How Millennials Are Changing the Housing Market

 

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Today, younger Millennials are purchasing their first homes and older ones are already moving on to buying their second. Millennials are known as the generation that will buy a $200 pair of jeans after extensive research and trying on 67 different pairs to find the exact right ones. The way they shop for homes is no different.

This research-driven culture is supported by the internet where everything they could ever possibly want to know is right at their fingertips.

The most surprising thing about the way Millennials buy their homes is that they actually want a realtor to help guide them through the process, but that’s not the only generational shift here.

Millennials Want Everything To Be Just Right
Millennials consider owning their own home as an important part of living the American Dream. Unfortunately, thanks to stagnating wages and a sharp increase in student loan debt, saving for that down payment isn’t going to be easy. As a result, there isn’t much cash left over after closing to make any updates Millennials want, so they instead seek out homes that are fully updated and move in ready to begin with.

At the top of Millennials’ wish lists are updated kitchens and bathrooms, green features like solar panels, an open floor plan, a home office, a good location, and good Internet and cell service. Almost half of Millennials would rather buy a brand new house in order to avoid any maintenance issues that might occur early on. Only 11% of Millennials consider a home to be permanent anyway.

Eventually, Millennials plan to sell their starter home as 68% view it as a stepping stone to the home they really want and making improvements is not part of that plan. The average homeowner keeps their home for ten years, while the average Millennial only keeps their home for six years.

Some Things Remain the Same Regardless of Generation
When it comes to where Millennials want to live, the suburbs still reign supreme. Half of Millennials live in the suburbs and a surprisingly low 25% live in urban areas. Research shows Millennials want to live in a place that is close to work and close to things to do, and urban areas typically provide both of those things.

Four out of five adults between the ages of 18 and 25 live outside of the urban core of a city, which indicates an even stronger shift toward the suburbs. Still, they want to be close to work to save on commute times and travel expenses, and 65% choose the location of their home based on how far it is to work.

Why Should Sellers Cater To Millennial Home Buyers?
Of all first-time home buyers, Millennials make up 66%, and they are 34% of home buyers overall. Over 66% plan to purchase a new home within the next 5 years. That’s a huge generational shift in real estate. Millennials are better informed about their options than probably any other generation before them.

In short, if you aren’t catering to this generation’s enormous buying potential you’re probably going to be missing out on a lot of opportunities. If you are considering selling your home:

Make All Necessary Repairs and Upgrades Before Listing
Consider updating kitchens and baths – these have always sold homes, but now they are more important than ever
Do an energy efficiency audit and make upgrades anywhere you can, including solar panels
Consider upgrading any old appliances
Install smart home features like programmable thermostats
Millennials do hours of online research just to buy a sweater, so they are naturally going to do even more research when it comes to buying a home. More than three-quarters of Millennial home buyers drove by a home because of photos and listings they found online, and over 60% did walkthroughs because of these listings.

Getting the information in front of them is key, and making sure you highlight relevant features is crucial.

Millennials Now Hold Massive Buying Power
Millennials hold a lot of buying power in today’s real estate market, but many are using their parents to close the deal. According to top performing Denver realtor, Denise Fisher, this makes for an interesting family dynamic with clients that she doesn’t see with other generations:

“One thing real estate agents must adapt to when working with Millennials is dealing with two sets of buyers for the same home. The millennial is usually the one that researches the home online but when it comes to the showing and buying, more and more parents are getting involved in the process. Millennials are frequently getting their down payment or the whole mortgage from their parents so when they are looking it’s a family affair. While the Millennial is my main client, I will often be talking to the parents through the transaction and while showing houses I’ll have 2 carloads of a family to walk through a house. They often have different tastes and ideas for the ideal home. This adds a new element to the sale for realtors.”

Millennials are quickly changing the face of real estate. Gone are the days of only seeing what your Realtor wants to show you. Gone are the days of the glorified fixer upper and the weekend warrior. Millennials are busy working their side hustle anyway. New homes and already fixed up homes are the ones that are going to be moving on the real estate market, an ode to the buying power of the Millennial generation.

Learn more about what Millennials want in a new home from this infographic from Nationwide Mortgages. Much like baby boomers changed the real estate market to shape the suburbs, Millennials are just now starting to make their mark.  Millenials in the Real Estate Market

 

~John White, Social Marketing Solutions

2015 State of the Real Estate Market

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The NW Multiple Listing Service recently sent out their annual summary of the year that was in Western Washington real estate. We probably don’t need to tell you that most of those numbers are up, up, up. Especially if you’ve been trying to buy a house all year long. We perused the report, which was chocked full of numbers, and picked out some of the most shocking, revealing and fascinating numbers within.

 

 

2015 saw 88,331 closed sales amongst NWMLS members in 2015, up 14.3 percent from 77,276 in 2014.

The value of every NWMLS member single-family home & condo sale was over $34 billion, up almost 23 percent from 2014.

