The decade in 7 stats: Housing facts to blow your mind
2019 was a wild year in the housing market, full of surprise drops, innovative ideas and new opportunities. High demand kept competition stiff in certain hot markets, while mortgage rates continued a surprising decline dating back to fall of last year. As we look toward 2020, we’re also taking a look back at the last decade with seven surprising facts that explain where the housing market’s been, and where it might be going.
1. Mortgage rates ride a rollercoaster—but are at historic lows now
As recorded by Freddie Mac, average rates for 30-year fixed rate mortgages have been on a journey since 2010, with periods of peaks and valleys. Rates topped at 5.10 in April 2010, before starting a downward descent to 3.35 at the end of 2012. Rates jumped quickly in June 2013 and November 2016 and hit recent highs of 4.87 in November 2018, but since then have been on a steady decline. While November’s 3.70 isn’t the lowest in the last ten years, it’s well near historic lows, making now an attractive time to buy.
2. Millennials purchase with lower down payments than boomers—but pay more
On average, millennials are only putting down 9% of home value as a down payment, as compared to baby-boomers (11%). Interestingly though, they’re still paying more than baby boomers. According to surveys from Porch.com, boomers paid an average down payment of $15,852.10, while millennials made an average down payment of $17,579.42. One possible explanation is that boomers are often downsizing into smaller homes with a lower price point, while millennials are opting for the first home and often want space to grow.
3. Incomes struggle to keep pace with home values
Since bottoming out following the housing bubble and accompanying Great Recession, home values have been on an upward climb. Unfortunately, average incomes have not kept pace. While home values rose 50% over the past seven years, household incomes rose only 11.3% in real terms from 2012 to 2017. Said another way, the price of typical home as increased by more than half of an entire year’s median income, making it more difficult for buyers to keep up.
4. Can ADUs save San Francisco’s housing problems?
Known by a number of names in the past like ‘Granny flats’, ‘coach houses’ or ‘accessory apartment’, Accessory Dwelling Units (or ADUs) have appeared as a potential solution for urban centers that lack affordable housing. According to a Terner Center for Housing Innovation, 1,970 Los Angeles residents filed ADU applications in 2017, compared with only 90 in 2015. And after San Francisco passed legislation to ease restrictions on the creation of ADUs, city planners saw ADU applications jump from 242 in 2016 to 1046 by the end of 2017 . While the results so far are mixed, ADUs might be one tool to help solve the housing affordability crisis in many high-density markets.
5. Buyers may dabble online, but agents still rule
Continuing the decade-long trend, the internet continues to dominate buyers’ searches for their new homes. According to the NAR, 95% of buyers used the internet at some point in their home search, and 50% found the home they eventually purchased online. While e-buyers have started to proliferate in towards the end of the decade, 86% of homebuyers used a real estate agent to complete their home sale.
6. It pays for VA homebuyers to be careful—and shop around
The mortgage product with the most amount of variability in terms of the mortgage rate quoted is VA loans. Among all mortgage products, VA loans had the highest APR percentage point variability, varying as much as 1.09 points. That means the rate quoted for VA homebuyers can vary more widely than other financing products. With so much variability for VA lenders, it’s important to work with a quality lender with a strong track record of working with veterans.
7. When it comes to AC vs. Mom, AC wins
Turns out, people value creature comforts more than they need to be near friends and family. When asked about the factors that are most important when selecting a home, respondents consistently rank having air conditioning as more important than being close to family or friends. Interestingly, results hold for both renters and buyers, and across all income brackets. So, it turns out family isn’t everything (at least during summer).