Americans Prefer Investing in Homes Over Stocks – Industry Outlook

By April 19, 2021Industry Outlook

Baby Boomers Plan Moves With Their Friend Group – According to The Wall Street Journal, wealthy baby boomers are increasingly buying properties in the same housing developments as their friends, even if it means moving hundreds of miles away from the place where they first met. Groups of empty nesters are looking to create communities and preserve or recreate their social circles as they move to new cities. For example, seven units at the Pendry Residences in Park City, Utah, were purchased by a group of friends from the same country club in San Diego. At Clear Creek Tahoe in Nevada, seven couples from Silicon Valley bought lots next to each other. “They want to look for a surrogate for that kind of community support that they would have had with their family as they grew older,” Michael R. Solomon, a marketing professor at Saint Joseph’s University who’s studied the baby boomer generation, told the Journal. “It’s a support network. It’s also driven maybe subconsciously by wanting to avoid the specter of being stuck by yourself in a nursing home.”

Source and link to the full article: “When Friends Move Next Door,” The Wall Street Journal (April 7, 2021) [Subscription required.]

3 Alt Credit-scoring Methods – Based on a recent National Association of REALTORS® webinar on alternative credit scoring, new types of data to determine prospective buyers’ creditworthiness may increase homeownership opportunities. However, standards need to be developed for the use of such data which come from sources outside traditional credit bureaus to ensure equitable and responsible lending practices.

Ann Schnare and Vanessa Perry, authors of the white paper “Tipping the SCALE: How Alternative Data in Credit Scoring Promote or Impede Fair Lending Goals,” said 21% of African American households and 19% of Hispanic households are considered “unscorable” because they don’t have access to traditional credit. Schnare and Perry suggested that three alternative data sets could help lenders determine “credit-invisible” consumers’ eligibility for loan products, including:

  1. Credit proxies:Payment histories for bills such as rent, utilities, and other financial obligations, which can suggest a person’s ability to pay and likelihood to default.
  2. Banking data:Account balances, check-writing history, and savings information that can tell lenders whether a person is financially stable.
  3. Nonfinancial personal data:Data harvested from a person’s digital footprint, such as spending patterns and social media activity suggestive of their purchasing power or financial status.

Source and link to the full article: Graham Wood; 3 Alt Credit-scoring Methods | Realtor Magazine

Property Taxes Jumped 5.4% in 2020 – According to ATTOM Data Solutions’ newest property tax analysis, homeowners may notice an increase in their property tax bills. Municipalities levied about $323 billion in property taxes on single-family homes in 2020, a 5.4% increase compared to 2019, for nearly 87 million single-family homes in the U.S. The average tax on single-family homes nationwide in 2020 was $3,719, reflecting an effective tax rate of about 1.1%. But many areas of the country faced much higher rates. “Homeowners across the United States in 2020 got hit with the largest average property tax hike in the last four years, a sign that the cost of running local governments and public school systems rose well past the rate of inflation,” says Todd Teta, chief product officer for ATTOM Data Solutions. “The increase was twice what it was in 2019. Fortunately for recent home buyers, they have mortgages with super-low interest rates that somewhat contain the cost of homeownership. But the latest tax numbers speak loud and clear about the continuing pressure on both recent and longtime homeowners to support the rising cost of public services.”

Source and link to the full article: ATTOM Data Solutions

Americans Prefer Investing in Homes Over Stocks – Based on a new study from the Federal Reserve Bank of New York, the pandemic may be shifting consumer preferences about what makes the best investment.  When respondents were asked to rate which is a better investment: a home or a financial asset such as stocks? Ninety percent of respondents chose owning a primary residence over investing in the stock market. Additionally, more than 50% of survey respondents say they preferred to own a rental property over purchasing stocks. Americans are increasingly bullish about housing. More households cite higher returns and lower volatility as reasons to buy a primary residence. However, “the preference for housing dipped in October 2020 and returned back to the pre-COVID-19 level by February 2021,” the authors of the study note. The concerns last October weren’t over lower home price expectations but mostly due to concerns about a risk of vacant rental units at the time, the survey notes. The pull to real estate isn’t just about money. Many respondents cited housing over stocks due to the belief that real estate offers more comfort and stability. For example, “desired living environment,” “provides stability,” and “less volatile” were among the most common survey responses. The stock market was more volatile during the initial weeks of the COVID-19 pandemic. The S&P 500 index lost over 20% in the first quarter after the outbreak struck the U.S. The stock market has largely recovered since.

Source and link to the full article: “Americans Think It’s Better to Invest in Housing Than the Stock Market—Here’s Why,” MarketWatch (April 5, 2021) and “Do People View Housing as a Good Investment and Why?” Federal Reserve Bank of New York (April 5, 2021)

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