Rethinking the 55+ Market

We are excited to have Nikki Buckelew back as our guest blogger for today. Nikki is considered a leading authority on seniors real estate and housing.

Mature Couple at ParkSomeone said to me recently, “Sixty-five is the new forty-five.” We chuckled, but the more I thought about it, the more I found myself in full agreement.

With more and more people working beyond traditional retirement age and the advances in modern medicine, the lines between middle and late adulthood are becoming a bit blurred.

What makes this relevant in the world of real estate?

As our population ages, we will see more and more organizations dedicating their marketing efforts toward the “senior” demographic. You have read previous KCM blogs about the various designations agents can earn for this specific purpose, and undoubtedly you have already seen real estate professionals in your market professing to “specialize”.

Reality check — not all seniors are the same.

Just as with using any label, we run the risk of putting people into a category when they may or may not actually belong there. This is especially true of the senior segment.

Despite the label of “senior,” there are 3 distinct types of moves you may encounter as a real estate professional — all three involve seniors, but they aren’t based necessarily on age. You see, age is not a good predictor of relocation. Instead, people generally make changes in residence based on life circumstances.

Listed below are the three primary types of moves made by those labeled as seniors:

Move #1: Amenity-based

These individuals and/or couples are seeking a certain type of lifestyle and their home is only one component of a much larger picture. When looking to sell, they are usually transferring their equity from one home to the next and can usually either pay cash or put a significant down payment towards their purchase. Depending upon employment status, they may be moving across the country for more appealing climates or seeking a place near an airport making it easier to commute. Some are moving closer to kids and grandkids, while others are moving to destination locations where the family can enjoy visiting.

Social engagement, including quality family and friend connectedness, are key decision-making elements.

Move #2: Anticipatory / Planning

As people age, they may begin to experience changes in personal health status or become the caregiver of a spouse requiring additional care. When this occurs, people may find their current home unmanageable or no longer suited for their current situation. Moving means simplifying and making preparations for future care needs and support. With this type of move, seniors are typically looking to either buy or lease a property with minimal maintenance, accessibility features, and in close proximity to quality healthcare. Family members and adult children may be called upon at this stage to assist, and will often have some influence in the relocation process.

Access to formal and informal support, as well as low maintenance and accessibility features, are primary decision-making factors.

Move #3: Needs-based

While most people intend to live independently until they die, unfortunately, this reality isn’t always possible. As health declines to the point where more support is needed than can be provided for within the person’s home and community, relocation is necessary. This move may involve selling the personal residence and relocating to a senior living community or into the home of a family member. In many cases, needs-based moves involve caregivers and/or family members as additional decision makers. Late-life moves involving frail elderly or those experiencing illnesses or disease processes can be highly emotionally charged and necessitate a level of empathy in addition to real estate competency.

Timing, health status, and caregiver support are keys to decision-making.

As you can see from these various different types of moves, not all seniors share the same housing needs and goals. And while specializing in the 55+ housing market appeals to many, there are actually many sub-niche opportunities within the senior segment worth exploring.

Regardless of whether you choose to make working with mature home buyers and sellers a part of your overall business plan, with at least 1 in 4 home sellers over the age of 65, there is little doubt you will work with older adults in the course of your general real estate practice. When encountering these opportunities, it will serve you well to consider the three types of moves listed here and evaluate your value proposition accordingly, so that you can be the very best agent possible for your mature clients.

Shiller ‘FINE’ with his Son Buying a Home

4.30 VisualIn a recent interview on CNBC’s ‘Squawk Box’, Robert Shiller, Nobel Prize-winning economist and founder of the Case Shiller Price Index, discussed today’s housing market in a rather personal way.

Shiller first commented that he believes

"There is a certain, substantial amount of momentum in the housing market—much more so than the stock market."

He then went on to make the point more personal when he revealed:

"My son just bought a house. I told him, 'Fine’."

Why was Shiller so comfortable about his son’s purchase? As he explained:

"The futures market at the CME is predicting something like 25 percent higher home prices in 2018."

The ‘guru’ of home prices just proclaimed that this was a good time for his own family to purchase a home.

That begs the question: Are you advising your adult children that now may be the perfect time to buy?

FreddieMac: Housing is Stronger Today

4.29 VisualIn a recent blog post, FreddieMac explained that “housing is stronger today than at any point since the Great Recession began and hit bottom in 2009”. They then gave three reasons which support their position:

  1. Home sales are up 13% since their low point.
  2. Housing starts are up 50% since they bottomed out.
  3. House Prices are up 16% since their trough.

