U.S. housing starts climbed 18.6% in Jan.

WASHINGTON (AP) – March 8, 2019 – U.S. housing starts jumped 18.6 percent in January, as builders ramped up construction of single-family houses to the fastest pace in eight months.

The Commerce Department said Friday that January ground breakings occurred at a seasonally adjusted annual rate of 1.23 million. Home construction rebounded sharply from December, when the annual rate was just 1.04 million.

Most of the new construction came from single-family houses, which were being built at the strongest rate since May 2018. Still, overall housing starts in January were slightly below the 2018 total of 1.24 million as the pace of apartment construction slowed.

The housing market was hurt for much of 2018 by rising mortgage rates, which made it costlier to purchase a home. But average rates have declined since early November and the average 30-year rate was 4.41 percent this week, providing a possible boost for home buying this year.

Permits for construction, an indicator of future activity, improved 1.4 percent to a seasonally adjusted rate of 1.35 million. The permits suggest additional apartment construction in the coming months, as that segmented accounted for the gains. Single-family permits fell 2.1 percent in January to an annual rate of 812,000.

Avoid buyer remorse from commuting woes

WASHINGTON – June 22, 2016 – During the home search process, it’s important for buyers to understand the average commute time for each property they’re considering. A recent U.S. News & World Report article shared some commuting-related questions home shoppers should consider when deciding where they want to buy.

How much will your commute impact your lifestyle? “I always ask people how long or how far they are willing to commute,” says Judy Moore, a real estate professional for The Higgins Group Realtors® in Lexington, Mass. “We get a lot of people moving from Boston proper – younger folks who are starting a family and moving out of the city and the ‘burbs. And they figure it’s only 11 miles, so it’s not too far.” However, in rush hour that typical half-hour trip to the airport can easily be closer to an hour, she says.

What are the pros and cons of living farther out? A longer commute may have some benefits, such as possibly better schools or more land. But do those potential benefits outweigh the longer commute?

How will you commute, and what will the costs be? Will you drive or take public transportation? A survey from HNTB Corp., an infrastructure solutions firm, shows that 55 percent of Americans are willing to pay extra for a home if commuting via public transit is an option. Whether taking public transportation or driving your own, home shoppers should factor in costs, such as parking (some major cities charge $30 a day to park in a garage) and gas fees or public transit rides.

Are you willing to pay more? If you want to be in walking distance to public transportation, be willing to pay more for the home but expect some perks from that at resale too. Homes near a train stop tend to sell for higher prices, found a 2013 study by the American Public Transportation Association and National Association of Realtors®. Homes near transit stops outperformed homes in the rest of the metro area by 41.6 percent. “The better proximity that a resident has to a good commuting option, the higher the value of the residence,” says HNTB senior vice president Mike Sweeney.

Source: “5 Questions to Ask About Your Commute Before You Move to Your Next Home,” U.S. News & World Report (June 6, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

Goal of owning home still strong and 8 other housing trends

WASHINGTON (AP) – June 22, 2016 – Americans still want to own homes – if they can afford to. That’s the finding of a report released Wednesday by the Harvard University Joint Center for Housing Studies.

The pressures of student debt, rising rents and the leftover wreckage from the nearly decade-old housing bust have restrained people’s ability to buy, even though the dream remains alive. The report sees reasons for both optimism (more millennials are poised to leave the nest) and concern (rising numbers of renters face extreme costs).

Those factors could determine whether the share of Americans who are renting keeps rising or whether the nation’s homeownership rate can rebound from a near 48-year low of 63.5 percent.

Here are eight other major trends documented in the report:

More household formation

Americans formed 1.3 million new households in 2015, a return to normal pace of growth. Household formation had floundered during the Great Recession and amounted to a paltry 653,000 in 2013. Much of last year’s increase reflected an aging population in which more households consist of adults older than 65. But the Harvard analysis says the increase in households should continue because of the influx of millennials, which it defines as those born between 1985 and 2004.

During the recession and the sluggish recovery, many millennials returned to their childhood homes or lived with roommates, a trend that limited household formation. But as the largest generation in U.S. history, millennials are reaching an age when more of them will move out on their own. Millennial household formation is expected to average more than 2 million annually over the next several years, a surge that will likely further raise demand for rental units.

Larger houses, smaller apartments

Some people might love those tiny houses built on tractor trailers. But most yearn for extra space. The median size of a newly built single-family house was a record-setting 2,467 square feet last year. By contrast, the median unit in a new multifamily building has shrunk to 1,074 square feet from a peak of nearly 1,200 square feet in 2007. This decline likely reflects a shift in multifamily buildings away from condominiums toward rental apartments.

