Most Don’t Know Their Credit Score

Most Don’t Know Their Credit Score. Study Says. Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

Most Americans underestimate the importance of their credit score, with four in 10 saying they don’t know what their credit scores are, according to a new Chase Slate Credit Survey of about 1,000 Americans. What’s more, 52 percent of those surveyed say they were unaware that paying bills on time is the factor that has the largest impact on their credit score.

The survey also found that confusion exists on what is a good versus bad one. Respondents who say they have previously checked their credit score consider a “good” one to be around 719. That’s 51 points higher than the 668 that those who never checked their score considered to be good. However, researchers note, even a score of 719 does not guarantee access to credit at the best rates.

“Having healthy credit could mean the difference between achieving major life goals, such as buying a home or starting a small business, and never realizing those dreams,” says Pam Codispoti, president of the Mass Affluent Business for Chase Card Services. “Yet too many Americans don’t have access to information and tools that empower them to properly plan for the future and manage their credit health.”

Only 37 percent of Americans say they feel confident that their current credit score can help them accomplish personal goals in their life.

Credit-score knowledge and confidence can vary widely among the generations. The survey found that Generation Xers tend to be bolder about facing their credit health than other age segments. Case in point: Just 4 percent of Gen Xers say they have never checked their score compared to 19 percent of Millennials and 13 percent of baby boomers. Sixty-seven percent of Gen Xers say they know their current credit score, higher than baby boomers (60%) and Millennials (55%).

Still, Millennials were found to be the most self-assured age group when it came to credit scores. Nearly three in five Millennials say they would be comfortable disclosing their credit score to their parents, compared to only 35 percent of Gen Xers.

Nevertheless, the general population tends to be more comfortable disclosing their age (70 percent) and weight (12 percent) than their credit score (11 percent) or their income (7 percent), the survey finds.

Source: Chase Slate Credit Survey

4 Million Missing Mortgages, Study Says

4 Million Missing Mortgages, Study Says. Image courtesy of ponsulak / FreeDigitalPhotos.net

Getting a mortgage was so difficult during 2009-2013 that millions of potential home buyers were shut out of the market. In fact, the Urban Institute has attempted to put a number on just how many potential buyers may have been shut out by tight credit standards. Its estimates: 4 million missing loans over the past five years due to lenders’ stringent underwriting and borrowers with less than perfect credit who were not able to qualify for a loan.

The Urban Institute estimates that the number of “missing” loans grew from 0.50 million to 1.25 million annually between 2009 and 2013. African American and Hispanic families have been particularly affected, the study says. In 2013, the strict credit standards in place resulted in 50 percent to 38 percent less in lending to African Americans and Hispanic borrowers. For comparison, the strict standards reduced lending to white borrowers by about 31 percent. It did not reduce lending to Asian families at all, according to the study.

Tight underwriting prompted a rise in cash sales during that time, the study authors note. “We believe the rise in cash sales share reflects both limited credit availability and more limited demand for home ownership,” the study suggests. The share of cash sales rose from 18 percent in December 2001 to 38 percent in 2013.

“A tight credit box has severe consequences,” according to the Urban Institute’s report, “The Impact of Tight Credit Standards on 2009-13 Lending.” “It means that fewer families will become home owners at an opportune point in the housing market cycle, depriving these families of a critical wealth-building opportunity. A tight credit box slows the housing market recovery by limiting the pool of potential borrowers. Ultimately, tight credit hinders the economy, as it slows all the associated economic activity that comes with home buying, such as furniture purchases, landscaping, and renovations.”

Source: “The Impact of Tight Credit Standards on 2009-13 Lending,” The Urban Institute (April 2015)          

Top 10 Features for New Homes

Top 10 Features for New Homes. Image courtesy of Ambro / FreeDigitalPhotos.net

The outdoor kitchen and two-story foyers are starting to lose favor among new home shoppers, while energy efficiency and bigger closets are gaining in popularity, according to a new survey from the National Association of Home Builders. NAHB asked builders to rank home features from 1 to 5 on how likely they were to include them this year in single-family homes they build this year.

An increased interest in energy efficiency is decreasing interest in two-story foyers and rooms, Rose Quint, NAHB’s assistant vice president for survey research, told MarketWatch. “Consumers consider those spaces to be energy inefficient,” she says.

Here are some of the least likely features that builders say they will include in new homes this year:

1. Outdoor kitchen (cooking, refrigeration, and sink)
2. Laminate counter tops in kitchen
3. Outdoor fireplace
4. Sun room
5. Two-story family room
6. Media room
7. Two-story foyer
8. Walking/jogging trails in community
9. Whirlpool in master bathroom
10. Carpeting as flooring on main level

On the other hand, these home features, builders say, are most likely to be included in a new home this year:

1. Walk-in closet in master bedroom
2. Laundry room
3. Low-e windows
4. Guest room (kitchen-family-room-living room)
5. Energy-star rated appliances
6. 9-foot ceiling or more on first floor
7. Energy-star rated windows
8. Programmable thermostat
9. Two-car garage
10. Granite counter top in kitchen

Source: “Whirlpool Bathtubs are Losing Out in New Homes,” MarketWatch (April 2, 2015)

Markets Still Have Long Way to Recovery

Markets Still Have Long Way to Recovery. Image courtesy of renjith krishnan / FreeDigitalPhotos.net

At the current pace of single-family home values, the full recovery in the housing market may still be about 2.5 years away nationwide, according to a new analysis of housing data by 24/7 Wall St. But in some large metro areas, the full housing recovery may even be a decade away.

