Category Archives: First-Time Homebuyers

Millennials Outnumber Baby Boomers: A Cue for Real Estate?

The Millennial generation is larger than the baby boomers — 87 million versus 76 million — and they’re expected to be a huge force in the real estate market in the coming years.

The number of households in their 30s is expected to increase by 2.7 million over the coming decade, which should boost demand for new housing, according to a housing report by Harvard University’s Joint Center for Housing Studies.

Millennials are not only bigger in size, but they’re also more diverse, U.S. Census data shows. Only 56 percent of Millennials are white.

Indeed, generations are gradually becoming more diverse. Babies born today mark the first generation where whites make up only 50 percent of the population, and in a few years, white children will no longer make up the majority, according to U.S. Census data.

Last year, the most common age in America was 22 years old. Of the 4.7 million 22-year-olds last year, 56 percent were white; 20 percent were Hispanic; 15 percent were black; and 5 percent were Asian.

In comparison, there were 4.4 million 55-year-olds last year, and 71 percent of them were white; 11 percent were Hispanic; 12 percent were black; and 5 percent were Asian.

The median age of Americans is 37.6 years old, according to the Census.

For more information on Millennials and their impact on markets across the country, continue to This Is Where Millennial Home Buyers Are Heading.

 

Original article posted on Daily Real Estate News

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4 Soothing Insights for Anxious First-Time Buyers

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Anxiety is an autonomic nervous system response that is hard-wired into every human being. It’s part of our instinctive reaction to sensing a danger or threat in the wild – and the wild world of real estate is no exception. Of course, buying a home doesn’t involve an actual, physical threat like the lions or tigers or bears our forebears faced. But during the home buying process, it’s not bizarre to feel like your dream home, your precious financial resources, your vision of your family’s future or your best interests are being threatened.

These anxiety-inducing “predators” range from the dangers of bad decisions, hidden home condition problems, and the other buyers who are bidding on your dream home.

As with a threat in the wild, anxiety can cause a normally calm home buyer to have a fight or flight response – making panicked decisions or freezing entirely up, both of which deprive you of your most deliberate, wise decision-making power.

If you’re experiencing low-grade anxiety around your first home purchase, that’s probably a sign that you take it seriously and that you understand the importance of the matter. But if your anxiety is rising to the level that it causes panic or paralysis, those reactions actually pose a bigger threat to your smart decision-making than any actual threat you’ll encounter in the wilds of the real estate market.

Here is a short list of truths about real estate that can soothe your  buyer anxiety down to a level at which it won’t foul up your decisions or your vision.

1.  It’s only takes one.  House hunting is daunting by dint of the sheer magnitude of the numbers involved: all the specs and characteristics of a home, all the decisions you have to make, all the documents you have to provide just to get pre-approved, all the homes on the market, and all the buyers you might have to bid against.  (And of course, there are all those zeroes on the purchase price itself, probably more than were at the end of any other purchase you have ever made.)

But here’s a soothing number you can focus on: one. You only need to find one house that fits with your family, your future and your finances. And millions and millions of homebuyers before you have been able to do just that. The challenge ahead of you is the highly do-able task of narrowing down all of those numbers to the one, the just right fit. If you find a home you love, but the sellers want dramatically more for it than you can afford or it turns out to have some fatal flaw, it’s not a panic-worthy disaster: it’s just not the one.

2.  You are the boss of you. And you’re qualified for the job. Feeling like you’re at the mercy of the mortgage lender, your agent, the market or “your” home’s seller is another serious source of home buying anxiety. But it’s an illusion. Do you have 100% control over every step of the home buying process?  No. But you have far more control at every step than you might think.

Among other ways you can be the boss of yourself and your first home purchase, you can and should:

  • run your own personal budget and determine the maximum amount you can afford to spend on housing
  • build your own team of advisors that work with and for you, including real estate and mortgage pros, but also a financial planner, lawyer and/or tax advisor, if that’s what you need
  • craft your own vision for your life after you buy your home, and use it as a tool to ensure you don’t buy a home you’ll regret later
  • research neighborhoods, cities, even states and the various factors that impact their future prosperity prospects
  • research the home buying process and ask questions (Trulia Voices is great for getting answers from local pros, but also from other local buyers who have gone before you)
  • work with your agent to understand market dynamics like list price-to-sale price ratio, and tweak your home search price range accordingly, looking at homes priced below your top dollar to give you room to go up, if that’s the norm in your area
  • work with you agent through your target home’s comparable sales
  • work with your agent and your mortgage broker to understand the cash you’ll need up front, at closing and monthly, based on your final offer price for any given home
  • attend your home inspections
  • read seller and HOA disclosures
  • read all the inspection reports and get follow-up inspections as needed
  • get bids for repairs and upgrades before you remove contingencies
  • request your loan docs in advance – and read them in advance
  • ask every question you have and keep asking, until you understand
  • back out of a transaction and recoup your deposit, if inspections or appraisals reveal serious issues, within your contingency period.

