[REN #846] Real Estate News Brief: Home Affordability, Foreclosures, Migration Patterns, Renter Preferences

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Real Estate News Brief: Home Affordability, Foreclosures, Migration Patterns, Renter Preferences, Real Estate News for Investors Podcast Episode #846

In this Real Estate News Brief for the week ending January 18th… we look at home affordability, foreclosures, where people are moving, and renter preferences in 2020.

Economic News

We begin with economic news from this past week, and a big jump in residential construction. The Commerce Department reported a 17% increase in housing starts for the month of December. They were up 11% for single-family homes and 32% for multi-families. Compared to December 2018, residential construction activity was up 41%. MarketWatch says that builders took advantage of warmer-than-usual December weather. (1) Building permits were down 4% in December but were still higher than the previous year.

Home builder confidence dropped slightly in January, but only by one point. The National Association of Home Builders says it fell from a 20-year-high of 76, to 75. Anything above 50 shows that confidence is improving so home builders are feeling positive about the new year.

Inflation spiked in December. It rose 0.2% for an annual reading of 2.3%. MarketWatch says it’s the biggest monthly increase in the cost of living since 2011, and brings the rate of inflation to a level we last saw in October of 2018. (1) Most of the price increases were limited to a few areas, such as fuel, health care, and rent.

Consumer confidence also slipped a bit. The University of Michigan says its index dropped from 99.3 to 99.1. MarketWatch economists had expected it to rise, but the reading is still quite high.

Mortgage Rates

Mortgage rates didn’t move much in the last week. Freddie Mac says the average 30-year fixed-rate mortgage was up just one basis point, to 3.65%. (2) The mortgage guarantor says that low mortgage rates and a strong job market “will certainly support housing market activity in the coming months.” 

The Mortgage Bankers Associations says the year has already gotten off to a strong start with a 30% increase in mortgage applications for the past week. The MBA’s Joel Kan says, “Purchase activity was 8 percent higher than a year ago, and the purchase index increased to its highest level since October 2009.”

In other news making headlines…

Foreclosures at Record Low

Foreclosures hit a record low for 2019. ATTOM Data Solutions says they were down 21% from 2018 and 83% from a high point in 2010 when almost 2.9 million people lost their homes. (3) There were less than half a million foreclosure filings last year or 0.36% of all U.S. housing units. 

ATTOM’s chief product officer Todd Teta says, “The continued decline in distressed properties is one of many signs pointing to a much-improved housing market compared to the bad old days of the Great Recession.” ATTOM began tracking foreclosures in 2005.

Home Affordability for U.S. Families

A majority of Americans are not at risk of foreclosure because they can’t afford to buy a home. An analysis by ATTOM Data solutions shows that 71% of the nation’s average wage earners could not afford to buy a home in the fourth quarter of 2019. That’s a very small improvement from a year earlier when 75% of those wage earners couldn’t afford a home. Lower mortgage rates have helped boost the number, but it’s still high due to home prices that remain out of reach for many buyers. 

To afford a home priced at the national median of $257,000, a buyer would need to earn about $67,000. The average annual wage is just $58,000.

Where Are People Moving?

Moving companies can give us a good look at migration patterns which also point to places with jobs and affordable housing. A report by Atlas Van Lines shows that California is not only losing people but also gaining a great many people. It had the largest number of people moving away, but also attracted more new residents than any other state in 2019. (4)

Texas ranked second for the most newcomers. Atlas says that people moving to the Lone Star State made up 55% of its business last year. A company representative said that “Texas registered its highest percentage of inbound moves in the U.S. since 2015.” Florida and Washington State were in the third and fourth positions for inbound moves.

As the Dallas News reports, there’s some variation in results from different moving companies. (5) Allied says that Florida ranked first for in-bound moves followed by Texas, California, Arizona, and North Carolina. Austin and Houston were tops in Texas, according to Allied.

What Do Renters Want in 2020?

There’s a new survey on renter preferences that could help landlords in the coming year. The National Multifamily Housing Council worked with Kingsley Associates to find out what renters want. Among the preferences they discovered — most renters still prefer to see an apartment in-person as opposed to a virtual tour. Many do like smart-home technology however, and even though more than a third of them said they already own a virtual assistant like Amazon’s Alexa or Google Home, 43% said they wouldn’t rent a place without one. More than a third of the survey participants were also pet owners and said they’d pay extra every month for things like dog parks and on-site pet services. (6)

One new trend that didn’t seem to generate much interest was for co-living spaces. 70% said they didn’t want this kind of living situation. More than half said they would like an on-site business center, however, so co-working may be a more desirable feature than co-living, in 2020. Last but not least, a majority said short-term rentals would be a nice perk, or wouldn’t be an issue if they were allowed in their complex. Only 16% said they’d steer clear of a building that allowed short-term rentals.


(1) MarketWatch Article

(2) Freddie Mac Primary Mortgage Market Survey

(3) Mortgage Bankers Association Press Release

(4) ATTOM Data Article

(5) Dallas News Article

(6) Housingwire Article

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