Markets in the South and West will experience the highest housing activity in 2020, as more millennials move out of big cities in search of more affordable markets, according to experts who shared some of the latest industry trends during last week’s International Builders’ Show in Las Vegas.
“Millennials will dominate housing in 2020 and account for 50% of mortgage originations,” said George Ratiu, a senior economist at realtor.com. He added that they will be leaving expensive metros for more affordable markets.
“Millennials will be moving to mid-sized cities like Boise, Idaho; Tucson; Chattanooga, Tennessee; and Columbia, South Carolina. These cities offer good weather, suburban downtowns and lifestyle amenities.”
Looking at this key demographic more closely, Ratiu said:
1-in-4 millennials have been looking for a home for more than a year.
16% are searching for homes in urban areas.
34% are looking for homes in the suburbs.
45% are seeking homes in small towns and rural areas.
Summing up his findings, Ratiu said that in 2020:
Millennials will demand an affordable product.
Mortgage rates will remain attractive.
Lesser markets will shine.
Baby boomers are not moving.
Ali Wolf, director of economic research for Meyers Research based in Costa Mesa, California, also noted that boomers are staying put.
“Boomers [say] they are not selling because ‘we don’t need to.’ Only 17% of boomers are dissatisfied with their current home,” said Wolf.
Other factors that are keeping boomers at home are that 23% have no retirement savings and 30% of those in the 62-66 age range have postponed retirement.
As for millennials, they are also facing affordability and supply constraints. “Affordability is the biggest obstacle to buying a home,” said Wolf. “Only 5% of millennials want to rent. They are the largest buyer demographic but faced with a supply shortage.”
Looking at public and private builders, Carl Reichardt, managing director at BTIG headquartered in San Francisco, said that 8-out-10 private builders expect sales will rise in 2020.
“Labor and land costs are their biggest worry,” he said. “Builders still appear cautious on pricing. Very few are raising prices aggressively.”
Meanwhile, Reichardt said that public builders account for 36% of all new homes in the U.S. market. (NAHB data show the top 20 builders accounted for 29% of all single-family starts in 2018.) Among the top 50 markets in the country, Reichardt said a public builder is No. 1 in terms of volume in 36 of these markets.
Reichardt said that public builders are not looking to get into all markets but instead are focusing on local market share in the metros they are currently engaged in.
NAHB Chief Economist Robert Dietz, who moderated the session, said that while the industry continues to face significant labor issues on the supply side, 2020 might be the year that labor shortages stop getting worse.
For more on the economic impacts of housing, visit nahb.org.
Millennials are buying homes. This much is known. But, despite the much-discussed generation making their entrance into the housing market, many still are still very uneasy about the process.
To try to get into the minds of millennials, TD Bank surveyed more than 850 millennials (which it categorizes as age 23-38) who are planning to buy their first home in 2020.
According to TD Bank’s First-Time Homebuyer Pulse, 68% said they think now is the right time to buy a home and 52% are actively searching home listings online.
But, 75% of first-time Millennial homebuyers admit they’re overwhelmed by the process of buying a home.
As for what’s weighing on millennials’ minds, the answers vary.
Just over half of those surveyed said they are worried about their job stability when it comes to looking for somewhere to live.
Meanwhile, 35% said they are thinking about their relationship with their significant other, 57% said they are worried about the state of the economy, and 47% said they are keeping in mind potential policy changes in the 2020 election – all of which play a role in their homebuying anxiety.
Unsurprisingly, student loan debt is playing a role too. Just over 40% of Americans who graduated in the last 20 years said they have delayed purchasing a home because of their student loan debt, the report said.
Even though a big chunk of Millennials say they are planning to purchase a home in the next 12 months, only 52% said they have started saving for a down payment, and 53% have reviewed their credit reports.
Meanwhile, only 42% said they have established a budget for their home purchase and only 30% have spoken with a mortgage lender.
