Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Costs deter buyers The average 30-year-fixed mortgage rate currently stands at 6.82%, well below the 23-year high of almost 8% hit in October, but still more than double the all-time low of 2.65% reached during the pandemic. This has led many prospective homebuyers to delay their purchasing plans, bolstering rental demand and putting upward pressure … [Read more…]
Job recruiters in the South are facing hurdles to attract skilled professionals from the Midwest despite offering competitive compensation packages, according to a Bloomberg report published Friday. That’s because many of these potential hires are locked into super-low 30-year mortgages.
During the fourth quarter of 2023, the proportion of job seekers in the U.S. who relocated for employment dwindled to a mere 1.5%. That marked the lowest level on record, according to a survey by Challenger, Gray & Christmas.
Janet Rivera Jones, founder of Florida-based 5 Star Global Recruitment Partners, told Bloomberg that potential hires who are repaying low-interest mortgages are often reluctant to move unless they’re offered relocation packages that account for the differential in housing costs.
According to an analysis conducted by Bloomberg on data from the Federal Housing Finance Agency, approximately one-fifth of U.S. homeowners carry mortgages with interest rates below 3%, while nearly 35% have rates ranging between 3% and 4%. Current rates for a 30-year fixed mortgage are about 7% and have more than doubled since hitting a historic low point of 2.85% in December 2020.
Meanwhile, the costs associated with employee relocations are on the rise. For mid-level managers, average relocation expenditures in the U.S. last year stood at $78,330 for homeowners and $33,349 for renters, according to data from ARC Relocation, a consultancy that offers employee relocation assistance for federal agencies and corporate clients.
Source: housingwire.com
American renters are fearful that their home-owning aspirations are increasingly getting out of reach, according to a recent survey by the real-estate platform Redfin, amid an environment of high home prices and elevated mortgage rates.
Almost 40 percent of the renters polled told surveyors they did not believe they would own a home of their own, up from 27 percent in a similar survey Redfin conducted in May and June. Part of the struggle for these Americans is that homes are beyond what they can afford. Securing a down payment can prove elusive, and high mortgage rates may discourage them from acquiring property.
Read more: How to Get a Mortgage in 2024
The Redfin survey sampled about 3,000 U.S. residents in February, and its analysis of renters’ expectations came from a 1,000 renters in the poll.
Mortgage rates in particular have stayed elevated over the past six months. After hitting a peak of 8 percent—the highest level since the turn of the century—mortgage rates declined to the mid-6 percent range at the end of the year and into 2024. In recent weeks, however, the cost of home loans have ticked up to above 7 percent, depressing activity in the mortgage market.
On April 11, the 30-year fixed rate rose to almost 7.4 percent, Mortgage News Daily reported, the highest levels since November 2023. The rise follows news that suggests borrowing costs may stay elevated for longer than economists initially anticipated.
High mortgage rates now mean that first-time buyers must earn about $76,000 to afford what the industry describes as a starter home, which is an 8 percent increase from a year ago and almost 100 percent higher than it was before the pandemic, Redfin said. It added that home prices have soared more than 40 percent since 2019, as buyers took advantage of low borrowing costs during the pandemic to acquire houses, increasing demand, escalating competition and pushing up prices.
Read more: Compare Top Mortgage Lenders
“Buying a home has become increasingly out of reach for many Americans due to the one-two punch of high home prices and high mortgage rates,” Redfin wrote.
Renters being unable to buy homes has in turn contributed to increased competition and price jumps in the rental market. The median asking rent is at $2,000 in the U.S., close to the record high it reached in 2022, Redfin said. Still, despite the elevated cost of rent, renting may be a more affordable option than homeownership.
“Housing costs are high across the board, but renting is a more affordable and realistic option for many Americans right now—especially those who have never owned a home and aren’t able to tap into equity from a previous sale,” said Daryl Fairweather, Redfin’s chief economist. “While owning a home is usually a sound long-term investment, the barriers to entry and upfront costs of buying are higher than renting.”
