Renters Admit They Favor Home Ownership

Seventy-two percent of renters “prefer” or “strongly prefer” to own a home rather than rent one, according to the latest SCE Housing Survey conducted by the Federal Reserve Bank of New York.

Nearly 56 percent of renters view homeownership as a “good investment,” the survey finds.

The majority of renters favor homeownership, despite expressing concerns about their ability to one day afford a home. However, they do believe it’s getting easier to qualify for a mortgage. Sixty-five percent of renters say qualifying for a mortgage is “somewhat difficult” or “very difficult,” but that is gradually declining. Twenty percent of renters view qualifying for a mortgage as “somewhat easy” or “very easy,” which is up from 15 percent in 2015.

Source: “Home Price Growth Expectations to Increase: Renters Perceive Easier Access to Mortgage Credit,” Federal Reserve Bank of New York (May 11, 2017)

Owners: Be Smart When Financing Renovations

The number of homeowners who are planning to take on home improvement projects or repairs this year is expected to increase 6.7 percent, according to the Joint Center for Housing Studies at Harvard University. As more owners look to remodel, they should be weighing how to fund their renovations.

Homeowners may be using credit cards, even though they intend to pay for the balance as soon as it’s due, because they want the benefits of getting airline miles or other rewards from using the credit card, says Todd Nelson LightStream’s business development officer. But for those who don’t intend to pay the credit card off right away should realize the interest rates are usually in double digits and is not tax-deductable.

An option is a home equity line of credit, the interest may be tax-deductible and there are few upfront frees. Another consideration may be a cash-out refinance is another option, where borrowers refinance for more than what they owe on the property and then take the difference out in cash. However, processing fees and closing costs are involved.

Source: “More Homeowners Pay for Repairs With Credit Cards,” realtor.com® (April 26, 2017)

Study: Millennials Hold Off on Big Life Choices

Baby boomers and millennials have different attitudes when it comes to marriage, children, and home ownership. Researchers with the National Center for Family and Marriage Research at Bowling Green State University compared adults who were 25 to 34 years old in the 1980’s with those who are in that age group today. One difference they found is that millennials are getting married later in life. In 1980, two-thirds of 25- to 34-year-old’s were married; in 2015, just two in five were married.

Because baby boomers were more likely to get married younger, they generally left their parents’ home much earlier than millennials. Americans in their late 20s and early 30s who live with their parents or grandparents have more than doubled since 1980, notes researcher Lydia Anderson. In 1980, only 9 percent of 25- to 34-year-olds were living with parents or grandparents compared to 22 percent in 2015.

Millennials are also putting off having children and buying a home. Plus, lag behind baby boomers when it comes to marriage, children, and home ownership, they are more likely to obtain a college degree, the study notes.

Source: “Young Americans Are Killing Marriage,” Bloomberg (April 4, 2017)

Home Prices Blamed for Student Loan Defaults

The housing crisis may also have sparked the increase in student loan default rates, according to a working paper by the National Bureau of Economic Research.

The study says the drop in home prices during the Great Recession also coincided with a 24 to 32 percent rise in student loan default rates. Researchers looked at administrative student loan data along with ZIP code home price data for about 300,000 student loan borrowers in repayment.

Last year, more than 1 million federal student loan borrowers defaulted on their debt.

“The huge rise in student loan defaults is on everybody’s minds and the question is what’s the cause of this rise?” says Holger Mueller, one of the authors of the paper and a professor of finance at New York University’s Stern School of Business. “What we want to do is point to another very important source of default risk and that’s just the labor market.”

Source: “Why Lower Prices Lead to Higher Student Loan Default Rates,” MarketWatch (April 1, 2017)

Homeowners Don’t Want Cookie-Cutter Lawns

Homeowners are focused on making changes to their front yards so they’re markedly different from their neighbors’ yards and easier to maintain, finds the 2017 U.S. Houzz Landscaping Trends Survey.

Homeowners want their yards to look distinct. Only 6 percent of homeowners reported front yards that were nearly identical to those in the neighborhood after their outdoor project, compared to more than a third before the update (36 percent), the Houzz survey shows. Two in five owners say they wanted to make a statement with a new front yard that was “very” or “extremely” different from others in the neighborhood following their update.

More homeowners are turning to low-maintenance plants to enhance their front yards, along with native plants and those that attract insects and birds. More than half of those who updated their front yard say that beds or borders, shrubs, and perennials were the most important to improving curb appeal.

