2020 Housing Market: Gen X, Boomers, and Millennials

As we head into 2020, many in the Real Estate industry, or those who are looking to buy or sell this year, may be wondering what the market will look like in the months to come and overall this year.

According to Realtor.com, one factor playing a major roll in the housing market this year is age groups. Gen Xers, Baby Boomers, and Millennials will all have an effect on the year 2020, just as they started to in 2019.

With Gen Xers and Baby Boomers:

Though many are beginning to retire and seek places that are sunnier, warmer, have lower taxes, and have lower costs of living, many are also opting to hang onto their homes a little longer than they did in the past. This is causing a diminish in home supply – even more of a diminish than there was before – and a diminish that new home builds cannot keep up with in order to keep inventory steady.

When it comes to mortgages, around 32% of home purchases this year are projected to be from Gen Xers, while around 17% of home purchases are projected to be from the Baby Boomer generation, a smaller percentage than in previous years.

About Millennials:

As for millennials, they are projected to make up a whopping 50% of all home purchases this year! That means they’ll take out more mortgages than the Gen Xers and Baby Boomers combined.

While some may think that Millennials are just looking for hip apartments in the city within walking distance to everything (or are drowning in too much student debt to hold their own in the Real Estate market), that isn’t the case. Not only are Millennials looking for other types of homes – such as an 1,800 square foot house in the suburbs – but they also have peak savings for down payments. The median age for millennials is 30 years old, which is also the age of the average home buyer now. These 30-somethings are starting families and seeking homes in good neighborhoods closer to good schools.

The only problem millennials will face, as will every other home buyer this year, is the inventory shortage, making it harder for them to find the right home.

 

This is just one factor looking to affect the 2020 market this year, but there are many more, which we’ll continue to write about in blogs to come. If you’re looking to possibly buy or sell a home this year, we’d love to help you in any way we can! You can call us at 928-771-1111.

Which to Buy: Townhome or Condo?

Whether it’s your first time buying or you just want to purchase something smaller, townhouses and condos are both great options. Check out the differences between the two to help aid you in your search!

Condominiums

Condominiums are similar to apartments in that you purchase an individual unit inside of a larger building, but not the property it sits on. This generally includes access to the building’s amenities, such as the clubhouse, pool, and gym. However, condo owners are not responsible for the upkeep and repair of these common areas. Because of the number of shared spaces, living in a condo often allows for meeting new people and building a strong sense of community. There is a fairly similar vetting process for loan approval as for a full-sized home; however, the lender will also look at the health of the condo association.

Townhouses

Those who purchase a townhome are generally purchasing the complete unit, both inside and out, including the land it sits on. This might also include the driveway, yard, or roof. Traditionally, these units are two- or three-stories tall and may also include common areas like pools and parks. Townhome owners pay a fee to a homeowners association every month and the loan process is the same as buying a full-sized home.

Which is the best choice?

Both townhomes and condos offer less maintenance than a traditional home and generally offer great shared areas. Your decision ultimately comes down to you and your family’s needs and wants seeing as townhomes generally tend to be larger. Things you’ll want to take into consideration include location, lifestyle, family growth, and price. Another thing to consider is investment. Later on down the road once your family grows out of the condo or townhome, these properties can make great rentals. Checking on the HOA’s rules with renting is a good idea if this is something you’re interested in when buying.

The Silver Tsunami: Baby Boomers Influence on Coming Real Estate Market

As we close out the end of our year, we look back on the Real Estate market over of 2019, but also forward to what it may become. From home sale prices, inventory of homes, and so much more, we found this article in Phoenix’s Multiple Listing Service (ARMLS) November Statistics an interesting read.

“The Silver Tsunami” commentary by Tom Ruff:

“I have little confidence in forecasting beyond six months, but Zillow’s not afraid to project 20 years out. These are the same people that told us buying a home near a Starbucks offers the best appreciation value and an ‘8’ in your address means ‘make a fortune’ to Chinese buyers. This brings us to the soup de jour of housing stories, the Silver Tsunami.

