Connect with us

Homeownership

Experts, politicians say improving homeownership will be complex

(REAL ESTATE) As tax reform remains hotly debated, experts and politicians discuss the way forward to protect homeownership, and thus the economy.

Published

on

jeb hensarling on homeownership

The consensus is that if more Americans can sustainably buy homes, the economy and taxpayers will benefit.

As the nation’s homeownership rate hovers around a 50-year low, it’s time to acknowledge and start addressing the range of issues suppressing the market today, according to individuals at a Realtors and S&P event this month.

“When there is no hope for owning real property, we are taking a huge step backwards for the future of our country,” said Senator Heidi Heitkamp (D-ND) in her opening remarks.

Politicians and industry experts at this event outlined a number of key issues that need to be addressed to improve homeownership rates and market stability in the U.S: Buying incentives, student loan debt, and affordability.

But most of all, it’s important that the complexity of the housing market never be ignored. There’s not just one issue to be addressed, or a single solution that will fix it all.

For example, leading up to the 2007 housing crash, home buyer enthusiasm peaked as mortgage rates were low and investment return rates high. It was an environment that many Americans felt was too good to pass up.

Many also feared getting priced out of the market if they didn’t buy right away and take advantage of the current market state, a phenomenon dubbed “buyer’s panic,” according to economist Dr. Robert Shiller. Shiller noted that public sentiment about the risks of home buying peaked in 2006, but homes were still bought left and right.

Chairman Jeb Hensarling (R-TX) of the House Financial Services Committee observed that sustainable homeownership plays a key role in protecting the overall economy, citing the “unsustainable housing finance rollercoaster” that caused the Great Recession, a “lost decade” of lost economic growth.

“The lesson is clear: Housing unsustainability doesn’t just create unaffordability,” stated Rep. Hensarling. “It can create economic catastrophe.”

Overall, interest rates and tax law aren’t the only market drivers, something industry leaders should keep in mind as tax reform legislation enters the House and the economy continues to slowly bounce back from the Great Recession.

Post-recession debt burdens aren’t helping the nation’s homeownership rate, either. Student loan debt is suppressing young adult homeownership in particular.

“Eventually, time will start to soften the impact of those high student loans,” Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, explained during a panel. “Jobs are coming around, wages are picking up.” But this is not to say the issue isn’t having real ramifications right now.

For those struggling to repay student loan debt, homeownership is simply not an option right now, according to Jessica Lautz, managing director of survey research and communication at NAR.

Meanwhile, many who are managing their student loan debt well aren’t in position to buy a home, either, a trend also identified by the National Association of Realtors 2017 Profile of Home Buyers and Sellers.

Another panel comprised of Dr. Lawrence Yun of NAR, Alex Nowrasteh of the Cato Institute, and Boyd Campbell of Century 21 discussed affordability concerns involving the supply and demand issues facing the housing market today.

Debt burdens aside, homeownership is just becoming too expensive for many Americans. “Prices have risen roughly 40 percent in the past five years, while people’s income has risen at a much slower rate,” Yun said. “This rise in prices forces an affordability concern.”

This particular issue isn’t just a real estate matter. The labor market plays a role as college-educated workers are priced out of areas where the job market is strong but housing prices are high.

As the number of families buying their first single-family homes remains well below the 50-year average, conversations about the range of issues impacting the housing market must continue.

“Prospective homebuyers face headwinds from the market, in the halls of Congress and in their own family’s budgets,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor and CEO of RE/MAX Boone Realty. “We can’t solve them all, but we know more can be done to smooth the way for creditworthy borrowers who want to own a home.”

Sienna is a Staff Writer at The Real Daily and has a bachelor's degree in journalism with an emphasis in writing and editing from the University of Wisconsin Oshkosh. She is currently a freelance writer with an affinity for topics that help others better themselves. Sienna loves French-pressed coffee and long walks at the dog park.

Homeownership

3D-printed homes that are up to code, coming soon to America

(REAL ESTATE) The first ever 3D-printed home has been created that is up to code in America – it’s affordable, and could crush the elitist tiny home movement.

Published

on

icon 3d-printed house

This is America – you know it’s not cheap to build a house these days. In fact, HomeAdvisor reports that the current U.S. national average cost to build a home comes in at just under $300,000, or about $150/square foot for a 2,000-square-foot home.

Sadly, this price is out of reach for many Americans’ budgets, so what are those with limited funds supposed to do?

One answer in recent years has been the tiny/manufactured/prefab house industry, a trend toward homes with smaller footprints with roots in the minimalist and green-building movements. But this option is not without its obstacles, often pertaining to jurisdictions not keeping up with the code and zoning issues surrounding these smaller, sometimes off-grid homes.

And another issue has popped up: Some of these so-called “tiny” homes are still relatively quite expensive per square foot and can take a long time to build (for those going the custom route). In fact, many believe that tiny homes have become a badge of honor for elitists.

These limitations and obstacles seem to have left a wide-open hole in the market for fast-built, low-cost homes that could eventually be built on a mass scale. Enter ICON, a construction technologies company based in Austin, Texas, whose website says it is “leading the way into the future of human shelter and homebuilding using 3D printing and other scientific and technological breakthroughs.”

