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trends

Boston Is Market To Watch In 2015

Great story from Boston Magazine

 

Boston Ranks as a Market to Watch in 2015

After analyzing real estate markets around the country, both Boston and Middlesex County are listed in the top 10 housing markets to watch next year.

Photo provided by Shutterstock.

Real estate search database Trulia has released their 2015 Housing Outlook report, including the top 10 housing markets to watch in 2015. After analyzing market potentials and trends throughout the country, researchers selected 10 markets with the capacity for real estate growth in the upcoming year. Factors like job growth, vacancy rate, and the amount of millennials ready to enter the work force influenced their report.

According to the report:

Our 10 markets to watch have strong fundamentals for housing activity. These include solid job growth, which fuels housing demand, and a low vacancy rate, which spurs construction. We gave a few extra points to markets with a higher share of millennials. These young adults are getting back to work and that will drive household formation and rental demand. We didn’t include markets where prices looked at least 5% overvalued in our latest Bubble Watch report.

Here are the Top 10 Housing Markets to Watch in 2015, in alphabetical order:

•  Boston, MA
•  Dallas, TX
•  Fresno, CA
•  Middlesex County, MA
•  Nashville, TN
•  New York, NY-NJ
•  Raleigh, NC
•  Salt Lake City, UT
•  San Diego, CA
•  Seattle, WA

Despite low inventory rates, over-asks, and bidding wars, the Boston market has a slue of new luxury apartments aimed at millennials, who are predicted to be one of the highest groups of home buyers this year.

Categories
architecture

Micro-Units Pop Up In Boston

Micro-Units Pop Up in Boston, Fetch High Prices

 

A great repost from Scott.

One Seaport Square, which broke ground earlier this month, will include 96 “innovation units” ranging 300 to 500 square feet in size.
One Seaport Square, which broke ground earlier this month, will include 96 “innovation units” ranging 300 to 500 square feet in size.

Elkus Manfredi

 

 

 

 

The new breed of micro units popping up in Boston and Cambridge’s hottest neighborhoods are definitely small, but they are packing some macro rents.

The micro revolution took a major step forward earlier this month when developers broke ground in Boston’s Seaport District on a $600 million, twin tower, apartment, retail, and entertainment complex.

One Seaport Square will include 96 “innovation units,” studios and one-bedrooms ranging from 365 to 685 square feet in size. Targeted at up-and-coming entrepreneurs and young professionals, it is the largest number of micro units to be built to date in Boston.

Developers are mum on the prices for the tiny new apartments, which will have a wing of their own in the VIA tower. Overall 832 luxury apartments are slated to be built in the VIA and an adjacent tower, The Benjamin.

But if the prices set by other developers for these postage stamped size apartments is any indication, they won’t come cheap.

A 464-square foot unit at 315 on A next door in Fort Point rents for $2,700 to $2,800 a month.

Innovation units at Factory 63 leased out at roughly $1,700 a month when that hip new Fort Point rental building hit the market last year. The units are a sprawling 374 square feet.

Across the Charles River in Cambridge, the pricing is similarly high. At Avalon North Point, pricing for micro lofts starts at roughly $2,000 for 421 square feet, rising to around $2,100 for 450 square feet.

For developers, it is the best of both worlds. They get to offer units at a somewhat lower overall price point in a market where $3,000 and up for space in a new rental tower is the norm, while also maintaining a high cost-per-square foot ratio, notes Vivien Li, executive director of the Boston Harbor Association and a long-term observer of new waterfront development trends.

Take a $1,700/month micro unit, double it to the size of a one bedroom, and suddenly you are at $3,400 a month.

But developers are also trying to create units that will appeal to younger renters, offering up common space that can be used for everything from working on a startup to meeting new friends.

One Seaport’s new innovation units will have their own separate wing, with common “collaboration spaces” for budding entrepreneurs to team up on projects and swap ideas. Those renting the innovation units will also have access to an array of common areas planned for the VIA tower itself, most of which will be luxury units.

The VIA will have outdoor lounges, water features, grilling areas and gardens, according to a press release detailing the project.

And while living in a micro unit could prove cramped and maybe even a bit lonely, pet friendly policies at One Seaport and 315 on A can ensure at least a little cuddly comfort.

“The innovation unit is where you sleep and keep your clothes,” Li noted. “When you want to socialize, you have these large common areas.”

“It’s one step up from a dorm room,” she added.