To purchase a house, a buyer would need about $60,000 as a down payment for a home loan, an amount that is out of reach for many Americans.
Fairweather added, “The sheer expense of purchasing a home is causing the American Dream of homeownership to lose some of its shine.”
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
New Mexico’s desert landscapes and cultural heritage create a compelling backdrop for renters seeking a extraordinary living experience. From the sun-soaked streets of Albuquerque to the historic ambiance of Las Cruces, the state offers a diverse range of cities worth exploring. This ApartmentGuide article takes you through the pros and cons of living in New Mexico so you can learn more about the “Land of Enchantment” and help you make an informed decision about your next home.
New Mexico’s cultural heritage is a blend of Native American, Hispanic, and Anglo influences, present in everyday life. The state is home to numerous cultural festivals, such as the Albuquerque International Balloon Fiesta and the Gathering of Nations Pow Wow, which showcase its diverse traditions and history.
Water scarcity is a significant issue in New Mexico, affecting both urban and rural areas. The state’s reliance on the Rio Grande and its aquifers means that drought conditions can severely impact water availability, leading to restrictions and conservation measures for residents especially in the summer.
New Mexico offers unparalleled opportunities for outdoor activities, with landscapes ranging from the Chihuahuan Desert to the peaks of the Sangre de Cristo Mountains. Residents can enjoy hiking, skiing, and exploring national parks like White Sands and Carlsbad Caverns.
During the summer months, New Mexico often experiences extreme weather conditions characterized by scorching temperatures and intense sunlight. Heatwaves are common, with temperatures frequently soaring above 100°F, especially in the desert regions. These extreme weather patterns can pose health risks, strain energy resources, and exacerbate water scarcity concerns.
Housing, utilities, and daily expenses are generally lower in New Mexico, making it easier for residents to enjoy a higher quality of life. These affordable housing costs are evident in cities like Las Cruces which has a median sale price of $279,000 and an average rent price for a one-bedroom of $942.
New Mexico faces challenges in providing comprehensive public transportation options, particularly in rural areas where services may be limited or non-existent. However even Albuquerque, New Mexico’s largest city has a transit score of 29 which makes it a car-dependent location.
New Mexico boasts numerous historic landmarks that contribute to its rich cultural heritage. Iconic sites such as Taos Pueblo, a UNESCO World Heritage Site dating back over a thousand years, and the historic adobe structures of Old Town Albuquerque provide glimpses into the state’s storied past.
In rural areas of New Mexico, access to cultural amenities such as theaters, museums, and galleries may be limited compared to urban centers. Residents in these regions often have fewer opportunities to engage in cultural events and activities due to the sparse population and distance from major cultural hubs
New Mexico boasts culinary diversity influenced by Native American, Hispanic, and Anglo traditions, offering a unique and flavorful dining experience. Dishes such as green chile stew, Navajo tacos, and carne adovada showcase the fusion of these cultural influences in New Mexican cuisine.
New Mexico faces infrastructure needs, particularly in transportation and utilities, which can pose challenges for residents. Issues such as road maintenance, broadband access, and water distribution systems may be inadequately developed in certain areas, leading to inconvenience and potential safety concerns.
New Mexico offers exceptional stargazing opportunities thanks to its clear skies and minimal light pollution, making it an ideal location for astronomers and stargazers. Notable sites like the International Dark-Sky Association-designated communities of Silver City and Clayton, as well as observatories such as the Very Large Array and the Apache Point Observatory, provide unparalleled views of the cosmos.
New Mexico faces limited job opportunities, particularly in certain industries and regions, which can be a drawback for residents seeking employment. For instance, the state’s reliance on the government sector, including national laboratories and military installations, may result in fewer private sector job prospects.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from Redfin.
Source: apartmentguide.com
Located in the northeastern region of the United States, New Jersey is characterized by its cities, picturesque coastline, and rich cultural heritage. From Jersey City’s skyscrapers to Cape May’s charming seaside towns, the state offers a diverse range of experiences for residents and tourists. In this ApartmentGuide article, we’ll discuss the pros and cons of living in New Jersey to provide valuable insights for those considering a move or wanting to learn more about the state. Whether you’re interested in renting, or ready to explore, read on to discover what life in New Jersey is like.
