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May 2014

News In Brief

By NWREporter

May 2014

  • Young homebuyers remain optimistic and see their home as a good investment, while older buyers are more likely to trade down to a smaller property to match changing lifestyles, according to the 2014 National Association of Realtors Homebuyer and Seller Generational Trends study. Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger, to 74 percent for buyers 68 and older. NAR mailed a 122-question survey in July 2013 to a national sample of 148,011 homebuyers and sellers who purchased their homes between July 2012 and June 2013, using a random sample of county records. It generated 8,767 usable responses, weighted to be representative of sales on a geographic basis; the adjusted response rate was 6.1 percent. Lawrence Yun, NAR chief economist, said the millennial generation, which is under the age of 34, is now entering the peak period in which people typically buy a first home. "Given that millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand," Yun said. "Moreover, their aspirations and the long-term investment aspect of owning a home remain solid among young people. However, the challenges of tight credit, limited inventory, eroding affordability and high debt loads have limited the capacity of young people to own." Twelve percent of all recent buyers had delayed their home purchase due to outstanding debt. Of the 20 percent of millennial buyers who took longer to save for a down payment, 56 percent cited student loan debt as the biggest obstacle. Fifteen percent of buyers aged 34 to 48 had delayed buying, with 35 percent citing student debt and 46 percent citing credit card debt. Even with the market frictions, the study found that the largest group of recent buyers was the millennials, sometimes called Generation Y or Generation Next, those born between 1980 and 1995, who comprised 31 percent of recent purchases. That group was followed closely by Generation X, those born between 1965 and 1979, at 30 percent of the market.
  • Seattle is the nation's fifth best market for home sellers, according to Zillow Inc. The Seattle online real estate company said San Jose, CA is the nation's No. 1 market for home sellers, followed by San Francisco, San Antonio and Los Angeles.
  • Seattle's the seventh best city in the U.S. to find a job right now, according to the Puget Sound Business Journal. According to a study by WalletHub, which said it used 13 different metrics to come up with its list, Fort Worth, Texas is the top city to find a job, followed by Washington, DC, Tampa, Arlington, Texas and Austin Texas.
  • Despite weak job growth, Washington state's unemployment rate fell three-tenths of a percentage point in January to 6.4 percent, its largest single monthly drop in four years. The state's economy added only 3,800 jobs during the month, down from a seasonally adjusted gain of 6,700 jobs in December. Still, the state Employment Security Department took a more positive, long term view. Without adjusting for seasonal variations, the labor market grew by 61,400 jobs statewide over the past year, as reported by the Seattle Times.
  • Seattle's traffic remains the eighth worst in the United States, with drivers wasting 37 hours a year sitting in traffic, according to a recent study by Inrix. Traffic in Seattle increased 7 percent in the last year. Yet, Seattle's traffic remains well behind nation-leading Los Angeles, where drivers there sit in traffic 64 hours per year.
  • The Puget Sound Business Journal reported that the Omni Group of Vancouver, B.C., has updated its plans for a massive residential development in Seattle's South Lake Union area. The latest plans filed with the city show a two-tower 40-story development with 1,085 residential units for the block bounded by Denny Way, John Street and Fairview and Boren avenues north. In the block directly to the north, Omni plans a two-tower, 24-story residential building with 860 units. The two blocks will have a total of 44,000 square feet of retail and 1,700 underground parking stalls.
  • The qualified mortgage (QM) rule was implemented in January of 2014. It is the first of two rules that came from the Dodd-Frank Wall Street Reform and Consumer Protection Act that will impact the housing market, as reported by Tom Kelly. The law is intended to protect consumers by strengthening underwriting standards, but some have argued that the rules will raise costs and reduce access for consumers. In addition, consumers need to have rock-solid evidence of their income, employment and resources. To gain insight on the impact of the new law, the National Association of Realtors research department surveyed a sample of lenders with questions about the impact of the lending on their business and how the rule could in turn impact consumers. When asked about the extent of the QM rule's impact, 55 percent of survey respondents indicated that the QM rule would affect 2.6 percent to 20 percent of their originations. However, 20 percent of originators surveyed indicated that the changes and heightened underwriting in general would impact nearly all of their production.