All-Cash Investment Home Prices Rise 5.4 Percent

Prices for investment properties purchased without leverage increased at a greater rate than traditional housing, according to June data released by HomeUnion. All-cash prices jumped 5.4 percent year-over-year to a median price of $160,000, while the owner-occupied median sales price grew 3.3 percent to $253,600.

"As global economic upheaval weighed on investors decisions, single-family rental (SFR) investment homes remained a safe haven for many investors," explains Steve Hovland, director of research for HomeUnion. "Prior to the recent Brexit vote and ongoing uncertainty in the global equity markets, investors parked capital in real estate for its stable returns, which has resulted in higher investment home prices."

"Owner-occupied home prices are hovering near all-time highs, which is keeping many potential buyers on the sidelines and slowing price growth," adds Hovland. Sales price increased at a healthy clip, indicating ongoing stability in the housing market, partially fueled by historically low interest rates. The overall median sales price - including both owner-occupied and investment housing - increased 3.9 percent year over year to $234,500 in June.

For more information, visit www.homeunion.com.

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Shoppers: 5 Ways to Find the Best Deal

The best part about scoring a deal is feeling like you did! From ad-watching and coupon-saving to dedicated comparison shopping, there are many ways to get a deal when shopping. According to the Huffington Post, these five ways are best:

1. Black Friday Sales - Officially opening the holiday buying season, Black Friday sales in-store and online offer some of the year's best prices on everything from electronics to household goods. Both online and brick-and-mortar retailers often publish prices in advance, and quantities are sometimes limited, so the early bird nearly always gets the buy.

2. Craigslist - The online classified service, now available globally, boasts bargain prices on new and used goods right in your neighborhood. (Keep in mind, however, that face-to-face interactions with strangers can be risky-if you are purchasing an item off Craigslist, insist on meeting the seller in a public place to conduct the exchange.)

3. eBay - The leader in online auctions, eBay remains the source for deals on everything, from appliances to xylophones. Once you open an account, you can bid on auctions, purchase an item immediately with the "Buy It Now" price, or use eBay's "Best Offer" tool to negotiate a deal.

4. Honey - Honey is an app that does the coupon-clipping for you. Once installed, the app searches for and applies coupon or discount codes to your shopping cart when you're ready to check out. It works with well over 100 stores, including Home Depot.

5. Retail Price-Matching - Retailers are losing out to online sales, so if you find a deal you like online, try matching the price in-store. Each retailer has rules about price-matching, but if you print out the online offer and bring it with you (or open it on your smartphone in the store), you may find you can snag the better price.

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LOW-INCOME EARNERS STRUGGLE MOST WITH MORTGAGE PAYMENTS

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​​People with low incomes spend nearly 23 percent of their income on monthly mortgage payments, compared to high-income earners, who spend 11.5 percent of their income on monthly house payments, according to a new Zillow(R) analysis.

Compared to the past, mortgage payments are very affordable for the average American because of persistently low mortgage rates. But that doesnt tell the whole story. To see how different groups are faring in terms of housing affordability, Zillow divided income earners and homes into three tiers, assuming that low-income earners buy less expensive homes, median earners buy median homes, and high-income earners buy more expensive homes in the top third of the market.

The results show that lower earners carry a heavier burden when it comes to making monthly payments. Their incomes have been largely stagnant, while low-priced homes are gaining value fastest.  Low-income earners could expect to spend nearly 40 percent of their income on housing in 2007. For people in the top third of incomes, the peak was in 2006, when they could expect to spend just over 20 percent of their income on a mortgage. 

In some large markets, the amount low-income workers spend on housing is much greater. In Los Angeles, people who earn the least could expect to spend more than three-quarters of their income on housing alone. For the top earners, mortgage payments only took up 27.5 percent of their income - a difference of nearly 50 percentage points.

"Housing affordability is a different story for low-income Americans than for median and high-earning people," says Zillow Chief Economist Dr. Svenja Gudell. "They are spending much more of their income on housing, even when they buy the least expensive homes. On top of that, we know that the least expensive homes are gaining value the fastest and are the most scarce, making it hard to find a home to buy even if you can afford one. From a high level view, mortgage affordability looks pretty good across most of the country, but its not good for everyone."

