Friday, April 28, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Seattle Millennials Top Movers

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Seattle millennials change homes here more often than anywhere else in U.S.

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In a hypercompetitive rental market, the city’s young people are on the move, looking for cheaper rent, a nicer place or somewhere close to work. They are so mobile, in fact, no other place in the country moves as much.

Gene Balk / FYI Guy

Seattle Times staff columnist

Moving is one of life’s more stressful events — the packing up of everything you own, the hauling, the flights of stairs — and what if it rains? One recent survey pegs it as even more stressful than a divorce.

So you might think Zach Shaner, after five moves around Seattle in seven years, would be one jittery fellow.

But Shaner and wife Sarah Herrington take it in stride. While all that moving is “pure drudgery,” he says, each new dwelling has been an upgrade. The couple’s most recent change of address was just a few weeks ago.

By now, Shaner surely knows how to load a U-Haul better than most — but the 34-year-old, who owns the local bike-rental startup Pedal Anywhere, really isn’t all that unusual among Seattle millennials.

Census data show that 36 percent of the city’s 25- to 34-year-olds — more than one in three — have changed homes within the past year. Among the 50 biggest cities in the U.S., Seattle has the highest percentage of millennial movers.

Despite all the rain, young people here sure aren’t gathering any moss.

New York may be famous as the city that never sleeps, but it doesn’t move much either. Millennials in the Big Apple are at the opposite end of the spectrum, only half as likely to have moved in the past year as their peers in Seattle. (One possible explanation: More than 1 million apartments in New York are rent stabilized or rent controlled — tenants only move out of those sought-after units feet first.)

Nationally, one-quarter of 25- to 34-year-olds have moved within the past year, according to census data. From age 35 on, as folks tend to get tied down with a spouse, a house and kids, they become much less mobile.

What’s behind all this moving in Seattle?

You might think it’s mainly being driven by all those newcomers. As everyone knows by now, Seattle is full of just-arrived young people drawn here from other places for tech jobs or some other reason.

That’s certainly part of it. But, in fact, the majority of these moves are local ones. Data show that 63 percent of millennial movers in 2015 (the most recent year available) were already living in Seattle or elsewhere in King County.

The Census Bureau doesn’t offer any interpretation of its data. But another government source, the Current Population Survey, does ask recent movers for reasons they relocated.

I thought it might offer some clues. So I looked at how 25- to 34-year-old movers in the Seattle area answered those survey questions, and compared the current data with the same age group in the previous decade.

Among all the factors cited by young movers in the Seattle area, housing issues — cheaper rent, more space, nicer apartment — saw the biggest jump, even eclipsing moving here for a new job. Housing issues were the primary reason for 29 percent of young movers from 2010 to 2016, up from 21 percent in the previous decade.

Considering how competitive the Seattle rental housing market has become, and how rents are spiking, that isn’t too surprising.

Some reasons for moving declined this decade, most notably family issues, which dropped from third to sixth place. That could be a reflection of the increasing concentration of newcomers, who have no ties to the area, and thus no reason to move for family issues.

“We’ve got 900 square feet on the main floor, a deck and a yard, yet are still one mile from Chinatown and on the most frequent bus in the city, the No. 36,” he said. “We lucked out.”Housing issues have certainly been a motivating factor behind the many moves of Zach Shaner. That includes the most recent one from Capitol Hill to Beacon Hill, where he got a lot more space — a two-bedroom house, in fact — for a very reasonable rent of $1,800.

After so many moves, Shaner concedes it would be nice to stay put for a while — but he’s not making any promises.

“Unless we have a kid, yes, I hope this is the last place until we either buy or leave town for some other opportunity,” he said.

“But if moving gets me an easier bike ride or a shorter transit ride or more space or a better value, I’ll move every time, no matter how annoying it is.”

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Thursday, April 27, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Average Mortgage Rates Drop

Average mortgage rate drops to 5-month low

By THE ASSOCIATED PRESS

WASHINGTON — Apr 20, 2017

The average U.S. mortgage rate fell below a key threshold of 4 percent this week, its lowest level in five months.

Mortgage buyer Freddie Mac said Thursday that the average interest rate on 30-year fixed-rate home loans declined to 3.97 percent this week from 4.08 percent last week. Interest rates on mortgages began to rise after President Donald Trump won the November election. But they've started falling as the fate of tax reform and other policies has become uncertain.

