In this week’s Real Estate News in Brief… we have trillions in new housing market value, big gains for home equity, and a new PropTech home in the Northeast.
We begin with economic news from this past week, and a new report on the Federal deficit that shows a whopping 77% increase for the first four months of the year. The Treasury Department says it hit $310 billion because of a 2% drop in tax revenue and a 9% increase in federal spending. The full-year deficit is expected to be around $900 billion.
The Commerce Department released December figures on new home sales. The report had been delayed because of the government shutdown. We are now learning that new home sales surged in December. They were up 3.7% for the month, and according to MarketWatch, 1.5% for the entire year. Analysts say there are “plenty of signs that Americans want to buy homes” but they are having a tough time finding affordable options. (1)
The January report on housing starts indicates that a lot of new homes are coming online. That data shows a 19% surge in all new residential construction, and a 25% surge in single-family starts. New requests for building permits are not as robust. They only rose 1.4% in January.
Long-term mortgage rates reversed course, and moved higher this last week. Freddie Mac says they rose 6 basis points to 4.41%.
In other news making headlines…
$33.3 Trillion Housing Market
The value of the U.S. housing market gained another $1.9 trillion last year. According to research by Zillow, it rose 6.2% in 2018 and is now worth a total of $33.3 trillion. It had hit a low point back in 2012, but has gained more than $10 trillion since then. California can claim a third of that gain.
The metro with the highest total home value is New York City. Total value for the New York metro area is $3 trillion, or about 9% of the nation’s total. Other more valuable markets include four in California. Los Angeles is worth $2.9 trillion; San Francisco $1.6 trillion, San Jose $800 billion, and San Diego $674 billion.
Homeowners Gain Another $10,000 in Equity
The rise in housing market value gave individual homeowners an average gain of $9,700 in 2018. A CoreLogic report shows that home equity levels rose in almost all 50 states, but the biggest increases were in the western region.
The state with the biggest average increase was not California, however. It was Nevada, with an average gain of $29,400 in home equity. Hawaii was next followed by Idaho, and then California. The average gain in California was $19,600.
About 2.2 million mortgages are still underwater. That’s about 4.2% of all mortgaged properties. CoreLogic’s Chief Economist Frank Nothaft is expecting another 4.5% increase in home prices this year. He says that could help some of the properties with negative equity.
More Seniors Becoming Renters
The homeownership rate among seniors is dropping as more people 65 and older choose to rent. Census Bureau data shows the homeownership rate for seniors at 78.8%. That’s down from 79.2% a year ago.
The information coincides with an analysis by RentCafe that shows the number of senior renters has grown at a much faster pace than younger generations. That report shows a 43% increase over ten years among seniors compared to a 7% increase among Millennials.
Rent Cafe economists are predicting that by 2035, seniors will represent the second largest group of renters. The report comments that, “As children move out, they find themselves alone, in a big house that costs a lot to maintain, causing them to rethink their housing choices.” (2)
If the increase in senior renters continues, that will help increase the supply of homes available for younger families. A recent study by Freddie Mac suggests that seniors are currently contributing to the housing shortage, because they want to remain in their long-time homes to “age-in-place.”
New York City Welcomes PropTech
Real estate technology investors, developers, and academics have a new gathering place in New York City. Venture capital firm MetaProp has launched a new hub called “PropTech Place” in Manhattan. It offers co-working spaces along with PropTech exhibits, educational events, superfast WIFI, and “amazing coffee.” (3)
For just $249 a month, you can reserve a work space. It looks like other options will include dedicated desk space and dedicated private office space for a higher monthly fee. The PropTech Place mission is to “help support current and aspiring real estate technology leaders.”
(3) Forbes Article