The Board of Governors of the Federal Reserve System published it’s most recent Survey of Consumer Finances This Week in Real Estate concluding that the primary residence represents the largest asset category on the balance sheets of households. Below are a few highlights from the third week of March that influence our business:
* Homeownership is Key to Household Wealth. According to the 2016 Survey of Consumer Finances (SCF), nationally, the primary residence represents the largest asset category on the balance sheets of households in 2016. At $24.2 trillion, the primary residence accounted for about one quarter of all assets held by households in 2016, surpassing other financial assets (20%), business interests (20%) and retirement accounts (15%). The 2016 Survey of Consumer Finances (SCF) was published by the Board of Governors of the Federal Reserve System. Compared to the quarterly Financial Accounts of the United States (previously known as the Flow of Funds Accounts), which provides aggregate information on household balance sheets, the SCF provides family-level data about U.S. household balance sheets and is available every three years. This post uses the 2016 data from the Survey of Consumer Finances (SCF) to analyze household balance sheets, especially their primary residence, by age categories. Total assets were $3.7 trillion for households under age 35, while they were $35.6 trillion for households aged 65 or older. The aggregate value of assets held by families where the head was aged 65 or older was approximately 10 times larger than those held by families where the head was under the age of 35. The increases in the total assets among age groups indicate that the value of assets grows with age groups. Among homeowners under the age of 45, home equity was the largest category of the household’s net worth (the sum of medians does not equal the median of the total). However, for homeowners above the age of 45, non-primary residence equity eclipses home equity as the larger portion of net worth, reflecting the accumulation of other assets by homeowners in later life stages.
* Permits Rise in January 2018. Over the first month of 2018, the total number of single-family permits issued nationwide reached 61,767. On a year-over-year basis, this is a 15.1% increase over the January 2017 level of 53,648. The results from the SOC are similar, single-family permits over the first month of 2018 was, 61,100 which is 14.0% ahead of its level over the same period of 2017, 53,600. Between January 2017 to January 2018, 32 states and the District of Columbia saw growth in single-family permits issued. Twenty states recorded a growth above 15.1% but 18 states had a decline in growth. Idaho had the highest growth rate during this time at 101.6% while single-family permits New Hampshire declined by 43.1%. In the single-family sector, Texas led with 10,119 permits issued year-to-date in January 2018 and Florida was second with 7,300 during this time. Meanwhile the lowest number came from the District of Columbia with 21 permits. The 10 states issuing the highest number of single-family permits combined accounted for 65.0% of the single-family permits issued. Year-to-date, ending in January 2018, the total number of multifamily permits issued nationwide reached 34,907. This is 3.6% ahead of its level over the first month of 2017, 33,679. The results from the SOC show an increase of 9.8% in multifamily permits over the first month of 2018, 37,000 compared to the same period of 2017, 33,700. Between January 2017 to January 2018, 27 states recorded growth while 23 states and the District of Columbia recorded a decline in multifamily permits.
* Move Over Millenials, Gen Z is Already Buying Homes. Who’s afraid of growing up? Apparently not Generation Z. The post-Millennial crop of kids, those born in 1995 and later, are already moving into homeownership. For Gen Z it is very early in the traditional homebuying cycle, but TransUnion reports they already held 99,000 mortgages in the 4th quarter of 2017. This was dwarfed of course by the 12 million Millennials, but members of the much smaller Generation X had 24 million mortgages, as did nearly 27 million baby boomers and 5.1 million members of the Silent Generation. They might be young, but these buyers seem to take homeownership seriously. Just 1.2 percent are more than 60 days past due on their mortgages while the average for Millennials is 1.6 percent. Mortgages held by Generation Xers are running 2.3 percent non-current and baby boomers have a 60-day delinquency rate of 1.6 percent.