Top 10 Reasons Renters Keep Renting

The majority of Americans who do not own their own home say they intend to one day and hold strong feelings toward home ownership. But how about those 20 percent of households who are adamant about renting and say they intend to stay renters now and in the future?

About 20 percent of renting households don’t have any intentions to purchase a home in the future, and researchers at Harvard’s Joint Center for Housing Studies recently surveyed such renters to find out why they’re shying away from what’s some consider the “American dream” of home ownership.                        renters

The bottom line: It’s not the lifestyle choices but financial constraints that renters say keep them from purchasing a home in the future. More than half of renters recently surveyed said they do not intend to buy because they think they cannot afford it or their credit is not good enough, according to JCHS.

According to the research, the top 10 reasons renters give for not planning to buy in the future:

  1. Cannot afford the purchase or upkeep of a home
  2. Not good enough credit for a mortgage
  3. Not a good time economically to buy a home
  4. Cheaper per month to rent than to buy
  5. Don’t want to be concerned with doing the upkeep
  6. Don’t plan to be in a certain area for an extended period of time
  7. Rather use the money for other investments than a home
  8. Process of buying a home seems too complicated
  9. Purchasing a home limits flexibility in future choices
  10. Can live in better neighborhood by renting

“These results suggest that about a third of renters, or 10 percent of all households, rent because of lifestyle and personal preferences,” writes Rachel Bogardus Drew, a post-doctoral fellow conducting the research for JCHS. “That their reasons appear to be largely idiosyncratic, rather than systematically related to their personal characteristics, further indicates that those who rent by choice do so in spite of strong social biases towards ownership that encourage the remaining 90 percent of households to view owning favorably. More than half of lifetime renters, however, see their tenure options as constrained, either by their own financial circumstances or by macroeconomic conditions.”

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Source: Harvard Joint Center for Housing Studies  10/28/2014

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Florida And Mortgage Fraud, Still

Mortgage fraud is on the rise, increasing 3.2 percent since the same period last year and amounting to about $19.8 billion in applications that contained elements of fraud or serious misrepresentations for the year, according to CoreLogic’s latest Mortgage Fraud Report.   mortgage fraud

In this year’s second quarter, about 11,100 mortgage applications contained elements of fraud, compared with 19,700 applications in the second quarter of 2013 (when the total application volume was substantially higher as well), according to CoreLogic’s analysis.
Other findings from the report:

• Florida saw the highest year-over-year growth in mortgage application fraud risk, while Arizona saw the largest decline in fraud, CoreLogic reports.

• Jumbo mortgages were found to have the highest fraud risk, followed by low-down-payment mortgages.

• Maintenance that has been deferred on some properties, along with quick price appreciation for other properties, has caused big discrepancies in values among nearby properties, which has led to an increase in opportunities for incorrect valuation and fraud-for-profit schemes. Such fraud was found most often in judicial foreclosure states and high vacancy areas.

Among the 25 largest metros, the following cities had the largest year-over-year growth rate in mortgage fraud:

  • Miami-Fort Lauderdale-West Palm Beach, Fla.: 113.2%
  • Tampa-St. Petersburg-Clearwater, Fla.: 61.2%
  • New York-Newark-Jersey City, N.Y.-N.J.-Pa.: 59.3%
  • Pittsburgh, Pa.: 52.6%
  • Chicago-Naperville-Elgin, Ill.-Ind.-Wis.: 30.6%
  • Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.: 25.4%

On the other hand, of the 25 largest metros, the following cities posted the largest year-over-year decreases in mortgage fraud:

  • Phoenix-Mesa-Scottsdale, Ariz.: –31.9%
  • Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.: –24.8%
  • Denver-Aurora-Lakewood, Colo.: –24.3%
  • Minneapolis-St. Paul-Bloomington, Minn.-Wis.: –20.6%
  • Atlanta-Sandy Springs-Roswell, Ga.: –19.8%
  • St. Louis, Mo.-Ill.: –16.7%

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Source: CoreLogic

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Sellers Are In The “Waiting Game”

Sellers are starting to get the message that the market is no longer tilting in their favor so they are in the “waiting game.”

The number of Americans who say now is a good time to sell plunged 17 percentage points from the previous quarter, according to Redfin’s latest Real-Time Seller Survey, which polls 295 current and potential sellers in 30 of the country’s large real estate markets.           waiting game

Some would-be sellers say they’re holding out for higher prices before selling; 59 percent of respondents say they want to wait for the maximum price on their home.

