Best Regions for Owning or Renting a Home

 According to the Bureau’s Home Vacancies and Homeownership report, the Midwest region of the country has the highest homeownership rate at 70.3% in the first quarter of 2023 and the South followed with 67.3%. If you are in search of a home to rent, then your best bet is to look in the South or Midwest regions of the US if you need to rent something in a hurry.

The U.S. Census Bureau agreed, reporting these two regions have the highest homeownership rates. The remaining regions reported were the Northeast with 62.7%, and the West with 61.9% which was up 1.7% from the same time last year. In fact, the rental vacancy rates were higher in the South at 8.3% and Midwest at 7.5% than the West at 4.3% and Northeast at 4.1%.

If you are looking to rent or purchase a home, contacting a local Realtor is the best way to go. A Realtor will be able to help you with what the best way to go for you might be. They also are familiar with the housing market and the Bureau’s report Owning or Renting the American Dream.

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A Gain in Single-Family Starts Seen in May

 The U.S. Department of Housing and Urban Development and the U.S. Census Bureau’s data shows a positive outlook when it comes to single-family starts. A good part of this is to give credit to limited existing inventory and improving supply chains.

May saw an increase of 21.7% to a seasonally adjusted annual rate of 1.63 million units.The May reading of 1.63 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. This caused the single-family starts to increase 18.5% which is still 6.6% lower than seen a year ago.

According to a NAHB/Wells Fargo HMI survey, builder confidence and housing starts are improving because of improvements to the supply chain. The start of the year though still puts it down 24% on a year-to-year basis. Single-family completions are only down 1.2% which is good news for the inflation.

Even though on a regional and year-to-date basis it is down in all four regions overall permits increased. Each region came out as 21.7% lower in the Northeast, 24.7% lower in the Midwest, 16.5% lower in the South and 24.1% lower in the West. Permits went up 5.2% to a 1.49 million unit, single-family up 4.8% to and 897,000 unit rate, and multi-family up 5.9% to an annualized 594,000 pace.

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Is Today’s Current Housing Market A Challenge Or An Opportunity For Homebuyers?

COVID-19 caused havoc on the housing market, especially due to health scares and stay-at-home orders.  During the pandemic home buyers were up against low home inventory which caused bidding wars.  Even though we are still seeing these challenges, many professionals in the industry say they are now a buyer’s opportunity.  In today’s current the inventory is still low but buyers are not as eager due to the higher mortgage rates. 

The low inventory is still a challenge because of underbuilding since the market crash in 2008. The current moderating of demand is slowing the pace of home sales which is starting to even out so builders are able to catch back up. For the buyer, this means there are more options to choose from.  Good news, as this will also lead to fewer and fewer bidding wars as home buyers have more options.  According to the National Association of Realtors (NAR) Realtors Confidence Index bidding wars are letting up month-over-month.   The average number of homes sold between April 2022 – June 2022 are as follows: April 5.5, May 4.2 and June 3.4.   Those that have been outbid for the past two years can see the light at the end of the tunnel.

If you are in the market for a new home, it is still a good idea to consult with a local sales agent who can guide you through the process.  With an agent, you will definitely make the strongest and best offer upfront.  Partnering with a real estate agent will just ramp up your home buying experience.

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High Home Prices Saw a Spike Due to the Change in the Way People Live

 The pandemic has shifted our normal in more ways than one. During the stay-at-home orders, we learned to live, work and play from our home. Studies show that working from home played a huge part in the increase in home prices. Home prices saw a 23.8% increase during the pandemic according to Zillow's home price index between December 2019 and November 2021.

Everyone had to learn to do most anything remotely from home. Working remotely allowed us the flexibility to live where we wanted even if it was farther away from our place of work. It started a trend of buying larger homes to accommodate the live, work, and play way of life from our home.

"There hasn't been a peacetime period where we have changed the way we do work in such a quick fashion," Johannes Wieland an associate professor of economics at the University of California, San Diego said. "Suddenly, we are moving further away from where our work is located. We don't need the office space. We now need this home space for work."

Two factors that played a big role in rising home prices according to the Federal Reserve Bank of San Francisco and the University of California, San Diego were the demand for more house and moving to a warmer climate. Wieland suggests that the evolution of remote work is likely to have a large impact on the future path of home prices and inflation.

"We were pretty shocked remote work had this impact, once we saw the estimates," Wieland said. "We thought about how people moving to different locations would be important. And it is. But it is the people who are remaining in a metro area -- the people who need more space at home if they work at home -- that is really pushing up prices. That is the majority of the story."

This finding is backed by the economists at Zillow. The shift has been deemed the "Great Reshuffling" and can contribute to the influx of demand for larger housing in warmer climates. Before the pandemic, economists saw an increase in home purchases in Austin, Texas, and Raleigh, North Carolina, but this influx grew greater in size to more areas once the pandemic hit. Now people can choose where they want to live because they are not tied down to moving close to work.

"There is more remote work where the weather is nice," Wieland said. "When you're not tied to a location because of your job, you can choose where you want to be. Many of these places...are attractive to people who can move to a place for lifestyle and not for work."