New Jersey is steeped in American history, offering numerous historical sites and landmarks. From the battlegrounds of the Revolutionary War in Princeton to the iconic Ellis Island and Liberty State Park, the state serves as a living museum. These sites not only provide educational experiences but also serve as beautiful places for exploration.
The housing costs in New Jersey is notably high compared to the national average. This is particularly evident in housing costs especially in popular metros like Hoboken, where the median sale price is $840,000 and rent for a one-bedroom is $2,900. Residents often find themselves allocating a significant portion of their income to maintain a standard of living, making savings a challenge for many.
New Jersey’s strategic location offers unparalleled access to major cities like New York City and Philadelphia. This proximity provides residents with the unique advantage of enjoying suburban tranquility while having easy access to the urban amenities, employment opportunities, and cultural experiences offered by these metropolitan areas.
With its dense population and proximity to major urban centers, New Jersey faces significant traffic congestion, particularly in the northern part of the state around Hoboken and Jersey City which are near the highways to to Manhattan. Commuters often experience lengthy delays, especially during peak hours, which can affect daily schedules and overall quality of life.
New Jersey boasts a diverse culinary scene, with a wide array of dining options ranging from fine dining to local diners and food trucks. The state is famous for its Italian cuisine, diners, and being the birthplace of the iconic Taylor Ham, egg, and cheese sandwich. This diversity offers residents and visitors a rich palette of flavors to explore.
New Jersey experiences a wide range of severe weather conditions including tornadoes, thunderstorms, high winds and hailstorms. These extremes can pose challenges for residents, from dealing with the discomfort of hot and humid summers to navigating the difficulties of storms and the associated disruptions they can bring.
The state is home to some of the nation’s pristine educational institutions, including Princeton University. New Jersey’s school system is one of the best in the nation, providing quality education from kindergarten through university.
New Jersey residents face some of the highest property taxes in the United States. The property tax rate is 2.26% which compared to the national average of 0.99% is very high. This financial burden can be a significant challenge for homeowners and those making a jump from renting to owning.
New Jersey offers a diverse range of housing options, catering to various preferences and lifestyles. From historic neighborhoods with charming brownstones to modern high-rise apartments overlooking bustling cityscapes, there’s something for everyone. This abundance of housing choices enables residents to find accommodations that suit their needs and preferences.
During the summer months, New Jersey becomes a hotspot for tourists seeking sun, sand, and sea along its iconic coastline. Boardwalks bustling with activity and amusement parks attract those looking for entertainment and relaxation. From the historic charm of Cape May to the lively feel of Atlantic City, New Jersey’s diverse attractions ensure a memorable experience for visitors throughout the seasons.
New Jersey’s sales tax rate is relatively high compared to many states, which can increase the cost of goods and services for residents. In fact, New Jersey is ranked 8th in the nation for its state tax rate standing at 6.625%. This tax burden may pose a challenge for individuals and families on tight budgets, impacting their purchasing power.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
Source: apartmentguide.com
UK homeowners are renting out a room in their house as a way of making some extra money amid the cost of living crisis that has pushed mortgage rates to record highs.
Over one in every 10 (12%) London homeowners have started renting out a room in their house in the past year to generate additional income, according to Barclays Consumer Spend report.
The trend is not exclusive to the capital, as some 3% of homeowners across the UK have also rented out a room in their property to make a bit more money.
UK homeowners have been particularly hit by cost of living woes, with the average rate on a two-year fixed deal currently stands at 5.74%, while for a five-year deal, rates are around 5.24%, according to figures from Uswitch.
Borrowers would need to spread their home loans over more than 70 years to be able to afford the same mortgages on offer just two years ago, banks have said.
Mortgage rates have risen substantially as the Bank of England increased interest rates to a 16-year high in a bid to tackle inflation.
