There are many financial benefits to homeownership, but probably none more important than its ability to create family wealth.
How Housing Matters is a joint project of the Urban Land Institute and the MacArthur Foundation. It is an online resource for research and information on how homeownership contributes to individual and community success.
“The ladder to economic success can stretch only so high without the asset-building power of homeownership.”
To this point, National Association of Realtors’ (NAR) Economists’ Outlook Blog revealed in a recent post:
“Housing wealth contributes positively to the homeowner’s and children’s economic condition, because home equity can be tapped for expenditures such as investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement…
Housing wealth (or net worth or equity) is built up over time via the home price appreciation and the principal payments that the homeowner makes on the loan.”
Just last month, NAR’s Chief Economist, Lawrence Yun, explained that even though home appreciation has slowed, homeowners are still building wealth:
“Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year.”
Later in life, this wealth is crucial…
This wealth is important to a family’s retirement plans. In a recent report from the Joint Center for Housing Studies at Harvard University titled, Housing America’s Older Adults 2018, they revealed that a renter 65 years old or older has a net worth of $6,710. Meanwhile, a homeowner 65+ years old has a net worth of $319,200. That huge difference will allow for a dramatic upgrade in one’s lifestyle during your retirement years.
Bottom Line
Homeownership builds wealth. This, in turn, allows families to have more and better options when it comes to their children and their life in retirement.
The Post and Courier recently reported that Some of South Carolina’s population growth hot spots have cooled. The data is from just-released census estimates, but new residents continued to pour in to Horry and Berkeley counties, the counties adjacent to Charlotte, and — perhaps surprisingly — Spartanburg.
The Palmetto State has been a fast-growing region for years and that continued through mid-2018. The state added 62,908 residents. More than 80 percent of the growth came from people relocating from other states, the Census Bureau estimated.
The additions raised the state’s population to 5,084,127.
The growth has generally been concentrated along the coast and along the Interstate 85 corridor in the Upstate. However, the places with the most rapidly growing populations in South Carolina keep changing, partly due to the availability of jobs and housing.
Berkeley County is an example. The county is home to multiple town-sized housing developments including Cane Bay, Nexton and Carnes Crossroads that are attracting new residents near the Summerville area.
On Berkeley County’s Cainhoy peninsula above Daniel Island, the Cainhoy Plantation development is expected to have 9,000 new homes.
The Nexton development off Interstate 26 near Summerville is eventually expected to have 10,000 homes, more than 6 million square feet of commercial space and more than 50 miles of trails.
Population growth has slowed rather dramatically in Charleston and Dorchester counties — falling by more than 50 percent since 2015 — while Berkeley has become the second-fastest-growing county in the state. The three counties together represent the Charleston metro area.
In 2015, the Charleston metro area was gaining 50 new residents every day, and Charleston County accounted for more than half the growth. By, 2018 that slowed to an average gain of 34 people each day, with half of those tri-county population gains going to to Berkeley County.
“I have people that I take around Charleston County, Berkeley County and Dorchester County, and they see what (homes) they can get in each place,” said Kimberly Lease, a Realtor with Century 21 Properties Plus. “Some people really want to be near downtown Charleston or the beaches, but if that’s not an issue, they almost always go to Berkeley out by Cane Bay.”
“It’s interesting how far people will drive for affordable housing,” she said. “There’s so much land in Berkeley County that there’s a ton of new construction.”
In Horry County, people moving from elsewhere accounted for all of the 11,496 one-year gain in population — and then some. More than 12,000 people moved to the county.
But the county also is home to many retirees and has more deaths than births each year, so its latest increase in population was slightly smaller than the number of people actually moving there.
Other South Carolina counties that have seen strong growth — including Charleston, Dorchester and Greenville — are gaining population from both robust birth rates and from people moving in. About a third of the growth in Charleston and Dorchester counties last year came from the birth rate.
One South Carolina surprise in the latest census report, which was publicly released Thursdaymorning, was Spartanburg County.
