I recently read through an article in Yahoo Finance, which was originally written by the Associate Press, entitled, “Why Americans waiting longer than ever to buy first homes”. Of course the nerd in me thinks there should be an, “ARE” in the title somewhere so it reads either, “Why ARE Americans…” or “Why Americans ARE…”. I, of all people, should not be commenting on people’s grammar though, so I will focus on the content of the story itself.
Here is the article for your reading entertainment: Why americans waiting longer ever buy first homes
There are a couple items in the story to highlight that are interesting to me:
The typical first-timer now rents for six years before buying a home, up from 2.6 years in the early 1970s, according to a new analysis by the real estate data firm Zillow. The median first-time buyer is age 33 — in the upper range of the millennial generation, which roughly spans ages 18 to 34. A generation ago, the median first-timer was about three years younger.
The times have certainly changed since the 70’s, I am wondering if this point was due to a gradual discrepancy over 40 years, or if this is closer to the technology metamorphosis that took place in the last 20 years.
There are certainly other elements that can play a role, for example mobility, and job stability. Some people know that they are going to live a longer life, so the 25-35 year old time frame is the opportunity to be flexible and try different areas of the country/world before settling down with a specific career and/or family development. This would lead to people making short term commitments to living arrangements without signing a 30 year note.
Jobs have also become more short term, and “freelance” style than ever before since we have found ways to streamline manufacturing, and have been able to automate so many tasks, while improving on communication and technology. The new normal for work includes flexibility, and opportunity to service from a remote locations. Because of the ability to provide a service from a remote location, this makes the job itself more competitive and drives down the cost of service, suppressing the income potential. This point would indicate that average hourly earnings has not kept pace with cost of living in this competitive environment.
Though it might not appear so at face value you, but these can be good things since it is appropriate for people to explore themselves, by exploring the world. People should be mobile in their 20’s and out of their comfort zone because that is where you learn the most about who you truly are.
And when young adults do sign the deed, their purchase price is now substantially more, relative to their income, than it was decades ago. First-time buyers are paying a median price of $140,238, nearly 2.6 times their income. In the early 1970s, the starter home was just 1.7 times income.
I believe that building permission and limitations have prevented ease of construction, limiting inventory while making it more expensive to build, especially with modern code. This would drive up costs due to of lack of inventory relative to demand, and building costs. Buildings are becoming more safer, and efficient than ever before because of new building requirements. For example, even though this point is before the 70’s, between 1890 and 1920 they used to use what is called, “knob and tube” wiring for electricity. It turned out to be very unsafe, and was a fire hazard. Another thing that was cheap to make was lead paint. They outlawed that in 1978, so the price for paint increase because it was now made with much safer chemicals.
Another element that drives up the purchase price to income multiple may be that more people in the household are contributing to the cost of living than before. Some examples may include colleagues living together and splitting the ownership, or paying a cost of living to an individual owner, or even both spouses working full time. I have heard many stories of the stay-at-home mom, or part timer, up until the 80’s and now it appears that both parents must work to support the family, and competitively cover the cost of living.
I tried my best to highlight some points, and add a perspective on some of the statistics mentioned in the story. I also didn’t want to bore the reader because I might be able to write a short story or even a novel on this topic. It is a very intriguing time that we are living in, and envision looking back 20 years from now, and saying, “yes, I remember what the norm used to be, and it was much different than it is now. These are some of the contributing factors, and there were people going through the change that didn’t even realize it.”
My expectation for the next 20-40 years is that there will be more of a consolidation of housing, to protect land/agriculture, while trying to use space safely and efficiently. We can build up, and occupy space that once was air, and that will not impact our food production. If we build out however, we will mitigate the amount of fertile land that is available to grow food. I personally like living on my own plot of land, but these changes we are going through are bound to change the normal living style/standards. The value to undeveloped land will continue to increase, which will also mean that single family homes will also become more expensive. Rumor has it, they aren’t making any more land…
Home prices are up for the 2nd straight quarter, the biggest year-over-year increase in more than two years.
Hi there, I just finished reading this article from CNNMoney, and it looks like homeowners can feel good about continued gains in their home prices. Here is the article:
I have been demonstrating to a friend of mine that there are continued positive signs in Real Estate, and he thinks I am full of it. Instead of arguing with him, because it is possible he subscribes to, “The Daily Pessimist”, (Yes, I made up that magazine name) I try to present him with facts, and articles from prestigious sources like this one.
