Stop Renting...Become a Homeowner
As the housing market slowly moves into recovery, more and more Americans are becoming more confident and hoping to be able to become a home owner. The home ownership rate has been dropping steadily since its high of 69.2% in 2004 to now just 65%. Millions of people lost their homes to foreclosure and millions more never entered the market, worried about the falling home prices. Now, 10% of renters in the U.S. say they would like to buy a home in the next year, according to a new report from Zillow, which surveyed renters in the 20 largest housing markets in the U.S.
If all the renters who said they wanted to buy a home in the next year actually did, that would represent more than 4.2 million first-time home buyer sales, about twice the number of first-timers in 2013.
First-time home buying has fallen to the lowest level ever recorded by the National Association of Realtors, at just 26% of sales in January. These buyers usually make up roughly 40% of the market. The good news is the majority of the renters who said they wanted to buy felt they could afford owning a home,even with the rising home prices and mortgage rates.
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The trouble is there is just not that much out there to buy. Home construction is still recovering at a slow pace, and prices for newly built homes are much higher on average than for existing homes. The number of homes for sale is rising slightly but is still below historical norms across most markets.
"Even after a wrenching housing recession, this data shows that the dream of homeownership remains very much alive and well, even in those areas that were hardest hit," Zillow's chief economist Stan Humphries said in the report. "But these aspirations must also contend with the current reality, and in many areas, conditions remain difficult for buyers. The market is moving toward more balance between buyers and sellers, but it is a slow and uneven process."
Renters hoping of owning a home were actually highest in some of the hardest hit markets of the housing crisis, such as Miami, Atlanta and Las Vegas, according to Zillow. That may be because so many renters there are former homeowners who lost their homes to foreclosure. They are now seeing these markets recover, as investors bought up the distressed properties, pushing prices higher much faster than anyone expected. These renters are seeing market resilience, and want to be a homeowner again. Foreclosure activity, fell 10% in February from January and is down 27% from a year ago to the lowest total since December 2006, according to a new report from RealtyTrac.
"Cold weather and a short month certainly contributed to a seasonal drop in foreclosure activity in February, but the reality is that new activity is no longer the biggest threat to the housing market when it comes to foreclosures," said Daren Blomquist, vice president at RealtyTrac.
The report, however, does state that more than 152,000 properties that are in the foreclosure process but not yet bank-owned have been vacated by their former owners, mostly due to the long foreclosure timelines. These so-called "zombie foreclosures" have been in process an average of 1,031 days. These homes sit untended and are a blight to the neighborhoods around them, often reducing nearby property values.
However, these bargains might be perfect for first-time buyers looking for a good deal. Meanwhile, tight credit and higher prices are keeping many of these same potential buyers away from new construction. Again, renters may want to buy, but there are still considerable turbulence in the market. However, as more inventory becomes available in the spring, it should relieve things.
If you would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.
Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang. Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.