Parents are increasingly helping their adult children buy their first home. In fact, a new study suggests that if families were considered a financial institution, the “Bank of Mom and Dad” would be the seventh largest mortgage lender in the country.

Parents and grandparents supported the nationwide purchase of $317 billion worth of property—1.2 million homes—last year, according to a newly released study from the Legal & General Group, a multinational financial services institution.

Many wallets lined up on their edges

Julius Drost – Unsplash

One in five of buyers received gifts or interest-free loans from family members, the study shows. The average amount buyers received from them was $39,000. The Pacific region saw the greatest share of young adults receiving financial help in buying; the Rocky Mountain region saw the lowest.

More than half—51 percent—of prospective home buyers under the age of 35 say they expect to have help from their family or friends when buying a home. And young adults who already have purchased a home say that without the gift from the “Bank of Mom and Dad,” they would have had to delay their home purchase for at least three years.

“For many, perhaps most, young adults, buying a house without help is an increasingly unattainable goal,” says Nigel Wilson, chief executive at Legal & General Group. But Wilson calls it a worrisome trend that so many young adults are relying on help from family and friends to buy a home.

For example, family and friends who provide financial assistance may be putting their own finances in jeopardy to do so. For example, they reported taking out a loan (15 percent), raiding their 401(k) savings (8 percent), downsizing their own home (6 percent), or coming out of retirement (3 percent), the study showed. The study authors warn that too many of the younger generation may be dependent on their parents and grandparents to buy a home, even if it comes at a financial strain to the gift giver.

The Bank of Mom and Dad “reflects, first and foremost, a housing market where significant problems remain in matching the supply and demand of different types of housing, most notably starter homes and affordable housing of all kinds,” Wilson says. “As the population changes and the millennial generation strives to join the homeowning democracy, new thinking is due on meeting the needs and aspirations of Americans.”

Source:
Legal & General Group

Nine out of 10 millennial renters say they want to purchase a home, but few are planning to do so in the near term, according to a new survey by rental website Apartment List. The chief reasons keeping them from homeownership are affordability (72 percent) and lack of savings for a down payment (62 percent), the survey of 6,400 young adult renters shows. Nearly 50 percent of respondents say they have zero savings, while only 11 percent have saved $10,000 or more.

Student debt is a main culprit, the survey finds. Twenty-three percent of college graduates without student debt could save enough for a down payment within the next five years compared to 12 percent of college graduates who do have student debt, according to the survey. However, down payment aid from family members is helping to make homeownership more attainable. Such help usually occurs among the highest millennial earners, the survey finds. Millennial renters who expect to receive assistance with a down payment tended to have incomes over $100,000 per year. They expect to receive $51,172 in financial aid from family toward a down payment. That is 10 times more than the average expected assistance of $4,358 from millennials who earn less than $25,000.

Apartment List chart

© Apartment List

Apartment List chart

© Apartment List

“Several long-term macroeconomic trends have made homeownership a difficult goal for millennials to attain,” Apartment List says in the survey results. “Much of the generation came of age during or in the aftermath of the Great Recession, resulting in limited opportunities and stagnant wage growth in the crucial early stages of millennials’ careers.”

Further, researchers found that two-thirds of millennial renters surveyed would need more than two decades to save for a 20 percent down payment based on their current savings rates. However, there are loan options for home buyers who don’t have enough savings for a 20 percent down payment.

Source:
January 29, 2019

Many parts of the U.S. have been struck with a snap of subzero temperatures. While keeping themselves warm during the bitter cold, homeowners also need to take precautions to keep their home safe, too.

In Wisconsin’s capital, the Madison Water Utility posted a photo on Twitter to show homeowners how a burst pipe can damage a home. The photo was taken at a vacant home in Madison. “They shut the heat off, so then the water burst up in the top level, maybe a toilet or a bathtub, and it obviously just kept leaking and leaking and leaking,” Matt Grauvogl, Madison’s Water Utility Field supervisor, said about the photo to WKOW.com.

