Rising Rent?

Rising Rents Not Motivating Consumers to Buy Homes,

Research Shows
home-keyNew Freddie Mac research reveals that despite rising rents, the majority of renters are not motivated to purchase a home and positive perceptions about renting are increasing. Harris Poll was selected by Freddie Mac to conduct the survey of more than 2,000 U.S. adults online in March 2015 to get their renting viewpoints.

“We’ve found that rising rents do not appear to be playing a significant role in motivating renters to buy a home,” said David Brickman, EVP of Freddie Mac Multifamily. “This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. We believe rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing.”
According to the U.S. Census Bureau, more than one-third of U.S. households are renting homes, and renters make up all net household growth over the last several years.

This year, rents are expected to rise 3.4 percent above inflation, a slight decrease from last years’ number of 3.6, according to the research. Only six percent of renters who have lived in their home longer than two years have experienced a decrease in their rent amount, while 38 percent of renters experienced an increase in their rent amount in the last two years.
Of the renters who experienced an increase in rent, 70 percent noted that they want to buy a home but cannot afford it right now, the data found. Fifty-one percent said that they would have to put off their plans to buy a home for now. Another 44 percent said that they would like to buy and are looking for a home to purchase.

“Growth in the number of renter households is occurring amid an improving job market and economy,” Brickman said. “The demand for rental housing is increasing and an estimated 440,000 new apartment units are needed each year to keep up with demand.”
A third of renters indicated in the survey that they are very satisfied with their rental experience and 30 percent say they are moderately satisfied. The main reasons selected for those that are satisfied with their renting experience are freedom from home maintenance, more flexibility over where you live, and protection against declines in home prices. These choices were the same in the last survey, with the numbers rising slightly. In spite of rent increases, 53 percent say they will not adjust their spending habits and 46 percent say they like where they live and will stay in their current place.


High rents, low rates top draws to owning a home

CHICAGO – May 6, 2015 – Sixty-two percent of potential homebuyers say that now is a better time to purchase a home than it was a year ago, according to Chase’s new national survey, “Insights From the Mind of the Homebuyer.” Rising rental costs and historically low interest rates are the top reasons Americans says it’s a good time to get off the fence.

Thirty-two percent of more than 1,000 consumers surveyed say they want to buy soon in order to take advantage of low rates; 35 percent say that the 30-year fixed-rate mortgage rising above 4 percent would delay their decision to buy.

Twenty percent of consumers say that the rising cost of rent is making homeownership look like a better value and the top reason why they want to buy. Also, 20 percent say a desire to upgrade their current home was a top motivation for buying.

Three in 10 potential homebuyers say they plan to purchase a home in the next 18 months.

“Potential homebuyers are optimistic that it’s a good time to buy, but they anticipate challenges,” according to the survey. Besides interest rates, potential buyers say they’re concerned about finding a home they want within their budget, and beating out the competition in order to get it.

Nearly 70 percent say they’re worried they may have already missed the best time to buy because of rising home prices. Three out of four buyers say they’re concerned their offer will be outbid by others, and three in five say they think they’ll need to buy a smaller home or consider other neighborhoods outside of their top choices because of rising prices, the survey finds.

“Buyers are clearly concerned about housing inventory and rising prices, especially during the competitive spring buying season,” says Cecelia Barbieri, senior vice president of marketing for Chase Mortgage Banking. “But the research shows that interested buyers are optimistic and ready to act on their goals. In fact, 73 percent said they’d give up things like eating out and taking vacations in order to buy their dream home.”

© 2015 Florida Realtors®

Average rate on 30-year mortgage slips to 3.65%

Mortgage Rate Trend Index

A slight majority (55%) of mortgage experts polled this week by Bankrate.com predict that nothing will change over the short term. Meanwhile, 36% look for an increase, while the remaining 9% expect a decline.

WASHINGTON (AP) – April 24, 2015 – Average long-term U.S. mortgage rates are down slightly this week and remain near historic lows.

Mortgage giant Freddie Mac says the national average for a 30-year fixed-rate mortgage slipped to 3.65 percent from 3.67 percent last week.