The 30-year rate stood at 3.59 percent a year ago and averaged 3.65 percent in 2016, the lowest level in records dating to 1971. Lower rates make it easier for homebuyers to afford their monthly mortgage payments.

The rate on 15-year mortgages declined to 3.23 percent from 3.34 percent last week.

The recent drop also illustrates the range of factors that affect mortgage rates. The average 30-year rate has declined steadily in recent weeks — it was 4.23 percent a month ago — even as the Federal Reserve has lifted the short-term rate it controls three times in the past 15 months.

And Fed policymakers have signaled more hikes are likely to come this year as long as the economy keeps growing.

Mortgage rates, however, more closely track the yield on the 10-year Treasury note, rather than the Fed's decisions. That yield rose after the election in anticipation of faster growth and greater inflation under President Trump.

Yet as investors have downgraded their expectations for tax cuts and infrastructure spending, the yield on the 10-year has fallen. That has led mortgage rates lower as well.

Wednesday, April 26, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Down Payment Could Be A Hurdle

Down Payment the Top Hurdle Holding Back Would-Be Home Buyers

Saving for a down payment was a barrier to homeownership for more than two-thirds of renters surveyed in a new Zillow survey, topping other hurdles including qualifying for a mortgage and job security.
Still, more than half (63 percent) of renters said they are confident they will be able to afford a home someday, with 25 percent saying they plan on buying in the next three to five years.
The majority of respondents (66 percent) said they believe owning a home is necessary to live The American Dream, and 72 percent said they believe owning a home increases their standing in the local community.

Saving a sufficient down payment is the biggest obstacle for renters looking to transition to homeownership, regardless of their age, income, gender or geography – a hurdle likely to get worse for many before it gets better.

Two-thirds of renters nationwide (67.9 percent) cited saving for a down payment as the biggest hurdle to buying a home, according to the first Zillow Housing Aspirations Report (ZHAR),[1] a semi-annual survey of 10,000 Americans seeking insight into their views on homeownership and their housing plans.

Thanks largely to low mortgage interest rates, monthly mortgage payments are generally more affordable than monthly rent payments, making homeownership an attractive financial option for many current renters. But the sometimes hefty down payments required to buy in the first place are preventing many renters from taking advantage of the savings. And rapidly rising home values, combined with interest rates that have also begun to creep up, mean that savings window could close before many are able to take advantage of it.

Down Payments: A Widespread Concern

Difficulty in affording a down payment was universally cited as the top barrier to homeownership by renters in virtually all major demographic groups. It was the top barrier cited by respondents from all 20 major metro regions surveyed. More women (72.2 percent) than men (62.2 percent) cited down payment difficulties as a barrier, but both genders noted down payment affordability as a barrier more than any other factor.

Millennial renters (aged 18-34) were more likely than older Gen X (35-54) and Baby Boomer/Silent Generation renters (55 and older) to note down payment woes – 69.2 percent, 68.5 percent and 64.3 percent, respectively – but all three groups noted down payment challenges more than other choices. Down payment concerns were surprisingly more prevalent among those in the highest income bucket[2] than in the lowest,[3] but again, renters in low (65.9 percent of respondents), middle (70.4 percent) and high (67.3 percent) income brackets all cited down payment struggles more than other factors.

Behind down payment woes, the next-most-commonly cited barriers to homeownership among U.S. renters were qualifying for a mortgage (53.2 percent of respondents said this was a concern) and debt burdens (50 percent). Other factors cited as barriers to homeownership included job security (38.5 percent), the renter not being in a position to settle down (20.1 percent) and complaints about not enough homes being for sale (11.2 percent).

Given the many hurdles that need to be cleared before successfully buying a home even in the best market conditions, it might be somewhat surprising that down payment concerns resonated so strongly with respondents. But in the order of operations that is buying a home, it all starts with securing a down payment, which will help determine a final budget, which will lead to actually finding a home within that budget to purchase, and finally to securing a mortgage and going to closing.

A Closing Window?

