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Homeownership

Older boomers are taking over the housing market

(HOMEOWNERSHIP) New data from the NAR shows that older boomers are taking over the housing market in more ways than one.

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Times, they are a changin’

The National Association of Realtors have released data confirming what we all could probably guess, people with equity and secure income are more likely to buy homes.

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However, the numbers are in, and it is a bigger difference than we thought.

Boomers making their comeback

The first bit of big news is that Baby Boomers, older Boomers in particular make up a larger proportion of home buyers than in the past. Folks aged 62 to 70 made up 14 percent of total home buyers in 2016, not to mention 21 percent of single female buyers.

That range is also more likely to prioritize personal use rather than investment in their real estate purchases:

19 percent cite retirement as their reason for purchase, with a further 19 percent motivated by the desire to live closer to family and friends.

Older buyers are also the most willing of any demographic to move long distances, at a median move distance of 25 miles, and are more likely to buy long-term, with 31 percent of buyers stating that they don’t plan on moving again and expect to live in their new home permanently.

Plot twist

That’s where things get interesting. Despite being the most active home buyers in the marketplace, the household income of buyers in the 62 to 70 range is meaningfully lower on average than the median income of buyers overall, $76,800 to the median $88,500.

Older Boomers offset short income with comparatively higher equity.

Over half (56 percent to be exact) of buyers use proceeds from the sale of a previous residence to fund their down payment, and 6 percent take funds from an IRA. They’re also the most likely demographic to have saved for a home for more than 2 years.

Role reversal

Bigger news, while older buyers are typically more conservative buyers, tougher and more demanding than the darn kids who won’t get off their lawns, older Boomers seem to be reversing that trend.

Boomers aged 62 to 70 aren’t just the most active home buyers in the marketplace, they’re the most likely to be happy with the purchase process.

Boomers reported a remarkable 91 percent satisfaction rate. They’re also the least likely to describe the paperwork as a difficult step, and most likely to state they made no compromises on their home purchase.

Bigger yet – older folks are looking to sell.

They’re the second most active home sellers in the marketplace, making up 21 percent of sellers overall. Boomers sell for the same sorts of reasons they buy: 21 percent because of retirement, and 26 percent to be closer to family and friends. As indicated by their buying patterns they also have the highest equity of any demographic at 36 percent, an average cash value of $60,000.

New target

People are living longer, working longer and making money longer.

Sales and marketing tends to emphasize younger demographics, but it’s increasingly clear that those looking to buy and looking to sell should both be looking for the oldest folks in the room.

#BoomerTarget

Matt Salter is a writer and former fundraising and communications officer for nonprofit organizations, including Volunteers of America and PICO National Network. He’s excited to put his knowledge of fundraising, marketing, and all things digital to work for your reading enjoyment. When not writing about himself in the third person, Matt enjoys horror movies and tabletop gaming, and can usually be found somewhere in the DFW Metroplex with WiFi and a good all-day breakfast.

Homeownership

If homeownership protections die under tax reform, real estate pros also pay a price

(REAL ESTATE NEWS) The heat is rising on tax reforms, and NAR activates their members to speak up and protect homeownership.

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Treasury Secretary, Steven Mnuchin yesterday offered an “absolute guarantee” that tax reform would be signed into law by the end of the year and warns Congress, “You could blow up the stock market if you fail to cut taxes.”

With these and other statements from the Administration, it is clear that the process is speeding up – supporters and critics are bracing themselves.

That includes the Realtor population.

The National Association of Realtors (NAR) put out a Call for Action to members on this topic today, the first of this year.

Taxes are a convoluted topic, but NAR’s analysis is that since homeowners pay 83 percent of all federal income taxes, and the reforms being debated could result of a 10 percent decrease in home values, middle class homeowners are not being protected.

NAR’s analysis concludes that for homeowners with incomes between $50,000 and $200,000, the average tax hike would be $815.

Our sources note that the current framework being debated keeps the MID (mortgage interest deduction) “in name only,” and a larger number of homeowners will see tax increases with this as well as state and local tax deductions being nixed.

NAR argues the current tax reform framework threatens homeownership as tax incentives are diminished and real estate professional also pay a price (literally).

People on both sides of the political aisle feel disappointed in the threat to homeownership incentives, particularly given that President Trump had drawn a line in the sand at the mortgage interest deductions just six months ago.

According to Doug Yearly, CEO of Toll Brothers, “making changes to the MID would be very bad policy.” He goes on to state,” this country has prided itself on encouraging homeownership, and MID has been around for decades. It’s worked very well.”

Agree with them or not, NAR is urging their members to “Tell Congress – Do not raise taxes on middle class homeowners in order to cut taxes for corporations,” and offers a pre-written letter that can be sent to their Representatives within seconds.

