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.

When Character is More Valuable than Competence

When Character is More Valuable than Competence | Keeping Current Matters

Today we are pleased to have Nikki Buckelew back as our guest blogger. Nikki is considered a leading authority on seniors real estate and housing. Enjoy!

It was her 80th birthday and as Sue’s family gathered around in celebration, she announced a major decision. After years of toying with the idea, she had come to the conclusion that now – yes, now – was the proper time for her to move into a continuing care retirement community (CCRC).

Although they were a bit surprised, Sue’s two adult children (both seniors themselves) nodded to each other and expressed relief that their mother would have access to the support and care she needed. Both admitted to a bit of worry about her living alone since their dad died, especially as they both traveled extensively and were not available to see her or care for her on a regular basis.

But, of course, they all realized that such a move would require a massive commitment of time and energy, with the first necessary step being to find a good real estate agent to help sell the longtime family home.

Sue mentioned that she was acquainted with an agent she had met at church and who regularly sent her mailings. The agent seemed quite nice and professional, had won numerous awards, was active in the community, and owned a variety of impressive-looking credentials. You know, she had a whole bunch of letters and acronyms at the end of her name.

Sue and her children arranged for a meeting with the agent, and while she was clearly competent and well-educated in her field, Sue just couldn’t get past a nagging feeling that something was amiss. The agent was nice enough, but throughout Sue’s entire life, she had tended to gravitate toward doing business only with those to whom she felt some sort of connection. Perhaps it was something she had learned from her father, a man who valued relationships in business dealings as much or more than mere competence. Not only did she want help, but she also wanted to feel a special sort of bond and trust.

The practice had served her well throughout life and now – with such an important transaction – she wasn’t about to change her approach.

Sue scanned the yellow pages, spoke on the phone with a few agents, and even met with another over coffee, but still she couldn’t find the sensation of trust and comfort she desired. She even did a couple of quick internet searches leaving her feeling confused and frustrated. It occurred to Sue’s daughter that perhaps the CCRC that was to be Sue’s new home would be able to provide a recommendation for a good agent. Indeed, they did, and that’s when she met Joe.

Joe was different

He arrived at her home and immediately the two hit it off. Sue hired Joe to list and sell her house and as he began to take his leave, Sue touched him gently on the arm and said «Thank you, Joe. You are different than other agents I’ve met with,» she smiled. «I don’t know exactly what it is, but I feel I can truly trust you to help me make this move.»

Sue’s home sold quickly, and with Joe’s help, she arranged for an estate liquidator to sell the belongings she no longer needed. He also arranged for a moving company to pack and transport what was needed to Sue’s new apartment at the retirement community, and made sure she was content in her new home.

A few days later, Sue’s children visited their mother, breathed a sigh of relief that everything seemed under control, that a large project was complete and that – most importantly – Mom was happy, healthy,  and safe. Her daughter (who admittedly had been a bit annoyed at Sue’s «pickiness» in choosing an agent) smiled and remarked that Sue had made a fine decision in choosing Joe to spearhead the sale and move. «But Mom,» Sue’s son asked. «How did you make your decision? Why did you choose him?»

Sue dug into her purse and drew out the list of notes she had made while interviewing Joe:

When Character is More Valuable than Competence | Keeping Current Matters

As her daughters looked at the list, Sue remarked «I felt ‘OK’ with the other agents. They were undoubtedly good at their jobs. But I wanted someone who was good for ME too.»

And thus ends the happy story of Sue, a senior whose outlook on doing business mirrors that of most of her generation, nearly all of whom value a firm handshake and «good vibes» as much as they do hard numbers and competency.

Bottom Line

As real estate professionals serving seniors, it’s important that we understand that what makes for a great partnership, truly is in the eyes of our clients.

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:

BUYERS

Millennial Buyers | The KCM Crew

SELLERS

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.

Non-Traditional “Retirement” Metros Becoming Meccas for Older Adults Who Want to Age in Place

Our guest blogger today is Nikki Buckelew. As the Founder and CEO of the Seniors Real Estate Institute, Nikki brings great insight into the Senior Market.

It’s probably only natural for real estate agents to assume that most boomers or retirees bent on moving to a new city to enjoy their golden years will be on the trail to Florida, Arizona, or some other state blessed with warmth and plenty of sunshine. And those states are probably the ones best situated to offer plenty of age-in-place benefits, right?

Nope.

When a boomer or senior who’s open-minded about where they wish to move and retire searches Google for the best cities to age in place or best cities to retire, they finds some spots that are a bit out of the norm, but quite intriguing nonetheless.

Places like Sioux Falls, SD; Provo, UT; Iowa City, IA; Bismarck, ND; Columbia, MO; Omaha, NE; Madison, WI; and Boston, MA top the list.

As adults 55+ begin to contemplate their future and plan for a possible move, they are hearing more and more about the importance of preparing to age-in-place. They already know they hope to live in their own home, independently, for as long as possible. And the cities listed above – plus many other non-traditional retirement options – are receiving plenty of attention as go-to spots for their aging-in-place benefits in the form of quality healthcare, accessible transportation, government initiatives in building the city as senior-friendly, and a number of other indexes.

The Milken Institute, a non-partisan think tank, compiled a list in 2012 of the 259 Best Cities to Age Successfully. Another ranking is due later this summer of 2014. It divided the rankings into «Large Metros» and ‘Small Metros,» with Provo, Utah topping the Large City list and Sioux Falls the Small City rankings.

Others in the Top 10 of Large Cities to Age Successfully include Pittsburgh, Toledo, Des Moines, Salt Lake City, and Washington D.C.

Others in the Top 10 of Small Cities to Age Successfully include Rochester, MN, Ann Arbor, MI, Missoula, MT, Durham-Chapel Hill, NC, and Gainesville, FL.

See the entire list here and learn more about the Milken Institute’s approach to promoting aging-in-place awareness: http://successfulaging.milkeninstitute.org/bcsa.html

Frankly, if I were a real estate agent or broker in any of these top cities (and even many further down the list), I’d be going full-bore to make sure I was positioned to capture as much of this older adult segment in my town as possible. Yes, older adults will purposefully be moving to my city and I should be the one to serve them and find a stellar house for them to buy. That would include promoting my area’s dominance as a haven for older adults, while working to ensure that I had the knowledge to properly help them. And oh yeah. Since older adults from outside the area will be searching online for information about my city, I’d want to make sure that I popped up front and center on Google as an expert in real estate for boomers and seniors in my town.

Simply put, lists like this give you plenty of marketing power – plus motivation – to grab a huge segment of business in your market that perhaps you never even knew existed.

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.

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.