The new American household: 3 generations, 1 roof.

The new American household: 3 generations, 1 roof

NEW YORK (CNNMoney) — As the economy continues to take a toll on consumers’ finances, a growing number of people are discovering that becoming roommates with mom and dad, or a 20- or 30-something son or daughter, helps to ease some of the financial pain in tough times.

As of 2010, 4.4 million U.S. homes held three generations or more under one roof, a 15% increase from 3.8 million households two years earlier, according to the latest data available from the Census Bureau.

When Alicia Moura’s father-in-law, Aecio D’Silva, retired from teaching at the University of Arizona in 2010 to pursue private-sector projects in aqua-culture and bio-fuel, he didn’t expect to wait long before his efforts paid off. But then the economy tanked, development funds dried up and his ventures languished.

Soon afterward, Alicia started experiencing some medical issues with her pregnancy and the family decided it would be best to move in together. Now everyone — Alicia, her husband, their two young daughters and the in-laws — live under one roof.

“We not only save money by having a joined household, but we save on stress, time and other resources by having in-home day care,” said Moura.

Foreclosure nightmares: 3 families fight for their homes

For multi-generational households, there is typically a nice payoff. Not only do they save money, but they are better able to avoid financial hardship.

The Pew Research Center reported that the poverty rate among those who live in multi-generational homes was 11.5% in 2009 (the most recent data available), compared to 14.6% for those who didn’t live with other adults other than their spouse or partner.

“It’s such an advantage to have multiple wage earners in the same household when the economy is still struggling.” said Nicolas Retsina, a lecturer at the Harvard Business School and one-time head of Harvard’s Joint Center for Housing Studies. Retsina said the multi-generational housing trend is one he expects will continue.

Freeing up finances. Leslie Bos, a mother of three who lives in Boston, asked her mother to move in with her when her mom had to leave her job as a social worker and go on disability due to health problems.

While Bos helped her mother out of a jam — her disability payments couldn’t even cover housing costs in Boston pricey real estate market — it has also saved Bos significantly over the years.

“The 10-year-olds still need minding after school so this has really cut my child care expenses,” said Bos, who works for a company that manages multi-family housing assets.

Census reported that “doubled up households,” those including at least one extra adult who is not enrolled in school and isn’t a spouse or partner, grew 10.7% to 21.8 million households in spring 2011, up from 19.7 million households four years earlier.

Many of those homes included adult children who flew back to the nest after being unable to find work. The number of 25- to 34-year olds living with their folks jumped by more than 25% between 2007 and 2001. Census reported.

Debby Bitticks’ adult daughter, Sandi Krul, moved back in so she could take a break from work and return to law school. Along with Sandi, came her husband and two young daughters. The entire clan live in the Bitticks’ Encino, Calif. home with Debby and her husband.

By combining the families, they are saving thousands of dollars a month in duplicate costs, giving Krul the opportunity to change the direction of her career without putting too much financial strain on her family.

Builders take note. “The recession caused doubling up to save money — and the story is still unfolding,” said Steve Melman, Director of Economic Services for the National Association of Home Builders.

The long-term impact, he said, is that more families will want bigger homes with more bedrooms to accommodate their extended families.

In fact, so many relatives are already moving in with one another that builders are starting to construct homes to accommodate them. Instead of offering a two-car garage, for instance, builders will design the house with a one-car garage and use the extra space for a guest room, explained Valerie Dolenga, a spokeswoman for Pulte Homes (PHM, Fortune 500).

Parents help their kids buy homes

Home builder Toll Brothers (TOL) has started incorporating multi-generational living arrangements directly into its designs — such as a guest suite with a kitchenette where a family room once may have been, according to Timothy Gehman, the company’s director of design. Previously, such accommodations were offered only as custom options.

When Rajendra Hariprashad, moved from Guyana to New York as a boy, he and his mom moved in with his grandparents. Now 34, Hariprashad lives in a four-bedroom home in Glen Oaks, N.Y., with his wife, 10-month-old son, parents, and his sister and brother-in-law and their two-year-old son.

