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Real Estate Big Data

US Census results show times are a changing (so might your business)

(BIG DATA) New Census data gives us insight into a few key takeaways regarding population shifts and how this is affecting the real estate market.

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The Census results are in

Seriously, get excited. It’s hard to get psyched for spreadsheets. I get that. But the US Census results are as important as spreadsheets get, and for real estate in particular, it’s vital to know who’s where and why.

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The details for the 2016 census came in last week, and while it’s not mandatory reading, Trulia has taken a deep dive into the subject.

The details are absolutely worth your time, but here are four big takeaways for anyone in the business:

1. America is old

Ironically, the most important demographic trend in the eternal geopolitical adolescent that is the United States, full to the brim though it is of new tech and youth-worshipping advertising, is the increasing prevalence and importance of older adults.

To state the obvious, more old folks around is a very good thing.

For one, it means our overall health is improving. For another, it means a more stable, consistency-oriented marketplace than us twitchy millennials and Gen Y types.

As we’ve previously written, older Boomers are taking over the housing market. The fact that every one of the 100 major metro areas in the United States saw an increase in the population of adults 65 years of age or older, representing growth from 14.9% to 15.2% of the national population, is big news for real estate, because those folks buy it.

2. America is not white

For any of y’all still laboring under the impression that America is supposed to be a solely European-American nation – seriously guys, not since Leif Erickson’s brother-in-law ran screaming from the people who are actually from here; come to The Real Daily for all your obscure historical trivia needs – Caucasian population (that’s just fun to write) has shown neither growth nor decline in the last two years.

Nationwide, all population growth between 2015 and now has been 50.7% Hispanic, 23.4% Asian, 15.8% black, 8.6% people identifying as two or more of those races, and a whopping 0.2% Caucasian.

Importantly, white populations aren’t declining either. America’s just made up of everybody. Market likewise.

3. Trends stay trending

For all of the rhetoric on both sides of the political spectrum, the demographic changes shown in the Census track what trends they’ve clocked since the far-away days of the year 2000. In fact, population change has slowed in that time: between 2000 and 2010 the population grew at a rate of 0.9%; from 2010 to the present it’s slowed to 0.7%.

Immigration has not spiked, nor have demographics undergone substantial changes nationwide. That’s the math.

If someone says otherwise, exercise skepticism.

4. Cities are changing

Trends may be consistent nationwide, but there are always outliers, and outliers can mean opportunity.

Notably, as of the most recent census 26 of American’s 100 biggest metro areas are majority-minority, which is to say, the minority population taken as a whole is larger than the Caucasian one. That’s the same as 2015, but representative of a substantial change over time: in 2000, there were just 14.

Urban populations are absolutely getting more diverse, and people doing business in those places need to take note.

Some are also moving in surprising directions.

The Hispanic population of the Bay Area, California is declining: the only two metros of the 100 tracked by the census that showed a decline in Hispanic population this year are San Francisco and San Jose. Conversely, the most rapidly changing cities are Fort Lauderdale and Orlando, Florida, both of which saw a major influx of Hispanic-Americans this year as well as the last.

Interestingly, Las Vegas also saw a rise in both its Hispanic and Asian-American population.

That’s the word from the American org chart. Time to do business accordingly.

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Matt Salter is a writer and former fundraising and communications officer for nonprofit organizations, including Volunteers of America and PICO National Network. He’s excited to put his knowledge of fundraising, marketing, and all things digital to work for your reading enjoyment. When not writing about himself in the third person, Matt enjoys horror movies and tabletop gaming, and can usually be found somewhere in the DFW Metroplex with WiFi and a good all-day breakfast.

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Real Estate Big Data

Housing optimism cools – what will it take to heat back up?

(REAL ESTATE NEWS) Despite economic gains and a hot housing market, optimism is cooling. Why is this happening and what’s the cure?

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Housing is a complex creature – the market can be on fire, but optimism can wane nonetheless. The National Association of Realtors (NAR) is reporting that despite solid job creation, the strength of the economy, and increased economic growth, many households are less keen on believing now is a good time for buying or selling, and are overall less confident about the economy.

This comes as a result of the fourth quarter HOME (Housing Opportunities and Market Experience) survey, which samples US households by a random digit-dial and was conducted by TehcnoMetrica Market Intelligence that gathered 2,705 households. The HOME survey collects data on a monthly basis and is focused on identifying real estate trends.

Despite an improving economy, more hiring, and low mortgage rates, optimism in home sales was not as expected, according to Lawrence Yun, Chief Economist for the NAR.

In general, most prospective home buyers had to deal with a lack of inventory – less construction, fewer sellers, and a lack of affordability.

Reduced economic confidence in the face of the economy’s improvements persisted, with more households feeling less secure about their financial situation, and less people believing the economy is improving. Simply put – they aren’t feeling it.

Renters are less engaged to buy, as demonstrated by a two percent decrease in renters believing now is a good time to go get that home.

Overall – the people most excited to purchase homes are current homeowners, households with income above $100,000, and those living in the Midwest and South. If you live in the West, it is likely that you believe yourself to be in a good market for selling a home.