The data from the Barclays report showed that one in six (16%) aren’t confident about their ability to meet their mortgage or rental payments, and 18% of those with mortgage or rent payments are adjusting their spending habits to cope with rising housing costs.
Still, consumers’ confidence in their general household finances remained steady in March, at 67%.
Jack Meaning, chief UK economist at Barclays, said: “With an expectation that the Bank of England will cut interest rates from June, and banks responding by reducing mortgage rates, our research suggests that the housing costs that have been a drag on consumers for over a year are on the cusp of a turn, and will become a boost to spending from H2 and beyond. Today’s data shows this transition happening in real time.”
Higher mortgage rates have also hit the property market, as house prices fell for the first time in six months in March amid rising mortgage rates, according to Britain’s biggest mortgage lender.
A typical home now costs £288,430, around £2,900 less than last month, said Halifax.
Household spending such as DIY and electronics fell 5.2% in March, with one in six (16%) holding off home renovations due to current economic pressures.
Consumer card spending growth flatlined in March as wet weather dampened both retail and restaurant sales.
Retail spending remained almost flat at 0.7%, brought down by falling in-store spending. Face-to-face retail (excluding groceries) was down 2.1% and clothing fell -1.8%, as spring showers deterred shoppers from visiting the high street. Meanwhile, restaurants had another challenging month, down 12.6%, consistent with the fall witnessed in February (13.4%), Barclays said.
This comes as 45% of consumers said they were continuing to rein in discretionary spending, with the majority (53%) of this group cutting back on clothing and accessory purchases, and nearly half (47%) spending less on dining out.
Britons are more concerned than ever about the cost of every day items, with concerns about general inflation shooting up to 87%.
Karen Johnson, head of retail at Barclays, said: “Retailers were braced for a more subdued start to 2024, and recent figures are in line with expectations. The wet weather has been a key factor in the slowdown in discretionary spending, as it’s meant fewer visits to the high street and to hospitality venues.
“However, in spite of this initial lull, many retailers are confident that spending will rebound in the coming months, particularly in anticipation of better weather, the energy price cap drop, an uplift in the National Minimum Wage, and the buzz around major events such as Taylor Swift’s Eras Tour and the Paris 2024 Olympics.”
A separate report by the British Retail Consortium (BRC) and KPMG Retail showed a more optimistic view on the UK retail sector in March.
Total UK retail sales were up by 3.5% on last March, above the three-month average of 2.1% and the 12-month average of 2.9%, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.
Food sales increased by 6.8% year on year, driven by Easter falling unusually early and the subsequent uplift ahead of the long weekend.
Easter also boosted sales of products such as cookware and tableware, as people readied themselves to host family and friends. Home textiles such as throws and pillows were also popular as consumers sought to spruce up their homes ahead of spring.
Elsewhere, wet weather dampened sales of garden furniture, barbecues, DIY products, and clothing and footwear.
Online sales continued to slide, falling by 1.4% despite strong performances in home accessories, health, beauty, and homewares.
BRC chief executive Helen Dickinson said: “After a difficult start to the year, retailers are hopeful that with warmer weather around the corner, consumer confidence will spring back up.
“A strong retail industry can boost investment across our towns and cities, and as we gear up for a general election, it is essential the next government recognises this and rethinks the burdensome costs imposed on retailers.”
Download the Yahoo Finance app, available for Apple and Android.
Source: finance.yahoo.com
Homebuying demand also showed signs of softening. Home tours were up 15% compared to the start of the year, a slower increase than the 21% seen at the same time in 2023. Mortgage purchase applications remained flat for the week. Additionally, pending home sales dropped 2.8% year-over-year and unexpectedly declined during the last week of … [Read more…]
From the lush greenery of its forests to the towering peaks of the Cascade Range and the serene waters of the Puget Sound, Washington offers a plethora of scenic wonders to its residents. Home to bustling urban centers like Seattle and Tacoma, as well as charming smaller communities, Washington presents a spectrum of lifestyles to suit a variety of preferences. However, like any area, living in Washington comes with its own set of advantages and disadvantages. In this ApartmentGuide article, we will explore the pros and cons of living in Washington.
