Home Buyer Demand Will Be Strong For Years To Come

There has been a lot written about millennials and their preference to live in city centers above their favorite pizza place. Some have even gone so far as to say that millennials are a “Renter-Generation”.

And while this might be true for some millennials, more and more research has surfaced that shows for the vast majority, owning a home is a major part of their American Dream!

New research shows that 66% of millennials who currently rent are determined to buy a home! Seventy-three percent of those surveyed by Pulsenomics plan to buy a home in the next five years, with 40% planning to do so within the next two years!

“Millennials want to own a home as much as prior generations,” Ali Wolf, Director of Economic Research at Meyers Research says. “We saw millennial shoppers scooping up homes in 2018—and 2019 will be no different.”

Bottom Line

Are you one of the millions of renters who are ready and willing to buy a home? Meet with a local real estate professional who can help determine your ability to buy now!

Seattle tops best cities for tech jobs!

seattle tech jobs Seattle tops best cities for tech jobs, Austin only ranks #32   are startups dying?

Top best cities for tech jobs named

Recently, Forbes names the top 50 best cities for technology jobs and the list has made waves in the tech community as the magazine took a look not just at the current scene, but how tech jobs have changed in the past decade, putting some tech cities low on the list.

The top 10:

  1. Seattle, WA
  2. Baltimore, MD
  3. Columbus, OH
  4. Raleigh, NC
  5. Salt Lake City, UT
  6. Jacksonville, FL
  7. Washington, D.C.
  8. New Orleans, LA
  9. Riverside-San Bernadino, CA
  10. San Diego, CA

John Cook at GeekWire.com wrote, “One of the biggest story lines of the past couple of years in the Seattle tech community has been the arrival of titans such as Facebook, Salesforce.com, EMC, Zynga and other Silicon Valley stalwarts who’ve chosen the region for new development centers.” He adds that Facebook is doubling its presence in Seattle and Amazon.com hired 8,000 people in the third quarter alone.

Are startups like Gowalla going out of business?

Unfortunately, it is true. Austin’s semiconductor industry has taken a hit in recent years while the startup industry has brought in millions of dollars in funding, but our sources hint that the startup world is quickly and quietly dwindling down.

Although it is a quiet notion and likely just a rumor, we were asked by a very successful entrepreneur in Austin if we knew that Gowalla could be going under and later that same day we were asked by a venture capitalist if Gowalla’s $10.4 million wasn’t keeping them afloat and 2012 wasn’t looking good. We have been told that Austin startup CEOs and employees have been quietly submitting their resumes at more established companies and even Gowalla employees are rumored to be sending out a high volume of applications. It isn’t just Gowalla though, they’ll just be the biggest let down if this is even remotely true (which we’re not convinced of).

We’re hearing that the first quarter of 2012 will be the last for many startups in town, so is Forbes on to something? Is 2012 the year the struggling startups finally run out of money or give up regardless of the millions that have been poured into them as they learn they’re not alone in their struggle? Time will tell but 2012 isn’t looking so good for Austin while it is looking quite promising for Seattle.

N.B.: The Seattle area has other employers as well. Namely, Boeing, Starbucks, Nintendo, Nordstrom, Costco, Paccar, Safeco etc. The Puget Sound is no longer a one trick pony in the job world.

Employment (and population growth) is the main reason that housing is a stable and safe choice in our area.

Bullish on Home Ownership (Part 1 of 2)

Bull-150x150Dave Stevens, former head of FHA and the current President and CEO of the Mortgage Bankers’ Association, is bullish on home ownership. According to Stevens, there’s sunshine on the horizon and it may be here sooner than anyone realizes.

A few days ago I had a chance to interview Dave Stevens about his take on where we are in terms of a real estate recovery. I also asked if he had any good news he could share in light of the constant onslaught of bad economic news. Here’s what he had to say.

1. The Market is Stabilizing
According to Stevens, the real delinquency rate is down from 10 percent in the second of quarter of 2010 to 8.5 percent for the second quarter of 2011. New foreclosure starts are also down. In addition, three of the hardest hit states for foreclosures, Florida, Nevada, and Arizona, are also stabilizing. Furthermore, for standard fixed rates loans, the delinquency rate was 6 percent in 2010. That number has dropped to 5 percent in 2011. As Stevens put it, “This is very close to being in ‘normal’ territory.”

2. Most Sectors Are Experiencing Real Home Price Growth
The problems with negative equity and declining prices are actually concentrated in a few key states. For example, 24 percent of the foreclosure activity is concentrated in Florida. Fifty percent of the foreclosure activity is in five key states. Stevens says that people who quote declines in the average price of homes nationally are using “dangerous data,” since each market is different.

According to Stevens, price declines are not a national problem. “The fundamentals are better than ever.” In fact, if you remove the foreclosure properties from the equation, non-distressed properties have actually experienced an increase in prices.

The challenge is consumer sentiment. People are scared to purchase now because they don’t know whether they will have a job. Nevertheless, for those who are willing to purchase in this market, the opportunity has never been greater.

3. The Best Time Ever to Buy
Many people view the cost of home ownership based exclusively on the price they pay for the property. A more accurate way to judge the cost is how much you paid plus the cost of the interest that you pay over the term of the loan. To illustrate this point, assume that a buyer is going to purchase a home with a $200,000 loan. The interest rate is four percent. Many buyers are worried about prices falling more. If the prices were to decrease another 5 percent, that means that the property would decline in value by approximately $10,000.

If the interest rate increases from 4 to 6 percent, the cost of waiting is extremely high. Over the life of a 30-year loan, the borrower will pay $87,937 more in additional interest. The cost of owning that home costs a whopping $77,937 more than the apparent $10,000 they might have saved by buying at the bottom of the market.

4. The Coming Home Shortage
Stevens says that there are two primary factors that will contribute to a home shortage in the not too distant future. The first of these factors is the size of Gen Y (those born between 1977 and 1994), which is estimated to be approximately 80 million or 25 percent of the U.S. population. They are now entering their prime time for starting their careers, their families, and for buying a home.

The second variable is supply. There has been virtually no new construction, despite the predicted explosion in population growth. To illustrate the severity of this problem, the 2010 census put the U.S. population at approximately 309 million. By 2050, the prediction is that the U.S. population will be 439 million. That’s a 130 million increase in just 40 years. Regardless of whether they own or rent, they will still need housing.

5. Getting from Here to There
Stevens believes the major challenges we are facing in the short term are job creation and dealing with the tight credit situation. The GSEs (Fannie and Freddie) as well as FHA have tightened lending guidelines to such a degree that is extremely difficult for even well qualified buyers to obtain a loan.

Furthermore, the tremendous amount of new regulation creates additional problems. For example, the Dodd-Frank bill alone adds over 100 new regulations. Each of these regulations creates additional risk resulting in higher costs for the both the borrower and the lender. Lenders have to alter loan documents, create new systems, and retrain their people to handle these new requirements. Furthermore, the effect of “piling on” more and more regulations increases the cost to consumers as lenders must defend themselves against additional litigation risks.

According to Stevens, real estate is now at bargain levels that we will never see again in our lifetimes. If there were ever a time to buy a home, that time is now.

Want to know more? Call me at 206-713-3244 or Emmanuel@EmmanuelFonte.com