Zillow research contends, ‘The massive Baby Boomer generation has already begun aging into retirement, and will begin passing away in large numbers in coming decades – releasing a flood of currently owner-occupied homes that could hit the market,’ concluding the U.S. is at the beginning of a tidal wave of homes hitting the market on the scale of the housing bubble in the mid-2000’s.

But an article published in NAHB NOW counters the Zillow research. ‘While it is difficult to accurately predict two years into the future – much less 20 years – here are the facts:

• Just because homes will turnover more in the future, does not mean home prices will fall. Turnover is fine, provided there is sufficient demand, and demand is generated by population growth.
• The U.S. Census projects that the U.S. population will grow by 25 million over the next decade.
• Of note, the 18 to 44-year-old population, which includes a significant share of the new construction buyer demographic, will increase by seven million from 2020 to 2030.
• Millennials – at 80 million strong – are the largest population group in American history and their median age is turning 30. This is significant because the median age of first-time buyers in the United States is in the
low 30s, so demand for single-family housing is rising.
• As the baby boomer generation shrinks and their homes hit the market, millennials and Gen Xers will be able to absorb this stock, plus provide enough demand for ongoing new home construction.”

Housing requirements are always going to be related to population. For those who like data, here’s a link to the population projections for Arizona.

The Zillow article also touched on Sun City:

‘The same demographics that propelled Sun City’s rise now pose an existential challenge to this suburb as baby boomers age. More than a third of Sun City’s homes are expected to turn over by 2027 as seniors die, move in with their children or migrate to assisted living facilities, according to Zillow. Nearly two thirds of the homes will turn over by 2037.’

This conclusion left me equally amused. When we view home sales in Sun City over the past 12 months, there were 1,477 single family residences sold. Public records tell us there are 19,605 single family residences in Sun City. At the current rate, 53% of the residences will sell, far greater than the alarming 33% mentioned in the article. As for 2037, based on current rates, 128% of the homes would sell. Sun City was a bad example to choose.

The story makes one final point. The homes owned by baby boomers are in places where younger people no longer want to live. This is nothing new. Phoenix saw urban flight in the sixties as the boomer’s grandparents aged
and their parents moved to the suburbs. We need to look no further than downtown Phoenix, which is now one of the most desirable places to live in the Valley. With a growing population base, real estate always finds a way to
transition.”

For a further look at ARMLS stats, click here.

First Time Home Buyer Struggles

In recent history, first-time home buyers once accounted for 40% of annual home sales in the United States according to NAR’s (National Association of Realtors) chief economist Lawrence Yun. However, 2019 has shown that the first-time home buyers of today still have not fully returned, making up only 31% of all homes sales thus far this year.

Because of this, home sales are still running at an annualized pace of 5 million, which means the housing market has essentially remained unchanged since 2000. This is odd because even though that number has remained the same, the US population has not.

From 2000 to 2019, the United States has seen growth of nearly 45 million people in population and 20 million in number of households. One would think that with a greater population and a greater number of households, that home sales would go up, but that hasn’t been the case because of first-time home buyers struggling to purchase.

So, why is it that first-time home buyers are having trouble breaking into the market? Well, there might be several things at fault here:

Student debt, which has tripled over the past decade. The population of those who have it are those who are younger, fresh out of college, in new careers, getting married possibly, and perhaps already have kids (or your general makeup of those whom are looking to buy a home for the first time). It’s hard to get qualified for a home loan when you aren’t making very much money, have to support a family, and have 50k plus in student loans over your head.

The real estate market is booming. What this means is affordability has gone down because home prices have risen fast. While interest rates have gone down and it takes a smaller share of monthly income to own, first-time buyers are struggling to find homes within their price range that meet their needs.

Starter home listings are in short supply. This is due to homebuilders focusing on expensive homes rather than affordable homes that millennials could buy, which makes it hard to purchase.

Not FHA Certified. A lot of homes that first-time home buyers could possibly afford are your condos and your town homes. However, many first-time home buyers also need to use an FHA loan, which cannot be used on these types of homes because they aren’t certified for them.

Credit Scores. Many millennials haven’t made the best decisions here with student loans (like mentioned above), credit cards, new cars, etc. Nowadays, a good credit score is crucial to purchase a home considering requirements to obtain a mortgage are tighter than ever because no one wants a repeat of the housing market crash.