Population | 8,000,000 |
Avg. studio rent | $1,489 per month |
Avg. one-bedroom rent | $1,790 per month |
Avg. two-bedroom rent | $2,017 per month |
Most affordable cities to rent in Washington | Pullman, Yakima, Cheney |
Most walkable cities in Washington | Seattle, Tacoma, Lynnwood |
Washington is a food lovers’ paradise, with a diverse culinary scene that celebrates locally sourced ingredients and international flavors. From farm-to-table restaurants in the fertile valleys of eastern Washington to seafood markets along the Pacific coast, the state offers a tantalizing array of dining options to satisfy every palate. If you’re in the Seattle area, you’ll have to try the iconic Seattle Dog, a hot dog topped with cream cheese.
The state’s thriving economy has led to rapid population growth and soaring housing costs, particularly in urban areas. For example, the median home sale price in Seattle is $845,000 and the average rent for a one-bedroom apartment is $2,175. This affordability crisis can make it challenging for many residents moving to popular metros in Washington.
Washington boasts stunning landscapes, including lush forests like the Hoh Rain Forest, majestic mountains like Mt. Rainier, and picturesque coastlines. The state’s abundance of outdoor recreational opportunities, such as hiking, skiing, and kayaking, make it a paradise for nature enthusiasts.
Traffic congestion in larger cities of Washington, such as Seattle and Tacoma, can be a significant challenge for commuters, with congested highways and crowded streets leading to long commute times and frustration. For instance, Interstate 5, which runs through Seattle, is notorious for its heavy traffic during peak hours, causing delays for drivers traveling to and from the city center. Additionally, major thoroughfares like Interstate 405 and State Route 520 often experience congestion, particularly during rush hour, impacting the efficiency of transportation networks in the region.
Washington’s commitment to environmental consciousness is exemplified by initiatives such as the Clean Energy Transformation Act, which aims to transition the state to 100% clean electricity by 2045, reducing reliance on fossil fuels and mitigating climate change impacts. Additionally, the state’s extensive network of public parks and protected wilderness areas, including Olympic National Park and Mount Rainier National Park, underscores its dedication to preserving natural habitats and biodiversity for future generations to enjoy.
Washington grapples with seasonal affective disorder (SAD) due to its long, gloomy winters especially in the western region characterized by overcast skies and limited sunlight. Residents often combat the effects of SAD by investing in light therapy devices, seeking out indoor activities, or even planning vacations to sunnier destinations during the winter months. Despite these coping strategies, the prevalence of SAD in western Washington can pose a significant challenge to residents’ mental health and overall well-being, detracting from the quality of life in the region.
Washington offers a vibrant cultural scene with a diverse range of entertainment events throughout the year. Seattle’s renowned music festivals like Bumbershoot and Capitol Hill Block Party draw crowds with live performances spanning various genres. Additionally, annual events such as the Washington State Fair in Puyallup showcase the state’s rich cultural heritage and provide entertainment for residents and visitors alike.
Washington faces natural disaster risks, particularly in seismically active areas such as the Cascadia Subduction Zone, where the potential for major earthquakes and tsunamis exists. Additionally, the state is home to active volcanoes like Mount Rainier and Mount St. Helens, which pose hazards such as volcanic eruptions and lahars.
Access to outdoor recreation in Washington is unparalleled, with the state offering a diverse array of natural landscapes and outdoor activities. From hiking in the Enchantments to kayaking around the San Juan Islands, residents have abundant opportunities to explore the great outdoors. Additionally, iconic destinations such as La Push and Mount Rainier National Park provide world-class hiking trails, camping spots, and scenic vistas, attracting outdoor enthusiasts from near and far.
