Home Buying March 28, 2017

Millionaire to Millennials: Buy Now!

Self-made millionaire David Bach was quoted in a CNBC article explaining that “the single biggest mistake millennials are making” is not purchasing a home because buying real estate is “an escalator to wealth.” Bach went on to explain:

“If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

In his bestselling book, “The Automatic Millionaire,” Bach does the math:

“As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!”

Who is David Bach?

Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists. He has been a contributor to NBC’s Today Show appearing more than 100 times, has been a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS, and has been profiled in many major publications, including The New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, The Washington Post, The Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.

Bottom Line

Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy one.

Market StatsWindermere Bellevue Commons News March 15, 2017

Are You 1 of the 59 Million Planning to Buy a Home This Year?

59 Million Americans Are Planning to Buy This Year.

Are You 1 of the 59 Million Planning to Buy This Year? | MyKCM

According to a survey conducted by Bankrate.com, one in four Americans are considering buying a home this year. If this statistic proves to be true, that means that 59 million people will be looking to enter the housing market in 2017.

The survey also revealed 3 key takeaways:

  1. Those most likely to buy are ‘Older Millennials’ (ages 27-36) or ‘Generation X’ (ages 37-52)
  2. Minorities, particularly African-Americans, were twice as likely to respond that they were considering purchasing a home this year than white respondents.
  3. Many potential buyers believe they need to put 20% down and need to have perfect credit to own and are unaware of programs that would allow them to buy now.

Holden Lewis, a mortgage analyst for Bankrate.com, pointed to one big reason why many Americans are starting to consider homeownership:

“Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream.”

Market Stats January 26, 2017

First Time Buyers, Millennials, and What to Expect in 2017

2017 Economic and Housing Forecast

I believe that the big story for the coming year will be first-time home buyers. Since they don’t need to sell before purchasing, their reemergence into the market ensures that sales will continue to increase, even while inventory is limited. Thirty-one percent of buyers currently in the real estate market are first-time buyers, but it would be more ideal if that figure was closer to 40 percent.

Why don’t we have enough first-time buyers in the market? With Baby Boomers working and living longer, we aren’t making much room for Millennials to start their careers. Plus, the major debt that the younger generation owes on student loans ($1.3 trillion today) hugely impacts the housing market. But the bigger issue is lack of down payments. Before the recession, many Millennials could look to their parents for help with down payments; however, these days that is not as much the case.

I would also contend that the notion of Millennials being a “renter generation” is nonsense. In a National Association of Realtors survey, 75 percent of them said that buying a home would be the most astute financial decision they’d ever make; however, 80 percent said they don’t think they could qualify for a mortgage. I do believe that Millennials will eventually buy, but they’re delaying their purchasing decisions by about three years when compared to previous generations, which is about the same amount of time they’re waiting to start families as well.

Mortgage rates have risen rapidly since the election, and unfortunately, I do not see a turnaround in this trend. That said, they will remain cheap when compared to historic averages.  Expect to see the yield on 30-year mortgages rise to around 4.7% by the end of 2017. For those who have grown accustomed to interest rates being at historic lows, this might seem high, but it’s all relative.

If I were to gaze all the way into 2018, my crystal ball takes me to the dreaded “R” word. Like taxes and death, recessions are another one of those unwanted realities that inevitably comes to visit every so often. Irrespective of who was voted into the White House, my view remains the same: prepare to see a business cycle recession by the end of 2018, but, rest assured, it will not be driven by real estate, nor will it resemble the Great Recession in any way.

This article was first posted in Windermere.com by  Matthew Gardner, Chief Economist, Windermere Real Estate