Yes, You Can Still Afford a Home

Yes, You Can Still Afford a Home

Presented as a public service by Joe Peters of Coldwell Banker

There is a hidden opportunity in all the discouraging news going on.  Interest rates on mortgages have never been this low.  Never ! There is a unique window of opportunity to take advantage of this opportunity.  If you were considering buying a home this year, the time is NOW !!!  Give me a call to explore your options at 908-238-0118.  Joe Peters

The residential real estate market has come roaring out of the gates in 2020. Compared to this time last year, the number of buyers looking for a home is up 20%, and the number of home sales is up almost 10%. The increase in purchasing activity has caused home price appreciation to begin reaccelerating. Many analysts have boosted their projections for price appreciation this year.

Whenever home prices begin to increase, there’s an immediate concern about how that will impact the ability Americans have to purchase a home. That thinking is understandable. We must, however, realize that price is not the only element to the affordability equation. Mark Fleming, Chief Economist at First American, recently explained:

“When demand increases for a scarce (limited or low supply) good, prices will rise faster. The difference between houses and other goods is that we buy them with a mortgage. So, it’s not the actual price that matters, but the price relative to purchasing power.”

While home prices have risen recently, mortgage interest rates have fallen rather dramatically. At the beginning of last year, the 30-year fixed-rate mortgage stood at 4.46%. Today, that number stands over a full percentage point lower.

How does a lower mortgage rate impact your monthly mortgage payment?

Michael Hyman, a research data specialist for the National Association of Realtors (NAR), explained in a recent report that, even though home values have increased over the last year, the monthly cost of owning a home has decreased:

“With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 15.5%…from 17.1% a year ago.”

When purchasing a home, the price is not as important as its cost. Today, the monthly expense (cost) of purchasing the same house you could have purchased last year would be less. Or, you could purchase a more expensive home for the same monthly expense.

Fleming, looking at all aspects of the affordability equation (prices, wages, and mortgage rates), calculated the actual numbers in a recent blog post:

“Low mortgage rates and income growth triggered a 13.5% increase in house-buying power compared with a year ago.”

Since wages have increased and mortgage rates have dropped to historically low levels, this is a great time to buy your first home or move up to the home of your dreams. As Tendayi Kapfidze, Chief Economist at LendingTreerecently advised:

“If you are in a point in your life where you’re considering buying a home today, it’s a better time to buy than 10 years ago. If you can get a mortgage, you’re getting much lower interest rates, and it enables you to afford more.”

Bottom Line

Whether you’ve considered becoming a homeowner for the first time or have decided to sell your home and buy one that better suits your current lifestyle, now is a great time to get together and discuss your options.

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

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

Reposted from


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.


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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