Overall, people more firmly believe it is a good time to sell their home over last year, which can spell some good news for potential buyers in 2018, as more people may be comfortable putting their homes on the market.

The key is that housing supply must increase. New builds and more sellers placing homes on the market will improve confidence about the housing supply and can work in tandem with a better job market and improved economy to make households feel more optimistic about their #future.

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Real Estate Big Data

Are people jumping back on the flipping bandwagon?

(REAL ESTATE NEWS) House flipping is fun to watch on tv, but the housing crash ended the big wave of investor flips – is it that time again?

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Just when you thought all those shows about flipping houses on HGTV were going to be obsolete, the entity behind the nation’s largest property database, ATTOM Data Solutions, drops news that home flipping may be on the rise in emerging markets.

ATTOM’s Q3 2017 U.S. Home Flipping Report found that there was an influx of flipping and market competition in 44 out of the 93 metropolitan markets.

“A more than nine-year low in the ratio of flips per investor is evidence of this increased competition,” Daren Blomquist, senior vice president at ATTOM Data Solutions, said at the release of the report on Thursday. “[This] is pushing many investors to new metro areas that often have weaker market fundamentals but also come with a bigger supply of discounted distressed properties to flip.”

In order to perform the statistical analysis included in the report, ATTOM maintained its analytical definition of flipping from previous years. The property data firm defines a flipped home as a property “sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data” that was collected by their research firm.

Areas with the largest revitalized interest for flippers: Baton Rouge, Louisiana (up 140 percent); Winston-Salem, North Carolina (up 58 percent); Salem, Oregon (up 51 percent); Indianapolis, Indiana (up 51 percent); and Buffalo, New York (up 47 percent).

However, this flipping increase of 47 percent of markets is bucking the national trend of shifting away from flipping. Nationally, the report finds that while from Q3 to Q2, the rate of home flipping has decreased 0.5 percent, the overall home flip rate comparing Q3 2016 to Q3 2017 has stagnated at 5.1 percent. Also, return on investment (ROI) is decreasing, which might be driving this declining rate.

As detailed in the report, only 37 percent of major metropolitan markets are experiencing an increase of average gross home flipping return on investment (ROI) in Q3. The rest of markets? They’re experiencing an ROI downturn, receiving lowest average gross flipping ROI since Q2 2015.

“Home flipping profits continue to be squeezed by a dwindling inventory of distressed properties available to purchase at a discount and increasing competition from fair-weather home flippers often willing to operate on thinner margins,” Blomquist said.

It looks like we shouldn’t count out the creation of “Flip this House: Baton Rouge” coming soon to a TV near you.

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Real Estate Big Data

The average first time home buyer struggles with debt and down payments

(REAL ESTATE NEWS) For years, the first time home buyer has been squeezed out of the market, but for those qualifying, what are the traits of today’s average first timer?

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While the nation’s housing supply tightens and home prices continue to rise, first time home buyers are also struggling to save enough for a down payment while burdened with student loan debt.

As a result, only 34 percent of 2017 home buyers were first time homeowners, a minor decrease from 35 percent in 2016, according to the National Association of Realtors 2017 Profile of Home Buyers and Sellers. This figure continues to fall away from the long-term historical market average of 39 percent, per the NAR.

The typical first time home buyer? A 32-year-old with an average household income of $75,000 who carries some lingering student loan debt.

While millennials are in their prime home buying years, the NAR found debt and saving for a down payment are the most significant home buying hurdles. A quarter (25 percent) of new first time buyers said saving for a down payment was the most difficult task they faced during the process and more than half (55 percent) said student loan debt delayed their home purchase.

Among the surveyed home buying newbies, 41 percent indicated they have student loan debt, which is up from the 40 percent recorded in 2016. And, the average debt balance has increased even more in the past year, reaching an average of $29,000 compared to $26,000 in 2016. More than half of debt-carrying buyers owe at least $25,000, too.

The typical first time home? A single-family home in a suburban area with a median purchase price of $190,000. And, as saving for a down payment is difficult for many young buyers, the average first time home buyer down payment averaged 5 percent in 2017, the lowest percentage recorded by the NAR since 2013. The average down payment figure also indicates such buyers finance nearly 10 percent more (95 percent) of their home purchases than repeat buyers (86 percent).

In addition to personal finance burdens, first time buyers have struggled to find affordable options as the housing inventory in many parts of the U.S. tightens and prices increase for what is available. When buyers are on a budget and balancing debt, this can dampen the dreams of homeownership and prolong the time spent searching for their first home. Overall, the 2017 NAR survey found the average home buying search lasts 10 weeks.

Regardless of reality, many currently believe that it’s just too expensive to buy.

“With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home,” said NAR chief economist Lawrence Yun. “Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked homeownership out of reach for countless would-be buyers.”

The NAR annual Profile of Buyers and Sellers survey is survey data-based snapshot of home buyers who have purchased a home in the past 12 months, which, for the latest report, meant between July 2016 and June 2017.

While the new first time home buyer stats may not be the most promising, these findings can help real estate professionals better understand the current housing market and better assist home buyers – especially younger buyers who may benefit from more guidance.

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