Since the average age of first-time homebuyers is now around 32, we are dealing with millennials now. The average age of a seller is 57, and the average age of a real estate agent is about the same. That means that both sellers and agents have to educate themselves about what's changed in buyer preferences. I had friends who were the above age, with an agent of the same "vintage", and she told them that their home was perfect. Although it was highly desirable, and in a great location, selling quickly, millennial buyers most decidedly had opinions on the décor and finishings.
Millennials want, above all, convenient, walkable locations, and homes that need no work at all. It would be hard to say which of those things would come first, and they are very different--one you can fix, and one you cannot. Flippers and investors take note, because you can definitely make money on properties that just need some updating and are in desirable places.
What do they want to see inside a home? An open floor plan. Soapstone counters. Gray walls. Big, luxurious bathrooms. Fancy appliances and fixtures. The list could go on, but you get the idea. DIY is OUT.
Where do they want to live? In cities, near cities, and near town centers. How much of the purchase do they want to finance? All of it, or as much as is possible. At current rates, almost anyone would make that choice. Who else is involved in the decisions? Their parents. I've dealt with more parents in the past few years than in my entire career. The helicopter parent has landed!
We certainly sell homes to non-millennials, and we certainly sell homes that don't match the above descriptions. However, it's always worth knowing what the trends are. But don't wait too long to act, if that's your intent, because tastes will change again; that's the one constant in real estate.
Showing posts with label investors. Show all posts
Showing posts with label investors. Show all posts
Monday, July 11, 2016
Tuesday, June 11, 2013
A New Problem
I've written before about how many sales are now for cash. It's ironic, because mortgage rates are still really low; however, it's hard enough for most people to get a mortgage, both because of credit issues and because of the paperwork requirements and timing, that many are choosing to go the cash route. Some of those people may go back and refinance later, but they are showing up at the closing table with cash. 56% of our sales in the first four months of the year were for cash! And that's true around the country, although in some places, it's due to multiple bids on insufficient inventory, leading to cash offers as a tactic to secure the property by nervous buyers.
We never thought we'd say this, but the change in closing dates has brought challenges that we couldn't imagine. One of those is that personal checks, given by buyers as deposits on sales, don't always have time to clear our escrow accounts before the closings. The big rush to close has been exacerbated, both for weather reasons (a slow start to the selling season and the need to close during the summer), and because many more people are choosing to cut out contingencies as a bargaining chip, so they have fewer things to do before they close. Also, there are lots of investors, who are buying at what they perceive to be bargain prices, and who may be planning to renovate anyway.
That's what we love about real estate--there's a new set of challenges in every kind of market!
We never thought we'd say this, but the change in closing dates has brought challenges that we couldn't imagine. One of those is that personal checks, given by buyers as deposits on sales, don't always have time to clear our escrow accounts before the closings. The big rush to close has been exacerbated, both for weather reasons (a slow start to the selling season and the need to close during the summer), and because many more people are choosing to cut out contingencies as a bargaining chip, so they have fewer things to do before they close. Also, there are lots of investors, who are buying at what they perceive to be bargain prices, and who may be planning to renovate anyway.
That's what we love about real estate--there's a new set of challenges in every kind of market!
Tuesday, November 1, 2011
Why the Rental Market Matters
We have been reading lately about New Haven's stellar rental market--either the lowest or the second-lowest vacancy rate in the country, depending upon your source. Why is this? And how does it relate to other real estate data?
New Haven's extraordinary occupancy rate for apartments has several causes, some of which are unique to New Haven, and some of which apply across markets nationally. New Haven's own reasons have to do, first of all, with the large number of students residing in the region. Students are almost always renters, and graduate students rarely live in university housing. The second driver in New Haven is the nightlife and culture prevalent here, so that young people (and empty nesters) who work in other places in Connecticut will disproportionately choose to rent in New Haven and commute to their jobs.
Around the country, there are certain trends that are helping rental markets to stay strong. Of course, high foreclosure rates will result in more renters, as the people displaced from their houses won't be able to buy right away. Also, the uncertainty of all job security means that many more workers, executives included, leave their families behind and rent in the new city until they are confident that they will stay at the job. That trend is exacerbated by the difficulty transferees are having in selling their homes in the locations they are leaving; until they do, many must rent. Even those who sell are renting in many instances, since they worry that housing prices have not bottomed out, and that this may not be the best time to buy a new home.
