HOME Survey: Economic and Financial Outlook, Attitudes About Home Buying and Selling on the Rise

Washington, D.C. – September 25, 2017 (nar.realtor) Existing-homes sales have retreated in four of the past five months, but new survey findings from the National Association of Realtors® indicate it is not because of a lack of confidence from consumers about buying and selling a home, or based on their views about the direction of the economy and their finances.

NAR logo

That’s according to NAR’s third quarter Housing Opportunities and Market Experience (HOME) survey(1) , which also found that two-thirds of households think saving for a down payment is challenging, and roughly half of renters expect to pay more in rent next year.

This quarter, there appears to be a revival from renters that now is a good time to buy a home. After dipping to roughly half of renters last quarter (52 percent), the share who believe now is a good time climbed to 62 percent (60 percent a year ago). Overall, current homeowners (80 percent), households with higher incomes and those living in the more affordable Midwest and South regions are the most optimistic about buying right now.

Amidst the steady gains in home values seen in many parts of the country, the share of homeowners that believe now is a good time to sell is also inching higher. Eighty percent of homeowners think now is a good time to list their home for sale (a new survey high), which is up from last quarter (75 percent) and even more so than a year ago (67 percent).

Lawrence Yun, NAR chief economist, says it is great news that homebuyer and seller optimism is advancing, but it remains unclear if it will actually translate to more sales. “The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale,” he said. “The pace of new home construction has not meaningfully broken out this year, and not enough homeowners at this point have followed through with their belief that now is a good time to sell. As a result, home shoppers have seen limited options, stiff competition and weakening affordability conditions.”

Added Yun, “Buyer demand is robust this fall, but the disappointing reality is that sales will continue to undershoot their full potential until supply levels significantly improve.”

Economic and financial outlook brightens

More households this quarter (57 percent) believe the economy is improving compared to the second quarter (54 percent) and a year ago (48 percent). Continuing the complete reversal from a year ago, those living in rural and suburban areas were more optimistic about the economy than respondents residing in urban areas. A majority of homeowners and those with incomes above $50,000 also had a positive outlook on the economy.

The rebound in economic confidence this quarter are also giving households increased assurances about their financial situation. The HOME survey’s monthly Personal Financial Outlook Index2, showing respondents’ confidence that their financial situation will be better in six months, jumped from 57.2 in June to 62.0 in September. A year ago, the index was 58.6.

“Jobs are plentiful, wage growth is finally showing signs of life, home values are up considerably in the past five years and the stock market is at record highs,” said Yun. “The economy is not perfect, and growth overall is still sluggish, but the financial health of the typical household looks as healthy as it has since the recession.”

Most renters likely to continue renting – even if their rent increases

This quarter, non-homeowners were asked if they expect their rent to increase over the next year, and given their current financial situation, what impact paying more in rent would have on their living arrangements.

Roughly half of current renters expect to pay more in rent next year (51 percent). If in fact their rent does increase, most will either resign their lease anyway (42 percent) or move to a cheaper rental. Only 15 percent of respondents will consider buying a home.

“Even though the typical down payment of a first-time buyer has been 6 percent for three straight years, two-thirds of respondents indicated that saving for one is difficult right now,” said Yun. “Rents and home prices have outpaced incomes in the past few years, and this is undoubtedly impacting their ability to put aside savings for a home purchase, even if they increasingly believe it’s a good time to buy. Heading into next year, higher home prices and limited inventory in the affordable price range will likely continue to hold back a share of renters who would prefer to be homeowners.”

About NAR’s HOME survey
In July through early September, a sample of U.S. households was surveyed via random-digit dial, including a mix of cell phones and land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 2,709 household responses are represented.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1. NAR’s Housing Opportunities and Market Experience (HOME) survey tracks topical real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home, and expectations and experiences in the mortgage market. New questions are added to the survey each quarter to reflect timely topics impacting real estate.

HOME survey data is collected on a monthly basis and will be reported each quarter. New questions will be added to the survey each quarter to reflect timely topics impacting the real estate marketplace. The next release is scheduled for Monday, June 12, 2017 at 10:00 a.m. ET.

2. Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in 6 months; 50 = all respondents believe their personal financial situation will be about the same in 6 months; 100 = all respondents believe their personal situation will be better in 6 months.