The cost of housing exceeds 30 percent of the median income, the traditional rule for housing affordability, in about one-third of major markets for lower wage earners, and is above 50 percent in Los Angeles, San Jose, San Francisco, and San Diego. By contrast, San Jose is the only place where high-wage earners can expect to spend more than 30 percent of their income on housing.

For more information, visit www.zillow.com.

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3 TIPS FROM THE RICH TO BUILD WEALTH

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​The overwhelming majority of affluent Americans accumulated their wealth not through inheritance, as is commonly believed, but through earned income and investments.

The financial editors at Money Magazine recently interviewed a sample of well-off individuals, coming up with three universal tips that may help average folks to build wealth:

1. Get There Slowly - While some attained wealth fairly quickly by starting the right business at the right time (or developing a killer app), most entrepreneurs say you can amass the better part of $1 million if you start to earn at a young age and remain persistent about saving for the long haul.

 A 25-year-old beginning at $40,000 a year, for instance, who gets 2 percent annual raises and contributes 12 percent of his/her salary each year to a 401(k), would end up with an account worth more than $1 million at age 65, assuming a 6 percent annual return and an employer match of 3 percent per year.

2. Stick with the Basics - Many wealthy people own non-traditional investments, including hedge funds, timberland, and art, but when they were asked by Money how they made their greatest investment gains, 89 percent said traditional stocks and bonds.

3. Don't Try to Out-Guess the Market - With pundits constantly predicting which stocks are heading up or down and which sectors will sizzle or fizzle, it's easy to get the impression that success lies in shrewdly shifting your money around. The majority of the rich don't buy that.

Just 14 percent asked by Money said they made the bulk of their investment gains by timing the market; the other 86 percent credited their success to good old buy-and-hold investing. They key, they said, is investing in a diversified mix of stocks and bonds, and riding the long-term upward sweep of the market.​​

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STUDENT DEBT AND AFFORDABILITY CREATE RIFT BETWEEN HOMEOWNERS AND RENTERS

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​​​​​​​​​​Despite lackluster economic growth and stark home-price appreciation in several parts of the country in recent months, roughly three-quarters of surveyed households still believe now is a good time to buy a home, but there's a considerable gap in morale between homeowners and renters, according to the latest installment of the National Association of REALTORS(R) Housing Opportunities and Market Experience (HOME) survey. The survey also found that roughly half of young adults with student debt are uncomfortable about taking on a mortgage.

In NAR's second quarter HOME consumer survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations, including questions on if carrying student debt is tempering their ability and appetite to take on mortgage debt.

Through the first half of the year, NAR's survey found that the share of homeowners and renters who believe now is a good time to buy a home is mostly holding steady, with 80 percent of homeowners (82 percent in March) and 62 percent of renters (unchanged from last quarter) saying it's a good time to buy. However, the share of renters who think so is down from 68 percent in December 2015, and those under 35 were the least confident that now is a good time to buy.

Lawrence Yun, NAR chief economist, says the survey brings to focus the ongoing disparity in buyer confidence between current homeowners and renters. "Existing-home prices surpassed their all-time peak this spring and have climbed on average over 5 percent nationally through the first five months of the year and even faster in areas with severe supply shortages," he said. "Most homeowners appear to realize that if they're ready to sell, they'll likely find a buyer rather quickly and be able to use the sizeable equity they've accumulated in recent years towards their next home purchase. Meanwhile, renters interested in buying continue to face minimal choices, strong competition and home prices growing faster than their incomes."

Adds Yun, "Given these affordability pressures, it's no surprise respondents earning over $100,000 and those living in the Midwest - the most affordable region of the country - are the most optimistic about buying right now."

This quarter's HOME survey also revealed that carrying student debt is causing many to be uneasy about taking on additional debt. According to the survey, roughly two-thirds of non-homeowners and half of respondents under 35 with student debt said they aren't comfortable also having a mortgage. Furthermore, of those with student debt, non-homeowners and younger adults were less likely to believe they'd be able to qualify for a mortgage if they applied.