These are just a few of the factors affecting first-time home buyers and we’re sure there are more because you never know what someone’s struggles may be, or why they’ve been having to rent all these years rather than purchase a home of their very own. Hopefully, as the economy continues to do well, so will those seeking to purchase a home, which will enable them to do so.

Are you looking to buy a home for the first time, but aren’t sure if you qualify or what you might qualify for? Call our office today at 928-771-1111. We work with some amazing lenders and it doesn’t cost a thing to talk to one, and see what your options might be!

How to Build Good Credit

Last week we posted a blog about why first-time home buyers are struggling to purchase. One of the main reasons was having bad credit. So, we wanted to touch on this subject further and find some ways the experts say you can build good credit.

Believe it or not, bad credit doesn’t always mean having made poor financial decisions. For a lot of people, they have bad credit because they have NO credit. They have avoided debt like the plague, having been instructed by parents and elders to not get themselves into debt. Ironically, it turns out that some debt is good. Why? Because it helps you build credit, and without credit, you can’t make any large purchase from a car to a house, or even a little “purchase” such as getting a credit card. One might stop there and ask, “Wait, how can I build credit if I can’t even get a credit card?”

According to thebalance.com, “having good credit means you’ve demonstrated that you can handle credit responsibly – that you’ve managed your credit obligations and have paid on time.” So, like we said, the first step in doing this is to first get credit (assuming you don’t already have credit). Here’s some ways to do this:

  • Apply for a secured credit card. A secured credit card requires you to make a security deposit against the credit limit before you can be approved for the credit card. The security deposit is used as collateral for the amount you charge on the card, which makes credit card issuers more likely to approve your credit card because there is less credit risk.
  • Get a retail store credit card. These are easier to get because the store will most likely have less strict credit requirements. However, beware because retail credit cards typically have low credit limits and high interest rates, and they can only be used at a specific store. So, if you choose this route, get a card at a store you frequent often, like Target, and remember you’re getting the card to build GOOD credit, not go on a shopping spree and get into bad debt.
  • Get a co-signer for a credit card or loan. This is when you get someone with good credit to co-sign on a credit card or loan in order to help you qualify. A co-signer would share liability on the card with you, which means that if you failed to make payments, it wouldn’t just affect your credit, but the co-signers as well. As long as you are reliable, then you’ll soon build enough credit to qualify for a loan or credit card on your own.
  • Make Your Payments on Time. Late payments are a huge factor on your credit score, if not the biggest of all. In order to build a good credit score, you need to make all your debt payments on time. The more on-time payments you have, the more your credit score will improve.
  • Watch How Much You Borrow. Just because you have a higher credit limit, doesn’t mean you need to spend all the way up to it. A good rule of thumb is to never borrow more than you can actually afford to pay each month. Not only does this make you look financially responsible to creditors and lenders, it also helps you not get yourself into any real debt. This same principle could be said for loans. No matter what a lender might say you qualify for, be careful not to take out more than you can afford to repay, otherwise you’ll dig yourself into a hole of debt that is hard to climb back out of.

These are just some of the main ways to help you build good credit, but there are so much more! If you’re still wanting to learn more about how to build your credit, you can do some research online, or visit your bank today to get some tips and tricks from the horses mouth.

iSquatters: When iBuyer self-tours go wrong

Today’s Real Estate game is changing and that includes new companies buying homes and turning around to re-sell them, commonly known as iBuyers. However, in places like Arizona where this type of Real Estate model is growing, there are some scary risks for agents and their clients whom go to see these iBuyer homes. Check out this article below from inman.com detailing just how serious and real some of these risks are.

Invasion of the iSquatters: What happens when iBuyer self-tours go wrong? Some iBuyers have drawn tech-savvy squatters who gain access to homes through company apps in a bid to find shelter or abuse drugs.

by Veronika Bondarenko

October 23, 2019

Mrgudich had been planning on touring a home listed on Opendoor with a buyer when he noticed something strange through a window. A child was running around the dining room while a woman looked on. Instead of buzzing the door open through an app on his phone, Mrgudich knocked — and promptly heard the sound of the lock clicking shut from the inside.