Both of those numbers are higher than the previous highs of 2007 when the housing market peaked.

Average area-wide supply was 2.4 month, down from the 3.5 months number of 2014. King County was the lowest of all, averaging only 1.3 months of supply. 4-to-6 month supply is considered a balanced housing market.

2,676 single family homes sold at $1 million or more, which was up over 29 percent from 2014. Add 237 condos priced at $1 million and up in as well.

The median price for a 3-BR home was $283,250, about 7.9 percent higher than 2014. Highest median price for 3-BRs came courtesy of San Juan County with $452,500.

Six of every 10 condo sales (61.9 percent) were located in King County.

As well as older sales did, new construction sales did even better. 8,548 newly-built single family homes sold for a median price of $425,000 while 1,018 new condos sold for a median price of $449,950.

The highest-priced single family home sold in 2015 by a NWMLS member? This $13.8 million Mercer Island estate. Topping the chart of high-priced condos was an Escala 3-BR that went for just over $3.1M.

There was a tie atop the list of cities with the most $5M+ home sales. Mercer Island and Bellevue both saw seven, while Clyde Hill (5), Medina (4) and Seattle (4) were close behind.

~ Sean Keeley

Considering Selling? 5 Reasons Not to Sell as Owner

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

Here are five reasons:

1. 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

2. Exposure to Prospective Purchasers

Recent studies have shown that 88% of buyers search online for a home. That is in comparison to only 21% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3. Results Come from the Internet

Where do buyers find the home they actually purchased?

  • 43% on the internet
  • 9% from a yard sign
  • 1% from newspaper

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.

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 9% over the last 20+ years.

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 $208,000 while the typical house sold by an agent sells for $235,000. This doesn’t mean that an agent can get $27,000 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.

Time to Sell?

If you have been thinking about selling your house this year, now may be the time to do it.

The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing.

We were still in high school when we learned the concept of supply and demand: the best time to sell something is when supply of that item is low and demand for that item is high. That defines today’s real estate market.

Jonathan Smoke, the chief economist of realtor.com, in a recent article revealed:

“Our preliminary review of April activity on realtor.com shows that traffic, searches, and listing views are up more than 35% over last year. With 3 million jobs created and close to 1.5 million new households formed in the past 12 months, many more people want a new home of their own, and they want it bad. Their patience will be tested with tight supply—indeed, the No. 1 impediment of active shoppers in April was not being able to find a home that meets their needs.”

In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction including the inspection, appraisal and financing contingencies.

Bottom Line

As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas.

~ KCM Blog


Great sign for housing…Pending Sales Surge!

The National Association of Realtors revealed that homes going into contract in February increased to their highest level since June 2013 in their Pending Homes Sales Index, a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The Index is now 12.0 percent above February 2014. The index is at its highest level since June 2013, has increased year-over-year for six consecutive months and is above what is considered “the average level of activity” – for the 10th consecutive month. Here is a graph showing the Pending Sales numbers:

This chart shows the Pending Sales increases by region:

Bottom Line

In an article from Investors’ Business Daily, Lawrence Yun, Chief Economist at the National Association of Realtors, explained what these numbers will mean to the overall market:

“It looks like the buyers want to come out to the market and they are eager to find the right home and make an offer. Therefore, I expect the second quarter of this year to be easily ahead of last year in terms of sales activity. Pending contracts are implying that the closing activity in coming months will be quite solid.”

~The KCM Blog

The RE market is starving for homes

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MARKET UPDATE: 4th Quarter 2014

OVERVIEW: Increased employment and historically low interest meant higher demand for real estate. Prices were up. However, the number of homes sales are not keeping pace due to a serious lack of inventory. Home values are expected to appreciate in 2015, but we need more homes to come on the market to meet pent up demand.

Laura White – Broker
Mobile: 425-444-8180
Office: 425-392-6600
Website:  LauraWhite.com

Choosy Buyers – List Price Critical

We are noticing that Buyers are definitely out again looking for homes, but are being very choosy. List price is critical in the current market…

Brokers Say Home Buyers Are Back, But They’re Choosy

Home buyers are back, and they’re savvy and selective, according to officials who commented on the latest statistics from Northwest Multiple Listing Service. For sellers, that means pricing a home correctly at the start is vital, said industry veteran Kathy Estey, a member of the MLS board of directors.

The new report summarizing October activity shows year-over-year gains in new listings, pending sales, closed sales and prices.

Northwest MLS members reported 8,643 pending sales last month, which is up nearly 6.9 percent from twelve months ago when members reported 8,086 mutually accepted offers. Most of the increases are from sales of single family homes, which rose more than 7.8 percent while condo activity was flat with less than a 1 percent rise in sales.

“New listings that are coming on the market are receiving a substantially higher than normal sales activity,” remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. He said a backlog of buyers and shortage of homes across the most popular price segments are fueling a strong seller’s market.