Here are a few tips from the experts to protect a home from the extreme cold:

Open cabinet doors. This may seem unusual, but HouseLogic, a home maintenance and remodeling website operated by the National Association of REALTORS®, suggests opening any cabinet doors covering plumbing in the kitchen and bathroom during cold weather. “This allows the home’s warm air to better circulate, which can help prevent the exposed piping from freezing,” the site notes. “While this won’t help much in pipes hidden in walls, ceilings, or under the home, it can keep water moving and limit the dangerous effects of freezing weather.”

Insulate. Keep drapes and blinds closed except when windows are in direct sunlight. Also, cover window air conditioners and insulate electrical outlets and switches on exterior walls with foam seals, which are available at home centers. Run paddle ceiling fans on low in reverse (clockwise when looking up) to help circulate more warm air, recommends “Today’s Homeowner With Danny Lipford.”

Turn the faucets on inside. Turn the faucets on occasionally to keep water moving through your system and slow down the freezing process. Aim for about five drips per minute, suggests HouseLogic.

Change filters on heaters. A heater needs to be checked annually to help prevent issues later on. But until you can schedule a checkup, change your filters, especially if you haven’t done so in a while. A clogged filter can prevent heat from getting into the home. “It’s no different than our vehicles that require preventative maintenance,” Steve Kistner, general manager at Kalins Indoor Comfort, told KTIV.com. “Our heating and cooling systems need the exact same things so they can work when we all count on them in this extreme cold. Eighty to 90 percent of the calls we go on right now are maintenance-related.”

Check outdoor connections. Make sure any outdoor spigots on all hoses have been disconnected and the spigots have been turned off and drained, advises the Madison Water Utility.

Shut off water immediately if pipes are frozen. If your pipes are already frozen, turn off the water immediately. Close off any external water sources, such as garden hose hookups. “This will prevent more water from filling the system, adding more ice to the pile, and eventually bursting your pipes—the worst-case scenario,” HouseLogic.com notes. “This will also help when the water thaws; the last thing you want after finally fixing your frozen pipes is for water to flood the system—and thus, your home.”

Source:
How to Protect Your Home During Extreme Cold Weather,” Today’s Homeowner With Danny Lipford and “5 Tricks to Keep your Pipes From Exploding This Winter,” HouseLogic.com

First-time buyer surveys consistently show the top hurdle to homeownership is saving up for the down payment. But potential home shoppers may be misunderstanding the amount of money they really need to buy a home.

Down payment resources

© pawel.gaul – E+/Getty Images

“Paying 20 percent down is, quite frankly, a myth,” Karen Hoskins, vice president at NeighborWorks, told HouseLogic. “Most buyers pay only 5 percent to 10 percent down—some even pay zero.”

Several assistance programs exist to help buyers with down payment concerns break into homeownership. For example, 69 percent of about 2,500 homebuying programs tracked by Down Payment Resource offer down payment assistance. The average amount of assistance from these programs tops $11,000.

HouseLogic offers several places where buyers can search for down payment assistance, including through national government programs. The Federal Housing Administration offers loans to first-time buyers with down payments as low as 3.5 percent. Programs like the USDA Rural Development Loans and VA Home Loans offer eligible buyers zero down payment loans.

Mortgage financing giants Fannie Mae and Freddie Mac offer eligible buyers loans where they can put down as little as 3 percent of the purchase price. When buyers put down less than 20 percent, they pay private mortgage insurance each month to protect the lender’s interest.

Many state and local homebuying programs offer assistance programs too. There are many different forms of assistance, such as forgivable loans and grants (gifts for some or all of the down payment and closing costs) to soft mortgages (down payment assistance loans that are deferred for some period of time based on the program’s requirements).

