June 2017

A Brief History of National Home Ownership Month

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June is National Home Ownership Month and if you missed it you weren’t the only one. Not only was there a lack of press coverage, there was also a large group of individuals who missed out on the opportunity to buy a home. In 2003, National Home Ownership Month was announced by President George W. Bush to promote awareness and policies to expand home ownership across the country. The awareness campaign and policies were not completely new, but rather an extension of President Bill Clinton’s National Home Ownership Day of 1995 and the Clinton 100-point action plan to increase home ownership to record levels.

Both the Democratic and Republican administrations’ plans had noble intentions, as they both recognized that home ownership is a part of the American dream. Home ownership does, in fact, promote civic responsibility and financial security for most Americans. I experienced this first-hand when I relocated my family to Dallas, Texas. We opted to rent for nearly a year while we learned more about the area. My family’s attitude towards our rental house and neighborhood were different than our current home. Our feelings toward our rental home were not bad or negative, we just did not experience the pride we feel now that we have purchased our own home.

Looking back now, we see that the President’s goal of increasing home ownership to record rates was met. However, it came at a great price as the “bubble” was created and real estate prices came crashing down shortly thereafter. The bubble bursting took most of the economy down with it which is now referred to as the “great recession.” The reality is that while most Americans dream is of owning a home, not everyone should or can afford own a home, due to all different kinds of circumstances.

Homeownership rates are now at the lowest levels in 50 years (see chart below) and there is pent up demand for affordable housing.

The term “home ownership rate” can be misleading. It is defined by the government as “the percentage of homes that are occupied by the owner.” It is not the percentage of adults that own their own home. The problem with this rate is it does not count adult individuals who are neither home owners nor are renters. Since the great recession of 2007, the group of young adults between the ages of 18-34 has increased dramatically. In fact, the individuals in this age group are opting more often to live with their parents than with a spouse, as marriage is being postponed to a later age. See chart below.

The home ownership rate alone can mislead you because if young adults don’t create a new household, then the percentage is skewed. Comparing number of actual historical households, it becomes clear that the number of young adults who are fulfilling the dream of home ownership is significantly less than the current home ownership rate states. Starting a new household is important for many factors, including the overall economic growth of the country. Owning your own home is equally important for most individuals’ financial security.

The month of May reached a new peak in the median price of homes. Unlike in 2007, this peak was not caused by government involvement but rather the laws of supply and demand.  May demonstrated a new low in listing inventory and a new record low of time on the market for a house to sell. The real estate headlines this summer will continue to highlight the shortage of affordable housing. Let’s hope by next June a plan is put into place that will spur new construction of homes that are priced to encourage more young adults to buy and afford buying their first home.

As June ends, it is the true beginning of summer.  Here’s to hoping that you have plans in place to enjoy both the benefits of home ownership, and enjoying the summer.

Peter

Six Characteristics to Being Successful

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What do successful people have in common? If you study people that have navigated the ever-changing world we live in and became successful in business and life, you will see them all share similar characteristics. Develop these six traits and success will follow you.

Vision

Vision is a mental picture of what the future will or could be like. It is the foundation for the changes you will make and actions you will take to support your idea of the future. With the correct vision, you are willing to go to extreme measures to see that vision through. Your vision for your life, your career or your business should inspire you yet be simple to understand. For some people, this is a statement. For others, it is a pictorial collection of what they want out of life and serves as a visual reminder of their goal. In either case, carrying that vision every day moves us toward creating the future we want and then to the future we must have.

Attitude

It isn’t very often that we get anything more than we expect. Your vision has you expecting to obtain great success. Don’t let the wrong attitude set you back. What you project outwards in your personal and professional life is what you will get back. What you think your career will be is likely what it will be. You will not have the motivation needed to succeed in life if you are fighting yourself. Don’t focus on what you haven’t done; focus on what you will do to achieve your dreams. Successful people have a positive attitude and stay positive in all circumstances.

Planning and Goals

Having a plan and establishing goals will point you in the right direction to start achieving your dreams. It is your map that will guide you to your final destination. Planning starts the process of building commitment to achieving your goals. The vision may be there, but without a systematic plan with measurable goals in place, it will remain just that – a vision.

Taking Action

The best-laid plans means nothing without action. Your actions will determine how people see you and how successful you will be, not your words. Leadership is an action not a position. Successful people are leaders of their future and take action each day to move forward. Make up your mind to move forward and turn your vision into a reality.

Continued Learning

Starting a career or business is the beginning of your learning process. Anyone who achieves outstanding results and lives a full life without regret became committed to continued learning and development. That person will read more, practice more and do more throughout their life. In all professions – from doctors to teachers to corporate executive – the top performers will commit to continued education that goes beyond the minimum requirements to keep professional certifications current or to please a boss.

Persistence

Persistence means you have the discipline to stay on track for obtaining your dreams regardless of what obstacles come your way. Persistence is essential to achieve the life you deserve and keeps you on track when others around you don’t provide positive reinforcement. Below is a quote that sums up an important component of persistence.

“The one who once most wisely said, ‘Be sure you’re right, then go ahead.’ Might well have added this to it, ‘Be sure you are wrong before you quit.”

Creating a great life and business takes time – you should plan on it taking lots of time. Getting there will take persistence. There will be setbacks, but does that mean you stop chasing your dreams? If your dreams are your passion, then you won’t give up easily and you will reach that goal.

Success leaves clues. Be sure you are working on fully developing these time-tested characteristics each day!

Best wishes in creating success as you define it.

Peter

The One Chart That Explains Why You Can’t Find a Home to Purchase

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Summer is not only the time every school age child looks forward to, it is also the traditional time of year that many families eagerly look forward to buying a new home. In fact, historical home sales data shows that the month of June is typically the busiest month for buying and selling real estate. As the school year ends, families execute plans they made in the spring to move to a new school district or buy a larger home. This year the challenge that many will face is the shortage of affordable homes available to buy.

This shortage of available housing is not a short term problem. With an ever growing population and housing construction that lags way behind the country’s population growth, the lack of available housing will continue into the foreseeable future. While news headlines have covered the annual increase in housing over the past five years, the actual data shows that the number of homes for sale is still at record lows. When you look at the actual amount of new homes being built and take into consideration the continued population growth, a clear picture comes into view of what challenges still lie ahead for potential homebuyers (refer to graph below).

Keep in mind that the “increase” in new home construction in 2016, compares to the same actual levels of new construction in 1982, when the country was in the midst of a deep recession. However, after the 1982 recession, home construction immediately and significantly rose again in 1983. There is no such increase in new homes being constructed in 2017 and the population of the country has increased by over 100 million people since 1982.

Want to know why home prices keep going up and you can’t find a home to buy? It’s a simple matter of supply and demand. There is an ever increasing demand driven by a growing population and a lack of inventory of homes for those buyers in the market to make offers on.

With the current rate and foreseeable future of new home construction remaining stagnant, this won’t be a short-term problem but rather a systematic long-term challenge for many trying to buy their first home or next home. You can expect home prices will continue to rise and affordable housing options will be in high demand driving up prices to even higher levels. The supply of new and existing homes available for sale across the country will remain very tight.

Homeownership is not just part of the American dream of freedom and independence, but also the number one way for most people to improve their long-term financial security. While it may be costly this year to buy a home, more than most likely it will be even more expensive next year. The law of supply and demand won’t change. Your best bet is to sit down and build a personal plan to achieve your family’s home ownership goals and financial needs and begin to take action to achieve those goals. On this topic, time is of the essence.

Best wishes for a fantastic, fun-filled summer and a successful home buying season!

Peter