Real Estate News

Mortgage Rates Fall for Third Straight Week

NAR Daily Real Estate News - August 24, 2018 - 1:00am

Mortgage rates are now at their lowest level since mid-April.

Categories: Real Estate News

Inventory Drought Pushes New-Home Sales to 9-Month Low

NAR Daily Real Estate News - August 24, 2018 - 1:00am

However, housing demand remains solid “due to economic strengthening and positive demographic tailwinds.”

Categories: Real Estate News

401(k) Auto-Enrollment Connected to Early Withdrawals, With Housing Implications

RisMedia Consumer Advice - August 23, 2018 - 4:41pm

With Social Security trust fund reserves waning—predicted to be depleted by 2034, leaving Social Security unable to maintain full scheduled benefits—and the number of retirees expecting to receive benefits increasing, more and more Americans are relying on 401(k) savings to support their retirement living. In fact, Statista estimates there are 41.2 million households who presently own a 401(k) plan in the U.S.

How does auto-enrollment fit in with these tax-advantaged savings accounts? There’s a clear benefit, as recently determined by 401(k) record-keeper Alight Solutions LLC in its 2017 Trends & Experience in Defined Contributions Plans report. Far more individuals contribute to a 401(k) with an auto-enrollment feature (85 percent) than to plans without it (63 percent).

While that should lead to higher savings rates and stronger financial health for future retirees, there is a glaring concern: Increases in auto-enrollment are leading to more early withdrawals. According to Retirement Clearinghouse LLC, over 60 percent of 401(k) participants with balances below $10,000 liquidate their accounts after leaving a company, reports the Wall Street Journal.

What’s causing this increase in withdrawals (also known as leakage)? Job changes lead to low 401(k) balances, which are largely cashed out due to company payout checks that can easily be deposited. The alternative? Having to fill out burdensome paperwork to transfer the funds into a tax-advantaged account. Others use their funds as a type of loan regardless of penalties incurred.

Although small loans or early withdrawals may not seem like much in the grand scheme of funds necessary to support retirement living, these can add up to a costly dip in long-term savings. While statistics by the University of Pennsylvania’s Wharton School show that most 401(k) borrowers pay themselves back (with interest), 10 percent default on nearly $5 billion per year.

How will this impact retirement-incentivized real estate? A survey conducted last year by The Hartford Advance 50 Team and MIT AgeLab found that 73 percent of surveyed adults over 45 strongly agreed with the statement “What I’d really like to do is stay in my current residence for as long as possible.”

That may not be achievable for a majority of retirees. Less funds to support retirement living may lead to more move-down buyers, as retirees struggle to pay off remaining mortgage debt on bigger homes while also maintaining their current costs of living. Additionally, aging in place no longer means simply staying in their current home, as improvements are necessary to ensure their safety and comfort, and these modifications can be costly.

Independent living in a safe format is merely one consideration. According to a Merrill Lynch Finances in Retirement Survey last year, the average cost to retire has increased to $738,400. The average balance in a 401(k) account is $102,900, according to Fidelity.

How much does auto-enrollment and early withdrawals impact retirement moving trends? Participating employees are more likely to reduce their potential auto-enrollment gains by as much as 42 percent, withdrawing an average of $850 more than employees who voluntarily enroll. This could lead to massive losses in retirement savings down the road.

When taking overall auto-enrollment savings into consideration, however, those who participated saved, on average, $1,200 more in eight years (in 2004 dollars) compared to employees hired only a year earlier but who were required to sign up on their own, according to the Alight report. Additionally, companies offering auto-enrollment are largely converting more employees, who would not typically contribute, into retirement savers.

Younger workers should start seeking employment with companies that offer 401(k) auto-enrollment now, and should refrain from pocketing low balances should they transfer jobs or withdrawing until they have reached retirement age. Additionally, in order to truly benefit from auto-enrollment and build up savings, Congress may have to impose added restrictions on low-balance payouts in response to job transitions, as well as make it easier for auto-enrolled contributors to transfer funds without the hassle of complex paperwork.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post 401(k) Auto-Enrollment Connected to Early Withdrawals, With Housing Implications appeared first on RISMedia.

Categories: Real Estate News

Challenged by a Down Payment? The Easiest Markets to Save For

RisMedia Consumer Advice - August 23, 2018 - 4:33pm

One of the biggest challenges for first-time homebuyers is saving.

Coming up with a down payment is a hurdle for the majority of millennials, shows study after study—but, there are areas where the average earnings are enough to save sufficiently, according to an analysis recently released by RealEstate.com. The easiest market? Chicago, where the average first-timer can save 20 percent for a starter in just over three years.