“I put one and two and three together and I go, ‘Alright we have a squatter here,’” Mrgudich, who works at West USA Realty in Peoria, Arizona, told Inman. “So I turn to my buyer and explain the safety issue briefly and suggest that we move on.”

The iBuyer model, which has grown in popularity for its convenience, has also posed new risks regarding squatters and people who enter the home to use drugs, party or engage in activities other than touring the home. Ever since Arizona police arrested a couple found squatting inside an Opendoor home with two children and a cache of drug paraphernalia in September, agents have been discussing safety issue they see with iBuyer homes.

Over the past four years, iBuyers have exploded in markets nationwide. Startups like Opendoor and Offerpad allow homeowners to unload their properties for an all-cash offer in exchange for a seller’s fee of approximately 7 percent.

Opendoor, which recently acquired a Georgia-based title and escrow company, currently operates in 20 cities and recently began providing home loans. Offerpad, meanwhile, has raised nearly $1 billion in equity and debt capital and hopes to operate in 30 cities by the end of 2020. Traditional real estate companies including Keller Williams and eXp Realty have also all launched their own instant-offer platforms.

Zillow Offers, another iBuyer platform, also operates nationwide and allows buyers to tour homes on their own through an app.

The iBuyer model has been particularly popular in states like Georgia and Arizona, where all of the major iBuyers have a presence.

With Opendoor, Offerpad and Zillow Offers, in particular, interested buyers can find for-sale homes near them through the companies’ apps and enter the property with or without an agent — either by entering a code on a front-door keypad or unlocking the home directly through a phone.

All Offerpad homes currently have traditional lockboxes but some also have instant access through a phone code.

Heather Gearhart, an agent in Chandler, Arizona, recalled in a recent Facebook post seeing a key left inside the front door of an Offerpad home. Bob Hertzog, another agent in Arizona, said numerous agents across the state have been discussing the problems they encountered when trying to tour iBuyer properties.

In August, Hertzog entered an Opendoor-listed home with a buyer when a man with disheveled hair ran past them while incoherently mumbling something about wanting to buy the property. They toured the home anyway but, upon coming in, noticed that the protection preventing the air conditioner from being tampered with had been torn off.

“In Phoenix, it gets so hot that people living on the streets or people who don’t have a home definitely look at this like an opportunity to shack up for a while,” Hertzog told Inman, adding that he tried to call Opendoor to report the problem but gave up after sitting on hold for nearly 30 minutes. “We’re starting to see it more and more.”

iBuyers acknowledge that their homes pose a risk of attracting squatters. An Opendoor spokesperson told Inman that, upon receiving reports of someone in a home, the company will “immediately engage with any impacted customers, investigate and regularly refer matters to local law enforcement.” It also said it has home monitoring systems, security patrols and customer-vetting systems in place to minimize risk.

Offerpad, meanwhile, told Inman that “home sellers have always encountered the unfortunate risk of becoming a victim to vandalization or breaking and entering” but that the company is working on a new security system that, once in effect, will improve safety at its homes.

Nonetheless, agents who have encountered problems at these homes believe the companies’ screening systems aren’t comprehensive enough considering that anybody with a smartphone can claim to be an interested buyer in a bid to gain access. Hertzog said that without the traditional high-security lockbox agents use to enter an open house, no security system can deter people with bad intentions from seeking out the homes.

“It takes seconds to kill somebody or hurt somebody really badly,” Hertzog said. “They can sit there and say all day long that they have monitoring systems and things like that but it didn’t work in my case.”

Robert Siciliano, a cybersecurity analyst and chief security architect at ProtectNow, told Inman there is no such thing as a 100 percent secure empty home — but the text-to-open-home model has attracted a new type of squatter that is specifically looking for homes with full amenities that are easy to open.

“When you can get a code online and walk into a house, you’re going to see a whole new stream of squatters take advantage of the situation,” Siciliano told Inman. “What you’re going to see is serial squatters with full knowledge of how to game the system.”

At the same time, Siciliano advises agents who are entering any open house alone not to “trust that the company is managing that risk” but rather take their own precautions every time they enter a home, iBuyer or not. This includes doing a full scan of the property before going inside, having alarms and easy access to law enforcement ready on one’s phone and getting trained in basic self-defense skills.

