Single Family Property Renters More Likely To Purchase A Home

Freddie Mac  (the Federal  Home Loan Mortgage Corporation) released a report last week indicating that renters living in a detached house, a condo or a townhouse (a single family rental, or SFR)  were more likely to purchase a home than a renter in an apartment community.

Overall, 55% of renters responded that they intend to continue renting for the next three years. When the data is broken down into the categories above, however, 55 percent  in a SFR intended to buy a house in the next 3 years, where only 36 percent of apartment dwellers (multifamily renters) said the same.

Of course, rental satisfaction plays a large role in this decision.  68 percent of renters claiming to be happy with their rental experience plan to continue renting vs. 32 percent that intend to buy a home.  Apartment renters reporting a happy experience were at 67%, compared to 60% of SFR renters.  This may be due to the fact that apartment communities often have on-site daily management tending to repairs and issues, where many SFR renters have to deal directly with an individual landlord.

The U.S. Census Bureau reports that renter households is up again for the 10^th straight year.

Image courtesy of Stuart miles/freedigitalphotos.net

First Time Buyers Drop But Still Significant



Courtesy of NAR

The National Association of Realtors® (NAR) has an Economists’ Outlook Blog.  Yesterday, it posted an article that claims 32% of all September sales were by first time buyers.  For some time, that figure has trended closer to 40%, and was at a 50% level in 2009.

The number of cash sales in this buyer group was up, too, from 8.7% in August to 11.4% in September.

First time buyers have it tough.  Mortgage financing is harder to obtain, government loan (FHA and USDA Rural Development Program) underwriting is more tedious, distressed home sales take longer to complete, and investors have often picked over the lower priced listings already. That being said, they are still a significant part of the buyer pool.

This information comes from the monthly NAR Realtors® Confidence Index survey for September 2012.

If you're looking for a home in Brighton, Howell, Livingston County or the surrounding areas of West Oakland and Washtenaw County, call me.

Closed Sales – Financing Types Through September 2012

We’ve all heard some recurring sound bites about this year’s housing market in SE Michigan and especially in Livingston County. Inventory and time on market are down, average and median sales prices are up, and the total number of sales is up.


While I am a very active listing agent, I also work with buyers. And I know from my experience as well as discussions with other agents that it’s difficult to find a financeable house in the $125,000 and under price range. If you do find a house that’s ‘ready to go’ you can be sure there will be multiple offers. If it needs some work, it likely won’t qualify for government loan programs – FHA and USDA Rural Development. And of course, these are the programs that many people need to enter the housing market.

Instead of repeating this past month’s stats, I delved into the difference between the kinds of loan instrument used for January through September 2011 vs. the same period in 2012. Here’s what I found.

Cash sales went up only nominally YTD. They represented a little over 23% of total sales in 2011 and are a little over 24% in 2012. Since cash purchasers come largely from investor-owners, is this showing us that investor action is leveling off? Hard to say, but certainly the lower inventory likely has a role to play in this market segment.

Conventional mortgage sales went up from 34.4% YTD in 2011 to 37.45% YTD in 2012. With mortgage rates at an almost ridiculous historic low  I would have expected more of this type of sale, but first-time buyers usually don’t qualify for a conventional mortgage, so they likely have little representation in this segment.

All FHA loan sales (includes the FHA 203K renovation program) dropped from 24.61% in 2011 to 21.5% this year. And the USDA Rural Development program loan sales went up slightly from 7.5% of all sales in 2011 to 8.58% in 2012. When you combine the FHA and USDA RD programs, my stats show that they were a combined 32.12% of sales in 2011 and represent a lower 30.1% usage in 2012. So at least in this market, closings with government loans are down on a percentage basis.

My personal experience with FHA and Rural Development buyers has been that the properties appraise at a value of or above their sale price, but the underwriters for government loans are being very, very picky, in some cases bordering on the insane. I know that there are a lot of buyers out there that are pre-qualified for these programs, but finding a home that is in financeable condition is tough. And banks have been slow to correct the deficiencies needed for the financing of foreclosure properties, even if it’s only a few thousand dollars in repairs.

If you’re considering a home sale or purchase, please call me for a confidential meeting to discuss your goals. I’d love to help you with your real estate needs. Let me put my market knowledge to work for you.

Activity Report - First Time Buyers Driving The Market

Single Family Home sales in Livingston County for the period of January 1st through May 31st have increased by 6% over the same period last year. The average sales price is down 12.9%, but at the end of April that figure was at 13.7%, so it appears that we're moving in the right direction.

Almost half of the sales (46%) are being attributed to first-time buyers. First-time buyers are defined by the U.S. Department of Housing and Urban Development (HUD) as:

- an individual (or spouse) with no ownership in a principal residence for the 3 years prior to the purchase of this home

- a single parent who has only owned a home with a former spouse while married

- a displaced homemaker who has only owned a home with a spouse

- an individual who has only owned a prinicipal residence not permanently affixed to a permanent foundation

- an individual who has only owned a property that was not in compliance with State, local or model building codes, and if that home cannot be brought into compliance with building codes for less than the cost of constructing a permanent structure

Condominiums continue to be a very good buy, too, although many first time buyers decline this type of home ownership because many lack basements for storage, they're intimidated by community regulations, and they don't want to pay the maintenance fees.

A future article will discuss the benefits and shortcomings of condominium ownership. If you have questions in the meantime, you're welcome to contact me directly. My blogging time has suffered due to a high increase in listing and selling activity, my community service commitments, and trying to keep a semblance of family time. You are always welcome to contact me via phone or email (available at my primary web site, http://www.RealEstateMich.com).