In this week’s Real Estate News in Brief… we have the benefits of renting versus buying, millennial buying power, and a new Airbnb battle in New York.
We begin with economic news from this past week and the Federal Reserve’s annual report to Congress. The report says the central bank plans to continue it’s “patient” approach to future rate hikes, due to the softer economy and lack of inflation. Overall, board members see slower but solid economic growth through 2021 with a 2% inflation rate.
The 5-week government shutdown is still causing delays in government data. We were supposed to get reports on January housing starts and building permits this last week, but they have been delayed.
The National Association of Homebuilders did issue a report on home builder confidence. The February report jumped four points as builders anticipate more sales because of a strong job market and lower interest rates.
High prices continue to take a toll on existing home sales. The National Association of Realtors says those sales hit a new three-year low in January. They ran at a seasonally-adjusted annual rate of 4.94 million. That’s 8.5% lower than January of last year. It took an average of 49 days for homes to close, compared to 46 in December.
Mortgage rates dropped once again, which helps offset those high home prices. Freddie Mac says the average 30-year fixed-rate mortgage fell another two basis points to 4.35%. It offers a rosy view of the upcoming spring home buying season saying that higher wages and more inventory should help get the market moving again.
In other news making headlines…
Cheaper to Rent in Every U.S. State
It’s now cheaper to rent a home than it is to buy a home in every U.S. state. That’s according to a report by CNBC which used Census data for its analysis. The Census data didn’t offer an explanation, but it’s likely due to higher monthly mortgage payments along with other homeowner expenses like repairs, property taxes, and insurance.
And those costs have gone up in the past year, according to CNBC’s Diana Olick. She cites realtor.com data that shows a 14% increase in the monthly costs of homeownership, and says it’s “three times the annual increase in rent rates nationally.” (1)
CNBC also points out that buying a home may be more expensive on a monthly basis, but could appreciate in value. That could give you a handsome profit when you decide to sell. Owning also provides housing stability, if you plan to remain in the same home for a long time and pay off your loan.
Millennials Having Buying Power
Millennials seem to understand the benefits of homeownership. A new report from Realtor.com says Millennials now represent 42% of all new home loans, and account for the largest share of home loans by dollar volume among all generations. (2)
There are two reasons for this high dollar volume. They are buying more homes, and they are making smaller down payments so they end up with a larger loan amount. But, they are also making this happen by moving to more affordable markets in the central and northeast states. The top five are Buffalo, Pittsburgh, Milwaukee, Cincinnati, and Columbus.
New York City vs. Airbnb
New York City is stepping up its fight against short-term rentals with a subpoena for data on 20,000 Airbnb listings. A district judge had issued a temporary injunction against a city ordinance that requires that data, but said the city could subpoena that information while the law is under review.
Mayor de Blasio says the city needs the data to make sure hosts are not breaking short-term rental rules, or operating as illegal hotels. The city wants Airbnb and other sites like Homeaway to provide host names, addresses and whether they are renting rooms or whole homes.
Airbnb responded to the subpoena with a letter that encourages New York City to adopt rules similar to those in other big cities like San Francisco that require hosts to register their rentals. It also pointed out that Airbnb has already implemented a “One Host, One Home” policy in New York, proactively, and is willing to work with the city to “get this legislation across the finish line.” (3)
Lenders Compete for Faster Closing
It’s getting easier to close on a loan in less than 45 days. Chase Home Lending just announced a new loan closing guarantee program that promises to close on a loan in just 21 days. If that doesn’t happen, the bank will pay the customer $1,000. But it’s also up against other lenders who are trying to close more quickly on loans, and digital mortgage companies may have an edge. LoanDepot just announced that it will close on a loan in just eight days.
(1) CNBC Article