Profile of today's homebuyer

 This can't be the sign of a healthy market.

What stood out to me was that home buyers are:

• Older
• Have higher incomes
• Are more likely to be married

Naturally, those who can afford to spend more are generally older and have higher incomes.  In fact, the median age for overall home buyers rose from 39 to 43.  The number of married couples buying homes rose 6 percent, while purchases by singles and unmarried couples were slightly down.

And what about new stricter mortgage standards called a Qualified Residential Mortgage (QRM)

The effect of QRM regulation would be to raise down payments to 20 percent to meet the requirements of a qualified residential mortgage.  This would disproportionately affect first-time and minority borrowers.

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Jobs, Housing Costs Forcing Millions To Flee California; Most In 100 Years

It's only one line, but I think the impact can be felt.

Housing costs are another factor cited by economists.

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Number of Households continues to shrink

Normal these graduates will be renting or doubling up with another friend however, they are living at home and that reduces the number of households out there will reduces the pressure on rents or home prices.

In record-setting numbers, young adults struggling to find work are shunning long-distance moves to live with Mom and Dad, delaying marriage and buying fewer homes, often raising kids out of wedlock. They suffer from the highest unemployment since World War II and risk living in poverty more than others — nearly 1 in 5.

Opting to stay put, roughly 5.9 million Americans 25-34 last year lived with their parents, an increase of 25 percent from before the recession. Driven by a record 1 in 5 young men who doubled up in households, men are now nearly twice as likely as women to live with their parents.

Broken down by race and ethnicity, 31 percent of young black men lived in their parents' homes, compared with 21 percent of young Latino men and 15 percent of young white men. At the state level, New York had the highest share of young men living with their parents at 21 percent, followed by New Jersey and Hawaii, all states with higher costs of living. Most of the cities with low percentages of young adults living at home were in the Midwest.

Homeownership declined for a fourth consecutive year, to 65.4 percent, following a peak of 67.3 percent in 2006.

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Asian and Hispanic families combining households

If you live in Southern California this is nothing new.

The number of such households, defined as those with three or more generations living under one roof, grew to almost 5.1 million in 2010, a 30 percent increase from 3.9 million in 2000, the data show.

Now, in the suburbs and not the farms.

Although the term multigenerational invokes images of grandma churning butter on a pioneer farm or turn-of-the-century immigrants crammed into tenements, today’s extended families are more likely to live in suburbs. Among large cities, the one with the highest percentage of multigenerational households, at 16 percent, is Norwalk, California, a collection of largely single- family homes 15 miles (25 kilometers) south of Los Angeles.

Cultural and Economic Reasons

Corporate America is figuring out ways to create products for, and market to, these multi-income, multifaceted families, Gallegos said.

Home builder KB Home (KBH) is seeing increased demand for what it calls double master suites, two large bedrooms with attached bathrooms to accommodate parents living with their adult children, according to Cara Kane, a spokeswoman for the company, which is based in Los Angeles. All 10 of the largest communities in the U.S. ranked by their percentage of multigenerational households were within an hour’s drive of the nation’s second- largest city. All had populations over 100,000....

Her research on the state’s Filipino residents found multigenerational households are most common among the poor, who live together so they can pool their resources, and the rich, who have the space.

“A lot of times it’s for economic reasons,” Yuan said in an interview. “Other times it’s just cultural preferences.”

On a recent Monday afternoon, the Norwalk Senior Center was bustling with people playing bingo and taking weaving classes. Francisca Bernard, a 75-year-old retired waitress, said she has lived in the same three-bedroom Norwalk house since 1968. It now accommodates four generations of her family, including three grandchildren and her father, who is 100 years old.

“The house is big and we like to be together,” she said. Finances also play a role, Bernard said. While her daughter does most of the grocery shopping, major purchases, such as a new car, are hashed out over the dinner table.

And other issues due to this trend.

The city saw an explosion in residents after World War II as returning soldiers swelled the population to 35,000 in 1950 from 5,770 a decade earlier, according to a municipal history.

