Tag: statistics

There’s a statistic that you may not have ever heard of, but it’s definitely being tracked, and that is the number of homes a buyer views before purchasing. The average has been decreasing, and sits at 8 — a record low — as of last year, compared to a peak of 12 a decade ago. It was holding steady around 10 between 2014 and 2019. As far as length of search time, it’s only ever been lower in the early 2000s.

Part of the recent dropoff is due to low inventory and the heavy competition that followed lockdowns. After all, you can’t look at many homes if there aren’t many to look at and you’re being encouraged to make quick decisions. That’s not the entire story, though. What has enabled buyers to make such quick decisions is technology. Internet-based methods of home viewing are becoming increasingly popular, such as virtual tours and highly detailed photography and videography.

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More: https://www.nar.realtor/blogs/economists-outlook/home-buyers-narrow-home-search-with-technology

The primary obstacle to homeownership has always been the large up-front cost and necessity to get a loan. But the monthly cost of homeownership has generally been lower than rent prices, making homeownership significantly cheaper in the long term. And in 58% of counties right now, homeownership is actually more affordable than renting for the median priced home.

That’s still the case now, but things are trending in the other direction. While home prices, rent prices, and wages are all going up, rent prices are increasing the slowest of the three. There may come a time when home prices have outpaced rent prices enough that renting is a more affordable option, even if you have the up-front cost of homeownership covered. However, it’s important to note that changes in rent prices can sometimes lag behind changes in home prices. Renters usually aren’t able to capitalize on swiftly changing markets because they need to wait for their lease to expire, and in rent controlled areas, landlords can’t raise rents directly to market value for tenant-occupied homes.

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More: https://nationalmortgageprofessional.com/news/home-ownership-more-affordable-renting-attom-reports

Most Millennials know how to unclog their toilet without calling a plumber, but there are still a lot of things they simply don’t know how to fix themselves. Three-fifths of them wouldn’t have any idea how to fix a leaky faucet. Roughly half don’t know how to caulk tile, fix a garbage disposal, or clean the dishwasher filter.

Part of this is because of the advent of self-cleaning appliances. When the self-cleaning fails, or their replacement model doesn’t have it, Millennials simply never learned how to deal with it. It’s also the case that the Millennial generation has taken longer to move out on their own, which means they’ve had the help of parents or roommates to cover their gaps in knowledge. In other cases, they simply don’t bother. 36% don’t feel the need to clean the showerhead, even though only 29% don’t know how.

It’s not necessarily even a problem of the proper equipment. The vast majority own some of the most common tools, though a tenth don’t know the difference between a Phillips and flat-head screwdriver, even if they own both. Still, 27% don’t own a level, 30% don’t own a ladder, and 54% don’t own a stud finder.

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The percent of income put into savings on average fluctuates rapidly, but for the most part tends not to be subject to sudden large shifts. There have been a few notable spikes or dips across the decades, but nothing like the pandemic spike. April 2020 saw a record-breaking 34% savings rate, attributed to lower spending during lockdowns in tandem with stimulus payments. There was a second less major spike after the second round of stimulus payments.

The 34% rate was approximately double the record in prior years, which was back in the 1970s. That prior record was still only a 2% difference from the prior year. By contrast, in October of 2019, the personal savings rate was 7.2%, a 26.8% difference. The most recently calculated rate, in October 2021, was nearly identical to the pre-pandemic rate, at 7.3%. The savings rate has still been trending upward in the past couple of decades, though, after a relatively steady decline since the 70s, bottoming out in 2005.

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More: https://journal.firsttuesday.us/the-20-solution-personal-savings-rates-and-homeownership-2/

Increased demand following the lockdowns meant that many people were eager to buy in 2021, especially first-time homebuyers, 85% of whom were renting at the time. Unfortunately, many of them weren’t able to because of heavy competition, with over 25% making an unsuccessful attempt. That hasn’t deterred most of them, though, with 72% of prospective first-time homebuyers expecting 2022 to be their year.

However, it’s important to note that less than 15% of those now looking to buy in 2022 were already looking in the beginning of 2021. That means it’s unclear whether they’re only recently planning a move to homeownership, or they deliberately avoided the highly competitive phase. It’s possible that they’ve only recently acquired the means to purchase, but it’s also possible they’ve had the money lined up and held off for a better time. In any case, optimism is strong among the current group of prospective first-time homebuyers.

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More: https://www.realtor.com/research/first-time-home-buyers-2021/

Two-thirds of homeowners feel they spend a large portion of their annual income just on their house. For 54% of homeowners, it’s their single largest financial burden. Most homeowners are well aware that homeownership is costly, yet still worth the price. Nevertheless, just over a third are struggling more than they expected with the annual cost of things such as mortgages, property taxes, and maintenance.

