Get The Home You Want, Millennials: Smart Strategies For First-Time Homebuyers in Hunterdon and Somerset Counties

Get The Home You Want, Millennials: Smart Strategies For First-Time Homebuyers in Hunterdon and Somerset Counties

Hey, Millennials. Come on into the real estate market! We really need you to buy some homes so we can keep chugging along. Oh, wait. Prices are rising and so are interest rates, plus inventory is scary low. Hmmm. Well, come on in anyway, wontcha?

It’s not easy to buy a home in a hot market where inventory remains at historic lows – and that covers a lot of areas across the country at a wide range of different price points. But it’s especially hard right now for Millennials, who aren’t exactly getting a warm welcome from the market that has been begging them to participate.

“I think it’s fair to say this is the most competitive housing market we’ve seen in recorded history,” Danielle Hale, chief economist for Realtor.com, told Curbed. “There’s record low inventory and strong interest from buyers in getting into the housing market. Millennials are reaching prime homebuying age – in 2020, the greatest proportion of that generation will be turn 30 – just as baby boomers are looking to downsize. This has created especially fierce competition for smaller homes, the type of starter homes that most first-time buyers desire. This dynamic can be especially frustrating for young adults because they may be bidding for the same smaller home as someone from an older generation who can lean on the accumulated wealth of decades of homeownership.”

But that doesn’t make buying impossible – just a bit more challenging. Get a leg up by following a few smart strategies.

Work with the right REALTOR®

This is not the right time to give your brother-in-law’s cousin’s neighbor who just got his license a shot. Having a competitive edge is more important than ever, and you need a savvy, experienced, and well-connected real estate agent to help you buy a home.

Work on your down payment

You may be competing against buyers who are coming in with an all-cash offer, which you’re going to have a hard time standing up to. But, there are ways you can make your offer look better. Remember that if it comes down to a multiple-offer situation for your home, sellers won’t just compare the offer prices. They’ll look at your down payment and the terms, and you need to have better terms than the next guy. You may only have 3.5% down, and that may be all you need to qualify for your FHA loan, but that doesn’t mean the seller will embrace you.

“Your down payment is a key part of the offer you present to the seller,” said Money Crashers. “The general rule of thumb is simple: the larger the down payment, the stronger the offer. More precisely: the greater the down payment’s share of the total purchase price, the more likely the seller is to accept.”

If you’re ready to buy and there’s no time to get a second job or go into hyper-savings mode, you can always take advantage of down payment assistance programs like the National Homebuyers Fund or hit up a relative. “If you’re struggling to pool enough cash for your down payment, a generous relative or friend can help by giving you money,” said NerdWallet. “But the money must be a true gift, not a disguised loan, and it must be documented properly through financial statements and a gift letter. If the gift is really a loan that you have to pay back, lenders won’t accept it.”

Be flexible on the closing

If another potential buyer is insistent on a 30-day close, but you could close earlier, later, and even rent back to the seller if need be, you just might end up with the house you want. Flexibility is key to submitting a winning offer, so make sure you have a Plan B – a place to stay for a few days or longer if you’re going to be between houses, and a mover/storage option squared away.

Look in adjacent neighborhoods

Yeah, you have your heart set on a specific neighborhood. But if it’s just not happening, consider the next neighborhood over. Experts say they have great potential upside.

Consider the worst house on the block

Buying the ugly duckling is a top strategy for investors, and one that can get buyers in the door (literally!) if they’re having trouble purchasing move-in-ready homes. “When your budget as a first-time buyer doesn’t stretch to a house in perfect condition in a neighborhood you adore, you might consider buying a home that needs work. Or maybe you’ve watched fixer-upper TV shows and think you could handle sweat equity. Either way, real estate experts say buying a house that needs renovating can make sense as long as you are realistic about the process,” said the Washington Post. “A fixer-upper can be a smart investment, particularly if you can buy a property under market value and then increase its value with the right projects. While some home buyers prefer move-in-ready homes, they are stuck with the choices the previous homeowner or builder picked for their countertops, fixtures and floors. Not only do buyers of fixer-uppers get to select their finishes, they also can make sure the work is done the way they want.”

