Millennials Not Saving

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Source: Bustle

Millennials are projected to number 75.3 million for 2015, surpassing a projected 74.9 million for Baby Boomers. Millennials will therefore comprise a greater percentage of the population than Baby Boomers for the first time. conducted a survey to gain insight into the saving habits of this age group. Since millennials are growing as a percentage of the population, their savings and spending habits will increasingly have a major impact on the overall economy.

Making sense of the story

More than 50 percent of millennials have less than $1,000 in savings. This would indicate that most millennials do not have a cushion to fall back on in case of an emergency, not to mention the funds for a down payment on a home.
The survey found 56.3 percent of millennials earning $25,000 to $49,000 had less than $1,000 in savings. This compared with 31.2 percent of those earning $75,000 to $99,999.
Among those earning $100,000 to $149,000, 14.8 percent had savings of $5,000 to $10,000.
Also, 14.3 percent of those with savings of $10,000 to $20,000 were those millennials with incomes in excess of $150,000, the highest percentage in that range of savings.
For a gender comparison, 56.7 percent of females have less than $1,000 in savings as compared to 46.5 percent for males.
Notably, 57.6 percent of respondents from the ages of 18 to 24 have less than $1,000 in savings. This compared to 47.1 percent of those from the ages of 25 to 34.
For savings of $1,000 to $5,000, 19.6 percent of respondents from 18 to 24 had savings in this range, compared to 16.6 percent of those from 25 to 34.

Category : Blog

Fed Raises Key Interest Rate

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Source: CAR
The Federal Reserve announced Wednesday that it is raising interest rates from record lows. The Fed coupled its first rate hike in nine years with a signal that further increases will likely be made slowly as the economy strengthens further and inflation rises from undesirably low levels.

Wednesday’s action signaled the central bank’s belief that the economy has finally regained enough strength 6½ years after the Great Recession ended to withstand modestly higher borrowing rates.

The Fed said that it was lifting its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent. Its move ends an extraordinary seven-year period of near-zero borrowing rates. But the Fed’s statement suggested that rates would remain historically low well into the future, saying it expects “only gradual increases.”

According to C.A.R.’s Chief Economist, Leslie Appleton-Young, “The Federal Reserve’s announcement today to raise the federal funds rate negligibly has long been anticipated and shouldn’t have a significant adverse impact on the housing market since rates are still historically low. In fact, it may spur potential home buyers who have been waiting on the sidelines to finally jump in now that they see the rates may continue to rise slowly in the next couple of years.”

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Category : Blog

Renters Put Too Much Toward Rent

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Source: Wall St. Journal

Renters Put Too Much Toward RentA record number of renters are spending more than 30 percent of their incomes on rent, which is a ratio that economists consider financially burdensome, according to a report released this week by Harvard University’s Joint Center for Housing Studies titled, “America’s Rental Housing: Expanding Options for Diverse and Growing Demand.”

Making sense of the story

  • More than 21 million households are burdened by how much they pay in rent, up from fewer than 15 million in 2001.
  • Nearly half of renters are paying more than 30 percent of their incomes in rent, the report says. While that is a slight improvement from 2011, it remains above where it has been for most of the last 13 years.
  • Inflation-adjusted rents rose 7 percent from 2001 to 2014, while renter household incomes fell 9 percent, creating affordability challenges for many renters.
  • In contrast, the number of rental units expanded by just 8.2 million, most of that from the conversion of single-family homes into rentals.
  • Another factor exacerbating affordability is that much of the new supply is aimed at higher-income renters.
  • The median asking rent for new market-rate apartments hit $1,372 last year, a 26 percent increase from 2012.
  • The number of higher-income renters earning $100,000 or more has grown by 1.6 million over the last decade. Households over age 40 now make up the majority of renters, according to the report.
  • It is likely to take years for some of housing being built now to come down in price, leaving cities struggling to hold onto middle-class families.

Category : Blog

FHA New Loan Limits

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Source: California Association of Realtors
IMG_2471The Federal Housing Administration (FHA) has announced the agency’s new schedule of loan limits for 2016. These loan limits are effective for case numbers assigned on or after Jan. 1, 2016, and will remain in effect through the end of the year.

Due to changes in housing prices, the maximum loan limits for forward mortgages increased in 188 counties. There were no areas with a decrease in the maximum loan limits for forward mortgages.