Given iBuyers’ young age (Opendoor launched in 2013 and Offerpad launched in 2015), the high risk of squatters may be part of the growing pains they need to get through as the companies work out more sophisticated systems and learn how to weigh easy access against security. But, at least in areas where iBuyers are most prominent, some agents are only now figuring out how to keep themselves safe while touring the homes.

“We’re just holding our breath, quite frankly, and hoping that there’s no worst case scenario,” Mrgudich said.

How to Cut Costs When Moving

As we get ready for the Holidays, cutting costs wherever we can is probably something that is on all of our minds. This is especially true if you’re in the middle of a move, or about to move.

If you’ve ever moved before in your adult life, you know that it can get really expensive really fast. So, in a time when you’re trying to save money for Thanksgiving and Christmas,  and all the gifts and travel costs that come with it, how can you minimize your moving costs?

Well, we’ve got some tips to help you do just that! Brought to you by our friends over at A & C Brothers Moving and Storage, here is some of their expert advice on how to best cut costs during your next move.

Here’s How You Can Cut Costs When Moving

Regardless of whether you’re just moving to the next town or all the way across the country, moving between homes can be a pretty expensive process. Despite the unavoidable expenses, though, it’s not impossible to move on a budget. From collecting boxes to hiring moving services, there are smart ways to keep your costs down when moving.

These tips will require plenty of extra work from you, but they’ll help you relocate successfully without breaking the bank.

Get rid of stuff you don’t need.

Most people are guilty of wanting to keep stuff they hardly use or probably won’t use anymore. Unless the items hold great sentimental value for you, now should be the perfect time to get rid of them.

When we say rid, we don’t mean throwing them in the trash. You can either arrange a garage sale, give them away, or donate them to charity. Surely, you can find a good use for the extra money you’ll earn at the garage sale. The possible tax deduction from donating your stuff isn’t so bad either.

By purging your stuff, you’ll have lesser things to pack and worry about. More importantly, you’ll end up with lower mover’s fees because there’s fewer stuff to move on the big day.

Use Improvised moving supplies.

You may not notice it, but moving supplies can eat up a good chunk of your moving budget. The great news is, it’s relatively easy to cut costs on moving supplies if you plan things ahead of time.

For starters, you can collect boxes from friends and family instead of buying them. If you can’t have them for free, try purchasing some from your neighborhood grocery stores. Don’t get brand new moving boxes, if possible. They’re quite expensive for something that you might end up using just the one time.

If you need packing supplies to protect your fragile belongings, make use of common household materials like blankets, towels, clothes, and newspapers as alternatives. They’re just as effective, but they won’t cost you a single penny!

Hunt for reliable moving companies with great deals.

If you want to score a good deal, ask for quotes, and get as much information from different movers before making a decision. However, never hire a moving company just because they’re offering you the lowest price. You’ll want reliable movers who can move your belongings from your old house to the new one without even a scratch.

When looking for the right movers to hire, always check online reviews – both on their website and social media platforms. These sources should provide you valuable insight into their quality of moving services.

Avoid moving on busier days and months.

As with most things, timing is everything. The schedule of your move has a significant impact on how cheap or expensive your relocation could be. Moving on weekdays is generally cheaper than moving on weekends, while the spring and summer are the busiest and most expensive seasons to relocate.

Most moving companies offer discounts for moves scheduled during the slower months of the year. If saving money is what you’re really after, you might want to move during the fall season or early winter.

While it’s so much easier to pay and have other people take care of the entire moving process for you, this will cost you a fortune. Like we said, moving on a budget is possible, but it will require a lot of effort and planning on your part. Anything that you can do on your own saves you from paying other people to do it.

Good luck!

Things to Never do to Your Home

Whether you are going to be in your home for 10 years or for the rest of your life, you always need to be considering resale when deciding which home projects to tackle next. That being said, here are some things you should never do to your house, both to save yourself money while you live there, and also to make your house more appealing when it comes time to resell.