All of these factors have combined in Greater New Haven to make rentals scarce and expensive. It also offers an opportunity for investors to buy property and rent it out, and not just the typical apartment building or multi-family house. Single family homes make good rentals also, particularly when you can buy one for a price that allows you to cover costs with rental income. It can even be a good alternative for those who have houses on the market that are not selling. Many people are looking for homes to lease, not just in the center city, and it's a good time to find tenants. This is especially true if you allow pets! As with all types of real estate markets, there are ways to make money in this one.
New Haven's extraordinary occupancy rate for apartments has several causes, some of which are unique to New Haven, and some of which apply across markets nationally. New Haven's own reasons have to do, first of all, with the large number of students residing in the region. Students are almost always renters, and graduate students rarely live in university housing. The second driver in New Haven is the nightlife and culture prevalent here, so that young people (and empty nesters) who work in other places in Connecticut will disproportionately choose to rent in New Haven and commute to their jobs.
Around the country, there are certain trends that are helping rental markets to stay strong. Of course, high foreclosure rates will result in more renters, as the people displaced from their houses won't be able to buy right away. Also, the uncertainty of all job security means that many more workers, executives included, leave their families behind and rent in the new city until they are confident that they will stay at the job. That trend is exacerbated by the difficulty transferees are having in selling their homes in the locations they are leaving; until they do, many must rent. Even those who sell are renting in many instances, since they worry that housing prices have not bottomed out, and that this may not be the best time to buy a new home.
All of these factors have combined in Greater New Haven to make rentals scarce and expensive. It also offers an opportunity for investors to buy property and rent it out, and not just the typical apartment building or multi-family house. Single family homes make good rentals also, particularly when you can buy one for a price that allows you to cover costs with rental income. It can even be a good alternative for those who have houses on the market that are not selling. Many people are looking for homes to lease, not just in the center city, and it's a good time to find tenants. This is especially true if you allow pets! As with all types of real estate markets, there are ways to make money in this one.
Monday, June 28, 2010
Where Have All the Buyers Gone?
The national news, as well as area papers, are full of stories about the abrupt dropoff in housing sales for May. Everyone knew that this might happen when the tax credits expired, but the amount of the decline is still surprising to people. After all, many families did not qualify for the credits, which decreased as income increased. Also, although the second round of credits applied to repeat buyers, it was always aimed at first-time buyers. They bought, but probably mostly in the first round, from what we could see. Ordinarily, first-time buyers make up about 45% of the total market for sales. With the tax credit, that percentage had increased to 55%. Even though that means that we have moved 10% of the sales from the future into the present (now the past) with the help of tax credits, there is still almost half of the buying population unaccounted for in these numbers.
Where did they go? It seems that consumer confidence, once again, has reared its ugly head. All the news reports about job losses, retail sales, and the stock market have affected homebuyers negatively. While we knew that this could happen--it's some version of the double-dip theory--it still surprises those of us in real estate, to some extent.
Interest rates are very low. Housing prices are back down, in many cases, to where they were several years ago. Everyone knows that, even if you sell low, it doesn't matter, as long as you also buy low. Consumers have stayed out of the fray for most of the tumultuous recent past. So they should be out in force, and they're not.
One theory is that there's too much on the market, and therefore they have paralysis. Another is that they think prices will continue to decline. It is true that mortgages are harder to get. And, of course, it's summer--hot and humid weather tends to keep people from doing all but the essential tasks of life.
However, we're all watching with bated breath. The housing industry cannot afford a long layoff from sales, as we endured at the beginning of last year. Congress, take note!
Where did they go? It seems that consumer confidence, once again, has reared its ugly head. All the news reports about job losses, retail sales, and the stock market have affected homebuyers negatively. While we knew that this could happen--it's some version of the double-dip theory--it still surprises those of us in real estate, to some extent.
Interest rates are very low. Housing prices are back down, in many cases, to where they were several years ago. Everyone knows that, even if you sell low, it doesn't matter, as long as you also buy low. Consumers have stayed out of the fray for most of the tumultuous recent past. So they should be out in force, and they're not.
One theory is that there's too much on the market, and therefore they have paralysis. Another is that they think prices will continue to decline. It is true that mortgages are harder to get. And, of course, it's summer--hot and humid weather tends to keep people from doing all but the essential tasks of life.
However, we're all watching with bated breath. The housing industry cannot afford a long layoff from sales, as we endured at the beginning of last year. Congress, take note!
