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Can Millennials Move On and Up?

Apr 8, 2018 by

As the biggest cohort of homebuyers, millennials are exercising influence in the market in unprecedented ways. They are at the center of demand for housing—built-up after many moved back in with their parents, and now releasing slowly, but surely, as the crash fades from memory. In fact, the majority of Power Brokers in RISMedia’s 2018 Power Broker Report & Survey believe millennials are their most auspicious opportunity this year.

There are factors, however, that could keep a lid on the millennial move-out. According to Freddie Mac’s monthly Insight, recently released, the amount of households led by young adults is down 3.6 percent from 2000—attributable to costly homes and stagnating wages. From 2000 to 2016, earnings grew just 1 percent for young adults; by comparison, home prices grew 29 percent. According to the National Association of REALTORS® (NAR), in March, home prices were up 5.9 percent year-over-year.

Analysts at Freddie believe the gap is too great to ignore. They posit that affordability constraints are the cause of more than one-quarter of the decline in the formation of households by young adults—and If the climb in costs persists, there could be dire implications for the market. For millennials, even an incremental rise could stall them: A 1 percent hike in home prices cuts the likelihood millennials will head up their own household by 5 percent. (A 1 percent increase in income, inversely, ups the odds 3 percent.)

MORE: Millennials Prep for Price, Rate Rises

“Housing costs are a major factor holding back young adult household formations,” says Len Kiefer, deputy chief economist at Freddie Mac. “Our research results indicate that 28 percent of the decline in young adult household formation is due to housing costs. If housing costs continue to rise, we could see about 600,000 fewer households over the next decade.”

Another factor? Timing. The catalysts (conventionally) for forming a household—aging, children and/or marriage—are not occurring as quickly. Comparing young adults in 2000 and 2016, data on fertility and marriages is lower now than it was—and according to realtor.com® research, “family needs” are the biggest millennial motivator for a purchase.

If conditions improve for millennials, Freddie forecasts an additional 19-21 million households by 2025. The alternative, the analysts believe, could have critical consequences for homeownership, investing and overall wealth.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Looking Back to Move Forward: Power Brokers Reflect on 2017

Apr 7, 2018 by

In 2017, there were highs in housing, and hurdles. For the Power Brokers in RISMedia’s 30th Anniversary Power Broker Report & Survey, assessing both—what was good, and what was not-so-good—is an annual exercise, indispensable to their longevity and paramount to their success.

NEW! Get the digital, interactive ranking of RISMedia’s Top 500 Power Brokers.

When asked what factors impacted them the most in the past year, Power Brokers said:

Williams_Tipper_100x100[The biggest impact on business was] new technology. It’s improving the way we do business by increasing time management and allowing for better conversion rates and leads. The biggest struggle we faced was training our agent base to embrace and adopt technology. My fear is if they don’t get on board, they’ll be out of business. ­­– Tipper Williams, Operating Principal, Keller Williams Virginia Realty Alliance Group, Richmond, Va.

Scott_Lennox_100x100This past year was the most intense market I’ve ever seen in my 41-year career. It was the sixth straight year of a frenzy market in Seattle. – Lennox Scott, Chairman & CEO, John L. Scott Real Estate, Seattle, Wash.

Rand_Joseph_100x100Business was strong in 2017. Inventory is low all over, which finally drove up prices in the Northeast. – Joe Rand, Managing Partner, Better Homes and Gardens Real Estate Rand Realty, Nanuet, N.Y.

Piccinini_JP_100x100We acquired Private Label Realty and grew our brokerage by about 200 new agents in 30 days. While it was a great move, we felt the impact of the growth. It bogged down our back-end office for a month or so, but it forced us to revisit our processes and improve our systems. – JP Piccinini, Founder & CEO, JP and Associates REALTORS®, Frisco, Texas

Mesa_Rei_100x100We had a significant lack of inventory in the entry and move-up price points. In the luxury market ($ 2 million and over), growing inventory and demand is definitely there, but there’s a disconnect between sellers’ and buyers’ expectations on value. – Rei Mesa, President, Berkshire Hathaway HomeServices Florida Realty, Sunrise, Fla.

McLaughlin_Mark_100x100Our vibrant economy and employment market in California has resulted in record-setting job creation that’s outperforming new housing units by a factor of four to one, so demand is driving the equation. With interest rates near all-time lows throughout 2017 and [strong] consumer confidence, we’ve seen a positive impact on the state’s economy and housing market. – Mark McLaughlin, CEO, Pacific Union International, San Francisco, Calif.

