Many Retirees Still Struggling with Mortgages

Many Retirees Still Struggling with Mortgages. Image courtesy of hyena reality / FreeDigitalPhotos.net

The number of seniors still making house payments into retirement has grown following the recession.

“It’s a big problem coming off the housing bubble,” says Cary Sternberg, an adviser to seniors on housing issues in a Florida retirement community called The Villages. “A growing number of seniors are struggling with what to do about their home and their mortgage and their retirement.”

Some baby boomers are finding they didn’t save enough for retirement, some may have lost their jobs prior to wanting to retire, some may have overpaid for their homes during the housing boom, some took out home equity lines of credit or dipped into their retirement funds prior to retirement. Whatever the case, a growing number are still stuck with a house payment into retire.

The Consumer Financial Protection Bureau’s Office for Older Americans says 30 percent of home owners 65 and older – or 6.5 million home owners — were paying a mortgage in 2013. That is up from 22 percent in 2001. The number of people 75 and older who still have a mortgage climbed from 8 percent in 2001 to 21 percent in 2011, according to a Federal Reserve study.

The median mortgage held by Americans 65 and older has more than doubled since 2001, blooming from $43,400 to $88,000, according to the CFPB.

In some cases, some older Americans are finding they just can’t keep up with their house payments in retirement, and some have lost their homes to foreclosure. An AARP study in 2012 found that 1.5 million Americans 50 and older lost their homes between 2007 and 2011.

Some older Americans are being forced to sell. For example, Seattle home owner Gayle Richards, 63, has two mortgages on her home that are for more than $150,000. In the Seattle-Tacoma-Everett area alone, 34 percent of home owners 65 and older were holding one or more mortgages in 2013, according to the U.S. Census Bureau. Richards, who is in the midst of divorce proceedings, says she can no longer afford to pay  her health insurance, car insurance, cellphone plan, and house payments on just Social Security disability benefits and a pension.

“I have to sell the house. I have no choice,” Richards told The Associated Press. “It’s just difficult because I don’t know where I’ll go.”

Source: “House Payments Burden More Older Americans,” The Associated Press (June 3, 2015)

What Worries Would-Be Buyers

What Worries Would-Be Buyers. Image courtesy of Ambro / FreeDigitalPhotos.net

With interest rates threatening to rise in the near future and pent-up demand at high levels in many parts of the country, buyers might feel ready to make a move. But a pair of surveys released this week reveal that many of them aren’t.

One survey from TransUnion, a Chicago-based credit information and protection company, reveals a majority of those planning on or considering buying a home in the next 12 to 18 months are unsure about what to do to improve their credit score. Nearly a third believe that closing old accounts—something that could actually harm their score—would help. They also found that a majority of the respondents were unsure about how their credit score affects the home financing process.

The survey, conducted by Toluna Analytics last month, included responses from 1,008 Americans, ages 18 to 64, who are planning or considering a home purchase within 12-18 months. Of these potential home buyers, 74 percent believe it’s important to check the accuracy of their credit report, but less than 45 percent correctly understand what their credit score even means, indicating a knowledge gap that real estate professionals can help to minimize.

You might consider tailoring your educational messages to potential home owners differently, depending upon where you work in the country. A second survey conducted last month concentrated on a specific age group, and found that knowledge gaps vary from region to region.

According to a survey from California-based Carrington Mortgage Services, millennials in the South are not only concerned about low credit scores, but they also worry that they don’t really know where to start when it comes to home ownership. By way of contrast, the survey found that Midwestern millennials are holding out on buying a home due to staggering amounts of student debt. Meanwhile, young adults in the Northeast are most concerned with credit card debt and those in western states are worried about being able to come up with enough money for a down payment.

Still, they found that more than half of the 2,000 millennials surveyed stated that they plan to buy a home within the next two years.

Sources: “Home Buyers Uncertain About How a Credit Score Affects Financing Process,” TransUnion (June 2, 2015) and “Survey by Carrington Mortgage Services Signals Down Payment Still Major Hurdle for Most Millennials,” PR Newswire (May 28, 2015)

Lower Sales Bit into REALTOR® Paychecks

Lower Sales Bit into REALTOR® Paychecks. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

The decline in sales took a chunk out of overall business activity for REALTORS® as well as their incomes in 2014, shows the newly released 2015 National Association of REALTORS® Member Profile.

“Existing-home sales didn’t surpass year-over-year levels until October, which is likely the reason the typical member had 11 transactions last year versus 12 in 2013,” says Lawrence Yun, NAR’s chief economist. What’s more, slightly fewer transaction resulted in the median gross income of a REALTOR® dropping to $45,800 from $47,700 in 2013.

“Despite the modest setback, median gross income last year was still the second highest since the downturn and up over 5 percent from 2012 (when it was $43,500),” Yun says. “Furthermore, NAR membership at the end of 2014 stood at 1.1 million, up 5.5 percent from 2013.”

The median gross income and number of transactions tended to increase with years of experience of the REALTOR®. In 2014, REALTORS® in the business for more than 16 years earned $68,200 and made 13 transactions. On the other hand, REALTORS® with three-to-five years earned less than half that amount ($37,400) and had 10 transactions.

Incomes also varied by license type, as members licensed as brokers in 2014 earned $65,300 ($66,300 in 2013), while the median earnings for sales agents fell $1,100 from the previous year to $33,900, the member survey showed.

NAR added more new members last year as the housing market recovery took hold across the country. The median years of experience in real estate remained at 12 years for the second consecutive year, but more members — 17 percent — said they had been in the business for two years or less (compared to 13 percent in 2013), according to the survey.

