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Where Have All the Buyers Gone?
Home sales are down nationwide. Realtors point to a shrinking 1st time house buyer market, as conventional loans are difficult to obtain, since the usual big banks are reluctant to loan due to arduous regulations.
Compared to a year ago, existing home sales are down 7.8% in the West, down 1.5% in the Midwest region, down 6.6% in the South but remain unchanged in the East. The good news is that overall, housing prices have risen the most in the West and South regions.
Follow this link for more details: http://www.cnbc.com/2015/09/21/chase-
There are 3 major factors affecting the current housing market. First, the baby boomer generation is rushing into retirement with many heading in one of three directions. One group is downsizing by trading stairs for ranch style or to save on the cleaning work, while the second group could go bigger using recent stock market windfall funs and the third group is simply stay in their current house in order to provide a place for the millennials to come back.
The second major factor, has the typical millennial waiting before buying a home in order to save for the down payment while paying down debt. The third major factor is somewhat debatable dependent upon which economist you follow, but there is a large group of the population who are under employed or unemployed.
Now, factor in this bit of news, Wall Street has been credited with fueling the rising house prices but now it seems, they will pull back per the following article: http://fortune.com/2015/09/25/housing-
Where does that leave the housing market? Which way will prices go? Are we really even out of the great recession? Or is the US economy still reeling from the Global Financial Crisis?
According to a Boston Globe article found at: https://www.bostonglobe.com/business/2015/09/25/millennials-
Homeownership has always been a status symbol, as young adults move to adulthood. The milestone tends to prove that they have finally arrived and ready to be on their own. Many homeowners have considered buying a home as a first major step in wealth building. Even the government rewards homeownership by granting a tax deduction for annual interest rates paid. So what happens if the millennials can no longer attain homeownership or at least the achievement is stalled until much later in life?
Interest rates are still historically low but that isn’t helping the economy grow as buyers are still skeptical of the future. The first time home buyer is usually younger but today’s buyers are weighed down with college debt, which often leaves them without the traditional down payment, or needed credit score.
Is there a gap that may position many creative financing minded investors to fill the need? Does that smell like opportunity or disaster?
Another aspect that is contributing to the declining home sales equation is in part due to the problems millennials are having in being able to afford their first home. Many millennials are weighed down by student debt, which in turn makes it difficult to save for the traditional down payment.