December 28th, 2020 1:35 PM by Richard Sardella MLO.100007700/NMLS 233568
Pandemic spurs rise in multi-generational households
Life circumstances can sometimes change on a dime. Such is the case of household living situations since the pandemic began, causing social and economic upheavals for many families.
Realtor.com's Sara Ventiera reports that after the stay-at-home orders went into effect in many parts of the country in March, the National Association of Realtors noted a 15% increase in buyers who purchased a multigenerational home compared with before the pandemic hit, compared with 11% in the previous year. NAR's vice president of demographics and behavioral insights, Jessica Lautz, says, "One in six home buyers who purchased during the pandemic purchased a multigenerational home. That's an increase from 1 in 10."
Intergenerational homes can be anything from two (or more) attached, fully functional units in a duplex model or one home that offers private kitchens and separate entrances, like a rental unit in a single-family house. Or they might also be a detached accessory dwelling unit, typically a smaller home, in the backyard of a larger house. Adult children concerned about placing their parents in nursing homes during the pandemic have simply decided to keep things in their own backyards, just to be safe. Parents whose older kids lack employment or can't attend college are included in this "pod" living situation as well.
The ideal is, of course, to offer the other generation a degree of independence, with separate entrances and separate kitchen facilities. And homebuilders have been and continue to step up to the plate to provide this arrangement. "As you might expect, homes intended for more than one family tend to be a little larger, by nearly 22%, according to NAR data," says Ventiera. "The typical existing home is 1,880 square feet and costs about $270,000. Yet a multigenerational abode is roughly 2,290 square feet and costs about 10.7% more, with a $299,000 price tag." These larger, higher-priced alternatives also take into account the pooling of several incomes, according to NAR's research.
"The figures released by NAR account only for recent purchases," says Ventiera. "The actual number of intergenerational households that have formed since the start of the pandemic has actually increased by a staggering 61%."
This trend of bringing more than one nuclear family under one roof started long before COVID-19 got everyone thinking about pandemic pods, she says, adding that starting after the recession and well into 2016, a Pew Research Center analysis of U.S. Census data found that a record 64 million people—20% of the U.S. population—lived with multiple generations of adults in a single-family home.
Source: Realtor | NAR | TBWS
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -1bps. This caused rates to move sideways for the week on low volatility.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to move rates this week. 1) End of Year, 2) PMIs, and 3)Geopolitical
1) End of Year: 2020 is about to be kicked to the curb, and I know everyone is ready for that. While it has been rife with political, economic, and pandemic turmoil, it has been a banner year for housing and mortgages. With another holiday-shortened week, combined with the end of the year, we typically see some bond purchases as stock traders make some moves out of stocks (usually to sell and book some losses for tax purposes, but the problem is everything is up LOL).
2) PMIs: We have a light week for economic data, but the Bell-weather Chicago PMI will take center stage. We will also get PMI data out of China this week.
3) Geopolitical: Brexit: The European side has voted on and approved their final package, and it will be voted on by the U.K. this week. Stimulation Nation: President Trump has gone ahead and signed the $900B Bill over the weekend. The overall impact of that Bill on economic growth in the short term is relatively muted given the package's overall size. In the meantime, the House is said to vote today (which may or may not actually happen) on increasing the $600 check to $2,000. The Senate may take it up for a vote after that, but there is a lot of resistance to the Senate's increase.
Treasury Dump: Here is this week's Treasury auction schedule:
This Week's Potential Volatility: Low
Rate markets will likely be flat, with low volatility heading into the new year. Typically heading into the new year with the abbreviated trading, rates remain mostly unchanged. We expect the same this week short of something unexpected with the three above items.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
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