Categories
trends

Boston Seaport Buildings May Rein In Rents

 

Good post by Scott at Boston.com. Check out the gorgeous renderings.

One Seaport Square May Rein In Boston’s Runaway Rents

 

Rendering of One Seaport Square, slated to open in 2017.
Rendering of One Seaport Square, slated to open in 2017.

Elkus Manfredi
By Scott Van Voorhis
Boston.com Correspondent

Take that, rising rents. More than 800 new apartments are poised to take shape near Boston’s waterfront in a massive project so large it might just help rein in the Hub’s runaway rents.

Developers of the $600 million One Seaport Square broke ground Friday on the 1.5-million-square-foot project, just across the street from Fan Pier and the new ICA in Boston’s Seaport/Innovation District.

A centerpiece of the new development will be a pair of new towers, 20 and 22 stories tall, that will be packed with 832 apartments ranging from tiny “innovation units” to spacious luxury digs.

Slated to open in 2017, the new development will put more new apartments on the market in Boston than any single project in decades.

The two towers, named VIA and The Benjamin, will come with an array of shared spaces, including gardens, places to grill, lounges, and a heated outdoor pool overlooking the skyline.

“When you bring so many new apartments, the market will adjust,” predicts Vivien Li, executive director of the Boston Harbor Association and a long-time observer of development along the city’s waterfront. “What we may find is that rents may start to level out.”

The new development will also feature oodles of new places to eat and shop, with 250,000 square feet of retail space planned for the largest shopping and dining venue yet in the Seaport. Coming attractions include the upscale ShowPlace ICON Theater, a Kings Bowl, and an Equinox fitness center.

The project is the work of a trio of high-powered developers. Veteran tower builder John Hynes, son of legendary newscaster Jack Hynes and grandson of one of Boston’s influential mayors of the last century, snapped up the sprawling collection of parking lots nearly a decade ago.

He later teamed up with the Berkshire Group and WS Development, which has rolled out a number of suburban life-style centers, including The Street in Newton and Legacy Place in Dedham.

“One Seaport Square will be our largest project in Boston,” Hynes said in a statement. “It will set the tone for just how dynamic this new neighborhood will be in all categories: commercial, residential, shopping, dining and entertainment. We cannot wait to bring it to life.”

While Hynes and his partners are mum on what rents will be for the new apartments, the developers say they aren’t looking to do just another luxury rental high-rise, but are aiming to have a wider range of apartments.

The innovation units in particular, will be aimed at young professionals, with relatively tiny apartments featuring just a few hundred square feet of space aimed at offering a more reasonable rent. But the luxury apartments are likely to draw a wide range of prospective tenants, including wealthy empty nesters attracted to the cachet of Boston’s vibrant and growing waterfront, Li said.

The apartments will join a neighborhood that’s seeing billions in new construction take shape, from office and hotel towers, to luxury condos and a $1 billion expansion of the Boston Convention & Exhibition Center.

Just across the street at Fan Pier, waterfront developer Joe Fallon has been selling dozens of multimillion-dollar condos.

“The market has really made this area hot,” Li said.

 

Aerial view of the One Seaport Square location.
Aerial view of the One Seaport Square location.

Hannah Cohen for Boston.com

 

Approximate views from the One Seaport Square location.
Approximate views from the One Seaport Square location.

Mike Diskin

 

Approximate nighttime view from the One Seaport Square location.
Approximate nighttime view from the One Seaport Square location.

Mike Diskin
Categories
analytics trends

Q4 Boston…what to expect

 

What David Bates thinks about Q4!

Boston Condos in the Last Bit of 2014: What to Expect

CurbedBoston.com by Tom Acitelli

Here’s the latest installment of Bates By the Numbers, a weekly feature by Boston real estate agent David Bates that drills down into the Hub’s housing market to uncover those trends and people you would not otherwise notice.Follow him on Twitter and check out his ebook, Context: Nine Key Condo Markets, 2.0.

holiday-house_283.jpgIt’s Q4. And while Q4 is packed with holidays, let’s not forget that it’s also chock-full of home sales. Nearly 1,000 Boston condos went under agreement during the fourth quarter of 2013, and sometimes holidays and sales were linked—like last Halloween when 12 Boston condos went under agreement, what a treat. And, on Thanksgiving 2013, twoBoston condos sellers gave thanks as they signed offers with one hand and presumably held drumsticks with the other. Also, while you might have missed the real estate door-buster last Black Friday, four Boston condo buyers didn’t; they put condos under agreement that day.

