A Different Type of Millennial

Demographics and Millennials 

Not All Millennials are alike in how they view housing needs.

I did an open house in Edison Township NJ and observed that due to the demographics of the specific area, most of the people coming into the house to take a tour were of Indo-Asian heritage, average age in the 40's to 50's with a pretty much established family size. The house was fully renovated and expanded to a five bedroom home, approx. 2400 sq. feet and built for a large family in mind. So far so good. (not really). What was not taken into consideration was that large families are not made up of just parents and children. Households for homes this size are made up of Parents, Grandparents and grandchildren (sometimes great grandchildren) and a form of communal living is more the norm than the exception. The older Grandparents need to be on the first floor, to avoid climbing up stairs and make it easier for them to get around inside the home.This is not uncommon within this demographic, where the buyers are somewhat driven and successful professionals or business owners, preparing for their children to go to college and eventually returning home afterwards to start their careers, find a spouse and eventually expand the family (always migrating back to the parental home). The thought is that with the anticipation of family expansion (and staying close together) and aging parents, in this case becoming grandparents, a home like this would be ideal to grow into for the long haul. 

I had the pleasure of meeting with a young couple, who seemed to be in their early 30's at best with no children in tow and was pleasantly surprised to get their take on why they would look a a house this size. I asked for honesty and they were nice enough to share their thoughts with me on the down side of the homes they had seen (as well were in). They were looking at starting a family of their own as well as facing the reality of older parents coming to live with them in the near future, knowing that it would be expected of them. Millennial's, in this culture, are marrying later, in order to go into a relationship better established financially, but with that, there is a sense of duty or even obligation to the parents to keep the family close together as they grow older, in order to give them the personal care they would eventually need. I was impressed that even though these were young professionals getting on with their lives, the bonds of family were still kept strong and duty to the family is done naturally and without question.

This isn't only something seen in the Indo-Asian communities, it's actually the norm for most Euro-Asian ethnicities, housing needs are shifting back to the large family home, especially for families migrating from other countries (1st and 2nd generation nationals). Most families come here to start a new life in this country, working hard for little money and no benefits to support their children who came with them, building on the value and resources of a close knit family. Today we see the American millennial's quite differently. We see them as well educated, career focused, high-tech and so on, striking it out on their own and each man for themselves.This is a great definition for second and third generation Americans that may have detached from the family hub because the family has already risen to some level of socioeconomic stability from previous generations, but not for the new arrivals from foreign lands looking to reestablish themselves here, in this new land legally. Yes, they are driven, hard working and focused, but all the efforts, of all the family members, are always brought back to the family head of household so they may prosper as one unit, taking care of each other financially and emotionally. This is how they can afford to buy these large homes.

Builders, Architects and contractors, pay close attention to the following. Baby Boomers make up a considerable part of the population and most of them had all to do to raise a family and try to get their children into higher learning institutions. Most of the Baby Boomers were faced with a roller coaster of economic highs and lows and many didn't plan for old age too well either (especially first generation that may have arrived later in life). At the end of the day there wasn't much left over to plan with. That being said, as parents become grandparents and start to become unable to keep up with the changing times around them as well as possible declining health, they become more dependent on their older, more established children to get them through this phase of life. 

What I'm getting at here is that most homes built in suburbia were colonial or cape style homes with bedrooms on the upper level and basement laundry rooms, built for the ideal family consisting of just mom, dad and two kids. Today's buyer, in this family centered culture, is better described in the preceding paragraphs and the need for the first floor suite (with bathroom) for the grand parents and laundry facilities on the main bedroom level are in high demand.Without question any builder who is doing rehab construction or even new build, keep this thought in mind. Larger homes are making a comeback to families as described here, but don't forget these two must haves when in the design phase of your project. As a side note, the basement has become the play room for the children as well as a storage area.

Change the design to fit the need. Change isn't coming, with this demographic, It's HERE.
#millennials #builders #community #realestate #dominickleone #fastrealtysales #dominickleonesellsnj.com #familyvalues

Let me know what you think. Feel free to leave a comment below.

Thanks - Dom.

Zestimates Can Ruin a Community

Let me give you an property valuation without looking at your home.

A listing I closed on, recently, showed up on Zillow, which still had an inflated Zestimate of the property and photos from a previous listing. This wasn't even updated to the current list price of $470,000, which was what it was the latest list price. This is the type of nonsense that realtors put up with having to dispute incorrect information posted on Zillow. Here is a community that hasn't had a sale, with the exception of this one, in over twelve months. As a home seller, ask yourself if you can afford to wait this long to sell a home, that may not even appraise? Every month on the market can reduce your list price by 1%!
Trust the professional who is familiar with your local area before trusting Zillow. At least he will visit your home. 

Over Priced Zestimate

tHE 

The actual list price was $20,000 above Market Price. This home sold for $450,000.

Rental and Second home investments still strong

The market is still in full swing and swinging even faster with the anticipation of interest increases looming in the near future.

Click on the article below and let me know what you think.

Top 5 Reasons You Should Not For Sale By Owner

Reprinted from KCM group 12/26/16

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

• 51% on the internet
• 34% from a Real Estate Agent
• 9% from a yard sign
• 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Drop a comment below, I always like to hear back from all of you.