High tourism in Washington can pose challenges for residents, leading to overcrowding, traffic congestion, and environmental degradation. For example, iconic attractions like Pike Place Market in Seattle and Mt. Rainier often experience large crowds of visitors, impacting local businesses and residents’ quality of life. Additionally, increased tourism can contribute to rising costs of living and housing prices in popular tourist destinations, making it more difficult for residents to afford housing and maintain a sense of community.
Washington’s islands offer residents a tranquil escape and unique coastal living experience. From the serene landscapes of the San Juan Islands to the rustic charm of Whidbey Island, these idyllic destinations provide opportunities for relaxation, outdoor recreation, and close-knit community living. Residents enjoy breathtaking views of the Puget Sound, abundant wildlife sightings, and a slower pace of life that embodies the essence of Pacific Northwest island living.
Parking in urban settings in Washington, such as Seattle, is often limited and expensive, with high demand for parking spaces and restricted street parking. Residents may face challenges finding parking near their homes or workplaces, leading to frustration and inconvenience. Additionally, the scarcity of parking options can result in longer commute times and increased reliance on alternative transportation methods, impacting residents’ overall mobility and quality of life.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
Source: apartmentguide.com
Your home is your sanctuary, but it’s also one of your biggest budget items. And after you retire, it may feel like more house than you need. But in this housing market, when a smaller home with upgraded features may be about as expensive as the one you’re selling, is it still smart to downsize?
In some cases, downsizing is appropriate, but not necessarily money-saving. You may be able to sell your house and buy something cheaper, but it might also make sense to downsize to move closer to family or have less house to clean.
It’s important to be clear on what you want. “Goals are so crucial,” says Juan HernandezAriano, a certified financial planner in Houston. “There are multiple pathways people can take.”
Here are some situations that may match up with a “For Sale” sign.
In retirement, you might find that rising prices combined with a fixed income make you feel a little squeezed.
HernandezAriano notes that his clients in southeast Texas are bothered by high home insurance premiums due to severe weather events, plus high property taxes. “A lot of insurance companies are dropping coverage on the southeast side of Texas,” he says.
If downsizing is a question of money, consider all your housing costs. Weigh the mortgage, property taxes and insurance, plus basic bills like electricity and water services for your current and future homes.
One client in Houston did the math and moved 90 minutes away, where they got a cheaper home and dropped their homeowners insurance by 60%. “Property taxes also went down since they weren’t in a highly competitive school district,” HernandezAriano says. “They still spent more on gas and water and had to pay for relocation expenses, but overall, they saved monthly.”
If you live in an expensive city, you have a better chance of selling your home and finding something cheaper. “When you’re in a lower-cost area, it’s going to be difficult to find something even [more] lower cost,” says David Demming, a CFP in Aurora, Ohio.
Just do some looking before you leap. Inventory is low in many places, and competition is steep for a smaller home with upgrades.
To save money overall, the value of the home you’re purchasing should be at least 20% less than the house that you’re selling, says Diane Pearson, a CFP in Wexford, Pennsylvania.
Your health may require you to find a new home with fewer stairs, a first-floor primary bedroom or an accessible bathroom.
Michael Maye, a CFP in Gillette, New Jersey, notes that his clients who’ve seen parents go through long-term care or health issues are more likely to consider future mobility when planning their retirement. “Recently, I proactively worked with a couple and they knew that they didn’t want to age in place, because they have a bigger house,” he says.
They wanted to buy into a continuing care retirement community, where they could take advantage of graduated levels of care as they needed it. “They could stay in their house, but they don’t plan to,” Maye says.
While being closer to children or aging parents is a good reason to downsize, don’t count on this being the cheaper option, especially if you’re moving into a hotter market.
Consider one of Demming’s clients, who moved from one part of Ohio to another part of the state. “It cost her $150,000 more to move there, to get a house that was acceptable to her,” Demming said.
Even with the higher cost, Demming says, it was worth it to be closer to her children and grandchildren — and her new city is booming. “There is no looking back,” Demming says. “Her new home has appreciated quite a bit since moving.”
