Monthly Archives: December 2019

U.S. housing market will continue to slow; home equity at the peak® forecast predicts inventory to evaporate making it more challenging for buyers to find a home despite attractive interest rates

SANTA CLARA, Calif., Dec. 4, 2019 /PRNewswire/ — At a time when millennials are reaching key life milestones, the U.S. housing market will continue to slow in 2020 as inventory reaches historic lows and economic uncertainty prompts consumers to pull back on their spending, according to the® 2020 housing forecast released today.

The forecast predicts that despite some relief from new construction, moderating home prices and relatively low interest rates, first-time buyers will continue to struggle with affordability. Sellers will contend with flattening price growth and slowing activity. These trends will drive existing home sales down 1.8 percent to 5.23 million.

Highlights of the® 2020 forecast include:

Home prices will flatten, increasing just 0.8 percent nationwide. Prices will decline in more than 25 percent of the 100 largest metros, including Chicago, Dallas, Las Vegas, Miami and San Francisco.

Inventory shortages will prevail and could reach historic lows, especially the entry-level category.

Mortgage rates will remain reasonable, averaging 3.85 percent throughout the year.

Affordability will remain a key driver for buyers, benefitting mid-sized markets.

Millennials – with the oldest members approaching 40 and the biggest cohort turning 30 in 2020 – will surpass 50 percent of all home purchase mortgages.

With little incentive to sell, baby boomers will continue to hold onto their homes, while Gen X is more likely to upsize, freeing up some entry level inventory.

“Housing remains a solid foundation for the U.S. economy going into 2020,” said George Ratiu, senior economist at®. “Although economic output is expected to soften – influenced by clouds of uncertainty in the global outlook, business investment and trade – real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting. Accordingly, 2020 will prove to be the most challenging year for buyers, not because of what they can afford, but rather what they can find.”

What will 2020 be like for buyers?

Buying a home in 2020 will be a mixed bag. It will offer more opportunities for some as the supply of new homes begins to offset inventory pressure that has built over the last four years, interest rates remain reasonable and home prices flatten. The broad price moderation will continue to make mid-sized markets in the Midwest and South attractive. However, the construction of new homes in 2019 was largely isolated to upper-tier of housing and that is unlikely to ease conditions for first-time homebuyers. Additionally, while qualifying for a mortgage could be easier on paper due to stabilizing prices and a still relatively low rate environment, the total number of homes available for sale will hit a record low.

What will 2020 be like for sellers?

Sellers in 2020 will grapple with dormant price growth and slowing activity, which will require a greater level of patience and a thoughtful approach to pricing. Entry-level home sellers can expect steady competition for their homes, which will keep prices firm. Upper-tier housing is expected to be softer as properties will likely sit on the market longer, requiring greater incentives to close deals. As the market moves toward a more balanced scenario, sellers who adjust to local market conditions can expect to benefit from continuing demand.

Forecasted key 2020 housing trends

Millennials expand their domination of the market – Demand from those born between 1981-1997 will reach new highs in 2020 with millennials accounting for more than 50 percent of all mortgages by the spring. Several factors are at play here. In 2020, the largest cohort of millennials – 4.8 million of them – will turn 30, a time when many purchase their first home, while the oldest members of the generation will reach 39, often a point when many look to move from the city to the suburbs for family-friendly amenities. The largest generation in history will consolidate their top spot in mortgage originations and effectively outnumber Gen X and baby boomers combined in their share of purchases.

Growing economic uncertainty – Although a recession isn’t likely in 2020, the economy will show signs of softening. The pullback in business spending is expected to lead to a slowdown in consumer spending. Housing remains the largest single consumer expense, making home-buying activity a major contributor to the U.S. economy and a bellwether for economic expectations. Rising uncertainty about the economic outlook will dampen consumer enthusiasm about spending, leading to a decline in sales and an increase in homeowners’ tenure.

