THE BIG SPLASH

Suburban America Experiences a Surprising Comeback

American suburbs, once associated with dying malls and empty office parks, are undergoing a remarkable revival. A convergence of demographic shifts, housing trends, and business changes is breathing new life into these areas.

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• According to Census data, the share of Americans living in the suburbs grew by 10.5% between 2010 and 2020, with the pandemic accelerating this trend even further. Contrary to popular belief, many millennials, the largest generation, are opting to buy homes and settle down outside of cities, challenging the perception of them as urban dwellers.

• One key factor driving this shift is the rise of hybrid and remote work. The ability to work from home has become a significant incentive for young families to seek out more affordable housing in remote suburban and rural markets.

• As suburbs gain popularity, they are attracting new restaurants and retailers to their town centers, leading to a resurgence in economic activity. Notably, renowned chefs are choosing suburban towns over major cities for their next ventures.

• These changes are also diversifying the demographics of suburbs, challenging the notion that they are predominantly white and less diverse than cities.

• However, downtown areas should not be written off just yet. Despite the hybrid work model, people are gradually returning to city centers. Additionally, while suburbs closer to cities thrive, demand for housing in more distant suburbs has declined since the peak of the pandemic.

A SCOOP OF MARKET DATA

Investors Selling Homes at a Loss

Real estate investors in the US are selling their homes at a loss at a rate of 13.5%, among the highest since 2016, according to a report by Redfin.

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• The trend is being driven by high mortgage rates that have pushed down sale prices and reduced homebuyer demand.

• Home flippers, or investors that buy and resell properties within nine months, sold around one in five homes at a loss in March, the report said.

• The worst affected market was Phoenix, Arizona, where 30.7% of homes sold by investors lost money, followed by Las Vegas, Nevada, (28%), Jacksonville, Florida, (20.9%), Sacramento, California, (20.2%) and Charlotte, N.C. (17.4%).

• However, investors are less likely to suffer losses in areas where house prices remained affordable during the pandemic, as well as certain markets in South Florida.

• While many housing investors continue to make gains from buying and selling homes, it is important to remember that home prices could fall further.

A SCOOP OF MORTGAGE

Mortgage Rates Take a Dip, Buyers Rejoice

As inflation rates start to cool down and the Federal Reserve signals that its series of hikes to the federal funds rate may finally come to an end, mortgage rates in the United States have fallen to their lowest level in five weeks.

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• According to Freddie Mac's chief economist Sam Khater, this shift in rates "should bode well for the trajectory of mortgage rates over the long-term."

• The average 30-year fixed rate mortgage slipped to 6.35% this week, compared to last week's average of 6.39%, while the average rate on a 15-year home loan also decreased incrementally from 5.76% to 5.75%.

• Although inflation still remains high, its rate of growth has moderated and is expected to slow down over the rest of 2023, which is good news for homebuyers.

• In addition, down payments for homes have decreased compared to last year, which means that more Americans can afford to purchase the median-priced home by putting down less than 20%.

• While buyers are tasked with weighing how much they can afford to put down on a house, how much they are willing to take out as a mortgage, and then must set their budget accordingly, mortgage applications have increased with the dip in rates.

A SCOOP OF IDEAS

How a 27-Year-Old Created a Luxury Tiny Home for $35,000

Precious Price, a 27-year-old woman from Atlanta, has built a tiny home in her backyard for around $35,000, which she now calls her primary residence.

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• With a space of only 296 square feet, her home is designed efficiently, and she lives in it for $0 since her mortgage, property taxes, and utility bills are covered by the rent she receives from her main house.

• Precious provides her advice on how to build a tiny home in your backyard. The first step is to check your local zoning to determine whether tiny homes are permitted and how big your lot needs to be to build one.

• After that, you need to consider your financing options, such as home equity loans or lines of credit, cash-out refinancing, or construction loans.

• You can also look into community development financial institutions for financial assistance.

• Precious used a prefabricated shed as the base of her tiny home and then customized the interior as per her design needs.

• She advises getting multiple construction bids from contractors and not making your decision solely based on price.

• Finally, she suggests securing your return on investment, which could be financial or non-financial, such as having more flexibility in the form of a home office or separate living space for aging parents or guests.

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