7 Trends That Will Drive the Future of Housing

Hanley-Wood’s ProSalesOnline.com identifies seven trends that the magazine’s editors believe will have the biggest impact on housing in 2011.

1. Big builders are wringing the extras out of construction costs and dropping the national average cost-to-build 36 percent to $52 per square foot.
2. Starting in 2011, Energy Star will ramp up its efficient design and quality installation standards. To get Energy Star certification, builders will have to install the right insulation, HVAC systems, and other features related to energy efficiency correctly every time.
3. Sheds are the next evolution. As homes get smaller, a separate shed will become a popular home addition.
4. There are 81 million “Echo Boomers” who were born from 1981 to 1999, compared to just 78 million Baby Boomers born from 1946 to 1964. These children and grandchildren of Boomers will drive home-building for years.
5. By 2015, demographers say, more than two out of every five households occupied by Generation Y people born between 1981 and 1999 will be WINKs (women with incomes and no kids).
6. Make room for the “Sandwich Generation” – Baby Boomers living with both their kids and their parents. These families like having two master suites, a second cooking area, and lots of storage.
7. Baby Boomers want to keep working and continue to live where they have always lived. They want a first-floor master bedroom near the washer and dryer and lots of convenient storage.

Source: ProSalesOnline.com (October 2010)

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Credit Score Requirements Stifling Borrowers

Despite record-low interest rates, an increasing number of Americans can’t afford to buy a house. The nation’s two largest mortgage lenders, Wells Fargo & Co. and Bank of America Corp., have raised the minimum required credit score on FHA-insured loans to 640 from 620. Requiring a 640 credit score excludes about 15 percent of FHA borrowers, FHA commissioner David Stevens said. Such a high limit will further delay a recovery in the real estate market, says Ron Phipps, president of the National Association of REALTORS®.

Source: Bloomberg, Jody Shenn and John Gittelsohn (11/17/2010)

Why Homeownership Matters

  • There’s a reason home ownership is called the American Dream.
  • Owning a home has long-standing government support in this country because home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy.
  • The Federal Housing Administration, Federal Home Loan Banks, and Fannie Mae were all created during the worst economic crisis our country ever faced in the Great Depression. Lawmakers back then understood the value of home ownership in fostering communities, creating social stability, and building wealth over the long term.
  • Home ownership didn’t create the foreclosure crisis – Wall Street greed and irresponsible lending practices did.
  • The real issue facing the nation’s economy right now is that many Americans can’t find meaningful work to support their families.
  • Housing cannot recover until jobs return to the economy.
  • Home ownership is an investment in your future.
  • Home is where we make memories, build our futures, and feel comfortable and secure.
  • Owning a home offers immediate shelter benefits and long-term value.
  • Home ownership strengthens communities. Homeowners are more likely to be involved and engaged in local issues and move less frequently than renters. This helps prevent crime, improve childhood education and support neighborhood upkeep.
  • Owning a home is one of the best ways to build long-term wealth, providing both equity accumulation and tax benefits over time.
  • A fixed-rate mortgage might last 15 to 30 years; renting is forever.
  • We need to ensure public policies that promote responsible, sustainable home ownership.
  • Anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.
  • Realtors® care as much about keeping families in their homes as they do about helping them find the home of their dreams.
  • When people lose homes to foreclosure, our communities, the housing market and our economy all suffer.
  • NAR Conference Economis Overview:

    NAR Chief Economist, Dr. Lawrence Yun gave a housing update at the NAR Conference, here are some bullets:

    •  Tax credits helped stabilize housing, however, the economy is now adding jobs so the “Stimulus Medicine” is no longer needed and the market needs to correct on its own.
    • Existing homes sales (Nationally) are equal to 2000 levels.
    • Consumers currently think “things are rotten” and that Americans almost always are optimistic about the future, no matter how bad their current reality is.  Currently, however, Americans are not optimistic about the future.
    • Business confidence is also low; while corporate profits are high they are reluctant to spend. Healthcare, tax uncertainty, etc. have companies worried. This must change for economy to move forward.
    • Government spending, however, is very high.  Washington D.C. has not experienced a recession!!
    • Gross Domestic Product (GDP) is growing but without vigor. It is growing at about 2-2.5% but must be at 4-4.5% for recovery.
    • While existing homes sales are starting to stabilize, they will continue “two steps forward, one step back!”
    • New home sales will continue downward.  Inventory is currently at a 30-40 year low.
    • Construction loans are VERY difficult to obtain, the main reason they have no government guarantees, thus, they are riskier for banks.
    • There are currently Four Million active listings nationally which is steady and a Nine month supply (6 months is healthy).
    • Recently originated loans are performing well, proving the old banking axiom:  “Most bad loans are made in good times”.
    • GSE Reform must occur:  Convert Fannie Mae and Freddie Mac into government-chartered, non-shareholder owned authorities that are subject to tighter regulations on product, revenue generation and usage, and retained portfolio practices in a way that ensures they can accomplish their mission and protect the taxpayer.
    • Continue to strengthen the FHA loan insurance program, keeping it available and affordable to responsible home buyers.

    Stats

    LISTINGS  Residential (Single Family & Condo) 
     Oct. 25 – 31     431
     Last Year  451
       
     SOLDS  
     Oct. 17-23     180
     Last Year  310

    How the RPAC Works

    The National Association of REALTORS ® Political Action Committee (RPAC), supports pro-REALTOR® Congressional and Senate candidates from both political parties. Decisions on which candidates to support are made based on the level of support an elected official or candidate has for our REALTOR® Public Policy Advocacy Agenda. Local and State Associations make recommendations to the National RPAC Trustees using Real Estate Issues as the single most important factor for support of a candidate for election or re-election

    NAR is one of the most effective lobbying forces on Capitol Hill. The results from Tuesday’s election have not diminished our ability to promote and protect the real estate industry.The New York Times, in the October 30, 2010 edition, singled out RPAC as “One of the few large outside spenders that has supported candidates from both parties…”Like most political action committees RPAC typically supports incumbent candidates with a strong level of support for our public policy agenda.RPAC has a long tradition of making our “friends” before we need them on Capitol Hill.  Many Members of Congress come to Washington with a good understanding of real estate issues based on close relationships started on the local and state level.By cultivating these relationships over the long haul, NAR will not be scrambling to play “catch-up’ because the party in power changed. NAR has been well positioned during previous changes in Congress and will be again this time.We recognize that many REALTORS® will use non real estate criteria to evaluate candidates.NAR encourages political involvement by all members.

    Stats

    LISTINGS  Residential (Single Family & Condo) 
     Oct. 25 – 31     431
     Last Year  451
       
     SOLDS  
     Oct. 17-23     180
     Last Year  310
    LISTINGS  Residential (Single Family & Condo) 
     Oct. 18-24 =    503
     Last Year =  505
       
     SOLDS  
    Oct. 10-16  =       163
     Last Year = 234