Home building up but still low

Homebuilders broke ground on 1.1 million properties last year, a healthy 10.8 percent annual increase from the depths of the recession. The problem is that figure still ranks among the worst years in the past half century. “In the long sweep of time, it’s still a pretty small number,” said Chris Herbert, managing director at the Harvard center.

Before 2016, apartment buildings, more than single-family houses, drove much of the increase in construction. But even as developers are stepping up single-family construction, they’re focused less on increasing the number of homes and more on catering to a smaller pool of affluent buyers who can generate more profit per house.

High rent

The government considers renters who spend more than 30 percent of their incomes on housing to be “cost-burdened.” Renters who spend more than 50 percent are considered “severely” burdened. The number of renter households that pay at least half their income reached a record 11.4 million in 2014, rising by 2.1 million from 2008 even as the economy began pulling out of the recession.

Poor dwellers can’t afford food

Compared with those who can find affordable housing, the poorest 25 percent of cost-burdened households spend on average 41 percent less each month on food. These same people also spend less on health care, not to mention retirement savings.

Housing aid eludes the neediest

Just one fourth of income-eligible renters receive any kind of public assistance. The shortfall is the result of inadequate government support, Herbert said. It’s true that the government can cut its housing expenditures by limiting its financial aid. But when people can’t afford rent, it creates an unstable situation where evictions become more common.

Housing instability can often increase people’s dependence on other social programs that raise costs for taxpayers in the long haul, Herbert said. It becomes harder to keep a job or learn in school when shelter is a constant uncertainty and increases dependence on other forms of welfare, he said.

“We can spend a little now, and in the end it’s going to create people who are much more financially stable on their own,” Herbert said.

Clusters of the poor

Between 2000 and 2014, the population in neighborhoods with poverty rates of at least 40 percent more than doubled to 13.7 million. That poverty overlaps with racial segregation. About 25 percent of poor blacks and 18 percent of poor Hispanics live in these high-poverty neighborhoods, compared with only 6 percent of whites.

Aging construction workers

The layoffs after the housing bust left builders with older construction crews. The share of building trades workers older than 55 rose to 16 percent from 10 percent in 2007. Just 13 percent of newly hired construction workers were under 25. Vocational training and immigration could help ease the coming labor shortage as older workers retire. So could opening up the industry to women, who make up less than 3 percent of construction workers.

AP Logo Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Fla.’s median prices, sales, listings rise in May

ORLANDO, Fla. – June 22, 2016 – Florida’s housing market reported higher median prices, more closed sales, increased new listings and fewer days to a contract in May, according to the latest housing data released by Florida Realtors®. Closed sales of single-family homes statewide totaled 25,518 last month, up 4.5 percent over the May 2015 figure.

“Florida’s housing market is growing at a more moderate pace,” said 2016 Florida Realtors®President Matey H. Veissi, broker and co-owner of Veissi & Associates in Miami. “New listings for existing single-family homes rose 5.8 percent compared to a year ago, while new listings for townhouse-condo properties rose 4.3 percent. While tight housing supply is having an impact in many areas, still-low mortgage rates, increased jobs and economic growth will continue to boost housing demand.”

Meanwhile, sellers continued to get more of their original asking price at the closing table. Sellers of existing single-family homes in May received 96.2 percent (median percentage) of their original listing price, while those selling townhouse-condo properties received 94.6 percent (median percentage).

The statewide median sales price for single-family existing homes last month was $221,050, up 10.5 percent from the previous year, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Thestatewide median price for townhouse-condo properties in April was $165,000, up 4.4 percent over the year-ago figure.

In May, statewide median sales prices for both single-family homes and townhouse-condo properties rose year-over-year for the 54th month in a row, Veissi noted. The median is the midpoint; half the homes sold for more, half for less.

Accordingto the National Association of Realtors®(NAR), thenational median sales price for existing single-family homes in April 2016 was $233,700, up 6.2 percent from the previous yearthenational median existing condo price was $223,300.In California, the statewide median sales price for single-family existing homes in April was$509,100; in Massachusetts, it was $350,000; in Maryland, it was $267,041; and in New York, it was $220,000.

Looking at Florida’s townhouse-condo market, statewide closed sales totaled 10,455 last month, up slightly (0.1 percent) compared to May 2015. Closed sales data reflected fewer short sales and cash-only sales in May: Short sales for townhouse-condo properties declined 40.4 percent while short sales for single-family homes dropped 37 percent. Closed sales may occur from 30 to 90-plus days after sales contracts are written.

“The renewed level of growth we’re seeing for sales of single-family homes statewide this month was largely due to the continued resurgence of local markets throughout North Florida and the I-4 corridor,” said Florida Realtors®Chief Economist Brad O’Connor. “Many of these areas began their recoveries from the previous downturn later than most of the markets in the southern part of the state, so they only recently began hitting their stride.

