Yes, Millennials Really Are Fleeing the State. The Data Says So

Yes, Millennials Really Are Fleeing the State. The Data Says So

Reposted from NJFuture.org

Summary

Contrary to some of the latest headlines, the recently released report commissioned by New Jersey Policy Perspective does in fact show that there is currently a net out-migration of Millennials from New Jersey, corroborating New Jersey Future’s 2017 report.  The fact that Millennials are leaving the state is not a myth.

The NJPP report set out to answer two questions: whether Millennials are leaving now at a faster rate than they have in the past; and whether Millennials are leaving at a faster rate from New Jersey than from select other high-cost states. The report concluded that the answer to both questions is no, but the data in the report showed that indeed Millennials are leaving both New Jersey and its neighbor states. Whether they are leaving faster, slower, or at the same rate as the previous generation of young people — for which appropriate data to support these assertions do not exist — does not change the fact that this generation is looking to live elsewhere. The young-person migration issue and the NJPP analysis are analogous to saying that our state’s water is polluted and has been for some time and is about as polluted as the water in neighboring states. It’s interesting to know this information and that we are consistent, but we still have a problem.

New Jersey Future has planned for the fall a series of articles looking into where out-migrating New Jersey Millennials have gone, and whether specific types of destinations provide clues as to what Millennials are looking for but are not finding in New Jersey. We will send out an announcement when each of these articles is live. In the meantime, below is a more detailed analysis of the trend.

Analysis

Let’s start out by defining “Millennials” as people born between 1980 and 2000. How many such people are there, nationally and in New Jersey?

In 2000 — the year in which the last of the Millennials were born and when we’re first able to count all of them — the youngest Millennials were under 1 year old and the oldest were 20. So the age range 0 to 20 roughly represents the Millennial generation in the year 2000. In that year, there were 84,522,713 people 20 and under in the country, and in New Jersey there were 2,380,877.

In 2016, the youngest Millennials (those born in 2000) were 16 years old, and the oldest (those born in 1980) were 36. Unfortunately, the standard Census Bureau age ranges do not match up exactly to these endpoints, so we have to approximate. Based on inferences from Census Bureau age range data , in 2016 there were approximately 92,178,152 people aged 16 to 36 nationally and 2,420,989 in New Jersey. (More detail on how these approximations were calculated is available upon request .)

Note that these both represent increases over the numbers from 2000. So if we were already counting the entire Millennial generation in 2000, how could the numbers of people in the country born between 1980 and 2000 have gone up? The answer: immigration.

The Immigration Effect, Nationally and in New Jersey

Between 2000 and 2016, both New Jersey and the country will have lost a small fraction of native-born Millennials to premature deaths, but we will have gained a lot more by absorbing young people through immigration. The United States has a net positive international migration flow, as does every individual state – that is, every state receives more in-migrants from other countries than it loses out-migrants to other countries. New Jersey is a particularly popular immigrant destination: It gained a net of 320,000 people via international immigration between 2010 and 2016 – 5.1 percent of all U.S. immigration, despite New Jersey only making up 2.8 percent of total U.S. population in 2016.

This international inflow represented 210 percent of New Jersey’s total population growth, meaning that without immigration from other countries, New Jersey would actually have lost population (thanks to more people moving from New Jersey to other states than moving into New Jersey from other states).

So, immigration is how the number of Millennials actually increased between 2000 and 2016, both nationally and in New Jersey. The increase was 9.1 percent nationally, and a far smaller 1.7 percent in New Jersey, despite New Jersey being a particularly popular immigrant destination. Instead of exceeding the national rate of increase, which would be the expectation thanks to New Jersey attracting a disproportionate share of international immigrants overall, the number of Millennials in New Jersey actually increased at far less than the national rate, and in fact barely increased at all. This could only have happened if a lot of the Millennials who were born in New Jersey moved elsewhere between 2000 and 2016 and weren’t replaced by Millennials moving in from other states, and were only barely offset by Millennials moving in from other countries.

How Millennials Compare to Generation X Nationally

Now let’s look at the size of the Millennial generation compared to the previous generation, Generation X, who are generally defined as having been born between 1964 and 1979. Note first that these two generations are not defined using the same number of years – the Millennials’ age range includes 21 years (1980 through 2000, inclusive of both endpoints), while that of Generation X only includes 16 distinct birth years. So the sizes of the generations are not directly comparable because of the different widths of the intervals.

