Across the country, it's more of a sellers' market than one that favors buyers, despite mortgage rates being in historically affordable territory. That's because asking prices continue to climb while inventory shrinks.
Despite these less-than-stellar buying conditions, however, homeownership has risen among members of Generation X, according to a newly released survey from the National Association of Realtors. Additionally, these same individuals are selling quite a bit as well, reducing their debt load in the process.
Nearly 30 percent of Gen X – individuals born in the 1960s and 1970s – are looking to buy a new home this year, according to NAR's survey research. That's up from 26 percent this time last year and is the largest share since 2014.
Gen X plagued by setbacks in recent years
Generation Xers have had a rough go it of as of late. NAR's survey found that many 40- and 50-year-olds have been mired in debt, preventing them from getting off the sidelines and into the marketplace, whether to purchase for the first time or as repeat buyers. Indeed, in an effort to get out from under back payments, Generation X was the most likely age group to have sold a foreclosed property in 2016.
Lawrence Yun, chief economist for the NAR, noted that on a median basis, Gen X sellers stay approximately 10 years in their residence before deciding to put up for sale.
"[This] puts many of them selling a property they bought right around the time home values were on the precipice of declining," Yun explained. "Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year and are definitely needed to ease the inventory shortages in much of the country."
Shoring up the real estate supply crunch are flipped homes, or those that are sold by the previous owners – typically investors – within a year of their purchase and after implementing various upgrades to increase curb appeal. Last year, approximately 193,000 single-family houses were flipped, according to ATTOM Data Solutions. That's a 3 percent uptick from 2015, the largest growth observed in more than a decade, when 276,000 properties were flipped, including condominiums.
Flippers see ROI of 49 percent
Home flipping can serve as a financial strategy to reduce debt, which as the NAR survey found many Generation X members are experiencing, often due to student loans. Last year, the median amount spent on a flipped home was $189,000, ATTOM Data Solutions reported. That gave investors a profit of roughly $62,624, not taking taxes into account. This equals a return on investment of nearly 50 percent.
So long as sellers put their property up for sale at the right price, their investment will likely pay off. However, just as location is a key component of housing sales, so too is timing. According to a study conducted by Zillow, homes that go up for sale between May 1 and May 15 sell roughly nine days faster than what's typical. How long properties stay on the market varies from month to month, but in January, the average was 50 days, according to NAR's analysis. A year ago during the same period, the average was 64 days.
In some parts of the country, May listings are snatched up even quicker than the national average. For instance, Chicago, area residences sold 12 days faster, Zillow reported, and in Los Angeles, 15 days.
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