Forget keeping up with the Joneses; kids these days just want to blow the Joneses out of the water.

Forget keeping up with the Joneses; kids these days just want to blow the Joneses out of the water.

Many consumers have spent too much on a luxury handbag, or signed on for a car payment that might require a regular phone call to Mom and Dad. But the price tag of appearing successful, wealthy, and independent has just gone up, as a new Bankrate.com survey shows that 30 million homebuyers have felt pressured to overspend on a home.

The survey also accounts for how peer pressure comes into play when shopping for things like school supplies or holiday gifts.

Ted Rossman, an industry analyst with Creditcards.com, said potential homebuyers should remember to identify costs beyond what’s posted on the “for sale” sign.

“You need to be careful not to overextend yourself, and you need to account for taxes, insurance and maintenance,” Rossman said. “But what feels like a stretch at first could become a much more reasonable monthly payment over time. That’s because your income could very well go up, and assuming you opt for a fixed-rate mortgage, that payment will remain static. So you’re insulating yourself from inflation in a way that renters are unable to do. Property taxes and construction costs generally go up over time, so factor that in, particularly if you’re planning major home improvements.”

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Have you ever wondered why Texas cities are more liberal than outlying areas?  It’s not a Texas thing.

Large urban environments are typically more ideologically liberal around the globe. Like a blast zone, liberal ideals diminish the further away you get from an urban environment.  But why?  The clichés of vibrancy, higher average education, and these days, younger populations.  But research is beginning shed a slightly different light on the phenomenon.

In a nutshell, liberalism today can be equated with empathy. The regular immersion and interaction between the daily lives of diverse peoples makes it easier to empathize with the effects of policies and ideas on people you know. Conversely, the further people are from those affected by negative actions, the easier it is to accept them. Call it skin in the game.

From the media we select, to friends (sometimes family), to the very real estate we inhabit, humanity has built its own echo chambers (often referred to as “bubbles”) in recent decades.

As a nation we cared more about war when there was a draft that (most) everyone was subjected to. When it was your children or your neighbor who was conscripted, you paid more attention. Would the Vietnam protests have changed the course of that war without mandatory service? Would the U.S. still be in Iraq and Afghanistan were there a draft? Would we have gone at all?

I hear you asking what this has to do with real estate. Simple. The vibrancy brought about by urban environments is not only great at attracting good restaurants and sidewalk-littering scooters, but it’s also good at breeding empathy, which today unfortunately equates to liberalism. Unlike the faceless online world, real life is generally kinder when real people are face-to-face.

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Millennial

Photo courtesy Wikimedia Commons

It started as a drumbeat last March, as Candace Taylor of the Wall Street Journal wrote that Baby Boomers who built million-dollar, large homes, suddenly were finding it difficult to unload them because Millennial buyers (the next market of age to buy a home after Gen Xers) were disinterested in (or couldn’t afford) the homes.

Seems Boomers, who are looking to retire and downsize, and Millennials have something in common — a slim-to-nil desire to live in too much house.

“Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell,” Taylor wrote. “That is a far different picture than 15 years ago, when retirees were rushing to build elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom. Many baby boomers poured millions into these spacious homes, planning to live out their golden years in houses with all the bells and whistles.”

The Boomer generation owns about 32 million homes and account for two out of five homeowners in the country.

Tastes Change

What nobody accounted for, really, was that tastes would change, and the buyers entering the market in the mid to late 2000s would be looking for walkable neighborhoods, energy-efficient homes, and clean floor plans, for the most part.

“Design trends have shifted radically in the past decade,” Taylor wrote. “That means a home with crown moldings, ornate details and Mediterranean or Tuscan-style architecture can be a hard sell, while properties with clean lines and open floor plans get snapped up.”