Even on the night before Christmas, when all through the house, not a creature was stirring, not even a mouse… three Boston condo sellers could be heard countersigning offers. At least that’s what the MLS data shows. Then, on Christmas itself, one Boston condo seller got a present they may not soon forget. It wasn’t an ugly sweater or something to be re-gifted, it was an acceptable sales price, so they wrapped up the paperwork and went on their merry way.

Will Q4 bring joy to Boston-area real estaters in 2014. Why not? There are plenty of reasons to buy this Q4. Interest rates are low; and, for many, new babies and new jobs crank up the home-buying motivation. And let’s not forget that what we often want most in a new year is positive change. Hey, what’s more positive change than a new home? In the last week of 2013, a week where almost nothing of consequence happens for most, 45 Boston condo buyers put units under agreement, guaranteeing their new year would start off on the right foot.

Today’s buyers, who for one reason or another missed the spring market, will note that more Boston condos were available for sale on Oct. 1 than were available for sale on April 1. Additionally, it is highly likely that there will be more Boston condos available on Nov. 1 than were available on May 1. So, if you like selection, put on your condo-buying shoes. Of course, while buyers note more selection, they’ll also note fewer competitors as it’s traditionally a slower time of the sales year—even more reason to buy in Q4 2014.

While there are many reasons to buy this Q4, it would be an injustice not to point out that it can be a great time to sell as well. Last year, 865Boston condo sellers listed their homes for sale in Q4. And, although Q4 is not known for its buyer quantity, it might be remembered for its buyer quality. That’s because the median list price of a Boston condo that went under agreement in December 2013 was $449,000. Heck, the median list price of a Boston condo that went under agreement in April 2013 was only $429,900. Can there be any doubt that holiday décor and wishes for joy, peace and goodwill toward all adds to home values?
· Our Bates By the Numbers archive [Curbed Boston]

Categories
general info trends

Three Boston Neighborhoods With A September To Remember

 

An interesting post from Curbed.com.

 

Three Hub Condo Markets Have a September to Remember

Thursday, October 16, 2014, by Tom Acitelli
Here’s the latest installment of Bates By the Numbers, a weekly feature by Boston real estate agent David Bates.

up-arrow.jpgIf September was the month that you were supposed to put down the home sale and pick up the homework, then nobody told the CambridgeSomerville and South End condominium markets. In Cambridge, the number of condominiums that went under agreement in September 2014 was 53 percent greater than did so in September 2013. In the South End, September under-agreements were up 64 percent. And versus September 2013, Somerville’s under agreements were up 18 percent and the median list price of Somerville under-agreements was up an impressive 20 percent.

These significant sales gains were in sharp contrast to the weak and somewhat flat results of many other Hub condo markets. In Back Bay, 17 percent fewer condominiums went under agreement in September 2014 than in September 2013. And, in Charlestown, September under-agreements were off 29 percent compared with the year before.

What was the leading indicator of how a market fared in 2014 versus 2013? Inventory, of course. In Cambridge, 40 percent more listings came to market this September versus last. The South End listed 20 percent more condos than it did in September 2013. In contrast, the Back Bay (-23 percent) and Charlestown (-23 percent) markets had significantly fewer condominium listings come to market than they had last September.

The increase in for-sale inventory and the advantageous market conditions combined to make this the best September for Cambridge pending sales since 2007. As well, according to MLS, data it was the best South End September for pending sales in at least as long. In Somerville, where nearly three times as many condominiums went under agreement as did in September 2011, it might have been the best ever September.

Will the uptick in pending sales continue in these key Hub markets for the rest of the year? It will depend on the amount of sale-able inventory that comes to market.
· Our Bates By the Numbers archive [Curbed Boston]

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general info

Boston Metro Luxury Town Rundown

 

Interesting post from Scott about the “W” towns.

 

Luxury Towns

Posted by Scott Van Voorhis

Thumbnail image for 190 Pond Road, Wellesley.jpg

The luxury market is red hot right now. And the suburban epicenter for multimillion-dollar home sales in the Bay State can be found in the suburbs of Wellesley and Weston.

High-end sales have always been big in these two coveted suburbs. Now both towns are nearing the point where practically all sales are in the luxury price ranges, a new report by Wellesley-based Pinnacle Residential Properties finds.