“Sellers playing the wailing game for higher prices will face reality soon, as all signs point to lower price growth and less competition among buyers in coming months,” says Redfin Chief Economist Nela Richardson. “Buyer demand is there, but only at the right price.”

Some potential sellers — 36 percent — are waiting to list their homes because of low inventories, believing that the small pool of homes for sale reflects a sluggish market, Richardson says.

“The lack of homes for sale creates a vortex of short supply that can only be relieved when potential sellers find homes they want to buy and then list their own homes,” according to Redfin’s research. Several markets are reporting that inventory levels are starting to climb over last year’s numbers, but supplies remain tight in many areas.

For the sellers who are willing to list, they’re coming to terms with the fact that they may not be able to price their home as aggressively as they thought. The double-digit home-price gains of last year have mostly vanished across the country.

“While some sellers are disappointed that they can no longer expect double-digit price gains, increasing inventory and stabilizing prices provide relief for everyone — buyers and sellers — that we are moving toward a much more balanced market,” says Shawn Flynn, a Redfin real estate professional in Boston.

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Source: Redfin Research Center 10/27/2014

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Housing’s Game Changer Is Marriage Delays

Marriage and real estate often go hand-in-hand. But a drastic decline in the number of married young adults, marriage delays,  is emerging as “one of the biggest game changers in the housing industry,” according to John Burns Real Estate Consulting.

The share of 25 to 29 year olds who are married has plunged by nearly 48 percent for men and 43 percent for women since 1970.                         marriage delays

“The housing market is unquestionably fueled by life stage changes, particularly the change of marital status and the addition (and subtraction) of children,” John Burns Real Estate Consulting notes in a recent blog post. “These changes significantly affect where consumers want to live and what kind of home and community they will choose.”

For example, according to the firm’s research, singles are more likely to rent and live in more urban locations, near entertainment and employment. Also, though cohabitation is on the rise, unmarried couples are choosing to live together at much lower rates than married couples. Marriage usually prompts a desire to own a home and the addition of children makes owning a home nearly a necessity, given education and space needs, writes Mollie Carmichael, a principal for John Burns Real Estate.

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Source: John Burns RE Consulting 10/22/2014.

 

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Where Are The “Boomerang Buyers” ?

Only a small number of Americans who went through a foreclosure or short sale during the economic downturn have bought homes again, according to a study by Experian. Where are the “Boomerang Buyers” ?

Many of these sidelined buyers were unable to buy two to seven years after. Now, four years following the Great Recession – which sparked the largest wave of foreclosures and short sales – millions of former borrowers are now eligible to buy again, but only a trickle are returning.                          boomerang buyers

Of about 5.43 million owner-occupied homes that were foreclosed on after 2007, only 2.1 percent of the borrowers – or 114,100 – had purchased a primary home by the end of 2013, according to Experian’s research, which reflects findings from 10 percent of its 220 million credit files. Of nearly 809,000 short sales on owner-occupied homes after 2007, about 44,300 – or nearly 5.5 percent – of owners have repurchased another home by the end of 2013.

The numbers are still low, but some mortgage lenders are reporting a gradual increase. For example, senior mortgage loan officer Deb Klein with Cobalt Mortgage in Chandler, Ariz., told The New York Times that 10 to 15 percent of the loans she closes are for borrowers who’ve had a distressed home sale. In Orlando, Fla., Rick Cason with Integrity Mortgage says two to three loans out of every 10 are for borrowers with a foreclosure or short sale in their past.

Indeed, some of these former home owners are re-emerging. “I see a lot of people coming back into it with eyes wide open,” Angel Johnson, a real estate professional with Redfin in Phoenix, told The New York Times. “They can get a loan, but they are still spooked.”

The pool of potential “boomerang buyers” is big. About 3.5 million borrowers lost their homes to foreclosure between 2006 and 2010, while 757,500 more went through short sales, according to RealtyTrac data.

“The behavior of these potential boomerang buyers will be a big part of shaping the U.S. housing market going forward,” says Daren Blomquist, vice president at RealtyTrac. “The bigger question now becomes how many have the stomach for home ownership again and how many will stay as long-term renters.”