Through mid-2018, the Spartanburg metropolitan area was the 19th-fastest-growing in the nation out of 383 total. Spartanburg County accounted for all of that growth, and the county was the fifth-fastest-growing in the state.
“That does not shock me, as a local business owner,” said Molly Cashman, co-owner of Blue Moon Specialty Foods in Spartanburg. “Our downtown is really seeing a revival.”
Cashman said that when she returned to her native Spartanburg nearly six years ago after living in Greenville and Charleston, there were lots of empty storefronts downtown. That’s no longer the case, she said.
“There’s been a lot of emphasis on downtown living, which has really been cool,” Cashman said. “There’s been a sizable number of new apartments. Really nice, high-quality downtown apartments.”
Once known for textile mills, Spartanburg County is now known for manufacturers, including BMW, and it sits along the I-85 corridor connecting Charlotte, Greenville and Atlanta. Spartanburg County gained more population from mid-2017 to mid-2018 than Charleston and Dorchester counties combined — 7,256 people.
Most residents of the county live outside the city of Spartanburg, which is home to about 12 percent of the county’s population, the state’s largest private art collection and a growing hospitality industry. Greenville-Spartanburg International Airport is in Spartanburg County, except for a portion of the runways, and so is the State Ports Authority’s Inland Port Greer.
South Carolina’s York and Lancaster counties are now considered bedroom communities for Charlotte, a metro area that was the nation’s 47th-fastest-growing. York and Lancaster were also South Carolina’s third- and fourth-fastest-growing counties.
The only other counties that saw population growth greater than the state as a whole were Jasper, Greenville and Lexington.
Of course, not every county has been experiencing a growing population. Twenty of South Carolina’s 46 counties lost population during the most recent year; most of them were rural counties facing the double-whammy of a negative birth rate and more residents leaving than arriving.
Combined, those 20 counties lost an estimated 4,348 residents, while the remaining 26 counties gained 67,256.
According to a new survey from Move.com, the wave of first-time homebuyers hitting the market this summer has resulted in an interesting statistic. Nearly 60% of buyers searching for a home this spring are willing to consider buying a fixer-upper, with 95% believing that the projects needed will increase their new home’s value!
Realtor.com’s Chief Economist, Danielle Hale, pointed to low-inventory at the entry-level price range for the increase in willingness to renovate.
“The combination of rising home prices and limited entry-level homes for sale is prompting many home shoppers to consider homes that need renovating.
Replete with inspiration at their fingertips – like Pinterest, Instagram, and various home renovation TV shows – some home shoppers are comfortable tackling home renovation jobs to find a home that balances their needs with their budget.”
Just over half of all respondents who said they would be willing to buy a home in need of some TLC, would also spend more $20,000 to make the home fit their needs.
The most common ‘expected’ renovation is a kitchen remodel which can run anywhere from $22,000 for a minor remodel to $66,000 for a major remodel.
This isn’t a new trend by any means. According to the Joint Center for Housing Studies at Harvard University,home improvement project spending reached a new high in 2018.
“Americans spent $336.9 billion on remodeling projects, up 7.4% from the $313.6 billion a year earlier.”
Home renovation television shows have given many buyers hope that they could renovate a home they can afford into their dream home!
Bottom Line
If you are one of the many Americans considering buying a home this spring, meet with a local real estate professional who can help you find a house with the potential to be your dream home!
Last week, realtor.com released a survey of active home shoppers (those who plan to purchase their next home in 1 year or less). The survey asked their opinion on an impending recession and its possible impact on the housing market.
Two major takeaways from the survey:
42% believe a recession will occur this year or next (another 16% said 2021)
59% believe the housing market would fare the same or worse than it did in 2008
Why all the talk about a recession recently?
Over the last year, four separate surveys have been taken asking when we can expect the next recession to occur:
70% of all respondents to the four surveys believe that a recession will occur in 2019 or 2020 with an additional 18% saying 2021.
