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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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doubt isolation boomers

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

Experts, politicians say improving homeownership will be complex

(REAL ESTATE) As tax reform remains hotly debated, experts and politicians discuss the way forward to protect homeownership, and thus the economy.

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jeb hensarling on homeownership

The consensus is that if more Americans can sustainably buy homes, the economy and taxpayers will benefit.

As the nation’s homeownership rate hovers around a 50-year low, it’s time to acknowledge and start addressing the range of issues suppressing the market today, according to individuals at a Realtors and S&P event this month.

“When there is no hope for owning real property, we are taking a huge step backwards for the future of our country,” said Senator Heidi Heitkamp (D-ND) in her opening remarks.

Politicians and industry experts at this event outlined a number of key issues that need to be addressed to improve homeownership rates and market stability in the U.S: Buying incentives, student loan debt, and affordability.

But most of all, it’s important that the complexity of the housing market never be ignored. There’s not just one issue to be addressed, or a single solution that will fix it all.

For example, leading up to the 2007 housing crash, home buyer enthusiasm peaked as mortgage rates were low and investment return rates high. It was an environment that many Americans felt was too good to pass up.

Many also feared getting priced out of the market if they didn’t buy right away and take advantage of the current market state, a phenomenon dubbed “buyer’s panic,” according to economist Dr. Robert Shiller. Shiller noted that public sentiment about the risks of home buying peaked in 2006, but homes were still bought left and right.

Chairman Jeb Hensarling (R-TX) of the House Financial Services Committee observed that sustainable homeownership plays a key role in protecting the overall economy, citing the “unsustainable housing finance rollercoaster” that caused the Great Recession, a “lost decade” of lost economic growth.

“The lesson is clear: Housing unsustainability doesn’t just create unaffordability,” stated Rep. Hensarling. “It can create economic catastrophe.”

Overall, interest rates and tax law aren’t the only market drivers, something industry leaders should keep in mind as tax reform legislation enters the House and the economy continues to slowly bounce back from the Great Recession.

Post-recession debt burdens aren’t helping the nation’s homeownership rate, either. Student loan debt is suppressing young adult homeownership in particular.

“Eventually, time will start to soften the impact of those high student loans,” Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, explained during a panel. “Jobs are coming around, wages are picking up.” But this is not to say the issue isn’t having real ramifications right now.

For those struggling to repay student loan debt, homeownership is simply not an option right now, according to Jessica Lautz, managing director of survey research and communication at NAR.

Meanwhile, many who are managing their student loan debt well aren’t in position to buy a home, either, a trend also identified by the National Association of Realtors 2017 Profile of Home Buyers and Sellers.

Another panel comprised of Dr. Lawrence Yun of NAR, Alex Nowrasteh of the Cato Institute, and Boyd Campbell of Century 21 discussed affordability concerns involving the supply and demand issues facing the housing market today.

Debt burdens aside, homeownership is just becoming too expensive for many Americans. “Prices have risen roughly 40 percent in the past five years, while people’s income has risen at a much slower rate,” Yun said. “This rise in prices forces an affordability concern.”

This particular issue isn’t just a real estate matter. The labor market plays a role as college-educated workers are priced out of areas where the job market is strong but housing prices are high.

As the number of families buying their first single-family homes remains well below the 50-year average, conversations about the range of issues impacting the housing market must continue.

“Prospective homebuyers face headwinds from the market, in the halls of Congress and in their own family’s budgets,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor and CEO of RE/MAX Boone Realty. “We can’t solve them all, but we know more can be done to smooth the way for creditworthy borrowers who want to own a home.”

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Homeownership

Preparing your clients for a long-distance move

(REAL ESTATE) You’re a community resource, even when a client is looking to move far away – here’s how to help prepare them.

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moving boxes move

A local move is never easy, but when moving across the country, it becomes a lot more complicated. The internet has made it easier to research utilities, communities and services.

But when you have clients who are preparing to move out of the area, you might want to make sure they are aware of these six mistakes that commonly occur.

1. Falling for a moving scam.
Rogue operators often give cost estimates sight unseen. Make sure clients know that this is a red flag. This publication of the Federal Motor Carrier Safety Administration is a good place to start.

