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.

CHECK YOUR EMOTIONS AT THE DOOR - PLEASE

One thing that always rings true is that "You can't take it with you."

Try telling that to someone who's going to sell a house they lived in for twenty years and haven't upgraded anything. Still, family memories and precious moments that occurred in the home make it priceless to the seller. It's not that they think they're taking the building with them when they die, but they feel that they will never have any good memories if they move away. As Realtors, we have the difficult task of explaining and convincing sellers, that the memories are theirs and their family's to keep no matter where they go and that they should look forward to making new memories.

The bad part about all this is that the buyer doesn't really care and that can become a real problem during negotiations. Reality can be tough for the seller and if not presented in a tactful and sympathetic manner, you can rest assured that the first offer presented will be your last chance to even try to negotiate the deal.

Being on the agent on the seller side of this scenario is difficult, but from the buyer agent side these challenges are just as real and difficult when presenting an offer that may be below asking but in line with market values. The seller is in an emotional state, while the buyer just sees dollars and cents, is totally detached and borderline insulting (by the seller's expectation).

It's the duty of the seller's agent to obtain the highest price for the client and to make the process as seamless as possible; but in these cases, the agent is aware that the owner is not in line with the market. When this type of scenario presents itself, it would be in the best interest of the buyers agent to initially present a streamlined market analysis to the buyer in order to compile a proper offer and present that offer with the local analysis to the seller's agent. This will serve to: 1) Justify the offer at hand and 2) assist the sellers agent in making sense of the offer, with a minimal amount of insult to them.

It's important to see the deal from both sides of the table. 

• Motivation (for both buyer and seller) can be anything from moving closer to the kids, downsizing, divorce, retiring out of state, etc. This conversation will give you guidance on how aggressive your buyer can or cannot be. Again, there are always some emotional ties on the seller's side. 

• Length of ownership will tell you just how attached the seller is to the property. A long residency means that they raised their family in the house, celebrated holidays, etc. The longer the stay, the more sympathetic and gentle an approach should be considered when working with the seller (and don't forget to have the buyer's agent provide a CMA with the offer).

Be realistic and treat each other as you would want to be treated. Eventually the deal will happen and everyone wins.

Fruit Store Lessons About Real Estate

EXPENSIVE BANANAS DON'T SELL

It's amazing where you find life's little lessons. I caught on to one while at a local food store where I was, just the week before, noticing the high price of fruit and vegetables. The numbers were high and of course I didn't buy any that week, figuring that I can do without for a little while or just buy frozen vegetables and hold the line on fresh fruit (I was still able to make a smoothie with frozen fruit).

So, I travel back next week and lo and behold, I notice the price of bannanas, which were $1.19 per pound to $.99 per pound. Of course they had ripened a bit over the week to a bright yellow color from the green / yellow color the week before. Thinking to myself, it's not a bad price, but still a little high, (although I did consider buying) I passed. Maybe at 89 cents a pound I'll pick some up.

Well, when I go back, what do I see? $.49 per pound. Needless to say, I was able to buy at less than half the price from two weeks ago all because the bananas started to show a few dark spots and nobody was buying before.

So, guess who got a great deal on bananas?? ME! Because;

• I waited for the right price to buy
• The price was high, nobody bought
• Price adjusted, still no one bought
• Fruit started to turn, priced forced to low point in order to avoid losing the product
• Everything SOLD OUT!

     

Real Estate - Banana's? Here's the lesson. I can't say how many times I go on a listing appointment and bring with me data that's used to get a handle on the market value of a home and the owner decides to go above the recommended list price to "test the waters" looking for a price based on emotion rather than solid data and experience. 

The listing, like the high priced banana's, sits on the market with no showings for a month or more (in most cases more). So after 3 to 6 months on the market with no real interest, The owner decides to lower the price a little closer to the recommended list price from 6 months ago (although he should get a new market analysis). Guess what? It gets a few looks, but no offers, another 3 to 6 months have passed and still not sale. The house listing is going stale, the owner is disappointed and the only offers coming in are low ball offers from investors looking to steal the property, thinking that the owners have become desperate.

Had the owner priced the property right, it might have sold within the first 30 to 60 days. Seasoned real estate investors look for hard data when buying or selling a property and price (or offer) accordingly. No emotion, just the facts. Investors know that time on the market lowers their bottom line and stops them from moving on to the next deal (or in the case of a homeowner, settling into  their next home).

Summing it up.... 

High Priced Bananas don't sell, and neither will an Over Priced Home!

