With Terry Story, a 26 year veteran with Coldwell Banker located in Boca Raton, FL. For more about Terry Story go to terrystory.com
Terry updates us on the housing recovery’s “missing link”, and what she’s alluding to is the drop off in millennial homebuyers. In the past, millennials have accounted for about 40% of first-time home buyers each year, as they settle down, marry, have children, and look to buy a home. But the number of millennial buyers is down sharply this month – to just 32%. She believes this is due to factors such as student loans, rising rental costs that cuts down their savings for a down payment, etc. So most of the buyers now are move-up buyers who have built-in equity that they transfer from one home to another.
And while homes are not the best long-term investment (Warren Buffett did not get rich buying and holding homes for the long run), owning a home keeps you at par with other homes, which is another way of saying that your home price rises with your neighborhood, and this accumulation of home equity—where you pay down your mortgage monthly and see home price appreciation—gives you the freedom to relocate and buy another home. By comparison, renters do not see any equity buildup effects from their rental payments and need to have other backup sources of income to keep paying their rents.
Additionally, how do you choose which home to buy in a neighborhood you like? Do you necessarily forego buying an expensive house for something that’s less pricey, or are you better off buying a more expensive home? According to Terry, the least expensive home will see the most appreciation—partly through remodeling—that could deliver a significant upside in home value.
Should homebuyers talk to banks or specialist mortgage lenders? Turns out, mortgage lenders have a wider basket of products that can better suit your financial constraints, often at a lower mortgage rate.
Finally, Terry answers a listener’s question about living in a townhouse that shares a wall with a house that has a rat infestation problem. Terry suggests first checking with your homeowner’s association which is often responsible for common walls or writing to the absent neighbor to let him know there is a rat problem, or, if all else fails, treating the infestation and getting/suing the HOA or the neighbor for their share of the expenses.