Source: “2017 U.S. Houzz Landscaping Trends Survey,” Houzz (March 29, 2017)

This Could Boost Millions of Credit Scores

Equifax, Experian, and TransUnion announced they will soon remove tax lien and civil judgment data from some consumer credit records. The reason for this change is that many liens and most judgments fail to include vital pieces of information. Beginning on July 1, the public records data the firms use must include these data points: the consumer’s name, address, and either a social security number or a date of birth. Existing reports that fail to comply will be struck from the consumer’s credit record and new data that does not have that information will not be added.

Credit scores are weighed carefully by lenders in making decisions about loan terms and how much consumers can borrow, and can be very important in securing a sustainable mortgage. FICO estimates the changes will cause an improvement to about 12 million consumer scores; however the boost will be modest, likely less than 20 points.

In recent months, several lawsuits brought by states have been pushing credit reporting companies to remove some categories of negative data from credit score reports, such as information related to library fines or gym memberships. But some experts fear removing negative public record information could pose a greater risk to lenders.

Source: “Reporting Change Could Raise Credit Scores, Risk,” Mortgage News Daily (March 14, 2017)

Home Buyers: Watch Out for Deed Restrictions

Deed restrictions can bring nasty surprises to homeowners looking to remodel or even when buying a home. These restrictions can limit a number of property features, such as the number of bedrooms in your home, the building height, the type of vehicles in your driveway, the fencing permitted, the type and number of trees that can be removed from a property, and even the style and color of construction materials used in a renovation (which often is intended to limit architectural variations).

During the escrow process or before making an offer, make sure you are aware of any deed restrictions—often called “restrictive covenants” — before buying to avoid problems later on. The property does not have to be part of a homeowners association to be limited by a developer rule included in a deed.

“Deed restrictions turn up during title searches and a careful reading of the current deed,” a realtor.com® article notes. Anyone who buys the property must abide by the restrictions, even if they were put in place on the land a century ago. Deed restrictions are known for being difficult to change and often take a judicial ruling to invalidate them.

Source: “Building, Buying, or Beefing Up a Home? Watch Out for Annoying Deed Restrictions,” realtor.com® (3/01/17)

Older Americans Face Challenges When Aging

Freddie Mac released today its Insight for February, which outlines challenges, costs and potential solutions of addressing the desire of older Americans to age in place. Survey data shows half of all 55+ Americans and three quarters of 75+ Americans are impacted by at least one physical functional limitation, heightening the growing demand for retrofitting.

Insight Highlights: 1)The Freddie Mac survey of the 55+ population indicates almost two-thirds of homeowners — 43 million people — wish to age in place. 2)Two-thirds of survey participants report their homes are not accessible for someone with arthritis, limited mobility, or in a wheelchair. 3)About 1.5 million older households today need some retrofitting, and that number rises to 2.0 million per year by 2030. 4)If a major retrofit is required, it can be 40 times more expensive than a simple retrofit such as adding some grab bars and new drawer handles. Retrofitting may be too expensive for many of those who wish to age in place.

Don’t Underestimate Power of Pets

Pets are having more of an influence in home buying and selling as well as renovation, a new study by the National Association of REALTORS® shows. Eighty-one percent of Americans say that animal-related considerations play a role when deciding on their next living situation, according to the 2017 Animal House: Remodeling Impact report.

“In 2016, 61 percent of U.S. households either have a pet or plan to get one in the future, so it is important to understand the unique needs and wants of animal owners when it comes to homeownership ” says NAR President William E. Brown. “REALTORS® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.”

99 percent of pet owners say they consider the animal part of the family. Eighty-nine percent of respondents say they would not give up their animal because of housing restrictions or limitations. Home owners are willing to move for their pets too. Twelve percent of pet owners have moved to accommodate their animal; 19 percent would consider moving to accommodate their animal in the future.

Source: National Association of REALTORS®

Consumers Will Compromise to Buy a Home

Consumers view homeownership as a priority and say they’re willing to make significant compromises in order to purchase a home, according to a survey of more than 1,000 consumers considering a home purchase in 2017, conducted by the online brokerage firm Owners.com.

Sixty-nine percent of survey respondents say they’re concerned they won’t have enough cash for a down payment in order to buy a home. As such, they’re willing to forgo some financial goals and investments to make sure they save enough.

Respondents said that saving for a home takes priority over saving for an emergency (61 percent) or contributing to retirement funds (60 percent). Seventy-two percent of survey respondents said they would limit their contributions to other investment funds in order to save enough to buy a home.

Surveyed consumers also say they’re willing to compromise on some elements of the home if it means they can move into a home this year. For example, 51 percent said they would consider buying a fixer-upper, and 36 percent said they would purchase a smaller home than what they desire.

Source: “Americans Are Making Big Compromises to Buy Homes,” USA Today (Feb. 1, 2017)