"It's becoming very evident from this survey and our research released last month that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers," adds Yun. "At a time of quickly rising rents, mortgage rates at all-time lows and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market and are ultimately missing out on the stability and wealth accumulation that owning a home can provide."

Mostly unchanged attitudes about direction of U.S. economy, personal financial outlook
A tick under half of all households in the survey believe the economy is improving (49 percent), which is mostly unchanged since the inaugural HOME survey in December 2015. Renters, respondents living in urban areas, and those in the West were the most optimistic. On the other hand, nearly two-thirds of those living in rural areas don't believe the economy is improving.

Reflecting somewhat lessening confidence that respondents' financial situation will be better in six months, the HOME survey's monthly Personal Financial Outlook Index of all households slightly decreased (to 57.7 in June) since March (58.1), but is unchanged from June 2015.

Expanding belief that now is a good time to sell
With strong price growth prevalent in most of the country and homes selling at a quickened pace, more current homeowners (61 percent) believe it is a good time to sell compared to the first quarter of this year (56 percent). Respondents in the West were once again the most likely to think now is a good time to sell, while also being the least likely to think now is a good time to buy.

"More homeowners acknowledging this pent-up demand may perhaps mean we begin to see more supply come online in the near future," adds Yun. 

When asked about their outlook for home prices in their community in the next six months, almost all believe that prices will stay the same or rise (93 percent), which is consistent with last quarter (91 percent). Respondents from the West, those living in urban areas and renters are most likely to believe prices will go up in their communities.

For more information, visit www.realtor.org.

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WHAT'S BEHIND THE GATES? HIGHER-PRICED HOMES

Homeowners behind gates can expect an average $30,000 more for their home come sale-a premium, however, that can be offset by costly community amenities, according to research from the American Real Estate Society (ARES). The premium is due to actual and perceived benefits, such as privacy and safety, on the part of the buyer.

"This [research] provides clear evidence that homes in gated communities sell at a premium relative to comparable homes in non-gated communities," said ARES Publication Director Ken Johnson in a release. Johnson is a real estate economist at Florida Atlantic Universitys College of Business.

The premium may be less in gated communities where amenities like a clubhouse, pool or tennis court drive up maintenance costs for residents, ARES researchers found. Examining a sample of gated communities, researchers discovered a $19,500 decrease in sale price in communities with these types of amenities.

"Additional maintenance costs associated with these amenities often outweigh their benefits, and it appears that while a gate has value, additional neighborhood amenities do not always provide additional value," explained Mark A. Sunderman, one of the ARES researchers.

"From the perspective of both the buyer and the seller, this information should help each to better price property," Sunderman continued. "A good understanding of what adds value and what does not should help create increased marketability of gated homes."

"The long-held belief that gates add value is supported by the data, as long as the impact of the amenities is properly factored in," Johnson added. "This should set buyers minds to rest as to whether or not they are actually receiving a boost in value when they purchase inside a gated community."

Source: Florida Atlantic University (FAU)

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LIVING COMFORTABLY IN THESE CITIES WILL COST YOU

Hankering to wing off to Worcester, or relocate to Rochester? Wherever you're considering moving, it's important to know whether your income can sustain a "comfortable" life there.

Finder.com recently crunched the numbers to determine just that in close to 80 cities around the country.

Among the key findings of Finder.com's analysis-and shocking no one-is San Francisco, Calif. at No. 1, requiring the highest salary of all the cities analyzed, and Los Angeles, San Diego and San Jose in the top 10. In these cities, the salary required to obtain a mortgage for the average home is higher than the salary required for mortgage payments, average debt and average expenditures.

The salary needed to live comfortably in San Francisco, according to the analysis, is $180,600-the average home in the Golden Gate City costs $1,119,500. In Los Angeles, the salary needed to live comfortably is $90,244; in San Jose, $129,864.

The city with the lowest salary requirement is Jackson, Miss., where residents can live comfortably for $43,265.

The U.S. Census Bureau reports the average salary was $52,250 in 2013. In the Finder.com analysis, this figure is sufficient income to live in 36 of the 78 cities analyzed.

