In recent months, there has been a well-publicized shortage of affordable homes for today's first-time buyers. That situation may soon change, much to the relief of young consumers anxiously waiting for available homes they can afford.
News reports carried on Builder online and the National Association of Realtors point to a new trend that could result in many new homes keyed to the needs and qualifications of first-timers. It noted that the number of homebuilders offering entry-level housing rose 25 percent last year compared to the year prior.
"Since the recession, the number of new entry-level homes plummeted. Builder online even declared the starter home 'nearly extinct' last year.
"However, the analysis of the 2016 Builder 100/Next Builder list points out an increasing number of builders are devoting at least 50 percent of their business to building entry-level homes. While the numbers are rising, the entry-level market is still a fraction of what it once was in 2010."
Still, "the re-entry of the entry-level buyer has begun, but this group's next moves will be gradual," says Metrostudy's Brad Hunter about young buyers' emergence into the housing market. "Income challenges remain, and there are still relatively few new house developments who target this group."
It still takes patience, but help is on the way. In the meantime, keep watching your local market and keep saving for that down payment.
Q: What is the direction of mortgage rates in today's market?
A: Mortgage rates have reached their lowest point this year, according to a report from Freddie Mac. In fact, the 30-year mortgage is now at a 3-year low rate, it was reported on May 12.
"The average fixed mortgage rates are falling for the third consecutive week following disappointing April employment data. Mortgage rates are at their low point for the year," it was reported. The 30-year fixed-rate mortgage averaged 3.57 percent with an average 0.5 point for the week. A year ago at this time, the 30-year FRM averaged 3.85 percent.
"Disappointing April employment data once again kept a lid on Treasury yields, which have struggled to stay above 1.8 percent since late March," said the chief economist for Freddie Mac. "As a result, the 30-year mortgage rate fell 4 basis points to 3.57 percent, a new low for 2016 and the lowest mark in 3 years.
"Prospective homebuyers will continue to take advantage of a falling rate environment that has seen mortgage rates drop in 14 of the previous 19 weeks."
Q: Are many young families (millennials) still renting their residence rather than buying a home?
A: The Mortgage Bankers Association's Research Institute for Housing America released a new report on May 3, detailing how household formation by millennials and the shift of many potential homeowners to a rental market during the depths of the Great Recession combined to create the current affordability crisis in rental housing.
The report, "Diverted Homeowners, the Rental Crisis, and Foregone Household Formation", analyzes various supply and demand factors that have led to this crisis and provide detailed analysis of the shifts in homeowner and rental demand.
"Demand for rental housing has greatly outstripped supply, rapidly pushing vacancies down and rents up even as incomes fell. The supply is still trying to catch up with the demand," said Lynn Fisher, RIHA's Executive Director and MBA's Vice President for Research and Economics. "In the middle of the last decade, right as the Millennials were anticipated to begin forming their own households and increase demand for rental housing, the supply side of the market stalled due to the turmoil in credit markets."
To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. Jim Woodard's email: [email protected]
Photo credit: Matthew Ragan