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Latest Home Listing Report Ranks Most Expensive and Affordable Cities to Buy a Home

November 14, 2014 Comments off

Latest Home Listing Report Ranks Most Expensive and Affordable Cities to Buy a Home
Source: Coldwell Banker

For the second time in three years, Los Altos, Calif. ranks as the most expensive real estate market in the country, where that size home averages $1,963,100. That’s six times the national average! With the tech boom getting hotter each year, it’s no surprise that Los Altos continues to be one of the most coveted places to live. In fact, California’s Silicon Valley is home to seven of the 10 most expensive cities in this year’s report.

On the other end of the spectrum, Cleveland, Ohio ranks as the most affordable city in the country at $64,993. The Midwestern town, which is home to the Rock and Roll Hall of Fame, is experiencing its own resurgence of growth.

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Returning to the Nest: Debt and Parental Co-residence Among Young Adults

November 13, 2014 Comments off

Returning to the Nest: Debt and Parental Co-residence Among Young Adults (PDF)
Source: Federal Reserve Board

This paper examines the relationship between a young adults’ debt burden and the decision to co-reside with a parent. Using a quarterly panel of young adults’ credit histories, and controlling for age, county, and quarter fixed effects, and local demographic characteristics, unemployment rates, and house prices, we estimate the relationship between current period debt and subsequent decisions to co-reside with a parent. Our results indicate that indebtedness–as measured by average loan balances, declining credit scores and delinquency on accounts–increases flows into parental co-residence. Moreover, after moving in, delinquency and low credit scores increase time spent in co-residence. We find that the changing debt portfolios of young adults over this period–characterized by rising student loan debt and small declines in credit card, auto and mortgage debt–can predict 30 percent of the observed increase in flows into co-residence, and 26 percent of the observed increase in time spent in co-residence.

New From the GAO

November 12, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Spent Nuclear Fuel Management: Outreach Needed to Help Gain Public Acceptance for Federal Activities That Address Liability. GAO-15-141, October 9.
http://www.gao.gov/products/GAO-15-141
Highlights – http://www.gao.gov/assets/670/666455.pdf

2. Federal Real Property: Strategic Focus Needed to Help Manage Vast and Diverse Warehouse Portfolio. GAO-15-41, November 12.
http://www.gao.gov/products/GAO-15-41
Highlights – http://www.gao.gov/assets/670/666857.pdf

3. Financial Audit: IRS’s Fiscal Years 2014 and 2013 Financial Statements. GAO-15-173, November 12.
http://www.gao.gov/products/GAO-15-173
Highlights – http://www.gao.gov/assets/670/666862.pdf

4. Defense Contract Audit Agency: Additional Guidance Needed Regarding DCAA’s Use of Companies’ Internal Audit Reports. GAO-15-44, November 12.
http://www.gao.gov/products/GAO-15-44
Highlights – http://www.gao.gov/assets/670/666866.pdf

The Impact of Missed Payments and Foreclosures on Credit Scores

November 11, 2014 Comments off

The Impact of Missed Payments and Foreclosures on Credit Scores (PDF)
Source: Federal Reserve Bank of Cleveland

This paper debunks the common perception that “foreclosure will ruin your credit score.” Using individual-level data from a credit bureau matched with loan-level mortgage data, it is estimated that the very first missed mortgage payment leads to the biggest reduction in credit scores. The effects of subsequent loan impairments are increasingly muted. Post-delinquency foreclosures have only a minimal effect on credit scores. Moreover, credit scores improve substantially a year after borrowers experience 90-day delinquency or foreclosure. The data supports one possible explanation of this improvement: the absence of mortgage payments relaxes the borrowers’ budget constraint, allowing them to restore other forms of credit.

Baby Boomers and Their Homes: On Their Own Terms

November 7, 2014 Comments off

Baby Boomers and Their Homes: On Their Own Terms
Source: Demand Institute (Nielsen/Conference Board)

The generation born following World War II has had a major impact on the U.S. economy and housing market over the past several decades, and the next decade will be no different as Baby Boomers enter their golden years. True, many Boomers have had to adapt their retirement and housing plans to new financial realties after the financial crisis and housing crash, but they will still account for nearly $1 out of every $4 spent on home purchases and rent in the next five years.

But don’t expect this generation to stick to the script when it comes to retirement and housing decisions. Our research reveals that not all Boomers are looking to downsize to a condo in Florida and spend their days golfing. Most plan to age in place, but many will move into larger homes and take out new mortgages to do so.

Highlights From the 2014 Profile of Home Buyers and Sellers

November 5, 2014 Comments off

Highlights From the 2014 Profile of Home Buyers and Sellers
Source: National Association of REALTORS®

For most home buyers, the purchase of real estate is one of the largest financial transactions they will make. Buyers purchase a home not only for the desire to own a home of their own, but also because of changes in jobs, family situations, and the need for a smaller or larger living area. This annual survey conducted by the NATIONAL ASSOCIATION OF REALTORS® of recent home buyers and sellers provides insight into detailed information about their experiences with this important transaction. Here are highlights from the latest report.

  • Thirty-three percent of recent home buyers were first time buyers, which is still suppressed from the historical norm of 40 percent among primary residence buyers.
  • For 43 percent of home buyers, the first step in the home-buying process was looking online for properties and 12 percent of home buyers first looked online for information about the home buying process.
  • Ninety-two percent of buyers use the internet in some way in their home search process and 50 percent of buyers use a mobile website or application in their home search.
  • Real estate agents were viewed as a useful information source by 98 percent of buyers who used an agent while searching for a home.
  • The typical home buyer searched for 10 weeks and viewed 10 homes—this is two weeks shorter than the previous year’s report.
  • Seventy percent of home sellers only contacted one agent before selecting the one to assist with their home sale.
  • The share of home sellers who sold their home without the assistance of a real estate agent was nine percent. Forty-four percent knew the buyer prior to home purchase.

See also: Presentation: 2014 Profile of Home Buyers and Sellers

Insurance — Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice – 2014

November 3, 2014 Comments off

Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice – 2014
Source: Insurance Information Institute

Executive Summary

  • The exposure value of the residual property market in hurricane-exposed states has declined significantly from the peak levels seen in 2011. In fact between 2011 and 2013, total exposure to loss in the plans fell by almost 30 percent to $639 billion. Policy counts in 2013—at around 3.2 million—are also down from their 2011 highs.
  • While attempts by certain states to reduce the size of their plans appear to be paying off, the fact that many of the plans charge rates that are not actuarially sound and do not accurately reflect the risk of loss means that a major hurricane could expose residents in certain states to billions of dollars in post-storm assessments.
  • Increased appetite for these risks from the capital markets—highlighted by Florida Citizens Property Insurance Corp’s record-setting $1.5 billion catastrophe bond issued in 2014 (the largest single catastrophe bond issuance in history)—should not detract from the core concerns that this concentration of risk represents.
  • As long as the plans continue to grow and their coverage remains underpriced, state finances will remain under threat, while policyholders and ultimately taxpayers, many of whom live nowhere near the coast, will continue to face the prospect of increased assessments in the years ahead.
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