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Homeownership

American marriage is happening later and it’s not why you think

(HOMEOWNERSHIP) Marriage is happening later and later with Americans and economists believe it’s not just about the changing face of relationships; it’s also about money and wanting to wait for financial stability.

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As we know, homeownership is a cornerstone of American family life. Homes provide long-term financial stability as a major investment for homeowners. Furthermore, they also provide a strong environment in which to raise a family; so many of us have fond memories of running around our backyards, or cozying up in the family room.

So, it stands to reason that homeownership and marriage are tied together; many couples will buy a home soon before or soon after they get hitched.

With all that said, some of the following statistics may be alarming, as it points to a trend that may play into the delay of homeownership.

Lots of data gathered over the past few years shows Americans are marrying later and later, if at all, according to a report from The Guardian. Today, Half of American adults are married, compared to 75 percent in 1960. The disparities are mostly consistent with class divisions.

Per the Guardian article, “26 percent of poor adults are married, compared with 51 percent in 1990.” That same study found 39 percent of the modern working class of adults are married, but that number was 57 percent in the 90s.

Education is closely tied with financial status, so an education disparity is also present. Today, 50 percent of adults with a high school are married; that rate was over 60 percent 25 years ago.

As the Guardian puts it, “Young people are increasingly seeing marriage as a “capstone” rather than a “cornerstone” event, a crowning achievement once other goals have been reached, rather than a launchpad for adulthood.”

That achievement is financial stability, and many more Americans are feeling a financial crunch.

There’s data to back this up, too. For example, a poll found “nearly half of never-married adults with incomes under 30k say being financially insecure is a major reason” behind their lack of marital commitment to a partner.

Part of steady income is a steady job, and past Pew Research found 78 of never-married women wanted a future partner to have a steady job.

A decline in manufacturing jobs is contributing to this as well, per some economic research on the subject, which may help to explain how the steepest drops in marriage rates come from the lower and middle class.

It’s not unreasonable to speculate that major living costs factor into that decision as well. For example, with real estate prices going up around the country, especially in major cities with strong job markets, the capstone that is owning a home is pushed farther away from the average American.

If marriage and homeownership are so closely tied together, the delay of one may also contribute to a delay in the other.

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Homeownership

Why a $1,490 home is a complicated purchase

(HOMEOWNERSHIP) Homeownership is still out of reach for some buyers given the down payments and fees, but what if you could buy a place for less than it costs to rent?

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It’s no secret that the housing market is a roller coaster ride of highs and lows. When you hear that a house is listed for sale at $1,490 (really!), your first thought might be, “that price is missing a few zeros;” I thought the same thing as well. It seems like such a ridiculously low price for a home, there must be an error, right? Wrong. There really is a house listed for $1,490.

The 580 square foot home is located in Washington D. C. It has one bedroom, one bathroom, and does indeed cost a mere $1,490 to own. It does, however, come with a few strings attached, according to Realtor.com®.

One major string is that the home is a limited-equity co-op or LEC. Realtor.com® describes this opportunity in a couple of steps with the help of Eva Seidelman, an attorney with the Neighborhood Legal Services Program in Washington, D.C.

First, the tenant of the building were originally renting. They decided to form a cooperative association in 2010 and purchase the building from the landlord by using a low-interest loan from the District of Columbia Department of Housing and Community Development.

This gave the tenants the ability to transform the building from the existing rental units into more affordable co-ops.

This brings us to our next step. In order to live in the building, the person must fall below the co-op’s maximum income limit of $60,839 for an individual, or $69,530 for a two-person household.

Since the medium income in Washington D.C. is around $75,628, a good portion of residents would qualify for this LEC.

Once you’ve paid your $1,490, plus taxes, transaction and broker fees, it doesn’t matter if you get a raise that’s puts you above the income limit, or lose your job completely, as you own the co-op.

Included in that price, in maintenance and repairs for as long as you live there. If you consider the average price to rent is approximately $1900/month and the average home sells for around $570,000, this LEC is a bargain.

As with anything else, it depends on whom you ask.

If you’re looking to build home equity, LECs are probably not for you. The appreciation on LECs remains fairly low, often because they are so affordable to begin with (less money invested, less to appreciate). However, of you’re looking for an affordable home in a less than affordable area, LECs can be amazing opportunities for homeownership.

LECs are a solid option for recent college graduates, people recovering from foreclosure, senior citizens, anyone re-entering the workforces or relocating for work or personal reasons, or anyone on a budget who would rather own than rent.

While LECs are not the spacious mansions of Hollywood Hills, they are a viable option for people looking to own, and given maintenance and repairs are often included, you cannot find a better option for a tight budget.

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