1. Chicago, Ill.
Annual Household Income for Millennials: $50,500
Annual Millennial Savings: $10,821
Median Starter Value: $177,300
Down Payment (20%): $35,460
Savings Timeline: 3 years, 3 months

2. Dallas-Fort Worth, Texas
Annual Household Income for Millennials: $50,600
Annual Millennial Savings: $10,843
Median Starter Value: $185,400
Down Payment (20%): $37,080
Savings Timeline: 3 years, 5 months

3. Detroit, Mich.
Annual Household Income for Millennials: $43,100
Annual Millennial Savings: $5,388
Median Starter Value: $96,700
Down Payment (20%): $19,340
Savings Timeline: 3 years, 7 months

4. Baltimore, Md.
Annual Household Income for Millennials: $54,300
Annual Millennial Savings: $11,636
Median Starter Value: $214,000
Down Payment (20%): $42,800
Savings Timeline: 3 years, 8 months

5. Indianapolis, Ind.
Annual Household Income for Millennials: $39,400
Annual Millennial Savings: $6,567
Median Starter Value: $122,500
Down Payment (20%): $24,500
Savings Timeline: 3 years, 9 months

6. Pittsburgh, Pa.
Annual Household Income for Millennials: $41,700
Annual Millennial Savings: $5,212
Median Starter Value: $103,600
Down Payment (20%): $20,720
Savings Timeline: 4 years

7. Cleveland, Ohio
Annual Household Income for Millennials: $42,900
Annual Millennial Savings: $5,362
Median Starter Value: $109,600
Down Payment (20%): $21,920
Savings Timeline: 4 years, 1 month

8. St. Louis, Mo.
Annual Household Income for Millennials: $43,200
Annual Millennial Savings: $5,400
Median Starter Value: $119,900
Down Payment (20%): $23,980
Savings Timeline: 4 years, 5 months

9. Austin, Texas
Annual Household Income for Millennials: $50,700
Annual Millennial Savings: $10,864
Median Starter Value: $249,700
Down Payment (20%): $49,940
Savings Timeline: 4 years, 7 months

10. Washington, D.C.
Annual Household Income for Millennials: $67,900
Annual Millennial Savings: $14,550
Median Starter Value: $343,000
Down Payment (20%): $68,600
Savings Timeline: 4 years, 9 months

The analysis factored in first-time homebuyers’ household income (median), plus the cost of a down payment on a median starter. (Twenty percent is ideal, but not a requirement.)

“Contrary to popular belief, millennials want to buy homes, but high home prices, low inventory and stagnant wage growth are some of the many factors that may be driving would-be buyers into delaying homeownership,” says Justin LaJoie, general manager of RealEstate.com. “However, in certain U.S. housing markets first-time buyers can find some relief; they just need to know where to look.”

RealEstate.com is part of Zillow Group.

For more information, please visit RealEstate.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Challenged by a Down Payment? The Easiest Markets to Save For appeared first on RISMedia.

Categories: Real Estate News

Top Cities for Young Professionals to Call Home

NAR Daily Real Estate News - August 23, 2018 - 1:00am

These metros offer the best prospects for 25- to 34-year-olds when it comes to employment, salary, and housing costs.

Categories: Real Estate News

Jumbo Loans May Be More Practical for Average Buyers

NAR Daily Real Estate News - August 23, 2018 - 1:00am

Interest rates for larger mortgages are becoming less expensive than those for conforming loans.

Categories: Real Estate News

Facebook Removes Ad Options After HUD Complaint

NAR Daily Real Estate News - August 23, 2018 - 1:00am

The social media giant has taken down more than 5,000 ad targeting options to “help prevent misuse,” the company stated.

Categories: Real Estate News

End of Fannie, Freddie Rental Programs Good for Market

NAR Daily Real Estate News - August 22, 2018 - 1:00am

The companies’ strategies to help institutional investors buy homes for rentals were exacerbating inventory shortages and affordability concerns, NAR says.

Categories: Real Estate News

Study: Lots Near Power Lines Lose Nearly Half Their Value

NAR Daily Real Estate News - August 22, 2018 - 1:00am

Health concerns and unattractive views drive the decrease in the value of land near high-voltage systems, researchers say.

Categories: Real Estate News

Reports: Compass to Buy Pacific Union in Cali Expansion

NAR Daily Real Estate News - August 22, 2018 - 1:00am

Combined, the brokerages could become the nation’s third-largest residential real estate firm based on transaction volume.

Categories: Real Estate News

Existing-Home Sales Reach Slowest Pace in 2 Years

NAR Daily Real Estate News - August 22, 2018 - 1:00am

Rising property prices are prompting would-be buyers to pull out of the market, says NAR Chief Economist Lawrence Yun.

Categories: Real Estate News

Disruptor Roundup: Divvy Takes on Rent-to-Own

RisMedia Consumer Advice - August 21, 2018 - 4:23pm

Editor’s Note: The Disruptor Roundup analyzes companies implementing unconventional models.

