Day: December 5, 2019

Personal Finance Daily: Read this before you panic about a global coffee shortage, and this bleak chart makes scary reading for all home buyers

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Happy Thursday, MarketWatchers. Don’t miss these top stories:

Personal Finance
Tapas bars, high-end gyms and pet services — how did a college education turn into a luxury vacation?

The financial arms race for the money of wealthy parents has no limit these days.

This bleak chart makes scary reading for all home buyers

Millennials want to be homeowners, but there are lots of obstacles in their way.

‘I am planning on retaining a lawyer’ — My mom left her entire estate to my stepfather, so how can I claim what is rightfully mine?

‘Even if you break bread on Thanksgiving and have known each other for most of your lives, you are not considered his child under the eyes of the law.’

Someone paying $120,000 for a banana duct-taped to a wall at Art Basel is the perfect picture of wealth inequality

Art sales and auctions have been setting records, which could be another sign of the wealth gap, according to a Citi report.

Read this before you panic about a global coffee shortage

The International Coffee Organization predicted worldwide coffee consumption would exceed production by 502,000 60-kilogram bags next year.

Mortgage rates hold steady, but economists say don’t expect that to last

Mixed economic data meant that interest rates on home loans remained unchanged this week.

Federal Reserve and others agencies have a plan to make it easier to approve personal loans

‘The agencies recognize that use of alternative data may improve the speed and accuracy of credit decisions,’ they said in a joint statement.

How some employers are helping workers pay student loans

With outstanding student loans at $1.5 trillion, it pays to work for a company that chips in.

This depressing chart shows the jaw-dropping wealth gap between millennials and boomers

Boomers had seven times the wealth at age 35 than millennials will at the same age

I discovered through Ancestry.com that my biological father is someone else — can I claim an inheritance as his heir?

‘The secret was never revealed to me either by him or by my mother.’

Elsewhere on MarketWatch
Fed’s Quarles says there are now more ‘options’ than just bailing out failing banks

Faced with a failing bank, future regulators will have other options than just bailing them out, Fed Governor Randal Quarles said Thursday.

Joe Biden challenges Iowa voter to push-up contest — may have called him ‘fat’

During a campaign stop in Iowa on Thursday, Joe Biden was confronted by a man who accused the former vice president of “selling access to the president” in exchange for a high-paying job in Ukraine for his son, Hunter. Biden didn’t like it.

Pentagon official concedes bigger Mideast troop deployment is on table

A top Pentagon official told senators that U.S. military officials are considering bolstering the U.S. force presence in the Middle East to counter threats from Iran following a significant buildup throughout the year.

‘Don’t mess with me’ — Pelosi gets into heated exchange over ‘hate’ for Trump

House Speaker Nancy Pelosi exploded at a reporter Thursday when asked if she “hates” President Trump, in a heated exchange that came after she called for impeachment articles to be drawn up.

Trump urges Democrats to make impeachment quick as Pelosi asks committee to craft charges

President Trump urged Democrats to hurry up with impeachment, saying he wanted a fair Senate trial and to move the country “back to business.”

Poloniex Delists DigiByte (DGB) After the Founder Criticizes TRON

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DigiByte

Digibyte has been thrown out of the exchange Poloniex after critical words were said of TRON’s Justin Sun.

What’s Next?

The news must have come as a shock for many in the crypto sphere, and many believe that it came about because of Digibyte founder Jared Tate’s incessant criticism of TRON founder Justin Sun. TRON is the 12th biggest cryptocurrency in the world, and in a Twitter thread yesterday, Tate went on to criticize the project in no uncertain terms.

In the aforementioned thread, Tate called Sun a ‘crook’ and eventually went on to say that TRON is not as transparent as its proponents seem to think. Before long, Poloniex put out a tweet in which it stated that Digibyte was being dropped from the exchange and claimed the reason was that it did not quite meet its listing standards. It should be noted that reports claim that Poloniex is apparently linked quite closely with Sun’s network, and many in the crypto sphere are claiming that this was Sun’s handiwork.

The Twitter thread from Tate proved to be an extremely controversial topic and enraged hundreds of TRON backers on the social networking platform. The personal attack on Sun was one thing, but what seemed to really trigger many TRON supporters was the fact that Tate suggested that the crypto token is completely ‘premined’ and fully centralized in nature.