A total of 274 homes were sold in Wellesley and Weston during the first seven months of 2014. Of these, just ten homes changed hands for $600,000 or less, with just three selling for less than $400,000.

By contrast, more than twice as many homes in the two W towns – 21 – sold for $3 million and up through the end of July, Pinnacle finds. (This five bed, eight bath manse, at 190 Pond Road in Wellesley, is now on the market for $5.2 million after a price cut of $100,000.)

Another 131 homes sold in the $1 million to $2 million price range during the same period in Wellesley and Weston, the report finds.

So as the W towns go, so goes the state? Well, not exactly. Still, luxury sales are on fire in upper income towns and neighborhoods across Massachusetts right now. The number of homes fetching $3 million and up has jumped by more than 30 percent compared to 2013, Pinnacle reports.

“It has certainly been a strong year for the trade-up and luxury markets,” writes Elaine Bannigan, the report’s author and owner and founder of Pinnacle Residential Properties.

 

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general info

Four Reasons To Buy Before Winter

 

A great post below from the KCM crew.

 

4 Reasons to Buy Before Winter

by  on September 8, 2014 in For Buyers

4 Reasons to Buy Before Winter | Keeping Current Matters
It’s that time of year, the seasons are changing and with them bring thoughts of the upcoming holidays, family get togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don’t have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 11.2% (most pessimistic) and 27.8% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains: “Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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general info

What to Watch For This Fall In Boston Real Estate- Curbedboston.com

 

Very good post by Tom at curbedboston.com.

 

What to Watch This Fall in Greater Boston Real Estate

by Tom Acitelli

Christian%20Science%20tower%2C%20rendering.jpg

[Rendering from Pei Cobb Freed/Cambridge 7 Associates via the Globe]
‘Tis the unofficial start of autumn/fall this week with the passing of Labor Day, so we thought we’d dive into which trends and events in Greater Boston Real Estate Land are worth your attention in the next few months (they’re certainly things we’ll be following). Will Boston see its first $20M condo sale? Will Everett get a casino-resort? Will Revere? Can anything bring Hub apartment rents down? Come along, now, let’s get interested.

The Great Luxury Apartment Pivot
This is a phenomenon already under way and it could really pick up steam this fall: the conversion of under-construction or planned luxury apartment complexes into luxury condos. There are two big reasons for this: a dearth of available condos, especially in downtown Boston (more on this in a bit); and too many new luxury apartments going up, especially in downtown Boston (more on this, too, in a bit). Higher demand in a red-hot condo market also makes this move deliciously appealing.

Up, Up and Away Go Condo Prices
Condo sales prices throughout the region have been scaling up for many months now. Take downtown Boston (please… no, seriously…). It’s entirely likely that as you read this that area’s average condo price is $1,000,000 or more. Limited supply + seemingly insatiable demand + maddening opposition to new development + historically low (for now) mortgage rates = sellers asking, and getting, more and more—a trend sure to continue this fall.

And the Rents Came Tumbling Down (Sort Of)
We called a luxury apartment glut a while ago and it looks like it’s here. Newer developments are starting to offer mad-crazy incentives to lure tenants (two free months?!) and others are taking their sweet time leasing up. Add to this surplus of supply a greater number of vacancies in general and you’ve got the seeds of gradually lower rents, particularly at the higher-end. We think this fall will mark the end, at least for a while, of $3,000-a-month studios. It was a helluva run.

Mass. Rolls the Dice on Everett or Revere 
Mark your calendars: Friday, Sept. 12. That is when the state gaming commission is set to designate either Everett or Revere as host city of eastern Massachusetts’ casino-resort. Yes, it seems like the wrangling has been going on forever (and it has: Massachusetts has already taken longer than any other state on its casino licensing, according to The New York Times); but the deadline for a decision is clearly in sight this fall. But! So is another deadline of sorts: Election Day on Nov. 4, when voters will have a chance to repeal the 2011 law O.K.’ing casinos.

The March Toward Boston’s First $20M Condo Begins
Construction on the massive pair of towers (massive for Boston, at least) at the Christian Science Plaza is likely to start this fall. The taller of the two towers will be quite swanky, with condos and hotel rooms managed by the Four Seasons brand (the tower’s rendered above, to the left of the Pru). Speculation has already started as to whether this699-foot spire, destined to be the tallest residential one in Boston, will host the city’s first-ever $20,000,000 condo deal. Allow us to add to the speculation: Yes, or the tower going atop Copley Place will.

