The purpose of this memo is to survey our current management techniques, and make recommendations on where we can improve our current model. The real estate industry is a cyclical market. We can observe almost regular 18-year cycles in the housing market, with the last recession occurring in 2008 (Nikolais, 2014). With this regularity, it has been very easy to predict when expansions will occur, which in turn allows real estate firms to position themselves in a way to fully capture the market. However, the last bust in 2008 has been much different. For the first time in history, people are electing to rent, rather than buy their home. This can be seen in a recent survey by MarketWatch: “Nearly six in 10 Millennials (59%) say they’d rather rent a home than buy one, with just one in four saying they are either very or completely likely to purchase a home in the next five years” (MarketWatch, 2015). The reason for this change in behavior is that first-time homebuyers are burdened with nearly $1 Trillion in student loan debt (Kingkade, 2013). This pressure has made younger people wary of taking on even more debt in the form of a mortgage loan.
On a broader level, we are six years into a recovery in the housing market that is likely to last for a considerable amount of time (Nikolais, 2014). Although we are seeing a rise in demand, and have been very busy as of late, there are always areas in which we can improve. Recent trends in technology have reshaped the way businesses are
Despite this fact, home ownership in the economic and social landscape of today is a big responsibility. Economically, most millennial most likely cannot afford to own their own home. A mortgage is a much larger payment than rent for an apartment. Similarly, owning a home means paying for gas, electric, water and furniture to fill a house; this also includes any grounds upkeep depending on the home’s location and property taxes. Socially, Millennials seem to be straying away from owning a home because it
I have selected an article titled Student Loan Debt Is Torpedoing Home Sales, written February 10, 2014 in Beyond Today’s News to review for this assignment. I found this article very interesting, and alarming at the same time. It also hits close to home, as I have a son graduating from college in May who is very anxious to buy his first home.
The typical series of big events in life include graduating high school, going to college, finding a significant other, graduating college, getting married, and buying a home. Although these events happen in a variety of different patterns nowadays, a major bump in the road is occurring when looking to buy a home, especially in Colorado Springs. This article highlighted the challenges that the millennial generation is facing when reaching this stage in life. "Student loan debt is more than $1.2 trillion, and nearly 70 percent of college graduates have some student loan debt, according to the Federal Reserve (pg 1)." These college graduates now need to add loan payments to their monthly debts, leaving them with even less disposable income. Not
Housing starts for single family homes have been gradually recovering to an annual construction rate of 800K since the Great Recession, but they remain substantially below the 1.2 million peak level that prevailed during the previous expansion. Rising prices should seemingly encourage higher levels of homebuilding activity. The apparent lack of
As of December 2015 more single family homes entered the marketplace for sale and with sales volumes increasing as these properties appreciate in value. Today’s trend has recovered more than 50% when comparing the previous real estate market peak year prior to
The mortgage crisis we are experiencing in the United States today is already ranking as among the most serious economic events since the Great Depression of the 1930’s. Hardly a day goes by without a story in the newspaper or on the cable news stations reporting about the increase in the number of foreclosures across the United States. The effects of this crisis have spread across all financial markets, where in the end all of us are paying a price for this home mortgage crisis. When the housing market collapsed, so did the availability of credit which our economy depends upon. The home mortgage crisis, the financial crisis and overall economic crisis all need to address by the
Some may reason that the cause of this decrease in homeownership is a result of rising prices of housing, or blame heavy debts such as student loans. Meanwhile, others may believe the fast paced lifestyle of today does not allow for one to buy a house and settle down for life without some circumstance driving them to move to a different location. These all remain factors in the reduction of homeowners over the past decade, but the question still remains if these are the only factors. Perhaps today’s generation prefers the high density living and atmosphere offered by apartments, while previous generations prefered a more tight knit but small community. Modern living also often involves plenty of uncontrollable events, so it is sometimes necessary to give way in order to be successful in the long run.
Nick Vertucci, a real estate expert, has spent years educating himself about the housing industry. He predicts that a tipping point
The availability of affordable housing stock may, therefore, be an issue. Furthermore, there is also the thorny issue of credit availability to consider. According to the Mortgage Banker’s Credit Availability Index, access to mortgage finance reputedly became more difficult in June for the eighth successive month, despite conventional mortgage rates remaining low. Meanwhile, the strength of new home sales in the high-end segment comes against a backdrop of a growing spread between jumbo (in excess of $417K) and conventional mortgages to their widest level since March 2011. Despite continued falling mortgage rates, the behaviour of this spread suggests risk aversion prevails amongst lenders.
In the aftermath of the Housing Bubble and Great Recession of 2008, unemployment has remained high and incomes have become stagnant, putting a strain on household budgets and preventing buyers from purchasing homes. Most recently, the decreasing value of homes and increased foreclosures have all contributed to the high growth rate in renting. In this environment, renting offers greater flexibility and requires less of a financial stretch than homeownership — which enables households to adapt to changing financial circumstances. As a dominant owner/operator of single-family rental properties, American Homes 4 Rent (AMH) has the ability to secure early-mover advantage and position itself as a top competitor. With the opportunity to continue acquiring
Homeownership is a double-edged sword. It is the “American Dream” to one day own a house. Compared to their predecessors, Millennials are seeing the advantages and disadvantages of homeownership at an earlier age. These early generations believed owning a house was the cherry-on-top to being an all-around American and achieving the “American Dream”. As a cynical generation who grew up with information at our fingertips and the world falling around us, millennials see homeownership differently. “The cautious and conservative approach to home buying displayed by millennials is driven by the fact their outlook on life was shaped by a number of bad things when they were young—the terrorist attack on the World Trade Center in 2001, the 2008 financial crisis, the housing bust with mass foreclosures and a weak recovery that has so far provided incomes below that of prior generations” (Stowe England, 36). We learned that the world was not fair and that it is time to redefine the “American Dream” to reflect our current economic society.
Brooklyn, NY – December 30, 2009 Foreclosures continue to rise drastically across the United States due to the recession, and have effected, and continue to affect thousands of families and individuals every day. One aspect we must take into consideration is that most people are not informed of what foreclosure means, or the process, even those who are homeowners. I believe that one step to preventing foreclosure is to educate first-time homebuyers. In addition, first-time homebuyer programs should not only assist potential buyers with financially preparing them to buy a home, but to keep the home once
The nation currently faces a widespread crisis of foreclosed homes. In what has proven to be an unstable market for homeowners, viable solutions must be explored. I would like to share my ideas on implementing a housing initiative to improve the structural integrity of the real estate market.
The information has already been provided that sense the the housing market crashed people in general have been apprehensive to purchase homes. But even more so to the new generation of millennials. And even current events are shaping the future of home ownership, like the new revision on taxes. So does most certainly understandable to why people would be so wary of the dangers, and struggles of buying a home. And how it might be all together easier not to buy one.
CAPSTONE PROJECT Project Title: APPLICABLE FINANCIAL POLICIES CHANGES THAT CAN BE USED TO ENCOURAGING HOUSE AND HOME OWNERSHIP IN MICHIGAN Submitted by: Submitted to University MBA/MS Program [list one] Capstone Mentor: [name] For University Use Date Received: ______________________________________________ Reviewed by: _______________________________________________ Approved/Disapproved: ______________________________________________ Signature: ______________________________________________ Date: ______________________________________________ Comments: ______________________________________________