>> Ethereum Devs Propose Hard Fork to Address Impending Ice Age

Decentralization is the very basis of the crypto sphere, and such an accusation must have irked plenty of TRON supporters on social media. He cited research from other sources and went on to infer, “Tron was the most blatant con job we saw after diving into hundreds of projects and blockchain protocols.” Earlier on, the founder of Digibyte had also got into a tussle with Binance.

Featured image: DepositPhotos © AndreyPopov

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Need financial advice but have no money? Look for pro bono planners

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When Michael Burns’s newborn son was diagnosed with leukemia a month after birth, his family’s world was turned upside down.

The Burns family spent months in and out of the hospital. The couple, who lives in New Hampshire with an older daughter, often traveled to Boston for medical treatments, incurring expenses not just on doctor visits, but hotel rooms and meals out. When maternity leave for his wife, Melissa, was over, she switched from full-time to part-time employment to care for their second child.

There was less money coming in, but credit card and medical bills kept piling up. The family needed financial guidance, and found it from a financial planner doing pro bono work — which is when experts donate their time and expertise for free. Slowly, they began to reassess and readjust their money management and were able to get themselves to a much better place, financially.

See: 8 mistakes to avoid when choosing a financial or tax adviser

Pro bono work can be a lifeline to people like the Burns family, who have an unexpected medical crisis, but it is also a crucial benefit to low-income families, individuals struck by a natural disaster or military members as well. The Foundation for Financial Planning, a Washington, D.C.-based nonprofit charity, works with hospitals and other organizations to find people in need, and offers them advisers who can discuss debt repayment, insurance and estate plans and budget-friendly tips to save more.

Other financial planning institutions, such as the Financial Planning Association, the Certified Financial Planner Board and the National Association of Personal Financial Advisors (NAPFA) banded with the Foundation for Financial Planning in September to expand pro bono services in the industry. “One hallmark of a true profession is the willingness of its practitioners to donate their skills to underserved people who otherwise would not be able to access and benefit from them,” the groups said in a joint statement.

Laura Perrotta of Portrait Arts Studios
The Burns family

In these pro bono sessions, planners will often collect as much financial information as they can from a family or person, including credit card statements and 401(k) balances. They’ll pour over the details, and highlight red flags or missed opportunities. They’ll then create a financial plan and send it to their clients so they can review it together, and discuss the ways in which they can implement these strategies.

Also see: How to find a competent, ethical financial adviser

The Burns family was connected to Tom Spiegelhalter, a retired adviser, by way of Family Reach, a nonprofit that assists families of cancer patients, which works with the FFFP to match advisers with individuals in need. People looking for similar services can search financial planning organizations, like the FPA and CFP Board, or ask specialized nonprofits for financial guidance (or a connection to a group that would offer it to them).

Veterans groups may have connections with pro bono planners for military members, for example, and city-based legal groups might have an arm dedicated to financial counseling for low-income families. There are also organizations dedicated to financial counseling assistance, including the National Foundation for Credit Counseling and Volunteer Income Tax Assistance.

It has been a year since their son was diagnosed, and he’s now in remission. The couple has pared down on discretionary expenses they didn’t need, like cable, and discussed life insurance and an estate plan. Michael also reviewed his workplace and retirement savings benefits, too. “Everyone can benefit from financial planning — it isn’t just the incredibly wealthy people who own a business,” Burns said. “Everyone should feel they could talk to a financial planner.”

More from MarketWatch

The Margin: Someone paying $120,000 for a banana duct-taped to a wall at Art Basel is the perfect picture of wealth inequality

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This is bananas.

An Italian artist duct-taped a banana to a gallery wall in Miami as part of the Art Basel festival — and it sold for $120,000. Actually, he’s sold two editions already.

There’s nothing especially fancy about the exorbitant fruit displayed at the Galerie Perrotin, which is titled “Comedian.” Maurizio Cattelan, an art world prankster perhaps best known for creating a $6 million, 18-carat-gold toilet that he named “America,” grabbed the banana from a local Miami supermarket, Artnet reports.

And it doesn’t symbolize anything in particular. “The banana is supposed to be a banana,” Cattelan said, although he told Artnet that the shape of the fruit, the angle it was taped to the wall and its placement in the booth were all “carefully considered.” He came up with the idea a year ago, when he was thinking of creating a sculpture shaped like a banana, according to a statement from Galerie Perrotin.

