Tag: statistics

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

Plenty of people own pets, and no one thinks buying a pet is odd, even if they aren’t pet owners themselves. So the recent increase in pet purchases may have flown under the radar, but it’s there and it’s significant. The percent of households with at least one pet jumped from 64% in 2020 to 73% in 2021. The increase is being attributed to pandemic lockdowns — it’s likely that many people unable to meet with their friends wanted a pet to keep them company.

This means that homes that can accommodate pets are in higher demand. Pet-friendly HOAs or landlords are a plus for condo or rental seekers. For SFRs, a few factors are important for pet owners. They want fenced-in outdoor space so their pets can be outside without fear of them going missing. Having a doghouse is also a bonus. They usually want an extra bedroom for indoor pets, or at least more living space. This is also a general trend among recent homebuyers, but the decision to move seems to coincide with pet purchases.

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More: https://themreport.com/daily-dose/10-26-2021/pet-friendly-features-can-help-sell-a-home-faster

The commercial sector, especially with regard to office buildings, is still recovering from the 2020 recession. Fortunately, the stats are showing a positive trend. The industrial market bounced back most readily, since warehouse space was still necessary even without storefront purchasing. Vacancy rates in the retail sector are still above pre-2020 levels, but it’s slowly dropping. Work-from-home has hampered recovery in the office sector, but the numbers are stabilizing.

The most significant changes over the year occurred in net absorption. Net absorption is the total amount of space that is occupied — regardless of how many separate properties that includes. For the industrial sector, net absorption is now in the millions of square feet across SoCal. It was already 3.9 million in the Inland Empire last year, but now it’s up to 6.9 million. Other areas were previously below 1 million. The largest increase, both in raw numbers and by percentage, was in Los Angeles county, which increased nearly ninefold from 417,900 to 3.7 million.

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More: https://journal.firsttuesday.us/decline-meets-optimism-in-socal-commercial-real-estate-markets/80486/

The concept of aging in place, whereby older homeowners simply live in their home instead of moving to a retirement home, has been trending upward in recent years. The COVID-19 lockdowns only amplified that trend — seniors don’t want to be stuck in a home with several other residents. Unfortunately, this is causing a problem for inventory, since Baby Boomers and the Silent Generation own a combined 58% of properties. If over half of the homeowners are aging in place, they aren’t selling.

It’s not entirely their fault, though. After all, they aren’t intentionally lowering inventory out of malice. The trend is merely compounding a different issue, which is that population is increasing, but construction rates aren’t, and it’s especially low for multifamily housing. Recent legislation has made it easier to develop multifamily housing. But if that doesn’t happen, seniors moving from SFRs into retirement homes isn’t going to suddenly open up enough affordable space for everyone.

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More: https://journal.firsttuesday.us/baby-boomers-are-hogging-all-the-inventory/80373/

Though the appraisal process can be waived, and it’s not all that infrequent — about 25% of transactions, as of August — when the appraiser disagrees with the buyer and seller on a home’s value, things can get awkward. For all-cash offers, the appraiser’s opinion doesn’t have any direct effects, though it can still influence the buyer or seller’s decision to stick with the deal or not. But for contracts involving a loan, the lender frequently will only lend up to an amount based on the home’s appraised value, even if the buyer offers more than that. And quickly rising prices make appraisal values frequently lower than the asking price, while many buyers are actually offering over the asking price.

Appraisers’ inability to keep up with a fast-paced market is slowing down many transactions. Buyers want to buy quickly, but appraisals take time. More disastrously, deals are forced into renegotiation when buyers find the appraisal is too low for them to qualify for a loan for the amount they expected. This results in 23% of deals being delayed after the appraisal process. About half of these delayed deals end up completely falling through.

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More: https://magazine.realtor/daily-news/2021/10/11/low-appraisals-stall-23-of-home-sales

In recent years, co-buying has skyrocketed. This refers to a situation in which a home is purchased jointly by multiple owners. And nowadays, more and more of them don’t share a last name, with this value jumping by 771% since 2014. Of course, there could be multiple reasons for not sharing a name, and they could even be married, but chances are they’re not.

Buying your first home is not easy in the current economic climate. Millennials, who make up the largest chunk of prospective homeowners, have inherited astronomical home prices, crippling student debt, a weak job market, and negligible wage growth. Most can’t afford a home on their own — so they ask their friends or roommates to co-buy a house with them. The percent of co-buyers identifying as neither a married nor unmarried couple is only 3%, but that’s still up from two years ago when it was only 2%. The percent of unmarried couples co-buying also went up from 9% to 11%, as Millennials as a generation are also tending to marry later or not at all, whether for financial or personal reasons.

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More: https://magazine.realtor/daily-news/2021/10/12/co-buying-has-skyrocketed-in-last-7-years

The foreclosure moratorium is over now, putting many homeowners at risk. However, unlike the previous recession, homeowners actually have options this time around. Home prices are high, rather than low, meaning home equity has also increased. This will allow many homeowners to sell their homes instead of being foreclosed on.

The average annual gain in equity this year was $51,500, the highest point in the past 11 years. It’s also five times the value last year. Another important statistic is negative equity, which CoreLogic started tracking in 2009. Fewer homes than ever since the statistic has been tracked have negative equity, at only 2.3%. At the state level, Louisiana is somewhat struggling at 7.8% negative equity share. Among metros, Chicago has the highest negative equity share at 5.2%, but also the second lowest amount of negative equity — meaning more people have lost money than average, but those who have haven’t lost very much. Conversely, San Francisco has the lowest negative equity share at 0.6%, but the highest amount of negative equity.

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More: https://www.corelogic.com/intelligence/strong-home-equity-gains-in-2021-lower-foreclosure-risk/