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St. Tammany Parish Council Delays Moratorium on Residential Rezoning

 St. Tammany Parish Council will have a proposed moratorium that will ban rezoning that will increase subdivision density. The proposal will not appear on the agenda until late spring. Parish President Mark Cooper believes the moratorium will help with accurate planning and assessing for growth in St. Tammany.

"The reality in St. Tammany Parish is that development is outpacing infrastructure improvements and has been for years,” said Cooper.

Originally the moratorium was to be put on the agenda for the March 3rd vote but was delayed. Jerry Binder explained that the agenda for March 3rd's meeting already had nine zoning appeals and thirty proposed ordinances. Five of the agenda items were to overturn Zoning Commission denials of rezonings for Timber Branch II, a controversial development.

The moratorium would not affect any commercial-zoned properties and would not apply to any development of any property under its current zoning. The purpose is for the moratorium to halt any rezoning or resubdivision of residential properties that would allow density greater than one house per acre.

Many residents are concerned and want the moratorium to pass. They are frustrated with the overdevelopment in their community that is negatively affecting the roads, drainage, water, and sewage. In fact, a group called the Concerned Citizens of St. Tammany has suggested to the council to not allow any high-density appeals to be approved until the moratorium is voted on.

"The time has come when we should stop codling developers seeking discretionary rezoning," says Rick Franzo, a member of the Concerned Citizens of St. Tammany.

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Five Financial Obligations Every Homeowner Should Know

Buying a home can be both stressful and exciting. Homeownership is an important life event, especially for first-time homebuyers. Understanding these five financial obligations can help your journey be less stressful.

1. Don’t be fooled by your mortgage pre-approval amount

Getting a pre-approval is the first step on the journey of owning a home. A pre-approval letter from a mortgage lender does not mean you have it in the bank so to speak. A mortgage pre-approval is only just assurance from a lender that the buyer is in good financial standing to take on a mortgage of a certain size.  Just because you are pre-approved for a certain amount, doesn't mean you can afford it. Your pre-approval does not equal your actual budget. For example, even though you are approved for $300,000 doesn't mean you can pay the payments for a $300,000 mortgage.

2. Closing costs can add up—and be complicated

Closing costs are out-of-pocket expenses which include title insurance, notary fees, and the cost of the deed. Buyers can ask for sellers to pay closing costs but it is not to their advantage in the current seller's market.

“Some loan programs only allow a certain percentage of the sale price to be given to the buyer as a credit,” says Joe DiRosa, a real estate agent with RealtyTopia in Pennsylvania.

That means that if you’re offering $200,000 for a house and your lender only allows you to accept 2% in closing costs, you shouldn’t ask for $5,000—that would be $1,000 down the drain since you can only accept up to $4,000 in credit. Before you make an offer, ask your lender if your loan institutes a limit on closing cost credits.

3. PMI isn’t actually the devil

PMI stands for private mortgage insurance and has been characterized as both a blessing and a curse. PMI is a safety net for mortgage lenders when homebuyers do not put 20% down. It covers the lenders if the homebuyers default on their mortgage. The PMI is an additional payment on your mortgage payment. Unlike your principal, PMI does not add to your equity. Once a homeowner does have 20% equity, you can ask to have the PMI removed.

4. You might have to make escrow payments

Escrow simply refers to the separate account where that money is held; basically, our lender sets aside the money for taxes and insurance, which acts as a safety net to ensure that we sock away enough money for those expenses.  So when you have a loan with PMI, you have to pay money into an escrow for property taxes and home insurance.

5. You need to budget for surprises (and your own mistakes)

There will definitely be unexpected expenses in homeownership. Even if you depend on your clean report from the home inspector, something could come up the next day. A home inspector gives the dishwasher an A+ but the next week after you move in and go to wash the dishes it won't start.

Homeownership is a great investment, but you have to plan ahead. A local Realtor can help you navigate and find your perfect dream home.

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Huge Gains in Housing Starts From October 2021 to November 2021

 The U.S.Department of Housing and Urban Development and the U.S. Census Bureau reported an 11.8% rise month-over-month to a seasonally adjusted rate of 1.68 million units from October 2021 to November 2021. The increase showed a double-digit gain caused by the low housing inventory and rising builder confidence. Single-family homes saw an increase of 11.3% to 1.17 million units and multifamily new construction saw an increase of 12.9% to 506,000 units.

“Breaking an eight-year trend, in recent months there have been more single-family homes under construction than multifamily units,” National Association of Home Builders chief economist Robert Dietz said in a statement. “Moreover, despite some cooling earlier this year, the continued strength of single-family construction in 2021 means there are now 28% more single-family homes under construction than a year ago. These gains mean single-family completions will increase in 2022, bringing more inventory to market despite a 19% year-over-year rise in construction material costs and longer construction times.”

"Mirroring gains in the HMI reading of builder sentiment, single-family housing starts accelerated near the end of 2021 and are up 15.2% year-to-date as demand for new construction remains strong due to a lean inventory of resale housing,” Chuck Fowke the chairman of the NAHB said in a statement.

