Mortgage ready Millennials

Future home buyers

The youngest in the millennial generation will turn 20 thus year and I doubt that many are ready to buy a home. I have had several clients in the last few years who are in their thirties. High student loan debt continues to be an issue because there are limits to how much debt a borrower can have and still get a home loan.

In the long run people who are able to buy their own home are able to accumulate more wealth than those who rent. The first step in getting ready for homeownership is to pay down debt. The second step it to save a little money for a downpayment. There are numerous downpayment assistance programs for credit worthy home buyers.

I like to send people who want to buy a home but who are not quite ready because of student debt or a low credit score to The Minnesota Homeownership Center. The Homeownership center is a non-profit and free.

From the dash board

The screen shot is from the “dash board” in our MLS. I have posted these before. It is a real estate snap shot of the last 7 days. It is pretty easy to see why the inventory of homes on the market is staying so low. The number of homes that have “pended” or have offers on them and are probably going to close is higher than the number of homes that were listed.

MLS dashboard – Saint Paul MN

There are actually fewer than 300 homes on the market in St. Paul that do not have offers on them. This is good news for sellers but maybe not good news for buyers. There are people who are waiting to sell but they won’t until they find a home to buy.

We seem to be in a kind of holding pattern. Most of my clients who are sellers during the last six months have been people who were selling a home or condo that they had been renting out. Often these sellers live out of state, are over 55 and I never actually meet them in person. In every case the home was sold to someone who is living in it rather than renting it out. Usually the desire to sell is triggered by a tenant moving out and owners who do not wish to find a new tenant.

Aging population impacts home sales

This chart shows the increase in the percent of the population 60 and older from 6 percent in 1900 to 16 percent in 2000 and projected to be 25 percent in 2030 and 26 percent in 2050. (U.S. Census Bureau)

Total population by age

An aging population has an impact on housing. There is all sorts of speculation about baby boomers. Will people move? Will they age in place? Will there be a great sell off in 2020? Right now there are more home buyers than sellers. Will that turn around in the next couple of years? Will the great sell off create a buyers market?

How will lack of affordable health care affect the housing market going forward? The aging trend isn’t just about aging baby boomers. We all live longer and have fewer children which is causing permanent changes.

Is there the right type of housing for all generations or will we all need to adapt to what is available and how will those adaptations affect our life styles?

Pretty heavy stuff I know but I spend a lot of time at a nursing home and that gives me time to ponder aging and it’s impact on the housing market.

Currently we have set yet another record low for the number of homes for sale in St. Paul. I think one of the reasons for the shortage of homes for sale is baby boomers who are staying put.

Local agents have aversion to page numbers

Screen print

The pages are supposed to be numbered on purchase agreements and on the first page there is even a space to put the total number of pages. “Page 1 of_______”.  As a broker I don’t accept purchase agreements without page numbers but apparently other brokers do. Our purchase agreements have some pretty specific instructions on how to number the contract pages.

The little things matter especially when creating legal documents like a purchase agreement.

Happy Valentines day.

Tax day coming soon

20160315_103828I went to the IRS web site and copied and pasted the answers to the most common and obvious questions home sellers ask about taxes. [Ten tax tips for individuals selling their home]

In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

You cannot deduct a loss from the sale of your main home.

If you bought a home in 2106 or own a home with a mortgage you may also have some tax deductions. [publication 530- main content]

There are some in the real estate industry who believe that people buy homes because of the mortgage interest tax deduction.

Supply down but sales are up

January 2017 - in the pink

In 2016 we hit some all time lows for the number of homes for sale in St. Paul and in the region but there were more homes sold in 2016 then have been sold during any year in the past decade. The number of homes for sale remains low because homes are selling quickly in St. Paul and in the entire region.

In 2006 during much of the year there were three times the number of homes on the market during any given month than there were on the market during the same months is 2016 yet about 300 more homes were sold in 2016 in St. Paul than were sold in 2006.

Median home prices are about $16,000 lower in St. Paul in 2016 than they were in 2006.

Home values will likely go up in 2017 because of short supply. We are also facing a housing affordability crisis as rents and home prices increase faster than earnings.