Gaps surface in national housing market
As the housing market nears full recovery, widening gaps along racial, socio-economic and generational lines are impacting the growth of the housing market and individual cities, according to a growing body of Zillow research, it was noted in a special report.
"For example, though millennials want to own homes, the share of young people living at home with their parents has increased sharply. … Housing affordability is twice as bad for those making a low income than those making a high income."
These inconsistencies in the housing market are causing problems to our general economy, according to the report.
"Our research on housing has unlocked issues that are closely linked to broader social and economic problems in the U.S. - such as poor access to credit, weak income growth and social mobility," said Zillow Chief Economist Svenja Gudell.
The report focused primarily on young and first-time homebuyers and prospective buyers.
"The research shows that millennials want to own homes and have views about homeownership that are as conservative as their grandparents." But the share of millennials (18-34) living at home with their parents has increased sharply over the past decade.
"Since 2012, the share of younger millennials (18-25) living at home has decreased from 55.5 percent to 54.2 percent, while the share of older millennials - those 26-34 who were scarred by the recession in their first years out of college - has increased from 12.9 percent to 14.5 percent.
"Young people are renting for longer before buying their first home, compared to a generation ago. And although first-time buyers' incomes have not changed significantly, the median price of their first home has increased by about a quarter.
"Over the last 20 years, home values in the metro areas with the most social mobility have soared, making it difficult for low-income people to afford living in the very places where they could most easily achieve socio-economic growth.
"Nationwide, the bottom third income earners spend twice as much of their income on mortgage payments than the top third."
In some expensive markets, the report pointed out, those making incomes in the bottom third would have to spend more than half of that income to afford the monthly payment on the cheapest homes on the market.
Q. Why are young couples (millennials) so active as homebuyers?
A. One reason might be that they are producing more offspring and feel the need of being settled in a home of their own.
"Millennial motherhood is on the rise. Could the increase in births for the millennial generation bode well for real estate and finally convince them to move into homeownership?"
That question was asked in a recent report by the National Association of Realtors.
"About 1.3 million millennial-aged women gave birth in 2015, which accounts for 82 percent of all U.S. births that year, according to Pew Research center data. Millennial women have lagged other generations in birthrates.
"Nearly half of Generation X women were already into motherhood by the time they were in the 18-to-33 age range, which millennials are at now."
Q. What are predictions for commercial mortgages this year?
A. Commercial and multifamily mortgage lending is expected to increase in 2017, as lenders' appetites to place new loans and borrowers' appetites to borrow both remain strong, according to a new Mortgage Bankers Association survey.
"Nearly two-thirds (63 percent) of the top firms expect originations to increase in 2017, with one-quarter (26 percent) expecting an increase of 5 percent or more. A full half (50 percent) expect their own firm's originations to increase by 5 percent or more," it was noted in a recent report.
"Commercial mortgage bankers expect 2017 to carry-over much of the momentum from 2016," said Jamie Woodwell, MBA's vice president for commercial real estate research.
• Email Jim Woodard at storyjim@aol.com.
© 2017, Creators Syndicate