“The bottom line is we need more homes and it will take time to reduce the housing stock ‘debt’ in the face of growing demand,” First American deputy chief economist Odeta Kushi said in a statement. “But today’s housing starts report, in combination with a positive builder’s sentiment report, sends an optimistic message about the housing market as we enter 2022.”

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St. Tammany Parish Libraries Are the Place To Go

The pandemic closed most public places for a good part of the last two years. Places are slowly starting to open back up with new procedures in place to help stop the spread of the virus. The St. Tammany Parish Library is one of them and is now open for residents to enjoy.

This fall the library will be pack with things for patrons to be involved in. The only difference, many events will be virtual programming or in-person outdoor events. Each library will maintain the rule of social distancing and the libraries have been redesigned to incorporate safety standards and features to keep patrons and library staff safe.

Masks will be required for everyone visiting the library ages five and older. Under Governor John Bel Edwards' indoor mask mandate masks must be worn by both vaccinated and unvaccinated patrons and workers. Computers will be open but only every other computer may be used and sanitizing supplies will be provided by the library.

If patrons are still leery of visiting the library, the libraries wills still offer curbside service and free wi-fi will be available in the parking lots of each library. The small libraries Abita Springs, Lacombe, Pearl River, Lee Road, Folsom, and Bush will now have evening hours on Wednesday nights.

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Investing Your Money In Real Estate Versus Stocks

A study conducted by the Federal Reserve Bank of New York found that the majority of homeowners believed investing in their house over the stock market was a better investment. In fact, over 50% of the households surveyed in the New York Fed survey said they would choose to invest in a rental property versus the overall stock market.

The SCE Housing Survey was conducted in February 2020, October 2020 and February 2021. Most data confirmed that housing represents the largest asset owned by most households and is a major means of wealth accumulation, particularly for the middle class. Those surveyed were asked what they would say to a couple in their early 30's when it comes to investing their money. Over 90% of the respondents said they would invest in a primary residence over the stock market.

The study did see a change from February 2020 to February 2021 in people's outlook on a home. Respondents chose high house prices and lower volatility in 2021 versus 2020 respondents who selected the choice of desired living environment that provides stability. This change has been pinned on the COVID-19 pandemic. The survey showed a dip in October 2020 of preference for housing. Consumers were worried during the pandemic about health safety and job stability.

Overall the survey highlights the importance that is currently put on housing as investments. Investors and homeowners alike feel that the housing market is currently more stable than the aggregate stock market.

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2021 Sees A Gain in Single-Family Permits

The first month of 2021 had a 19.2% year-over-year increase over January 2020 for single-family permits. In the first month 83,921 were issued nationwide which was an increase in all four regions. Midwest reported a 21.5% increase, the Northeast saw a 20.7% increase, the South a 20.3% increase and the West saw a 15.1% increase.

From January 2020 to January 2021 46 states and the District of Columbia experienced growth in single-family permits.  The highest growth rate was seen in South Dakota with a 104% increase.  Montana was one of the four states that saw a decline with a 15.8% decline.

At the local level, below are the top 10 metro areas that issued the highest number of single-family permits.

Metropolitan Statistical Area	Single-family Permits: Jan (Units #YTD, NSA)
Dallas-Fort Worth-Arlington, TX	4,330
Houston-The Woodlands-Sugar Land, TX	4,258
Phoenix-Mesa-Scottsdale, AZ	2,656
Atlanta-Sandy Springs-Roswell, GA	2,622
Tampa-St. Petersburg-Clearwater, FL	1,954
Austin-Round Rock, TX	1,940
Charlotte-Concord-Gastonia, NC-SC	1,506
Washington-Arlington-Alexandria, DC-VA-MD-WV	1,335
Jacksonville, FL	1,275
Nashville-Davidson–Murfreesboro–Franklin, TN	1,208

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Reform of the Housing Finance System a Top Priority

The National Association of Home Builders (NAHB) created a white paper in 2012 called “A Comprehensive Framework for Housing Finance System Reform” which recommended utilizing both public and private sources of housing capital to keep the current federal government housing agencies. Recently NAHB has amended the 2012 white paper regarding the advancing of housing finance so there will be a secure and strong national financial market, job market and economic growth.

This is important when it comes to the housing market.  Without housing finance there would be no reason for new

developments and construction of new housing around the country. The home building industry is dependent on the housing finance system. One of the biggest hindrances mentioned in the white paper are the credit challenges home builders and home buyers are still facing that stemmed from the Great Recession.

The white paper clearly defines the importance of federal government support within the new system but limits the extent of the federal government’s duties. Conventional mortgages will be supported by private capital and a privately funded, mortgage-backed insurance fund with a federal government backstop to ensure it will be covered in case of a cataclysmic occurrence such as what happened in 2008.  Now the housing finance will be more private-sector with Fannie Mae and Freddie Mac transforming into a private-sector oriented system.

NAHB has challenged Congress and federal regulators to redefine housing finance reform because every American should have a decent place to live as stated in The Housing Act of 1949. 

Homeownership is one of the best financial decisions one could make and proves to be a stable investment. It provides solid jobs for Americans through home building and manufacturing products used in construction.  Hopefully these steps and challenges will reduce the risk that America will be hit by another Great Recession.

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