Media Contact:

Adam DeSanctis
(202) 383-1178
Email

For Least Valuable U.S. Homes, Housing Crisis Recovery Lagging

Homes in the bottom third of the market lost 30 percent of their value during the housing bust and have yet to regain it

– National home values rose 6.9 percent from August 2016, to a Zillow Home Value Index (ZHVI) of $201,900. Home values in Seattle, Tampa, Fla. and San Jose saw the strongest appreciation.

– Rents across the country are up 1.9 percent year-over-year, to a Zillow Rent Index (ZRI) of $1,430 per month, with rent in Sacramento, Calif. and Seattle appreciating the most.

– The top and bottom thirds of the market in Detroit have seen the most uneven recovery in terms of homes regaining the value lost following the housing crisis.

Seattle, WA – Sept. 21, 2017 (PRNewswire) Median home values are reaching new peaks in more than half of the nation’s largest housing markets, but a closer look at which homes are regaining value reveals an uneven recovery in the biggest markets.

Zillow Logo

More than 50 percent of U.S. homes have reached or surpassed the value they reached during the housing boom period, according to the August Zillow® Real Estate Market Report(i), but the types of homes that are recovering are not the same, particularly in the most populated places. In 24 of the nation’s largest 35 markets, the homes in the bottom third of the market are least likely to have recovered the value lost when the housing bubble burst.

Detroit has seen one of the least balanced recoveries following the Great Recession. Nearly two-thirds of the most expensive homes in Detroit have regained the value lost when the market collapsed. The typical top-tier home value in Detroit is $284,800, higher than it was during the housing bubble. In comparison, homes in the bottom third have only regained 33.7 percent of their lost value, and are now worth a median of $53,000. Only 10.6 percent of these homes have fully returned to their peak values.

As homes are often the most expensive asset someone owns, the recovery contributes to the growing wealth gap across the country. Household incomes show a similar pattern of inequality, according to newly released Census data(ii). The median household income across the United States increased in 2016, but those in the top 20 percent of earners took home more than half of the overall income.

“The housing market as a whole is moving at a steady clip, with high demand and low inventory combining to maintain strong home value appreciation,” said Zillow Chief Economist Dr. Svenja Gudell. “Most new construction has been at the higher end of the market, so demand for the limited supply of entry-level homes is pushing up their values, but these homes also lost more value when the bubble burst. Many of these homeowners are still waiting to see their homes come back to where they were about 10 years ago. Even as headline numbers show an overall recovery, there are still thousands of Americans struggling to bounce back from the housing bust.”

The median home value in the U.S. rose 6.9 percent over the last year to a Zillow Home Value Index(iii) of $201,900. Seattle is the only major U.S. market where home values rose at a double-digit annual pace, up 12.4 percent since last August to a median home value of $453,100. Tampa home values rose 9.3 percent, and the median home is worth $187,400.

Annual rent appreciation grew for the fourth consecutive month, with rents increasing 1.9 percent from last August to a Zillow Rent Index(iv) of $1,430.

Limited inventory leaves few options for buyers. Nationally there were 12.6 percent fewer homes available in August 2017 than there were in August 2016. San Jose and San Diego saw the biggest annual declines in inventory, down 59.4 percent and 37.2 percent respectively.

Mortgage rates(v) on Zillow ended August at 3.62 percent, near the lowest level of the month. Rates moved steadily lower throughout the month after starting at a high of 3.72 percent(vi). Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site and reflect the most recent changes in the market.

Chart

Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

(i) The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow’s Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder’s office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data.

(ii) https://www.census.gov/library/publications/2017/demo/p60-259.html

(iii) The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.

(iv) The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow’s database, regardless of whether they are currently listed for rent. It is expressed in dollars.

(v) Mortgage rates for a 30-year fixed mortgage

(vi) Monthly high occurred on August 1st

CoreLogic Reports 2.8 Million Residential Properties with a Mortgage Still in Negative Equity

  • U.S. Homeowners Gained an Average of Almost $13,000 in Equity
  • 500,000 Homes Would Regain Equity If Home Prices Rose Another 5 Percent
  • The Number of Underwater Homes Decreased by 22 Percent Year Over Year

Irvine, CA – September 21, 2017 (BUSINESS WIRE) CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its Q2 2017 home equity analysis, which shows U.S. homeowners with mortgages (roughly 63 percent of all homeowners*) have seen their equity increase by a total of 10.6 percent year over year, representing a gain of $766 billion since Q2 2016.

