New Home Construction on the Rise
Despite some metrics indicating that the overall growth of the U.S. economy is slowing down, home builders across the country are increasing their efforts in response to a marketplace that's demanding new inventory.
According to some of the latest statistics from the National Association of Home Builders (NAHB), builders' confidence has risen two points to 60 (out of a possible 100). That's the second highest level this year. Expectations regarding the confidence level for the next six months are also on the increase, reaching 67, a one point increase from the previous period.
The confidence index is a metric that shows how likely builders are to start on new construction projects, which not only introduce new home inventory into the market, but also spur job creation and stimulate the sale of home-related products.
According to NAHB Chief Economist Robert Dietz, historically low mortgage rates, a firming labor market, and growth in household formations will keep these trends moving in a positive direction for at least the remainder of the year.
But it isn't just home builders who are optimistic. Buyers are gobbling inventory up as soon as for-sale signs are posted. According to the U.S. Census Bureau, new home sales in the month of July skyrocketed to what's almost a nine-year high.
"Current mortgage rates have remained lower than expected, and mortgage lenders have made it simpler for first-time home buyers to get mortgage-approved for a home loan," The Mortgage Reports explains. "Fannie Mae recently added the 3% down HomeReady mortgage program to the full complement of low- and no-down payment loans available to today's buyers; and purchase mortgage applications are getting approved at the highest rate since the start of the decade."
The exciting thing about the increase in home construction and new home sales is that new homes haven't sold at this rate since November of 2007 - just prior to the start of the 2008 recession.
Are First-Time Buyers Out of Luck?
"New home sales have started the year strong, with buyers snapping up homes at every available price point - faster than builders can build them, even," says The Mortgage Reports. "At the current pace of sales, the complete stock of new homes for sale would be sold in 4.3 months. This means that all newly-built homes for sale would be 'sold out' by the first months of 2017."
So what does this mean for first-time homebuyers in 2017? Well, it isn't exactly great news. In order to get a home at an affordable price, buyers should consider making a purchase before the end of the year.
In the first quarter of 2016, six out of every 10 homes were "affordable" in the United States. This figure assumed that buyers used a 30-year mortgage, made a decent down payment, and maintained good credit scores. The second quarter saw incredibly low mortgage rates, but prices also began to rise.
Now, affordability numbers are on the decline. Whereas 75 percent of homes were affordable to median income earners in 2012, we're down to just a hair above 62 percent. These numbers are expected to dip even lower as home inventory gets purchased and prices are driven up as much as 5 to 10 percent.
Hawaii Markets Heating Up
Whereas you had to look pretty hard to find a hot market in the U.S. five years ago, you can practically place your finger on the map and locate a healthy housing market. But did you know that one of the hottest markets right now is in Hawaii?
It's easy to forget about the Big Island, but Hawaii is leading the way in terms of home sales and maturing values. This includes Hawaii natives - who are either moving to new cities, upgrading, or downsizing - as well as buyers from the mainland, who are either deciding to move to the island full-time or securing a seasonal vacation home.
"Our economy feels like it's more robust," local realtor Nancy Cabral told the Hawaii Tribune-Herald. "Demand's going to continue to increase. Interest rates are outside of our control. If they inch up a little bit, it's not too bad."
Kehaulani Costa, another local expert, has noticed that cash is leading the way. She also spoke with the Tribune-Herald and said, "Right now cash sales are gangbusters. If you have cash to buy a house, cash is king. But unfortunately, that leaves a lot of people out."
As job markets improve on the mainland and average salaries and wages increase, American Dream Realty, which specializes in Hawaii real estate, believes more people will gravitate towards the Big Island - and Maui in particular.
"Honestly if you are in search of laid back living and are an outdoor enthusiast, then Maui is arguably the very best place in America to live," American Dream Realty explains. "Not to say that it doesn't have some roadblocks (it can be pricey), but if you are able to find the right situation, then the island of Maui in amazing Hawaii is a family friendly place to live."
Millennials Aren't Interested in Buying
Buying a house has always been a part of the American Dream, but millennials are pushing back on this idea. Though many can afford to purchase their homes, only a fraction of millennials are choosing to do so.
"They either don't have enough money for a down payment due to student loan debt or poor credit. Others simply just want the convenience and freedom of renting," reports Tess Hill of Fox 2 News.
But some millennials are choosing not to rent or buy. Instead, they're moving back in with their parents. Studies show that nearly one-third of millennials live with their parents, which now makes 18-to-34-year-olds more likely to live in multigenerational households than the elderly.
It remains to be seen how this will affect housing markets in the coming years, but some argue that it's actually a good thing. It's better for millennials to live at home and save their pennies than put a down payment on a home and default in three to five years.
Keep an Eye on the Markets
From a business perspective, it's interesting to study these trends. While you should be careful not to pick out a single statistic and let it guide your decision-making, it can be helpful to take a step back and review all of the data collectively.
Right now, it's pretty clear that the market is in a healthy place. As interest rates continue to rise, it'll be interesting to watch how these changes affect things like new home construction, home sales, and the rent vs. buy vs. stay at home decision for young adults.
Every market in the U.S. is different, but they tend to move in the same direction. 2017 will be a big year, as a new president enters the Oval Office and fiscal policies undergo changes.
Stay tuned and make sure you're ready to react.
-- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.
from DIYS http://ift.tt/2cB91Le
No comments:
Post a Comment