“Every time he traveled, he brought a banana with him and hung it in his hotel room to find inspiration,” the statement continued. “He made several models: first in resin, then in bronze and in painted bronze (before) finally coming back to the initial idea of a real banana.”

It’s unclear how often the banana will be replaced, as it will probably turn black and begin to spoil in about a week. The gallery expects to throw out the one currently on view at the end of the week, unless the collector wants to keep it.

Art Basel guests have found it so a-peeling that Cattelan has jacked the price up to $150,000, which is being shopped to museums. (Two have reportedly already expressed interest.) Not too shabby considering you can buy four bananas for $1 from most NYC street vendors, and duct tape runs $5 to $10 on Amazon.

But plenty of people on Twitter TWTR, +0.68%  found this whole concept hard to swallow.

Yet the latest global art market report from Citi Global Perspectives & Solutions shows the time is ripe for such headline-making art sales. People are spending more money on high-end paintings, sculptures and other works, and the report notes that ultrahigh net worth individuals collectively hold $1.74 trillion in art and collectibles. Indeed, the average price for fine art at auction globally jumped from $26,578 in 2000 to $49,234 in 2014, according to Citi’s C, +0.39% 2015 Global Art Market report.

That’s thanks in part to the rise of Chinese art investors; China has accounted for a third of the art market’s global growth. But the authors also suggest that the rising art prices on the top end reflect widening wealth inequality; America’s 1% hasn’t had this much wealth since just before the Great Depression, even as millions of people live paycheck to paycheck. “Art may, moreover, also serve to signal one’s wealth, status, background, or taste — or give access to a particular lifestyle (fairs, exhibition openings, auctions) or social circle (artists, dealers, collectors),” the report reads.

Opinion: The super rich elite have more money than they know what to do with

And several auction records were set in 2018 and 2019. They include Sotheby’s BID, -0.53%   selling Amodeo Modigliani’s largest painting (a nude) for $157.2 million in May 2018, which was the most expensive work of art in the auction house’s history. The Collection of Peggy and David Rockefeller sold at Christie’s last year for $835.1 million. In May of this year, Jeff Koons’s Rabbit sold at Christie’s New York for over $91 million — setting an auction record for the most expensive work by a living artist. And Banksy’s satirical “Devolved Parliament” — which replaced British politicians with chimpanzees — sold for $12.1 million at Sotheby’s London in October.

Christie’s reported its highest grossing year ever last year, with $7 billion in total art sales. Phillips also reported its best year in 2018 with $916 million in art sales world-wide. And Sotheby’s private sales hit a five-year-high to reach $1.02 billion, while its total consolidated sales (including auctions, private sales and sales from inventory) reached $6.4 billion, according to Citi.

In One Chart: ‘Don’t fall asleep on gold’ as it gears up for another run, says prominent analyst

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Investor ardor for gold, as measured by inflows into exchange-traded products, is finally cooling as the metal pulls back from a six-year high set earlier in 2019 — and that might be the contrarian, positive development it needs to make another run higher, said one of Wall Street’s most widely followed chart watchers.

‘We don’t want you to fall asleep on gold, the charts are too good.’

Jeff deGraaf

“The noise around gold during its big run in the summer has certainly quieted down as the metal has been consolidating for over three months. ETF inflows for gold have finally moderated from extreme levels as investor exuberance fades,” said Jeff deGraaf, chairman of Renaissance Macro Research, in a Thursday note that included the annotated chart below, highlighting ETF flows in the lower panel and the performance of the VanEck Vectors Gold Miners ETF GDX, +1.12%  in the top panel:

Renaissance Macro Research

“We don’t want you to fall asleep on gold, the charts are too good,” deGraaf said. “A drop in extreme sentiment during a period of consolidation as the overbought condition works off after breaking out of a large basing pattern is exactly the type of action you want to see.”

Gold futures GC00, +0.22%  accelerated a move to the upside in June. The rally saw gold briefly top the $1,570 an ounce level in September — its highest since 2013 — before beginning a pullback.

