Summer is the best time to buy a US home

Photo credit: Cyndie

The best time to buy a home in the USA is late summer, suggests new research.

As summer approaches, overall inventory of homes for sale is down 5.3 per cent from a year ago, according to Zillow, signaling another competitive home shopping season for buyers this year. Even in markets that have seen a recent uptick in the number of homes for sale, inventory is still well below the levels of five years ago.

Spring traditionally kicks off the home shopping season – most new listings hit the market during these months. April in particular had more new listings than any other month in 2016. However, shopping in spring can be competitive, and these homes are more likely to sell for a premium. Homes listed in late spring sell faster and for a $1,500 premium on average, according to Zillow’s Best Time to List analysis.

As a result, Zillow concludes that house-hunters would be best waiting until later in the year, when there are more options on the market and buyers are more in the driving seat.

Indeed, there are more homes for sale at the end of summer than at any other time of year, according to Zillow, giving buyers the greatest selection. In most major metros, August had more for-sale listings than any other month. In Los Angeles, for example, there were about 8,000 more homes for sale in August than in April. In Seattle, the difference was about 5,000 listings.

At the same time, price cuts are more common as home sellers start to worry about not selling their homes. Across the country, 15 percent of listings in August have had price reductions. In most large markets, buyers are most likely to find a home with a reduced price tag in either August or September.

“In such a competitive housing market, it’s easy for buyers to get frustrated when they are putting in multiple offers without success,” says Zillow Chief Economist Dr. Svenja Gudell. “Buyers who start their home search in the spring may still be looking months later – but for those who can wait it out, the end of summer will bring more favorable conditions. Homes that may have been overpriced earlier in the year are more likely to have a price reduction, and those listings passed over in earlier months may look better with a fresh perspective.”

 

San Jose, San Diego, San Francisco: The US cities where renters can afford to own

25th August 2016

It has rarely been a better time to buy a home in the US, but homeownership is declining, as more and more buyers find themselves renting. In the country’s tech hubs, though, renters can afford to become buyers.

As the homeownership rate has declined over the past decade, a broader socio-economic swath of Americans are renting than at any time in recent history. That means people who could afford to buy are renting instead, increasing competition for limited available homes for rent, according to Zillow’s latest Renter Profile.

Across the country’s largest rental markets, almost 14 percent of on-market renters have strong credit scores, relatively high incomes and could afford to buy the median home in their market, reveals the site’s research. But young adults, both the affluent and otherwise, are renting longer than ever before as they delay many of the hallmarks of adulthood that typically lead to homeownership, such as finishing their education and starting families.

In general, markets with lower homeownership rates have higher proportions of on-market renters with both strong credit and high incomes. That said, even when controlling for the homeownership rate, booming markets closely associated with the tech industry tend to have “exceptionally high proportions” of highly qualified, on-market renters.

San Jose, San Diego, and San Francisco have the largest segments of on-market renters who have the credit score and income necessary to purchase a home, making those metros highly competitive for renters. Los Angeles, New York and Seattle also made the list of metros with large segments of current renters who are financially qualified to buy a home.

At the other extreme, markets that tend to have higher homeownership rates, such as Houston, and metros that were particularly hard hit during the housing bust and foreclosure crisis, including Cleveland and Detroit, have lower shares of renters who report both strong credit and high incomes.

“When faced with hurdles of high prices and low inventory, first-time homebuyers are renting longer than ever before even if they are qualified to buy,” says Zillow Chief Economist Dr. Svenja Gudell. “San Jose, San Diego and Seattle are among the most competitive places for buyers, and the going isn’t any easier for renters – as they are competing against throngs of financially sound applicants with strong credit and high incomes. This is a conundrum for many young people who move to those cities because of their strong job markets, only to find tight inventory and steep competition standing between them and their dream home.”

 

Texas leads list of best US places to buy a home

The US has never been more attractive for first-time buyers looking to become homeowners. But where is the best place to buy?

The US has never been more attractive for first-time buyers looking to become homeowners, thanks to record low mortgage rates and low unemployment levels among those with a college education. While millennials have made up the largest share of buyers for three consecutive years, though, sales to them remain low, as they find themselves facing a slew of financial obstacles (including deposits and rising rents) to save up for the jump on to the property ladder. Where, then, is the best place for them to be buying?