If you’re worried about how you’re going to pay for all those renovations, ask your real estate agent or lender about a 203(k) loan, which rolls renovation funds into your mortgage. “An FHA 203k loan, (sometimes called a Rehab Loan or FHA Construction loan) allows you to finance not one, but two major items 1) the house itself, and; 2) needed/wanted repairs,” said The Mortgage Reports. “Because the lender tracks and verifies repairs, it is willing to approve a loan on a home it wouldn’t otherwise consider.”

The loan addresses a common problem when buying a fixer home: lenders often don’t approve loans for homes in need of major repairs.”

Waive contingencies before you submit your offer?

Note the question mark. Your real estate professional may caution you against this strategy. But, lenders like Better Mortgage are making it work with a program that “allows buyers in select markets to not only underwrite their finances, but also get the appraised value of their home before they submit an offer. That means they have the option to waive both financing and appraisal contingencies to make their offer as competitive as cash.”

 


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What N.J. needs: More downtowns for millennials (and boomers)

What N.J. needs: More downtowns for millennials (and boomers)

Reposted from Philly.com

When at last they are able to leave the nest for good, New Jersey’s millennials are likely to head downtown — or up and out of the Garden State altogether.

These are among the conclusions in a new report by New Jersey Future, a smart-growth advocacy organization that’s been studying our state’s evolution since 1987.

“People in the media were asserting that millennials and baby boomers wanted to move to town centers, and I got curious,” says the report’s author, Tim Evans, explaining the origins of the project.

“I generally don’t believe media hype until I can see the data.”

He found that the number of people between the ages of 22 and 34 fell in New Jersey between 2000 and 2013, from 1.48 million to 1.44 million. That 2.7 percent decline compares with a 6.8 percent increase in the size of the group nationally during that time — and came about despite the fact that the percentage of millennials living with their parents is higher in New Jersey, at 47 percent,  than in any other state.

“That’s a pretty powerful piece of evidence that many [millennials] simply can’t afford to get their own place” in the state,  Evans says.

Like their peers elsewhere, he notes, New Jersey millennials who are living independently do indeed love living in dense, walkable town centers with good transit connections to big cities.

The percentage of millennials in the population of these communities tends to exceed the statewide average of 16.4 percent; Hoboken has become New Jersey’s most powerful millennial magnet, with 45 percent of its population between the ages of 22 and 34.

Evans also found that boomers (my people!) aren’t generally heading to the Hobokens of New Jersey. They are rather more apt to age in place in the big house, big lot, car-centric suburbs where they raised their kids, or moving to one of the vast over-55 communities — often isolated on the suburban fringe — cropping up statewide.

About these worrisome phenomena, more in a moment.

But first, the “New Jersey is losing millennials!” headlines the NJ Future report has generated.

“The report has a pop culture hook,” notes Evans, who has worked for NJ Future since 1999 and serves as its research director.

The report also has been preceded by several years of sporadic stories about one or another group  “fleeing” what some have dubbed the “most abandoned” state (along with New York and Connecticut), mainly due to property and/or other taxes.

Wall Street worthies, retiring boomers, and recent college graduates who may account for some of those departing millennials are among those whom various publications have described as hightailing it out of Jersey.

All of which might be entertaining in a late-night-punchline sort of way, were it not for the fact that Evans’ report is about challenges facing a state that’s home to 8.9 million people. Me included.

“It matters … if you care about the next generation of people being able to live here,” he notes, adding, “Housing being too expensive is probably the biggest factor preventing New Jersey from being able to retain our millennials.”

The report “confirms everything we already knew — that there are places where people in general, and not just millennials, want to live. But [the availability of] these places is limited,” says Westmont resident Jason Miller, who helped found the South Jersey Urbanists group.

Nevertheless, in Haddon Township, which includes Westmont, the millennial population is on the rise, from 14.8 percent of the population in 2000 to 16.8 in 2013.

“There’s a wave,” says Miller. “The whole Haddon Avenue corridor has just the right mix of things people are looking for … one of the better commuter lines, good schools, and houses with backyards.”

