With Terry Story, a 30-year veteran with Keller Williams located in Boca Raton, FL
Steve spoke with Terry Story, a 30-year veteran at Keller Williams. In this installment of the weekly Real Estate Round-Up, Steve and Terry talked about millennials and how they are purchasing first-time homes in greater numbers. Terry and Steve also discussed how having two incomes and watching the mistakes of their parents are helping millennials conserve money and make larger purchases. In addition, they discussed the real estate moves of the older generation, in contrast to those of millennials.
Millennials Are Dominating The Market
Today, more first-time buyers are millennials than ever before. Millennials are now essentially dominating the market, playing a very important role in real estate sales.
The biggest reason for this? The majority of them are of the age where they are beginning to form households, getting married, and having children. This is the group who are in their late 20s to late 30s.
Jobs And Attitude
Another reason millennials are taking over the market is that the economy is stronger and better jobs are available for them. And because they’ve formed households, they often have two incomes coming in, which means that they can buy bigger first homes than their parents did.
Millennials have watched some of the financial mistakes their parents have made, therefore, they have a different attitude about things. They’re more conservative financially. They watched the housing market crash when, instead of spending the traditional 30% of income on housing, people were spending 60% or more on housing. Millennials aren’t making the mistake of being fooled into thinking that housing prices will increase exponentially and indefinitely.
Space And Location
Millennials today, particularly those with children, are looking for more space and better locations. Of course, the definition of a great location depends entirely on the millennial or the millennial couple. Some could be looking for a country club setting. Others may want a beach-front property. Others are looking to be in the middle of the woods or the middle of downtown. Millennials tend to be more adventurous and individualistic as far as wanting to explore different locations.
One of the main focuses for millennials with children is a location near good schools and activities that their children will be able to get involved in.
One final point on locations: millennials have started job-hopping a lot. This could be blamed on their adventurous spirit. But what it means for the real estate market is that they end up buying more homes and often in many different places.
Switching Gears To The Older Generation
Now, it’s time to talk about the older generation. A general rule of thumb goes that the older generation—once the kids have left the nest—are usually looking to downsize. They may own a four- or five-bedroom house with space that they don’t really need.
Typically, a sizable amount of equity has built up in the home. It’s appealing to think about capturing the equity and reducing the cost of living by getting a smaller place. But a new trend called “aging in place” appeals to about 83% of older homeowners who are deciding they want to stay in the home they have. There is a consistency with that that’s comforting to a lot of people.
However, the home they currently live in might not be senior-citizen friendly; it may have lots of stairs or bathrooms that don’t accommodate their needs, which could lead them in the trap of spending more money to renovate their home. Aging in place also means that seniors don’t have access to the amenities that are available in a retirement community. Nonetheless, that’s the choice many seniors are making.
If you’d like to learn more about buying a home or selling your home, connect with Terry at Keller Williams!
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: It’s time for Real Estate Round Up. This is the time every single week we get together with noted real estate agent, Terry Story. Terry is a 30-year veteran with Keller Williams, located in Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: In terms of the mix of clientele you’re seeing now, are you seeing more millennials than normal? What’s the age group?
Terry Story: Well, we are seeing a lot of first-time millennial homebuyers which is great and exciting because years ago there were none.
Steve Pomeranz: Yeah. Well.
Terry Story: It had really dried up. As a matter of fact, the millennials are just making up a large portion of the market. They do play a very important role.
Steve Pomeranz: You’re talking late people in their late 20s to, let’s say, age 40.
Terry Story: Yes.
Steve Pomeranz: They’re forming households now.
Terry Story: Correct.
Steve Pomeranz: They’re finally … No.
Terry Story: They’re finally.
Steve Pomeranz: They’re getting married.
Terry Story: Getting married, leaving the nest.
Steve Pomeranz: No. They’re growing up.
Terry Story: Getting jobs.
Steve Pomeranz: They got jobs now, yeah.
Terry Story: Here’s one of the key things is the jobs. The job market is a lot stronger than it has been in years, so there’s more stability in the marketplace.
Steve Pomeranz: Absolutely, absolutely. There’s two incomes coming in.
Terry Story: Two incomes coming in.
Steve Pomeranz: Steady job. The economy is pretty good, so they’re starting to feel more confident, and they’re buying homes.
Terry Story: Correct.
Steve Pomeranz: They have a different attitude than, let’s say, you and I had when we were coming up. They’re a little more conservative.
Terry Story: They are more conservative. You know, the old rule of thumb was you wouldn’t spend more than 30% of your gross monthly income on housing. When the market went crazy, they were spending up 60, 65% of their income on housing. That’s part of the reason why the market crashed.
Steve Pomeranz: That’s right. Let me tell you why they were doing that. Because they were fooled into thinking that housing prices would rise forever.
Terry Story: Were constantly rising. Right.
Steve Pomeranz: They could flip and work it out by making capital gains.
Terry Story: Right. They were making money by going into this at those high levels.
Steve Pomeranz: Yeah, right.
Terry Story: Reality is they’ve seen their parents, they’ve seen others. They’ve learned that’s not what I want to do. It’s also, what’s interesting about mllennials having millennial children myself, they like adventures. They like to travel.
Steve Pomeranz: Experiences.
Terry Story: They like experiences. They want to spend their money on experiences. Their housing needs … A lot of their them, I think, aren’t as strong-
Steve Pomeranz: Critical.
Terry Story: … or critical.