For its analysis, Finder.com defined living "comfortably" as:

 - Having the ability to purchase an average home (with a 20 percent down payment);
 - Having the ability to cover average per-person expenditures; and
 - Having the ability to pay off annual non-mortgage related household debt.

Using those controls, Finder.com analyzed factors such as the state's median home price, average interest rate for a 30-year, 20-percent-down mortgage, and average non-housing expenditure.

To learn income requirements for a comfortable life in your desired city, visit Finder.com.

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SURVEY: SAVING A TOP PRIORITY FOR MILLENNIALS, BUT IMPULSE SPENDING A MAJOR BARRIER

One in three millennials (34 percent) ranked saving as their No. 1 goal for the year - ahead of living a healthy lifestyle (20 percent), paying off debt (19 percent), and losing weight (14 percent). But while saving was a top priority, a majority of millennials attributed their lack of saving to impulse buying (65 percent).

According to a recent survey from the American Institute of Certified Public Accountants (AICPA) and the Ad Council, for older millennials - those born between the early 1980s and early 1990s - saving is crucial as they work toward major milestones in their lives. When asked what they were saving money toward, respondents sought to secure their future by saving for an emergency fund (40 percent), saving for retirement (22 percent) or starting a family (15 percent). They also reported saving for larger purchases like a vacation (36 percent), a new house (27 percent), a car (26 percent), home improvements (20 percent), or a wedding (8 percent).

To provide Americans aged 25 to 34 with the tips and tools to take control of their personal finances, AICPA and the Ad Council's national advertising campaign, Feed the Pig, is continuing to collaborate with new partners to deliver this critical content in a relevant and engaging way.

"Many young adults think saving is impossible," says Gregory Anton, CPA, CGMA, chair of the AICPA's National CPA Financial Literacy Commission. "While low salaries and high debt levels can certainly be barriers to saving, the key is to create a budget and stick to it. Establishing a disciplined saving strategy early in life and avoiding missteps will reap substantial long-term dividends."

In addition to impulse buying and lack of budgeting, an overwhelming majority of young adults say that their current salary (84 percent), having too many bills (81 percent), paying down debt (79 percent) and not establishing a personal budget (62 percent) are impediments to saving more. Regardless of the reason, almost half (44 percent) of those surveyed did not pay their full credit card balance each month or borrowed money from friends or family. Forty-one percent had less than $100 in their checking account, 30 percent paid a late or overdraft fee, and 23 percent missed a bill payment.

Over half (55 percent) of the young adults surveyed admitted that they were impulse shoppers, defined as making an unplanned purchase of $30 or more on a daily or weekly basis. Impulse buyers are more likely than those who never or rarely make an impulse purchase to have carried a balance on their credit card (45 percent vs. 35 percent) and have paid a late or overdraft fee (31 percent vs. 21 percent).

The Internet is viewed as a positive by millennials as an overwhelming majority (92 percent) agree that it has made it easier to get the best deal and 88 percent agree that they comparison shop for the lowest price before making a purchase. However, approximately one in four (28 percent) have seen a big ticket item they purchased for a lower price than they paid in the past year - underscoring the importance of being diligent when shopping for big ticket purchases.

"The good news is that millennials are internalizing the message that saving is important, but they still need help creating habits that stick," says Ad Council President and CEO Lisa Sherman. "We're excited to collaborate with partners like Facebook and Games for Change to create new tools and content that will help make saving easier and more accessible for millennials."

The Feed the Pig website offers a range of interactive tools, including calculators, podcasts and free subscriptions to weekly saving tips via email and text message to help foster positive saving habits.

To date, the Feed the Pig campaign has received more than $382 million in donated media through the Ad Council's model. The CPA profession launched a unified financial literacy initiative, 360 Degrees of Financial Literacy, 12 years ago. The effort brought together the AICPA, state CPA societies, and individual CPAs to address financial illiteracy.

