to rise a median 5.3 percent in the region compared to 3.8 percent in the South, 3.6 percent in the Northeast, and 3.3 percent in the Midwest. [Read this article]

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Why Mortgage Rates Haven’t Risen As Expected

July 20, 2014

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By most estimates, mortgage rates were expected to climb this year, with rates on the 30-year fixed-rate mortgage predicted to exceed 5%. Instead, rates are now lower than they were this time in 2013 – much to the advantage of mortgage shoppers. There are a few reasons why higher rates never came to pass. Rates on the 30-year fixed-rate mortgage averaged 4.15% for the week ending July 10, according to Freddie Mac’s weekly survey of conforming mortgage rates. A year ago, rates averaged 4.51%. “In January, we were projecting at the end of the year that the 30-year would be 5.1%,” said Leonard Kiefer, deputy chief economist with Freddie Mac. “We most recently revised that down to 4.4%. Eventually mortgage rates will go higher – unless there’s some sort of slowdown in economic growth, a recession or some big shock to the economy, Kiefer said. “It’s likely to be gradual, but [rates are going] up, for sure,” he added. [Read this article]

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Where Do The Smartest People Move?

July 7, 2014

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There are obvious economic reasons why people move some places and not others: Maybe they want a higher-paying job, or maybe a lower rent or mortgage. There might be personality factors involved, too, hence American stereotypes about friendly Midwesterners or irritable Northeasterners. But what role, if any, does basic intelligence play in determining where people choose to live? That’s the question at the heart of a new analysis from psychologist Markus Jokela of the University of Helsinki. Jokela reports that cognitive ability does explain some of America’s migration decisions, even after accounting for factors like income. But the findings are hard to boil down into any simple takeaway other than this: Smart people just don’t like to stay put. [Read this article]

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