Home values nationwide have been growing at a rapid pace for well over a year now – February marked the 55^th consecutive month of annual U.S. home value growth and the 18^th month in a row in which annual appreciation exceeded 5 percent. But while that growth is generally positive for the U.S. economy overall and for current homeowners in particular, for renters trying to save for a down payment on a home, it can often feel like trying to hit a moving target. A renter saves up enough to put a decent amount down on a home in their price range, perhaps only to find out that home has appreciated in value beyond their means.

And not only is it difficult to determine the right amount to save, renters also have the added challenge of trying to save when they’re already paying more of their income to rent in the first place. As of the end of 2016, the typical home buyer nationwide buying the median-valued home could expect to pay about 15.8 percent of their household income to a mortgage. A typical U.S. renter, unable to take advantage of low mortgage interest rates, should have expected to pay 29.2 percent of their income to their landlord each month – and close to half their income in a handful of very pricey markets. And as the share of income spent on rent rises, saving money for anything – let alone tens of thousands of dollars set aside for a down payment – becomes increasingly difficult.

Finally, even as owning a home retains its financial advantages over renting, those advantages are beginning to narrow. In 2016, typical U.S. household incomes grew 2.2 percent, a slowdown from growth of 3.3 percent in 2015. The mortgage payment on the average U.S. home, on the other hand, grew by 9.9 percent in Q4 2016, up from 6.7 percent in Q4 2015. In other words, rising mortgage interest rates and continued home value growth helped make mortgages less affordable by the end of 2016 than they’ve been in half a decade – a trend likely to get worse.

More than 100 economists and real estate experts nationwide recently surveyed by Zillow said they expect home values to rise another 4.4 percent in 2017 and 17.3 percent, cumulatively, through 2021 (on average). And Federal Reserve projections suggest a 100 basis point increase in the Federal Funds Rate (which influences mortgage rates offered by lenders) over the next year, putting conventional, 30-year, fixed mortgage rates in the 4.75-5 percent range by the end of 2017. This rate is still low by historical standards, but high enough to give some buyers sensitive to small changes in monthly payments pause. So while mortgages look set to remain more affordable than renting for the foreseeable future, the time to lock in as much savings as possible before the gap narrows is right now – as if renters already struggling to save a down payment didn’t have enough to worry about.

Millennial Confidence

Still, the first ZHAR isn’t all doom and gloom. Results suggest a great deal of confidence in the housing market, despite challenges, and an encouraging amount of faith in the importance of homeownership to achieving the American Dream.

Here are some additional highlights from the report:

Almost all respondents (90 percent) said they are confident they will be able to stay in their current home for as long as they want. Respondents in Atlanta and Detroit were the most confident.
More than half (63 percent) of renters are confident they will be able to afford a home someday, with 25 percent saying they plan on buying in the next three-to-five years.
Millennial renters are more confident than any other generation that they will be able to afford a home someday.
The majority of respondents (66 percent) said they believe owning a home is necessary to live The American Dream, and 72 percent said they believe owning a home increases their standing in the local community. Millennials believe these two statements more than any other generation.

Svenja Gudell is Chief Economist at Zillow.

Tuesday, April 25, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - US Home Sales 10 Year High

US Home Sales Shoot Up to 10-Year High

By THE ASSOCIATED PRESSAPRIL 21, 2017

WASHINGTON — Americans purchased homes in March at the fastest pace in over a decade, a strong start to the traditional spring buying season.

Sales of existing homes climbed 4.4 percent last month to a seasonally adjusted annual rate of 5.71 million, the National Association of Realtors said Friday. This was the fastest sales rate since February 2007.

The U.S. housing market faces something of a split personality: A stable economy has intensified demand from would-be buyers, but the number of properties listed for sale has been steadily fading. The result of this trend is prices rising faster than incomes, homes staying on the market for fewer days and a limit on just how much home sales can grow. It's a situation that rewards would-be buyers who can act quickly and decisively.

"The pace of sales we saw in March is unsustainable," said Nela Richardson, chief economist at the brokerage Redfin. "Sales may be soaring, but inventory isn't."

The inventory shortage largely reflects the legacy of a housing bubble that began to burst a decade ago.

Foreclosed properties were snapped up by investors who turned the homes into income-generating rentals, depriving the market of supply. And many owners who escaped the downturn unharmed chose to refinance their mortgages at extremely low rates, possibly making them hesitant to move to a new house that could increase their monthly costs.

