Millennials: How Many are Actually ‘Living with their Parents’

Millennials: Millennials: How Many are Actually ‘Living with their Parents’ | Keeping Current Matters

Every day we are pleasantly surprised with the research coming forward regarding the Millennial generation. Whether it was the over-exaggeration of the student debt challenge, the misbelief that they are not yet ready to buy or the under estimation of their actual home purchases, evidence is beginning to debunk the myths many have held about this generation and homeownership. Now, one more strongly held belief is being questioned.

Do Millennials Live in their Parents Basements?

It seems not as many as once was reported. Our friends at Calculated Risk (CR) alerted us to a post by Derek Thompson in the Atlantic: The Misguided Freakout About Basement-Dwelling Millennials. The article explains that according to the Census Reports:

“It is important to note that the Current Population Survey counts students living in dormitories as living in their parents’ home.”

What?!? If you live in a college dorm, the census counts you as living with your parents. Thompson has some fun with this when he explains:

“When you were adjusting to your freshman roommate, you were ‘living with your parents’. When you snagged that sweet triple with your best friends in grad housing, you were ‘living with your parents’. That one time you launched butt-rattling bottle rockets at the stroke of midnight off your fraternity roof? I hope you didn’t make too much noise. After all, you were ‘living with your parents’.”

The data is “Criminally Misleading”

According to Thompson, the counting of those living in college dorms as living with their parents is “criminally misleading”. He explains that part of the increase in these numbers is actually attributed to the fact that more people are attending college:

“[T]he share of 25- to 29-year-olds with a bachelor degree has grown by almost 50 percent since the early 1980s. More than 84 percent of today’s 27-year-olds spend at least some time in college and now 40 percent have a bachelor’s or associate’s degree. More young people going to school means more young people living in dorms, which means more young people ‘living with their parents’, according to the weird Census.”

Thompson then goes on to reveal that:

“[T]he share of 18-to-24-year-olds living at home who aren’t in college has declined since 1986. But the share of college students living “at home” (i.e.: in dorms, often) has increased.

So the Millennials-living-in-our-parents meme is almost entirely a result of higher college attendance.” (emphasis added)

The Other Side of the Argument

However, Trulia’s chief economist Jed Kolko, doesn’t totally agree. In a post in response to the Thompson article, Kolko explains:

“The Current Population Survey’s (CPS) Annual Social and Economic Supplement (ASEC) counts college students who are living in dorms as living with their parents, and college enrollment has indeed gone up. But it does not follow that basement-dwelling millennials are a myth. The ASEC and other Census data show that after adjusting for college enrollment and for dormitory living, millennials were more likely to live with parents in 2012 and 2013 than at any other time for which a consistent data series is available.”

Bottom Line

There are more Millennials living with their parents than ever before. However, the numbers being quoted by some seem to be exaggerated.

Buying a Home? Know ALL Your Options

Buying a Home? Know ALL Your Options | Keeping Current Matters

In a post earlier this week, we suggested that the Millennial generation’s struggles with student debt and the overarching concept of homeownership are not the reasons for so many first time buyers hesitating to move forward with the purchase of their first home. Now there is another firm suggesting the same. The asset management company, Nomura, came out with strong guidance to their investors. According to an article in Housing Wire last week:

“Nomura’s note to clients has a take few have offered: The first time homebuyers are holding out and it’s not student debt, a shift away from homeownership as a choice by Millennials, or any of that.”

Instead, they think it is a lack of a full understanding of the mortgage process. The article explains:

“Analysts say it’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

This comes off the heels of a survey by Zelman & Associates that revealed that 38% of those between the ages of 25-29 years old and 42% of those between the ages of 30-34 years old believe that a minimum of 15% is required as a down payment to purchase a home. In actually, a purchaser may be able to put down far less.

The Reality of the Situation

According to Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management, in a recent Executive Perspectives piece:

  • A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
  • Freddie Mac’s purchase of mortgages with down payments under 10 percent more than quadrupled between 2009 and 2013.
  • More than one in five borrowers who took out conforming, conventional mortgages in 2014 put down 10 percent or less.
  • Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family or grants or loans from non-profits or public agencies.

Ms. Boyle goes on to explain:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Bottom Line

If you have considered purchasing a house or moving-up to a new dream home, know all of your options. Reach out to a real estate and/or mortgage professional in your marketplace to get the best, most up-to-date information available. You may be surprised to learn what you and your family are capable of achieving.

Millennials and Student Debt: We Knew They Were Wrong!

Millennials & Student Debt: We Knew They Were Wrong! | Keeping Current Matters

For almost a year now, we have been trying to debunk the myth that student debt is keeping the vast majority of Millennials from purchasing a home.

We explained that Millennials have purchased more homes over a recent twelve month period than any other generation as was reported by the National Association of Realtors).

We explained that the homeownership rate of people currently between the ages of 25-29 is 34.3%. That is higher than the 33.6% rate members of the previous generation (people currently between the ages of 45-49) achieved when they were that age (as per John Burns Consulting).