Projections Going Forward

FreddieMac also believes that the market will continue to improve through 2014. They projected:

  1. Home sales to increase about 3% in 2014 as the purchase market continues to evolve
  2. Almost 20% growth for housing starts in 2014, which will begin to help ease tight inventories in many markets
  3. Home value increases will continue their positive momentum in 2014

Frank Nothaft, Freddie Mac vice president and chief economist, further explained what the housing market may look like in the agency’s April 2014 U.S. Economic and Housing Market Outlook:

"Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected. This is good news for those markets that have room to run on the house price appreciation front, but it's also going to increase the affordability pinch in many markets, especially along the country's east and west coasts. Two indicators that are supporting local housing activity are rising consumer confidence and declining unemployment rates."

Bottom Line

The real estate market is improving every day. The biggest challenge is a lack of inventory in many markets. If you are thinking about selling, now may be the time to make the move.

Gallup Poll: Real Estate Best Long Term Investment

Solid InvestmentsThe Gallup organization just released their April Economy and Personal Finances Poll which asked Americans to choose the best option for long term investment. It was no surprise to us that real estate returned to the top position over other investment categories (gold, stocks/mutual funds, savings accounts/CDs and bonds).

Back in 2011, gold was the most popular long-term investment among Americans. However, with the housing market improving across the U.S. and home prices rising, more Americans now consider real estate the best option for long-term investments.

4.28 Visual 1000

The poll also revealed that real estate was considered to be the best long term investment by all four subgroups by age and two out of three by income:

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The State of Hispanic Homeownership

Hispanic Father and Son in Front of Their New Home with Sold Home For Sale Real Estate Sign.This month the National Association of Hispanic Real Estate Professionals (NAHREP) released their annual State of Hispanic Homeownership Report for 2013. A 35 page report designed to highlight “the homeownership growth and household formation rates of Hispanics as well as their educational achievements, entrepreneurial endeavors, labor force profile, and purchasing power in the United States”.

This report is full of great information and you should download it and read all 35 pages. In this blog post, I will mention a few facts that, in my opinion, are relevant to all of us:

Household formation

  • Since 2010, Hispanics have accounted for a net increase of 559,000 owner households, representing 56 percent of the total net growth of owner households in the U.S.
  • The number of Hispanic households has grown from 9.2 million in 2000 to 14.7 million in 2013, an increase of 5.5 million, representing a growth rate of 60 percent.
  • Four out of 10 new households between 2010 and 2020 are expected to be Hispanic.
  • By the end of the decade, Hispanics alone will account for approximately five million net new households, out of an estimated 12 to 14 million net new households in the country.

Hispanic Millennials

  • The median age of the Hispanic population is 27 years old, which is ten years younger than the median age of the overall U.S. population.
  • Hispanics are heavily represented in the 26 to 46 year age range.
  • A Hispanic youth turns 18 every minute of every day.

Income

  • Hispanics with incomes between $50,000 and $100,000 represent 29 percent of all Hispanic households and comprise nearly 40 percent of Hispanic purchasing power.
  • Three out of every four prosperous Hispanics are under the age of 45 and own a home.
  • Twenty-two percent of all Hispanic households earn more than $75,000 annually.
  • The number of Hispanic-owned businesses in the U.S. nearly doubled from more than a decade ago, growing from 1.7 million in 2002 to an estimated 3.2 million in 2013.
  • Latina entrepreneurs are launching businesses at a rate SIX TIMES the national average.
  • Hispanic businesses contribute in excess of $465 billion to the nation’s economy annually and employ more than two million workers.
  • Latinos now own one out of every 20 businesses in the U.S., while Latinas own 10 percent of all women-owned businesses.

The Hispanic community is becoming a major player in the housing market.

12,575 Houses Sold Yesterday!

houses-with-cart1If you read certain headlines, you might be led to believe that the housing recovery has come to a screeching halt. Naysayers are claiming that rising mortgage rates and a lack of consumer confidence are keeping Americans on the fence when it comes to purchasing real estate. That is actually far from reality.

After all 12,575 houses sold yesterday, 12,575 will sell today and 12,575 will sell tomorrow. 12,575!

That is the average number of homes that sell each and every day in this country according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. According to the report, annualized sales now stand at 4.59 million. Divide that number by 365 (days in a year) and we can see that, on average, over 12,500 homes sell every day.

If you are considering whether or not to put your house up for sale, don't let the headlines scare you. There are purchasers in the market and they are buying - to the tune of 12,575 homes a day.

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…