Low inventory – Despite increases in new construction, next year will once again fail to bring a solution to the inventory shortage that has plagued the housing market since 2015. Inventory could reach a historic low as a steady flow of demand, especially for entry level homes, and declining seller sentiment combine to keep a lid on sales transactions. With housing prices expected to stabilize and concern over economic uncertainty, there will be little incentive for baby boomers to sell in the coming year. The younger Gen X is more likely to upsize and free up entry level homes, but not fast enough to ease inventory woes.

Affordability brings secondary markets to the center stage – As buyers are priced out of suburban environments near large metropolitan areas, they will begin searching for family-friendly lifestyles in other metros or across state lines. Cities in Arizona, Nevada and Texas will continue to benefit from shoppers looking for more affordable alternatives to California. Meanwhile, home seekers from expensive Northeast markets will find the warmer options in the Carolinas, Georgia and Florida attractive. Midwest markets will become more attractive, as buyers will find the affordable housing and solid, diversified economies of Ohio, Indiana and Kansas compelling.

Election will be 2020 wild card – Along with the presidential election, there will be candidates running for 35 of the 100 seats in the U.S. Senate, along with 435 seats in the House of Representatives. The 2020 elections will be closely watched by consumers and businesses for indications of potential changes. Although the outcome of the presidential election is not directly tied to the performance of the housing market, business optimism and investments, along with consumer confidence and spending do influence economic output, and can also influence housing activity. Looking at housing trends over the past three decades, the pace of sales, price and inventory are intertwined with economic performance – employment, wages, and interest rates.® 2020 Housing Market Forecast

Mortgage Rates Up to 3.88% by year end
Existing Home Median Price Appreciation +0.8%
Existing Home Sales -1.8%
Single-Family Home Housing Starts Up 6%
Homeownership Rate 64.6%

For the senior retiree, home equity peaks point to the best time to move into a reverse mortgage based on the highest equity numbers. Consider a Reverse Mortgage now. It’s time. Call Warren Strycker for a chat 928 345-1200.



I knew a carpet layer once, he wouldn’t change.

by Warren Strycker

When did you first realize you could buy milk at Walgren’s?

Maybe you didn’t think much about it, but in real life now, things dry up and blow, but not always away — usually, they land somewhere else because things have changed — in yourself or among others.

The milk guy expanded his supply with your competitor. Have you noticed? The change is subtle so you might not have picked up on it at first. And then, you faced it because you had to. Few people do well with change — at first. Some adjust. Some don’t.

As an entrepreneur, you had plenty of customers and then one day you didn’t. What happened? Probably another company came in and sold your customer at a better price or by offering more service than you did. In the end, you lost the business. In some cases, you lost the business to your supplier who learned how to compete with your business by watching you do it. It’s called change and it’s not easy to bear it because you feel dumb when it happens.

Nobody wants to be dumb. Nobody.

I knew a carpet layer once who shut his business when his suppliers required the use of a computer. He refused to learn to use one. He was stubborn and he lost his business. He would not adjust. Can you stop change? Probably not.

Can you stop change? Probably not

3 Reasons to Retire as Early as You Can; Protect home equity by using it

Retiring early may be more possible than you think. Here are three good reasons to consider doing so.

Selena Maranjian

Mar 24, 2019 at 9:46AM

Author Bio: Retiring early might be a pipe dream of yours — and one you assume you’ll never realize. But 37% of workers have retired earlier than they had planned to, per the Center for Retirement Research, and that might happen to you, too.

Whether you plan to retire early or not, here are three reasons to contemplate doing so. See if they apply to you.

1. To enjoy retirement as much as possible

Not only do many people not know just when they’ll actually retire, most of us also have no idea how long we’ll live. It’s a sad fact that plenty of people die earlier than expected. If you’re putting off retiring longer than you need to, you might end up cutting it short, with relatively few work-free years to enjoy.

