Interactive Map: Where Can Renters Afford to Own?
Source: Joint Center for Housing Studies of Harvard University
Homebuyer affordability remains near an all-time high, so where are all the first-time homebuyers? According to indexes that incorporate gross measures of house prices, interest rates, and household incomes, affordability remains at unprecedented levels. The National Association of Realtors® index, for instance, shows that the median-income household can afford to buy a home in all but 7 percent of the largest metros. Given that affordability looks good on paper, the lack of first-time homebuyers in all metros has been surprising. In 2013, first-time homebuyers made up 38 percent of home purchases, below the historical average of 40 percent, dating back to 1981. The most recent American Housing Survey shows that 3.3 million households were first-time buyers in 2009-2011, a 22 percent drop from the 2001 survey, which covered 1999-2001. This decline in first-time buyers comes in spite of real mortgage payments for the median home that remain below $800 (levels unprecedented before the recession) and a 7 percentage point decline in the mortgage payment-to-income ratio since 2001.
Historically, the majority of first-time buyers are households aged 25-34. Looking at renters in this age group, most would find the monthly costs of homeownership affordable in many metros across the country. Indeed, in 42 of the 85 metros studied, more than half of renters can afford the monthly costs of homeownership. Nearly 30 percent of the 25-34 year old renters in our sample lived in these affordable metros. Only in six metros, concentrated almost exclusively in California, are renter incomes so low compared to house prices that less than 30 percent of renters aged 25-34 can afford the costs of owning.
So why, given that so many metros are affordable to potential 25-34 year old first-time buyers, has the first-time buyer share remained low? Many demographic and economic forces are constraining the transition to homeownership for renters in their 20s and 30s.
Dependent Children Usually Resident in England and Wales with a Parental Second Address, 2011
Source: Office for National Statistics
Dependent children who shared their time between two different parental addresses were analysed for the usually resident population in England and Wales using 2011 Census data. Analysis includes the age and sex profiles of these children in 2011, as well as their geographical distribution and location of their usual residence and parental second address.
New GAO Reports
Source: Government Accountability Office
1. Manufactured Housing: Efforts Needed to Enhance Program Effectiveness and Ensure Funding Stability. GAO-14-410, July 2.
Highlights – http://www.gao.gov/assets/670/664589.pdf
2. Data Transparency: Oversight Needed to Address Underreporting and Inconsistencies on Federal Award Website. GAO-14-476, June 30.
Highlights – http://www.gao.gov/assets/670/664537.pdf
Lenders Note Impact of Higher FHA Fees
Source: National Association of REALTORS®
The mortgage market was buffeted by a number of changes in 2013 and 2014 among them higher fees at the FHA. NAR Research’ s second Survey of Mortgage Originators includes questions about the impact of changes to the FHA program on consumers.
Since 2010, the FHA has increased the rates it charges for mortgage insurance. On average, responding lenders indicated that 5.7% of originations were lost because of the increase in FHA fees. The distribution clustered between a response of 1.1% to 2.0% and 6.1% to 7.0%. A loss of 5.7% in sales would correlate to roughly 200,000 to 250,000 home sales lost, near the mid-point of estimates NAR Research produced in April.
New GAO Reports and Testimonies
Source: Government Accountability Office
1. USDA Farm Programs: Farmers Have Been Eligible for Multiple Programs and Further Efforts Could Help Prevent Duplicative Payments. GAO-14-428, July 8.
Highlights – http://www.gao.gov/assets/670/664671.pdf
2. 401(K) Plans: Improvements Can Be Made to Better Protect Participants in Managed Accounts. GAO-14-310, June 25.
Highlights – http://www.gao.gov/assets/670/664392.pdf
3. National Flood Insurance Program: Additional Guidance on Building Requirements to Mitigate Agricultural Structures’ Damage in High-Risk Areas Is Needed. GAO-14-583, June 30.
Highlights – http://www.gao.gov/assets/670/664517.pdf
4. Medicaid Financing: States’ Increased Reliance on Funds from Health Care Providers and Local Governments Warrants Improved CMS Data Collection. GAO-14-627, July 29.
Highlights – http://www.gao.gov/assets/670/665076.pdf
1. Screening Partnership Program: TSA Has Improved Application Guidance and Monitoring of Screener Performance, and Continues to Improve Cost Comparison Methods, by Jennifer Grover, acting director, homeland security and justice, before the Subcommittee on Transportation Security, House Committee on Homeland Security. GAO-14-787T, July 29.
Highlights – http://www.gao.gov/assets/670/665067.pdf
2. Budget Issues: Opportunities to Reduce Federal Fiscal Exposures Through Greater Resilience to Climate Change and Extreme Weather, by Alfredo Gomez, director, natural resources and environment, before the Senate Committee on the Budget. GAO-14-504T, July 29.