However, we must realize that a recession does not mean we will experience another housing crash. According to the dictionary definition, a recession is:
“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
During the last recession, a dramatic fall in home values helped cause it.
However, according to research done by CoreLogic, home values weren’t negatively impacted as they were in 2008 during the previous four recessions:
During the four recessions prior to 2008, home values depreciated only once (at a level that was less than 2%). The other three times home values appreciated, twice well above the historic norm of 3.6%.
Bottom Line
If there is an economic slowdown in our near future, there is no need for fear to set in. Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained that there’s no reason to panic right now, even if we may be headed for a recession.
“We’re seeing a cooling of the housing market, but nothing that indicates a crash.”
Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.
However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.
Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.
This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.
Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:
What will happen when mortgage interest rates rise?
Most experts think that the mortgage interest rate will increase to about 5% by year’s end. How will that impact affordability? Zillow also covered this in their report:
Rates would need to approach 6% before homes became less affordable than they had been historically.
Bottom Line
Though homes are less affordable today than they were last year, they are still a great purchase while interest rates are below the 6% mark.
The economists at CoreLogic recently released a special report entitled, Evaluating the Housing Market Since the Great Recession. The goal of the report was to look at economic recovery since the Great Recession of December 2007 through June 2009.
One of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from December 2012 to December 2017 to show how prices over the last five years have fared.
Frank Nothaft, Chief Economist at CoreLogic, commented on the importance of breaking out the data by state,
“Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now.
Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels.”
The map below was created to show the 5-year appreciation from December 2012 – December 2017 by state.
Nationally, the cumulative appreciation over the five-year period was 37.4%, with a high of 66% in Nevada, and a modest increase of 5% in Connecticut.
Where were prices expected to go?
Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).
According to the December 2012 survey results, national homes prices were projected to increase cumulatively by 23.1% by December 2017. The bulls of the group predicted home prices to rise by 33.6%, while the more cautious bears predicted an appreciation of 11.2%.
Where are prices headed in the next 5 years?
Data from the most recent HPES shows that home prices are expected to increase by 18.2% over the next 5 years. The bulls of the group predict home prices to rise by 27.4%, while the more cautious bears predict an appreciation of 8.3%.
Bottom Line
Every day, thousands of homeowners regain positive equity in their homes. Some homeowners are now experiencing values even higher than before the Great Recession. If you’re wondering if you have enough equity to sell your house and move on to your dream home, contact ME!
Nexton is a premiere neighborhood in Summerville, featuring A blend of homes, shopping, restaurants, recreation, schools and parks A front porch community with current technology tempered with an old town charm. The Award winning Swim Club features a 25-meter competition pool, splash pad, lawns, large deck area, an open pavilion, and fire pit. Future pools are also planned to be added throughout Nexton; Parks and Trails – Almost half of Nexton’s total acreage is devoted to parks and nature (approximately 2,000 acres of green space!). A walking/biking trail system with several miles is already in place and more than 50 miles planned. Nexton also features GigaFi – South Carolina’s first fiber to the home community that offers a 1GB upload & download capability.
Schools – Berkeley County School District Nexton Elementary School – Every student is given a tablet computer and the entire school has access to Giga-Fi. Cane Bay Middle – Cane Bay High School.; Community Events – Everything from outdoor concerts and kids’ activities to festivals and farmers markets to yoga classes in the park. Enjoy the Cocoa Cup 5K run, a Piccolo Spoleto event at Brown Family Park, and a number of other community events. Housing; If you are considering Nexton, check out 607 Long Meadow St., it is Currently for sale. It was built in 2016 with an immense amount of upgrades, and the owners have further enhanced this property. It is a great value in a phenomenal community. You could not build this property today, with it’s upgrades, for the current list price. 607 Long Meadow st! 3 BR, 2.5 b, Loft, 2 car garage, Offered at $359,983!
Real Estate Matters in Charleston SC - Gena Glaze 