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Source: New York Times 10/22/2014

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Home Equity Rise Slows Its Pace

More home owners are eeking out equity again on their properties, but with slowing home appreciation, that home equity rise is slowing its pace, and millions of home owners may still be at risk of foreclosure.

Equity-rich properties – those with at least 50 percent equity – grew to 10.8 million, or 20 percent of all properties with a mortgage, in the third quarter, according to RealtyTrac’s third quarter U.S. Home Equity & Underwater Report. That percentage is up from 19 percent of properties in the second quarter of 2014.                        home equity

Another 8.5 million properties – or 16 percent of all homes with a mortgage — are teetering on the edge of equity, with between 10 percent of negative equity and 10 percent of positive equity.

But many home owners have yet to regain equity. There are 8.1 million U.S. residential properties seriously underwater – in which the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market vale, according to RealtyTrac. The number of properties with negative equity has fallen to the lowest level since RealtyTrac began tracking such data in 2012. The peak was in the second quarter of 2012 when 12.8 million properties – or 29 percent of all properties with a mortgage – were seriously underwater.

“The decrease in underwater properties is promising but the estimated $1.4 trillion in negative equity means that the flood waters are not receding as quickly as they were before, corresponding to slowing home appreciation,” says Daren Blomquist, vice president at RealtyTrac. “Slower price appreciation means 8 million home owners seriously underwater could still have a long road back to positive equity.”

To paint a picture of the typical underwater home owner, RealtyTrac found it’s often a home owner who bought or refinanced during the housing bubble years (from 2004 to 2008), owns a home worth less than $200,000, and who lives in the Sun Belt or Rust Belt.

On the other hand, the highest percentage of equity rich home owners were those who bought or refinanced between 1994 and 1998; have properties valued at $500,000 or more; and tend to live in New York, California, and Washington, D.C.

The States With the Highest Levels of Negative Equity

The following states had the highest percentage of residential properties seriously underwater in the third quarter, according to RealtyTrac:

  • Nevada: 31%
  • Florida: 28%
  • Illinois: 26%
  • Michigan: 25%
  • Rhode Island: 22%

The metro area (with population of 500,000 or more) with the highest percentage of properties seriously underwater was Las Vegas at 34 percent.

The Equity-Rich Markets

The following metros had the highest percentage of equity-rich properties – those with at least 50 percent equity or more – during the third quarter:

  • San Jose, Calif.: 45%
  • San Francisco: 41%
  • Honolulu: 36%
  • Los Angeles: 32%
  • New York, N.Y.: 31%

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Source: RealtyTrac

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Home Owners Delaying Remodeling

Remodeling and home improvement spending posted a strong rebound last year, but the rebound was short-lived, a new report says. Home owners remodeling projects and expenditures are back on the decline this year as housing market conditions and fading tax incentives cause more home owners to delay projects once again.

The primary driver of home remodeling expenditures is the pace of single-family existing home sales, writes Robert Dietz, an economist with the National Association of Home Builders, in an article at U.S. News & World Report. Between the summer of 2013 and March of this year, existing-home sales fell, Dietz says, despite a recent rebound. As such, Dietz says the remodeling market has seen declines in the annual pace of improvement spending since December 2013.                                         home owners

“Existing home owners are most likely to improve a home prior to placing the home on the market, and new home owners find the best time to make substantial changes to a home is immediately after purchase,” Dietz notes.

The pace of remodeling in August was down more than 10 percent year-over-year, according to U.S. Census Bureau data.

Dietz points not only to the stall in home sales but also to the expiration at the end of 2013 of a set of federal energy-efficiency tax credits for the slowdown in remodeling expenditures. The tax credits helped home owners to offset the cost of replacing older windows, hot water tanks, and appliances with new energy-efficient models.

“Despite these economic and policy headwinds, the prospects for the remodeling sector appear more positive for 2015,” Dietz notes. An index of professional remodeler sentiment shows a gain in confidence, particularly as the existing single-family sales market improves. The National Association of REALTORS® is forecasting a 7.7 percent growth in existing sales in 2015.

“Underlying these market improvements is the fact that our nation’s housing stock continues to age, and aging homes require upgrading and modification,” Dietz notes. The median age of owner-occupied homes was 35 years old, according to the 2011 American Housing Survey (in the 1985 AHS survey, the median age was 23).