Housing costs are also increasing over time, which is contributing to the unexpected struggles. Single-income households are certainly worse off, but even dual-income households are having financial woes. But the most significant contributor to unexpected costs is repairs and maintenance. It seems most homeowners simply don’t consider how much it could cost to maintain their home. However, even costs that are laid out ahead of time are causing more strain than people realize. Almost half of homeowners didn’t think HOA costs would be such a big deal.

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More: https://www.consumeraffairs.com/finance/what-is-house-poor.html

The rising cost of lumber has been mentioned a few times, mostly in the context of slowed construction rates. But lumber costs aren’t the only issue, and it’s affecting more than just construction. The pandemic and subsequent recession were the primary driving force for supply chain difficulties across the board, and climate change is also a big player.

Though lumber prices are still relatively high, they are actually much lower than the peak in Q1 of 2021, and the number of construction workers, while still below pre-pandemic levels, isn’t far off. Where there are still issues are in other sectors. Paint and furniture are more expensive than ever. Part of the increased cost of furniture is the still-high lumber prices, but it’s mainly the result of extreme weather — Texas was the main contributor to raw materials to produce paints and furniture stuffing before cold snaps and hurricanes halted much of the production. Paint and furniture are also both in high demand as a result of people spending more time at home and therefore wanting to remodel. The same trend has resulted in an ever-growing backlog of home appliance deliveries.

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More: https://www.realtor.com/news/trends/how-supply-chain-is-strangling-real-estate-what-you-need-to-know/

We’re seeing more potential signs of economic recovery as housing affordability is trending slightly upward from the second quarter. This is measured as the percentage of people that can afford a median priced California home, which was valued at $814,580 for the third quarter. The overall difference is small, an increase of only 1% — from 23% to 24% — but the upward trend holds across 30 of the 51 counties tracked (California has 58 counties total). Affordability is still down from 2020 numbers.

The county that showed the largest increase was already the most affordable California county, Lassen County, increasing 6% from 62% to 68%. There was also a 5% increase in Contra Costa County, from 26% to 31%. Contra Costa is also in a region that experienced an increase in affordability across every county, the San Francisco Bay Area. The least affordable county remains Mono County, but even in that county there was a 4% increase in affordability, from a measly 9% to 13%. The sharpest decline in affordability was felt in Siskiyou County, dropping 3% from 44% to 41%.

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More: https://www.car.org/aboutus/mediacenter/newsreleases/2021releases/3qtr2021hai

Nearly two-thirds — 64% — of homebuyers in the US don’t consider climate change in assessing the safety of the property they plan to buy, according to a recent survey. More and more areas are becoming prone to wildfires or flooding. Of course, some of them don’t believe in climate change at all, accounting for 12%. But just over half of the people not thinking about climate change simply failed to consider it, but recognized the value in doing so. 19% of respondents are aware of climate change but didn’t think it relevant to their homebuying decisions.

There’s plenty of evidence that the younger generations, Millennials and Gen Z, think about climate change and consider it a significant issue. But apparently, mostly in a broad sense, and not specifically in relation to home buying. It is important to note that most of those in Gen Z are not old enough to buy a home yet, and therefore wouldn’t be included in the survey. Only 10.6% of respondents considered climate change to be a top priority in homebuying decisions. For 5.9%, it was the most important consideration.

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More: https://www.mpamag.com/us/mortgage-industry/guides/homebuyers-unmoved-by-climate-change-survey-finds/317704

The labor force has been unhappy for quite some time, given that wage growth continually fails to meet inflation levels. What has been holding workers back from quitting en masse is that they don’t have anywhere to go. Unstable finances, mostly due to that same lack of wages, means many of them would rather keep a job they don’t like than risk being unemployed. During lockdowns, about 3 million people quit, but many of them were forced to — people normally don’t want to quit during recessions because the economic climate is too unstable. This year, even without being forced, over 4 million have left their jobs.

In many ways, this was actually spurred on by the pandemic. School closures are still happening in some areas, and they’re not necessarily predictable. That means families need to either find a way to pay for childcare or quit their job to take care of the children themselves. For some, it’s the stimulus payments plus the trend towards economic recovery that allows people to be more confident in risking temporary unemployment. In addition, older at-risk individuals are retiring early to reduce exposure. Employers are starting to reopen positions that were cut during lockdowns, and are desperate to fill them, offering higher pay and more benefits — though still not a living wage in many cases.

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More: https://journal.firsttuesday.us/where-have-all-the-workers-gone-the-great-resignation-hits-home-in-california/80841/

This winter is probably going to be hotter than usual — and I’m not talking about climate change. According to a survey conducted in September and October of this year, 65% of sellers who planned to list between then and the end of 2022 are targeting either this year or the first quarter of next year. The holiday season tends to be slower, but sellers aren’t predicting that it will be.

