What’s trending?

In looking at the trends among buyers, the National Association of Realtors reported that Generation-X buyers (that means those ages 33-47) comprised the largest segment (31%) of home buyers from July 2011 to June 2012.

The next largest segment (28%), was Generation Y (meaning those 32 years old or younger) followed by the younger baby boomers (18%) and older baby boomers (14%). This is not surprising, as first-time buyers are still having a relatively hard time securing financing.

Another trend has been that homes available for sale are increasing across the country. The number of listings has increased 4.3% this past June, according to Realtor.com. This is the most significant increase in a year’s time. What’s the reason for this? It’s that rising home prices are enticing homeowners to list their home.

A recent survey from Better Homes & Gardens showed that 75% of home buyers believe home ownership is a better investment than the stock market. The respondents (57%) felt that a home is a better indicator of success than their occupation or position.

The survey also revealed what luxury homebuyers are seeking. The findings are that 53% want more than one home for their life-style activities (e.g., skiing, boating); 58% said they already own multiple homes; 60% would prefer having more upgrades than square footage; 94% would give up 1,000 square feet of living space in their next home to get desired amenities; 66% wanted a high-tech or smart home over a green home; and 87% would not consider a home that was not high-tech. These high-end buyers also sought outdoor space and amenities like an outdoor kitchen or separate guest or a pool house.

The most recent report for U.S. inflation is that it is a reasonable rate of 2%. However, interest rates are expected to tick up. The rents for apartments and the hypothetical rent of what homeowners would get for their properties are both rising more than 2% a year and could reach 3%.

Housing shortages in certain areas of the country and markets coupled with decreasing rental-vacancy rates are the reasons for rising rental rates.

As housing expenses constitute the largest component of the consumer price index, rent increases have a significant impact. Other costs having substantial impact on inflation are medical and energy costs.

When inflation increases, so do mortgage rates. According to NAR chief economist Lawrence Yun, should inflation increase to 3% by 2015, mortgage rates will have to increase by a percentage point to compensate lenders for the purchasing power of the money paid back to them.

Mr. Yun exemplifies the impact by stating a one percentage point increase on a $200,000 loan will increase a monthly home payment by $167 and on a $500,000 mortgage, a monthly home payment increases by $417.

Increases in inflation will affect budgets in a number of ways, including interest rates and mortgage payments. Homebuyers should keep in mind that interest rates are still relatively low.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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