Each year, FHA recalculates its loan limits based on 115 percent of the median house price in the area. For counties, or equivalent, located in Metropolitan Statistical Areas (MSAs) the limit for all areas in the MSA is calculated based on the highest cost county.

There is no change to the FHA national loan limit “ceiling” which remains at $625,500 and the “floor” which remains at $271,050. FHA’s minimum national loan limit “floor” is set at 65 percent of the national conforming loan limit of $417,000. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.

Any area where the loan limit exceeds the “floor” is considered a high cost area. The maximum FHA loan limit “ceiling” for high cost areas is 150 percent of the national conforming limit.

Category : Blog

2016 Home Sales to be Best Since 2006

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Source: CNBC

New home construction and moderate gains in the existing home market will deliver the necessary one-two punch to push total home sales to the highest levels since 2006, according to the 2016 housing forecast issued today by®.

San Leandro and Pleasanton real estateMaking sense of the story

  • The 2016 housing market is expected to be a picture of moderate but solid growth as acceleration in existing home sales and prices both slow to 3 percent year over year due to higher mortgage rates, continuing tight credit standards, and lower affordability.
  • The new construction market will see more significant gains in the coming year as new home starts increase 12 percent year over year and new home sales grow 16 percent year over year.
  • Total sales for existing and new homes will reach 6 million for the first time since 2006, a result of a strong gross domestic product increase of 2.5 percent and continued job creation.
  • These healthy economic indicators will be tempered by lack of access to credit and rising home prices, which will ultimately limit housing demand and growth.
  • Chief Economist Jonathan Smoke commented, “Next year’s moderate gains in existing prices and sales, versus the accelerated growth we’ve seen in previous years, indicate that we are entering a normal, but healthy housing market.”
  • Millennials are expected make up the largest demographic of home buyers in 2016, having represented 30 percent of the existing home market. Driven by increasing income, millennials will seek out homes that meet the needs of their growing families.
  • Providence, Rhode Island, is ranked as the hottest market for 2016, with the San Diego region and Sacramento also in the top 10.

Category : Blog

First-Time Buyers at Risk

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A lack of affordable homes near city centers will push new and first-time home buyers to suburbs that feel like walkable, amenity-rich mini-cities, according to Zillow’s 2016 Housing Market Predictions. Rising rents will force more young renters to wait longer before buying a home, and the looming threat of rising mortgage interest rates will slowly erode some of the terrific mortgage affordability the market has enjoyed for the past few years.

Highlights from Zillow’s Market Predictions include:

  • The median age of first-time buyers will reach new highs in 2016 as millennials put off homeownership and other major life decisions.
  • Growth in home values will outpace incomes, especially for low-income Americans. In 2016, those whose incomes fall in the bottom third of all incomes will be priced out of homeownership and unable to afford even the least expensive homes on the market.
  • Rising rents won’t let up in 2016, and will continue to set new records. The next year will bring the least affordable median rents ever
  • As affordable housing close to city centers grows increasingly scarce, people will move farther out. Dense, walkable suburbs with an urban feel – especially those that offer good access to the city – will be 2016’s new hot spots.
  • The median expectation of more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey was for home values to grow about 3.5 percent in 2016.

Source: CAR

Category : Blog

2015 3rd Quarter Housing Report

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Source: C.A.R.

California’s housing market softened in October as both statewide sales and median price contracted from the previous month; however, the market is still on target to meet forecast projections, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

Making sense of the story

  • Home sales exceeded the 400,000 level in October for the seventh consecutive month and posted higher on a year-to-year basis for the ninth straight month.
  • Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 403,510 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.
  • The October figure was down 5.1 percent from the revised 425,120 level in September and up 1.3 percent compared with home sales in October 2014 of a revised 398,510.
  • The year-to-year increase was the lowest since January 2015 and was significantly below the six-month average of 9.7 percent observed between April 2015 and September 2015.
  • The median price of an existing, single-family detached California home slipped 1.3 percent in October to $475,990 from a revised $482,150 in September.
  • October’s median price was 5.7 percent higher than the revised $450,460 recorded in October 2014.
  • While sales continued to improve from last year at the state level, the number of active listings continued to drop from the previous year. Active listings for California dropped 5.6 percent from September and decreased 7.6 percent from October 2014.

Category : Blog


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Source: C.A.R.