For that reason, let’s restrict our analysis to the generations in their “young adult” years of 22 to 34, when most people have graduated from college and are more likely to be in charge of their locational decisions. In 2000, the 22-to-34 age range included people born from 1966 to 1978, matching up pretty closely with the common definition of Generation X. Fast-forward to 2016: The 22-to-34 age range included people born from 1982 to 1994, representing all but the youngest of the Millennial generation, and comprising the subset of Millennials who were old enough to be making their own locational decisions (rather than just leaving the state for college). Let’s call these the “working-age Millennials.” Working-age Millennials were age 6 to 18 in 2000.

In 2000, there were 50,965,195 people age 22 to 34 nationally – this was Generation X in their young adult years. Also in 2000, there were already approximately 53,097,840 future 2016 working-age Millennials, meaning they already outnumbered Generation X, even before their ranks had a chance to be augmented by immigration. By 2016, the number of people nationally age 22 to 34 had swollen to 57,486,614, an increase of 12.8 percent, thanks to the older end of the larger Millennial generation replacing Generation X in this age range. Thus a national 12.8 percent increase in the number of 22-to-34-year-olds can be taken as a benchmark for what is likely to happen everywhere, all other things being equal, when a larger generation replaces a smaller one in the young-adult stage of life.

Millennial vs. Generation X in New Jersey

Whether you define “young adults” as ages 22 to 34 or as ages 18 to 38, New Jersey has not experienced the increase in the number of such people that is to be expected when the Millennials, the largest generation in American history, replaces the much smaller Generation X in that age range.

But in New Jersey, the number of 22-to-34-year-olds increased only by 1.8 percent between 2000 and 2016 – only one-seventh the national rate, or one-seventh the default increase to be expected by the larger generation replacing the smaller one in the young-adult years. This is despite the fact that, in New Jersey, just like nationally as noted above, the number of people age 6 to 18 in 2000 – the future 2016 working-age Millennials – already exceeded the size of Generation X, even before being supplemented by immigration. Thus New Jersey’s very small increase in the number of young adults cannot be attributed to some demographic anomaly in which New Jersey started out with proportionately fewer Millennials at birth than was true nationwide.

If the replacement of Generation X by the much larger Millennial generation in the young-adult stage of life resulted in a 12.8 percent increase nationally in the number of 22-to-34-year-olds between 2000 and 2016, and if the Millennial generation is disproportionately larger than Generation X throughout the country, then we would also expect this same process of generational replacement to produce roughly a 12.8 increase in the number of 22-to-34-year-olds in New Jersey. But it didn’t. If it had, the number of 22-to-34-year-olds in New Jersey in 2016 would be more like 1,667,196 (a 12.8 percent increase over New Jersey’s population of 22-to-34-year-olds in 2000), instead of the actual 1,505,190. So New Jersey’s population of 22-to-34-year-olds in 2016 is about 162,000 shy of where it ought to be if generational replacement were happening as expected. This means almost 10 percent of the 22-to-34-year-olds one would have predicted to find in New Jersey in 2016 are, essentially, “missing.”

This shortfall in the expected number of young adults in New Jersey in 2016 can only be explained by one or both of two things. Either New Jersey’s home-grown Millennials moved out of the state at a higher rate than previous generations, eroding the expected increase in the size of the young-adult population, and/or New Jersey’s Millennial population did not get supplemented by in-migrants from other countries to the same extent as in previous generations, robbing the young-adult population of one of its past sources of growth. So either a good chunk of New Jersey’s Millennials have fled the state, and/or potential in-migrating Millennials from elsewhere have chosen to stay away. Neither of these results is good for New Jersey’s future prospects, and both deserve to be addressed.

 

 


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Top Millennial ZIP Codes Trend Toward Urban Cores

Top Millennial ZIP Codes Trend Toward Urban Cores

This article orginally appeared on BUILDER’s sister site, Multifamily Executive.

It’s not a news flash to learn that Millennials—people born between 1977 and 1996—love living in the city. But what cities and urban areas in particular do they favor?

To find out, apartment-search firm RENTCafé analyzed U.S. Census data to find where millennials live and their next potential hot spots. The company then ranked ZIP codes in the 30 biggest U.S. cities by three measures: (1) highest increases in millennial population from 2011 to 2016; (2) largest current share of millennials; and (3) highest current population of millennials.

Highest Increases in Millennials
As predicted, downtown and areas surrounding urban landscapes are the clear favorites among the Gen Y crowd. Two downtown Los Angeles ZIP codes, 90014 and 90013, saw the highest increases of millennials from 2011 to 2016, at 91.4% and 60%, respectively. The third- and fifth-ranked ZIP codes jumped over to the East Coast, in New York City’s Battery Park City and Lincoln Square, with 54.5% and 47.7% reported increases, respectively.

