New Jersey looks pretty impressive here
Penny & Greg Toombs are The Toombs Team: Your Home Team for Residential Real Estate in Somerset, Morris & Hunterdon, New Jersey. We are here for you!
New Jersey looks pretty impressive here
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to look at where rates are headed when deciding to buy now or wait until next year.
Below is a chart created using Freddie Mac’s July 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of the next 12 months.
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
Dr. Frank Nothaft, the SVP & Chief Economist for CoreLogic, had this to say in their latest MarketPulse:
“If you are thinking of buying a home and have the financial means to do so, this could be a good time to take a look at the neighborhoods you are interested in. We expect home prices in our national index to be up about 4.3% in the next 12 months, and mortgage rates are also likely to increase over the next year.”
If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.
Even a small increase in interest rate can impact your family’s wealth. Meet with a local real estate professional to evaluate your ability to purchase your dream home.
Millions of America’s young people are really struggling financially. Around 30 percent are living with their parents, and many others are coping with stagnant wages, underemployment, and sky-high rent.
And then there are those who are doing just great—owning a house, buying a car, and consistently putting money away for retirement.
These, however, are not your run-of-the-mill Millennials. Nope. These Millennials have something very special: rich parents.
These Millennials have help paying their tuition, meaning they graduate in much better financial shape than their peers who have to self-finance college through a mix of jobs, scholarships, and loans. And then, for the very luckiest, they’ll also get some help with a down payment, making homeownership possible, while it remains mostly unattainable for the vast majority of young adults.
To start with, most of those who continue their education after high school have families that are able to help financially. A recent report from the real-estate research company Zillow looked at Federal Reserve Board data on young adults aged 23-34 and found that of the 46 percent of Millennials who pursued post-secondary education (that’s everything from associates degrees to doctorates), about 61 percent received some financial help with their educational expenses from their parents.
And yet, even with this help, the average student at a four-year college graduates with about $26,000 in student-loan debt. Millennials who are lucky enough to have some, or all, of a college tuition’s burden reduced by their parents have a leg up on peers who are saddled with student debt, and they’ll be able to more quickly move out on their own, and maybe even buy their own house.
And that matters a lot in the long run: While many remain skeptical about the real-estate market, homeownership is still the primary way that Americans build wealth. But first-time buyers—a group generally made up of younger adults—have been scarce since the recession. And research indicates it’s not because many of them want to remain renters, but because they just simply can’t save up enough for a down payment, especially not the down payments needed in the expensive urban markets where so many Millennials prefer to live. According to Svenja Gudell, the senior director of economic research at Zillow, “There’s a ton of people out there who want to buy. In our most recent survey in the beginning of the year, we had 5.3 million renters interested in buying over the next year.”
But, because of their student-debt loads, they cannot. “When it comes to taking out a mortgage, they aren’t able to carry that mortgage payment because they have very chunky payments to make to the lenders of their student loans. So that’s certainly holding Millennials back along the way,” Gudell says.
A recent study by the real-estate company Trulia laid it out this way: Imagine an individual who earns $50,000 and is shopping for a $200,000 home (the median U.S. income and house price). This person would like to put 20 percent down. If he or she follows the popular financial advice to save 10 percent of his or her annual pay, it’ll take him or her about eight years to have that down payment ready to go. If that same person has $26,000, of student debt, which means monthly payments of $280 based on a 10-year repayment plan, it’ll take this person closer to nine years.
But even these numbers are optimistic, with many Millennials owing monthly payments much more than $280 per month, and making much less than $50,000 a year. And in many markets, good luck finding a $200,000 house. In some of the priciest areas, such as San Francisco, it would take those with a college degree and student loans nearly 30 years to save up enough for a 20 percent down payment. For those without the wage boost that a degree brings, it probably won’t be possible at all.
According to Zillow, 43 percent of Millennials who got help from their parents in paying for school were also able to become homeowners. According to Census data the homeownership rate for all young adults was about 36 percent in 2014.
Then there is the group that the Zillow study dubs “double lucky.” These are the select few whose families had enough money to not only help them with college, but to then also assist them with a down payment on a home. This group accounts for more than half of the Millennial homeowners in the Zillow’s data, though they account for only 3 percent of the total Millennial population. Only about 9 percent of Millennials whose parents were able to contribute to their post-high school education were also able to help them purchase a home—and the group that had such significant help is an incredibly low percentage of the total Millennial population.
The study calls this a “funnel of privilege”: Young adults with rich parents soon become rich themselves.
“Haves are turning their riches or their wealth into bigger wealth because they are investing in the housing market by simply living in a house,” says Gudell. This advantage is one that these Millennials will carry forward as they earn more than their degree-less peers, and save more than those who were forced to throw away tens of thousands of dollars on rent due to their inability to buy. In the future, they’ll have wealth to pass down to their own kids, continuing the cycle.
by Mark Mueller
Take that, Jersey-bashers!
Often ridiculed on the national stage as a place teeming with toxic waste, political corruption and gauche reality TV stars, New Jersey has landed at the top in a recent ranking of the best states to raise a family.
Niche, a Pittsburgh-based company that mines and analyzes all manner of government data to produce “best of” lists, found the Garden State had just the right alchemy of factors to push it to number one.
The report card included “A” ratings on education, typically one of New Jersey’s strongest draws, and on access to libraries. Three more categories — crime and safety, access to daycare and community involvement and investment — received “A-” scores.
In the company’s weighting, safe communities and good schools accounted for 40 percent of the overall score. Daycare and access to grocery stores were worth 5 percent each.