As always, dear reader, stay tuned.

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general info

S&P Case Shiller Composite: Prices Up 9.3%

Growth continues to cool

20-city index shows yearly price growth dropped to single digits in May

Teke WigginStaff Writer INMAN NEWS

Yearly growth in U.S. home prices continued to slow in May, but still remained well above average.

The S&P/Case Shiller 20-City Composite Index showed prices rising 9.3 percent year over year in May, down from 10.8 percent in April. Annual price gains slowed in May for all cities tracked by the index besides Charlotte and Tampa.

Source: S&P Dow Jones Indices and CoreLogic
Source: S&P Dow Jones Indices and CoreLogic
Still, prices climbed 1.1 percent month over month in May, with all 20 cities posting monthly increases for the second straight month.

Tampa registered the highest monthly price gain (1.8 percent), followed by San Francisco (1.6 percent) and Chicago (1.5 percent). Phoenix and San Diego were the only cities to show monthly increases of less than 1 percent in May, with gains of 0.4 percent and 0.5 percent, respectively.

The picture changes when adjusting for seasonal factors.

After factoring in the spring’s typical influence on home prices, prices decreased 0.3 percent month over month in May, with only six out of 20 cities showing gains.

 

Home to seven of the top eight cities showing the most annual price growth, the Sun Belt continued to lead price gains.

Despite seeing their annual price growth decrease by 2 to 3 percentage points, Las Vegas (16.9 percent) and San Francisco (15.4 percent) still posted the largest annual price increases.

The other cities that showed double-digit annual gains were: Miami (13.2 percent), San Diego (12.4 percent), Los Angeles (12.3 percent), Detroit (11.9 percent), Atlanta (11.2 percent), Tampa (10.2 percent) and Portland (10 percent).

Expanding home inventory has helped cool home prices in recent months. Economists generally view the trend as favorable because it will keep prices from rising too quickly, which hurts affordability and reduces buyers’ options.

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general info

5 Things To Know About Housing In 2014

A long but very interesting post from Housing Wire – from a national perspective – and while many of the fundamental issues do not directly reflect our local market performance…it is important to know as we  navigate our own real estate markets.

 

5 things to know about housing for the rest of 2014

See what housing insiders are saying

The future of housing for 2014 looks a lot different  than it did at the start of the year.

Either fundamentals have changed, or the evidence is getting so overwhelming that neither the most hopeful naiveté or calculating spin can cover it.

That’s not to say there aren’t bright spots, but marking the danger spots on the map is a lot more important than marking X on the buried treasure.

So here are five things to know about housing and where it’s going for the rest of 2014.

1) Luxury Sales Fly as Home Sales for the Rest Crash and Burn

Home sales among the 1%  look like they will beat last year’s numbers, and that’s about the only real bright spot in housing on the horizon, and the only thing looking positive for the rest of 2014.

Sales of the priciest 1% of homes are up 21.1% so far this year, according to Redfin. This follows a gain of 35.7% in 2013. Meanwhile, on the other side of the bridge, home sales in the remaining 99% of the market have fallen 7.6% in 2014.

It’s not that interest rates are usurious by any stretch. This is despite mortgage rates having dropped to their lowest level in more than six months. The 30-year, fixed-rate mortgage averaged 4.14% for the week ended May 22.

BlackRock CEO Laurence Fink said Tuesday that the housing market is “structurally more unsound ” than prior to the financial crisis due to its reliance on the government-sponsored enterprises of Fannie Mae and Freddie Mac.

“There are haves and have-nots, and the haves are the ones out buying,” Redfin CEO Glenn Kelman said.

2) Real Estate Investment Highly Uncertain

Concerns still linger over the state of residential investment, which contracted in both the fourth quarter of 2013 and the first quarter of 2014, as well as prices being driven up by investors rather than homeowners, and the growing affordability gap for buyers. The weak labor market means that the recovery is tenuous. Weak job growth and wage stagnation remain challenges for both housing and for the economy in general.

Federal Reserve Bank of Cleveland researchers Edward Knotek II and Saeed Zaman say there are three primary factors behind the recent slowdown in residential investment: the increase in mortgage rates since early 2013; the unusually cold winter; and a modest tightening of lending standards in the residential mortgage market.

The weather reason doesn’t really fly. As CoreLogic’s (CLGX) reported, past severe winters that have affected housing starts negatively were followed by a rebound after temperatures began to rise again. This analysis indicates there should be a rebound again this spring, but it will not be sufficient to counteract the current weakness in the market, which can’t be blamed on the weather.