Relatively flat home prices weren’t enough to ease housing affordability as higher interest rates reduced the number of Californians who could buy a home in the third quarter, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

Making sense of the storyIMG_2336

  • Twenty-nine percent of California households could afford to purchase the $487,420 median-priced home in the third quarter, down from 30 percent in second-quarter 2015 and unchanged from 29 percent in third quarter 2014.
  • A minimum annual income of $98,350 was needed to make monthly payments of $2,460, including principal, interest, and taxes on a 30-year, fixed-rate mortgage at 4.16 percent interest rate.
  • Thirty-eight percent of home buyers were able to purchase the $390,740 median-priced condo or townhome. An annual income of $78,840 was required to make a monthly payment of $1,970.
  • The median home price was $485,910 in second-quarter 2015, and an annual income of $96,140 was needed to purchase a home at that price. The effective composite interest rate in second-quarter 2015 was 3.95 percent.
  • Compared to the previous year, housing affordability declined in all regions except Marin, San Luis Obispo, Santa Barbara, and Santa Cruz, which improved, and held steady in five regions (Napa, Orange, Monterey, Merced, and Placer).
  • The remaining 19 regions (Alameda, Contra Costa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma, Los Angeles, Riverside, San Bernardino, San Diego, Ventura, Fresno, Kings, Madera, Sacramento, San Joaquin, Stanislaus, and Tulare) saw declines in housing affordability from the previous year.
  • Other Bay Area counties, such as Santa Clara, Solano, and Sonoma, experienced significant affordability drops as home buyers looking for more affordable homes moved to outlying counties and drove home prices higher.

Category : Blog

Fed Again Delays Interest Rate Hike

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Source: HousingWire

The Federal Reserve prolonged the wait for the first interest rate increase in nine years. On Wednesday, the Fed announced that its benchmark rate would remain unchanged at 0-0.25 percent. As a rationale for the decision, a statement from the Fed commented that the country’s economy still has not met the targets laid out by the Federal Open Markets Committee.

Making sense of the story

  • Even after chair Janet Yellen said in June that 2015 would be an appropriate timing for a hike, and inflation was crawling towards the Fed’s 2 percent goal, the labor market’s progress was mixed.
  • The Fed’s hesitancy to raise rates shouldn’t be a surprise, given its repeated reluctance to raise rates in previous meetings.
  • The Fed has not raised interest rates since June 2006.
  • The Fed acknowledged that the pace of job gains slowed, following the past two weaker-than-expected employment reports.
  • Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further.
  • The Fed will continue to monitor labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
  • The report states, “The pace of job gains slowed and the unemployment rate held steady. Nonetheless, labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year.”
  • The Fed continued, “Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft.”

Category : Blog

2015 Housing Recap and 2016 Outlook

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IMG_1608California’s housing market will continue to improve into 2016, but a shortage of homes on the market and a crimp in housing affordability also will persist, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2016 California Housing Market Forecast”.

The C.A.R. forecast sees an increase in existing home sales of 6.3 percent next year to reach 433,000 units, up from the projected 2015 sales figure of 407,500 homes sold. Sales in 2015 also will be up 6.3 percent from the 383,300 existing, single-family homes sold in 2014.

“Solid job growth and favorable interest rates will drive a strong demand for housing next year,” said C.A.R. President Chris Kutzkey. “However, in regions where inventory is tight, such as the San Francisco Bay Area, sales growth could be limited by stiff market competition and diminishing housing affordability. On the other hand, demand in less expensive areas such as Solano County, the Central Valley, and Riverside/San Bernardino areas will remain strong thanks to solid job growth in warehousing, transportation, logistics, and manufacturing in these areas.”

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 2.7 percent in 2016, after a projected gain of 2.4 percent in 2015. With nonfarm job growth of 2.3 percent in California, the state’s unemployment rate should decrease to 5.5 percent in 2016 from 6.3 percent in 2015 and 7.5 percent in 2014.

The average for 30-year, fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels.

“The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, the global economic slowdown, financial market volatility, and the anticipation of higher interest rates are some of the challenges that may have an adverse impact on the market’s momentum next year. Additionally, as we see more sales shift to inland regions of the state, the change in mix of sales will keep increases in the statewide median price tempered.”

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Summary of the 2015 Housing Market

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Category : Blog

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