The state fared poorly on housing, a category that incorporates home values, property taxes, housing costs, and the age of new home buyers. Niche rated New Jersey a “C” on that front. But because it accounted for just 10 percent of the overall score, housing was not enough to dislodge the state from the top spot.
Cost of living, typically one of the biggest complaints about New Jersey, was not considered in the ratings.
The Northeast in general made a strong showing in the assessment, with Connecticut ranking fifth, Massachusetts sixth, New Hampshire 10th, Vermont 12th, New York 16th, Pennsylvania 19th and Maine 20th.
Virginia, which scored poorly only on access to grocery stores, finished just below New Jersey, followed by Minnesota and Utah.
Hawaii — land of luaus and white sandy beaches — was not considered because of insufficient data, Niche reported.
The worst state to raise a family?
Louisiana, according to the company, which gave the Pelican State grades of “D+” for crime and safety, “C” for education and “C-” for community involvement and investment.
New Mexico, Tennessee, Mississippi and Nevada rounded out the bottom five.
How Millennials Living With Parents Are Affecting the Housing Market – Yahoo Homes
It’s getting better for millennials financially, but the housing market is getting impatient.
A Ned Davis Research report from a few months back indicated that joblessness, stagnant income and student loan debt had not only set millennials back, but kept enough of them away from buying homes to account for 3 million homes’ worth of property demand. That’s 1 million more homes than the 2 million existing homes, or 4.6-month supply, that the National Association of Realtors says are in the national inventory.
According to the Census Bureau, 30.3% of millennials ages 18 to 34 still live at home with their parents. That’s more than 22 million out of 76 million millennials, including nearly 12 million between the ages of 25 and 34. Eric Mintz, portfolio co-manager at Eagle Asset Management, notes that millennials living at home are a huge headwind for the overall economy.
“The marriage rate has been down, but it has a lot to do with the financial well-being of the millennial generation,” he says. “But it does appear to be on the mend and, as we work our way through the recovery, household formation should start to climb higher.”
Millennials have a whole lot of other obstacles to clear before reaching that point, however. The effective unemployment rate for millennials, including those who’ve dropped out of the workforce, was 13.9% in March. Even those who are employed are having a hard time saving. They’re coming out of college with average student loan debt of more than $33,000 apiece, with more graduates having $40,000 or more in student loan debt than at any other time in U.S. history.
They’d like to own homes — and 43.4% of college-educated millennials do want to, according to the Lending Tree — but 67.4% say they need a higher salary, 28.7% want to pay off student loans first and 25.7% say homeownership would be a possibility after they spent time and money on other things, such as traveling, investing and philanthropic missions. Besides, 44.8% have less than $5,000 in savings.
“As the economy is rebounding, this market segment is still feeling longer-term effects of the recession,” says LendingTree founder and CEO Doug Lebda. “Underemployment and low salaries combined with high student debt and uncertainty about the future are a reality that is affecting the housing market. The demand is there, but until this age group sees higher salaries, lower debt levels and feelings of settlement, millennial participation in the housing market will be slow.”
Meanwhile, millennials’ parents have been their most trusted financial advisors and biggest supporters. According to a survey by the Principal, millennials’ parents still chip in for their cellphone bills (12%), car insurance (8%), health insurance (7%) and rent (7%). Their investment is starting to pay off.
Joe O’Boyle, a financial advisor and retirement coach with Voya Financial Advisors in Beverly Hills, Calif., notes that millennials living at home aren’t always doing so because they’re jobless. In many cases, it’s the most fiscally responsible way they can pay down debt — if their parents go along with it. O’Boyle shared the story of a financially savvy millennial client who is a doctor in Los Angeles and made the conscious decision to live at home with her parents after finishing medical school.
“She used the estimated $4,000 a month that would have been going towards rent and utilities and the cost of living on her own towards paying down her student loans, building up her emergency reserves and savings towards a wedding fund,” he says. “She has a great relationship with her parents, and lived at home for two years — $96,000 in savings — to put herself in a better financial position to start a life with her soon-to-be husband.”
One of O’Boyle’s other clients, a sales director with a six-figure salary, opted to live at home to pay off student loan and credit card debt and build a $36,000 travel fund to give himself $3,000 a month for a year abroad.
“He said he had no concerns about finding a job upon his return,” O’Boyle says. “He would live with his parents for a few months when he returned from his trip. This way he could find a new job and build up his savings so he could live comfortably on his own. He said, ‘The time for this adventure is now,’ and he made it happen.”
Overall, millennials have seen their fortunes improve during the economic recovery. According to the Principal, 32% of employed millennials have more job security than a year ago and just 4% have less job security. Another 30% of millennials say their savings are in better shape now than a year ago, while just 15% are less comfortable. Finally, 33% of millennials report their overall financial situation is better than 12 months ago compared with 16% who say it has deteriorated.
Eventually, even among millennials who live with their parents, that typically means a step into the housing market. O’Boyle notes that many millennials with good jobs who can afford to live on their own make the choice, with their parents, to live at home so they can save money toward buying their first home. In the costly Los Angeles housing market, one of his millennial client who is an attorney with student loans or credit card debt decided to live at home so she could save toward the down payment on a home. She lived at home for three years after she finished law school and saved up more than $200,000 to make a 20% down payment on a home in a nice neighborhood near her office.
“She said that there were some small sacrifices to her social life that came with living with her folks, but that it allowed her to buy her first home and it was definitely worth it,” O’Boyle says. “The trade-off for many millennials living at home is giving up some of their independence today for greater financial freedom tomorrow.”