5 Reasons Why Millennials Buy a Home [INFOGRAPHIC]
Buyer Demand Surging as Spring Market Begins
Last fall, some predicted that the 2019 residential real estate market would be a disaster. There was even belief we might experience a housing crash like the one that occurred during the last decade.
However, according to two separate reports*, buyer demand dramatically increased over the last three months, leading into this spring buyers’ market (the March data is not yet available).
Both the ShowingTime Showing Index and the National Association of REALTORS Buyer Traffic Index show that buyer demand has increased in each of the last three months.
Why the increase in demand? Increased buying power.
According to the National Association of Realtors’ Economists’ Outlook Blog, purchasing a home has become more affordable, which has led to increased demand.
“Due to the combination of falling home prices and mortgage rates, the income needed to make an affordable mortgage payment (mortgage no more than 25% of income) on a median-priced home with 10% down payment and 30-year fixed rate mortgage decreased from $60,425 in June 2018 to $53,783 as of February 2019, and the difference of $6,642 represents a gain in buying power because one can afford a home purchase at a lower level of income.”
It appears the spring buyers’ market is going to be much stronger than many had projected. Whether you are selling or buying, this is important news.
*The methodology behind the indices:
The ShowingTime Showing Index
“The ShowingTime Showing Index® tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends.”
The National Association of REALTORS® Buyer Traffic Index
“In a monthly survey of REALTORS®, NAR asks respondents ‘Compared to the same month last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?’ NAR compiles the responses into an index, where an index above 50 indicates that more respondents reported “stronger” traffic than “weaker” traffic.”
Are Low Interest Rates Here to Stay?
Interest rates for a 30-year fixed rate mortgage have been on the decline since November, now reaching lows last seen in January 2018. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates came in at 4.12% last week!
This is great news for anyone who is planning on buying a home this spring! Freddie Mac had this to say,
“Mortgage interest rates have been steadily declining since the start of 2019. These lower mortgage interest rates combined with a strong labor market should attract prospective homebuyers this spring and could help the housing sector regain its momentum later in the year.”
To put the low rates in perspective, the average for 2018 was 4.6%! The chart below shows the recent drop, and also shows where the experts at Freddie Macbelieve rates will be by the end of 2019.
If you plan on buying a home this year, let’s get together to start your home search to ensure you can lock in these historically low rates today!
Home Value Appreciation Stops Falling, Begins to Stabilize
The percentage of home price appreciation on a year-over-year basis has decreased each month for over a year. The question was how far annual appreciation would fall. It seems we may now have the answer.
In a recent post on the National Association of Realtors’ Economists’ Outlook Blog, it was revealed that Realtors are starting to sense that home values are beginning to stabilize and that we may see appreciation beginning to accelerate again:
“About 3,000 REALTORS® who responded to NAR’s February 2019 REALTORS Confidence Index Survey had more optimistic— although modest— home price growth expectations over the next 12 months. Respondents expect home prices to typically increase by 1.9 percent nationally, up from 1.4 percent in the January survey.”
The thinking that home appreciation has bottomed-out was also confirmed in two additional housing reports recently released:
CoreLogic Home Price Index – The analysts at CoreLogic increased their projection for home appreciation for the next twelve months to 4.7% as compared to the 4.6% they projected in their previous report.
The Home Price Expectation Survey – In the 2019 first quarter survey, the nationwide panel of over one hundred economists, real estate experts, and investment & market strategists increased their projection for home value growth in 2019 to 4.3% compared to the 3.8% increase they had projected in the fourth quarter of 2018.
Agents working the business every day, one of the premier data companies in the real estate space, and one hundred housing experts all agree: home price appreciation has ended its decline and looks to be stabilizing… and may even accelerate.
Home Buyer Demand Will Be Strong for Years to Come
There has been a lot written about millennials and their preference to live in city centers above their favorite pizza place. Some have even gone so far as to say that millennials are a “Renter-Generation”.
And while this might be true for some millennials, more and more research has surfaced that shows for the vast majority, owning a home is a major part of their American Dream!
New research shows that 66% of millennials who currently rent are determined to buy a home! Seventy-three percent of those surveyed by Pulsenomics plan to buy a home in the next five years, with 40% planning to do so within the next two years!
“Millennials want to own a home as much as prior generations,” Ali Wolf, Director of Economic Research at Meyers Research says. “We saw millennial shoppers scooping up homes in 2018—and 2019 will be no different.”
