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What does aging housing stock mean for home buyers?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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In a survey from the Department of Housing and Urban Development American Housing Survey (HUD), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

In December 2014, the average cost of a new home was $298,100 while the cost of an existing home was $209,500. Saving that kind of money on a home purchase allows a homeowner to budget in a remodeling project.

This leaves remodeling as the viable option

Remodeling costs can be eased by taking it on a do-it-yourself (DIY) basis. According to the 2013 American Housing Survey, a homeowner can save more than half of the cost of a project with DIY. A professional bathroom remodel runs $8,221 versus a DIY at $3,000. The kitchen, one of the most costly remodeling projects, comes in at $15,000 for DIY and $35,821 for a professional.

Buying an existing home can put a first-time homeowner in a better financial position. Instead of renting until they save up money for that new home, they can begin gaining equity in their house and enjoy the benefits of having their own residence. Encourage homeowners to remodel to get the home they want at the price that works for their budget.

#AgingHouses

Dawn Brotherton is a staff writer at The Real Daily, and has an MFA in Creative Writing from the University of Central Oklahoma. Before earning her degree, she spent over 20 years homeschooling her two daughters, who are now out changing the world. She lives in Oklahoma and loves to golf. She hopes to publish a novel in the future.

Politics

NAR takes HUD to task for removing anti-discrimination language

(POLITICS) It turns out that HUD is altering their mission statement – although it is more concise, it removes any reference to Fair Housing protections. The real estate industry’s not on board.

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The National Association of Realtors (NAR) has long advocated for Fair Housing, in fact, has been extremely far ahead of federal government organizations by being more inclusive. Seven years ago, NAR amended the Code of Ethics to include sexual orientation as a protected class that cannot be discriminated against (Realtors in violation can lose their license). The U.S. Department of Housing and Urban Development (HUD) still has not caught up to the real estate industry, making no amendments.

Now, according to a March 5 memo to HUD political staff, HUD is altering their current mission statement “in an effort to align HUD’s mission with the Secretary’s priorities and that of the Administration.”

The current mission statement reads as follows:

HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination, and transform the way HUD does business.

It will now become:

HUD’s mission is to ensure Americans have access to fair, affordable housing and opportunities to achieve self-sufficiency, thereby strengthening our communities and nation.

Brilliantly more concise, but wildly lacking.

President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty said, “we believe that fair housing for all should remain a core part of HUD’s mission. The Fair Housing Act provides that HUD will enforce the Act and administer its programs and activities in a manner that affirmatively furthers fair housing. When President Lyndon B. Johnson signed the Fair Housing Act into law, he exclaimed that fair housing for all – all human beings who live in this country – is now a part of the American way of life.”

Mendenhall added, “Not only is Fair Housing integral to the ethical commitment of our members, as outlined in the REALTOR® Code of Ethics, it is critical to our ability to serve our customers, clients and the community. We look forward to continuing our work with HUD to advocate for inclusive sustainable communities free from discrimination.”

Dr. Ben Carson heads HUD, and prior to his confirmation said that the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation. Stripping it from the mission statement is not a world-class plan, it’s a failure.

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Politics

President Trump signs Executive Order on healthcare, calls it “a beginning”

(BUSINESS NEWS) The ink is drying on President Trump’s latest Executive Order, pushing agencies to adjust how existing healthcare laws are implemented.

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President Donald Trump signed an Executive Order Thursday, seeking to bring affordable health insurance to millions of Americans by promoting flexibility, choice, and competition.

The Order assigns the Labor Department to consider how to allow groups (small businesses, possibly individuals) to buy Association plans across state lines, consider expanding coverage through short-term low-cost plans, and to consider changes to employee reimbursement accounts.

House Minority leader, Nancy Pelosi said prior to the signing of the Order that “it is a sabotage of the Affordable Care Act, and quite frankly, a real disservice to the American people.”

Pelosi opined that President Trump “knows very little about healthcare legislation.”

Supporters have long pushed for health insurance to be competitive by opening the market across state lines and using the power of numbers to buy insurance like a trade Association.

Critics have long said an Order of this type will increase premiums as the risk pool adjusts up, filled mostly with people buying insurance that have pre-existing conditions. They also say that premiums may be lower under this Order, but benefits may be reduced.

Neither side has a universal solution all can agree upon, but this Order certainly marks the first steps in President Trump making good on his campaign promise to dismantle Obamacare.

The administration cites that it could take over six months to take effect. Congress has already given up on the notion of repeal/replace of Obamacare in 2017, and while President Trump can’t repeal the Act himself, today’s Order proves he is willing to push his administration to update guidance and expand how the law is implemented.

How the agencies will adjust to change the current regulations as ordered by the President will become clear over time, stay tuned.

National Association of Realtors President, William E Brown tells The Real Daily, “Today’s White House announcement is an important part of the work to expand health coverage opportunities. Association Health Plans have long offered promise for small business owners and self-employed individuals seeking affordable health coverage.”

Brown concludes that they are “reviewing the specifics of the proposal to determine the promise that it may offer self-employed individuals, like real estate professionals.”

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Politics

FHA Commissioner named, now all he needs is a yes from the Senate

(POLITICS) President Trump has confirmed his choice for the new commissioner of the FHA, all that is left is for Senate to approve.

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fha montgomery commissioner

Confirmation, finally

Confirming rumors that began in May, President Trump this Wednesday announced his nomination of Brian Montgomery for Federal Housing Administration (FHA) commissioner.

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Montgomery will replace acting commissioner Edward Golding.

Commissioner round two

If the Senate approves his nomination, Montgomery will serve for the second time as FHA commissioner. He held the post for eight years under former president George W. Bush, and for about six months after Obama’s inauguration before resigning in July 2009.

Currently, Montgomery serves as Vice Chairman for an advisory firm he founded – The Collingwood Group, based in Washington D.C.

In his previous tenure as FHA commissioner, Montgomery created a bill, passed in July 2006, which significantly modernized the FHA, and also worked to assist black families trying to purchase a home for the first time. For his leadership in the cause of affordable housing, in 2008 he was awarded the Robert J. Corletta Award.

In a statement issued by the White House, Montgomery was praised for his leadership during his previous term as commissioner. The statement acknowledged Montgomery’s “efforts to preserve… affordable rental housing,” as well as his successes in “reducing rental assistance costs and the costs of FHA insurance claims,” and in financing the development of “more than 300,000 rental units.”

Work to do

If his nomination is confirmed, as FHA commissioner, Montgomery will need to address the suspension of the proposed mortgage insurance rate cut that Trump imposed shortly after taking office in January.

Last November, Montgomery told Politico that in order “To restore housing to its traditional role as an engine of economic growth and opportunity, the incoming Trump administration should pursue policies designed to make the path to homeownership possible again for fully-informed prospective buyers who have the ability to carry a mortgage.”

Pick up the pace

Business leaders and realtor are calling for the Senate to confirm the nomination as soon as possible. National Association of Realtors President William E. Brown wrote, “FHA’s mission is critical to the business of our members. Having strong leadership at the helm means fresh opportunities to improve the FHA programs that put homeownership in reach for millions of Americans every year. We congratulate Brian on the nomination and hope to see him swiftly confirmed.”

#ComishMontgomery

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