Home Prices Hit a Record High – Industry Outlook

By June 26, 2018Industry Outlook

Trump Administration Proposes Privatizing Fannie and Freddie –According to the Trump administration’s proposal ending the government’s long conservatorship of mortgage financing giants Fannie Mae and Freddie Mac which still requires congressional approval, Fannie Mae and Freddie Mac would be converted to “fully private entities.” Fannie Mae and Freddie Mac have been under U.S. conservatorship since 2008. “Although the federal role in the housing market has helped to facilitate the availability of the 30-year fixed-rate mortgage, the current system has structural flaws that have also created distortions in home pricing that may actually hinder the goal of homeownership,” the administration’s proposal states. Under the proposal, the GSEs would focus more on “qualified borrowers,” while the Department of Housing and Urban Development would take primary responsibility of programs to assist low and moderate-income buyers.

Are Millennials Finally Flying the Coop? –According to new data released from the CoStar Group, more millennials may be ready to leave Mom and Dad’s basement to start their own household. The number of 18 to 34-year-olds living with their parents last year dropped slightly. In 2017, 31.5 percent of that age group was living with their parents, down from 32 percent in 2016. The percentage remains elevated from the historical average of 28 percent. But economists say the downward trend likely will continue as the economy improves. “There are more individuals in that age group who are employed,” Michael Cohen, director of advisory services at CoStar, told CNBC. “We also should see some wage gains in that age range. That gives me some degree of confidence that we’ll see some more momentum in young adults moving out of Mom’s place.” Many millennials chose to live with their parents as they built their careers and tried to pay down student debt. The generation carries the majority of the $1.5 trillion in student debt. Also, their wages are lower than their parents’ salaries were when they were in their 20s. More than a third of workers are millennials, now the largest generation in the labor force, according to the Pew Research Center.   

Most Renters Wish They Lived Elsewhere, Survey Says –Based on a new survey by RentCafe of more than 2,000 renters, the majority of renters aren’t happy with the location of where they live. Eighty-three percent of renters say they live in less than their ideal location, but cost of rent was their number one concern in moving. Sixty percent of the renters surveyed say they are not able to pay anything more than the actual rent or a maximum of $100 more to live in their preferred location. The national average rent in top-rated locations is $1,655, which is about 37 percent more than the average national rent of $1,211 charged in lower-rate locations, according to the RentCafe study. That marks a difference of $444 in monthly rent. 

Home Prices Hit a Record High –Based on the latest housing report released by the National Association of REALTORS®, home buyers can expect to pay more for a home this summer. The median existing-home price for all housing types reached an all-time high in May at $264,800. Many markets continue to see a flood of buyers but not enough homes for sale, which is prompting prices to rise and also limiting the number of sales. For the second consecutive month, existing-home sales dropped, even in the midst of a typically busy selling season. Total existing-home sales which are completed transactions for single-family homes, town homes, condos, and co-ops fell 0.4 percent to a seasonally adjusted annual rate of 5.43 million in May, the National Association of REALTORS® reported. Sales are now 3 percent lower than a year ago. “Inventory coming onto the market during this year’s spring buying season was not close to being enough to satisfy demand,” says Lawrence Yun, NAR’s chief economist. “That is why home prices keep outpacing incomes and listings are going under contract in less than a month and much faster in many parts of the country.”  

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