Highlights – http://www.gao.gov/assets/670/665090.pdf
3. Federal Real Property: Better Guidance and More Reliable Data Needed to Improve Management, by David J. Wise, director, physical infrastructure issues, before the Subcommittee on Government Operations, House Committee on Oversight and Government Reform. GAO-14-757T, July 29.
Highlights – http://www.gao.gov/assets/670/665086.pdf
4. Tobacco Taxes: Disparities in Rates for Similar Smoking Products Continue to Drive Market Shifts to Lower-Taxed Options, by David Gootnick, director, international affairs and trade, before the Senate Committee on Finance. GAO-14-811T, July 29.
Highlights – http://www.gao.gov/assets/670/665082.pdf
5. Medicaid: Completed and Preliminary Work Indicate that Transparency around State Financing Methods and Payments to Providers Is Still Needed for Oversight, by Katherine M. Iritani, director, health care, before the Subcommittee on Energy Policy, Health Care and Entitlements, House Committee on Oversight and Government Reform. GAO-14-817T, July 29.
Highlights – http://www.gao.gov/assets/670/665070.pdf
6. Combating Nuclear Smuggling: Past Work and Preliminary Observations on Research and Development at the Domestic Nuclear Detection Office, by David C. Trimble, director, natural resources and environment, before the Subcommittee on Cybsersecurity, Infrastructure Protection, and Security Technologies, House Committee on Homeland Security. GAO-14-783T, July 29.
Highlights – http://www.gao.gov/assets/670/665073.pdf
House prices have increased significantly in Canada over the past decade, driving household debt and residential construction activity to historical highs. Although macro-prudential tightening has slowed the pace of household borrowing in the last few years, house prices have continued to trend higher, and affordability remains a major challenge in urban centres. First-time home buyers must therefore spend more of their incomes to purchase a house and are vulnerable to future interest rate hikes. Overbuilding in the condominium sectors of some cities appears to be a source of risk, especially if a major price correction in these segments spills over into other markets. The country benefits from a sound and effective housing finance system, which performed well throughout the global financial crisis thanks to strong regulatory oversight and explicit government backing of the mortgage market. Nonetheless, the dominance of the crown corporation CMHC in the mortgage insurance market concentrates a significant amount of risk in public finances. Improving competitive conditions in the mortgage insurance market could help diversify these risks and reduce taxpayer contingent liabilities, while introducing coverage limits on loan losses would better align private and social interests. There may be a shortage of rental housing in several cities, especially in the range that low-income households can afford. Urban planning policies have resulted in low-density residential development which contributes to relatively high transport-related carbon emissions. Addressing these externalities requires stronger pricing signals for land development, road use, congestion and parking, combined with better integration of public transit planning. To prevent the marginalisation of low-income households, planning policies should support social mix and increase incentives for private-sector development of affordable housing.
NAR Identifies Best Purchase Markets for Aspiring Millennial Homebuyers
Source: National Association of REALTORS®
First-time homebuyers have been largely absent from the housing market in the current economic recovery, but some metropolitan areas – particularly in the Midwest and West – are well positioned to see increases in home-buying from the Millennial generation in upcoming years, according to new research by the National Association of Realtors®.
NAR analyzed current housing conditions, job creation and population trends in metropolitan statistical areas1 across the U.S. to determine the best markets for aspiring, leading edge Millennial2 homebuyers. Austin, Texas and Salt Lake City were identified as top standouts for Millennials for having a young adult population with solid job growth rates and still relatively affordable home prices. Seven of the 10 metro areas recognized are in the Midwest and West.
The Olympic and Paralympic legacy: Inspired by 2012 – second annual report
Source: Cabinet Office
This report describes the activities which took place in the second year since the Games to build a lasting legacy across a number of commitments, namely sport and healthy living, the regeneration of east London, bringing communities together, the Paralympic legacy and economic growth.
The report includes a foreword by the Prime Minister and the Mayor of London, and an assessment of progress by Lord Sebastian Coe, the Prime Minister’s Olympic & Paralympic Legacy Ambassador.
Proximity to Coast Is Linked to Climate Change Belief
Source: PLoS ONE
Psychologists have examined the many psychological barriers to both climate change belief and concern. One barrier is the belief that climate change is too uncertain, and likely to happen in distant places and times, to people unlike oneself. Related to this perceived psychological distance of climate change, studies have shown that direct experience of the effects of climate change increases climate change concern. The present study examined the relationship between physical proximity to the coastline and climate change belief, as proximity may be related to experiencing or anticipating the effects of climate change such as sea-level rise. We show, in a national probability sample of 5,815 New Zealanders, that people living in closer proximity to the shoreline expressed greater belief that climate change is real and greater support for government regulation of carbon emissions. This proximity effect held when adjusting for height above sea level and regional poverty. The model also included individual differences in respondents’ sex, age, education, political orientation, and wealth. The results indicate that physical place plays a role in the psychological acceptance of climate change, perhaps because the effects of climate change become more concrete and local.
