Lombardy lane ArlingtonDid your parents help you buy your first house? I know that down payment money is not supposed to be “borrowed,” but it can be a cash gift.

Of course, with a Fannie Mae loan, you can put down as little as 3 percent for a down payment, but there are strict limits on the prices of properties.  I think this cute $165,000 1950s ranch in Westwood, Arlington would work. The giant mortgage service company that is publicly traded but also quasi owned by the Federal government went on a quest to find out what kind of assistance young adults get from their parents, and how that assistance impacts their likelihood of buying a home.

We are all bemoaning the drop in homeownership among young adults: since the Real Estate bust, homeownership rates of households headed by 25- to 34-year-olds has fallen by nearly 10 percent, to 36.9 percent in 2014, when it was almost 46 percent in 2006.Lombardy lane Arlington.jpg kitchen

Of course, 2006 was the era of easy peasy money, no income documentation loans, etc. It clearly helped young home buyers.

So do kids buy more real estate if mom and dad make it easier to get a loan because they help with the down payment?

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More often, home is where the degree is

More often, home is where the degree is.

Long ago I was told that it’s more lucrative to be paid to think than to do. Turns out that piece of advice is true on many levels that intersect with homeownership.

Several years ago, the Federal Reserve Bank of New York released data that seemed to say that student loan debt was dragging down homeownership rates among younger buyers. It’s a belief that persists.

At first blush, it makes sense.  If you have more debt, you have less to spend on housing because your debt-to-earnings ratio was weakened.  However, new research is blowing a hole in that homily. It seems that when corrected for education, it’s not debt that’s holding back homeownership rates, it’s education itself.

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Millenial Wages

Konrad Putzier, a reporter at The Real Deal in New York City, tweeted this chart yesterday. It shows the plight of NYC’s millennials: 28.4% work in retail or hospitality – up from 21.9% in 2000 – but wages are down. Annual wages in retail or hospitality are less than $30,000 a year in one of the most expensive cities in the world. How can you save up for a home (or a NYC condo) on $30,000 a year? I wonder what the numbers would be for Dallas Millennials –certainly we would have far fewer well-paid workers in the financial industry. Still, Millennials have been escaping the pricey cities (once Mom and Dad stop supplementing) for places like Nashville, Dallas and Austin.

But now they find that even the most affordable cities are getting pricier.

Millennial-Homeownership-Affordability

Skyrocketing prices and appraisals are good news for Dallas homeowners who want to sell, but what about those who want to buy? According to data just released by Apartment List, 79 percent of Millennials who are renting would prefer to own a home, but cite high prices as the biggest barrier to homeownership.

The data, which comes from 30,000 Millennial renters surveyed by Apartment List, shows that those who want to own a home are putting off their purchase until at least 2018. But if housing prices continue to rise, could the affordability gap grow, too?

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colins-tiny-house

People are a lot less likely to build tiny homes, if they can afford to build at all.

What is the ideal home size today? What are Millennials buying, if they are buying? What socio-economic group is building now? The National Association of Home Builders knows these things.

The median size of homes that people wanting to build or are currently living in is 1,859 square feet. This is according to an NAHB (National Association of Home Builders)  survey of 4,326 recent and prospective home buyers that I have been meaning to tell you about.

Also, when asked how big their ideal home would be, most people said 2,020 square feet, or about 9 percent bigger than the current average size. So yes, it’s true: everyone wants a bigger house.

No wonder then that the average size of a house that started construction last year (2015) hit a record 2,721 square feet, according to the NAHB, citing data from the U.S. Census Bureau. That’ edging pretty darn close to 3,000 square feet.

Almost half of those homes have four or more bedrooms, 38 percent have at least three full bathrooms, gotta be a powder room, and 24 percent have a garage that can fit at least three cars.

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The average sales price of a home like this is $351,000. So much for the “Small House Movement”.

But according to Dow Jones MarketWatch, one reason why these figures are so hefty is that right now, only folks with the moola to build are building, and therefore skewing averages:

It isn’t that all Americans, in general, are clamoring for huge homes. Rather, it’s mainly the wealthy that are building right now, and they’re building big—skewing the overall average.