In the rest of the top 20, Denver has four ZIP codes present, with one near downtown and three in neighborhoods. Other top cities with the highest influx of millennials include San Francisco and Philadelphia, with two each.

Greatest Share of Millennials
ZIP codes with the largest share of millennials differed from those experiencing the highest Gen Y increases. In Chicago’s West Loop, 60661, 73% of residents are millennial members. The study reports that this ZIP code “is as close as it gets to business without actually being in the Loop, and has only recently been turning into a more residential area.”

Two neighborhoods tied for second in millennial share, with 71%: Philadelphia’s Manayunk and lower Manhattan’s Financial District. The downtown areas of Denver; Dallas; Oklahoma City; Columbus, Ohio; Charlotte, N.C.; and Indianapolis also have high shares of millennials.

Highest Population of Millennials
Population-wise, areas surrounding New York City make up nine of the top 20 of those with the largest millennial populations, but none is in Manhattan. From Williamsburg in Brooklyn to Corona in Queens, over 40,000 millennials call these ZIP codes home. ZIP code 11211, in Williamsburg, houses 43,700 millennials, the largest amount in the U.S.

Chicago comes in second in population, with its Lakeview neighborhood (41,500) and has another six ZIP codes in the top 20 list. The other four remaining population-heaviest cities are Los Angeles; El Paso and Houston, Texas; and San Francisco.

 

 


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Millennials are marrying later, but that’s not exactly bad for homebuilders, Toll Brothers CEO says

Millennials are marrying later, but that’s not exactly bad for homebuilders, Toll Brothers CEO says

 

Reposted from CNBC.com

Millennials may be frequently blamed for destroying industries like brick-and-mortar retail, but their habits aren’t exactly bad for homebuilders like Toll Brothers, the luxury construction company’s CEO told CNBC on Tuesday.

“We know they’re marrying later, so they’re buying homes later, but that also means they’re wealthier when they buy,” CEO Douglas Yearley told “Mad Money” host Jim Cramer in an interview.

CNBC reported in July that today, just 57 percent of first-time homebuyers are married, compared with 75 percent in 1985.

That trend could lead to more millennials being able to afford Toll Brothers’ higher end homes, a boon for the company, Yearley told Cramer.

“If not, they’re going to buy the homes from our buyers, because … while we’re not selling the starter home, that’s in our food chain. We need that to be healthy,” the CEO added.

Investors have been worried about the state of the housing market for much of 2018. Rising mortgage rates and a slowdown in luxury real estate sales in key areas of the country have made some question the fate of Toll Brothers, which does business in 20 states including California and New York.

But Toll Brothers’ trajectory tells a different story. Its latest earnings report handily beat Wall Street’s quarterly profit estimates, buffered by rising home sales and prices.

“This is the largest premium for a new home to a used home that I’ve seen in my 28 years, and it’s because the architecture’s better, the options you can put into the home are better,” Yearley told Cramer. “More and more people want new than ever before and we’re really benefiting from that.”

And while Toll’s California results were slightly weaker compared with this quarter in 2017, Yearley cast last year’s numbers as “an aberration,” adding that California was “still one of our top markets.”

“Last summer was very odd in that we sold more homes in the summer in California than in the spring, and everybody that follows the industry knows that the spring season is when most homes are sold,” he explained. “So … if you look back two years ago, our numbers are up significantly.”

All in all, the reported slump in areas of the luxury housing market doesn’t seem to be touching Toll Brothers.

“We love our niche,” Yearley said Tuesday. “The luxury end of the market is very strong. There’s more and more households that make $100,000 or more, which is our business.”

Shares of Toll Brothers closed up 0.77 percent on Tuesday at $36.57, far off their 52-week high of $52.73.

 


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12 Common First-Time Home Buyer Mistakes and How to Avoid Them

12 Common First-Time Home Buyer Mistakes and How to Avoid Them

Reposted from NerdWallet.com
First-time home buyers are prone to missteps, such as getting just one rate quote. Here are some common errors and how to steer clear of them.
Every year, first-time home buyers venture into the market and make the same mistakes that their parents, siblings and friends made when they bought their first houses.

But today’s novice buyers can stop the cycle. Here are 12 mistakes that first-time home buyers make — and what to do instead.

 

1. Not figuring out how much house you can afford

Without knowing how much house you can afford, you might waste time. You could end up looking at houses that you can’t afford yet, or visiting homes that are below your optimal price level.