A survey by Nationwide Insurance revealed that 48 percent of Millennials wanted new construction, to avoid renovations and plumbing and electricity problems.  (more…)

save

Photo courtesy Joint Base San Antonio

From staff reports

Not quite 20 percent of Americans surveyed by LendEDU said their goal was to save enough to retire one day, but almost 40 percent of them felt that goal was unattainable.

The survey was released earlier this month, and polled 1,000 Americans to understand their financial goals and their confidence that they could meet them. The data was then sorted further by generation.

Also on many minds was paying off credit card debt — 14 percent said it was a goal, but seven percent weren’t confident they would. Twenty percent said they wanted to buy their own home, but 17 percent didn’t believe they would be able to do so. 

Four percent of the post-millennial age bracket said they’d like to invest in real estate — more than the stock market or creating a retirement account. (more…)

new buyers

While the housing market might be lightly tapping the brakes as of late, a new report found that a wave of new buyers is coming — although how robustly they arrive will vary from city to city.

While there was an impressive wave of first-time home buyers over the last decade, Zillow did the math and found that in the next 10 years, an extra 3.11 million people will be at that prime first-time buyer age — 34.

“From 2019 through 2028, 44.9 million people will turn 34, the median age of current first-time home buyers,” Zillow said. “That’s an increase of 7.4 percent from the past 10 years, when 41.8 million people passed that threshold.”

Now, sure, not all of these prospective new buyers will actually be clamoring to buy homes when they hit their mid-thirties, that huge influx in potential buyers will definitely have an impact on the market.  The largest three-year generational group in the U.S. right now is only 24 to 26 years old — which means that the increased strength of their potential buying power has not been realized yet.

In Dallas-Fort Worth, it’s estimated the metro area will see about a 3.1 percent increase in potential homebuyers in that age range. Other major metros in Texas will also see increases — Austin and San Antonio well each see an estimated 14.2 percent increase, while Houston will see a 6.1 percent increase. (more…)

From staff reports

Across all income brackets, Millennials said they don’t think they are wealthy, a new survey of 1,000 people who fall in the 23-38 age bracket conducted by LendEDU revealed.

The company set out to find out how the generation that is eclipsing the Baby Boomer generation frames personal finance and the concept of wealthy.

“The 1,000 respondents were split evenly between three income brackets, allowing us to analyze where millennials from each economic class are similar and different in their views on finance,” LendEDU research analyst Mike Brown said.

The three income brackets were divided as $49,999 or lower; $50,000 to $99,999; $100,000 or higher.

LendEDU

Across every income bracket, respondents overwhelmingly said that they did not consider themselves to be wealthy. (more…)

home buyingWho is most likely to have home buying as a goal this year? Will remodeling and home improvement spending continue to grow?  We look at this and more in this week’s roundup of real estate news.

Four Percent List Home Buying a 2019 Goal

Four percent (about 10 million Americans) said buying a new home was their main financial goal for the year — and millennials were the most likely generation to claim that as a goal, a new Bankrate survey revealed.

Seven percent of millennials said they wanted to buy a home this year.

But that doesn’t mean financial goals aren’t being set. Bankrate’s survey revealed that about 89 percent of Americans have at least one goal for the year, with paying down debt being at the top of the list, with three in 10 saying that was their goal, followed by better budgeting (13 percent), saving more towards retirement (12 percent), saving more for emergencies (10 percent), getting a higher-paying job (6 percent), and investing more (5 percent). (more…)

The only hope many younger generations have to accumulate wealth is to stay cozy with grandma. Since 1995 (over a decade before the Recession), the median wealth of 25-34 year olds declined 39 percent, while 35-44 year olds declined 27 percent, and 45-54 year olds’ wealth declined 15 percent. There have been potent gains reported from 2013 to 2016, but obviously not nearly enough to offset long-term losses. The main culprits are excessive student loan debt and the decline in homeownership rates. You might say the growth of student loan debt has heavily contributed to lowered homeownership rates. To me, the chart below demonstrates why down payments are harder for younger buyers to save up for.

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