Gold sits around 5.6% below the September high, holding a 15.8% year-to-date gain and posting a 19% rise over the last 12 months. The popular, bullion-tracking SPDR Gold Trust ETF GLD, +0.22%  is up 14.8% year to date and 18.9% over the last 12 months. GDX GDX, +1.12%, the VanEck Vectors gold-miners ETF, meanwhile, is up more than 31% in the year to date and around 41% compared with a year ago.

The S&P 500 SPX, -0.05%  is up around 24% year to date, bouncing back from a steep fourth-quarter 2018 selloff, leaving it up around 15% over the last 12 months.

DeGraaf said GDX is starting to show strength as it breaks out above resistance that had been holding through a consolidation period. “Gold may be gearing up for another run and we think it’s worth owning here,” he said.

Read this before you panic about a global coffee shortage

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Anyone rushing to stockpile Chock full o’Nuts ahead of an impending worldwide coffee shortage would be well advised to save their time and money, experts and economists say: U.S. retail supplies and prices are unlikely to be affected much, if at all, even if the global production shortfall pans out as predicted.

“There’s a glut of ordinary coffee out there,” said Peter Roberts, a professor at Emory University’s Goizueta Business School and a leading independent expert on the global coffee industry.

The International Coffee Organization, the intergovernmental body representing coffee-growing countries, raised eyebrows Wednesday with its latest monthly report, which predicted worldwide coffee consumption would exceed production by 502,000 60-kilogram bags next year.

But widespread shortages or rationing are unlikely, experts say. The predicted shortfall is equal to about 0.3% of global supply and about 0.2% of typical year-end world-wide inventories, ICO data reveal. It’s also about one quarter of the shortfall seen in 2017, when prices fell.

“Whether you look at one year, five years or the last few months, we’re looking at a solid downward trend [in retail coffee prices],” said Steve Reed, an economist at the U.S. Bureau of Labor Statistics.

And “historically, this is not the largest ‘shortage’ we’ve seen,” said Bernadette Gerrity, a director of the New Jersey-based coffee producer Pan American Coffee Co. “Fluctuations in retail price are unlikely unless a ‘shortage’ persists through future crops.”

International coffee futures have already risen 31% from October’s lows in anticipation of tighter supplies. But that still leaves them below their 2017 average. They’re also down over three, five and ten years. They remain 60% below peak levels seen in 2011. In May they hit a 14-year low. “The coffee market has been exceedingly low over the past year and a half,” says Gerrity at Pan American Coffee.

J.M. Smucker Co. SJM, +0.01% , the producer of Folger’s coffee, and Massimo Vanetti Beverage U.S.A., the producer of Chock full o’Nuts, could not immediately be reached for comment. Starbucks SBUX, -1.05% ; Keurig Green Mountain, a division of Keurig Dr Pepper KDP, -1.82% ; and Walmart WMT, +0.04%, Target TGT, -0.26%, Whole Foods AMZN, -0.94%  and Kroger KR, -4.49% also did not respond to requests for comment.

But if such a shortage persists? “Prices will go up and restore equilibrium in the market for coffee,” said Stan Veuger, an economist at the American Enterprise Institute, a conservative-leaning think tank. “Prices will go up and there won’t be a ‘shortage.’”

“Prices of these beans will go up,” added Alex McKay, a Harvard Business School economics professor. “This is how we’ll allocate coffee to people who want it the most.”

Gerrity says that she doesn’t see this filtering through to U.S. consumers any time soon. But she added that if international coffee prices rise a long way, that could happen.

Typically, the cost of green, unroasted coffee makes up only a small percentage of the total retail price, so even big changes in the underlying cost of the coffee are likely to have only a small effect on how much consumers are likely to pay.

In a store or a coffee shop, “a lot of the costs you’re paying for are the labor costs, the rent of the location, and the production process,” said McKay.

At $1.22 a pound, raw, unroasted coffee prices make up barely a third of the cost even of cheap coffee bought in a tub at an inexpensive supermarket. They account for even less of the cost of premium coffee, experts say. The cost of the raw beans accounts for only about 5 cents of the cost of a typical cup of coffee served as a beverage, they add.

As a result, a 20% jump in raw coffee prices might add only about 20 cents to the cost of a pound of coffee in the store and a single penny to the cost of a cup of coffee in a diner. The retailer may well just absorb the costs rather than trying to pass it on to the consumer, the experts suggested.