So do these things. Remember that from the time you get the inspiration to buy a home until the time you close escrow, you are ultimately in charge.  You make the final call on a home, on a price, and on when to remove contingencies and make the transaction a done deal. But you also have a great deal of control at every phase of your house hunt – so exercise it.

3.  Speaking up pays off.   No matter how timid or introverted you normally are, just for this experience of buying a home, embrace your inner advocate and make a commitment from the start to speak up for yourself freely and loudly.

Don’t understand something in your Good Faith Estimate? Say so – and ask your mortgage broker for an explanation.

Worried about something you see in your HOA disclosures?  Tell your agent – and work with them to get clarification or additional information.

Have questions or concerns about things you see in the home while you’re attending the inspector? Ask the inspector. And if they don’t know, ask the seller or get a specialist to come out and check it out.

Worried about how you’ll ever afford to fix the plumbing or deal with all the necessary repairs?  Say so, and work with your agent to make a wise decision about asking the seller to chip in or reduce the price, if that makes sense given the other details of your deal.

I once saw a buyer catch a very significant error in loan closing docs before anyone else in the room did. Instead of second-guessing herself or assuming she was the one in error, she spoke up – and probably saved herself thousands of dollars and hours of time in the process.

4.  Almost no transaction goes precisely as planned. I hate to use the cliche, but you will truly experience much less anxiety throughout the course of your transaction if you expect the unexpected. It might take you longer than expected to find a home that works for your life and your budget. You might end up spending thousands beyond what you started out thinking was your top dollar. Maybe your closing date will get pushed out for reasons beyond your control (and beyond the seller’s control, too). Or it’s possible that the home inspector will recommend an electrical inspection, which reveals some updating that urgently needs to  happen (urgent, as in before you get those custom kitchen cabinets you were planning to have installed the day after closing).

It’s a very rare transaction in which everything comes off precisely as it was planned. Understanding this and being as flexible as possible will prevent the emotional roller-coaster of breath-holding, anger, outrage and complete lifestyle chaos that arises when first-time buyers expect every step of the transaction to happen with Swiss-watch precision.

Five Things a First Time Home Buyer Should Know

As a first-time real estate buyer, you probably have no idea how the overall purchasing process works or how to make sure you’re making a smart decision to purchase. And you’ll probably be very surprised to learn how much work it really is just to buy a home. To get you started in the right direction, and this is just a start, here are a few tips that you should consider.

Get lender-qualified and find a good real estate agent
To start off, you should get qualified by a lender to see what price range you can realistically afford and interview some real estate agents to find the right person to represent you in your transaction.

Once you’re qualified and have your price range estimate in hand, you’ll be able to spend your time shopping in neighborhoods that you can afford. But remember: Just because the bank says you can qualify for a certain amount, that doesn’t mean you should spend that amount. Make sure you can actually afford the monthly payment, along with all your other bills.

Make sure you plan to be a long-term owner
Once you know your price range and have looked at some properties, it’s time to make sure that you believe you can find a property that you will own for a minimum of five years.  This is because an owner really doesn’t earn any equity, on average, in a property for at least five years, unless it’s a cash purchase or huge downpayment.  That’s the general breakeven point. The truth is, long-term real estate ownership can be a great way to earn wealth, but short-term ownership usually will diminish your wealth.

Educate yourself
Buying property is probably the most complex, riskiest and expensive thing you will ever do. Do your homework: Talk to real estate owners, go to first-time buyer seminars, check out online material and read some books to learn what to avoid in the buying process. The more you educate yourself, the better the chances that when things go wrong — and they will go wrong — they will only be minor issues, not major headaches.

Find a nice affordable property
The real gems in real estate are the nice, decent shape, moderately priced, boring houses, town homes and condominiums that are within your budget. Most buyers stretch to purchase the most expensive property they can afford. What if you lose your job? How about saving some of your money for retirement? You want your home to be an asset you can afford, not a liability that leaves you with no additional funds over the cost of homeownership.

Take your time
Realistically it should take you six months or longer to buy a nice quality property that will add to your long-term wealth. Make sure you have a full understanding of what the marketplace has to offer in your price range and that you know what you’re doing.

Those are a few tips to get you started in the right direction. Real estate is buyer beware, so try to make sure you’re one of the buyers who is “aware” of how to make quality wealth-building real estate decisions. Down the road you’ll pat yourself on the back when things work out well.
— Courtesy of Zillow