New research by the National Association of Realtors analysed employment gains, population trends, income levels and housing conditions in the largest 100 metropolitan statistical areas across the country to identify the best purchase markets for millennial homebuyers. The NAR highlights the less expensive metro areas with steady job growth and lower qualifying incomes needed to buy a home.

Lawrence Yun, NAR chief economist, comments: “Even with potentially higher incomes, prospective millennial homebuyers residing in some of the most expensive cities in the country face the onerous task of paying steep rents while trying to save for an adequate down payment. However, for those currently living in or looking to move to a more affordable part of the country, there are metro areas right now with solid job growth and that offer a smoother path to homeownership.”

Austin, Texas leads the pack, accompanied by Charleston, South Carolina, Denver
Minneapolis, Minnesota, Ogden, Utah, Portland, Oregon, Raleigh, North Carolina
Salt Lake City, Seattle and Washington, D.C..

According to Yun, during the early stages of the economic recovery some of the largest metro areas – such as New York and parts of California – were attractive to millennials for their strong job markets, but their higher costs of living made it difficult to buy. Now that many more affordable, middle-tier cities have mostly recovered from the downturn and are once again experiencing robust job growth, millennials moving to some of these cities will likely realise they’re earning enough to purchase their first home.

Where is best in the US for first time buyers?

6th May 2016

A recent report from Zillow revealed that it is currently cheaper to buy than rent a home in the US. But where is the best place for first-time buyers to get on the housing ladder?

To determine which markets are best, Zillow looked for places where it’s more affordable to make a monthly mortgage payment than a monthly rental payment. Zillow also looked at median home values and competition, including how many homes the first-time buyer has to choose from and whether they are likely to be up against all-cash offers.

San Jose, Seattle and Austin are among the hardest places for first-time home buyers to get in the market – a conundrum for many young people who move to those cities because of their hot job markets, only to find a limited and unaffordable selection of starter homes to choose from.

Indianapolis, Pittsburgh, and Memphis, on the other hand, are the best markets for first-time home buyers right now. (Cleveland, Chicago, Houston, and Birmingham, Ala. also made the top 10.)

“Buying your first home is a big decision that takes a lot of planning,” said Zillow Chief Economist Dr. Svenja Gudell. “First-time buyers across the U.S. are up against high prices and low inventory, but these are the places where the availability of affordable, entry-level homes and the presence of cash-buyers are less of an issue. First-time buyers in these markets won’t have to deal with as many bidding wars or run-away prices; they’ll be able to find a first home that fits their needs with less stress. With record low mortgage rates, it’s a good time to buy a home and certainly worth considering.”

Buying a home in the US is cheaper than renting

15th February 2016

Buying a home in the US is cheaper than renting, according to Zillow. Measured over two years, the cost of getting on the housing ladder is more affordable than renting out a home.

This is true of roughly 70 per cent of all US metros, thanks to low interest rates, healthy home value forecasts, and the relatively fast pace of rents in recent years.

However, there are regional variations, as the market recovery continues at different paces in different parts of the country; home buyers in Boston, New York, and Washington, D.C., for example, would have to live in a home for at least three years to break even on a purchase, and buyers in the Bay Area would have to stay nearly that long to make buying financially advantageous.

The shortest Breakeven Horizon is in Dallas, where buyers would have to live in a home for 1.3 years to save money compared to renting.

Around the country over the last year, the Breakeven Horizon quickened in most of the Midwest and Southeast as well as in the Northeast corridor from New York to Boston.

However, the decision to buy may not be so simple for millennials – whose first jobs often take them to job centres with relatively high Breakeven Horizons. Boston, one of the nation’s youngest cities, has a Breakeven Horizon of just over three years. San Francisco’s Breakeven Horizon is 2.9 years, up from 2.6 years in the fourth quarter of 2014. Both markets are attracting young people following jobs, and many of those remain renters despite record-high rental costs.

“Even with record-high rents in job centers like San Jose, Boston and Washington, D.C., putting off a home purchase might be the best financial decision for a young person who has saved enough for a down payment, depending on how long they intend to stay in their jobs and homes,” observes Zillow Chief Economist Svenja Gudell.

In general, rents are flattening across the country and expected to continue to stabilise, a factor that could lengthen the Breakeven Horizon as homes continue to appreciate.

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