The average rate for a 15-year mortgage, popular with homeowners who refinance, slid to 2.92 percent from 2.94 percent.

A year ago, the 30-year mortgage rate averaged 4.33 percent; the 15-year mortgage averaged 3.39 percent.

The 30-year average rate hit a record low 3.31 percent in November 2012. The 15-year average hit bottom at 2.56 percent in May 2013.

Rates have remained low despite the Federal Reserve’s decision last year to stop monthly bond purchases meant to hold down long-term rates.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage averaged 0.6 point this week, down from 0.7 point last week. The average fee for 15-year mortgage was 0.6 point, up from 0.5 point.

The average rate on a five-year adjustable-rate mortgage dropped to 2.84 percent from 2.88 percent last week, and the fee fell to 0.4 point from 0.5 point. For a one-year ARM, the average rate slipped to 2.44 percent from 2.46 percent last week; the fee was unchanged at 0.4 point.

Another reason to buy now: Rents going up again

NEW YORK – April 24, 2015 – CEOs of the largest companies renting out single-family homes say they plan to raise rents up to 5.7 percent this year, as they switch their focus from buying more properties to optimizing revenue from the thousands of properties they already own. According to Bloomberg, they want to take advantage of an increased demand for rental homes.

“In the 2015 rental season, we’re really seeing the ability to move rents,” says David Singelyn, chief executive officer of American Homes 4 Rent at a recent conference in Miami Beach. The company is one the nation’s largest publicly traded, single-family landlords. It has about 35,000 homes in its inventory.

Large-scale investors – those who purchase at least 10 properties a year – have spent about $68 million snatching up 528,000 single-family rental homes since 2011, according to a report last month by Haendel St. Juste, a Morgan Stanley analyst. Now the CEOs of Silver Bay, Starwood Waypoint, American Residential Properties and Blackstone Group all say they plan to start raising rents this year.

“We are focusing aggressively on rent bumps,” Stephen Schmitz, American Residential Properties CEO, said during a panel discussion. “There’s a supply imbalance in some markets. The same thing that keeps occupancy high also drives rents.”

Schmitz says he plans to bump up rental rates by 4 percent on renewals and up to 5.7 percent for new tenants.

Source: “U.S. Single-Family Landlords Are Raising Rents, CEOs Say,” Bloomberg (April 21, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

1 in 3 Americans say real estate the best investment

NEW YORK – April 24, 2015 – For the second year in a row, the largest percentage of Americans surveyed by Gallup (31 percent) said that real estate as the top long-term investment – a sign of mounting confidence in the housing recovery.

Real estate beat out other long-term investment options, such as stocks/mutual funds (25 percent rated it tops), gold (25 percent), savings accounts/CDs (19 percent) and bonds (6 percent).

The pattern has shifted in the past few years. Financial security reigned as a top priority after the recession. As a result, people preferred to park their money in savings accounts and CDs as a hedge against additional losses.

According to Gallup, Americans’ attitudes about real estate as a long-term investment started to show up in last year’s annual survey, and “continued strength this year indicates it was no fluke.”

Source: RISMedia (04/23/15) De Vita, Suzanne

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Fla. No. 7 ‘tax-friendly’ state for wealthy clients

ORLANDO, Fla. – March 31, 2015 – For clients in every income bracket, geographic location is an important factor in determining tax burden. A state that is economically friendly for low-income families may tax the high-net-worth at stratospheric rates (and vice versa).

With this in mind, the folks at WalletHub set out to determine the most tax-friendly spots for residents at three income levels: low ($25,000), medium ($50,000) and high ($150,000). Their research team looked not at tax rates, but at the share of a person’s income that goes toward various tax obligations, including sales tax, property tax and income tax.

It’s no surprise that the results look very different from one income bracket to the next. For high earners, the total tax rate in the friendliest state was just 3.43 percent. In the least-friendly state (Connecticut, if you’re wondering), it was a whopping 11.19 percent.

Where you live makes a difference but region does not. Wealthy clients can settle in the South, the West, even on the East Coast and keep tax rates reasonably low.