By the time Norwalk incorporated in 1957, the city’s developable land was largely built out, according to Kurt Anderson, director of community development. Population increases and additions put on existing structures have strained the municipality, which now counts 105,000 residents.

“Parking is a huge issue,” said Marcel Rodarte, a Norwalk native and city council member. The city requires more onsite parking when permits are requested for room additions, he said

Funny this article doesn't address traffic in these areas.  

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The Housing Market is Shrinking

There is statistic this report that household sizes are growing.  Meaning that more people are moving in together and that's decreasing the demand for housing.  Is it temporary?  It's hard to tell, but the economy is bad, so it might be awhile before household size shrinks.

Households had been getting smaller over the past decades, despite population growth. That was great for housing, because it meant more demand. "A one tenth of a percent increase in people per household would wipe out three years worth of population- and immigration-driven household growth," according to Green Street Advisors. That appears where we're headed.

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Renters Plan to Continue Renting. Blame Uncertainty

This will put more downward pressure on housing.

Sixty-four percent of respondents said that the economy is on the wrong track, the highest number in the six-quarter history of the survey.  In the wave of interviews conducted in July for the third-quarter report this number rose to 70 percent.

Persons reporting concern about their job security, 26 percent of those interviewed, expressed more anxiety and pessimism across the board than those respondents who were not concerned about losing their jobs in the next 12 months.  For example, 33 percent of employment-concerned Americans thought they had sufficient savings compared to 49 percent of the others and 44 percent said their household expenses had increased significantly over the last year while only 35 percent of the unconcerned made that statement.  Concerned respondents were also less likely to view this as a good time to buy a house (65 percent against 76 percent for those who were not concerned about their employment) and more likely to rent than to buy the next time they moved (34 percent versus 24 percent.) 

Continued weak demand

"Survey data make clear the relationship between home purchase demand and concerns about the stability of employment. Dissatisfaction about the direction of the economy and related employment fears are damping demand to buy homes and slowing the recovery. People who believe owning is a better deal than renting are nonetheless planning to rent, at least until things improve it would seem."

More than 50 percent of the renters responding to the survey live in single-family homes while another 35 percent live in small (under five units) multi-family housing.  Only 11 percent reported living in large (50+ unit) complexes.   Single-family renters tend to have about the same income levels as multi-family renters, but are younger and are much more likely (47 percent to 27 percent) to have children living at home.  Single-family renters are more likely than multi-family renters to consider owning a home as being more sensible than renting (74 percent to 68 percent) but both groups plan to continue renting.  Fifty-four percent of single-family renters and 67 percent of multi-family renters say they will rent rather than buy their next home.  

Both groups of renters are pessimistic about the chances of financing a home.  More over 70 percent say it would be somewhat or very difficult for them to get a home mortgage compared to 53 percent in the general population and 56 percent of underwater homeowners.  While roughly the same percentage of each rental group cited debt, down-payment, income, and job security as reasons a mortgage might be unobtainable, 33 percent of single-family renters cited their credit history as a hurdle compared to 20 percent of multi-family renters.

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Homeownership drops to 1998 level

Not surprising as people received loans that probably shouldn't been qualfied to get.  Now, with the economy not growing that number will increase.

The U.S. homeownership rate in the second quarter dropped to its lowest level in 13 years, according to the Census Bureau, with analysts expecting even more drops ahead.

The homeownership rate fell to 65.9%, down one percentage point from a year ago. It's the lowest level measured since the first quarter of 1998. Analysts at Capital Economics said this means the homeownership rate built during the housing boom has been "completely wiped out" by its bust.

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Homeownership no longer an aspirational goal: PIMCO

This new trend in demographics will impact years to come.

The idea of homeownership as an aspirational goal may no longer carry much weight as college graduates enter the work force saddled with high student loan debt and older Americans focus on retirement.

Rod Dubitsky, an analyst with PIMCO, said the overall question that looms large over the mortgage industry is: Who is going to buy housing in the next 10 years?