The sooner you retire, the sooner you can get around to all those fun activities that you’ve long meant to do, such as taking a few months to drive across the country checking out local landmarks and diners, walking through old cities in Europe, making long-overdue visits to far-flung friends and relatives, planting a killer garden, learning to sail or golf, or taking history courses at a local college. While you’re younger, you’re likely to be healthier than you will be later, and can use and enjoy your money more, as you’re more able to travel and enjoy recreation.

 2. Because you can

For many people, another great reason to retire early is that they can. If you haven’t taken the time to figure out how much money you’ll need in retirement and how well you’ve been growing your nest egg, you may not even know whether you can retire early or not.

You can use the flawed-but-still-helpful 4% rule to help you roughly estimate how much annual income you might wring from the amount you have saved up and the amount you expect to have at retirement. The rule suggests that you can withdraw 4% of your nest egg in your first year of retirement, adjusting future withdrawals for inflation, in order to make your money last for 30 years. The table below shows how much you might withdraw in your first year of retirement from nest eggs of various sizes.

Retirement Nest Egg 4% Withdrawal
$100,000 $4,000
$250,000 $10,000
$500,000 $20,000
$750,000 $30,000
$1 million $40,000
$1.25 million $50,000
$1.5 million $60,000

You can, of course, play it safer by making smaller withdrawals, and you might have some of your portfolio invested in solid dividend-paying stocks that generate income without requiring the selling of any shares. If you have, say, $400,000 invested in stocks with an average overall dividend yield of 3%, you’re looking at $12,000 in dividend income for the year — $1,000 per month. You might also deploy some or much of your nest egg to buy one or more fixed annuities, which can deliver relatively guaranteed income for the rest of your life.

If your nest egg isn’t as fat as it should be, you can beef it up by saving more aggressively over the coming years. Here’s how effective that can be:

Growing at 8% for $10,000 Invested Annually $15,000 Invested Annually $20,000 Invested Annually
3 years $35,061 $52,592 $70,122
5 years $63,359 $95,039 $126,719
10 years $156,455 $234,682 $312,910
15 years $293,243 $439,864 $586,486


3. Because it’s not worth delaying Social Security

Finally, give some thought to Social Security. If you haven’t done so, you might be forgetting that Social Security income could bring you closer to being able to afford an early retirement. Most beneficiaries actually start collecting as early as they can, at age 62, and the average monthly retirement benefit was recently $1,417, which amounts to about $17,000 per year. If your earnings have been above average, though, you’ll collect more than that.

Those who are fairly familiar with Social Security will know that putting off starting to collect benefits will make those benefit checks bigger. Odds are, though, that you shouldn’t delay.

You’re eligible to receive your full Social Security benefits at your “full” retirement age, which is based on the year you were born. For most of us, it’s 66 or 67. Despite that, you can start collecting as early as age 62 and as late as age 70. For every year beyond your full retirement age that you delay starting to collect Social Security, your benefits will grow by about 8%. Delay from age 67 to 70, and you’ll get benefits that are 24% bigger. If you start collecting early, your benefits can shrink by up to 30%.

Starting as late as possible may seem like a no-brainer, but that’s not necessarily the case. According to the Social Security Administration, “If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between.” (Remember: The checks you get if you start collecting at 62 or 67 might be a lot smaller than what you’d get at 70, but you’ll get a lot more of them.) Since it’s pretty much a wash for those who live close to an average-length life, starting to collect at 62 can make a lot of sense, and can make an early retirement possible.

Why you might not want to retire early

Of course, despite the excellent reasons above to retire early, it might not be the right move for you. Why? Well, lots of reasons: You might love your job more than almost anything else, in which case continuing to work is quite reasonable. You might not have anywhere near enough saved up with which to retire. You might come from a family where people routinely live into their late 90s — which is great, but can put a strain on the nest egg that might be built to support you for 30 years, not 40.

The calculations and considerations will be different for everyone. Give the matter some thought and see whether you may be able to retire early — and whether you want to.

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*Whatever you do, a Reverse Mortgage fits right in with the plan.