All of the adults in the house are employed, making it easier to afford the four-bedroom, three-bath house, which cost about $600,000.

“But it’s more than a financial thing,” said Hariprashad. “Everyone thinks we should all have our own homes, but we’re so happy living together.”

Hariprashad said he envisions his family always staying together, even as the younger generation expands. “We’ll just need to buy a bigger house,” he said.

FHA Loan Apps Rise as Borrowers Try to Beat Fee Hikes

FHA Loan Apps Rise as Borrowers Try to Beat Fee Hikes

Mortgage applications for Federal Housing Administration loans soared 11 percent from the previous week as borrowers try to rush their applications in to beat the higher FHA costs that will start rolling out on Monday, according to the U.S. Mortgage Market Index report released from Mortech Inc. and Mortgage Daily.

Starting April 1, the FHA will be increasing its annual mortgage insurance premiums on all FHA loans. The annual premium is paid with the monthly mortgage payment. The FHA also will be increasing the FHA mortgage insurance premium that is paid up front during closing, also starting April 1.

Borrowers who are trying to avoid the higher fees are trying to get their FHA mortgage applications approved before the changes take effect. The new fees also will apply to home owners who refinance their mortgages.

FHA loans have soared in popularity in recent years since they allow for smaller down payments, as low as 3.5 percent compared to traditional loans, and often carry less stringent credit requirements.

Source: “Mortgage Applications for FHA Loans Increase Ahead of Higher Fees,” Realty Times

How Involved Should Sellers be in a Real Estate Sale?

How Involved Should Sellers be in a Sale?

With competition high, sellers may be intervening more when it comes to selling their home, and it can cause personalities to clash.

Because it might take a little longer to find a buyer nowadays, some sellers are getting very “hands on,” proofreading every line carefully on the MLS and brochures, and questioning your every step, according to a recent article at The Philadelphia Inquirer.

“Sellers get particularly ‘brainy’ in terms of the value of their home, but the reality is that they may not be aware of all recent comparable sales, or been inside those comparables, to really pinpoint value,” Mark Wade, a Philadelphia real estate sales associate, told The Philadelphia Inquirer.

Real estate professionals say it’s important for agents to keep their seller-clients informed every step along the way and educate them about the market.

“Our job as their agents is to advise and to educate them as to the present climate and conditions,” says Marilou Buffum, a Philadelphia agent. “We cannot make decisions for our clients. We only advise and represent.”

The Internet has provided abundant housing information to sellers so they may have access to a lot, but it require some explanation.

“We are dealing with more informed involvement on the part of both the buyers and sellers, it still requires the REALTORS® to analyze all the data and summarize it in a way that provides useful information that can be utilized,” Paul Leiser, a real estate professional from the New Jersey shore, told The Philadelphia Inquirer.

Source: “The Seller’s Role: How Big Is Their Part?” RISMedia (March 24, 2012)

Single-Family Real Estate Investment: It’s Time To Get Back In!

Single-Family Real Estate Investment: It’s Time To Get Back In

“…if I had a way of buying a couple hundred thousand single-family homes…I would load up on them and…take mortgages out at very, very low rates…it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.”  Warren Buffett, CNBC Squawk Box interview

If you aren’t investing in real estate right now, you are making a mistake – it’s that simple. Yes, you might have been burned by the real estate market collapse, or maybe you just knew someone who was – it doesn’t matter – if you aren’t buying property today you are missing out. This is a bold statement, but as you can see, one that is supported by one of the greatest investors of all time. Don’t take our word for it – or Warren Buffett’s for that matter – we are prepared to back up our statement with facts that non real estate investors should find very interesting.

Real Estate Fundamentals Are Changing

The United States is quickly transitioning from a home ownership society to one of renters. Home ownership in the U.S. currently sits around 66.4 percent, but that number is expected to drop down to 59.7 percent over the next several years, as delinquent borrowers drop out of the market – according to a recent Morgan Stanley Housing Market Insights report. The real estate market collapse has caused a few of things to happen. First and foremost, there have been a lot of foreclosures – this isn’t news to you we are sure. But what is often overlooked, is that just about every time someone loses a home to foreclosure, a new renter is created. That isn’t the only thing causing an increase in the number of renters, though.

