California’s solar mandate cost?

Recently, California became the first state in the nation to make solar mandatory for new houses. Beginning in 2020, newly constructed homes must have solar panels, which could be costly for homeowners: According to California’s Energy Commission (CEC),that mandate will add between $8,000 and $10,000 per home.

CEC estimates suggest that the solar addition will increase the average monthly mortgage payment by $40, but new homeowners will save an average of $80 a month on their heating, cooling and lighting bills.

Source: cnbc.com/2019/02/15/california-solar-panel-mandate

Homeowners ‘Tax Snags’ Update

Tax season is here, and many homeowners may have questions about what they can and can’t write off under the new tax code.

One big change: Homeowners who used to write off property taxes and interest paid on their mortgage may no longer be able to entirely. But that doesn’t necessarily mean they’ll pay higher taxes. HouseLogic, the National Association of REALTORS®’ consumer-facing website, offers guidance and worksheets on the changes for homeowners.

Under the new law, the standard deduction every tax filer gets has nearly doubled ($24,000 for married couples who file jointly and $12,000 for single filers). Most people likely will be better off taking the standard deduction than itemizing their write-offs.

Other interesting information at: “Tax Deductions for Homeowners: How the New Tax Law Affects Mortgage Interest,” HouseLogic.com (2019) and “Are Closing Costs Tax Deductible Under the New Tax Law?” HouseLogic.com (2019)

Young Adults Living With Parents’

More young adults are still living with their parents and not branching out on their own, and that could have a long-term, negative impact to their finances, according to a new study from the Urban Institute. Researchers found there is no long-term advantage financially for young adults who live with their parents.

The share of young adults aged 25 to 34 who live with their parents rose from nearly 12 percent in 2000 to 22 percent in 2017. Young adults who stayed in their parents’ home longer did not end up buying more expensive homes or have lower mortgage debts later on than those young adults who moved out earlier, the study showed. Researchers say this suggests that “living with parents does not better position young adults for home ownership, a critical source of future wealth, and may have negative long-term consequences for independent household formation.”

Source: “Young Adults Living in Parents’ Basements,” Urban Institute (January 2019)

Fannie, Freddie’s ‘Holiday Gift’

No Foreclosures! Mortgage financing giants Fannie Mae and Freddie Mac announced a nationwide suspension of eviction lockouts on foreclosures for the holiday season. The foreclosure moratorium will last from Dec. 17 to Jan. 2, 2019, and applies to all foreclosed occupied homes owned by Fannie Mae and Freddie Mac.

The moratorium, however, does not apply to other pre- or post-foreclosure activities. Legal and administrative proceedings for evictions can continue, but families will be able to remain in their home during the holiday moratorium.

Source: Freddie Mac and Fannie Mae

The Makings of a Buyer’s Market

Buyers are pulling back. Home prices have been rising too much relative to income for many would-be buyers to keep pace. Since 2011, the U.S. median home price has risen 55 percent while wages are up only 18 percent. Now, the Federal Reserve has become more aggressive against inflation; with several short-term interest rate increases over the past year. A monthly mortgage payment on a typical home today is $1,136, up from $639 in 2011.

And confidence is down. Only 38 percent of consumers today strongly believe it’s a good time to buy, down from 43 percent last year, and the numbers are lower for renters who don’t have equity to tap for a down payment.

With buyers stepping back a bit, inventory is no longer falling. New-home construction is increasing and more homeowners are considering listing. A recent survey NAR conducted shows 50 percent of consumers strongly indicate it is a good time to sell, compared to only 28 percent just two years ago. Most home sellers will also be buyers. With inventory expected to grow, prices will stop rising so fast. That’s a healthy adjustment. Buyers can soon resume their search for the American dream.

Source: magazine.realtor/news-and-commentary/economy/article/2018/10/the-makings-of-a-buyer-s-market?

Market Shifting to Home Buyers’ Favor

A housing market defined by rapidly rising home prices, bidding wars, a lack of inventory, and sellers with the upper hand in negotiations may be changing. “The signs are pointing to a market that’s shifting toward buyers,” says Danielle Hale, realtor.com®’s chief economist. “But in most places, we’re still a long way from a full reversal.”