Also, the median age of members inched up to 57 years (from 56 years in 2013). Overall, 2 percent of all REALTORS® are under 30 years of age, 18 percent are between ages 30 and 44, and 25 percent are 65 and older, the survey showed.

Source: National Association of REALTORS®

Home Owners See Solar, Wind in Their Future

Home Owners See Solar, Wind in Their Future. Image courtesy of Danilo Rizzuti / FreeDigitalPhotos.net

The preferred energy sources for the future of U.S. homes may be solar and wind, according to a new survey conducted by SolarCity, a solar installer, and Clean Edge, a marketing research firm.

Of the approximately 1,400 home owners surveyed, half identified solar energy as the most important energy source for the future of housing—regardless of where respondents lived or their political views. Coming in second as an important future energy source was wind, followed by natural gas, increased efficiency, oil, hydro- and nuclear power.

On the other hand, the power sources that received the least public support were geothermal, coal, and biofuel/biomass.

About 87 percent of respondents surveyed said that renewable sources are important to the nation’s energy future. However, respondents said that “saving money,” not “reducing my environmental impact,” serves as the most important factor in deciding to purchase clean energy products and services. In fact, 82 percent of home owners surveyed cited saving money as the most important factor, while reducing the environmental impact was cited by 34 percent.

“Sustained double-digit growth rates for more than a decade reflect the long-term nature of this current shift to more efficient, cleaner, and environmentally friendly products and services,” the surveyors wrote. “But don’t be mistaken; as our research clearly points out, it is cost savings, much more than environmental factors, that are driving this monumental shift.”

The survey found the most popular energy upgrades that home owners are planning on for the next year are LED light bulbs (27 percent) and smart thermostats (12 percent). Fewer people cited pricier energy upgrades such as photovoltaic panels (6 percent), electric vehicles (4 percent), and heat pumps (4 percent).

Source: “What Home Owners Think About Clean Energy,” Green Building Advisor (June 2, 2015)

Amp Up Your Website’s Homepage Appeal

Amp Up Your Website’s Homepage Appeal. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Is your website’s homepage doing enough to interest buyers and sellers to contact you? Too many websites fail to maximize the power of their homepage, even though it’s often the most visited page to their website, according to a recent article at Forbes.com by contributor Neil Patel, cofounder of Crazy Egg, Hello Bar, and KISSmetrics.

“The homepage is often a battleground of competing interests, a hodge-podge of unfocused strategies, a showcase of poorly executed redesigns, and a circus of sheer confusion,” Patel says. Yet your homepage is the “entrance to your entire site. Your branding front.”

Patel says that too often, web creators fail to consider the main purpose of their website — whether that’s just to serve up listings, educate clients, sign up for a mailing list, or fill out a lead form. Patel recommends that a site’s homepage purpose be action oriented rather than information oriented.

“The unstated intent of many web pages is to ‘increase brand awareness or information.’ That’s good, but it’s neither actionable nor measurable. The best way to increase brand awareness is for your site visitors to do something,” Patel notes.

He also recommends emphasizing that central purpose of your site with calls to action throughout the site, particularly by using large buttons. Patel advises optimizing the site around that purpose as well as placing a form on the sidebar or header so visitors don’t miss it. A prominent phone number on the site’s header also allows for easy contact.

To get visitors to click on your call to action, you need to make them curious and excited to learn more, research shows.

Patel offers the following example: “Let’s say you’re a property manager selling your property management services to real estate investors. You understand their needs, their motivations, and their pain points. ‘Hey investors, your rental problems are solved! Call for the best rates in property management!'”

Patel says the load time is an important factor on your homepage, too. Half of web users recently surveyed expect a load time of 2 seconds — otherwise, they’ll go elsewhere.

Track your site’s load time as well as get more ideas of homepage fixes by inserting your URL into Google’s Page Speed Insights tool for a free report.

Source: “How to Create a Homepage That Drives Revenue,” Forbes.com  (May 19, 2015)

Your Sellers May Need Reality Check on Price

Your Sellers May Need Reality Check on Price. Image courtesy of smarnad / FreeDigitalPhotos.net

Your clients likely are overly optimistic about the value of their home, a new study finds. Home owners tend to overestimate the value of their properties by about eight percent, according to a study published in the Journal of Housing Economics.

Researchers say that the overvaluations often are from owners who miscalculate their estimations over the capital gains they’ve accumulated in the house. The study echoes similar findings from a recent survey conducted by Quicken Loans, which found a “widening gap” between what home owners think their home is worth and appraisers’ valuations.

In a recent article, The Seattle Times asked appraisers why home owners tend to overvalue their homes — besides the emotional attachment they likely have to it. The appraisers said homeowners tend to have unrealistic expectations about how much their improvements add to the home’s resale value.

“Consumers may think they can get back what they put into the improvements they’ve made over the years,” says Tom Horn, an appraiser in Birmingham, Ala. “But it doesn’t work that way.”

Appraisers also note that home owners often don’t realize that they may have over-improved their home compared to others in the neighborhood, which can lead to overestimated values. Owners may spend thousands of dollars for an ultra-gourmet kitchen when nobody else in their price point has done so, says Don Boucher, an appraiser in Washington, D.C.

Plus, home owners who install highly personal and costly remodeling items commonly don’t see the full-cost payback on those projects either. So, if a home owner installs a luxury indoor lap pool or spa for their personal desire, they can’t expect that prospective buyers will view it as valuable as they do.

Source: “Owners Tend to Overvalue Homes,” The Seattle Times (May 30, 2015)