To find a program, HouseLogic recommends NeighborWorks, which provides housing counselors to discuss mortgage options for free, and the Down Payment Resource, where buyers can check their eligibility for assistance programs. Mortgage brokers should also be able to supply buyers with information about programs in their area and help determine eligibility.

Read the full scope of your buyers’ options and share the available resources for down payments—or no down payments—on HouseLogic.

Source:
Known Ways You Can Buy a House With No Down Payment,” HouseLogic.com (December 2018)

Long Island City, New York and Crystal City, Virginia

King of Hearts / Wikimedia Commons / CC-BY-SA-3.0 | Splat215~commonswiki

Amazon has chosen two East Coast cities—Crystal City, Va., and Long Island City, N.Y.—as the locations to house its new headquarters.

After a yearlong search, Amazon has chosen two East Coast cities—Crystal City, Va., and Long Island City, N.Y.—to house its new headquarters. The online retail giant is expected to announce its decision on Tuesday that it’s coming to Long Island City, a neighborhood of Queens, and Crystal City, an area within Arlington, Va., just outside of Washington, D.C.

The two real estate markets have already seen their housing markets rising in anticipation of the announcement. In the first seven days of November, views of listings in Long Island City surged 648 percent compared to a year ago, and views of listings in Crystal City rose 371 percent over last year, reports the real estate brokerage Redfin.

Amazon will be hiring thousands of high-tech workers and plans to bring about 50,000 employees to the two new locations. Amazon also plans to invest more than $5 billion over the next two decades in its new headquarter spots.

Amazon made the decision to split what was originally dubbed “HQ2” into two sites instead of choosing just one. “Picking multiple sites allows it to tap into two pools of talented labor and perhaps avoid being blamed for all of the housing and traffic woes of dominating a single area,” The New York Times reports.

Both cities are directly across from major city centers and are served by major transit systems, which Amazon had long said was an important judging criteria for its new site. Koki Adasi, a real estate professional in the Washington, D.C., area and 2018 president-elect for the Greater Capital Area Association of REALTORS®, told Forbes.com that Crystal City will see an influx into the market for those looking to rent and purchase. “This is also a very good thing for area REALTORS®,” Adasi says. “It’s a tight market and if demand goes up, inventory will decline, and most likely prices will rise.” The median home price in Crystal City is just over $600,000, according to realtor.com®.

As for New York, Mayor Bill de Blasio has said Amazon coming to the city would be “the single biggest economic development deal in the history of New York City,” de Blasio said. The median home price in New York is currently $1.1 million; it’s $600,000 in Queens County, according to realtor.com®.

Amazon could have some competition: Google is also planning an expansion into New York. Alphabet Inc., Google’s holding company, plans to add office space for more than 12,000 new workers, doubling its current staff over the next decade, The Wall Street Journal reports.

Amazon made its final decision for its two new headquarter sites after reviewing 238 applications from cities all vying to be the chosen spot. Amazon will continue to operate its headquarters from Seattle. Seattle has been one of the fastest-growing cities in the nation, and some housing analysts point to Amazon as the cause. Amazon has about 45,000 employees in its Seattle headquarters.

The Wall Street Journal reports that other city contenders may also receive some major sites from Amazon. The online giant will make its announcement Tuesday.

Source:

Underwater View

© borchee – E+/Getty Images

The number of equity-rich homeowners has been climbing, but not all are enjoying higher property values. Nearly 9 percent of all U.S. properties with a mortgage—or more than 4.9 million—are considered “seriously underwater,” according to a new report from ATTOM Data Solutions, a real estate data firm. Properties are underwater when the combined estimated balance of loans secured by the property is at least 25 percent higher than the property’s estimated market value. The percentage is up slightly year over year from 8.7 percent in the third quarter of 2017.

The highest share of seriously underwater properties are in Louisiana (21.3 percent); Mississippi (16.2 percent); Iowa (15.5 percent); Arkansas (15.3 percent); and Illinois (15.1 percent).