“I would strongly predict that if [the raw coffee] price went up 20% from where it is now, you would see no rise whatsoever in the retail price of good quality coffee,” says Emory’s Roberts.

It’s unclear how much of next year’s shortfall may be due to climate change. “Some of the production issues could be related to climate change, [but] others are market-based,” said Aaron Davis, a senior researcher at London’s Royal Botanic Gardens and co-author of a recent paper on climate change and coffee growing.

Davis and other experts warn that climate change may hurt coffee production in some parts of the world in the future, threatening rising prices for consumers here and economic pain for producers there.

Meanwhile, the ICO reports that global coffee production by exporting countries has risen by about a fifth over the past 10 years and by around 50% over the past 20.

Outside the Box: Tapas bars, high-end gyms and pet services — how did a college education turn into a luxury vacation?

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Does a four-year college degree need to cost a quarter of a million dollars?

Don’t be indoctrinated into believing the slick marketing. Schools are masters at selling the college experience. “Would you like to live in a castle? Done.”

From king to pauper.

Our 16-year-old twin sons are beginning this journey. We don’t like what we see. Observing some pretty interesting aspects of college life, we noted the following amenities:

Multi-level, Equinox-style gyms on campus.

Indoor running tracks.

Luxury high-rise dorms.

Crepe and tapas stations in the school cafeteria.

Juice bars.

Free puppy petting during finals week.

A campus-run sports bar.

Sports facilities rivaling Yankee Stadium.

Of course, the tour ends at a Bloomingdale’s-like bookstore. God forbid if we left without buying a $75 hoodie!

How much of the $1.5 trillion in crippling student-loan debt has gone to finance these expenditures? The financial arms race for the bucks of wealthy parents seemingly has no limits. Pretty impressive stuff — but there’s a rather large college-mascot elephant lurking in study hall.

WTF does this have to do with education, future earnings potential and life satisfaction?

We would argue: Nothing.

This delusionary world void of any semblance of adulting is setting up students for a major post-college hangover. Moving from a Club Med-like dorm to a cramped apartment shared with four roommates, along with a boatload of student debt, is one big reality check.

One of our sons, who has an excellent BS meter, made a sharp observation: “This would be a great place to go on vacation for a week or two.”

Bingo!

We’re not saying college isn’t a terrific investment for certain students — just not at this price.

Here’s what you get for a college degree:

We need to rethink this idea. Is brainwashing already-extended parents with a severe case of FOMO what our country really needs? School is supposed to be about education, not status.

Money has an interesting perspective on this crazy scene. Is a massive, singular four-year investment preparing students for the next 40 to 50 years of their work life?

Would a dedicated program of lifelong learning, rather than a four-year vacation-like experience, be a wiser choice?

Are these expensive four years attended at the height of emotional immaturity the best way to figure out the next century?

Farnoosh Torabi, host of the podcast “So Money,” has an interesting perspective. She says:

“So there may not be all of this investment up front, going to get a degree. Maybe it’ll be, I’m going to get training or a certificate so that the next 10 years I can do this, but then I’m going to pivot and do that. That’s how I would go about it. Smaller investments in my advancement and education throughout my life. Because life changes; I change. There’s no sense in putting all my eggs in the college basket if I’m going to be living for a century. And of course, what I learned won’t be applicable anymore because I learned it 60 years ago and I’m still working.”

For some, it’s worth it.

Some massively expensive private schools become an audition for entitlement.

We are taking the “under” in this debate.

Is there anything wrong with attending a community college for two years and then transferring to a four-year university?

Why are state schools often one-third the price of their private counterparts?

Why does everyone have to go to college?

If you believe college tuition should go toward multimillion-dollar contracts for football coaches or a penthouse-like dormitory — go for it.

For the rest of us, we need to reconsider a lot of the conventional wisdom that’s being thrown at us. Does the only acceptable education have to be such an expensive one?

That’s the quarter-of-a-million-dollar question.

It’s symbolic that many of these tours end at the school’s gift shop.

Consider yourself lucky if your biggest expense is an overpriced sweatshirt.

Here’s a list of the most expensive colleges in the country:

Tony Isola is head of the Educator/403(b) Division at Ritholtz Wealth Management LLC in New York. Follow his blog or his Twitter account @ATeachMoment.