At some point, I hope this friend of mine admits that he overpaid, and should have gone with a real estate agent to negotiate on his behalf in the first place. Some people think they can do it all, and don’t need to work with others… he made a mistake, and I probably won’t hear him admit to it in the 70+ years that I will know him. Yup, that is right, we are both going to live into our 100’s.
I just read a very interesting article through yahoo news. The article comes from, “The Atlantic Wire” and it had a really interesting story about what will be the new tallest building in the world. Here is the article for your enjoyment.
The closing remarks really fascinated me. “In theory, if a grocery store moves into one the retail spaces, you could be born in Sky City and never have to leave.” Can you imagine living your whole life in one building? I am also curious to see how they will act regarding their carbon foot print? Will they have renewable energy sources anywhere? Will they go with the best energy and use Geothermal, as well as supplement it with some wind or solar?
What will they think of next…?
In my market research I came across this article and I am pretty sure it hits home:
As I read this article, I thought to myself about the construction sites that I have seen popping up around Amherst and the Pioneer Valley. Sometimes I think that we live in a unique area and when I see that the trends are on a national level it brings me great confidence that we are heading in the right direction. It is great to see positive news about housing, and another interesting bit that stood out to me in the article was the fact that each new home built, adds 3 jobs annually.
Take a chance to read the article, and let me know what you think.
It is amazing what can be done when you surround yourself with the right group of people.
Thanks to all the hard work done by:
- Randall Roberts General Contractor, Window Works
- Steve Doolittle, Doolittle Construction, and
- Paul Palmgren, Paul’s Fine Painters
Thank you guys for all of your hard work, you produced a great product!
Just finished reading this great article from the Associated Press, these numbers continue to please me. Not because I am in the business of Real Estate, but I view this as an overall recovery for everyone in our country. Take a look for yourself, and let me know what you think.
Some of the elements that I consider when reading this include:
- Comparing numbers to May of 2010 when there was a very beneficial tax break in place
- We are approaching an annual rate of 5.5million sales which is considered a healthy market, we are currently at an annual rate of 4.82 million
- Home-builders broke ground on more new homes in August than July, normally things cool off in August
- At this pace, the 2.47million homes for sale would be sold in around 6 months time, another sign of a healthy market
- Rates remain at record lows to entice new buyers or encourage people to refinance, freeing up more spendable income
I have to laugh, because I just brought this point up with some friends of mine, sure enough a few days later CNBC posts an article about it. The point I told my friends was that “We have a good problem, there is so much work right now that contractors can’t keep up with it. Those that have been searching for work are TOO busy. Of course, it is still a problem, because now people have to wait for the projects to finish up, and it interferes with their daily routine.” Sure enough here is the article the mentions the national trend that we feel on a local/regional level:
Take a moment to read it, and let me know what you think.
Today, I have the honor of speaking at my former school Greenfield Community College, (GCC). I was invited to speak in front of an E-Commerce class, with the expectation of discussing driving traffic to a website. My former Professor, Kathy Vranos was the one who invited me in. As I reflect on my time spent at GCC, I can clearly remember the times I spent in her classroom. I was actually fortunate to have her for a professor in 4 different classes, and I was driven to learn, and exceed my limitations thanks to my relationship that I shared with her. I have to laugh, because no matter how long or short the classes were, she never had enough time to share what she knew because she had such a wealth of knowledge in every subject she taught. She was always willing to listen, and give me feedback whenever I had a question for her. I only hope when students take her classes that they realize what a talented and enlightening professor that they have at their fingertips in such a small community. Hind sight shows me that I was very fortunate to have her, and when she took the time to invite me back to speak in front of one of her classes there is no way that I would pass that opportunity to speak for her class. She has devoted so much time enriching my education, the least I can do is take a couple of hours out of my day to be there for her. I only hope that I can encourage her students to challenge themselves, and find out who they really are through the education that she provides.
Home ownership is certainly not for everyone. Testimonials from people I talk to on the street, in the grocery store, the coffee shop or any social scene tend to have a variety of feelings about the “American Dream”. For most of our lives, the American Dream has been pushed onto us as college, then marriage, then house, then family. Owning a house has become one of those very debatable subjects within the American Dream since Globalization has taken over. Globalization means many things but one subject it covers is job/employment mobility. People must be ready to get up and move to where ever their next job may be within a years time. With that in mind, the idea of making payments on a property for 30 years doesn’t make sense, so they decide to rent a place with the freedom to leave after their year commitment has expired.
If you consider yourself a numbers person, and are thinking of being in an area for 2-5 years, here is an interesting article to look at.
Here are some before and after shots of the retaining wall that was long overdue to be rebuilt. I certainly enjoy this project but it is not easy to build a flat wall with round stones.