ATTOM Data Solutions reports that in 26 ZIP codes, more than half of all properties are still seriously underwater, including areas in Detroit, Milwaukee, St. Louis, Atlantic City, N.J., and Cleveland. The top five ZIP codes with the highest share of seriously underwater properties are: 08611 in Trenton, N.J. (71 percent seriously underwater properties); 63137 in St. Louis (66.5 percent); 60426 in Harvey, Ill. (64.2 percent); 38106 in Memphis, Tenn. (60.7 percent); and 44105 in Cleveland (59.2 percent).

November 13, 2018

Quicken Loans ranks highest in customer satisfaction for the ninth consecutive year, according to the newly released 2018 U.S. Primary Mortgage Origination Satisfaction Survey. Customers overall are happier with their mortgage lender this year compared to last year, and a lot of that is attributed to lenders’ use of mixing in more digital interactions in the process, according to the survey, which is based on responses from more than 5,000 customers with new mortgages or who have refinanced within the last 12 months.

“The mortgage marketplace is changing rapidly as traditional players and new digital-native entrants ramp up their digital and mobile offerings,” says John Cabell, financial services practice lead at J.D. Power. “While improved digital offerings are helping mortgage originators build customer satisfaction, it is important to find the right balance between digital self-service offerings and personal interaction with a representative. Technology alone is not a magic bullet in this market; the key is knowing where to leverage it and where to layer in more traditional forms of one-on-one support.”

Quicken Loans, Fairway Independent Mortgage, Guild Mortgage, and Mr. Cooper scored the highest in customer satisfaction in this year’s survey. Mr. Cooper had the greatest year-over-year improvement.

JDPower mortgages chart. Visit source link at the end of the article for more information.

© J.D. Power

Here are some additional findings from this year’s survey:

  • Satisfaction improves with digital integration. More customers are using digital and mobile channels to connect with lenders. Customers use an average of 3.1 different channels during the mortgage process, with the phone leading at 72 percent, followed by websites (69 percent) and email (58 percent).
  • Representatives are still key players. Only 3 percent of mortgage customers say they rely only on digital self-service channels in the origination process. Customer satisfaction is highest among customers who spoke with their lender in person or over the phone when applying for a mortgage, followed by those who used a combination of personal and self-service tools. Consumers say that representatives provide the greatest value by following up after initial inquiry and also confirming loan terms and payment.
  • Fast replies are critical. Satisfaction is also highest among customers who received contact within one day of their inquiry. Satisfaction drops the longer customers have to wait for a response.
November 12, 2018

Rookie buyers looking for an affordable home may purchase one in need of repair in hopes of turning it into the house of their dreams. But an extensive rehab can quickly become the stuff of nightmares.

Construction workers analyzing blueprints

© skynesher – E+/Getty Images

Realtor.com® contributor Erica Sweeney shares her personal story of tearing down and rebuilding her first home 11 years ago in Little Rock, Ark. The home was built in the 1940s, and the floor plan didn’t fit her and her family’s lifestyle. The entire process took eight months. “It was all worth it, but if I had to do it again, I’d definitely do a few things differently,” Sweeney writes in her realtor.com® article. She shares several of her biggest regrets, hoping to help others who are embarking on a similar remodeling journey.