CoreLogic Logo

Additionally, homeowners gained an average of $12,987 in equity between Q2 2016 and Q2 2017. Western states led the equity increase with Washington homeowners gaining an average of approximately $40,000 in home equity and California homeowners gaining an average of approximately $30,000 in home equity (Figure 1). Home price increases in these states drove the equity gains.

From Q1 2017** to Q2 2017, the total number of mortgaged residential properties with negative equity decreased 10 percent to 2.8 million homes, or 5.4 percent of all mortgaged properties. Year over year, negative equity decreased 21.9 percent from 3.6 million homes, or 7.1 percent of all mortgaged properties, from Q2 2016 to Q2 2017.

“Over the last 12 months, approximately 750,000 borrowers achieved positive equity,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This means that mortgage risk continues to decline and, given the continued strength in home prices, CoreLogic expects home equity to rise steadily over the next year.”

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both.

Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009.

The national aggregate value of negative equity was approximately $284.4 billion at the end of Q2 2017. This is up quarter over quarter by approximately $200 million, or 0.1 percent, from $284.2 billion in Q1 2017 and down year over year by approximately $700 million, or 0.2 percent, from $285.1 billion in Q2 2016.

“Homeowner equity reached $8 trillion in the second quarter of 2017, which is more than double the level just five years ago,” said Frank Martell, president and CEO of CoreLogic. “The rapid rise in homeowner equity not only reduces mortgage risk, but also supports consumer spending and economic growth.”

*Homeownership mortgage source: 2016 American Community Survey.
**Q1 2017 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.

For ongoing housing trends and data, visit the CoreLogic Insights Blog.

Methodology

The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position. The data is first generated at the property level and aggregated to higher levels of geography. CoreLogic data includes more than 50 million properties with a mortgage, which accounts for more than 95 percent of all mortgages in the U.S. CoreLogic uses public record data as the source of the MDO, which includes both first-mortgage liens and second liens, and is adjusted for amortization and home equity utilization in order to capture the true level of MDO for each property. The calculations are not based on sampling, but rather on the full data set to avoid potential adverse selection due to sampling. The current value of the property is estimated using a suite of proprietary CoreLogic valuation techniques, including valuation models and the CoreLogic Home Price Index (HPI). In August 2016, the CoreLogic HPI was enhanced to include nearly one million additional repeat sales records from proprietary data sources that provide greater coverage in home price changes nationwide. The increased coverage is particularly useful in 14 non-disclosure states. Additionally, a new modeling methodology has been added to the HPI to weight outlier pairs, ensuring increased consistency and reducing month-over-month revisions. The use of the enhanced CoreLogic HPI was implemented with the Q2 2016 Equity report. Only data for mortgaged residential properties that have a current estimated value are included. There are several states or jurisdictions where the public record, current value or mortgage data coverage is thin and have been excluded from the analysis. These instances account for fewer than 5 percent of the total U.S. population.

Source: CoreLogic

The data provided is for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be re-sold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from CoreLogic. Any CoreLogic data used for publication or broadcast, in whole or in part, must be sourced as coming from CoreLogic, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data is illustrated with maps, charts, graphs or other visual elements, the CoreLogic logo must be included on screen or web site. For questions, analysis or interpretation of the data contact Lori Guyton at lguyton@cvic.com or Bill Campbell at bill@campbelllewis.com. Data provided may not be modified without the prior written permission of CoreLogic. Do not use the data in any unlawful manner. This data is compiled from public records, contributory databases and proprietary analytics, and its accuracy depends upon these sources.

About CoreLogic

CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled solutions provider. The company’s combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.

CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries. All other trademarks are the property of their respective owners.