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Source: US News & World Report 10/20/2014

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Some Housing Markets Still Facing Inventory Crunch

Some housing markets still facing inventory crunch. Supply nationwide in September was at five and a half months; most economists consider a normal level to be six to seven months. The supply of new homes was even lower, at nearly five months, according to realtor.com®’s September National Housing Trend Report.

“To truly relieve the inventory shortage on a sustained basis, new-home construction needs to rise by at least 50 percent from the current levels,” says Lawrence Yun, chief economist for the National Association of REALTORS®.

The following markets have posted some of the biggest drops in listings year-over-year:

  • Las Vegas: -37.9%
  • San Jose, Calif.: -36.2%
  • Columbus, Ohio: -29%
  • Cincinnati: -26.5%
  • Houston: -25.2%
  • Washington, D.C.: -25%
  • San Francisco: -23.4%
  • Chicago: -22.8%

Meanwhile, in some markets, home buyers have found more choices in the past year. These markets have seen the biggest growth in inventory levels year-over-year:

  • Honolulu: +27.5%
  • Orlando, Fla.: +25.8%
  • Miami: +22%
  • Charleston, W.Va.: +20.1%

Nationwide, the median age of inventory fell slightly year-over-year in September due to the reduced number of homes on the market, according to realtor.com®. Homes spent about 90 days on the market in September, three days less than a year ago.

Also, median listing prices held steady for the fourth consecutive month, maintaining a 7.7 percent gain year-over-year. The median list price in September was $214,900 nationwide.

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Source: Realtor.com September National Housing Trend Report

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1 in 3 US Homes Are Rentals

A growing number of single-family homes have become rentals, according to the findings from the newly released 2013 American Housing Survey, by the U.S. Department of Housing and Urban Development and U.S. Census Bureau. The report takes a look at the nation’s housing stock and provides information on the housing quality and make-up.

1 in 3 US homes are a rental . The report shows that 65 percent of all housing units were occupied by owners in 2011, while 35 percent were occupied by renters. Fewer homes are standing vacant. Of the 133 million total housing units in 2013, 87 percent were occupied—an increase of 413,000 since 2011.               rentals

The housing stock is reportedly having fewer maintenance issues. Households reported slightly fewer problems with the plumbing, heating, and electrical from 2011 to 2013, the report showed. Still, nearly 2 million homes reported severe physical problems in 2013, and nearly 4 million housing units that had moderate physical problems. Ten percent—or 1 in 10 households—reported seeing signs of cockroaches within last 12 months; 9 percent reported evidence of mice.

The survey also showed that lot sizes are getting a lot smaller. The median size of a single-family lot was 0.25 acres in 2013, compared to 0.36 acres in 1973. But at least as lots get smaller, more Americans are getting along with their neighbors. About half of all Americans reported getting along with their neighbors. Eighty-two percent of households said they had talked to their neighbor in the past month and about 50 percent “strongly agree” with the statement that they get along with their neighbors, the survey showed.

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Source: US Census Bureau & HousingWire 10/16/2014

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Foreclose On Everything Says Detroit

Detroit is aiming to further eliminate neighborhood blight and recover lost revenue from home owners who are delinquent on their mortgages. Wayne County is taking on an unprecedented effort to take possession of every property that is three or more years behind in taxes. Foreclose On Everything Says Detroit. The county is notifying 80,000 property owners that they are on the verge of losing their homes to foreclosure due to delinquent taxes. That equates to one of every five properties in Detroit, the city’s Motor City Muckraker reports.                              foreclose

The effort is the biggest foreclosure spree since foreclosures started skyrocketing years ago in the city. In 2013, Wayne County began the foreclosure process on 42,000 properties; this year, it has targeted 56,000 properties.

“We have decided to foreclose on everything,” says Chief Deputy Treasurer David Szymanski. “In 2008 and 2009, finances were so tight that people had to decide between eating and paying taxes in Detroit. The economy has improved.”

Szymanski hopes that the foreclosure warnings will prompt more home owners to catch up on their bills or get assistance under the Step Forward Program, a statewide assistance program for home owners who are in default.

“If someone can’t pay their taxes, they really shouldn’t own a home,” Szymanski says. “We have a culture that has grown to expect that taxes are optional.”

The county currently has crews knocking on doors and posting foreclosure signs on properties affected by the 80,000-property sweep.

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Source: Motor City Muckraker 10/10/2014

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