In addition to the foreclosures, banks are now making it much more difficult for people to become homeowners. Only a few years ago, just about anyone who wanted to could buy a home – that is no longer the case. Gone are the days when people with marginal credit could get 100 percent financing, or even 90 percent financing for that matter. In order to buy a home in today’s market a person must have a decent amount of money to put down, as well as fairly good credit.

Lastly, the real estate market collapse did something else – it caused many people to fear buying a home. After all, who is going to invest in a home if they feel like the value will just continue dropping? A large number of people who could purchase a home, are sitting on the sidelines waiting for the market to recover – or truthfully for the media to tell them that it has. Good investors, though, know that many markets in the U.S. have already started to recover – despite what the media says. If you wait for the mainstream media to tell you it is okay to start investing again – you’ve already missed out on your chance.

Prices Are Low, And Rental Yields Increasing

There are many different types of real estate investment, but we are of the mindset that nothing beats the tried and true buy and hold method. If you buy a property with the intent of holding onto it over the long haul, then you should – for the most part – be able to judge the validity of an investment before you ever buy it. It is not hard to figure out what the going rent should be for a particular property, nor is it difficult to figure out what your expenses for the property will be. So if you are able to figure out how much you are going to spend, and how much the property will generate in income – then before you ever invest a single cent, you should know whether to buy it or not. If the property isn’t going to generate significant cash flow for you – don’t buy it. If you are banking on appreciation, then you are bringing on added risk. As long as the property makes you money every month, you can hold out through the ups and downs of the real estate market. So many investors seemed to overlook this basic principal of real estate investment during the bubble, and we all know what happened to those investors.

Today’s real estate market offers an incredible opportunity for investors. Thanks to the real estate market collapse, prices have fallen by as much as 50-60 percent in some markets, while rental rates for the most part have stayed the same or increased. As we brought up earlier, the rental market is only getting better for landlords. With the number of renters increasing, rents rising and property prices lower than they have been in years – now is the time to buy.

We, at HomeUnion Services, are in the business of reducing the risk for investors in a number of ways. First, we only operate in stable cash flow zones (more about them in future articles) in 6 markets (Chicago, Atlanta, Memphis, Pittsburgh, Birmingham, Memphis & Kansas City) that offer our investors great yields – with minimum risk. These 6 markets are in no means the only markets investors should be looking at, but they are a great starting point for investors considering to get into real estate. These markets enjoy stable economies, and are large enough to provide investors with lots of choices in terms of investment properties and tenants.

Commercial Investors Are Beginning To Invest

Typically when you think of single family real estate investors, you don’t think of commercial investors like hedge funds, insurance companies and the like. However, these larger investors are beginning to see the incredible investment opportunity present in today’s market, and they aren’t about to pass up on easy money. The FHFA recently announced a program that will allow large investors to bid on foreclosed properties in bulk, and the interest doesn’t stop there. This article from the Wall Street Journal, talks about several hedge funds that have begun to invest in single family homes in order to increase their fund’s performance.

We understand that you aren’t going to be buying properties by the hundreds or thousands like these funds, however, there is a reason they are buying single family homes when historically they have avoided them – like Buffett, they see the potential to generate significant returns. Buying single family properties presents significant challenges for large investors, and represents a dramatic mind shift in investment philosophy for them – don’t overlook this. These people are paid a lot of money to find the very best investment opportunities in the world, and they are able to invest in a lot of things that normal people can’t. The fact that they are saying the very best investment available to them right now is single family real estate should speak to you.

Overlooking single family real estate as the incredible investment opportunity it is – at this very moment – is going to be one of the biggest mistakes millions of investors make in their entire lifetimes. Hopefully our article has inspired you to not make this mistake, but if we haven’t convinced you yet, we urge you to at least look into it further. Don’t take our word for it, do your own due diligence, you will be amazed at what you discover.