The 10 states that make tax season a bit more bearable for affluent clients.

10. Delaware
Sales tax as % of income: 0.72%
Property tax as % of income: 1.26%
Income tax as % of income: 4.16%
Total tax as % of income: 6.14%

9. Alabama
Sales tax as % of income: 2.30%
Property tax as % of income: 1.10%
Income tax as % of income: 2.64%
Total tax as % of income: 6.03%

8. North Dakota
Sales tax as % of income: 3.00%
Property tax as % of income: 1.50%
Income tax as % of income: 1.20%
Total tax as % of income: 5.70%

7. Florida
Sales tax as % of income: 3.14%
Property tax as % of income: 2.40%
Income tax as % of income: 0.02%
Total tax as % of income: 5.56%

6. New Hampshire
Sales tax as % of income: 0.72%
Property tax as % of income: 3.94%
Income tax as % of income: 0.70%
Total tax as % of income: 5.36%

5. South Dakota
Sales tax as % of income: 3.09%
Property tax as % of income: 2.09%
Income tax as % of income: 0.00%
Total tax as % of income: 5.17%

4. Tennessee
Sales tax as % of income: 3.27%
Property tax as % of income: 1.51%
Income tax as % of income: 0.19%
Total tax as % of income: 4.97%

3. Nevada
Sales tax as % of income: 2.21%
Property tax as % of income: 2.05%
Income tax as % of income: 0.46%
Total tax as % of income: 4.71%

2. Wyoming
Sales tax as % of income: 2.22%
Property tax as % of income: 1.76%
Income tax as % of income: 0.00%
Total tax as % of income: 3.98%

1. Alaska
Sales tax as % of income: 0.88%
Property tax as % of income: 2.35%
Income tax as % of income: 0.20%
Total tax as % of income: 3.43%

© 2015 Summit Business Media. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Tips for increasing a home’s property value

SAN FRANCISCO – April 2, 2015 – With the spring selling season in full swing, now is the time for clients to improve their home and make it more appealing to potential buyers, even if they don’t plan to put it on the market right away.

Where to start? Peter Chovanes, a Realtor® with Van Guard Properties in San Francisco, advises clients to start with the four home improvement basics: foundation, roof, plumbing and electrical.

Of these, the roof is most important.

“I am almost always asked ‘How old is the roof?'” he says. “And keeping the roof in good shape alleviates other problems. For example, water can run laterally, and once a leak starts it can follow plumbing and even electrical conduits. So what you think is a plumbing leak might really be a hole in the roof.”

Fix-up steps with an eye toward selling one day

  • Repair: First take a good look at the state of the home, inside and out. Fix the obvious areas that need maintenance.
  • De-clutter: Find ways to store odds-and-ends in containers and cabinets, or donate belongings to charity.
  • Lighten up: Brighter, light-filled rooms are more appealing and make a house feel more spacious. Consider replacing heavy drapes with shutters, shades or blinds.
  • Add eco value: Replace old windows with energy-efficient versions to reduce home energy costs and add value.
  • Update: Water heaters, furnaces and toilets are also good to update for energy and water conservation, though newer ones probably won’t add significantly to the home’s value. 
  • Refinish: If wood floors are looking tired, refinish them. Replace worn carpeting where possible.
  • Kitchen cleanup: The kitchen is an obvious focal point for buyers. Consider a light upgrade in the kitchen by replacing the sink or replacing cabinets. If you’re planning to replace counters, try solid surface quartz-based materials, which have become the popular alternative to granite.
  • Better bathrooms: Bathrooms are typically less expensive to remodel than kitchens, so there is more potential for a return on the investment. Buyers frequently request double vanities and a walk-in shower, so consider upgrading accordingly.
  • Remodel: It’s usually more cost-effective to remodel attics and basements than to add entirely new rooms.
  • Spruce up: Add curb appeal by weeding and sprucing up the garden with low maintenance, drought-tolerant plantings – also called xeriscaping. Giving the front door a new coat of paint is a low cost way to add curb appeal.

Source: Houseplans.com

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688