We explained that a recent survey showed that almost three out of every four (74%) young adults between the ages of 18-34 plan to buy a home in the next five years with 32% planning to do it in the next twelve months.

However, no matter how hard we tried, the same recourse was trumpeted back at us – What about student debt?

The good news is that the real facts about student debt are coming to light. Last week, The New York Times posted an article titled The Reality of Student Debt Is Different from the Clichés. This article went into great depth regarding the findings of a new study just released by the Brookings Institution, Is a Student Loan Crisis on the Horizon? which looked at data through 2010. The NYT article quoted key elements of the report:

  • 58% of young-adult households have less than $10,000 in debt. An additional 18% have between $10,000 and $20,000
  • 36% of households with people between the ages of 20 and 40 had education debt, up from 14% in 1989. Some of the increase stems from the good news that more people are going to college.
  • Taking financial aid into account, the average tuition at private (nonprofit) colleges has not increased any faster than overall inflation over the last decade.
  • Because the incomes of college graduates have grown since the early 1990s, the share of income that a typical student debtor has to devote to loan payments is only marginally higher than it was in the early 1990s — and somewhat lower than it was in late 1990s. It was 3.5% in 1992, 4.3% in 1998 and 4% in 2010.
  • The burden for the people with the most debt is significantly lower today than two decades ago. Someone at the 90th percentile of debt had to devote 15% of their income to repayment in 2010, down from 20% in 1992.

Bottom Line

The authors of the actual study put it simply in their conclusion:

“Despite the widely held belief that circumstances for borrowers with student loan debt are growing worse over time, our findings reveal no evidence in support of this narrative. In fact, the average growth in lifetime income among households with student loan debt easily exceeds the average growth in debt, suggesting that, all else equal, households with debt today are in a better financial position than households with debt were two decades ago. Furthermore, the incidence of burdensome monthly payments does not appear to have become more widespread over the last two decades.”

Millennials: They ARE Buying & Selling Houses

Millennials Are Buying & Selling Houses | The KCM Crew

A recent study by the National Association of Realtors, Home Buyer and Seller Generational Trends, revealed that Millennials are a much higher percentage of the overall housing market than the public may realize. Here are the breakdowns:


Millennial Buyers | The KCM Crew


Millennial Sellers | The KCM Crew

Bottom Line

Contrary to what many believe, Millennials make up the largest percentage of all buyers and a substantial percentage of all sellers.

Millennials: Diversify with Housing

Justin DeCesare is back as our guest blogger today. Justin is the CEO of Middleton & Associates Real Estate, one of the largest independently owned Brokerages in coastal San Diego. 

A recent article written by Kelley Holland of CNBC titled “Retirement trumps home ownership for millennials” references a National Endowment for Financial Education study that claims only 13% of Millennials see home ownership as a top priority.

Half of the same sample claimed retirement saving was their primary goal.

To me, as both a Millennial and a Real Estate Broker/CEO, the answers to this survey stem from the perception of what home ownership is.

The last decade, or the fail decade as it is known by MSNBC’s Chris Hayes, has wiped out countless sums of home equity. Even in the gains of the last two years, we are not back at the record highs of 2005 and 2006.

The correlation here is that this decline in home prices is when Millennials have come of age. We have grown up in a time when people began treating home ownership like they would a swing trade. It became the same as renting, but with the possibility for a quick return. Pride of ownership left the picture and Real Estate was turned into another get rich quick scheme.

The free-market economics of the Real Estate Market took over when the bubble was too full, and for most of the average Millennials adult life they have heard nothing but Real Estate negativity in the media.

As the market rebounds, and the understanding that home ownership provides for long term wealth takes over the perception of how retirement savings can be made, I am sure future results of this study will change.

1994 was 20 years ago.

Go back in the public records (or your MLS if it reaches two decades ago) and find some homes that were sold and have remained with one owner since. Even considering the plummeting values of the late 2000s, the home values and retirement savings are still there.

As Agents and Brokers, it is our duty to help our clients and not simply act as a salesman.

My suggestion to you is that as you are breaking down the monthly payments of your young clients’ mortgage, help them see how the home itself is more than a dwelling and how it will play into the diversity of their retirement plans.

With Rates & Prices on the Rise, Do You Know the True Cost of Waiting?

Young Couple Moving HouseThere is a great opportunity that exists now for Millennials who are willing and able to purchase a home NOW… Here are a couple other ways to look at the cost of waiting.

Let’s say you’re 30 and your dream house costs $250,000 today, at 4.41% your monthly Mortgage Payment with Interest would be $1,253.38.

But you’re busy, you like your apartment, moving is such a hassle…You decide to wait till the end of next year to buy and all of a sudden, you’re 31, that same house is $270,000, at 5.7%. Your new payment per month is $1,567.08.