 The a key reason besides jobs...student debt.

And student debts are expected to go even higher, as salaries are dropping, according to Dubitsky. The average median salary for recent graduates fell to $27,000 in 2010, compared to $30,000 in 2007.

Dubitsky said the ability of these borrowers to make their way into the housing market is contingent on whether they have the opportunity to save money. But the statistics on this point remain grim with the average student debt now equal to a 15% down payment on a median-priced home

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One of five homeowners having difficulty paying the mortgage

This article confirms some of the reports that shadow inventory could be as high as 4.5 million homes.

At this time last year 24 percent of those with mortgages thought they were under water, three points higher than the number now.

Other highlights:

• Two thirds (66 percent) of all adults have mortgages on their homes, slightly lower than last year's 69 percent.

• While most homeowners with mortgages (73 percent) are having little or no difficulty making their mortgage payments, the 22 percent who are having difficulty represent about 32 million people. And the 7 percent having a great deal of difficulty represent more than 11 million people.

• Those who believe their homes are worth less than the money they owe on their mortgages (21 percent of all those with mortgages) include 8 percent who say their homes are worth "a lot less." However theses numbers are somewhat lower than they were a year ago (24 percent and 11 percent).

• Most adults (62 percent), whether or not they are homeowners with mortgages, are at least somewhat concerned that their family's income will not be enough to cover all their costs and expenses this year. This number is also very slightly lower than it was last year (65 percent).

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Millions of homeowners keep paying on underwater mortgages

I think what this article is missing is that any increases in food, fuel, or goods will probably cause more straigetic defaults.

How could that be a source of future trouble? Because, with home prices stagnant in much of the country, payments on mortgages that are underwater could absorb billions of dollars that might be used for other forms of consumer spending — a drag on family finances, the housing market and the overall economy.

 Of the estimated 15 million homeowners underwater, about 7.8 million owed at least 25% more than their properties were worth in the first quarter of this year, according to Moody's Analytics' calculations of Equifax credit records and government data

And how long this problem could last?  A lot longer than most people think.

But nobody is expecting a return of rapid real estate appreciation any time soon. If home prices were to rise at an annual rate of 3%, not an unlikely scenario, it would take the Hineses about 11 years to get to a point where their mortgage balance was even with their property value.

Refinancing the Hineses' 6.5% interest loan could be a big help, saving them almost $600 a month. But lenders won't even consider them.

And unless borrowers fall behind on their mortgage payments or face a high risk of defaulting, there's little chance that lenders, even with federal incentives, would reduce their principal or lower their interest rates.

"They feel completely left out," said Fred Arnold, past president of the California Assn. of Mortgage Professionals, referring to many underwater borrowers.

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Low household formations translate to high vacancy rates

Low Household formation puts downward pressure on rents and home prices.  This is not surprise since 85% of college graduates are moving back home.  In addition, a lot of these recent college graduates also have higher student loan balances, which will put them out of the housing market for several years.  Plus you have the high underemployment in this recession.

The 2009 year-round vacancy rate in California metropolitan areas was:

• 12% in Bakersfield, up from 9% in 2008;
• 6% in Los Angeles, up from 5% in 2008;
• 5% in Ventura, with no change from 2008;
• 12% in Riverside, up from 10% in 2008;
• 13% in Sacramento, down from 15% in 2008;
• 10% in San Diego, with no change from 2008;
• 10% in San Francisco, up from 9% in 2008; and
• 6% in San Jose, with no change from 2008.

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85% of college grads move home

This is important because this means very new households are not formed.  So it puts downward pressure on rents and home values.

So hard that a whopping 85% of college seniors planned to move back home with their parents after graduation last May, according to a poll by Twentysomething Inc., a marketing and research firm based in Philadelphia. That rate has steadily risen from 67% in 2006.

"It's peaking at levels we have not seen before," said David Morrison, managing director and founder of Twentysomething.

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