For many first-time buyers, the goal is to buy a house and get a loan with a comfortable monthly payment that won’t keep them up at night. Sometimes it’s a good idea to aim low.

How to avoid this mistake: Use a mortgage affordability calculator to help you know what price range is affordable, what’s a stretch and what’s aggressive.

 

2. Making a down payment that’s too small

You don’t have to make a 20% down payment to buy a home. Some loan programs (see item No. 5) enable you to buy a home with zero down or 3.5% down. Sometimes that’s a good idea, but homeowners occasionally have regrets.

In a survey commissioned by NerdWallet, one in nine (11%) homeowners under age 35 agreed with the statement “I should have waited until I had a bigger down payment.” It was one of the most common regrets that millennial homeowners had.

How to avoid this mistake: Figuring out how much to save is a judgment call. A bigger down payment lets you get a smaller mortgage, giving you more affordable monthly house payments. The downside of taking the time to save more money is that home prices and mortgage rates have been rising, which means it could become more difficult to buy the home you want and you may miss out on building home equity as home values increase. The key is making sure your down payment helps you secure a payment you’re comfortable making each month.

In another survey commissioned by NerdWallet, millennial homeowners described how long it took to save for a down payment. Among millennials who had bought a home in the previous five years, it took an average of 3.75 years to save enough to buy. So if it’s taking you three or four years to save up, you have plenty of company.

 

3. Emptying your savings

If you buy a previously owned home, it almost inevitably will need an unexpected repair not long after. Maybe you’ll need to replace a water heater or pay a homeowner’s insurance deductible after bad weather.

“That’s a growing pain for the first-time homeowner, when stuff breaks,” says John Pataky, executive vice president of the consumer division of EverBank. “They find themselves in a hole quickly” if they don’t have enough saved for emergencies.

How to avoid this mistake: Save enough money to make a down payment, pay for closing costs and moving expenses, and take care of repairs that may come up. Lenders will give you estimates of closing costs, and you can call around to get estimates of moving expenses.

 

4. Not looking for first-time home buyer programs

As a first-time home buyer, you probably don’t have a ton of money saved up for the down payment and closing costs. But don’t make the error of assuming that you have to delay homeownership while saving for a huge down payment. There are plenty of low-down-payment loan programs out there, including state programs that offer down payment assistance and competitive mortgage rates for first-time home buyers.

Yes, 11% of millennial homeowners say they regret not making a bigger down payment. But the vast majority don’t express such a regret.

How to avoid this mistake: Ask a mortgage lender about your first-time home buyer options and look for programs in your state. You might qualify for a U.S. Department of Agriculture loan or one guaranteed by the Department of Veterans Affairs that doesn’t require a down payment. Federal Housing Administration loans have a minimum down payment of 3.5%, and some conventional loan programs allow down payments as low as 3%.

 

5. Ignoring VA, USDA and FHA loan programs

A lot of first-time home buyers want to or need to make small down payments. But they don’t always know the details of government programs that make it easy to buy a home with zero or little down.

How to avoid this mistake: Learn about the following loan programs:

  • VA loans are mortgages guaranteed by the U.S. Department of Veterans Affairs. They’re for people who have served in the military. VA loans’ claim to fame is that they allow qualified home buyers to put zero percent down and get 100% financing. Borrowers pay a funding fee in lieu of mortgage insurance.
  • USDA loans can be used to buy homes in areas that are designated rural by the U.S. Department of Agriculture. Qualified borrowers can put zero percent down and get 100% financing. You pay a guarantee fee and an annual fee in lieu of mortgage insurance.
  • FHA loans allow for down payments as small as 3.5%. What’s more, the Federal Housing Administration can be forgiving of imperfect credit. When you get an FHA loan, you pay mortgage insurance for the life of the mortgage, even after you have more than 20% equity.

6. Getting just one rate quote

Shopping for a mortgage is like shopping for a car or any other expensive item: It pays to compare offers. Mortgage interest rates vary from lender to lender, and so do fees such as closing costs and discount points.

But according to the Consumer Financial Protection Bureau, almost half of borrowers don’t shop for a loan.

How to avoid this mistake: Apply with multiple mortgage lenders. Research from Freddie Mac indicates that borrowers could save an average of $1,500 over the life of the loan by getting one more rate quote, and an average of $3,000 if they get five rate quotes. All mortgage applications made within a 45-day window will count as just one credit inquiry.