The company announced last year that it has built the first permitted, 3D-printed house on site in the United States.

The 350-square-foot home was created in approximately 48 hours of total printing time and for around $10,000 (printed portion only). ICON predicts that the production version of its printer, which they named the Vulcan, will be able to print a single-story, 600-800 square foot home in under 24 hours for less than $4,000.

But you won’t be able to buy your own 3D-printed home from ICON quite yet. The company currently isn’t working with individuals, choosing to focus on its partnership with the nonprofit New Story. Together, they plan to tackle housing shortages around the world. In fact, the Austin house serves as a prototype for the work they plan to do.

While there is some (understable) criticism of the tiny home movement — mostly due to the more elitist, ridiculously expensive trends making waves in the industry — what ICON is doing seems like a major step in the right direction.

Continue Reading

Homeownership

Recent survey says great time to buy/sell a home is now/not now?

(HOMEOWNERSHIP) Are people ready to buy a home? The most recent NAR survey explores this and other questions, and of course the answers vary

Published

on

home for sale

The National Association of Realtors® (NAR) conducted a poll during the final quarter of 2019 and the results are in: more than half of Americans believe it’s a good time to buy a home.

In fact, over 70% of individuals born between 1925 and 1964 (the silent and boomer generations) report that they believe it’s a great time to buy. Of course, part of this likely has to do with the continued decrease in mortgage rates, which makes buying a home a less expensive process.

Doctor Lawrence Yun, chief economist of the NAR, says these attitudes towards home buying are also influenced by the strong economy. With the economic conditions improving, many also make the assumption that the housing market is turning around in their favor as well. Not to mention, the strong job market has made relocating a more feasible option for many – meaning more homes to buy and sell.

And speaking of home sales: many also believe now is a great time to sell a home. Granted, this perspective seems to be skewed in favor of those with incomes over $100,000. Of that demographic, over 80% reported confidence in selling their home.

That said, this optimism is far from universal.

Those earning less that $100,000 per year were less likely to believe the economy was improving, which isn’t too surprising. Furthermore, those from urban areas were less likely to have an optimistic outlook on the economy compared to people who lived in rural parts of the country. This might have to do with the housing prices in urban areas increasing at a faster rate than housing prices in less populous regions.

Of the demographics, millennials (born between 1981 – 1996) are the least likely to report an optimistic economic outlook and the most likely to believe housing prices will increase in their communities. Then again, makes sense why the people entering the job market during the aftermath of the 2008 recession might look at the glass as half empty.

NAR’s survey covered 2,707 households across the nation and was conducted by TechnoMetrica Market Intelligence between October and December of 2019.

Continue Reading

Homeownership

Historic Mansion is demolished, pointing out flaws in protections

(HOMEOWNERSHIP) West Mansion in Houston almost makes it 90 years before being demolished; this points out some issues in historical preservation protections.

Published

on

historic mansion demolished

“No money will be spared to make this one of the showplaces of the country,” declared Joseph Finger, architect of the West Mansion. Constructed in Clear Lake in 1930, West Mansion’s had a unique 89 years – housing everything from the Lunar Science Institute to the luxurious Dr34m display – but that came to a close with its recent demolition.

The mansion was in good structural condition, was listed as a Historic Landmark and had even been ranked on Preservation Texas’s “most endangered” list in 2007.

So, why did it get demolished?

First, it’s worth understanding that West Mansion has been on the chopping block before. The original owner, James M. West Sr., initially built the mansion as a centerpiece of his sprawling ranch. Still, he sold the mansion, along with the ranch, a mere 8 years after it had been constructed.

The mansion remained unused for over 20 years.

From 1961 – 1992, West Mansion became the Lunar Science Institute (later renamed Lunar Planetary Institute), at which point it was sold with the restriction that it had to be preserved for twenty years. Although many groups tried to fight for it to be preserved longer, none could raise the money necessary for extensive preservation.

West Mansion was once again at risk of demolition in 2012, but the current owner (Rockets player Hakeem Olajuwan) instead opted to renovate the home and use it as a place to showcase his luxury clothing line, Dr34m.

Although groups like Preservation Houston continued to work towards keeping this historic landmark, Olajuwan was able to schedule and demolish in under a month.

This move came abruptly. Pasadena, the city where West Mansion resided, has no preservation ordinances for historic structures. Although outside organizations have offered incentives for owners of historical structures, there was nothing stopping owner Olajuwan from tearing it down without any public notice.

Worse, according to David Bush of the Greater Houston Preservation Alliance, there was no attempt made to salvage any of the material, much of which was expensive and easily recyclable.

West Mansion, which had grown to become more than simply a landmark of Texas wealth, will certainly be missed. There is also a lesson in the West Mansion demolition: while non-profits can work hard to preserve historical structures, it also comes down to residents working to ensure there are local protections in place.

Continue Reading
Advertisement

Our Parnters

Get The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox!

Still Trending

Get The American Genius
in your inbox

subscribe and get news and exclusive content to your email inbox