El Paso Investors Club ™

Is a lack of having a down payment holding back renters from buying a home?  A new survey from Zillow found that nearly 70% of renters in 20 U.S. metros said that was the case.  When you consider that the U.S. homeownership rate hovering near an all-time low, rents at record highs, and mortgage payments cheaper than rent in all but two of the 35 largest U.S. metros, the findings certainly seem to make sense.  Zillow’s Housing Aspirations Report (ZHAR) also found that:

• 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) believe owning a home is necessary to live The American Dream, and 72 percent believe owning a home increases your standing in the local community — millennials believe these two statements more than any other generation.
• About half of renters surveyed said debt and qualifying for a mortgage were barriers to homeownership.
• A 20% down payment on a typical U.S. home costs more than two-thirds of the national median annual household income. In pricier markets, it can cost more than 180% of the average annual income.

Click here to read the full report on Zillow.

The folks over at FortuneBuilders remind us that there are number of benefits to owning rental properties – from preparing for a financially stable future, tax deductions, property appreciation and to having a reliable cash flow.  To those ends, they recently put together this handy infographic with the Top 10 Markets for Owning Rental Properties…..Happy Friday!!

Whether you are just launching your real estate career or you’re already a seasoned professional, owning rental properties is a great way to accumulate long term wealth, prepare for retirement, and diversify your investment portfolio.  Than Merrill

A TV station in Richmond, Virginia is reporting that a family’s home was recently foreclosed on and sold at auction after a bank invoked a “death default provision” on the loan even though the mortgage was kept current by the family – months after the death of their father.  Apparently, when the family patriarch signed the mortgage agreement (decades ago), it included a rare death default provision that called for full payment of the balance of the loan, in full, upon his death.  The family says they were unaware of this clause and kept paying the mortgage over a period of at least 10 months totaling more than $8,500.  There are a lot of lessons to be learned in this situation, not least of which is all-around due diligence.

“The mortgage lady said there was a death default on the promissory note he signed and that means when he died the entire balance was due upon his death….No one told me that for about 10 months after he passed away….They accepted every payment.”  Said daughter Peggy Stroud as reported by WTVR.

Click here to read the full story.

According to the Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI), mortgage credit availability increased 0.4% in February 2017 and reached its highest level since 2007.  The MCAI measures the quantity and quality of mortgage credit supplied to the market over time and for different segments of the market.  A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit.

“The increase in February was the net result of two countervailing movements.  There was an increase in the supply of credit, as more investors offered affordable low down payment mortgages and streamlined documentation for loans guaranteed by the Federal Housing Administration and the Veterans Administration.”

Click here to read more on MBA.org.

You read that headline right…..Flipping is back and it’s at a 10 year high.  According to ATTOM Data Solutions’ 2016 Year-End U.S. Home Flipping Report, 193,009 single family homes & condos were flipped in 2016.  That number is up 3.1% from 2015 and is the highest level since 2006 – which saw 276,067 flips.  Overall, home flips accounted for 5.7% of all single family home and condos sales in 2016 – up from 5.5% from 2015.  In addition to all that,  homes flipped in 2016 sold for a median price of $189,900, a gross flipping profit of $62,624 above the median purchase price of $127,276 and representing a gross flipping return on investment (ROI) of 49.2%.

“Home flipping was hot in 2016, fueled by low inventory of homes in sellable or rentable condition along with a flood of capital — both foreign and domestic — searching for the returns and stability available with U.S. real estate….Investors in search of flipping returns are increasingly willing to move to secondary and tertiary housing markets and neighborhoods with older, smaller properties that are available at a deeper discount.”  Said Daren Blomquist, senior vice president at ATTOM Data Solutions.

Click here to read the full report on RealtyTrac.

The NY Fed’s Center for Microeconomic Data is reporting that total household debt increased by 1.8% in the fourth quarter of 2016, rising $226 billion to reach $12.58 trillion, only $99 billion short of its peak in Q3 of 2008.  The CMD’s latest Quarterly Report on Household Debt and Credit provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies.

Some takeaways:

• Aggregate household debt balances grew in the fourth quarter of 2016. As of December 31, 2016, total household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. Overall household debt is now 0.8% below its 2008 Q3 peak of $12.68 trillion, and is 12.8% above the 2013 Q2 trough.
• Balances on home equity lines of credit (HELOC) were roughly flat, rising $1 billion to $473 billion.
• Mortgage balances, the largest component of household debt, which stood at $8.48 trillion as of December 31, saw a $130 billion uptick from Q3  2016.
• Non-housing debt balances rose in the fourth quarter; with increases of $22 billion in auto loans, 32 billion in credit cards, and 31 billion in student loans.

Click here to read the full report.

Real estate investment management firm HomeUnion recently released their 2017 National Single-Family Rental Research (SFR) Report which says that 2017 will be a good year with an “unprecedented demand” for single-family rentals.  Their comprehensive study ranks 31 metro areas based on market conditions, rental demand, prices, and other criteria.  Most interesting, they’ve identified metros by an Opportunity Ranking that provides a strong balance of supply& demand fundamentals while offering favorable entry prices and limited threats.

“The outlook remains positive for 2017…supply and demand for rental properties nationwide will result in another solid year for investors. The economic recovery will continue to generate hundreds of thousands of new households this year, creating an unprecedented demand for single-family rentals, especially as single-family construction levels remain tempered compared to boom periods.” Said Steve Hovland, director of research for HomeUnion and the lead author of the 2017 NSFR.

Click here to read the full report on HomeUnion.com

In some cities across the country, Millennials are actually buying instead of renting homes.  Using data from the U.S. Census Bureau, smartasset.com recently ranked 200 of America’s largest cities according to their under-35 homeownership rate (among other variables) and it changed between 2006 and 2015.  Putting all this into some perspective, consider that homeownership rates for millennials dropped from 40% in 2006 to 32% in 2015.

Click here to read the full story on smartasset.com

This month ATTOM Data Solutions, “curator of the nation’s largest fused property database,” released their 2017 Rental Affordability Report which says that buying a home is more affordable than renting in 66% of U.S. housing markets.  The report used data from HUD, the Bureau of Labor Statistics and RealtyTrac on 540 counties with at least 900 homes in 2016.

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” said Daren Blomquist, senior vice president with ATTOM Data Solutions, the new parent company of RealtyTrac.

Click here to read ATTOM Data Solutions’ 2017 Rental Affordability Report.

Early this month, Zillow recently released their list of what they believe will be the ten hottest real estate markets of 2017.  Topping that list is Nashville, Tennessee, which Zillow predicts will see homes appreciating by 4.3% (Nationally, Zillow expects home values to appreciate 3% over 2017).  For their analysis, Zillow looked at cities with quickly rising home values, low unemployment rates and strong income growth.

Zillow’s top 10 hottest housing markets for 2017 are:

1. Nashville, Tenn.
2. Seattle
3. Provo, Utah
4. Orlando, Fla.
5. Salt Lake City, Utah
6. Portland, Ore.
7. Knoxville, Tenn.
8. Ogden, Utah
9. Denver
10. Sacramento, Calif.

“The growth and demand for housing will drive up home prices in 2017, and these hot markets are experiencing change as more people discover them.” Said Zillow Chief Economist Dr. Svenja Gudell.

Click here to read the full story on Zillow.com.