Compared to the spring, many more sellers are expecting things to go their way. 38% are banking on heavy competition, which will also lead to higher-priced offers either at or above asking price, more all-cash offers, and more concessions by the buyer. They also think they’ll be getting offers quickly; 42% expect an offer within the first week. Only 1% of respondents don’t expect any of these things to happen.

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More: https://news.move.com/2021-11-11-Low-Temps,-High-Expectations-Realtor-com-R-Survey-Shows-65-of-Prospective-Sellers-Plan-to-Enter-the-Market-this-Winter

One indicator that the real estate market is showing signs of recovery is the levels of mortgage fraud. Unfortunately, that’s not a good thing, because mortgage fraud dropped dramatically during the Great Recession. Fewer mortgages does mean fewer opportunities for fraud, but the numbers are expressed as percentages, so it’s not a directly proportional relationship. Fraud indications increased by 37% between Q2 2020 and Q2 2021. Even with such a large jump, it’s actually not much higher than the average across the past decade.

Mortgage fraud can originate from either the lender or the borrower. Borrower fraud is relatively simple to look out for, but it’s something the lender would need to do. Lenders can look at recent job changes, especially to a higher-paying job, claims that the property is a primary residence, inconsistences in data about the property, failure to disclose debt or past foreclosures, or possible attempts to disguise parts of the transaction. These indicators aren’t a surefire guarantee of fraud, but they’re important areas to begin the search. A borrower who has had a Suspicious Activity Report (SAR) filed against them may be blocked from future mortgage loans or be required to pay off their mortgage immediately or go into foreclosure. Fraud by lenders could result in fines, loss of license, or possibly jail time.

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More: https://journal.firsttuesday.us/californias-mortgage-fraud-risk-rises-in-2021/80751/

While Millennials make up the largest contingent of potential homebuyers, they’re not without competition. Baby boomers have been buying at an accelerating rate as well, perhaps looking for retirement homes, or potentially buying for their children, who are probably Millennials. Average age of home buyers has been trending upward for years, but the Great Recession intensified the trend greatly.

This is because heavy competition favors the older generations. Millennials are generally first-time homebuyers without any equity, many are saddled with college debt from ever-increasing tuitions, and wage growth hasn’t even begun to keep up with inflation. What low supply existed was easily snatched up by those who could afford to pay above asking price, in all likelihood, those who had already owned a home for decades.

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More: http://zillow.mediaroom.com/2021-10-14-Baby-Boomers-and-Millennials-Are-Competing-for-Homes,-and-Boomers-Are-Winning

The pandemic and work-from-home sparked a trend of moving out of dense urban areas into rural, cheaper areas. Leaving congested cities meant social distancing would be easier, and people were still able to work while paying less for housing. But it turns out that the trend didn’t really change anyone’s opinion of rural living — it’s starting to decline as pandemic fear is lessening and more people are moving back into the city, as well as back into offices.

Searches outside the prospective buyer’s current metro area are still above the pre-pandemic levels, at 30.1% compared to 25%. But they’ve dropped off consistently since the peak in Q1 of 2021, which was 31.5%. The pattern is likely to return to normal levels in 2022 or 2023. While more people are moving back to the big cities, they’re still paying attention to their wallets in where they look. Cheaper metro areas, such as Sacramento, are becoming far more popular destinations than expensive coastal metros like San Francisco.

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More: https://journal.firsttuesday.us/the-relocation-trend-has-come-to-a-head/80583/

Homeownership costs are not a simple matter of paying the purchase price. For one thing, most people don’t pay full cash. Even a 20% down payment is going to be the bulk of your first year’s costs, but it’s not all of it. Closing costs are an additional up-front cost, and you’re also going to pay the first installments of recurring costs, which include mortgage payments, homeowner’s insurance, and property taxes. Because of these costs, there’s a slight difference between ranking median home prices and ranking average total first-year costs, though they’re not too far off.

Among 20 of the largest US cities, Indianapolis has the lowest first-year costs, while San Francisco has the highest. These also happen to have the lowest and highest median home prices, respectively, of the cities on the list. But take a look at New York City. Property taxes are fairly low in NYC, but that’s eclipsed by the incredibly high closing costs and homeowner’s insurance cost. This makes the first year in NYC a bit more expensive than San Diego, despite lower median home prices. Similarly, Philadelphia having the lowest property taxes on the list makes it the fourth cheapest city in the first year, despite relatively high closing costs and a slightly higher median price than the next cheapest, Houston, which also has more expensive homeowner’s insurance.

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More: https://smartasset.com/data-studies/how-much-does-the-first-year-of-homeownership-cost-in-large-us-cities-2021