Like Westmont, other South Jersey communities possess the density, walkability, and transit access that draw young people, Evans notes. These include Collingswood, also in the Haddon Avenue/PATCO corridor; the Burlington County RiverLine towns, and Woodbury/Pitman/Glassboro, where the long-planned Gloucester County line may (let’s hope) eventually be built.

But even in municipalities with attractive downtowns, leafy streets, and similar amenities, such as Moorestown, senior citizens — whose ranks now include the oldest boomers — often find it difficult to get around, says Trudi Herman. She founded the all-volunteer It Takes a Village NJ organization to offer transportation and other assistance; it currently serves about 60 Burlington County residents.

“Buses are on the periphery, and taxis are too expensive,” Herman says. “People can’t get to the doctor or get groceries, or [participate in] the community. They need that.”

And many older residents are reluctant or can’t afford to sell long-paid-off homes, she adds.

The NJ Future report urges the state to encourage the development of a range of housing types, and the creation of new downtowns around existing shopping centers, as has been done in Voorhees and Somerdale.

Despite the high costs, New Jersey “is blessed with a lot of the kinds of places that the younger workforce is looking for,” says Evans, who’s 50 and lives in the Philly suburbs. “If I were a millennial, I would be taking a serious look at New Jersey.”

Joe Russell grew up in South Jersey and moved to Collingswood from the Boston area in 2012.

He and his wife “walk downtown, walk to the train, and ride our bikes everywhere,” Joe, 33, says. “There’s a mix of people, a variety of people, and that’s one of the things that’s important to us.”

 


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Millennials will spend 45% of income on rent before age 30

Millennials will spend 45% of income on rent before age 30

Most rent burdened generation

Reposted from Housingwire.com

As rent prices continue to rise, a new study shows Millennials are paying about 45% of their total income toward rent, and pay out close to $100,000 toward rent before they turn 30.

Analyzing U.S. Census Bureau data going back as far as 1974, a new study from RentCafé found that Millennials have been the hardest generation for those ages 22 to 30. And the future does not look bright for Generation Z.

As it turns out, Millennials pay about $92,600 in rent by the time they turn 30. While they may earn more in income compared to previous generations, they also have to spend more on rent, the study showed.

During that same age span, from 22 to 30, Gen Xers paid an average $82,200 and Baby Boomers paid about $71,000 on total earned income of $202,100 and $195,700, respectively.

While Baby Boomers paid just 36% of their income toward rent while in their 20s, Gen Xers paid 41% and Millennials now pay 45% of their monthly income toward rent.

If this trend continues, Generation Z is expected to have to pay around $102,000 in rent during their 20s

Some of this trend can be attributed to many Millennials preferring to live in downtown urban areas paying rent that they know is way too high, rather than buy a home.

Also, student debt is holding back many Millennials from buying a home, forcing them to pay higher rent prices. About 50% of Millennials who have student debt said they are uncomfortable taking on a mortgage. What’s more, this group was less likely to believe they could even qualify for a mortgage, according to data from the National Association of Realtors.

But a survey from Zillow shows that while mortgage payments are more affordable on average than monthly rent payments, renters are struggling to buy a home due to perceived down-payment barriers.

In 2017, rent increased 3.1% with higher increases seen in certain major metro areas, according to data from Trulia. Overall, rent has increased 19.6% since the end of 2012.

 


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More Than Half of Millennial Buyers Head to the Suburbs including Hunterdon and Somerset Counties

More Than Half of Millennial Buyers Head to the Suburbs including Hunterdon and Somerset Counties

Forget Big-City Living: More Millennials Are Transforming Small-Town America

Reposted from Builderonline.com

Everybody knows the deal: Millennials want to be in the biggest cities, in the center of all the trendiness, all the job growth, and, generally speaking, all the action. Right?

Well, not so fast.

It turns out that millennial home buyers are increasingly moving to small towns, according to the 2018 Home Buyer and Seller Generational report from the National Association of Realtors®. About a fifth of those aged 37 and under, 21%, bought homes in a small town compared with 16% in the previous year, according to the report. That’s compared with 15% who moved to urban areas, which has been the same for the past two years.

However, the bulk of millennial buyers, 52%, are still heading to the suburbs.