The difference in payment is $313.70 PER MONTH!

That’s like taking a $10 bill and tossing it out the window EVERY DAY!

Or you could look at it this way:

  • That’s your morning coffee everyday on the way to work (Average $2) with $12 left for lunch!
  • There goes Friday Sushi Night! ($80 x 4)
  • Stressed Out? How about 3 deep tissue massages with tip!
  • Need a new car? You could get a brand new $22,000 car for $313.00 per month.

Let’s look at that number annually! Over the course of your new mortgage at 5.7%, your annual additional cost would be $3,764.40!

Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining.  We could come up with 100’s of ways to spend $3,764, and we’re sure you could too!

Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $112,932, all because when you were 30 you thought moving in 2014 was such a hassle or loved your apartment too much to leave yet.

Or maybe there wasn’t an agent out there who educated you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready, but if they showed you that you could save $112,932, you’d at least listen to what they had to say.

They say hindsight is 20/20, we’d like to think that 30 years from now when you are 60, looking back, you would say to buy now…

Millennials & Income

Today, Justin DeCesare returns as our guest blogger.  Justin is the CEO of Middleton & Associates Real Estate in La Jolla, CA. – The KCM Crew

Millennials have become an important topic of discussion for media outlets and blogs throughout the Country. While some argue that my generation is blossoming later than our predecessors, optimists such as myself believe that with our rebounding economy will help Millennials finally arrive in the economic arena that allows them the growth potential generations before us were afforded.

While I truly believe Millennials are positioned to become an important force in the new economy, the widening economic policy that minimizes retirement accounts and creates underemployment of Millennials threatens what is now America’s largest demographic.

In his post for MSN, Austin Thompson points out that Millennials are now in peak childbearing age, and from a Real Estate, as well as a parental Standpoint, what goes hand in hand with raising a family is the desire to own a home.

Families want to put down roots. They want to know they have a certain level of security if possible, while growing some form of equity for retirement.

While slashing pensions and lower wages certainly puts a strain on Millennial workers, the ability to purchase Real Estate can still be a saving grace in the Millennial financial planning process.

As agents and brokers, we are meant to advise our clients. We can’t change the fact that outside economic factors can have a negative impact on the lives of our clients. What we can do is try and help Millennials understand that they can take their future, and subsequently their retirement, into their own hands.

Chances are, your average Millennial client, like their parents, will not be starting out with a beach front multi-million dollar estate. Our job, is to help explain the path that starting in smaller affordable homes now will have down the road, how it will help them grow, and how it will help them take control of their livelihood.

Do more than sell my generation a house…help them build a future.

Hispanic Millennials & Housing

Nielsen recently released their report “Millennials – Breaking the Myths” and today I want to focus on the information reported about Hispanic Millennials.

Of the 77 million Millennials, 19% are Hispanic. This group (age 18-36) is the most racially and ethnically diverse than any previous generation. According to this report, Nielsen expects the Hispanic population to grow by 167% by 2050.

Millennials are 14% first generation, and 12% second generation Americans, keeping strong ties to their home country, culture and language. For example:

1. 63% of the Millennials feel it is their responsibility to care for an elderly parent, according to Nielsen: “this is partially tied to the ethnic diversity of the generation. Typically ‘Hispanic and Asian Americans’ have cultural expectations that elderly family members will be cared for by the younger generations.”

This can help you to understand why when a Hispanic Millennial is looking for a home, they are requesting that extra bedroom.

2. 65% of Hispanic Millennials are U.S. Born and are more bilingual than other generations

  • In 2003, 34% were Spanish dominant, 44% English dominant, 22% bilingual
  • In 2013, 31% were Spanish dominant, 31% English dominant, 38% bilingual

“Today, the bilingual Hispanic is the dominant group within these Millennials.” According to this report, this is telling us that “Hispanics are choosing to speak more Spanish and maintain cultural ties.”

Where are they looking for homes?

This report revealed “62% of the Millennials prefer to live in the type of mixed-use communities found in urban centers where they live in close proximity to a mix of shopping, restaurants and offices. This is the first time since the 1920s where the growth in U.S. cities outpaces growth outside of the cities. And, 40 percent say they would like to live in an urban area in the future.

The “American Dream” is transitioning from the white picket fence in the suburbs to the historic brownstone stoop in the heart of the city” and the markets with a major concentration of Millennials reflect this desire:

Top 10 markets for Millennials (by %):

  • Austin, TX (16%)
  • Salt Lake City, UT (15%)
  • San Diego, CA (15%)
  • Los Angeles, CA (14%)
  • Denver, CO (14%)
  • Washington, DC (14%)
  • Houston, TX (14%)
  • Las Vegas, NV (14%)
  • San Francisco, CA (14%)
  • Dallas-Ft. Worth, TX (14%)

Do you have an urban center in your market place? If you already know that 40 percent say they will like to live in an urban area in the future. Are Hispanic Millennials a part of your business plan?