After all, home sales aren’t exactly tanking. Prices for existing homes were up 4.6 percent from a year ago in the National Association of REALTORS®’ latest housing report. The median home list price in August was up 7 percent from last year.

While these numbers are still higher than last year, economists point to a slowing growth in the percentage jumps. Last year, median home list prices increased by 10 percent from the previous year and by 9 percent the year before that.

Mortgage Interest Rates ‘Mostly Holding Steady’

Mortgage rates haven’t been this stable since the fall of 2016. Rates did inch up this week, but only slightly and are still offering prospective buyers a window of opportunity, says Sam Khater, Freddie Mac’s chief economist.

The recent slowdown in price appreciation in several markets, mixed with these steady mortgage rates, is “good news” for many prospective buyers who may have been priced out earlier this year. “Given the strength of the economy, it is possible for home sales to pick up even more before year’s end,” Khater says. “The key factor will be if affordably priced inventory increases enough to continue this recent trend of cooling price appreciation.”

Freddie Mac reports the following national averages for the week ending Aug. 30:

  • 30-year fixed-rate mortgages: averaged 4.52 percent, with an average 0.5 point, rising from last week’s 4.51 percent average. Last year at this time, 30-year rates averaged 3.82 percent.
  • 15-year fixed-rate mortgages: averaged 3.97 percent, with an average 0.5 point, falling from last week’s 3.98 percent average. A year ago, 15-year rates averaged 3.12 percent.
Source: “Mortgage Rates Tick Up,” Freddie Mac (Aug. 30, 2018)

Too Much Income Devoted to Making Rent

Renters are struggling to catch a break. In seven of the largest U.S. cities, the average household would need to make at least six figures to comfortably afford the rent on a two-bedroom apartment, according to a new study by SmartAsset, a personal financial website. SmartAsset researchers looked at how much it takes to afford average rental rates in the nation’s 25 largest cities.

Households that spend more than 30 percent of their incomes on housing are considered “cost burdened” by most economists. SmartAsset researchers found rents in California’s largest cities took some of the biggest bites out of American’s paychecks. Four California cities ranked in the top 10 on the list: San Francisco, Los Angeles, San Jose, and San Diego.

A separate study, recently released by PropertyShark and RentCafe, found that if renters could save enough for a down payment they may fare better as homeowners. Renters in more than half of the 50 cities in the study could barely make it until payday, while in 44 of the 50 cities tracked, homeowners were projected to be able to save money each month.

Delayed Ownership and Wealth Disparities

Millennials aren’t purchasing homes on the same timelines as previous generations, and that has some economists worried. The homeownership rate for millennials was 37 percent in 2015, which is about eight percentage points lower than Generation X and baby boomers when they were at the same age between 25 to 34, according to a new report released by the Urban Institute.

Economists point to several factors for millennials’ delay into homeownership, including their delays to get married (being married increases probability of owning a home by 18 percentage points), rising student debt, delayed child bearing, and increasing rents that are making it more difficult to save for a down payment.

But the Urban Institute’s report notes that such delays into ownership are sparking concern. Less educated young adults are falling further behind in homeownership, the report notes. The gap in homeownership rates between the more educated versus the less educated population has grown significantly, increasing from 3.3 percent to 9.7 percent between 1990 and 2015. “Less educated millennials could be falling behind homeownership because of their unstable incomes and rising rents,” the report notes.

Source: “Millennial Homeownership,” Urban Institute (July 11, 2018)

Will Driverless Cars Change Home Values?

The era of autonomous vehicles is coming, but what influence could that have on your home? Autonomous vehicles could usher in greater car sharing among families and neighbors. The car drops off a passenger and then goes to pick up another. Since the vehicles are self-driving and will come when called upon, they may not even need to be parked at home and could be parked in a remote lot. Ride sharing services may grow to become a normal option for homeowners.

“A decrease in car ownership/leasing will likely translate to a decrease in the need for garage space,” says Justin Thompson, a columnist at Forbes.com . “Two-car homes could become one-car homes, rendering the two-car garage obsolete.” “The impact of an increase of this magnitude on home values would certainly have far-reaching economic effects,” Thompson notes. “Increased living area square footage, a rise in home value, additional property tax revenue, and more revenue from permitting fees is an impressive list of benefits.”