This mismatch between supply and demand can be seen in two simple figures tracked by the Realtors.

Sales have risen 5.9 percent over the past year, but the inventory of homes for sale has fallen 6.6 percent to 1.83 million properties. This means there are essentially more buyers chasing fewer properties.

The consequences can be seen in home values and days on the market. The median sales price in March climbed 6.8 percent over the past year to $236,400, significantly outpacing wage growth. And it took an average of 34 days to complete a sale, compared to 47 days a year ago.

In March, sales rose in the Northeast, Midwest and South but declined in the West.

It's possible that more Americans are devoting their incomes to housing as retail sales have struggled in recent months, said Jennifer Lee, a senior economist at BMO Capital Markets.

"Although spending on doo-dads may have slowed, perhaps more of their funds are being directed towards housing," Lee said.

Demand might increase further as mortgage rates began to dip in recent weeks.

Home loan costs had been climbing after President Donald Trump won the November election, under the belief that the government would engage in forms of stimulus such as tax cuts and greater deficits that could cause higher levels of inflation. But major initiatives such as tax reform have stalled in recent weeks as the administration has yet to put forward a proposal, prompting more doubts as to when and whether any stimulus might arrive.

Mortgage buyer Freddie Mac said Thursday that the average interest rate on 30-year fixed-rate home loans declined to 3.97 percent this week from 4.08 percent last week. The average is now at its lowest level in five months.

Wednesday, April 19, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Millennials Face Tough Market

The struggle is real for Millennial homebuyers

It's going to be an intense house-hunting season -- especially for young buyers.

After years of many experts lamenting how Millennials weren't interested in becoming homeowners, it turns out many are actually diving in. But they're facing a lot of competition.

Millennials are the largest group of homebuyers, according to Ellie Mae, a software company that analyzes mortgage data. In January, Millennials represented around 45% of all purchase loans, up from 42% the same month in 2016.

And many expect more Millennial house hunters to jump into the market this spring buying season.

But their path to homeownership won't be easy.

"Millennials are mostly first-time buyers and they are competing against repeat buyers who have more buying leverage and experience," said Javier Vivas, manager of economic research for Realtor.com. He added that Millennials recently became the dominant group of users searching for homes on the website.

New buyers this spring will also be up against buyers who started looking last year, but still haven't bought a home.

A shortage of available homes has driven up prices -- particularly among starter homes that tend to fall within first-time buyers' budgets.

There were 3% fewer homes on the market in February compared to a year ago, according to a recent report from Zillow, and home values are up nearly 7%.

That's led to bidding wars and fierce competition, especially in the lower end of the market.

When Andy Greene and his wife Jenna began looking for their first home together near Columbus, Ohio, they found themselves in a super competitive market.

"We would get a notification that a house went on the market. You had to go see it that night ... you had to go the same day it was out," said Greene.

They thought they found their perfect home early in their search and put in an offer. But they weren't the only ones. The seller received 13 bids.

Despite going $10,000 above the asking price, the Greenes were not the winning bidders.

"It was a little defeating," said Greene. "It made us wonder if we were actually going to be able to make it work and second guessing if we could find something we could afford."

Rising home and rent prices can make it difficult for many first-time buyers and young people still establishing their careers to save for a down payment.

The Greenes, who both work full-time, saved $30,000 for a down payment, mainly by living off one income and banking the other.

They were tempted to increase their budget as they continued their search, but they stuck to their pre-determined limit. Finally, after three months of hunting, they found a house and had their bid accepted. They're scheduled to close this month.

"We didn't want to be in a house we couldn't afford," he said. "And we didn't want to have to buy a house and dump money into it."

For first-time buyers looking to become homeowners this year, experts say do your homework: determine your budget, prioritize your requirements and get pre-approved for a loan.

"Be first in line," advised Vivas. "Start your search early, figure out your budget early on."

Millennials are also facing a tighter lending environment compared to a decade ago as banks stiffen up on credit requirements.

But despite the obstacles they face, Millennial buyers do have a major advantage: low interest rates.

"If you compare their access to credit and ability to get into a home, it's far easier for Millennials than previous generations," noted Joe Tyrrell, executive vice president of Ellie Mae. "Back when Millennials' parents were buying homes, they had higher interest rates and there weren't down payment assistance programs."

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