“Sellers who are thinking of putting their homes on the market are well advised to do so now,” suggested Estey, the branch managing broker for the John L. Scott Bellevue Main office. Although the pace of sales has slowed somewhat since June, she said demand is steady, with about half of all new listings selling in the first 30 days.

Brokers are scrambling to keep inventory replenished as last month’s pending sales of single family homes and condominiums (8,643) outpaced the number of new listings (8,102).

A comparison of total inventory shows a drop of nearly 3.7 percent from a year ago. At month end there were 23,501 active listings across 21 counties in the MLS database. That’s nearly 900 fewer listings than the year-ago total of 24,391.

Inventory at the end of October, as measured by months of supply, stood at 3.24 months, a slight drop from the previous month’s figure of 3.7 months. In King County there is less than two months of supply, well below the four-to-six month level that many industry analysts use as a gauge of a balanced market.

Not all counties experienced declining inventories. Five counties served by Northwest MLS reported gains in the number of active listings: Cowlitz, Grant, Ferry, Pierce, and Snohomish.

As the selection expands, buyers who have been on the sidelines are being lured back into the market, according to MLS director John Deely, principal managing broker at Coldwell Banker Bain in Seattle. Deely noted sellers whose properties were languishing on the market are now seeing brisk activity and even multiple offers after adjusting their prices. “This activity indicates there is still strong buyer demand and that buyers are watching the inventory closely,” he added.

“Watching some markets around the Puget Sound is like watching a championship tennis match, first a buyers’ market, then a sellers’ market,” remarked George Moorhead, a board member for the multiple listing service. “As these shifts become more of a blend, as they have the last 18 months, we will see good balance and stability in our market with healthy growth and competition,” stated Moorhead, the designated broker and owner of Bentley Properties/America’s Home Caretakers in Bothell.

Another positive indicator during October was a healthy increase in closings. MLS members reported 7,257 closed sales during the month, a 7.5 percent gain from a year ago.

Prices on those sales were up 7 percent, rising from an area-wide median price of $271,000 to $290,000. Four counties reported double-digit price hikes, led by San Juan County, where prices jumped 18.4 percent, and Snohomish County, with a 17.4 percent year-over-year gain.

Despite only a slight improvement in the number of condo sales from a year ago, the median price system-wide surged more than 14 percent, rising from $200,000 to $228,500.

“It has never been more important to properly price properties,” advised Deely. Despite recent news about easing of mortgage standards, he reported an increase in low appraisals, which can delay or jeopardize a transaction.

MLS director Dick Beeson agreed. “The main thing sellers are realizing is that buyers have lots of data to base a sound offer on and there is no “fluff” available when pricing their home for sale,” he explained. Also, he emphasized, “Buyers are realizing they better take advantage of these incredible interest rates before they are gone, which could be after Jan. 1st.”

Beeson, the principal managing broker at RE/MAX Professionals in Tacoma, said even with attractive rates, some new home buyers are “struggling with the noose of student debt” as they try to meet underwriting standards currently imposed by lenders. There’s no easy way out of the student debt, but he expects lending standards will improve.

Also crimping activity is the practice of a delayed seller’s review of offers. “Interestingly, new listings without the delayed review restrictions are often not selling immediately, but in a few days or within a week there are suddenly multiple offers,” Estey reported. “Many buyers are just not willing to compete, so they wait to see what happens with a new listing, then ultimately end up in competition.”

Diedre Haines, another MLS director, said seasonal factors are starting to affect activity. “We are seeing the beginning signs of the post-election, year-end, holiday slowdowns,” she remarked, but described them as “modest” compared to past history. “First time and second time move-up buyers are still in abundance, but they’re taking their time in making decisions and offers,” according to Haines,  the regional managing broker for Snohomish County at Coldwell Banker Bain.

Commenting on anticipated increases in interest rates, Haines said they are not expected to be dramatic. “The recent changes in FHFA’s easing of standards for mortgage qualifications will give the buyers’ ability to buy a major boost in the coming year,” she predicts. She also expects the relaxed qualifications will spur an increase in activity during the first quarter of 2015 and continuing throughout the year.

Northwest MLS brokers also commented on distressed sales and upticks in remodeling and new construction.

REO (bank-owned) inventory levels have continued to fall, according to an analysis by Moorhead, who also found a slight increase in foreclosure filings, “but nothing alarming for the local economy.”

Haines reports more buyers, “first time and otherwise,” are completing major renovations on their purchases before moving into that property. She said the most common improvements are kitchen and bathroom updates or makeovers, along with patios, decks and garage extensions.

“With the promise of increases in new construction by local builders, a positive economic forecast for the region, and more homeowners surfacing from being “under water” and now able to sell due to increase in appreciation, 2015 is gearing up to be as active if not more so than 2014,” Haines stated.

~ NWREporter