Attractive Prices and Record-Low Mortgage Rates Have Yet to Generate Stronger Home Sales

Median home prices in Fountain Valley are holding steady at four-year lows as mortgage rates teeter at record low levels.

It would seem to be a perfect time to buy a home, but other factors like a high unemployment rate, stagnant wages, tighter lending policies and a shaky economic outlook continue to keep buyers away. Mortgage News Daily reported this week that “mortgage rates and most things related to bonds have ventured back into record setting territory. Stock markets are at the tipping point of full-blown panic and interest rates have been the main beneficiary.”

But so far, buyers are not taking advantage of the rock bottom rates. Instead, they are investigating other less risky options like renting, becoming roommates or moving in with parents and grandparents in a multigenerational home. It is a direct result of continued high unemployment and a flat economy.

eVantage Real Estate reports that the median list price of a home in Fountain Valley stands at $574,100. That’s down from $579,000 one month earlier. And prices on 46 percent of homes on the market in Fountain Valley have been reduced.

So where are all the buyers? Many continue to look for rentals until the market improves. But rents have been rising steadily, so that’s not the best option for everyone.

MPF Research in Carrolton, Texas reports that Orange County renters are paying an average of 2.7 percent more in rent than they were a year earlier. The rental market is so tight that the research firm expects rents to rise as much as 5 percent, or $73, more a month.

Occupancy rate is 95.4 percent, and average rent stands at about $1,475.

Becoming a roommate can be an option for singles or a couple without children, but that can be costly as well. Rooming in Fountain Valley and nearby Westminster can cost $600 to $1,000 a month. Roommates often have their own bathroom and kitchen privileges, but there are privacy issues, and a decision has to be made on how to divide up grocery and utility costs.

So faced with higher rents, potential problems in rooming and more difficulty in buying a home, more young people are considering living with their parents. And more parents are living with grandparents. It’s nothing new, and was commonplace during the Great Depression.

But it’s looking more attractive to younger Americans just looking for an affordable place to live. It’s not uncommon in Fountain Valley and elsewhere to have Generation Xers, born from the late 1960s through the late 1970s or Generation Y, born from the mid-1970s to mid-1990s living with Baby Boomers, born during the post-World War II baby boom, and the parents of Baby Boomers.

Newsday.com reports that the U.S. had about 500,000 more households that were multigenerational in 2010 than in 2009, according to an AARP Public Policy report. More than 7 million American households are now home to more than one generation.

While it can be a money-saving option for children and their children, while providing some cash to grandpa and grandma if rent is charged, multigenerational households are not without problems. Grandparents can be used to the quiet life, while the younger generations are more independent. Also, young children also invade the quiet lives of the elderly.

The Dutcher & Zatkowsky law firm, specializing in elderly law, points out that whether the kids are moving back until they find their dream job, or parents come to live with their children until they find the right retirement community, the goals and practical steps to reach the goals must be discussed.

Also, if two generations of a family plan to buy a home together, then many other details have to be considered. They have to consider tax and estate-planning considerations. That’s where an attorney might be necessary.

In addition, multigenerational homes must be designed for all the age levels that will live in them. That might mean remodeling bathrooms to suit both kids and the elderly.

It’s not a perfect situation, but a practical one that can get families through hard economic times.