Are you one of the millions of renters who are ready and willing to buy a home? Let’s get together to determine your ability to buy now!
Why Pet-Friendly Homes Are in High Demand
One of the many benefits of owning your own home is the freedom to find your ‘furever’ friend. By pointing out the aspects of your home that make it ‘pet-friendly’ in your listing, you’ll attract these buyers, rather than alienating the 68% of American households that have a pet!
If you are one of the many homeowners looking to list your home for sale, how do you stand out to the millions of pet parents searching for their dream home?
Whether a dog person, a cat person, or someone who prefers the company of another pet species, 99% of pet owners say that they consider their animal to be family. When finding a home, 95% of animal owners believe it is important that a housing community allows animals.
A study by the National Association of Realtors (NAR) revealed that there are many aspects of the home buying, selling and owning experience that have been greatly impacted by our love for our pets.
This should come as no surprise, as $72 billion was spent on pets in the U.S in 2018. NAR’s President William E. Brown shed some light on the impact of pet owners and their home search.
“It is important to understand the unique needs and wants of animal owners when it comes to homeownership. REALTORS® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.”
The Power of Pets When Choosing the Right Home
- 89% of pet owners say they would not give up their pet due to a housing restriction
- 81% of Americans say their pets play a role in their housing situation
- 31% of animal owners have refused to put in an offer on a home because it wasn’t a good fit for their animals
- 19% of Americans say they would consider moving for their pet
- 12% percent have moved for their pet
New home builders have actually begun installing retractable pet gates that tuck away neatly inside door jams as a highly requested feature in new homes to attract pet-parents.
So, if you are a homeowner looking to sell in today’s pet-friendly environment, point out the features of your home that will attract pet owners:
- Fully fenced in backyard – (91% of pet owners ranked this as the most important feature of a home to accommodate their pet)
- Locations of dog parks/walking paths/pet-friendly beaches in the area (71% ranked this as the top feature of any neighborhood they would consider)
- Proximity to veterinarians/groomers/pet supply stores (31%)
Americans love their pets and will look for pet-friendly features in the home they wish to buy, so take advantage of this knowledge by pointing out your home’s ability to meet their needs.
What to Consider When Choosing Your Home To Retire In
As more and more baby boomers enter retirement age, the question of whether they should sell their homes and move has become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement.
According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.
“It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.”
Would moving to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?
“If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.”
The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $9,700 in equity last year.
“As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline.”
As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind of not having to do the maintenance work yourself?
“Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind.”
As scary as that thought may be, any additional security is helpful. An extra set of eyes looking out for you always adds to peace of mind.
“Renting won’t do if the dog can’t come too! The companionship of pets can provide emotional and physical benefits.”
Consider all of your options when it comes to bringing your ‘furever’ friend with you to a new home. Will there be necessary additional deposits if you are renting or in a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?
“No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility.”
Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn’t mean that down the road you won’t need your home to be more accessible. Installing handrails and making sure your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.
“Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!”
How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.
When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, let’s get together to evaluate your ability to sell your house in today’s market and get you into your dream retirement home!
3 Graphs that Show What You Need to Know About Today’s Real Estate Market
The Housing Market has been a hot-topic in the news lately. Depending on which media outlet you watch, it can start to be a bit confusing to understand what’s really going on with interest rates and home prices!
The best way to show what’s really going on in today’s real estate market is to go straight to the data! We put together the following three graphs along with a quote from Chief Economists that have their finger on the pulse of what each graph illustrates.
“The real estate market is thawing in response to the sustained decline in mortgage rates and rebound in consumer confidence – two of the most important drivers of home sales. Rising sales demand coupled with more inventory than previous spring seasons suggests that the housing market is in the early stages of regaining momentum.” – Sam Khater, Chief Economist at Freddie Mac
“A powerful combination of lower mortgage rates, more inventory, rising income and higher consumer confidence is driving the sales rebound.” – Lawrence Yun, Chief Economist at NAR
“Price growth has been too strong for several years, fueled in part by abnormally low interest rates. A mild deceleration in home sales and Home Price Index growth is actually healthy, because it will calm excessive price growth — which has pushed many markets, particularly in the West, into overvalued territory.” – Ralph DeFranco, Global Chief Economist at Arch Capital Services Inc.
These three graphs indicate good news for the spring housing market! Interest rates are low, income is rising, and home prices have experienced mild deceleration over the last 9 months. If you are considering buying a home or selling your house, let’s get together to chat about our market!