The Conversation: Here’s how to gauge the true cost of just a bare-bones retirement

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The U.S. population is aging at such a rate that within a few years, older Americans will outnumber the country’s children for the first time, according to census projections. But rising rents, health care and other living costs mean that for many entering their retirement years, balancing the household budget can be a struggle.

To get a better understanding of how much of a struggle, a team at the University of Massachusetts Boston established a benchmark against which to measure the financial security of Americans aged 65 and over. Jan Mutchler is professor of gerontology and director of the Center for Social and Demographic Research on Aging in the Gerontology Institute at UMass.

Question: What is the Elder Index?

Jan Mutchler: The Elder Index is a measure looking at how much income is needed for older people to maintain independence and meet their daily living costs while staying in their own homes. It is based on the bare-bones budgets of singles and couples aged 65 or over. For 2019, we found that the average income needed by an older individual in rental housing to meet all basic needs was $25,416, and for a couple in rental housing it was $36,204. The index breaks this figure down county by county.

Q: Why did you create it?

Mutchler: The brainchild of researchers at the Gerontology Institute at UMass Boston, including myself, the index was created to provide a realistic benchmark for what it costs older people to get by and remain independent. It can help guide and support the development of policies meant to promote the well-being of older adults and also serve as a financial planning tool for older people and their families to help alleviate economic insecurity.

Q: How does economic insecurity differ from poverty?

Mutchler: The federal poverty line is widely used to summarize hardship and insecurity, but we know that the benchmark is way below what an adequate lifestyle requires. The Elder Index defines economic security as the income level at which older people can cover basic and necessary living expenses without relying on loans, gifts or income support programs like food subsidies and housing assistance. It is also uniquely focused on thresholds specific to older adults’ expenses.

Q: What are the major living costs faced by older Americans?

Mutchler: Housing and health care top the list. Medical bills in particular can be very expensive, especially as people move into their 70s and 80s and encounter chronic conditions that require ongoing treatment and medications. For couples, health care is especially costly — there is no family plan for Medicare, meaning couples pay twice the individual rate. Social Security plays a critical role in meeting these costs. Many older people also draw on pensions, savings or other assets to pay the bills or continue to work into later life, at least on a part-time basis. But even so, a significant number of older Americans are forced to make ends meet by holding back on the health care they need, going into debt, or using other strategies that do not support health and well-being.

Q: How big a problem is economic insecurity among the elderly?

Mutchler: Our research shows that in 2019, half of older Americans living on their own lacked the income needed to pay for their basic needs, as did 23% of couples. Taken together, we estimate that more than 10 million people aged 65 or older and living independently have incomes below the Elder Index. In short, it is a big problem.

Q: Who are most financially vulnerable among Americans over 65?

Mutchler: Older people in regions with low average incomes, such as in Mississippi and Louisiana, are vulnerable. But there is also a problem in more affluent areas that have seen jumps in the cost of living and housing, such as in parts of Massachusetts and Vermont, and notably in the San Francisco area. Older people who live alone also tend to be at higher risk. To some extent, this just reflects economies of scale in their household budgets. But people living alone are also more likely to be women and are older on average, which would also put them at a higher risk.

It is important to note that the vulnerability seen in later life is a reflection of lifelong disparities in the ability to earn an adequate wage, accumulate Social Security credits and save for retirement. For these reasons, women and older people of color both are more likely to be at risk.

Read: Planning to sell your house to fund your retirement? Think again

Q: What measures can be taken to better support older Americans?

Mutchler: Any effort has to include protecting and enhancing our Social Security system, as many older people rely on it for most or all of their income. Likewise Medicare, which forms the basis for receiving medical care for nearly all older Americans. Meanwhile, subsidies and benefits targeting low-income older people can really help. But these programs need to be widened, as typically the only people eligible are at or very near poverty levels, rather than being economically insecure. Communities, too, need to better promote economic security through affordable senior housing and making sure older residents receive the benefits available to them.

Finally, we really need more conversations about what the true cost of retirement living is and how people can plan for that. At present, people are not adequately informed. As a result, too many people enter retirement without financial security.

This was first published by The Conversation — “Turning gray and into the red: The true cost of growing old in America”.

Now read: We get $2,740 a month from Social Security and want a warm, friendly city near the ocean. Where should we retire?