2. Waiting until the last minute
Many people put off doing the research to move and be ready. Don’t make that mistake. Start packing early. This gives time to purge and pack. Label all boxes as you go. Have a timeline that shows when the moving company will pick up belongings, when the new place will be ready and where to stay in between.

3. Paying for clutter to travel across the country
The moving company charges for weight and size of goods. Purge the clutter and unused items from the house before the move to avoid adding extra charges to the move.

4. Setting up utilities in your new home
There are so many details to manage before the move, it can be easy to overlook this step. Moving into a home without electricity or water can be trying.

5. Forgetting to cancel services at the old home
The landscaping service, pest maintenance company, or pool person may not realize the family moved. Don’t run up unnecessary charges by neglecting to cancel these services.

6. Getting too stressed
Moving across country should be an adventure. Sure, there is going to be stress. Remind your clients to manage their stress and make the most of their last days in the community with friends and family. With careful planning, everything will go much smoother and this can happen.

You don’t have to credit anyone, just have your own materials prepared for clients moving long distances – you’re the ultimate resource and the community relies on you, even when they’re leaving!

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Homeownership

The Granny Pod could be the alternative to nursing homes (and why people will soon demand bigger back yards)

The Granny Pod looks like a guest house and sits conveniently in any backyard – they plug right up to existing plumbing and electrical and allow both caregiver and senior to have their own space while remaining connected.

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I’ve spent most of my life living everywhere but the United States, and from what I’ve seen in other cultures, when couples tie the knot parents come with the marriage! That doesn’t necessarily mean the parents live with the kids (although I’ve seen that in countries like Japan, Korea, and Turkey), but I feel safe saying that it’s a given the kids will taken in/take on/take over their ailing parents at some point in said parent’s lives (Italy for example).

I’m not sure the US is set up that way. The big business of senior living facilities and nursing homes tells me otherwise.

But that might be changing thanks to the Granny Pod and similar mono-living facilities that can be installed in a person’s backyard (which is why we suspect people may demanding bigger back yards in coming years).

Close, but not TOO close

MedCottages or “Granny Pods” seem to be a viable solution for taking care of elderly family members without giving up the independence Americans put so much emphasis on.

A recent story explains that Reverend Ken Dupin created the MedCottage as an alternative to nursing homes, as 78 million baby boomers head toward retirement.

These 12 feet by 24 feet pods can sit conveniently in any backyard and plug right up to one’s existing plumbing and electrical. The pods allow both caregiver and senior to have their own space while remaining connected.

Retiree support for Granny Pods

For its part, AARP, the lobbying group for aging Americans, has gone on record to assert that local zoning laws pose one of the biggest obstacles to making such dwellings a practical solution to caring for aging family members in what it calls “accessory dwelling units.”

AARP spokesperson, Nancy Thompson said “the MedCottage has some of the features the organization advocates in accessory dwelling units, but not all of the universal design features that could be useful for people of all ages.” She does add that it’s a step in the right direction for accessory dwelling units.

No more condo fees

I’m no social worker, but studies bear out that human contact is vital as we grow older. Even in a worst case scenario (when an individual living in a nursing home is alone in their room for much of the day), they at least meet other patrons at lunch or dinner, and at whatever social outings are plugged into a daily schedule. For all the close circuitry and monitoring the Granny Pod offers, I don’t know if it takes the place of human contact, so hopefully families will remember the ties that bind them and do more than just monitor a screen to see if Granny is okay.

Another benefit of the Granny Pod is that once it’s paid for and installed, that’s it – no more monthly rent or condo fees that can deplete a retiree’s resources.

Granny Pod starting a movement

According to the Washington Post, other companies seeking to make similar structures are Seattle-based FabCab (whose name comes from Fabulous Cabin), and San Francisco-based Larson Shores Architects, which designs what it calls “Architectural Solutions for the Aging Population,” or ASAP, and its “Inspired In-Law” dwellings” demonstrates that assisted living facilities aren’t the only item on the menu.

As this type of structure catches on, it may threaten nursing homes and even retirement condo villages, and could influence the sizes of yards builders offer in coming years. Industry practitioners should be aware of the trend, and be able to offer this type of setup to clients who are actively considering options for their parents (the solution may just be a bigger back yard).

#GrannyPods

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