Get Rid of Your Only Tub: No matter how much you want a super dreamy walk-in shower, if it requires getting rid of your only bathtub, don’t do it. A home without a bathtub can be a huge turn-off for many buyers who like having that option or who have kids and need a bathtub for this purpose.

Leave Your Cabinet Doors on While Painting them: Painting cabinets has become very popular in recent years because it is a cheap way to update your kitchen/bathroom look without the huge price tag of replacing the cabinets. It’s something that isn’t that hard to do yet makes a big difference in appearance. However, if this is your next project, make sure you remove the cabinet doors and drawers when you do so. Take the doors off and paint them separately, don’t leave them on while you do this. It makes for a much cleaner look in the end.

Plant a Tree Close to the House: This seems like it would be a no-brainer, but you’d be surprised. If you’re wanting to plant a new little sapling in your yard, make sure you do so with ample space away from the home. Otherwise, in years to come, that tree will grow large and could cause issues from falling branches and roots that grow underneath the home, going into foundation and piping. If that’s the case, it could cost you big bucks to remedy if you’re still living in the home, or even be something buyers ask you to remedy before buying your home.

Cover Wallpaper with Water-based Paint: Wanting to get rid of that tacky 70s wallpaper to have a fresh and updated look? Well, in case you didn’t know, depending on the condition of the wallpaper, you can actually paint right over it instead of going through the agonizing trouble of removing it. However, don’t use water-based paint when you do this. Water-based paint can actually re-activate the wallpaper glue and cause it to peel. We’re thinking peeling painted wallpaper wasn’t the updated look you were going for? Instead, make sure you use oil-based primer, let it dry, and then you can apply a normal latex paint over that.

Paint Exterior Brick: Now, this one might have some mixed reviews as to whether or not this is okay to do, but if you’re planning on being in your home for a long time, painting the brick on the outside of your home might not be such a good idea. Painting brick can destroy the brick and mortar, which could go so far as to cause a crumbling foundation. When comparing those costs, it’s just not worth it. If you’re looking to up your curb appeal, perhaps paint the door or add some shutters instead.

Tear Out Character: While your home might have some little corky features you aren’t thrilled about such as custom millwork, tin ceiling tiles, stained glass windows, etc., don’t be too quick to rip these things out (unless of course they are beyond saving and in disrepair). These classic details give your home character that buyers love and appeal that is hard to come by these days.

These are just a few things you should probably re-consider doing to your home or look further into to make sure you do them properly, if they are things you’ve been considering doing.

There are so many cheap and fun ways to update your home these days. Things that make it homier for you, but also things that can add great re-sale value to your home in the long run. But, make sure you do your homework on these house projects first! Not all of them are created equal.

How to Sell Your Home This “Off” Season

Although we love the Fall season, in the Real Estate business, it does start a downturn in our industry. The market slows with less people out looking to buy a home as they prepare for the holiday season with their family. Even though Prescott has a great housing market, we are not immune to this slower season.

So, what can you as a seller do then to help sell your home if you are trying to sell during this time? Well, check out this great article below from HomeLight about just that. They have some great tips on things you can do to sell your home this season, as well as some great advice to help with this process as well.

Market Statistics for August 2019

As we transition from our busy summer Real Estate season and into our slower winter season, we will start to see a decline in home sales through the next months.

Tom Ruff from ARMLS (Arizona Regional Multiple Listing Service) says, “This is the time of year sales slow. It’s simply the seasonality of our market… Demand almost always subsides every year between July and January… When judging your bushels of apples, you want to view the year-over-year trend. Sales in August were 8.6% higher than a year ago, which understates the real year-over-year improvement. There was one more business day last year, which brings our real improvement closer to 13%. This August accounted for the third highest sales volume in ARMLS reporting history, surpassed only by 2004 and 2005, with only 266 fewer sales than ‘04. With 690 more sales this year than last, 2019 sales year-to-date have now surpassed 2018. Looking ahead to how the year might end, I’m willing to go out on a limb and say the prognosticators were wrong back in January (I may or may not have been one of them). 2019 sales will surpass 2018 in both sales volume and price.”

Therefore, even though the graphs below show a slowing market, it isn’t cause for concern. Not only is this normal for this time of year, as stated above, but we are still doing better than proceeding years.