Steve Pomeranz: I don’t know though. I think once you start having children and you want to have enough space, that’s so important.
Terry Story: Right.
Steve Pomeranz: I think that’s a struggle for people now. They don’t really have enough space.
Terry Story: That’s right. That’s a different type of millennial. Millennial with children.
Steve Pomeranz: Married with children. Remember that?
Terry Story: Yes, yes. That’s where I was going with it.
Steve Pomeranz: When you think of your typical, let’s say, dual earning couple and they’re looking for a place, what are they looking for mostly? What are you seeing? What is the millennial experience?
Terry Story: You know, they like … A lot of what I see is they want to … It’s all about location, which is actually kind of surprising because it used be-
Steve Pomeranz: What do you mean? Like country club kind of thing? No.
Terry Story: No, not necessarily country club. In some case depending on the millennial, it could very well be a country club. Location, and they’re taking their time. They’re really making sure they’re making right decisions. I find that they’re exploring all the different options, the newer homes versus something that would be closer to the beach, which would be a smaller, older home in our area. They’re weighing it all out.
Steve Pomeranz: What about school areas, school zones?
Terry Story: School is always very critical to them.
Steve Pomeranz: I think they feel that if they’re going to get a cheaper house in a lesser neighborhood, that they’re going to have to send their kid to private school, so it’s going to cost them either way. Sometimes there’s demand closer to a decent school.
Terry Story: That’s correct. Very, very true.
Steve Pomeranz: Also, in some of the information I’ve been reading, there’s more job hopping with millennials.
Terry Story: That’s another factor. That’s right.
Steve Pomeranz: They need to keep money aside to bridge the lack of money between the jobs as they’re going from a job to another.
Terry Story: Right. It’s never a good idea to jump a job until you have another job to jump into.
Steve Pomeranz: Yeah, but even so-
Terry Story: They do it.
Steve Pomeranz: … they’ll be a delay in the paycheck.
Terry Story: Yeah. I see with family members, cousins. They’re doing that. They decide, “You know what? I don’t like this anymore. I’m going to do something else.” Not a good idea.
Steve Pomeranz: I know. All right.
Terry Story: The market. That just shows how good the housing … the job market is.
Steve Pomeranz: Well, that’s it. There are plenty of jobs right now. Let’s switch gears now to the other end of the spectrum, the older population now. There used to be rules of thumb as far as downsizing your house. You know, children are grown.
Terry Story: Right.
Steve Pomeranz: You got a four or five-bedroom house. You don’t really need that. Maybe it’s two story, and that’s getting to be a challenge for you so you want to get to one story. Plus, you’ve got this equity you’ve built up in your home-
Terry Story: That’s right.
Steve Pomeranz: … and you would like to capture that equity and maybe reduce the noose by getting a smaller place. As with everything in American society, it’s so dynamic and so opportunistic that things are changing all the time. That’s not the only strategy anymore. Let’s talk about some of the strategies. The one that we’ve talked about before and that I want to start with is this idea of aging in place. Tell us about it.
Terry Story: Sure. About 83% of all homeowners would like to just to just stay in their place. In other words, just stay in the house that they’re in until the end of time. That’s great. It gives you consistency in your life. However, the current home also might not be friendly for you to age in place like you had mentioned. The stairs, just the way that the bathroom areas are designed.
Steve Pomeranz: That’s right. They may not be big enough or something like that.
Terry Story: Right. They don’t have the … Your house wouldn’t have the amenities that you might find in a senior environment.
Steve Pomeranz: Yeah. Also, it may be in need of an update, and now you’re spending more money on that. Whereas you could have moved to a more modern place that’s already fit for someone at your age bracket. The aging in place is one thing. There’s also a trend for home sharing, especially among women.
Terry Story: Right. There is this concept of home sharing. Home sharing. There’s actually home-sharing services, which I wasn’t aware of, which help pair up homeowners. I guess it’s like match.com but for seniors or-
Steve Pomeranz: But for co-renters.
Terry Story: … for housing cohabiting, sharing a house together. Again, great. You save money.
Steve Pomeranz: You have companion, built-in companionship-
Terry Story: You have companionship. Yup.
Steve Pomeranz: … which is pretty cool.
Terry Story: Not everyone can share. The older we get, we’re a little more selfish.
Steve Pomeranz: Is that right? You get more set in your ways.
Terry Story: You’re set in your ways.
Steve Pomeranz: Do you really want to share that with somebody? Who know what they’re ways are like?
Terry Story: Exactly. It was hard when we were in our 20s sharing, let alone our 80s.
Steve Pomeranz: What about this idea of selling your house and then just renting another house or renting an apartment?
Terry Story: That’s certainly an idea. There’s some pros and cons to that. You’re pulled out all the equity in your home, which is great, yay.
Steve Pomeranz: That’s great.
Terry Story: And it offers flexibility so you can cut and go anytime you want at the end of the lease. Cons. You’re now paying a landlord, and he can tell you it’s time for you to leave.
Steve Pomeranz: Right, right. Again, you don’t have control over your own life.
Terry Story: You’ve lost control.
Steve Pomeranz: You’ve put some company or some other person in control of your homestead, which is kind of a little if-y, I think.
Terry Story: Right.
Steve Pomeranz: Most of the time there’s not a problem.
Terry Story: Right.
Steve Pomeranz: That is something to consider. My guest as always is Terry Story, 30-year veteran with Keller Williams located in Boca Raton, and she can be found at terrystory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.