“In addition, these markets are less reliant on international buyers, so they have not been negatively impacted by recent uncertainty in foreign real estate investment activity.”

Inventory was at a 4.4-months’ supply in May for single-family homes and at a 6.1-months’ supply for townhouse-condo properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.60 percent in May 2016, down from the 3.84 percent average recorded during the same month a year earlier.

Decade after housing peaked: Owners richer, renters hurting

MOUNT PLEASANT, South Carolina (AP) – June 20, 2016 – It’s a troublesome story playing out across America in the 10 years since the housing bubble peaked and then burst in a ruinous crash: As real estate has climbed back, homeowners are thriving while renters are struggling.

For many longtime owners, times are good. They’re enjoying the benefits of growing equity and reduced mortgage payments from ultra-low rates.

But for America’s growing class of renters, surging costs, stagnant pay and rising home values have made it next to impossible to save enough to buy.

The possible consequences are bleak for a nation already grappling with economic inequality: Whatever wealth most Americans possess mainly comes from home equity. An enlarged renter class means fewer Americans can build that same wealth and financial security.

Nearly two-thirds of adults still own homes. And some who rent do so by choice. Yet ownership has become a more distant dream for the many Americans who still regard it as a route to prosperity and pride. The problem has become especially severe in areas that offer the best job prospects as well as those that have been battered by foreclosures.

“It doesn’t paint a pretty picture,” said Svenja Gudell, chief economist at Zillow, the online real estate database company. “You’re really blocking out a group of buyers from owning a home. They’re truly living paycheck to paycheck, and that does not put them into a good position to buy.”

Joe Fabie and his wife face just such a bind. They moved to Mount Pleasant, just over the bridge from historic Charleston, South Carolina after law school in Pittsburgh. The suburb’s pastel-hued harbor vistas, tin-roofed houses and Spanish moss-adorned live oaks were enchanting.

But the rising rent on their one-bedroom apartment – more than for their three-bedroom rental in Pittsburgh – made it impossible to save enough to buy a home. With their rent going up again, the couple moved to a cheaper suburb in hopes of repaying their student debt and saving for a starter home.

“The best school district is Mount Pleasant, and we would like to be there,” said Fabie, 27. “But if you’re lucky you can get some beat-up homes for around $300,000.”

An exclusive analysis by The Associated Press of census data covering over 300 communities found that two major forces are driving a wedge between the fortunes of renters and homeowners:

Historically low mortgage rates have enabled homeowners to refinance and shrink their monthly payments, thereby reducing a major household cost. The median annual mortgage expense for a U.S. homeowner has dropped by $1,492 since 2006.
A combination of foreclosures and new college graduates crowding into the strongest job markets has raised demand for rentals. Renters accounted for all the 8 million-plus net households the United States added in the past decade. Homeownership has dipped to 63.5 percent, near a 48-year low.
That demand has driven up rents, which in turn have prevented or delayed people from buying first homes.

The government says if you spend more than 30 percent of your pretax pay on housing, you are “cost-burdened.” The total number of renters in that category has jumped more than 30 percent in the past decade, to 21.2 million. Half of all renters are now considered cost-burdened, compared with just 24 percent in 1960.

These trends are reflected in how and where Americans live. Suburban cul-de-sacs built for owners are now tilting toward rentals, especially in such areas as Orlando, Las Vegas and Tampa, where the bubble and crash were especially intense.

After the bust, investors bought distressed houses in these communities at sharp discounts and rented them out. Many of the new tenants belong to Generation X households – ages 35 to 51 – that began renting after the crash, according to the Harvard University Joint Center for Housing Studies.

Rents have also jumped in areas that absorbed many young college-educated job hunters. These workers have increasingly clustered in areas, including Boston, San Diego and Washington, with abundant jobs but high housing costs. The result is delayed homeownership for a population group that historically had the means to buy.

The AP analysis also found a contrasting belt of stability across the Midwest where the housing boom and meltdown had little effect on homeownership. Rates of ownership remained relatively stable, for example, in Minneapolis, St. Louis and Kansas City, Missouri, where starter homes are comparatively affordable.

But the transformations have been vast in other areas, particularly in smaller suburbs where much of the country lives.

Both before and during the housing boom, farmland around the country was bought cheaply and developed into houses, schools and shopping plazas –a build-out that ignited homeownership. Now, in a twist, many of those cul-de-sacs are occupied by renters living in homes whose former owners lost them to foreclosure.

To see just how drastically the foreclosure crisis transformed certain neighborhoods from the domain of owners into blocks of rental properties, consider the Orlando suburbs.

The shift has been vivid over the past five years in the Piedmont Park neighborhood of Apopka, a former agricultural hub now crowded with housing developments. Where one in 10 homes was once a rental, now more than a third are. Many are owned by Wall Street investment firms that bought them out of foreclosure at deep discounts.