Contacts

for CoreLogic
For real estate industry and trade media:
Bill Campbell
(212) 995-8057
bill@campbelllewis.com

or

For general news media:
Lori Guyton
(901) 277-6066
lguyton@cvic.com

Unison Survey Reveals 4 in 10 Americans Find Saving for a Down Payment the Biggest Financial Barrier to Home Ownership

Although 77 Percent Agree Buying a Home Is a Good Financial Decision, Data Shows Why Many Do Not Follow Through

SAN FRANCISCO, Sept. 19, 2017 (PRNewswire) Unison Home Ownership Investors, the leading provider of home ownership investments, today announced findings from its survey of 2,018 Americans, conducted by Atomik Research, on the biggest barriers to home ownership. The findings reveal that there are significant generational and regional differentiators when it comes to housing, including how much is being spent on rent, flexibility in budget and compromises for the ideal home location. While majority of Americans agree that buying a home is a good financial decision, saving enough money for a down payment and the process of getting approved for a loan are the major financial barriers.

Unison Logo

The New York Fed’s recent Household Debt and Credit Report shows total consumer debt in Q2 2017 has increased by $114 billion to $12.84 trillion and student loan debt alone reached $1.3 trillion. Between skyrocketing rents, student loans and debt to pay off, many Americans have a hard time budgeting for a down payment. To understand changes in home purchasing behavior and industry perceptions, Unison’s survey dove deep into the decision-making process to understand barriers of entry, impact on monthly financials and accessibility to additional funds.

The Decision-Making Process to Buy or Not to Buy a Home

Although the majority of Americans understand that owning a home is a sound investment and are willing to make sacrifices for the ideal place, they are not ready to follow through with a purchase. Part of this is a result of not fully understanding the financial benefits or trusting the credibility of information available.

  • Majority of respondents (77 percent) agree that buying a home is a good financial decision, however, 15 percent admit they are not comfortable when it comes to understanding the implications that purchasing a home has on personal finances.
  • Over half (63 percent) agree to some extent that home ownership can reduce the stress and anxiety associated with rentals and moving, and improve mental health.
  • 54 percent agree to some extent that a home mortgage is often less expensive than renting, which can improve family health by freeing up money for healthier food and doctor appointments.
  • Nearly half of respondents (46 percent) would accept a financial strain if it meant living in a neighborhood with high quality schools and was close to good job opportunities.
  • When receiving information on buying a home – 54 percent would trust the credibility of their local realtor/real estate agent; 43 percent would trust their family and friends, or their bank – and only 12 percent would trust their local newspaper.

Financial Barriers Holding Prospective Buyers Back

Once the value of home ownership is understood, there are other financial factors stopping prospective buyers from moving forward. From rising property prices to not being able to save enough money for a down payment, people would rather avoid the hassle. Also, there’s a disconnect between what the respondents felt was required of a down payment for a mortgage, versus what is considered reasonable.

  • Saving for a down payment is the biggest financial barrier for 41 percent of those looking to become home owners; 30 percent find it a headache to get approved for a loan.
  • 56 percent of respondents believe that low wages and debt make it hard to save money in their area.
  • However, the high price of rental homes and apartments are also becoming a major concern for 57 percent of respondents, followed closely by cost to buy or own a home in their area (53 percent).
  • In fact, 66 percent of those surveyed admit paying between $500 and $2,000 per month for rent or mortgage. And, more than half (55 percent) admit this to be a strain on their monthly budget.
  • While 3 in 10 would expect their bank to require a 10 percent down payment for a mortgage, 24 percent felt a 5 percent down payment would be a more reasonable amount.

Generational and Regional Gaps to Home Ownership

The survey found that Millennials, compared to Baby Boomers and Gen Xers, are also far less likely to take the plunge. In addition, in major metro cities where housing is expensive, people are more likely to spend outside of their budgets to purchase a home.