In One Chart: This bleak chart makes scary reading for all home buyers

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The median age of U.S. home buyers is now 47, according to the data compiled by Deutsche Bank DB, +0.14%. In 1981, the median age of American home buyers was 31.

Notably, the median age has increased by eight years since the financial crisis. Much of this rise can be attributed to the disappearance of young, first-time home buyers from the housing market.

Notably, the median age has increased by eight years since the financial crisis. Much of this rise can be attributed to the disappearance of young, first-time home buyers from the housing market.

In larger U.S. cities that have proved more popular with today’s young adults, home prices have skyrocketed. Inventory is a significant challenge: Baby boomers are increasingly choosing to age in place, while home builders have focused primarily on the upper end of the market since the Great Recession.

That’s left few entry-level homes available for younger people to buy.

The average annual income of home buyers has increased to over $93,000 in the wake of the affordability crisis, according to the National Association of Realtors. That’s well above the national median income of $61,937.

Read more: These housing markets will feel the biggest impact from the ‘Silver Tsunami’

Younger adults are also struggling under the weight of student debt. A 2017 study from the National Association of Realtors and education-financing nonprofit American Student Assistance found that 83% of non-home owners said they believe that student-loan debt has delayed them from buying a home.

That figure was higher among the older cohort of millennials who were born between 1980 and 1989. That same report indicated that student debt was causing millennials to delay home ownership by a median of seven years.

And those heavy debt loads can make it more difficult to get a mortgage for a home. “No one talks about this anymore, but it’s still really hard to get a mortgage,” said Nela Richardson, investment strategist at Edward Jones. “You need to have pristine credit.”

Read more: Here’s one thing you should be shopping for this holiday season

Other factors are also at hand beyond the financial. Millennials have delayed marriage and having kids, for instance, which are milestones that tend to lead to people buying homes.

Delaying home ownership could have unfortunate ripple effects in the future, as owning a home is one of the primary drivers of wealth.

Matters may, however, improve in the years to come. TransUnion TRU, +0.04%  has predicted that at least 8.3 million first-time home buyers will enter the mortgage market between 2020 and 2022, thanks in part to low unemployment, low mortgage rates and rising wages.

And research has suggested that the demand to own a home remains extremely high among Generation Z, the generation that follows millennials.

Mortgage rates hold steady, but economists say don’t expect that to last

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Mortgage rates didn’t budge much over the last week amid mixed signals as to the economy’s strength as the holiday season kicked into full drive.

The 30-year fixed-rate mortgage averaged 3.68% during the week ending Dec. 5, unchanged from the previous week, Freddie Mac FMCC, +1.44%  reported Thursday.

Compared to a year ago, mortgage rates were more than a full percentage point lower. During this same week last year, the 30-year fixed-rate mortgage averaged 4.75%.

The 15-year fixed-rate mortgage dropped one basis point from the previous week to an average of 3.14%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.39%, falling four basis points from a week ago.

Home buyers today are particularly rate-sensitive given the high cost of homes across the country. When rates increased at the beginning of 2019, home-buying activity decreased substantially. But this summer’s drop in rates helped spur an uptick in activity in the housing market, including both sales and home construction.

The trajectory of mortgage rates will largely dictate whether the good times keep rolling for the housing market in the New Year. Economists have projected that rates will stay below 4% next year.

Realtor.com has forecast rates to hit 3.88% by year’s end in 2020, while Fannie Mae’s latest projections show rates dropping to 3.5% in the fourth quarter of 2020. But these forecasts could be off the mark. This time last year, for instance, Fannie Mae projected that mortgage rates would reach 5% in the fourth quarter of 2019.

Also see: These housing markets will feel the biggest impact from the ‘Silver Tsunami’

“This week the economy sent mixed signals, leaving mortgage rates unchanged,” Sam Khater, Freddie Mac’s chief economist, said in the latest report released Thursday. “Survey data for manufacturing and service industries varied while construction spending fell modestly. However, home-buyer demand continued to improve, rising 8%.”

Mortgage rates generally track the direction of the 10-year Treasury note TMUBMUSD10Y, +1.41%. The 10-year Treasury yield has seesawed over the last week, on the heels of that same economic data.

Read more: Here’s one thing you should be shopping for this holiday season

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