Plano hits the top 20 when it comes to best places to rent, we have a look at June’s single-family and multi-family housing starts, and homeownership is up for one key age group. We have all this and more in this week’s roundup of real estate news.
Best Places to Rent? In North Texas, Start in Plano
If you want to look for the best places to rent in North Texas, you’re going to need to head to Plano, where the city came in 19th out of 180 cities in a new report on the best and worst places to rent by personal-finance website WalletHub.
“To help prospective renters get the most bang for their buck, WalletHub compared more than 180 U.S. cities based on 23 key indicators of rental attractiveness and quality of life,” the company explained. “The data set ranges from historical rental-price changes to cost of living to job market.”
In besides Plano, Grand Prairie (40), Arlington (54), Fort Worth (58), Irving (93), Garland (103), and Dallas (106), were the other North Texas cities in the report.
And statewide, El Paso came in 9th, Brownsville 87th, San Antonio 92nd, Laredo 100th, Corpus Christi 119th, and Lubbock 165th. Laredo also had the lowest cost-of-living index, 77, which is 2.5 times lower than in San Francisco, the city with the highest at 196.
Single-Family Starts Improve in June
Estimates from the U.S. Housing and Urban Development and Commerce Department indicate single-family starts improved in June, economist Robert Dietz with the National Association of Home Builder’s Eye on Housing reported recently.
“According to estimates from the U.S. Housing and Urban Development and Commerce Department, single-family starts improved in June, consistent with the recent stabilization of the NAHB/Wells Fargo Housing Market Index (HMI),” Dietz wrote. “Single-family starts increased 3.5 percent to an 847,000 seasonally adjusted annual pace in June. However, total housing starts were down approximately 1 percent (1.253 million annual rate) due to a decline in apartment construction. Multifamily starts declined 9.2 percent to a still-strong 406,000 annualized rate after an elevated reading in May.”
Year-to-date, single-family starts are 4.9 percent lower than the first six months of 2018. Dietz says that the NAHB’s forecast and other forward-looking data suggests that stabilization followed by slight gains thanks to mortgage interest rate declines could be in the future.
Single-family permits are down 6.1 percent year-to-date, but the number of single-family units authorized but not under construction declined in June to 85,000 units, down from 90,000 a year ago — a potential sign that permit growth could be coming.
“We expect additional single-family growth, as areas beyond the exurbs respond to for-sale housing demand and ongoing healthy labor markets,” Dietz said.
Regionally, single-family starts are down 13.6 percent in the Northeast, 13.4 percent in the West, 8.3 percent in the weather-challenged Midwest (but improving) and up 1 percent in the South – the only region with net gains. As of last month, there were 519,000 single-family homes under construction, and 616,000 apartments under construction (the highest count since April 2017).
Homeownership Up Among People Under 35
Although overall homeownership was down slightly in the second quarter of 2019 (64.1 percent versus 64.2 percent), and homeownership is still lowest in the under age 35 bracket at 36.4 percent, that younger bracket is the one that posted an increase in 2Q 2019, a new report from Zillow said.
The homeownership rate was highest in the Midwest at 68 percent, followed by the South at 66 percent. It was highest for the 65-plus age group at 78 percent, Zillow Director of Economic Research Skyler Olsen said.
“Homeownership rates repeated the declines of the previous quarter, albeit less dramatically. The declines we’ve seen in recent quarters are erasing gains we started to see in 2016,” she wrote. “The continued decline was more dramatic in older age brackets. In a surprising turn, while their older peers have apparently been pulling back, the homeownership rate in the under-35 age bracket increased.”
“This goes against the abrupt slowdown in home value appreciation in the entry-level market: As home values exploded over 2017 and 2018, incomes were dwarfed,” Olsen continued. “By 2019, some buyers simply couldn’t save enough for a down payment and pulled back from the market, causing sales and home value appreciation to slow dramatically. Given the affordability challenge of saving for that down payment, this could be a testament to the ambition of younger households to break into homeownership.”
The more modest decreases in homeownership in the second quarter of 2019, Olsen said, could show that a slowdown isn’t going to be terrible, but instead a “momentary breather” that acknowledges that the home value appreciations of the last two years were not sustainable. However, she also stressed that while the market may look more “sane,” it’s still not a recovery.
“In most age brackets, homeownership rates are nowhere near their levels of the late 1990s, before the housing bubble. This is particularly true for 35- to 44-year-olds, whose homeownership rate remains over 5 percentage points below the rate in June 1995 (59.4% versus 65.1%). The only two age groups that approach or exceed pre-bubble years are the ones lucky enough to have dodged the mother of all boom and bust cycles:
- The over 65 age bracket — who owned homes and built equity for a much longer period before all the trauma in housing — was less likely to fall into negative equity and foreclose, and so homeownership rates remained stable.
- Households currently in the under 35 age bracket simply didn’t own property yet.”
Olsen also found that the Black/White housing ownership gap is increasing. For white and Hispanic households, homeownership rates are higher than the mid-90s. For Black households, recovery is negligible, and gains made at the end of 2018 have all but been erased in the second quarter of 2019.