Category Archives: millennials

Homeownership? It’s for the dogs

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Who knew adding a dog to the mix would lead more millennials to homeownership?

According to a recent survey from SunTrust Mortgage, one-third of millennials in the U.S. said they purchased their first home to have better space or more yard for a dog. Pups led to homeownership for millennials more so than marriage or a baby. Forty-two percent of millennials who have yet to purchase a home said their dog, or their desire to have one, will be a reason they buy a home.

“Millennials have strong bonds with their dogs, so it makes sense that their furry family members are driving home-buying decisions,” said Dorinda Smith, SunTrust Mortgage president and CEO. “For those with dogs, renting can be more expensive and a hassle; homeownership takes some of the stress off by providing a better living situation.”

In addition to Fido, the largest percentage of millennials (66 percent) want more living space, which led them to purchase their first home, while 36 percent cited a desire to build equity. One-quarter of millennials said marriage was the key factor that led to purchasing their first home, while 19 percent said the birth of a child made them take the leap.

“Millennials are trending toward homeownership,” Smith added. “Demand among millennial-aged, first-time homebuyers is robust, and we expect them to continue adding strength to the housing market.”

Earlier, this year, NAR found that 61 percent of households either own a pet, or are planning to get one, while nearly one-third of pet owners have not put an offer on the house because it was less than ideal for their animal.

More millennials having children and moving to the suburbs

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As the millennial generation ages, their preferences are evolving.

According to the National Association of Realtors® 2017 Homebuyer and Seller Generational Trends study, 49 percent of millennial homebuyers have at least one child, up 4 percent from last year and 6 percent from 2015. Approximately two-thirds are married, comparable to previous years.

With a growing family, less millennials are choosing city life when buying. Only 15 percent choose to buy in the city, down 2 percent from 2016 and 6 percent from two years ago.  Two-thirds of millennials who purchased in the past year are first-time homebuyers.

Eighty-five percent said homes are a good investment.

“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” said NAR Chief Economist Lawrence Yun. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families. A significant boost in new and existing inventory will go a long way to ensuring the opportunity is there for more of them to reach the market.”

However, the survey also found that younger baby boomers are more apt to consider their millennial children when they are purchasing a home, with 20 percent purchasing a multi-generational home, and 30 percent reporting it was because their adult children had never left or were moving back home.

Millennials have made up the largest generation of homebuyers since the report’s inception in 2013. More than 90 percent of millennials searched for a home online, and 90 percent reported they purchased a home using an agent.

“Online and mobile technology is increasingly giving consumers a glut of real estate data at their disposal,” said NAR President William E. Brown. “However, at the end of the day, buyers and sellers of all ages — but especially younger and often DIY-minded consumers — seek and value a Realtors®’ ability to dissect this information and use their expertise and market insights to coach buyers and sellers through the complexities of a real estate transaction.”

Baby boomers expected to lead remodeling over next decade

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For the past two decades, baby boomers have been the leaders in renovation spending.

According to the Demographic Change and the Remodeling Outlook, it looks like they aren’t backing down any time soon. Renovations by homeowners 55 and older are expected to increase by nearly one-third in the next decade (by 2025), representing more than 75 percent of total gains.

In 2025, baby boomers are expected to represent 56 percent of all renovation spending, up from 31 percent in 2005. Generation X members are expected to finally do the remodeling they have put off, due to the economy, and millennials are also expected to pour some money into renovations in their newly-purchased homes. Remodeling is expected to grow about 2 percent each year until 2025, the report found. In 2015, homeowner remodeling hit $340 billion, a new high.

“With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.

The study said that rising home prices are leading owners to update their homes, but this could be making these homes even pricier when they do hit the market. Baby boomers are most likely to update their homes to be more accessible, while millennials are updating for energy efficiency and automation.

“The remodeling industry should see numerous growth opportunities over the next decade,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Strong demand for rental housing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to in invest in upgrades.”

Compared to previous generations, millennials are less apt to move

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In 2016, only one in five millennials had moved in the past 12 months.

This is a decrease from 2000, when 26 percent of young adults had moved in the previous year, as well as 1963, when, yet again, 26 percent of young adults reported moving the year before, according to a recent report from the Pew Center.

The Pew Center analyzed why millennials aren’t as apt to move. Most likely, it’s due to lack of funds, thanks to lower-paying jobs. In fact, most millennials who did move in 2016 did so for a job, the Pew Center reported. Student loan debt is also a huge part of millennials’ inability to get a mortgage, and purchase a home.

For those millennials that did move last year, 22 percent moved into a home they purchased. Comparatively, in 1981, 35 percent of young adults the same age moved into a home they had purchased.

There are also three main factors that separate millennials from previous generations. One of the top reasons is that less millennials are married at this age than previous generations. Today, 42 percent of millennials aged 25 to 35 live with their spouse. In 1963, 82 percent of those aged 25 to 35 lived with a spouse.

Millennials are also less likely than previous generations to own a home, only 37 percent live in an owner-occupied that isn’t their parents’, compared to 56 percent of baby boomers at the same age. Finally, millennials are less likely to have children at this age.

Despite not owning a home, thus making it easier to move, and not having children, many millennials are hesitant to move, thanks to lack of funds, high student debt and their inability to get a mortgage.

 

 

 

Real estate predictions for 2017

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“Millennials will be buying properties. 2017 will be a year when we see more loan applications and purchases for millennials,” said Abby Shemesh, founder and CEO of Amerinote Xchange, on what trends he anticipates for the real estate industry in 2017.

Another trend Shemesh expects is that baby boomers will be downsizing this year. However, he said where the boomers and millennials buy may not be where you would expect.

“A lot of folks are saying that millennials will be purchasing in ‘hot’ cities, I disagree. A lot of markets are so saturated and overpriced. My assessment is that you will see a huge increase in cities that are not being focused on. It will be a huge migration, depending on the job situation for millennials. They may be moving to not-so-sexy cities.”

He said bigger cities in Pennsylvania will still see growth this year, but not at the rate they have experienced in the past year. “It will be steady in Philadelphia and Pittsburgh, but there may be slower periods. As for smaller areas, they should see more inventory this year, so they may be attractive.”

As for the baby boomers, he said they may still be heading south, but not as south as before. He thinks the southeast may see an uptick in boomers, as they strive to find housing that is affordable.

Shemesh also believes we will see mortgage rates increase. He predicts they will be as high as 4.75 percent, especially if the economy is doing well, but doesn’t see it going any higher.

“The president-elect should not make too much trouble for real estate market, at least for now,” he said. “I feel that his business practices align with how real estate markets can grow. But if he does something in politics that would significantly affect the American economy, it would affect real estate market eventually,” said Shemesh.

How can Realtors® prepare for the housing market this year? Shemesh believes it’s all in how you do business.

“I’ve seen agents blow by their competition by thinking outside the box. Broaden horizons and get more creative. All Realtors® in all areas can benefit from that advice. Let go of what you think you’re supposed to do. Apply yourself in a way that would be creative. Don’t be another agent waiting in line to submit a bid.”