August 3, 2017
A decade after the housing bust, more U.S. households are headed by renters than at any point since at least 1965, according to a new Pew Research Center analysis of Census Bureau housing data.1 Because of the lingering effects of the housing crisis between 2006 and 2016, the number of homes occupied by their owners remained relatively flat 2 while the total number of households in the United States grew by 7.6 million, which drove the homeownership rate from a peak of 69.1 percent in 2004 to 63.5 percent last year?the lowest in decades.3 Meanwhile, rentals soared. The share of households renting their home increased significantly, from 31.2 percent of households in 2006 to 36.6 percent in 2016.4From 2005 to 2015, single family rentals were the fastest growing rental category, growing by 34 percent to a total of 15.2 million units, and all rentals, including apartments, grew by 18.8 percent. Young adults – those younger than 35 – continue to be the most likely of all age groups to rent. In 2016, 65 percent of households headed by people younger than 35 were renting, up from 57 percent in 2006.5 Rental rates also went up among households headed by someone ages 45 to 64, rising from 22% of households in 2006 to 28% in 2016. But among the oldest Americans – those 65 or older – the rental rate remained steady at around 20%.6 Renters Wish They Could Buy The evidence is mounting that tens of thousands of renters, especially young households, are renting out of necessity, rather than choice. For example, a 2016 Pew study found that “Adults who rent their homes are mostly renting as a result of their circumstances rather than as a matter of choice. And many see their financial situation, such as existing debts or their inability to afford a down payment, as a barrier to owning a home.”7 The study is only one of many that have found that most young renters want to become homeowners.8 It’s no secret that young buyers today face major hurdles when it comes to buying their first homes. Some hard facts: Homeownership requires a greater financial sacrifice from first-time buyers. Buyers of starter homes are paying an average of 36.1 percent of their income each month on housing compared to buyers of premium homes pay only 14.3 percent of their income.9 Starter homes are very hard to find today. The share of starter homes fell from 26.9 percent last year to 25.9 percent in early 2017. The persistent and disproportional drop in starter and trade-up home inventory is pushing affordability further out of reach of homebuyers. A recent national survey found that millennials in many of the nation’s large metros will need at least a decade to save enough money for a 20 percent down payment on a condo.10 Yet still an average of 33.1 percent cheaper to buy than rent in all of the 100 biggest U.S. metro areas, ranging from just over 50 percent cheaper to buy than rent in Baton Rouge, La. to a mere 3.5% cheaper in San Jose, Calif.11 Low Down Payments Get Renters into Homeownership About half of renters (52%) say not being able to afford a down payment is a major reason when asked more specifically about the reasons why they rent rather than own their home.12 Low down payment programs like FHA, VA, state and local programs sponsored by housing finance agencies are helping first-time buyers become homeowners despite the barriers they increasingly face. These low and super-low down payment programs are so popular that 61 percent of first-time buyers are putting down less than six percent.13 1 www.pewresearch.org 2 Ibid 3 www.census.gov 4 www.pewresearch.org 5 www.pewresearch.org 6 www.pewresearch.org 7 www.pewsocialtrends.org 8 www.time.com 9 www.trulia.com 10 www.apartmentlist.com 11 www.trulia.com 12 www.pewsocialtrends.org 13 www.nar.realtor
If your clients have been hesitating about getting into a home because they think they would need twenty percent or more for a down payment, contact me today for more information on low down payment mortgages.
Jason Osenton NMLS # 21487 Branch Manager 700 Larkspur Landing Circle Ste 210 Larkspur, CA 94939 (415) 524-8695 office (415) 265-5550 cell My Website Email Me CA LIC # CA-DOC21487 | FL LIC # LO1018 | MA LIC # ML021487 | NJ LIC # 21487 | OR LIC # 21487 | PA LIC # 23423 | WA LIC # MLO-21487 *Rates displayed are quoted as of August 3, 2017. All rates are subject to change and may vary by geographical location. These rates assumes that you are buying or refinancing an owner-occupied single family home; credit scores of 740 or higher, debt-to-income ratios of 35% or lower, asset and reserve requirements are met, and your property has a loan-to-value of 80% or less. The Annual Percentage Rate (APR) is based on a loan amount of $300,000 and may include up to 2 points. (Points include any origination, discount and lender fees.) On adjustable-rate loans, interest rates are subject to potential increases over the life of the loan, once the initial fixed-rate period expires. By refinancing the existing loan, the total finance charges may be higher over the life of the loan. This is not a loan approval. *loanDepot Lifetime Guarantee (“Guarantee”) Guarantee applies to future refinances of the same property by the same borrower subject to the conditions and contact requirements outlined below. This Guarantee is non-transferable. This Guarantee may not be applied to a Purchase Loan, a Home Equity Loan, a Personal Loan, or combined with other discounts or promotions. This Guarantee excludes loanDepot’s Wholesale division. Future refinancing is conditional on whether the program type or applicable state/federal laws contain “seasoning” restrictions that would make refinancing during a specific period legal. For example, waiting until after the 12th month may be required. For future refinances of the same property with loanDepot, this Guarantee may not be redeemed within 180 days of the Date Issued. Your loan approval for any future loan is not guaranteed. The appraised value of your home for the future loan is not guaranteed. In the event a full appraisal of your home is required, the property value at that time must be acceptable for the program and loan terms requested. The interest rate for the future loan is not guaranteed. You will have to qualify for the loan requested and will be quoted interest rates in effect at the time of your next loan. For loans meeting the above requirements and which are successfully closed, your appraisal fee will be reimbursed at the closing of the loan transaction and no lender fees will be charged. “Lender fees” do not include discount points associated with your loan transaction. “Appraisal fee” includes only the fee associated with the first appraisal on your loan transaction and does not include any ancillary appraisal fees that may be charged in connection with your loan transaction (e.g., second appraisal fee, appraisal reinspection fee, appraisal recertification fee, etc.). This program is only available to applicants who closed their previous loan with loanDepot and received a “loanDepot Lifetime Guarantee” certificate. Rates, terms, and availability of programs are subject to change without notice. loanDepot.com, LLC NMLS ID 174457. Licensed by the CO department of Regulatory Agencies, Division of Real Estate as a Registered Mortgage Company. Regulated by the Division of Real Estate.
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