The report is based on responses from a total of 7,866 home buyers who purchased a property from July 2016 to June 2017. Millennials are defined as 37 years old and younger; members of Generation X are 38 to 52; younger baby boomers are 53 to 62; older boomers are 63 to 71; and members of the silent generation are 72 to 92.

“It’s a common myth that all millennials are living in urban centers,” says Jessica Lautz, managing director of survey research at NAR. “The majority of millennials are buying in suburban areas, and there’s a large share who are purchasing in small towns. It costs less to purchase a home in those areas, and schools are becoming a priority for millennial parents.”

Enrolling their kids in good public schools without having to shell out big bucks for city private schools is important for many millennial buyers, says Jason Dorsey, president of the Center for Generational Kinetics, a millennial and Generation Z research group based in Austin, TX. And, increasingly, their jobs are conducive to small-town living.

“They’re able to commute to where their work is located, or they’re able to work remotely,” he says.

The younger generation made up the most buyers of any generation, at about 36%, according to the report. Nearly two-thirds are first-time buyers, roughly the same percentage of whom are married couples. Nearly half, 47%, have children.

“Millennials are getting older and having more stable relationships,” Dorsey says. “Planning to have kids is a catalyst for wanting to buy a home.”

Members of Generation X scooped up about 26% of homes on the market. They’re the most likely to be married and have kids under 18. And with the highest median household incomes of any generation, $104,700, they’re buying the most expensive and biggest homes.

Younger baby boomers scooped up 18% of homes, while older boomers nabbed about 14%.The silent generation purchased only 6%.

“People buy homes to accommodate their lives,” says Chief Economist Danielle Hale of realtor.com®. “So life factors like getting married, having kids, having the kids move out of their houses … are driving a lot of the home-buying and -selling behavior.”

Know the competition: Who’s buying homes anyway?

So who are these hordes of home buyers swamping the market, submitting offers over asking, and engaging in bidding wars?

Overall, about two-thirds of recent buyers were married, 18% were single women, 8% were unmarried couples, and 7% were bachelors. Thirty-seven percent had children under 18 living at home.

About 34% of recent purchasers were first-time buyers, down just 1 percentage point from last year.

What kinds of homes are people shelling out for?

Choosing the right home is more important than ever to buyers. It had better be—they plan to live in their abodes for a median 15 years. (An additional 18% swore they’re never moving.) Millennials are more likely to stay in their homes for only 10 years, while younger boomers expect to stay put for about 20 years.

Buyers overwhelmingly purchased existing (previously lived in) houses. Those places accounted for 85% of sales compared with 15% for newly constructed homes. Millennials, who make less, were less likely than younger boomers to buy new homes.

Those shopping for homes also preferred the detached, single-family kind. These houses made up 83% of all sales. The silent generation was the only group of buyers to buy higher numbers of generally lower-cost—and lower maintenance—condos and townhomes.

“If they’re looking to buy in the suburbs, the inventory of homes is overwhelmingly single-family,” says Hale. “People generally prefer to not be able to hear their neighbors next door.”

The typical home had three bedrooms and two bathrooms and spanned 1,870 square feet. It was a median 27 years old. Younger buyers tended to buy older homes, which usually cost less.

Who’s selling their homes?

So in this topsy-turvy market of soaring prices and rising mortgage rates, why are sellers plunking down a “For Sale” sign in their front yards? Their top reasons: They needed more space; they wanted to be closer to family and friends; or they needed to move for work.

Their homes were on the market for a median of three weeks and fetched 99% of their asking prices. That was a median $47,500 more than they originally paid for their abodes, which they generally lived in for a decade.

Gen Xers were the most likely to put their homes on the market, making up 26% of home sellers. They typically moved up into larger homes, often to accommodate growing families or their parents moving in with them.

Younger boomers made up 23% of home sellers, but they tended to stay in roughly the same-size homes. Those 63 and up tended to downsize.

The majority of sellers didn’t move too far from their previous homes. Nearly three-quarters stayed within the state.

 


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More older Millennials are living with relatives in Hunterdon and Somerset Counties, a legacy of 2007-09 recession

More older Millennials are living with relatives in Hunterdon and Somerset Counties, a legacy of 2007-09 recession

Reposted from USA Today.