 

7. Not checking credit reports and correcting errors

Mortgage lenders will scrutinize your credit reports when deciding whether to approve a loan and at what interest rate. If your credit report contains errors, you might get quoted an interest rate that’s higher than you deserve. That’s why it pays to make sure your credit report is accurate.

How to avoid this mistake: You may request a free credit report each year from each of the three main credit bureaus. You may dispute any errors you find.

 

8. Not knowing whether to pay discount points

Mortgage discount points are fees you pay upfront to reduce your mortgage interest rate. Interest rate savings can add up to a lot of money over the life of a mortgage, and discount points are one way to gain those rate savings if you’re in the right position to purchase them.

How to avoid this mistake: If making a minimal down payment is an accomplishment, the choice is simple: Don’t buy discount points. If you have enough cash on hand, the value of buying points depends on whether you plan to live in the home longer than the “break-even period.” That’s the time it takes for the upfront cost to be exceeded by the monthly savings you get from a lower interest rate.

 

9. Applying for credit before the sale is final

One day, you apply for a mortgage. A few weeks later, you close, or finalize, the loan and get the keys to the house. The period between is critical: You want to leave your credit alone as much as possible. It’s a mistake to get a new credit card, buy furniture or appliances on credit, or take out an auto loan before the mortgage closes.

Here’s why: The lender’s mortgage decision is based on your credit score and your debt-to-income ratio, which is the percentage of your income that goes toward monthly debt payments. Applying for credit can reduce your credit score a few points. Getting a new loan, or adding to your monthly debt payments, will increase your debt-to-income ratio. Neither of those is good from the mortgage lender’s perspective.

Within about a week of the closing, the lender will check your credit one last time. If your credit score has fallen, or if your debt-to-income ratio has gone up, the lender might change the interest rate or fees on the mortgage. It could cause a delay in your closing, or even result in a canceled mortgage.

How to avoid this mistake: Wait until after closing to open new credit accounts or to charge furniture, appliances or tools to your credit cards. It’s OK to have all those things picked out ahead of time; just don’t buy them on credit until after you have the keys in hand.

 

10. Shopping for a house before a mortgage

It’s more fun to look at homes than it is to talk about your finances with a lender. So that’s what a lot of first-time home buyers do: They visit properties before finding out how much they are able to borrow. Then, they are disappointed when they discover they were looking in the wrong price range (either too high or too low) or when they find the right home, but aren’t able to make a serious offer.

How to avoid this mistake: Talk to a mortgage professional about getting pre-qualified or even preapproved for a home loan before you start to seriously shop for a place. The pre-qualification or preapproval process involves a review of your income and expenses, and it can make your bid more competitive because you’ll be able to show sellers that you can back up your offer.

Neal Khoorchand, broker-owner of Century 21 Professional Realty, in the South Ozone Park neighborhood of Queens, New York, pre-qualifies his clients before showing them properties.

“If you’re qualified for a one-family house for $500,000, we’re not going to show you a one-family for $600,000 — it would be a waste of time,” he says.

 

11. Underestimating the costs of homeownership

After you buy a home, the monthly bills keep stacking up. This can come as a surprise if you’re not ready.

“It’s not just your mortgage payment,” says Seth Feinman, vice president of Silver Fin Capital, a mortgage brokerage in Great Neck, New York. “You’re going to have the oil bill, the gas bill, you’re going to have a cable bill, you’re going to have all these things that the bank doesn’t care about when qualifying you for a mortgage.”

Renters often pay these kinds of bills, too. But a new home could have higher costs — and it might come with entirely new bills, such as homeowner association fees.

How to avoid this mistake: Work with a real estate agent who can tell you how much the neighborhood’s property taxes and insurance typically cost. Ask to see the seller’s utility bills for the last 12 months the home was occupied so you have an idea how much they will cost after you move in.

 

12. Miscalculating repair and renovation costs

First-time home buyers are frequently surprised by high repair and renovation costs. Buyers can make two mistakes: First, they get a repair estimate from just one contractor, and the estimate is unrealistically low. Second, their perspective is distorted by reality TV shows that make renovations look faster, cheaper and easier than they are in the real world.

How to avoid this mistake: Assume that all repair estimates are low. James Ramos, owner of Re/Max Bay to Bay, a real estate brokerage in Tampa, Florida, recommends doubling the estimates to get a more realistic view of costs.

Seek more than one estimate for expensive repairs, such as roof replacements. A good real estate agent should be able to give you referrals to contractors who can give you estimates. But you also should seek independent referrals from friends, family and co-workers so you can compare those estimates against ones you receive from contractors your agent refers.