What about our Millennials? (more…)

millennials real estate

Millennials use their smart phones extensively in the homebuying process and use apps for research. Photo: Garry Knight

For years, millennials have largely been thought of as renters, not buyers, but that has changed. Millennials, born from the early 1980s to the early 2000s, now represent the largest group of homebuyers in the U.S. at 32 percent, taking over from Generation X, according to the 2015 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends study, which evaluated the generational differences of recent home buyers and sellers.

This matters because the way millennials buy real estate is markedly more technology-driven than older generations, and Realtors need to adapt to their style if they want to keep up, says David Maez, Broker and Co-Owner at VIVO Realty.

“There’s lots of frustration among older agents in working with the millennials, but they’re not going away and agents need to learn to adapt,” Maez said. “It’s exciting because of all of the technology that’s available to us to make it easier to buy and sell properties. How people buy properties is going to continue to evolve on the technology level.”

millennials real estate

Take, for instance, the telephone. Many Realtors are used to speaking with clients, but millennials are much more into texting.

“With millennials, you have to communicate how they want to—they are big on texting and many don’t even answer their phones,” Maez said. “Some agents have had success using Facebook messaging because [their millennial clients] are not checking their email, either.”

The smartphone is key to a lot of the differences in millennial real estate patterns. More than half of them search for homes on their mobile phones and 26 percent of those buy a house they found that way, according to research from NAR.

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More Millennials are buying homes, but are you prepared to serve them?

More Millennials are buying homes, but are you prepared to serve them?

Millennials may not have been homebuyers in the past, but it seems they’re quickly coming around to the idea – especially if you look at recent stats.

In fact, according to comScore data, 65 percent of Millennials looked at real estate sites or apps in August alone. The reason? For some, it was income increases, for others it was rising rents, great interest rates, and just general unhappiness in their current living situation.

Whatever the cause, it seems Millennials are ready to buy – if only they can find the time to look, the right property and the money for a down payment.

But while they deal with those hurdles, it’s time for the industry – real estate agents in particular – to start preparing for their arrival. Millennials aren’t like the buyers of the past, and they won’t be happy with the traditional hassles of the homebuying process. If you want to please this generation, it’s time to make some changes.

Have a Millennial buyer? Want to make sure you please them? Here are four ways to get it done:

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One of the current listing on Airbnb in downtown Dallas offers this nighttime view. Photo: Airbnb

One of the current listing on Airbnb in downtown Dallas offers this view for $72 per night. All photos: Airbnb

“Try before you buy” is a hard concept to implement in the world of real estate. But a new partnership between Airbnb and realtor.com aims to do just that for potential homebuyers, letting them experience a specific neighborhood before purchasing there.

The partnership is particularly focused on millennials, who now represent the largest group of homebuyers in the U.S. at 32 percent, recently taking over from Generation X. This age cohort, born from the early 1980s to the early 2000s, is about 79 million strong, and their purchasing power is estimated to be $170 billion per year.

The Airbnb-realtor.com partnership aims to reduce some of the unknown factors associated with relocating to a new community. Here’s how it will work: Visitors to realtor.com will see an “Airbnb before buying” option for certain properties, and the choice will also appear on the homepage and on for-sale listing pages. Potential buyers will be able to book accommodations on Airbnb ranging from single-family homes to condos, lofts, and other properties located near their chosen neighborhood.

“As we offer a variety of unique accommodations in neighborhoods across the country, we’ll be able to allow potential home owners the special opportunity to experience those neighborhoods as if they already live there,” said Chip Conley, Airbnb head of global hospitality and strategy.

Millennials are extremely technology-driven in their home-buying efforts, according to the 2015 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends study. This partnership plays perfectly into that, allowing them to make all arrangements online.

“I think it’s brilliant—this could give [millennials] a taste of a neighborhood and change them from renter to buyers,” said Jay Forrester, a Realtor with Ebby Halliday Preston Center.

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