MReport April 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Affordability: A Look at Homebuyer Perception Here's what homebuyers are saying about how much home they can afford in today's market. A ccording to the National Association of Home Builders' Q 4 Housing Trends Report (HTR), 2018 saw little change in how homebuyers perceived their ability to af- ford homes available in their markets. In the fourth quarter, three out of every four buy- ers (76 percent) estimated they could afford fewer than half the homes for sale in their markets. That number is slightly lower than the 79 percent of buyers who shared that perception in Q 4 2017. On the other hand, 23 percent felt they could buy the majority of homes for sale in their markets, just barely ahead of the 21 percent who had that view in Q 4 2017. Affordability is an issue for all age groups: 75 percent to 78 percent of buyers in each generation could afford fewer than half the homes avail- able in their markets. According to the report, mil- lennials lead the pack as the generation planning to purchase a home within 12 months (22 per- cent), while seniors are the most unlikely to do so (4 percent). It's a seller's market with a crunch in inventory affecting buyers of all generations. More than 60 percent of each group reported fewer or the same number of homes for sale as compared to three months earlier. Nearly 60 percent of each generation's active buyers have been looking for more than three months in search of the right home to buy. Buyers seem undeterred, how- ever, as 63 percent indicated that if they were still unable to find a home in the next few months, they would nevertheless continue looking for the "right" home in the same preferred location. Another 44 percent said they would expand their search area. In the final quarter of 2018, only 16 percent said they would give up trying to find a home to buy until next year or later. Across generations, few buyers expect the search to get easier, with 72 percent reporting their search will get harder or stay about the same (21 percent of mil- lennials, 21 percent of Gen-x, and 15 percent of baby boomers). The Silver Spike A report tracks a surge in builder confidence for the 55+ housing market. B uilder confidence is up in the single-family 55+ housing market, ac- cording to the latest 55+ Housing Market Index (HMI) from the National Association of Homebuilder (NAHB) The In- dex score rose to 66 in Q 4 2018, up six points from the previous quarter. "Overall, builders and devel- opers in the 55+ housing market are reporting strong demand across the country," said Chuck Ellison, Chairman of NAHB's 55+ Housing Industry Council and VP-Land of Miller & Smith in McLean, Virginia. "However, builders need to continue to man- age rising construction costs to keep homes in 55+ communities at affordable price points." All three components of the index, including present sales, expected sales, and prospective buyer traffic increased in Q 4. Present sales rose six points to 72, expected sales for the next six months increased five points to 70 and traffic of prospective buy- ers jumped 10 points to 53. The 55+ HMI measures two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each segment of the 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and an- ticipated six-month sales for that market are good, fair, or poor (high, average, or low for traffic). NAHB also notes increases in the multifamily 55+ condo market, with a three-point gain to 47. The index component for present sales for condos increased three points to 51, expected sales for the next six months fell four points to 49 and traffic of prospective buyers rose seven points to 38. In the 55+ multifamily rental market, two out of four components saw in- creases. According to the NAHB, present production increased six points to 60 and present demand for existing units rose four points to 67, while future expected production and future expected demand both fell two points to 54 and 62, respectively. "Like the broader housing market, the 55+ HMI is benefit- ting from the recent decline in mortgage rates," said Robert Dietz, NAHB Chief Economist. "Favorable demographics and solid homeowner wealth should continue to support demand for new 55+ housing." Across generations, few buyers expect the search to get easier, with 72 percent reporting their search will get harder or stay about the same (21 percent of millennials, 21 percent of Gen-x, and 15 percent of baby boomers).

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