Homes are a Better Investment than Retirement Savings

Americans want to buy homes and they want to buy them as an investment option. According to a study on homebuyers by NerdWallet, a personal finance website, 75 percent Americans say that buying a home was a priority for them. NerdWallet analyzed data of more than 2,000 adults surveyed, the company’s mortgage calculator, data from the Consumer Financial Protection Bureau (CFPB), and other sources to develop the study on current home buying sentiments, concerns, and outlook.

The study found that most Americans considered buying a home as a good investment with 64 percent of the people surveyed citing this as a reason to buy a home. And it’s not only the older generation that feels this way. Around 56 percent millennials felt that they would rather own a home that appreciated in value than have more money in retirement savings, reflecting the sentiment of 52 percent of the overall people surveyed.

In fact, according to the survey, 82 percent millennials said that buying a home was a priority compared with 75 percent of generation X and 69 percent of baby boomers. Millennials also aspired to buy more homes, on average throughout their lifetime and were most likely to say that they would like to buy a home to rent out for extra income.

Source: dsnews.com/daily-dose/02-01-2018

Should Retirees Remodel or Relocate?

The decision on whether to renovate or relocate in retirement can be complex and emotional. A recent report revealed that as people edge towards retirement age, the more they value the emotional connection to their home rather than the financial value.

After meeting with remodeling experts, architects, real estate pros, and financial advisors, these remodeling guidelines should be considered:

  • Think about how long you plan to stay in the home and spend the money that’s comfortable to continue to enjoy living there.
  • Consider the potential consequences of the remodeling plan, so remodelers don’t have to go back and fix previous jobs.
  • Talk to a local real estate professional who knows the neighborhood and can advise on features that are currently in demand for potential buyers.
  • Focus on features that will improve the curb appeal and the overall value of the home.

Source: “Renovation vs. Relocation in Retirement,” The New York Times (April, 10, 2015) and “Most Americans Want to Move in Retirement,” REALTOR® Magazine Daily News (April 3, 2015)

 

Study: Multifamily Rental-Housing in for Shortage

By 2023, there could be up to 4.7 million more renter households due to demographic forces, according to Harvard University’s report, The State of the Nation’s Housing 2014. But the supply of multifamily rental housing will likely be far less than demand, writes David Brickman, Freddie Mac’s executive vice president for multifamily business.

“New construction by itself won’t fill the gap,” Brickman notes. “Additional investment needs to be made in existing units to keep them in active inventory. As part of this, there is a growing need to direct ‘flexible’ capital into renovating, preserving, and, in some cases, transforming the nation’s aging rental housing stock.”

Rental demand is rising due to younger generations who want to rent as they start their careers, those who face certain financial situations, and more interest in urban living, which will lead to higher rates of renters.

While multifamily construction has risen in recent years to try to meet the increase in demand, Brickman says it won’t be enough at the current pace, even with about 3.1 million new units expected over the next 10 years. Meanwhile, the existing rental housing stock is aging. Nearly 60 percent of U.S. rental properties with 20 or more units were built prior to 1980, according to the Census Bureau’s 2012 American Community Survey. About 6 percent of all units are “retired” each year, according to the survey.

Brickman says by some estimates, the supply already could be 1.5 million apartments short.  “Low vacancy rates have sped up rent growth faster than inflation and income growth,” he notes. “Add to that stagnant or falling wages, and the result is that more than half of all renters live in apartments considered unaffordable to them today. That is, they spend more than 30 percent of household income on rent and tenant-paid utilities.”

Source: Freddie Mac