Diversions July 23, 2015

Where First Homes Are Flourishing

A stronger economy means many would-be homeowners are thinking seriously of buying that first home. Which states have the most first-time homebuyers?
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California and New York don’t make the cut for top states for first-time homeowners.

With the economy continuing to strengthen, many wannabe homeowners have decided it’s time to buy that first home, according to a GOBankingRates survey of the 10 states with the most growth in first-time homebuyers while maintaining lower levels of foreclosure rates.

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Seven out of the 10 states fall in the Northeast, including the top three. Arizona was the only western state in the contiguous U.S. to make the list. 7 Washington, D.C., has the highest median price of a home on this list at more than $500,000 – but also boasts one of the lowest foreclosure rates (.01%).

First-time homebuyer stats are from 2003 to 2013, and also show some interesting data for the top states. In West Virginia, the share of new first-time home buyers increased 58%. Foreclosures this year remained low, at 0.01%. The median home sale price is reportedly $115,850, with a monthly payment on a 30-year mortgage costing around $550 a month.

New Hampshire’s portion of homebuyers looking to purchase for the first time increased 89%. The state’s foreclosure rate is .05% and the median sales price $224,700. Buying is still cheaper than renting: A monthly mortgage payment is around $1,060 on a 30-year loan, compared with the median rent price of $1,250 in the state.

Rhode Island had the largest amount of growth in first-time homebuyers; its rate of this type of borrower nearly doubled. Foreclosures are also fairly low at 0.06%. The median rent is reported at $1,400, the monthly 30-year mortgage payment is about $1,030 based on a median sale price of $217,625.

Vermont saw a 48% rise in first-time homebuyers. The state also has one of the lowest foreclosure rates, at .02%. The ratio of first-time homebuyers in Massachusetts jumped 74%. The state also has a foreclosure rate on the lower end. Hawaii had a 53% increase in first-time homebuyers and has a foreclosure rate of .03%. The state offers a mortgage credit certificate that can reduce the federal income tax homeowners owe.

The top 10 states for homebuyers are:

  1. West Virginia
  2. New Hampshire
  3. Rhode Island
  4. Vermont
  5. Massachusetts
  6. Hawaii
  7. Washington, D.C.
  8. Wyoming
  9. Maine
  10. Arizona
The Markets July 22, 2015

ESG Portfolios Outperform Broad Market Indices

Environmental, social and governance investing has great value, Calvert attests.
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Companies are increasingly trying to mitigate potential environmental, social and governance (ESG) risks as a way to protect their brand value and ensure stable demand for their products, Calvert Investments states in a new report, “Perspectives on ESG Integration in Equity Investing: An opportunity to enhance long-term, risk-adjusted investment performance.”

“Companies are also responding to a wide range of global sustainability challenges with new business solutions that could boost financial performance and provide long-term competitive advantages,” Calvert says. “For investors who recognize the importance of considering non-financial information when making investment decisions, there is an opportunity to generate excess returns and better manage risk in investment portfolios by using ESG factors.”

Calvert analyzed data on ESG investing in various ways between June 2000 and December 2014, starting with ESG screens, then moving to stand-alone ESG investing and finishing by looking at a combination of traditional and ESG investing. “We find empirical evidence across each of these approaches that incorporating ESG factors into investment decisions improves the investment selection process and enhances risk-adjusted returns,” Calvert says.

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From December 31, 2008, through December 31, 2014, the Calvert Social Index (CSI) outperformed the Russell 1000 Index by 142 basis points on an annualized basis, Calvert says. “Importantly, ESG screens can add value through stock selection by helping investors avoid ‘bad actors’ as well as by identifying more sustainable companies,” Calvert says.

Next, when looking at portfolios that actively selected ESG stocks between March 2004 and December 2014, Calvert found that “portfolios consisting of companies showing the greatest improvement in their ESG portfolios outperform both comparable broad market indices and portfolios made up of companies with deteriorating ESG profiles.” The top-quartile ESG portfolios delivered annualized total returns of 9.76%, compared to the Russell 1000 Index’s 8.28% return and the bottom-quartile ESG portfolios’ 7.92% return.

Finally, Calvert analyzed the performance of hybrid portfolios consisting of traditional and ESG equities between March 2004 and December 2014, again separating portfolios with improving ESG scores in the top quartile from portfolios with deteriorating ESG scores in the bottom quarter—and found a difference in those quartiles’ returns of as much as 4.88%.

Calvert says that in 2014, $21.4 trillion of professionally managed assets around the globe applied ESG criteria to their investment analysis. In the U.S., $6.57 trillion on assets use ESG criteria.

Calvert’s findings mirror a recent global survey of 97 institutional investors by LGT Capital Partners and Mercer that found that more than three-quarters incorporate ESG criteria when investing in alternative asset classes, and more than half (57%) believe ESG investing has a positive impact on risk-adjusted returns.

Calvert's report can be downloaded here.

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