Divvy
This tech-powered, rent-to-own platform was launched at the end of 2017, and provides consumers with the ability to transition from renting to homeownership with a three-year program that amasses a down payment within its required monthly payments. Currently available in Atlanta, Cleveland and Memphis, Divvy is looking to expand to other markets.

Divvy purchases homes on behalf of consumers. There are, however, restrictions. Divvy cannot purchase and lease condos, non-bank approved short sales, auction properties, manufactured or mobile homes, undeveloped lots, homes in pre- or mid-construction or properties with problematic conditions that require extensive maintenance.

How does the program work? Applicants must first be preapproved and undergo a thorough underwriting process that requires photo identification, tax returns, recent bank statements and a credit check. This process typically takes between 24 hours and three business days, according to the Divvy website.

In addition to rent, Divvy also charges “equity credits,” which make up about 25 percent of the monthly payment and are used as down payment funds at the end of the leasing period. Additionally, 5 percent of the monthly payments go toward maintenance funds, to be used for any home repairs, which applicants must address themselves, as Divvy does not function as a traditional landlord.

The qualifications? Candidates must:

  1. Have been employed for the last 12 months
  2. Have an average monthly income of at least $2,300 per month
  3. Be able to comfortably afford a Divvy monthly payment (rent, equity credits, maintenance funds)
  4. Have a credit score of at least 550
  5. Have had any bankruptcies discharged at least 12 months prior to applying
  6. Have at least $1,300 saved for a down payment

The cons? First, Divvy customers may only use partnered agents, which highly limits buyers. How are these agents chosen? Divvy does not provide guidelines on its website, and was not available for comment.

Additionally, while this incentivizes homeownership for prospective buyers who have trouble building up a down payment, the leasing program is more of a forced savings program in which they risk losing out on funds if they break the lease and choose not to purchase the home. Divvy will only refund 50 percent of the total dollars of equity credit if the three-year lease is broken, and, at closing, deducts 1.5 percent of the applicant’s equity credits in order to cover its own selling costs.

Buyers might also be wary of Divvy’s static home value projection, which estimates how much the property will be worth in three years. It can be difficult to ascertain whether buyers are truly leasing to buy at fair market value three years prior to the actual time of purchase.

As Divvy does not provide mortgage services, buyers will still need to be approved for a loan at the end of the lease period, which brings up additional questions regarding the home’s value and appraisal conditions. Divvy can report on-time rental payments to the credit bureaus during the three-year lease in order to help applicants who wish to increase their credit score before purchasing, improving their chances of being able to qualify for a home loan.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Disruptor Roundup: Divvy Takes on Rent-to-Own appeared first on RISMedia.

Categories: Real Estate News

Hospitals Invest in Housing for Healthier Communities

NAR Daily Real Estate News - August 21, 2018 - 1:00am

Growing research points to a link between living in areas of concentrated poverty and health. That’s prompted some hospitals to invest in housing.

Categories: Real Estate News

Study: Foreclosures Rising in 44% of Metros

NAR Daily Real Estate News - August 21, 2018 - 1:00am

This marks the first annual increase in foreclosure starts nationwide after three years of declines.

Categories: Real Estate News

Fewer Americans Are Willing to Move for a Job

NAR Daily Real Estate News - August 21, 2018 - 1:00am

Will courting the relocation business be less lucrative? New data suggests so.

Categories: Real Estate News

3 Biggest Blockchain Myths Debunked

NAR Daily Real Estate News - August 21, 2018 - 1:00am

Find out why this new technology is probably safer than you think from an expert who’s dispelling misconceptions.

Categories: Real Estate News

New Zealand Bans Foreigners From Buying Homes

NAR Daily Real Estate News - August 20, 2018 - 1:00am

Lawmakers say the move is intended to combat soaring home prices and rising homelessness in the country.

Categories: Real Estate News

Developer to Equip 25K Apartments With Smart-Home Tech

NAR Daily Real Estate News - August 20, 2018 - 1:00am

Alliance Residential Company is partnering with technology leaders such as Google, Nest, and Dwelo to launch the initiative.

Categories: Real Estate News

Survey: Consumers Lose Sleep Over Housing Costs

NAR Daily Real Estate News - August 20, 2018 - 1:00am

More than one in 10 adults—or about 29 million Americans—say they have restless nights, worrying about their ability to pay the mortgage or rent.

Categories: Real Estate News

Should Listing Photos Be Removed After the Sale?

NAR Daily Real Estate News - August 20, 2018 - 1:00am

Some home buyers express concern that photos of their properties continue to live on real estate websites after they’ve closed on the purchase, and they’re asking real estate professionals to help take them down.

Categories: Real Estate News