“It continues to amaze me how many buyers begin their home search without first speaking with a mortgage lender,” said Rick Bechtel, head of U.S. residential lending at TD Bank. “A knowledgeable loan officer will work hand-in-hand with a buyer to help them understand mortgage and homeownership costs and establish a realistic budget. To put the cart before the horse is to pursue a significant life decision with possibly incomplete or inaccurate information.”
A decent amount said they feel prepared to buy, but it’s that same amount that said steep home prices are keeping them from purchasing a home in the neighborhood they desire, 22% both cases.
Of those respondents, 36% said they thought homes were overpriced. On the other end, 17% of buyers said they have yet to buy a home because they enjoy renting in their current neighborhood, but can’t afford to buy there.
“The millennial cohort of homebuyers is unlike any other in history,” said Bechtel. “They grew up during the explosion of personal technology, the fall of the housing market and the renaissance of the rental market. And as our survey found, their expectations of homeownership are shaped by all of it.”
Although Millennials were considerably young during the housing crisis in 2008, 67% said they are familiar with the housing crisis, while 55% said their family or a family they knew lost their home.
Those who were influenced by the housing crisis said it made them nervous to buy a home (47%), and a whopping 70% said they view the housing market as fragile.
And in an offshoot of that, 85% of buyers who said their families lost their home during the 2008 housing crisis said they will receive financial help from their parents when they go to buy their first home.
The most common way parents are contributing to the child’s home purchase is in the form of their child’s down payment (33%), followed by closing costs (20%), monthly mortgage payments (17%) or by co-signing the loan (9%).
All in all, mom and dad are still the role models for many of these Millennials. Case in point, 37% say they regularly ask their parents for advice about homebuying.
The top three were the same for all homes priced under $5 million
Point2 Homes, a real estate listing website, analyzed the language in 1.2 million home listings across the U.S. and came up with the most common phrases.
The three most frequently-used feature descriptions for homes priced under $5 million were: “granite countertops,” “hardwood floors,” and “stainless steel appliances.” Next on the list: “open floor plan,” “fenced backyard,” and “covered patio.”
For homes priced under $250,000, other words in the top 10 had to do with minimizing post-purchase costs, to attract first-time buyers who wanted to keep a lid on expenses. So, “new roof” and “move-in ready” were among the most common.
In the $250,000 to $499,000 range, words like “dual sinks,” “natural light,” and “formal dining room” rounded out the top 10. Meanwhile, in the $500,000 to $999,999 range, the most popular feature descriptions after the top three that all listings had in common were: “perfect location,” “gas fireplace,” and “vaulted ceilings.”
Among homes in the $1 million to $5 million range “wet bar,” “French doors,” and “natural light” rounded out the top 10 phrases.
Where it gets interesting is when listings were priced over $5 million. Then, the top three phrases were: chef kitchen, pool and spa, and ocean view. That was followed by “wine cellar,” “gourmet kitchen,” “guest house,” and “hardwood floors.”
Focusing just on adjectives, rather than descriptive phrases, the report said “large,” “new,” and “spacious” were among the most common, regardless of price. For locations, “cul-de-sac,” and “close to restaurants and shopping” were frequently used.
Among the most popular descriptive phrases for the exterior of homes, the list was topped by “fire pit,” “private backyard,” and “mature trees,” the report said. Also in the top 10: “sprinkler system,” “large deck” and “storage shed.”
On Friday, Dec. 13, Dolese Bros. Co. acquired Standard Material Group assets including the land, buildings and batch plants in Piedmont, Del City, Newcastle, Cushing and Chandler.
“We look forward to adding the Standard Material Group employees and their former locations to the Dolese team of people who are building communities from the ground up,” Dolese Bros. Co. President & CEO Mark Helm said.
Dolese is headquartered in Oklahoma City operating more than 65 facilities throughout Oklahoma offering full-service construction supply and material operation.
It’s time for young professionals attending the 2020 IBS to show their creative side and share their experiences as an IBS attendee. To be considered, just submit a selfie-style video (around a minute) showcasing your onscreen awesomeness and explain why you should be one of the official 2020 IBS vloggers.
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