So Much for Home Downsizing?

A recent study by Bank of America Merrill Lynch found that nearly one-third of Baby Boomers and seniors are buying larger homes in retirement instead of downsizing.

The report seems to point to an interest in larger home specifically that have extra bedrooms. One-third of retirees surveyed say a top reason they wanted to upsize was to have a home large enough for family members to visit. When adult children, grandchildren, and other family members are scattered around the country, the homes of retirees tend to function as a meeting place for extended family functions.

Some retirees may be looking for something more than just a guest bedroom, however. The multigenerational household trend is evident in the study, with one in six (16 percent) retirees saying they have a “boomerang” adult child who has moved back in.

Only 51 percent of those surveyed actually did downsize, citing greater financial freedom (64 percent) and lowered maintenance duties (44 percent) among their top reasons for doing so. The remaining 19 percent moved to a similarly-sized home.

Source: “Retiree preferences are poised to drive the housing market, study says,” L.A. Times (Feb. 25, 2015) 

Spring Thaw? ‘Better Days Ahead for Housing’

Home sales likely will remain subdued early on in the year before picking up in the second quarter and then maintaining a brisk pace for the rest of the year.

Housing activity has been bumpy so far. The National Association of REALTORS® reported this week that existing-home sales tumbled to a nine-month low in January.

But economists polled by Reuters are optimistic that a turnaround will occur due to a strengthening job market that is expected to offset some of that drag.

“We expect the housing market to improve this year,” David Nice, an economist at Mesirow Financial in Chicago, told Reuters. “It is only a matter of time until the improved jobs market has a positive effect on the housing market. We are betting that first-time buyers return this year.”   Please provide your comments!

Source: “Strong Jobs Market to Spur U.S. Housing in 2015: Reuters Poll,” Reuters (Feb. 24, 2015)

2015: The Breakout Year for Home Sellers?

Home owners are living in their homes longer. Typically, home owners stay in their homes six or seven years before making a move. But in 2014, that number grew to a 10-year average, according to research by the National Association of REALTORS®.

NAR researchers are predicting that “pent-up sellers” will likely be unleashed in 2015, after regaining equity and feeling more confident from the economic recovery.

Many home owners have been staying put longer due to the after-effects of the housing crisis, which placed a large number of home owners in underwater status, owing more on their mortgage than their home is currently worth, researchers note. Many home owners may have been waiting to move until home values edged higher.

But for many home owners: Home values are up 25 percent over the past three years, on average, according to NAR. (Read: The ‘Equity Rich’ Home Owner Is Back)

Source: “Pent-Up Sellers?” National Association of REALTORS® Economists’ Outlook Blog (Jan. 28, 2015)

The Biggest Obstacles Facing Housing in 2015

Industry analysts and economists largely believe the real estate market will gain traction this year, but they acknowledge several challenges that pose a potential derailment to the ongoing recovery. CNNMoney recently highlighted several of those challenges:

Investors exit the market: Institutional investors accounted for 15 percent of all sales in October, a drop from 20 percent in January, according to National Association of REALTORS® housing data.

Lending criteria still tight. REALTORS® still say tight credit is holding many of their would-be buyers back and derailing transactions as buyers continue to struggle to qualify for a mortgage (although REALTORS® surveyed say they have seen a slight improvement in lending recently), according to the latest REALTOR® Confidence Index.

Rising mortgage rates: Mortgage rates are sitting near historical lows at the moment, under 4 percent for the 30-year fixed-rate mortgage, but don’t expect that to last. Many economists are predicting rates will push up to 5 percent by the end of this year.

Foreign buyers buying less in U.S.: Foreign buyers helped fuel the housing market recovery, but there are signs they’re presence is receding.For example, in California alone, sales to international clients has plunged about 25 percent in the past year, according to the California Association of REALTORS® (more: NAR’s 2014 Profile of International Home Buying Activity).

Source: “5 Biggest Threats to the Housing Market,” CNNMoney (Jan. 2, 2015)