It’s Tuesday News Day and these are this weeks hot topics concerning the real estate market, the financial market, general market conditions, and interest rates.New York Times – Affordable Housing Draws Middle Class to Inland Cities
Domestic migration patterns within the U.S. are increasingly being driven by the quest for cheaper housing, so the country’s fastest-growing cities are now those where housing is more affordable than average. The desire for a new, better, or cheaper home and the opportunity to buy instead of rent were among the housing-related reasons people increasingly cited for moving.
- Moving inland to states in the heart of the country is a decisive reversal from the early years of the millennium, when easy credit allowed cities to grow without regard to housing cost and when the fastest-growing cities had housing that was less affordable than the national average.
- Among people who have moved long distances, the number of those who cite housing as their primary motivation for doing so has more than doubled since 2007.
- Rising rents and the difficulty of securing a mortgage on the coasts have proved a boon to inland cities that offer the middle class a firmer footing and an easier life.
- For example, Oklahoma City has outpaced most other cities in growth since 2011. Other affordable cities that have jumped in the growth rankings include several in Texas, including El Paso and San Antonio, as well as Columbus, Ohio, and Little Rock, Ark.
- Tony Trammell, one of a group of about a dozen friends to make the move from San Diego, paid $260,000 for his 3,300-square-foot home in a nearby suburb. “This is the opposite of the gold rush,” Mr. Trammell said.
- For those who moved more than 500 miles, the share who said they were chiefly motivated by housing has risen to 18 percent in 2014, from 8 percent in 2007.
- Glenn Kelman, the chief executive of Redfin, said that when the company started its real estate service in 2006, he expected the business to thrive in coastal centers. “Now we’re growing fastest in the middle of the country; we can’t hire people fast enough in Houston, in Dallas, in Denver. And all of our customers come from the same place — the airport.”
In other news…
The Atlantic – Many Renters Could Afford Mortgages, But Can’t Afford Homes
In many metro areas across the U.S., more than 50 percent of renters could afford to own a home, so why aren’t more young renters becoming first-time home-buyers right now? According to data analysis, the Atlantic notes that “Young renters don’t appear to be transitioning into homeownership at the rate they could be. Either renters are opting out of the American dream, or it remains out of reach for reasons beyond affordability.” Possible explanations include tight credit, low inventory, and investor cash.
Bankrate – Closing costs: States ranked
States have been ranked by average closing costs, from most expensive to least expensive. To determine the rankings, Bankrate requested good faith estimates for a $200,000 mortgage loan from up to 10 lenders in each state. The hypothetical loan was for a purchase of a single-family house in the state’s largest city, using a 20 percent down payment, with excellent credit. California ranked as the 22nd most expensive state for closing costs.
HousingWire – Homeownership at near 20-year low, but some bright spots
Homeownership in the U.S. continues to fall, down to a low of 64.7 percent, a level not seen since 1995. Despite low interest rates and expanding credit availability, affordability has remained an issue. Also, first-time home purchasers are declining as a share of total home sales. Experts have expressed concerns that loosening of mortgage credit and a reduction in home price growth won’t be enough to reduce the trend of declining mortgage origination.
HousingWire – Moving from renting to homeownership could get easier
For some potential homeowners, adding in rental history to a credit score could make all the difference in securing a mortgage. In a survey of 20,000 people in government-subsidized housing, 59 percent of that group would have prime credit scores if rental history was added to credit score evaluations. Notably, it was reported earlier this summer that mortgage lenders might start considering rent payment history in credit scores.
Wall St. Journal – Fed Survey: Mortgage Standards Ease for First Time Since Housing Bust
Nearly one in four U.S. banks said they had eased mortgage-lending standards for borrowers with strong credit during the second quarter, the largest such movement by lenders since the housing bust hit nearly eight years ago. Demand for prime mortgages rebounded to its highest level in a year, according to the Fed survey, offering a hopeful sign for housing markets that have stumbled during the first half of the year.
Read the full story
L.A. Times – High housing costs are a drag on California’s economy, report says
A shortage of housing – especially at affordable prices – is becoming a bigger drag on the state’s economy, according to a new report from forecasting firm Beacon Economics. That being said, the pace of home sales in California should pick up in the second half of this year and into next. The firm predicts annual price growth of 4 to 6 percent for the next two years, a more sustainable pace than the double-digit gains seen for much of the last two years.
Talking Points …
- Home prices nationwide, including distressed sales, increased 7.5 percent in June 2014 compared to June 2013, according to CoreLogic. This change represents 28 months of consecutive year-over-year increases in home prices nationally.
- On a month-over-month basis, home prices nationwide, including distressed sales, increased 1 percent in June 2014 compared to May 2014.
- At the state level, including distressed sales, only Arkansas posted a decline in June 2014 with 0.4-percent depreciation. A total of 12 states, plus the District of Columbia, reached new highs in the Home Price Index dating back to January 1976, when the index started. These states are Alaska, Colorado, District of Columbia, Iowa, Louisiana, Nebraska, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, Vermont, and Wyoming.
If you have any questions about the current real estate market give me a call at (408) 840-3852 or shoot me an email at Thomas.Feng@gmail.com to discuss your situation and how to get the most out of the current real estate housing market.
Because of the many legal and tax situations that can arise through the sale and purchase of real estateALWAYS consult with your ATTORNEY or ACCOUNTANT before making ANY decisions in ANY transaction
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* THIS ARTICLE WAS POSTED AT Thomas Feng’s Bay Area Connect *