The share of older Millennials living with relatives is still rising, underscoring the lingering obstacles faced by Americans who entered the workforce during and after the Great Recession.

About 20% of adults age 26 to 34 are living with parents or other family members, a figure that has climbed steadily the past decade and is up from 17% in 2012, according to an analysis of Census Bureau data by Trulia, a real estate research firm. The increase defies record job openings and a 4.1% unemployment rate, the lowest in 17 years.

Not surprisingly, a much larger portion of younger Millennials age 18 to 25 (59.8%) live with relatives, but that figure generally has fallen the past few years after peaking at 61.1% in 2012.

After graduating from Texas Tech University with a journalism major in 2005, Heidi Toth, now 35, got a job quickly at a Provo, Utah, newspaper. But in early 2007, she went on an 18-month church mission, landing her back in the job market in the depths of the recession in 2008. Unable to find work, she moved in with her mother in Roswell, New Mexico, for nine months while she hunted for work and took part-time, low-paying jobs.

She was rehired at the Provo paper in spring 2009 but left again in 2013 after a series of layoffs modified her duties. After months of fruitless job searching and traveling, she returned to her mother’s house for three months until she was hired at a Lubbock, Texas, paper.

Toth was grateful she could live rent-free during her periods of unemployment. But, she adds, “It wasn’t ideal, professionally or personally.”

Prospective employers in larger, distant cities didn’t think she would be readily available for interviews. And at home, “I felt like I was back in high school,” she says. “I felt like I had to ask permission to go out.”

Toth, who now works in public relations at an Arizona University and rents a duplex in Flagstaff, says her winding career path has hampered her earnings and career advancement.

All told, 38.4% of 18-to-34-year-olds live with family. That’s up from 28.7% in 1962 in part because a growing number of young people are delaying marriage, says Trulia’s chief economist, Ralph McLaughlin. The living-at-home trend accelerated during the recession but has been stable since 2012 as more younger Millennials, but fewer older ones, leave the nest.

The older group got hit hardest by the recession of 2007-09 because that’s when many graduated from high school and college, economists say.

“That was a tough time to establish your career and gain work experience,” McLaughlin says. Many couldn’t get a job or took positions for which they were overqualified, setting back their careers and forcing them to move in with parents or other family members.

“That scarring, of not being able to get that experience after graduation, is very harmful,” says Elise Gould, senior economist at the Economic Policy Institute.

By contrast, many younger Millennials have pursued their first jobs in a healthy labor market the past few years. For employers, a 24-year-old just starting out may be a more attractive and cheaper hire than a 32-year-old with a spotty resume, McLaughlin says. As a result, some members of the older group may continue to struggle with underemployment and lower wages and move out on their own at a slower-than-normal pace, Gould says.

One sign that the younger group is closing the gap on older members of their generation in the competition for jobs: Their unemployment rate is typically much higher than that of the 26-34 age group because they lack experience. In early 2007, before the recession began, the jobless rate was 8.7% for the younger group and 4.7% for the older one. Early this year, however, unemployment had again fallen to 4.7% for the older workers but was just 7.8% for their younger counterparts — the smallest difference between the two populations on records dating to 1962, according to annual data compiled by Census and analyzed by Trulia

There are other reasons more older Millennials are living with relatives. Many are burdened by student debt and can’t afford high rents, especially in larger cities. Total U.S. student loan debt hit a record $1.36 trillion in the third quarter, the Federal Reserve Bank of New York said last week.

And with a housing shortage driving up prices in recent years, some people in their late 20s and 30s prefer to live with relatives so they can sock away more money to buy a home, McLaughlin says. But he and Gould say the battering that age group endured early in their careers is the main factor.

A 2012 study published in the American Economic Journal found that graduating from college in a recession causes an average 9% loss of earnings initially, and that deficit disappears only slowly over a decade or so. Graduates typically start at smaller, lower paying companies and switch jobs more often to catch up.

Some “less advantaged graduates can be permanently affected,” the study said.


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USAA members and their families can receive a substantial reduction on their next real estate transaction.