  • Millennials (56 percent) are more likely to be concerned about the cost to buy or own a home than Baby Boomers (47 percent).
  • 56 percent of Millennials reported that they felt ‘very comfortable’ or ‘somewhat comfortable’ understanding the financial options available for purchasing a home.
  • Millennials (38 percent) are less likely than Gen X (51 percent) and Baby Boomers (55 percent) to agree that home ownership allows for deductions on federal, state and local income taxes.
  • Millennials (65 percent) are more likely than Gen X (59 percent) and Baby Boomers (51 percent) to view mortgages as an opportunity to own a home by the time they retire.
  • Millennials (32 percent) are far less likely to own their home compared to Gen X (52 percent) and Baby Boomers (65 percent).
  • Nearly 60 percent of Millennials report rent and mortgage payments as a strain on their budget each month, compared to 58 percent and 43 percent for Gen X and Baby Boomers, respectively.
  • Cities where housing is most expensive (New York City – 59 percent and San Francisco – 54 percent), respondents were most willing to spend outside their budget if the neighborhood had better schools and job opportunities. Portland, Oregon (35 percent) and Hartford, Connecticut (36 percent) were least likely.
  • Los Angeles had the highest percentage of participants paying over $2,000 per month for rent or mortgage (27 percent), compared to the average of 7 percent.
  • Nearly a third (32 percent) of respondents in San Francisco expect they would need to put down 20 percent for a new home mortgage.

“At Unison, we want to make home ownership a reality for more people. To do so, it’s important to study the current landscape and get a granular understanding into why the home ownership rate for the first-time buyer demographic has dropped over the last decade,” said Brian Elbogen, director of research, Unison. “While this survey confirms that saving enough money for a down payment is the biggest financial barrier, we also found that there is a missed opportunity for those who do not understand the benefits of home ownership, and that there are alternative financing options available.”

Methodology

The Unison survey was conducted by Atomik Research on a sample of 2,018 general population respondents in the United States and in accordance with MRA guidelines and regulations. The online survey was fielded between August 7 and 11, 2017. Of the survey participants, 100 respondents were in each of the following cities: Baltimore; Boston; Chicago; Hartford/New Haven, Connecticut; Los Angeles; New York; Norfolk-Portsmouth-Newport News, Virginia; Philadelphia, Phoenix; Portland, Oregon; San Francisco; and Seattle. Atomik Research is an independent creative market research agency that employs MRA certified researchers and abides to MRA code.

For more information on Unison, please visit www.unison.com.

About Unison Home Ownership Investors

Unison is the leading provider of home ownership investments, modernizing home financing through long-term partnerships. Unison works with lenders, regulators and institutional investors to integrate home ownership investing into the U.S. housing finance system. Unison HomeBuyer helps purchasers buy the home they want with less debt and risk, typically by doubling the down payment. The larger down payment makes it easier to qualify for a loan, increases buying power, lowers the monthly payment and/or allows a buyer to reserve cash. Unison HomeOwner provides current homeowners with cash to eliminate debt, remodel, pay for school, invest or as a cash cushion, without the added debt or payments of a home equity loan or HELOC.

Unison’s platforms have received prestigious recognitions including the FinovateSpring 2017 and Benzinga 2017 Best of Show awards. Headquartered in San Francisco, Unison operates in 13 states and has secured over $300M in total capital. For additional information, visit www.unison.com.

Media Contacts

Michael Micheletti
Director of Corporate Communications
(415) 365-0092
Michael.micheletti@unison.com

Ivy Chen
Account Director, MWWPR
(415) 580-6133
ichen@mww.com

Student Debt Delaying Millennial Homeownership by 7 Years

Washington, D.C. – September 18, 2017 (nar.realtor) Despite being in the prime years to buy their first home, an overwhelming majority of millennials with student debt currently do not own a home and believe this debt is to blame for what they typically expect to be a seven-year delay from buying.

NAR logo

This is according to a new joint study on millennial student loan debt released today by the National Association of Realtors® and nonprofit American Student Assistance®. The survey additionally revealed that student debt is holding back millennials from financial decisions and personal milestones, such as adequately saving for retirement, changing careers, continuing their education, marrying and having children.

NAR and ASA’s new study found that only 20 percent of millennial respondents currently own a home, and that they are typically carrying a student debt load ($41,200) that surpasses their annual income ($38,800). Most respondents borrowed money to finance their education at a four-year college (79 percent), and slightly over half (51 percent) are repaying a balance of over $40,000.

Among the 80 percent of millennials in the survey who said they do not own a home, 83 percent believe their student loan debt has affected their ability to buy. The median amount of time these millennials expect to be delayed from buying a home is seven years, and overall, 84 percent expect to postpone buying by at least three years.

