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Real Estate Report for October 2015

The net worth of home owners’ is significantly higher than renters. A typical home owner’s net worth is $195,400 compared to a renter’s $5,400, according to the Federal Reserve’s last data from 2013. The Fed’s next survey of household finances, which is conducted every three years, is due out in 2016 and the renter to home owner gap is expected to widen further due to price increases. Lawrence Yun, chief economist for the National Association of Realtors®, predicts the figure to jump to a range of $225,000 to $230,000 in median net worth for home owners in 2016 and around $5,000 for renters. If that proves correct, the typical home owner will be ahead of a typical renter by a multiple of 45 on a lifetime financial achievement scale. “Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that home owners steadily build wealth,” Yun writes in his latest column for Forbes.com. “The simplest math shouldn’t be overlooked. A vast majority of home buyers take out a 30-year fixed rate loan to make a home purchase. After 30 years, there is no loan payment (nor rent payment). So the home price growth over that time period would be the equity that the home buyer would have accumulated.” Source: Forbes

A new study has found potential homebuyers are placing a higher degree of priority on residential properties that are energy efficient. The National Association of Home Builders (NAHB), through the new report What Green Means to Home Buyers: Perceptions and Preferences published by its BuilderBooks division, has determined that potential homeowners are putting clean tech solutions and the savings associated with them at the top of their list when judging houses to buy. While having a home in a safe community is still the number one concern among buyers (90 percent), the other top-five considerations for a home purchase are energy efficiency (88 percent), low maintenance (85 percent), lower operating costs (85 percent) and durability and resilience (84 percent). “This new study is an incredibly useful tool to help builders and remodelers determine not only consumer attitudes towards green homes, but also which green features consumers care most about,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “We have seen incredible growth in green and sustainable building over the years, and the results of this survey only further solidify the continued consumer interest in green building, and which attributes matter most to these buyers.” Source: NAHB

The growing number of aging homes could provide a big boost to the remodeling market in the coming years. About two-thirds of owner-occupied homes in the U.S. were constructed prior to 1980. Forty percent were built before 1970, according to the latest American Housing Survey, published by the Department of Housing and Urban Development. On the other hand, newly built owner-occupied homes constructed after 2010 comprise only about 2 percent of the U.S. housing stock. The number of homes three decades old has grown considerably. Indeed, the median age of owner-occupied homes is 37 years old compared to only 27 years old in 1993. “The age of the housing stock is an important indicator for the housing market going forward,” according to the National Association of Home Builders’ Eye on Housing blog. “Aging homes require remodeling and renovations, as these structures are, for example, less energy efficient than new construction.” Source: The National Association of Home Builders