• Get good data
• Price it right
• Sell your home 
• Move on. 

Simple!

* Feel free to comment below or send an email to dominick.leone@gmail.com 

Credit Scores Explained

When it come to mortgages it's good to know.

Your credit score has a big impact on your personal finances, with a good score translating into a better rate on everything from home mortgages to auto loans to credit cards. So how do credit scores work?

Your credit score can range from 350 to 850. The higher, the better. The five factors that determine that score, and the percent to which they count towards your score, are as follows.

Payment history: 35%

This is your record of making payments on time and in full. Timely mortgage payments are particularly important. A single late mortgage payment in the last 12 months can downgrade your score. Late payments on other debts such as credit cards and car loans are also bad for your credit score, as are judgments, charge-offs and collections accounts. 

A single bankruptcy in the past seven years can damage your ability to get a new credit account or a loan. If you’re looking to get a loan, you’ll have to pay off any judgments or liens first, and possibly get a “satisfaction of judgment” from the court. Your credit score will also reflect the amount of time it takes you to make a late payment. The later the payment, the worse it will be for your score. Being in default of a debt is the worst situation.  

 To avoid damage to your score, pay bills on time, settle any delinquent accounts and check your credit report regularly to make sure you’re not being held responsible for disputed bills.

The balance you owe compared to your available credit limit: 30%

 Ideally, you should keep your balance below 30 percent of your credit limit. At the very least, it should be below 50 percent. While it may seem like a good idea to close credit accounts you don’t use often, you’re actually better off leaving them open. Also, don’t concentrate large balances in a few accounts. It’s better to spread the balance across credit lines than to have one or two accounts with a balance constituting more than 50 percent of the limit. If your credit card company is willing to increase your credit line without pulling a new report, you should take advantage of that.

How long your accounts have been open: 15%

The longer your accounts have been open, the better it is for your credit score. Again, avoid closing credit accounts. But if you have to, close the newer instead of the older ones. And opening new accounts can lower your score initially, so keep that in mind if you’re tempted to open one just to get a 0 percent introductory rate or a discount at the store. That being said, opening a few extra accounts that you don’t intend to use may not be a bad idea if you intend to get a mortgage eventually. If you don’t have much of a credit history, those extra accounts can raise your score eventually if you keep them active and their balances low.   

Type of credit: 10%

A mix of credit types is best, including mortgage, auto loan and not more than five credit cards. Having nothing but a lot of credit cards will hurt your score. 

Number of recent inquiries by creditors: 10%

Checking your own credit report won’t affect your score. But when a potential creditor — such as a mortgage or auto loan lender, credit card company, or department store   — performs an inquiry on your credit, that can have an impact on your score for up to a year. But you can reduce that impact by taking certain steps. When they’re done within 45 days of each other, multiple inquiries about mortgage or auto loans are treated as only one. However, if you already have a mortgage in the works, you might want to wait until the loan closes before applying for any new credit.   

Please keep in mind that this is only for informational purposes, and that you should consult with appropriate professionals for tax, legal and financial planning advice. 

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.

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.

Housing Value at Record-High: Will You Be Able to Keep Up?

Not a good time to be sitting on the fence

New buyers may be loosing opportunities and renters may remain renters

Housing’s collective value grew to $29.6 trillion this year, a record-high reflecting 5.7 percent appreciation—an additional $1.6 trillion—in 2016, according to a recently released analysis by Zillow. The most housing value in the nation is in Los Angeles, Calif., New York, N.Y., and San Francisco, Calif., at 8.6 percent, 8 percent and 4.2 percent, in order.

The continuing growth in prices, however—now marking a full recovery since the crash—has the potential to push more prospective homebuyers to the sidelines, says Zillow Chief Economist Dr. Svenja Gudell.

“Housing is incredibly important to us personally and to the economy as a whole,” says Gudell. “The U.S. housing stock is worth more than ever, which is a sign of the ongoing housing recovery. As buying a home gets more expensive, affordability remains a concern for many, and these numbers highlight just how much people are spending on housing. The total value of the housing stock grew nearly 6 percent this year, a pace that will likely mean some American families are priced out of homeownership.”

Despite this year’s appreciation, approximately 60 percent of housing markets remain below values reached during the bubble years, according to the analysis.

Renters, to compare—with approximately 635,000 new renter households formed this year—paid $478.5 billion in 2016, up $17.7 billion from 2015. Apartment renters paid $50 billion more than single-family home renters, and the most rent was paid in New York and Northern New Jersey, at $55 billion.

Reprinted from RIS Media