24/7 Wall St. recently analyzed home values in 50 of the largest metro areas to determine how long it would take for home values to return to their peak values since the aftermath of the housing crisis and recession.

The markets with the longest recovery periods “probably had more building and sales and home activity in general during the periods of peak values,” says Danielle Hale, director of housing statistics at the National Association of REALTORS®. “Therefore, the legacy of the aftermath of the housing crisis is a little bit sharper in these areas than in other areas.”

Also, some of the reasons for a delayed recovery in some areas has to do with the overall local economy’s performance, Hale adds. In some areas, job growth has yet to catch up to peak levels.

“There’s a really strong relationship between jobs and the overall economic performance and the housing market,” says Hale. “Economic performance as reflected in the jobs numbers is really key to understanding what’s going on in the housing market.”

To identify the housing markets with the longest estimated recovery periods, 24/7 Wall St. reviewed the number of years current home values in the 50 largest metro areas would need to reach their respective peaks at their current annualized growth rate. The following are five areas that are estimated to have some of the longest housing market recoveries:

1. Providence-Warwick, R.I.-Mass.

• Estimated years to recover: 16.8
• Percent change peak to trough: -32%
• Percent change peak to January 2015: -24.4%

2. Detroit-Dearborn-Livonia, Mich.

• Years to recover: 10.9
• Percent change peak to trough: -44.6%
• Percent change peak to January 2015: -24.6%

3. Phoenix-Mesa-Scottsdale, Ariz.

• Years to recover: 9.7
• Percent change peak to trough: -47.1%
• Percent change peak to January 2015: -27.4%

4. Las Vegas-Henderson-Paradise, Nev.

• Years to recover: 7.9
• Percent change peak to trough: -58.2%
• Percent change peak to January 2015: -38.9%

5. Riverside-San Bernardino-Ontario, Calif.

• Years to recover: 7
• Percent change peak to trough: -50.5%
• Percent change peak to January 2015: -30.2%

View the full list of housing markets with the longest road to recovery as well as more about the methodology used in the study at 24/7 Wall St.

Source: “Eight Housing Markets With the Longest Road to Recovery,” 24/7 Wall St. (March 27, 2015)

The New Hot Housing Market: Vacation Homes

The New Hot Housing Market: Vacation Homes. Image courtesy of Simon Howden / FreeDigitalPhotos.net

It’s a good time to have a vacation real estate niche. Vacation home sales jumped to a record high in 2014, according to the National Association of REALTORS®’ 2015 Investment and Vacation Home Buyers Survey. Vacation home sales climbed to an estimated 1.13 million last year, the highest since NAR began its survey in 2003.

Sales of vacation homes rose 57 percent compared to the 717,000 tally in 2013. Vacation sales in 2014 nearly doubled the combined total of the previous two years.

“Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investments,” says Lawrence Yun, NAR’s chief economist. “Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.”

Vacation home sales comprised 21 percent of all transactions in 2014 – the highest market share since NAR began conducting its survey.

As vacation home sales soared, investment purchases dropped for the fourth consecutive year, the report showed. Investment home sales in 2014 fell 7.4 percent to an estimated 10.2 million in 2014 compared to 1.10 million in 2013. The market share of investment sales dropped to 19 percent in 2014 from 20 percent in 2013.

“Despite strong rental demand in many markets, investment property sales have declined four consecutive years to their lowest share since 2010 as rising home prices and fewer distressed properties coming onto the market have further reduced the number of bargains available to turn into profitable rentals,” Yun says.

Here are some additional findings from the report:

Sales prices: The median sales price of vacation and investment homes dropped last year. The median vacation home price was $150,000, an 11 percent drop from $168,700 in 2013. The median sales price of an investment home was $125,000, down 3.8 percent from a year ago when it was $130,000.

All-cash transactions: The share of vacation buyers who paid in all-cash dropped to 30 percent in 2014 compared to 38 percent in 2013. Investment buyers who paid all-cash in their transactions dropped to 41 percent in 2014 compared to 46 percent in 2013. For those buyers who did finance their purchase with a mortgage, 48 percent of vacation buyers and 41 percent of investment buyers financed less than 70 percent of the purchase price.

Distressed properties: Forty-five percent of vacation homes and 44 percent of investment homes purchased last year were distressed properties – either a foreclosure or short sale.

Vacation buyer profile: The average vacation home buyer last year had a median household income of $94,380 – higher than in 2013 when the median income was $85,600. Vacation home buyers also tended to buy a property that was a median distance of 200 miles away, and plan to own their property for a median of six years. Forty percent of vacation buyers bought a home in a beach area, 19 percent purchased in the country, and 17 percent purchased a vacation home in the mountains.

Investment buyer profile: The average investment home buyer in 2014 had a median household income of $87,680 – less than $111,400 in 2013. The median distance of the investment property was 24 miles from their primary residence. Investment buyers purchased property for a variety of reasons, including for rental income (37 percent), because of low prices and the buyer found a good deal (17 percent) and for potential price appreciation (15 percent). Investment buyers plan to hold onto the property for a median of five years. The South was the the most popular choice for investment properties. The majority of investment buyers (37 percent) purchased a property in the South last year, followed by 26 percent in the West, 20 percent in the Midwest, and 17 percent in the Northeast.

Source: National Association of REALTORS®