Knotek and Zaman say the resumption of more normal weather and ongoing improvements in labor markets and the broader economy should allow for a rebound in residential investment. However, the researchers also note that the experiences of the past year highlight the strong interest rate sensitivity of the housing sector.

3) Investor Price Increases Push Housing Out of Reach

Home prices in the United States are just 12.8% off the 2006 peak, according to the comprehensive March home price index report from Black Knight Financial Services.

April home price data from S&P/Case-Shiller released on Tuesday, found slight increases for the month. The 10-city and 20-city composites recorded miniscule rises for March 2014, increasing .8% and .9% month-over-month.

Separately, the Federal Housing Finance Agency House Price Index found that prices continued to trend higher in the first quarter, and increased for the eleventh consecutive quarter, rising 1.3% in the first three months of 2014.

Housing affordability is being skewed by cash investors (increasingly) and institutional buyers (less so than last year) which are still accounting for almost half of all home sales. Until there is affordability, there cannot be a rise in first-time buyer participation. Which brings us to the next point.

4) Millennials Want to Buy but Can’t

DoubleLine Capital founder Jeffrey Gundlach said he is concerned that would-be young buyers are shunning mortgages even though all the evidence shows they want to buy rather than rent. So far, returning homebuyers havedominated the scene in 2014 because too many first-timers are dealing with mounting debt.

“The deferral of marriage has such a staggering impact on real estate and I just don’t think people focus on it,” said real estate investor Sam Zell, 72, whose Chicago-based Equity Residential is the largest U.S. apartment landlord. “I don’t think the multifamily market has ever had a better set of future demographics.”

Zell said he expects the Homeownership rate to drop as low as 55% from the current 35-year low, as more people delay marriage.

So what’s the good news? Now might be a good time to invest in apartments.

5) Mortgage Originations Fizzle

Mortgage originations are at their lowest level in 14 years and everyone is expecting that will only get worse as mortgage rates creep up.

Chris Flanagan, MBS/ABS strategist for BofA Merrill Lynch, said mortgage activity is going to underperform in 2014.

“We were expecting $1 trillion in gross issuance for the year (at the start of 2014.) We’re at about $200 billion now,” Flanagan said. “So we’re on track for $750 billion for the year, which is less than expected.”

He said credit remains a headwind for buyers.

“We came into this year knowing credit would be tight,” Flanagan said. “We hear anecdotal evidence that credit is loosening, but (when you consider mitigating factors to the anecdotal evidence) the end result is credit is still very, very tight.”

Flanagan said that while the FHA has lowered its threshold for FICO scores by 15 points, it hasn’t translated into increased mortgage originations.

It’s happening across the board. Bank of America (BAC) reported that its first-quarter mortgage originations fell 65% year-on-year in its earnings report. Wells Fargo (WFC) reported record net income of $5.9 billion, up 14%, or $1.05 per diluted common share, for first-quarter 2014, where as JPMorgan Chase (JPM) recorded a first-quarter 2014 net income of $5.3 billion, a drop from $6.5 billion in the first quarter of 2013.

Lawrence YunNational Association of Realtors’ chief economist, noted in the most recent existing-home sales report from NAR, “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”

The housing market has improved since the financial crisis, but it’s not clear how strong that improvement is, given that so much of it is supported by intense government subsidies, protection and backstops.

Even Federal Reserve Chair Janet Yellen concedes that housing is no longer helping – it is hurting the economy.

“One cautionary note, though, is that readings on housing activity – a sector that has been recovering since 2011 – have remained disappointing so far this year and will bear watching,” she said. “Another risk – domestic in origin – is that the recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”

Further complicating matters is the conflict between regulatory pressures at cross-purposes – a push for an affordable housing mandate versus regulatory standards for debt-to-income ratios, QM mandates and so on.

That’s where things stand as the market crosses the halfway point on the calendar year.

Anthony Sanders, distinguished professor of real estate finance at George Mason University, sums up the problem by taking a step back from the details.

“True, credit is tighter than during the housing bubble, but average FICO scores on closed loans has been dropping,” Sanders says.“But the problem remains a slow recovery for the middle class in terms of employment and income. Of course, The Fed could speed up tapering and allow rates to rise (cutting off cheap funding sources to investors). As it stands, house prices are rising while affordability for the middle class is shrinking.”