Hetherington_Todd_100x100In 2017, there was (and continues to be this year) recruiting pressure from virtually every model of real estate: traditional, flat-fee, technology-based, salaried agent, tiered commission, cap commission, etc. That downward pressure on commissions, along with the degradation of broker profitability, continues to challenge even the healthiest of brokerages. It’s uncertain if some of those models can sustain and thrive in a down market. – Todd Hetherington, Founder, Co-Owner & CEO, NM Management, Inc./CENTURY 21 New Millennium, Washington, D.C.

Hengle_Felicia_100x100The very aggressive market we’re in has had a positive impact on business. We’re still seeing shortages in inventory, favorable interest rates and consumer engagement. – Felicia Hengle, Director of Ohio Operations, Coldwell Banker Schmidt Family of Companies, Strongsville, Ohio

Hampton_Marti_100x100Reduced levels of inventory. – Marti Hampton, Broker/Owner, RE/MAX One Realty, Raleigh, N.C.

RISMedia’s 2018 Power Broker Report & Survey is sponsored by American Home Shield, Homes.com, HSA Home Warranty, Leading Real Estate Companies of the World® and Pillar To Post Home Inspectors. The Power Broker Survey ranks brokerages by residential sales volume and transactions in 2017. The complete ranking of the Top 1,000 will be released shortly.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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RIP Forever Homes: Millennials More Inclined to Move

May 29, 2017 by

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

Say goodbye to the idea of a “forever home.” No, I’m not talking about taking home a rescue pup. Instead, I’m referring to the antiquated idea of buying that dream house and living there forever. A recent community survey from Taylor Morrison shows that over half (56 percent) of homeowners no longer believe in the forever home.

To get these results, Taylor Morrison employed Wakefield Research to survey 1,000 U.S. adults who purchased a home in the last three years, or who are likely to purchase a new home in the next three years. While the study focused on homeowners of all ages, it was clear that millennials (the next gen of homeowners) are way beyond the forever home trend. Fifty-eight percent of millennials believe that the forever home is dead, and expect their home to evolve as their life does. From a growing family to a new job or a lifestyle change (buh-bye bar scene, hello golf course!), millennials want their living situation to be adaptable.

According to the survey, a third of millennial buyers intend to live in the next home they buy for less than 10 years, and 80 percent are equally or more interested in a newly constructed home over a resale home.

The following infographs offer a bit more insight into the survey:

Millennials_Move_Infog

Source: Taylor Morrison

Zoe Eisenberg is RISMedia’s senior content editor. Email her your real estate news ideas at zoe@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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Don’t Move: Americans Migrated Less This Year

Nov 19, 2016 by

Despite a strengthening housing market and an improving overall economy, a new study shows Americans are deciding not to move as much. Moves across the country have declined to an all-time low this year, with the percentage of Americans migrating within the country falling to 11.2 percent.

The most moves, according to the U.S. Census Bureau’s “Geographic Mobility: 2015 to 2016,” came from minority demographics. The African-American population made up 13.8 percent of those relocating, and the Asian population brought in another 13.4 percent. The Hispanic/Latino population comprised 12.6 percent of all moves; the white population comprised only 10.3 percent of those packing their boxes. The non-Hispanic white population brought up the rear with 9.8 percent.

“People in the United States are still moving, just not to the same extent as they did in the past,” says David Ihrke, a survey statistician in the Census Bureau’s Journey-to-Work and Migration Statistics Branch. “The decision to move can be personal and contextual. What causes one person to move might not be enough to convince another.”

Why Are(n’t) We Moving?
The majority of those who moved (42.2 percent) did so for a “housing-related reason,” such as the desire to snag a “better” spot. As employment strengthens, more people are able to sock away a little savings or afford higher monthly mortgage.

The report noted that approximately 27 percent of movers migrated for a “family-related reason.” A chunky 20.2 percent moved for an “employment-related reason.”

The South is a happening place. While the most outbound moves (901,000) occurred in the South, those residents were replaced with even higher inbound moves (940,000), according to the report.

Moves between Florida and New York and California and Texas occurred at a marked rate: New York had 69,289 residents migrate to Florida, and California had 65,546 residents migrate to Texas.

The most significant migration at the county level took place from Los Angeles County to Orange County and San Bernardino County, Calif., with 39,865 moves as residents of La La Land hightail it out of the city.

Source: U.S. Census Bureau

Suzanne De Vita is RISMedia’s online news editor. Email her your story ideas at sdevita@rismedia.com. Zoe Eisenberg is RISMedia’s senior content editor. Email her your story ideas at zoe@rismedia.com.

This was originally published on RISMedia’s blog, Housecall. Visit the blog daily for housing and real estate tips and trends.

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