  1. Figure out exactly what you want before you start. Do you only want to remodel the kitchen and master bathroom instead of the entire house? Sweeney says she and her husband kept adding projects onto their remodeling list before finally deciding to tear down the entire house and build new—which then required an architect and new house plans. “I wish someone had encouraged us to step back and think carefully about what we really wanted upfront, taking into account current and future needs and budget,” Sweeney writes. “That way, we could have done just one building plan rather than two.”
  2. Shop for what you need before beginning the project. Sweeney suggests making as many decisions about the look of the house and materials you want early in the process. This will help you get a better sense of your budget before you start. Prioritize what rooms or items are most important to you as you shop.
  3. Beware of the neighbors. If you’re doing a big renovation, you may want to inform your neighbors and apologize in advance for any inconvenience, Sweeney says. She once found a neighbor’s child playing on the construction site of her new home. It’s important to keep the construction site as secure as possible, such as fencing it off with a “no trespassing” sign. It’s a good idea to let the entire block know and remind neighbors about the dangers of a construction site, she notes.
  4. Check everything. “This is something I can’t emphasize enough: Check each invoice, list of materials, quotes, and anything else,” Sweeney writes. “Chances are something will be wrong, and problems found early are much easier to fix.” Sweeney says the quote for the doorknobs included the wrong count, and the window quote listed windows with the wrong grid pattern.

November 13, 2018

The last few years, the home improvement business has been booming as more homeowners look to spruce up their homes. But are owners getting too confident that they can do it all themselves? “Costs, pop culture, and perhaps overconfidence could be driving DIY culture,” according to a new study from NerdWallet, a personal finance website.

Where middle class owners can buy a home

© Westend61 – Getty Images

NerdWallet’s 2018 Home Improvement Report found that younger generations are particularly gung-ho about tackling home improvement projects themselves than other age groups. Homeowners under the age of 35 take on more than half of all their home repair or home improvement projects themselves, according to the study which surveyed about 2,000 adults in the U.S.

Eighty percent of all homeowners surveyed say that professionals charge too much for labor and materials. Further, 73 percent say there is a wide variety of resources available with enough information that homeowners feel they could do every single one of their home repair or improvement projects themselves if they chose to.

Some homeowners go DIY merely for the cost savings—but they tend to take on smaller projects when they do. Homeowners who did a kitchen renovation themselves typically spent $22,000 less than those who used a professional, according to the report. Landscaping and bedroom renovations were the most common projects that homeowners took on themselves rather than hiring a professional.

While homeowners may be more confident to take on a project, they don’t always complete it correctly. Forty-three percent of homeowners admit to butchering a DIY home project at least once. Thirty-five percent say a home improvement show influenced them to take on a DIY project that ended badly.

“Have some humility when you think about tackling repairs and renovations yourself,” says Holden Lewis, NerdWallet’s home expert. “If it’s a job you’ve never done before, and it’s hard to undo, think really hard whether you should do it yourself, even with the guidance of YouTube.”

For the most serious repairs, like those that involve plumbing and electricity, homeowners do say they are more likely to hire a pro.

Source:
2018 Home Improvement Report,” NerdWallet (Nov. 8, 2018)
October 15, 2018

Some home buyers may be drawn to the cachet of owning a property with a rich historical past, but there are more benefits than status. “Historic districts tend to hold their value better during economic downturns, and they appreciate more during upswings,” Tom Mayes, vice president for the National Trust for Historic Preservation in Washington, D.C., told realtor.com®. These areas come with “built-in character. They have a uniqueness and distinctiveness.”

Small town main street

© Gail Shotlander – Moment/Getty Images

But buyers need to do some research before they purchase a historic property. Older homes can require more burdensome maintenance and updating, and there may be some restrictions on remodeling. Realtor.com®’s research team analyzed 500 of the largest urban areas in the U.S. to identify the areas with the most historic homes. They looked at the per capita number of properties listed on the National Register of Historic Places and the number of historic landmarks, as well as the property description of homes in those markets. The following are America’s most historic cities, according to realtor.com®:

1. Cambridge, Mass.

  • Median list price: $949,000
  • Properties listed on the national register: 209

2. Charleston, S.C.

  • Median list price: $305,000
  • Properties listed on the national register: 100

3. Davenport, Iowa

  • Median list price: $139,900
  • Properties listed on the national register: 251

4. St. Louis

  • Median list price: $174,900
  • Properties listed on the national register: 435

5. Santa Fe, N.M.

  • Median list price: $496,500
  • Properties listed on the national register: 61