Do Coastal Building Codes Make Stronger Houses? (PDF)
Source: Cato Institute
The National Flood Insurance Program (NFIP), which provides federal flood insurance to property owners in participating communities, is currently $24 billion in debt. The shortfall has long been foreseen by policymakers because the insurance is underpriced, effectively subsidizing property owners of coastal properties. Congress attempted to curtail that subsidy with the 2012 Biggert–Waters Flood Insurance Reform Act, which was intended to put the burden of flood risk squarely on property owners rather than taxpayers. However, beneficiaries of the subsidies rallied against the legislation, and earlier this year both houses of Congress passed, and President Obama signed, legislation delaying the 2012 subsidy reform.
Communities that participate in the NFIP must adopt the program’s building code, which incorporates minimum building standards set forth by the Federal Emergency Management Agency (FEMA). Economists have theorized that building codes associated with the provision of subsidized insurance may create moral hazard by inducing risk taking. That is, the acquisition of insurance against some contingency is associated with a decreased incentive to avoid or prevent the insured loss because policyholders do not bear the full consequences of their actions. Independent of any insurance provision, moral hazard can also result from a false perception of safety if building codes are not effective.
This article examines the effectiveness of the NFIP’s building code in reducing damages to barrier island property in a hurricane. We determine whether similarly located properties fare better or worse in a hurricane based on the code regime under which they were constructed. We use data from Lee County, Fla., where 2004’s Hurricane Charley made landfall. Our findings raise questions about the optimal scale of code design, and about unintended consequences from building code changes.
Evaluating the Effect of Smart Growth Policies on Travel Demand
Source: Transportation Research Board
TRB’s second Strategic Highway Research Program (SHRP 2) has released a project brief that provides transportation planning agencies with improved tools and methods to accurately and comprehensively integrate transportation investment decision making with land development and growth management.
Global Real Estate Transparency Index 2014
Source: Jones Lang LaSalle
JLL’s eighth Global Real Estate Transparency Index , covering 102 markets worldwide, shows continued progress in the transparency of commercial real estate around the world. Over 80% of markets have registered improvement since 2012. The top improvers in each survey generally correlate with a surge in foreign direct investment and corporate occupier activity, as investors help to accelerate transparency reforms and governments realise that poor transparency will affect continued inward investment, long-term growth prospects and the quality of life of citizens.
2014 CoreLogic Storm Surge Analysis Identifies More Than 6.5 Million US Homes with Total Reconstruction Value of Nearly 1.5 Trillion Dollars at Risk of Hurricane Storm Surge Damage
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled services provider, today released its 2014 storm surge analysis featuring estimates on both the number and reconstruction value of single-family homes exposed to hurricane-driven storm surge risk within the United States. According to the findings, more than 6.5 million homes along the U.S. Atlantic and Gulf coasts are at risk of storm surge inundation, representing nearly $1.5 trillion in total potential reconstruction costs. More than $986 billion of that risk is concentrated within 15 major metro areas. This exposure could constitute significant risk for homeowners and financial services companies, as many at-risk homes lack protection from insurance coverage.
The analysis examined homes along the coastlines of 19 states and the District of Columbia in the Gulf and Atlantic regions, extending as far west as Texas and as far north as Maine. Florida ranks number one for the highest number of homes at risk of storm surge damage, with nearly 2.5 million homes at various risk levels and $490 billion in total potential exposure to damage. At the local level, the New York metropolitan area, which encompasses northern New Jersey and Long Island as well, contains not only the highest number of homes at risk for potential storm surge damage (687,412), but also the highest total reconstruction value of homes exposed, at more than $251 billion.
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Does Planning Regulation Protect Independent Retailers? (PDF)
Source: Harvard Business School Working Papers
Regulations aimed at curbing the entry of large retail stores have been introduced in many countries to protect independent retailers. Analyzing a planning reform launched in the United Kingdom in the 1990s, I show that independent retailers were actually harmed by the creation of entry barriers against large stores. Instead of simply reducing the number of new large stores entering a market, the entry barriers created the incentive for large retail chains to invest in smaller and more centrally located formats, which competed more directly with independents and accelerated their decline. Overall, these findings suggest that restricting the entry of large stores does not necessarily lead to a world with fewer stores, but one with different stores, with uncertain competitive effects on independent retailers.
2014 Global Life Sciences Cluster Report
Source: Jones Lang LaSalle
Notable shifts and surges in industry activity have been the recent norm for Life Sciences. Big players have made moves to become more nimble, while small to medium sized companies have made steady headway into the marketplace. Learn more about the ever-changing landscape, trends in real estate that are helping to support these changes, and what global regions are leading the way in the Life Sciences industry.
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