Preference builds among youths for suburban living
This year is shaping up to be the year of the first-time homebuyer. Millennials may be suburbanites, after all.
In recent years, economists and demographers have argued that members of Generation Y will have a longer love for city living, in smaller living quarters, than their predecessors.
But a newly released survey by the National Association of Home Builders discounts that, suggesting that what millennials really want is a single-family home outside of the urban center — just like other generations.
The survey of more than 1,500 people (born since 1977) found that 66 percent of millennials want to live in the suburbs, 24 percent want to live in rural areas and only 10 percent prefer to live in a city center.
“While you are more likely to attract this generation than other generations to buy a condo or a house downtown, that is a relative term,” says Rose Quint, NAHB's assistant vice president of survey research. “The majority of them will still want to buy the house out there in the suburbs.”
They want to live in more space than they have now, Quint says.
“Eighty-one percent said they want three or more bedrooms in their home,” she said.
“The preference for the suburbs suggests that future demand will be in the form of single-family homes rather than condominiums more prevalent in cities,” David Berson, chief economist with Nationwide Insurance Co., told The Wall Street Journal.
“That's also good news for future suburban single-family sellers, many of whom are baby boomers.”
Q. Will there be a boom in FHA refinance applications following the implementation of the premium cut?
A. That's a good possibility. Analysts are predicting a revived interest in obtaining new Federal Housing Administration loans because of the agency's 50-basis-point premium cut, which went into effect Monday, Feb. 2.
The FHA has been allowing lenders to cancel loan case numbers so that they can obtain a new case number, also as of Feb. 2, to ensure applicants can take advantage of the premium reduction.
Q. How will the housing market shape up this year?
A. Fannie Mae has an interesting view on that question. The strengthening of the economy will drive the housing market forward this year and make up for last year's “unspectacular” housing activity, according to Fannie Mae's Economic and Strategic Research Group's report.
Stronger wages for many Americans likely will lead to a higher rate of household formation in 2015, Fannie researchers note.
Fannie economists point to several positives in the housing recovery's favor: low gasoline prices, stronger labor market conditions, rising household net worth, improving consumer and business confidence, and reduced fiscal headwinds. Fannie economists predict the economy to climb to 3.1 percent this year, up from its prior estimate of 2.7 percent.
Q. Are many homes still “under water?”
A. Yes, but the number of those homes is decreasing. RealtyTrac, a source for housing data, recently released its new Home Equity and Underwater Report for the fourth quarter of 2014.
The report shows that at the end of the year there were 7,052,570 U.S. residential properties seriously under water — where the combined loan amount secured by the property is at least 25 percent higher than the property's estimated market value — representing 13 percent of all properties with a mortgage.
Q. Will the lower FHA fees recently established cost the taxpayers?
A. No, not according to HUD. The FHA's new lower annual premiums on insurance for homebuyers will not come at the cost of another taxpayer bailout, said HUD Secretary Julian Castro. HUD regulates FHA, which insures home loans with down payments as low as 3.5 percent, it was noted by the National Association of Realtors.
On Jan. 26, the FHA lowered its annual premiums on the loans it insures from 1.35 percent to 0.85 percent. The move is expected to save a typical first-time homebuyer about $900 a year.
• Email Jim Woodard at storyjim@aol.com.
© 2015, Creators