Source: AICPA; The Ad Council

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​STUDENT LOAN DEBT A HURDLE TO HOMEOWNERSHIP

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​​The U.S. currently has a student debt load of $1.3 trillion, which accounts for 10 percent of all outstanding debt. The magnitude of the debt continues to grow in size and share of the overall debt in the economy. While this amount of debt has risen, the homeownership rate has fallen, and fallen more steeply among younger generations. To evaluate those trends, the National Association of REALTORS(R) (NAR) teamed up with American Student Assistance(R)'s (ASA's) SALT(R) consumer literacy program to conduct a survey of student loan borrowers who are current in repayment. The results are available in a new report entitled Student Loan Debt and Housing Report 2016: When Debt Holds You Back. Notably, only 55 percent of student loan borrowers are current in repayment.

Among non-homeowners, 71 percent cite student loan debt as the factor delaying them from buying a home. This is most frequently the case due to the fact that borrowers cannot save for a down payment because of their student debt. Sixty-nine percent of those who are delayed don't feel financially secure enough and 63 percent can't qualify for a mortgage due to debt-to-income ratios. Millennials are more likely to have difficulty saving for a down payment, and Gen Xers and baby boomers are more likely to have high debt-to-income ratios. For older millennials, 79 percent believe their student loan debt is delaying them from buying a home.

Among homeowners, 31 percent say student debt is impacting their ability to sell an existing home and move to a different home. These homeowners face a variety of problems: 18 percent believe it is too expensive to move and upgrade to a new home; 7 percent have problems with their credit caused by student loan debt; and 6 percent are underwater on their home.

The delay in buying a home among non-homeowners and homeowners is five years. One in five expect to be delayed three to five years. Those with higher amounts of student loan debt and those with lower incomes expect to be delayed longer from purchasing a home than those with higher incomes and lower amounts of debt.

Forty-two percent were delayed moving out of their family member's home after college, regardless of whether they were buying a home. This delay has a financial impact on both parents and the student loan borrower. Twenty-two percent were delayed by at least two years in moving out of a family member's home after college due to their student loans. While 18 percent are currently homeowners, 17 percent live with friends or family and do not currently pay rent. Forty-six percent of younger millennials live with family (both those paying and not paying rent) compared to just 25 percent of Gen Xers.

Among survey respondents, most are employed. Seventy-one percent are employed full-time, 14 percent are employed part-time and seeking full-time employment, and 10 percent are seeking employment. Sixty-seven percent received their loans from a four-year college, 31 percent from a two-year college, 27 percent from graduate/post-graduate school, and 11 percent from a technical college.

According to the National Association of REALTORS(R) Profile of Home Buyers and Sellers, among recent homebuyers, one-quarter have student loan debt and the typical amount is $25,000. The share of those with student loan debt rises to 41 percent among first-time homebuyers. Even among successful homebuyers, this amount of debt is cited as a difficulty in the home-buying process.

To find the full report, go to www.realtor.org/reports/student-loan-debt-and-housing-report.

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BUYING A HOME FOR THE FIRST TIME? WHAT YOU SHOULD KNOW ABOUT WARRANTIES

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​​​​​​​Home service contracts, or home warranties, are an important consideration in the home-buying process, especially for new homeowners.

"Homes are a major financial investment, and repairs and replacements on appliances and major systems can cost anywhere from $700 to more than $3,500," explains Tim Meenan, CEO and executive director of the Service Contract Industry Council (SCIC). "While new homeowners face numerous expenses, a home service contract can guard against these unexpected pricey repairs and replacements."

Generally, a home service contract covers repair or replacement costs of major systems or appliances that fail within the contract period-often one year. This may include coverage of the home's electrical system, HVAC unit and plumbing system. Typically, the contract can be renewed annually. Most contracts come with a nominal service fee, paid at the time of the incident.

Aside from monetary coverage, the home service contract provider will refer the buyer to a vetted contractor who can perform repair or replacement work-a boon to buyers new to an area.

Most homeowners with home service contracts call upon the contract provider two times or more each year.

The SCIC strongly recommends first-time homebuyers negotiate a home service contract before committing to a home. If you're new to home-buying, discuss your options with your real estate professional-he or she can offer counsel for your circumstances.

The peace of mind, Meenan says, is worth it.

Source: Service Contract Industry Council (SCIC)

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