“The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and other major life decisions,” said Lawrence Yun, NAR chief economist. “Sales to first-time buyers have been underwhelming for several years now1, and this survey indicates student debt is a big part of the blame. Even a large majority of older millennials and those with higher incomes say they’re being forced to delay homeownership because they can’t save for a down payment and don’t feel financially secure enough to buy.”

According to Yun, the housing market’s lifecycle is being disrupted by the $1.4 trillion of student debt U.S. households are currently carrying2. In addition to softer demand at the entry-level portion of the market, a quarter of current millennial homeowners said their student debt is preventing them from selling their home to buy a new one, either because it’s too expensive to move and upgrade, or because their loans have impacted their credit for a future mortgage.

“Millennial homeowners who can’t afford to trade up because of their student debt end up staying put, which slows the turnover in the housing market and exacerbates the low supply levels and affordability pressures for those trying to buy their first home,” added Yun.

Real Estate Infographic

Repaying student debt is influencing career choices, life milestones and retirement savings

In addition to postponing a home purchase, the survey found that student debt is forcing millennials to put aside several additional life choices and financial decisions that contribute to the economy and their overall happiness. Eighty-six percent have made sacrifices in their professional career, including taking a second job, remaining in a position in which they were unhappy, or taking one outside their field. Furthermore, more than half say they are delayed in continuing their education and starting a family, and 41 percent would like to marry but are stalling because of their debt.

Even more concerning, according to Yun, is that it appears many millennials are putting saving for retirement on the backburner because of their student debt. Sixty-one percent of respondents at times have not been able to make a contribution to their retirement, and nearly a third (32 percent) said they were at times able to contribute but with a reduced amount.

“Being unable to adequately save for retirement on top of not experiencing the wealth building benefits of owning a home is an unfortunate situation that could have long-term consequences to the financial well-being of these millennials,” said Yun. “A scenario where only those with minimal or no student debt can afford to buy a home and save for retirement is not an ideal situation and is one that weakens the economy and contributes to widening inequality.”

A better understanding of college costs is needed

The financial pressures many millennials with student debt are now experiencing appear to somewhat come from not having a complete understanding of the expenses needed to pay for college. Only one-in-five borrowers indicated in the survey that they understood all of the costs, including tuition, fees and housing.

“Student debt is a reality for the majority of students attending colleges and universities across our country. We cannot allow educational debt to hold back whole generations from the financial milestones that underpin the American Dream, like home ownership,” said Jean Eddy, president and CEO at ASA. “The results of this study reinforce the need for solutions that both reduce education debt levels for future students, and enable current borrowers to make that debt manageable, so they don’t have to put the rest of their financial goals on hold.”

“Realtors® are actively working with consumers and policy leaders to address the growing burden student debt is having on homeownership,” President William E. Brown, a Realtor® from Alamo, California. “We support efforts that promote education and simplify the student borrowing process, as well as underwriting measures that make it easier for homebuyers carrying student loan debt to qualify for a mortgage.”

In April 2017, ASA distributed a 41 question survey co-written with NAR to 92,419 student loan borrowers (ages 22 to 35) who are current in repayment. A total of 2,203 student loan borrowers completed the survey. All information is characteristic of April 2017, with the exception of income data, which is reflective of 2016.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1. According to NAR’s annual Profile of Home Buyers and Sellers, the percent share of first-time buyers in the past three years is 33 percent, which is below the long-term historical average of near 40 percent.

2. According to 2017 research on student debt from Experian. (link is external)

Media Contact:

Adam DeSanctis
(202) 383-1178
Email

Redfin: Home Prices Surged 7.7 Percent in August as Inventory Fell 12.4 Percent

Hurricane Harvey sent Houston home sales down 29 percent while new listings tumbled 12 percent

Seattle, WA – September 14, 2017 (BUSINESS WIRE) (NASDAQ: RDFN) — Home prices in August surged 7.7 percent, the largest year-over-year price gain since May 2015, according to Redfin (www.redfin.com), the next-generation real estate brokerage. The national median sale price was $293,000, flat from July. None of the metro areas Redfin tracks saw prices decline in August. The median value of off-market homes in August was $251,000, as measured by the Redfin Estimate, up 0.7 percent from July.

Redfin Logo

Sales in August fell 5.5 percent compared to last year, the largest decline posted since July 2016. This follows the 5 percent decline posted in July by the Redfin Housing Demand Index.