If downsizing means a new city, keep in mind that you may have to rebuild your community. Even if you’re moving to be near family, you shouldn’t count on them to be your activities hub. “Are you a social person who’s going to be able to get out and about and make your own way?” Maye says.
You’ll need to make new friends, find new medical professionals, find a new gym. “Those are the trade-offs,” Maye says. “None of them are deal breakers, but I think people should really think about all these other things.”
This article was written by NerdWallet and was originally published by The Associated Press.
Source: nerdwallet.com
Young aspiring homeowners are increasingly reliant on the bank of mom and dad to help make their purchase, new research finds.
Over a third of Generation Z and millennials who plan to buy a home in the near term are expecting to use, in part, gifts from family to help with a down payment, according to a report by Redfin. The 36% share is twice as large as it was just five years ago, the online real-estate brokerage said.
In a 2019 millennial-only poll, 18% said they were turning to family for assistance, The portion increased by only 5 percentage points to 23% last year.
Despite the surge in family support, Gen Z and millennial buyers are also trying to do their part as well in most cases. Approximately 60% of consumers in the same age demographics are regularly saving income to fund a down payment, with 39% also taking on second jobs to help them reach their homeownership goals, Redfin found.
Further down the list of likely funding options was the sale of stock investments, mentioned by 29%, while 22% said they would consider drawing early from retirement funds.
The rising share of consumers using family gifts for a leg up points to a larger affordability issue that makes even a starter-home purchase beyond reach for many, according to Redfin Chief Economist Daryl Fairweather.
“Because housing costs have soared so much, many young adults with family money get help from mom and dad even when they have jobs and earn a perfectly respectable income,” she said in a press release.
“The bigger problem is that young Americans who don’t have family money are often shut out of homeownership. Many of them earn a perfectly good income, too, but they aren’t able to afford a home because they’re at a generational disadvantage; they don’t have a pot of family money to dip into.”
Heightened attention on housing challenges, particularly related to the difficulty in coming up with down payment and closing-cost funding, has turned much of the mortgage industry’s attention toward buyer assistance resources in the past several months. Last year, housing agencies across the country added 135 new programs, a 6% increase from 2022, according to data from Down Payment Resource.
But consumers are sometimes not fully aware of the benefits offered. To address some of the information gap, Freddie Mac also unveiled a portal last fall to help aspiring homeowners and their mortgage lenders find down payment assistance they might qualify for.
As of January this year, just under 2,300 of such programs were available across the country, provided by a combination of groups, including state housing agencies, municipalities and nonprofits, Down Payment Resource said.
In March, two financial institutions announced their plans to up homebuyer assistance efforts. Atlanta-based Citizens Trust Bank launched a new down payment grant program, offering a maximum of $2,000 to eligible borrowers that can help reduce initial costs of the home purchase.
Meanwhile, the Federal Home Loan Bank of Chicago said it would increase the amount made available to each of its Midwestern member institutions to $1 million for funding of their own homebuyer grant programs. The new total represents a 43% increase from the 2023 limit of $700,000, while the overall budget for the Chicago bank’s down payment assistance projects is now over $39 million. Eligible first-time mortgage borrowers will have access to up to $10,000 of financial aid when financing through a member bank or their partners.
Despite recent slowing in home price growth, the current level of housing costs is the No. 1 reason young consumers are opting not to buy in today’s market, Redfin said. In its survey, 43% of the segment not in the market cited it as a factor, followed by 34% who said the inability to save for a down payment deterred them. The challenge of keeping up with mortgage payments and perceived high interest-rate levels was each noted by 29%.
Housing affordability looks likely to rise in the public eye this year, with President Biden seemingly ready to make it a talking point during campaign season. In his recent State of the Union address, Biden called for mortgage tax credits, title insurance alternatives and up to $25,000 in down payment assistance in order to help address affordability challenges the country faces.
Housing issues could play a role in the final presidential election result. In a previous Redfin analysis, its researchers found a majority of U.S. households indicating home affordability might influence who they vote for this year.
Source: nationalmortgagenews.com