Sunday, January 10, 2010
New Year, New Attitudes
Happy New Year! It is clear from watching the stock market that investors in that area have confidence about the future. In our business, we are looking forward to the same sort of sustained rise during 2010. I just returned from Arizona, where the number of sales has gone up quite a bit from the year before, although prices continue to lag and short sales are still very common. Since we are behind Arizona on the real estate curve, we can look there to see what's down the road for us.
What they are worried about is the glut of homes that could come up for sale if owners lose interest in trying to hold on to them while values are low. Moral suasion may not be enough to convince people to continue paying on mortgages that are underwater. There have recently been a number of articles about just that--homeowners moving into rentals and spending the difference in their monthly payments on trips and consumer goods. That's not good for real estate.
We will be somewhat protected from that phenomenon in Connecticut, I believe, since whatever happens on the West Coast and in Florida will most likely cause the government to take steps to prevent the spread of anything that might impede a general economic recovery, and before it gets to us. They took prompt action in the banking crisis, and the recent extension and expansion of the tax credit for homeowners is a good indication that real estate will be treated in much the same way. In addition, since we had nowhere near the amount of speculation and building as the South and Southwest, we are not in the position of having lots of empty houses and condos to fill. Sometimes it's not bad to suffer from slower growth!
In the meantime, we should take heart in the surge of interest in real estate in Arizona and other similar markets. Investors are buying, and there is activity. I talked to one agent who said that her experience there is bearing out what I've been preaching in this blog: Those properties that are priced correctly and are in good condition are hard to get, since they receive multiple bids early on. Although there is a great deal on the market, only homes and buildings considered to be good values are moving. So, if you want to sell, be sure that you are in that category. If you want to buy, get a jump on that trend and buy before the spring market and before the tax credit expires on April 30th.
What they are worried about is the glut of homes that could come up for sale if owners lose interest in trying to hold on to them while values are low. Moral suasion may not be enough to convince people to continue paying on mortgages that are underwater. There have recently been a number of articles about just that--homeowners moving into rentals and spending the difference in their monthly payments on trips and consumer goods. That's not good for real estate.
We will be somewhat protected from that phenomenon in Connecticut, I believe, since whatever happens on the West Coast and in Florida will most likely cause the government to take steps to prevent the spread of anything that might impede a general economic recovery, and before it gets to us. They took prompt action in the banking crisis, and the recent extension and expansion of the tax credit for homeowners is a good indication that real estate will be treated in much the same way. In addition, since we had nowhere near the amount of speculation and building as the South and Southwest, we are not in the position of having lots of empty houses and condos to fill. Sometimes it's not bad to suffer from slower growth!
In the meantime, we should take heart in the surge of interest in real estate in Arizona and other similar markets. Investors are buying, and there is activity. I talked to one agent who said that her experience there is bearing out what I've been preaching in this blog: Those properties that are priced correctly and are in good condition are hard to get, since they receive multiple bids early on. Although there is a great deal on the market, only homes and buildings considered to be good values are moving. So, if you want to sell, be sure that you are in that category. If you want to buy, get a jump on that trend and buy before the spring market and before the tax credit expires on April 30th.
Tuesday, February 3, 2009
Connecticut Commercial Real Estate Now
We had an interesting Commercial Department meeting this morning. One of the agents said that the selection of good commercial properties in our area is the best that it's been in a long time. Well-located, well-priced buildings are now on the market, for buyers who can come up with the financing. Based on what else we are hearing, that may mean that they have to have cash! Even that is not a total bar, as there are many investors around who do have access to cash or capital from others. While some may suggest that it's best to wait until prices fall further, I'm not sure that we know enough about the stimulus plan to know when that will be (or even if it's now!).
Well, it's snowing AGAIN. Since no one buys real estate in the snow, my only question for the rest of the day is whether yoga will be held. Yoga is one of the arrows in a real estate broker's quiver these days--whatever calms you down is good.
Well, it's snowing AGAIN. Since no one buys real estate in the snow, my only question for the rest of the day is whether yoga will be held. Yoga is one of the arrows in a real estate broker's quiver these days--whatever calms you down is good.
Wednesday, January 7, 2009
sale leasebacks
Yesterday we spent some time brainstorming about sale leasebacks, and wondering how to get more companies to think about doing them, to free up cash. We have investors who are interested in buying properties that have long-term tenants in place, and we know that there are companies out there who could profit from such a move, but it's a challenge to reach them. We're hoping that, by getting the word out to lawyers and CPAs, that we will be able to connect the dots.
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