Erika Pringley, a 42-year-old police dispatcher, rented with her husband a three-bedroom ranch house this year. Through a string of subsidiaries, the house is owned by Blackstone, the world’s largest real estate private equity group.

Previously, the house had been owned for eight years by Damian and Eva Elizondo, who lost it to foreclosure in 2013. The Elizondos owed nearly $258,000 on the home; the investment firm bought it for roughly $100,000.

At that price, the equivalent of the monthly mortgage would be under $500.

Pringley’s rent: $1,310 a month.

Pringley, who works for the Florida Highway Patrol, hopes to buy a home – if she can emerge from debt.

“I’m kind of tired of paying for somebody else’s property,” she said. “At my age, I want to own something that’s my own, have something that’s my own.”

Making that leap to ownership is becoming harder for typical Americans. The average first-time buyer makes $84,559, much more than the average household income of $75,037 – the widest such gap in over 15 years, according to an analysis by the online housing marketplace BuildZoom.

The residue of the housing bubble also remains achingly visible in Las Vegas, where the gamble of no-money-down, interest-only mortgages ignited a rush of construction in 2006 that led to mass foreclosures.

Vegas recovered slowly. Tourists returned to the casinos. Population growth picked up as retirees flocked to the Nevada desert. Ikea opened its first Las Vegas outlet, not far from where 8,000 apartment units are planned for construction.

Still, thousands of houses are stuck in the foreclosure pipeline, controlled by banks, and could flood the market should prices recover enough. Nearly half of Las Vegas now rents, compared with less than 40 percent a decade ago.

This closes one of the paths to accruing wealth. On average, homeowners have a net housing wealth of $150,506, according to figures soon to be released by the Urban Institute’s Housing Finance Center. That average climbs to $229,296 for those who own their homes free and clear, making the house an asset that provides a crucial financial cushion.

Elsewhere, rising prosperity is the reason why renters are stuck.

Just as the economy tanked nearly a decade ago, millennials began flooding the job market after college and graduate school. The most educated tended to cluster in cities where jobs were still plentiful, such as Boston, San Francisco and San Diego. They now pay historically high rents – a result of too few apartments to meet demand and too few renters with enough savings to buy.

Over the past decade, the number of under-35 college graduates in Washington rocketed up more than 50 percent to nearly 100,000. Bistros, boutiques and posh gyms opened along the once-downtrodden 14th Street corridor. Builders erected condos and rehabbed old buildings into apartments.

All this has created a paradox in Washington: Incomes are rising – normally fuel for homebuying – even as homeownership is declining. Average household income in the district has climbed an inflation-adjusted 8.7 percent since 2006 to $104,615, according to the Census Bureau. Yet ownership has dipped to 41.6 percent, from 45.8 percent.

Ultra-low mortgage rates have enabled Jim Phillips, 51, to capitalize on the influx, buying condos and renting them at a profit.

“With more and more younger people moving into the city, it’s creating an opportunity for me,” Phillips said. “So far, I have two condos. My goal is to buy, basically, one a year.”

The opportunities are there for people who have money – or those who are already homeowners.

Americans have refinanced $9.4 trillion of mortgage debt after the bubble burst, according to the Mortgage Bankers Association. New mortgages at under 4 percent interest have freed up thousands of dollars annually for households in several metro areas, according to Census figures.

Alpana Patel and her husband landed a house in San Marcos, California, about 35 miles from San Diego, in 2007. To buy their $845,000 home, they took out an interest-only mortgage with an adjustable rate starting 6.7 percent. Including property taxes and insurance, their monthly costs totaled about $6,000.

The couple kept paying the mortgage through the housing bust before refinancing in 2013. Their new mortgage charged just 3.75 percent, which shrank their monthly payment by $2,000 and allowed them to build equity.

“We’re actually able to pay down our mortgage, because initially we were just paying interest only,” said Patel, a 42-year-old real estate agent.

The couple eventually decided to rent out that house at a price that covers nearly all their mortgage costs and to buy a second, larger home where they could live.

“Now, we’re able to own two homes because we hung in there,” Patel said.

What the housing recovery presented was a rare opportunity to capitalize on mortgage rates that had never dipped so low in anyone’s lifetime. But even while millions of renters struggle to save enough to buy, many such homeowners have never had it so good.

“They’re basically taking advantage of the changing economics of homeownership in ways that renters can’t,” said Andrew Jakabovics, senior director of policy and research at the affordable housing nonprofit Enterprise Community Partners.

AP Logo Copyright © 2016 The Associated Press. AP writers Meghan Hoyer in Washington, Mike Schneider in Orlando, Florida, Alex Veiga in Los Angeles and Jim Salter in St. Louis contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.