The number of homes for sale plunged 12.4 percent, the largest year-over-year decline in a 23-month streak of declining inventory. The number of new listings in August was down 1 percent from a year ago, leaving just 2.8 months of supply. Less than six months of supply signals the market is tilted in favor of sellers.

Chart

Nearly a quarter (24.9%) of homes sold above their list price. The average sale-to-list ratio was 98.5 percent. The typical home that sold in August went under contract in 39 days, two days longer than July’s record-setting pace, typical of a seasonal slowdown.

“The real estate market still favors sellers, with strong demand and rising prices, but perhaps less so now than earlier in the year,” said Redfin CEO Glenn Kelman. “Newly listed homes are selling faster in 2017 than in 2016, but whereas in April the market was nine days faster than the 2016 market, in August it was five; the gap between 2016 and 2017 is narrowing slightly. Normally such differences wouldn’t be worth mentioning, but Redfin managers of coastal markets where demand has been strongest are now reporting that some buyers are stepping back from higher prices.”

Hurricane Harvey’s Impact on the Houston Real Estate Market

Hurricane Harvey sent Houston sales falling 29 percent year over year, as buyers backed out of purchasing flooded homes and home settlements were delayed awaiting required reinspections. Flood damage is limiting the number of homes being listed for sale. New listings declined 12.2 percent compared to last August. Despite the decline in new listings, inventory was still up 5.7 percent compared to last year.

While most real estate activity halted for a few days immediately following the storm, Redfin agents reported rebounding buyer interest, tours and offers in the final days of the month.

Other August Data

Competition

  • Seattle, WA was the fastest market, with nearly half of all homes pending sale in just 8 days, down from 10 days from a year earlier. Portland, OR and Denver, CO were the next fastest markets with 11 and 12 median days on market, followed by Boston, MA (13) and Tacoma, WA (13).
  • The most competitive market in August was San Jose, CA where 73.8% of homes sold above list price, followed by 72.3% in San Francisco, CA, 67.3% in Oakland, CA, 51.3% in Seattle, WA, and 48.1% in Tacoma, WA.

Prices

  • Seattle, WA had the nation’s highest price growth, rising 16% since last year to $522,000. Fort Lauderdale, FL had the second highest growth at 15.6% year-over-year price growth, followed by Cincinnati, OH (14.5%), Las Vegas, NV (14%), and San Jose, CA (13.4%).
  • No metros saw a price decline in August.
  • Detroit, MI had the highest month-over-month increase in the value of off-market homes up 3%, as measured by the Redfin Estimate; this mirrored price growth for on-market homes, up 5.3% year over year.

Sales

  • Columbia, SC saw the largest decline in sales since last year, falling 93.2%. Home sales in Newark, NJ and Houston, TX declined by 75.3% and 29.1%, respectively.
  • 4 out of 75 metros saw sales surge by double digits from last year. Camden, NJ led the nation in year-over-year sales growth, up 22%, followed by Baton Rouge, LA, up 21%. Baltimore, MD rounded out the top three with sales up 19% from a year ago.

Inventory

  • San Jose, CA had the largest decrease in overall inventory, falling 49.9% since last August. Oakland, CA (-31.8%), San Francisco, CA (-30.9%), and Tampa, FL (-26.8%) also saw far fewer homes available on the market than a year ago.
  • Austin, TX had the highest increase in the number of homes for sale, up 13.9% year over year, followed by New Orleans, LA (8.3%) and Houston, TX (5.7%).

Redfin Estimate

  • The median list price-to-Redfin Estimate ratio was 94.1% in San Francisco, the lowest of any market. This indicates the typical home for sale in August was listed at a price 5.9% below its estimated value. Only 8.9% of homes in San Francisco were listed for more than their Redfin Estimate.
  • Conversely, the median list price-to-Redfin Estimate ratio was 103% in Miami, FL and 102.6% in West Palm Beach, which means sellers are listing their homes for more than the estimated value in those metro areas. In Miami, 64.6% of homes were listed above their Redfin Estimate.

To read the full report, complete with data and charts, click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts

Redfin Journalist Services:
Alina Ptaszynski
(206) 588-6863
press@redfin.com