What's in Store for the Luxury Real Estate Market in 2017?

Reprint from: RISMEDIA, Saturday, February 11, 2017

— Eight years after the housing bubble, homebuyers are still exercising caution. This is particularly seen in the luxury real estate market, which ended 2016 on a slow note. A combination of oversupply and rising housing costs in cities like San Francisco and New York left buyers feeling choked out. Will the market improve in 2017? Experts have mixed feelings.

"We have seen inventory come back at a steady pace, and buyer demand is strong enough that it will continue to keep the market moving as we go through the next 12 months," David Charron writes in The Washington Post.

But others aren't so sure. Over-development across the country and around the world has left the luxury housing market "soft," according to Beckie Strum at Mansion Global. The result is competition for dollar buyers in the flooded market; however, thanks to the Brexit and other global political upheavals, the dollar is strong compared to other currencies. This means that buyers looking to spend with American money will be able to get even more for their cash.

Rising Mortgage Rates Play a Role
In addition to the increase in both housing costs and supply, mortgage rates are also rising around the country. The biggest jump occurred right after Trump was elected, reflecting a cautious optimism that his presidency would be good for the economy. In addition, in December 20216, the Federal Reserve raised interest rates by 0.25 percent. This is a signal that the Fed is seeing and trusting positive economic conditions: the 2016 rate hike was the second time in a decade that the Fed decided to raise rates.

Implications for REALTORS®
What does this mean for REALTORS®? Higher mortgage rates in the early part of this year could potentially coax more buyers into making a home purchase before mortgage rates get too high.

"We should expect the early part of 2017 to be filled with a brisk pace of not only homes going under contract more quickly, but also taking less time to reach a settlement date," Charon writes, which means that the length of time that a house stays on the market can be expected to drop in the early part of the year.

In addition, as the post-election euphoria wears off, cities like New York could still be faced with a surfeit of available properties. The housing market in the Bay Area is also expected to struggle. Home prices in the area have been steadily rising for the past five years, jumping to $680,000 in December 2016. The combination of high home prices and rising mortgage rates led to a decline in Bay Area home sales at the end of the year.

According to Zillow, home sales will continue to drop on the coasts, while the markets that will see stronger sales will be further inland. This includes surprises like Nashville, where the housing market is blooming as a result of lower rent prices.

Even as renting becomes more affordable, Zillow cautions that construction for new homes may be impacted by the labor shortages that may result from Trump's restrictive stance on immigration.

"A shortage of construction workers...may force builders to pay higher wages, costs which are likely to get passed on to buyers in the form of higher new home prices," according to Zillow Chief Economist Dr. Svenja Gudell.

Comments and opinions welcome.

Skyrocketing Rents Begin to Fizzle (not as much as you may think)

RISMEDIA, Friday, February 03, 2017:

Skyrocketing rents will begin to fizzle in 2017, driven by a multifamily market marked by less starts and oversupply, according to the Freddie Mac Multifamily Research Group's 2017 Multifamily Outlook.

"Demand for rental units is at a historic high due to demographic changes and lifestyle preferences, but increasing new supply and other factors are likely to moderate multifamily market growth in 2017," says Steve Guggenmos, Freddie Mac Multifamily vice president of Research and Modeling. "In particular, landlords are likely to pull back on rent increases as new supply enters the market and vacancy rates rise."

Rents are expected to grow at their 2016 pace; vacancy rates are expected to reach 5 percent for the first time since 2011.

 For more information go to: http://www.freddiemac.com/

A Local Perspective by: Dominick Leone

Northern Ocean County in New Jersey is still reeling from the effects of Super Storm Sandy, not just destroying homes but peoples credit and lives in general. Just after the storm, there was an unprecedented rush to locate rental housing for the storms victims who were left homeless. Years later, those who lost their homes, started to suffer financial hardships while trying to untangle the FEMA paper-jam and insurance nightmares. It drove some people to just abandon their homes and move on. 

Banks and lending institutions, not being as liberal as they would like (especial local community banks) under the Dodd-Frank regulations, developed a new set of hurdles for homeowners to jump over. Those who abandoned there homes had foreclosures on record because, while paying rent, they couldn't afford to continue a mortgage as well and this became a massive burden on their credit scores. This carried on to owners of homes who ran out of government assistance waiting for their homes to be raised and rebuilt, also having the burden of rent and mortgage payments at the same time. 

I'm not saying that things aren't getting better, I'm saying that there are still people trying to dig themselves out of a tough situation and their FICO scores are suffering because of it. So, buying a home is not within reach as of yet for many of the people who lost it all in the storm. To add insult on top of injury, when your credit is damaged (regardless of circumstance), renting a home isn't easy ether.

With the inventory becoming depleted and credit scores dropping, the rent rates jumped to all time highs. Like I said before, things seem to be improving a little, but I don't see much of a decline in rent rates for 2017. 

Those who invested in distressed and "bargain" properties with a fix and hold (for rent) portfolio may be the smart ones, creating  an annuity plan with equity growth in the future paid by their tenants. Passive income, 26 year depreciation on the property with added capital improvement and business tax benefits seems like the the winning formula in the long term real estate game.