Are Renters Saying There’s Market Trouble Ahead?
When it comes to residential real estate, young households are the canary in the mineshaft. It’s a sign of market health if they’re able to find affordable houses to buy and also obtain financing. If homes aren’t available and financing is hard to get, markets can’t thrive. Move-up buyers, as important as they are, simply can’t carry markets on their own; you need a pipeline of first-time home buyers, because they’re your move-up buyers of the future.
New data on renter attitudes from NAR is showing the canary getting a little ill, because renters are souring on home ownership. Not because they don’t want to be owners, but because they think it’s simply out of their reach right now. Only 62 percent of renters say now is a good time to buy, down from 68 percent last quarter.
Is a drop of 6 percentage points significant? NAR Chief Economist Lawrence Yun thinks it is. He says the drop in renter sentiment reflects the growing affordability gap between household incomes, which are growing about 2 percent a year, and home prices, which are rising about 6 percent a year, largely because of a persistent shortage of inventory, particularly in lower-priced single-family homes.
The issue is a top story in The Voice for Real Estate news video for the week of March 21. The video looks at several other big issues facing real estate, including the success NAR has had getting Congress to look seriously at easing FHA condo financing rules. Right now, only 10 percent of condo buyers use FHA financing. That’s because the financing isn’t available if you’re trying to buy a unit in a development in which 50 percent or more of the units are being rented out. Given the extent to which owners like to rent out their units, finding a property that’s under that threshold isn’t easy. FHA imposes other tough restrictions as well, like a limit of 25 percent of the amount of space that can be used for commercial purposes.
But with NAR’s encouragement, the House not long ago passed a bill to ease these requirements, and now it’s just a matter of the Senate taking it up. Once it does, there’s a reasonable chance of it passing, given that the House passed the bill 427-0. It’s clearly a bill that lawmakers on both sides of the aisle can get behind.
The video also looks at young households’ new appreciation for the suburbs. In survey after survey, millennials—those 35 years or old or younger—say they like to rent in urban areas to take advantage of city life. But once they’re ready to buy, they look for a home in the suburbs, in part because they have their eyes on schools and other amenities important to young families.
An upcoming Supreme Court case on the Clean Water Act is covered in the video as well. The U.S. Army Corps of Engineers and the Environmental Protection Agency have published rules expanding the jurisdiction of the Clean Water Act to more bodies of water than are currently covered. That means far more pieces of property will be subject to an expensive and time consuming permitting process. The goal is to make sure any wetlands or other bodies of water that are on the property, either all year or only at certain times of the year, are managed in accordance with federal rules.
The Supreme Court plans to take up a case to determine whether a property owner can sue right away if the federal government says the land requires a permit or whether the owner has to wait until after going through the permitting process. NAR thinks the owner should be able to sue right away, so it will be watching carefully how the Supreme Court rules.
Other news in the video include recent home sales figures, what attendees learned at the Association Executive Institute, which was held two weeks ago in San Antonio, and what NAR looks for when it gets requests for assistance under its Legal Action program.
The content for this post was sourced from www.RealtorMag.Realtor.org
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