Improving economy and job growth draw buyers back to housing
market, forming more households
Source: C.A.R.
With an improving economy and job market over the past year, home buyers have started forming
households again, and buyers who previously experienced a foreclosure or short sale are back in the
housing market, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2015
Survey of California Home Buyers.”
Making sense of the story

In 2015, more households were formed as the share of buyers who previously lived with their
parents increased to 12 percent – the highest in the survey’s history, up from 2 percent in 2014.

Additionally, the share of those who previously rented dipped from 40 percent in 2014 to 39
percent in 2015, and those who previously owned fell from 59 percent in 2014 to 47 percent in
2015.

In what could further exacerbate a future housing inventory shortage, buyers in 2015 indicated
they plan to keep their home longer than ever – an average of 20 years – substantially longer than
the six years cited by home buyers in 2013.

Buyers cited “tired of renting” (15 percent), “wanted a place to live” (14 percent), “desired larger
home” (12 percent), “changed jobs/relocated” (11 percent), and “desired better/other location” (8
percent) as the top reasons for purchasing a home.

For first-time buyers, “tired of renting” was the top reason for purchasing a home (21 percent),
followed by “wanted a place to live” (19 percent).

Despite the recent run up in home prices, the vast majority (85 percent) felt that their home was
worth the price they paid, while 14 percent said the price was too high, and 1 percent said the
price was too low.

Buyers put an average of 24 percent down on their home purchase in 2015, down from 28 percent
in 2014, and 25 percent in 2013, but more than what has been the traditional 20 percent since
2009.
Read the full story
http://www.car.org/newsstand/newsreleases/2015releases/2015buyerssurvey
In other news …
Fed Officials Finally See U.S. Housing Sector on the Upswing
Source: Wall St. Journal
The Federal Reserve, the central bank, signaled a shift in its view of the housing market, with the minutes
of a policy meeting noting that “Signs of stronger housing activity were encouraging.” Solid readings in
recent months on U.S. home sales and residential construction have led the central bank’s policy makers
to change their tune. However, they still cautioned that “Home construction was still below the trend that
would appear consistent with population growth, sales remained at low levels, and credit availability was
still relatively tight.”
Read the full story
http://blogs.wsj.com/economics/2015/07/08/fed-officials-finally-see-u-s-housing-sector-on-the-upswing/
54 Percent of American adults living with friends or relatives plan to
move out within a year
Source: Business Insider
The number of shared households – those with an adult that does not own the home or is not the
significant other of the homeowner – has taken off to incredibly high levels during the economic
recovery. Such shared households have put a drag on household formation, which is an important
economic driver leading new house construction and growth. According to a survey done by UBS
economists, 13 percent of Americans aged 21-34 live as the other adult in a shared household. Sixtyseven percent of people who were not expecting to move out within the next year said they were
eventually planning on it, up 12 percent from November.
Read the full story
http://www.businessinsider.com/54-of-people-living-at-home-pan-to-move-out-within-a-year-2015-7
HUD report shows housing market recovery slowdown
Source: Inman
The Department of Housing and Urban Development (HUD) is painting a different picture when it comes
to describing market conditions in comparison to many economists, mortgage data analytics providers,
and the government-sponsored enterprises. According to HUD’s Office of Policy Development and
Research, the housing market recovery experienced a slowdown in the first quarter. HUD notes that
construction starts fell for both single-family and multifamily housing, and first-time home buyers
accounted for 29 percent of all sales transactions this quarter, well below the historic norm of 40 percent.
Read the full story
http://www.inman.com/2015/07/08/hud-report-shows-housing-market-recovery-slowdown/
Harsh reality for young home buyers
Source: Union-Tribune
Younger Californians hoping to buy a home may be graying by the time they can save enough to buy a
median-priced home in many parts of California. For instance, Trulia says it would take 18 years for a
San Diego household of college-educated young professionals earning the median income to afford a
median-priced home in the county. A household earning $89,000 per year that can save 10 percent of its
income for 18 years would then have enough money for the standard 20 percent down payment on a
median-priced home of $589,000 in the county. It takes 29 years to save for a 20 percent down payment if
a household has a college degree; the cities San Jose and Los Angeles round out the top three.
Read the full story
http://www.sandiegouniontribune.com/news/2015/jul/08/trulia-down-payment-savings-real-estate/
Here’s Why Economists Are Worried About a New Housing Bubble
Source: Fiscal Times
According to a report by CoreLogic, home prices in 33 states are at or within 10 percent of record highs,
after posting their 39th consecutive month of year-over-year price gains. Prices are so high in certain
areas that some economists are starting to worry about localized bubbles. Relatively low mortgage rates
have helped fuel the price gains. In cities like San Francisco, where there is limited supply and high
demand, prices are growing at a double-digit clip. CoreLogic economists expect prices to increase 5.1
percent year-over-year in June.
Read the full story
http://finance.yahoo.com/news/why-economists-worried-housing-bubble-120000247.html
U.S. Construction Spending Hits New Postrecession High
Source: Wall St. Journal
According to the Commerce Department, construction spending advanced 0.8 percent to a seasonally
adjusted annual rate of $1.036 trillion in May, the highest level since October 2008. Such spending has
been climbing steadily since December and in March broke $1 trillion for the first time since 2008.
Overall, spending on all private construction – residential and nonresidential – was the highest since July
2008. The latest figures suggest stepped up activity from builders will help boost the labor market and the
overall economy.
Read the full story
http://blogs.wsj.com/economics/2015/07/01/u-s-construction-spending-hits-new-postrecession-high/
Talking Points …

RealtyTrac’s May 2015 U.S. Home & Foreclosure Sales Report shows 24.6 percent of all single
family home and condo sales in May were all-cash purchases, down from 28.5 percent in the
previous month and down from 30.4 percent a year ago.

The cash sales share in May was close to its long-term average going back to January 2000 of
24.8 percent and well below its recent peak of 42.2 percent in February 2011.

The share of institutional investors — entities purchasing at least 10 properties in a calendar year
— dropped to 2.4 percent of single family home sales in May, a record low going back to January
2000.