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46 | 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 Are 30-Year Mortgages Bad for Financial Wellness? Once seen as an accessible path to homeownership, new analysis is questioning whether the amount of credit accumulated on a 30-year loan is worth the investment. A nalysis from Forbes questions whether the 30-year mortgage is good for the financial well-being of homeowners, due to the amount of interest accu- mulated during the term. The 30-year mortgage started after the Great Depression under the premise that Americans would pay off the loan during their working years. While many credit 30-year mortgages for the ac- cessibility to home- ownership, Forbes reported, there are rising concerns over the amount of interest consumers pay and the recent abuses in the system. The article states that on a $260,000 home with a 30-year mortgage at 4%, the homebuyer would pay more than $186,000 in interest over the life of the loan. This number would drop to $80,000 in interest if consumers used a 15-year mortgage at 3.75%. One of the benefits of a 30-year mortgage is payment flexibility. "The lower 30-year mortgage offers payment flexibility for those future changes," the report reads. "You can pay your 30-year mort- gage at the pace of a 15-year and then drop down to the 30-year payment when changes in your income occurs." Flexibility in finances is critical, as Zillow reported last month that 55% of homebuyers make a financial sacrifice to achieve homeowner- ship. This number jumps to 71% for millennials and Generation Z homeowners. Younger homebuyers are more likely to make more serious tradeoffs to achieve homeowner- ship, as 13% of millennial and Gen Z homebuyers skipped healthcare services. This number falls to 8% for Generation X and 3% of older buyers. Zillow also states that younger buyers are more likely to reduce or cancel insurance cover- age to save money for a home purchase. "The fact that homebuyers have to make tradeoffs to save for the down payment is not surpris- ing," said Kathryn Coursolle, an economist at Zillow. "That's pretty much the study of economics: how people make decisions when they can't have everything. But today's tradeoffs are non-trivial and often cut into more than just the 'nice-to-haves.' Indeed, some of those who manage to buy young are foregoing going to the doctor or paying for insurance. To buy young means sacrificing more, os- tensibly for the ability to sacrifice less, later." Record Highs for Single- Family Home Lot Prices A region with historically low lot values reportedly has prices that are more than double of those during the housing-boom years. T he average single-family lot size reached a new record high in 2018, with half of the lots selling at or above $49,500, according to the National Association of Home Builders' analysis of the Census Bureau's Survey of Construction. Data shows the biggest rise in lot values was in the West South Central division, where median- lot values more than doubled since the housing boom years. Lot values, however, adjusted for inflation have not reached housing-boom peaks. Lots sold for more than $43,000 during those years, which is over $53,000 when converted in 2018 money. The West South Central Division—made up of Texas, Oklahoma, Arkansas, and Louisiana—historically has had the lowest lot values in the nation. The NAHB states that lot values began rising in 2013 and reached the national average by 2015. According to the NAHB, as of 2018, lot values in the division sell for more than $62,000, which is $25 above the national average. Lot values were outpacing prices during the housing boom when lots were under $30,000. New England had the most expensive lots in the nation, with half of all sold single-family homes had lot values higher than $140,000. "New England is known for strict local zoning regulations that often require very low densities. Therefore, it is not surprising that typical single-family spec homes started in New England are built on some of the largest and most expensive lots in the nation," said the NAHB. The Pacific Division had the smallest lots, but the average value reached $87,000 in 2018—a new record for the division. The Pacific Division is the most expensive in terms of per-acre costs. Lot values in the East North Central Division also hit a new record high of $52,000. The East South Central Division—including Alabama, Mississippi, Tennessee, and Kentucky—has the second-largest lots and the lowest median-lot value at $38,000. Home prices in September saw its highest month-over-month increase in two years, rising 0.2% to 3.95% for the month—the highest its been since March when home-price growth was in a 16-month slow trend. The average home price is up 54% from the bottom of the market from early 2012 and is 15% higher than the pre-crisis peak set in June of 2006. One of the benefits of a 30- year mortgage is payment flexibility.