From the Desk of Bob Caldwell

Real Estate News 4-30-13

Nearly 21 million Americans (29.3 percent of homeowners nationwide) own

their homes outright, unencumbered by a home loan, according to a recent Zillow analysis of

housing finance data. Analyzing data through the third quarter of 2012, Zillow found that 20.6

million homeowners nationwide own their homes free and clear of debt. Among the nation's 30

largest metro areas included in the study, Pittsburgh (38.6 percent), Tampa (33.2 percent), New

York (29.7 percent), Cleveland (29.4 percent) and Miami (28.9 percent) had the highest

percentage of free-and-clear homeowners. A number of elements influence the percentage of

free-and-clear homeowners in a given area, including median home values. Zillow found that

areas with lower home values generally have higher outright homeownership rates, as smaller

loan amounts are easier to pay back more quickly. Demographic factors including the age and

credit rating of primary borrowers also influence free-and-clear homeownership rates. Zillow

found that 65- to 74-year-olds are most likely to be free-and-clear (20.5 percent), followed by 74-

to 84-year-olds (17.9 percent). This is attributed to the fact that the longer someone owns a home,

the longer they have to pay off their home loan. Interestingly, when examining free-and-clear

ownership rates as a percentage of homeowners in various age groups, Zillow found 34.5 percent

of 20- to 24-year-old homeowners are free of debt. Source: Zillow

Price and proximity to work are key concerns for first-time homebuyers, while trade-up buyers

tend to be most focused on the design of the home and the neighborhood, according to

"Characteristics of Home Buyers," an analysis of the recently released 2011 American Housing

Survey (AHS) by the National Association of Home Builders (NAHB). The biennial survey, which

is conducted in odd-numbered years by the U.S. Census Bureau, covers about 6.8 million home

sales that occurred in 2009 and 2010. NAHB's analysis additionally compares the homes that

buyers purchased with what they say they want using results from "What Home Buyers Really

Want," a new consumer preference survey published by the association. "Among first-time

homebuyers, price was the most frequently cited reason for selecting a particular house, with a 38

percent share. At 30 percent, proximity to work was the most frequently cited reason for choosing

a specific neighborhood," said David Crowe, NAHB's chief economist. "The majority of trade-up

buyers (36 percent) cited the design of the home as the primary reason for selecting a particular

house, with 28 percent citing the looks and design of the community as the reason for choosing a

specific neighborhood." More than 90 percent of the sales reported in the 2011 AHS were existing

homes, a significant increase from previous years. "Sales of new homes were very low in 2009 and

2010 due to the unique circumstances surrounding the Great Recession and the housing market

crisis. We expect that situation to turn around as the housing market recovery takes hold," said

Crowe. "More than half (55 percent) of the people surveyed for 'What Home Buyers Really Want,'

NAHB's consumer preferences study, said they would prefer to purchase a new home rather than

an existing home." There's good reason for that preference. New homes provide buyers the

opportunity to choose finishes, fixtures, flooring and more. And they are apt to have the other

elements that buyers want including open design, up-to-the-minute kitchens and baths, and features

such as a laundry room and walk-in pantry that help with organization and storage. There is also

growing interest in single-story homes, and energy efficiency continues to be a concern. In fact,

nine out of 10 buyers surveyed would prefer to purchase a home with energy-efficient features and

permanently lower utility bills rather than to buy a home without those features that costs two to

three percent less. Source: National Association of Home Builders

Renters insurance seems undervalued by both apartment and single-family home dwellers. In fact,

only 34% of home and apartment renters have insurance, according to a study from

InsuranceQuotes.com. When surveyed, 60% of people incorrectly guessed $250 to be the annual

cost of renter's insurance. About 21% of individuals interviewed thought renter's insurance wouldcost them as much as $1,000 per year or more.

In reality, the true cost of renter's insurance is only $185 per year. As for why few buy renters insurance, 57% of those interviewed said their

apartment or home has decent security. About 52% said renter's insurance is too expensive, another

47% said their landlords already have insurance. "Renter's insurance is a lot more affordable than

most people think," said Laura Adams, senior insurance analyst at InsuranceQuotes.com. "Most

renters don’t realize that their landlord’s insurance usually only covers the structure and not the

renter’s belongings. And even in a safe area, renters can fall victim to theft, fire, water damage or

another calamity." Source: HousingWire

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"From the Desk of Bob Caldwell" Blog, Copyright 2013 Bob Caldwell