IS 2016 THE YEAR MILLENNIALS WILL START BUYING?

Millennials. They're the ever-frustrating group that's been making the real estate industry quiver for years. Where are they? Why aren't they buying homes? What's going to happen to the market if they don't step up? What is going on here?!

Every blip, bump, and bounce has been microstudied, overanalyzed, turned into an infographic and used to define an entire generation whose buying habits don't seem to behave.

"The lack of buying among first-time buyers in the wake of the economic crisis has had the industry biting its nails wondering if young adults would ever give up renting or move out of their parent's basement," said CNN Money.

But that might be changing. CNN Money's article identified "the top 10 markets where millennials represented a large share of new mortgages," according to Realtor.com, and a few of them may surprise you. The list includes:

• Des Moines, Iowa
• Provo, Utah
• Baton Rouge, Louisiana
• Pittsburgh, Pennsylvania
• Lafayette, Louisiana
• Grand Rapids, Michigan
• Madison, Wisconsin
• Clarksville, Tennessee
• New Orleans, Louisiana
• Shreveport, Louisiana

The new home trend

Maybe millennials were just waiting for the right thing to buy. A recent article by Prashant Gopal on Bloomberg Business took a look at a new phenomena they called "The return of the affordable starter home." In particular, the trend is being seen in brand-new homes from builders like D.R. Horton, TriPointe, Taylor Morrison, and Meritage Homes. The one thing the communities have in common: they're being designed for first-time buyers.

While other builders were continuing "to chase larger profit margins by catering to move-up and luxury buyers," said Bloomberg, D.R. Horton was keying in on an underserved market and weaving their new, more affordable Express brand into an array of product offerings across the country. In San Antonio's Mission del Lago community, Express homes give new buyers a more affordable option in an established and desirable masterplan.

D.R. Horton, the largest homebuilder in the nation for the last 14 years, was the industry guinea pig with this product type. "When D.R. Horton first announced that it was going to go after the entry level portion of the market, a lot of other builders wanted to wait and see how it turned out," Brad Hunter, chief economist for housing-research firm Metrostudy, told Bloomberg. "Now that they've seen the concept proven, they're figuring out their own way to provide a home that's more affordable."

That "proven concept" translates to a whopping 14 percent of revenue for D.R Horton since Express homes began last year, helping the builder to a 26 percent increase in net sales orders for the 2015 fiscal year. D.R. Horton is set to expand the Express brand "in 2016 to most of its 79 markets," while "Tri Pointe plans to increase its share of first-time buyer properties to 40 percent from about 35 percent now."

Streamlined offerings

One way builders are lowering price points to attract millennial buyers - especially in light of rising land costs - is by streamlining offerings. Or, rather, stripping away some of the bells and whistles.

"Meritage has been expanding a segment it calls ‘entry-level-plus,' which starts in the low $200,000s in the Houston area," said Bloomberg. "The entry-level-plus homes are $50,000 to $100,000 cheaper than the company's typical homes in the Houston market because they're smaller," and also because they're being designed without features like fireplaces and mud rooms, and without all the architectural detail that might be found on more expensive homes.

"At Tri Pointe Group Inc.'s Terrain, a new Castle Rock, Colorado, community... the home has press-board kitchen counters and a (small) yard. It's almost 30 percent cheaper than the average for a new house in the area."

Those tradeoffs seem to be worth it for a market segment that had been wary (at best) of dipping into the real estate market - especially since rents continue to rise to uncomfortable heights. In many areas across the country, renting is more expensive than buying.

"Americans in their 20s and early 30s are getting a nudge toward homeownership a decade after sales peaked during the housing bubble. It's not their nagging parents. It's rents. They've risen so much that buying is making more sense," said Bloomberg."

Continuing economic growth is another strong driver. And then there's the good-ole American dream, whose future has been teetering on the grasp of this complicated group.

Will 2016 be the year millennials embrace homeownership? Weigh in with your opinion in the comments.

Source: RealtyTimes, Jaymi Naciri
http://realtytimes.com/consumeradvice/buyersadvice1/item/41243-20151231-is-2016t-the-year-millennials-will-start-buying

REALTORS®' Top Concerns Heading into 2016

REALTORS®' Top Concerns Heading into 2016

An improving job market, still-low interest rates, and recent measures to make credit more accessible are all offering help to the housing market’s recovery, but several challenges prompting closing delays remain.

The latest REALTORS® Confidence Index conducted in November reveals some of the top concerns on real estate professionals' minds. The survey is based on more than 2,500 responses from members about local market conditions.

Here are some of the most common concerns that REALTORS® raised in the latest survey:

1. New mortgage disclosure rules: The implementation of the TILA/RESPA Integrated Disclosure (TRID) regulations on Oct. 3 has been delaying closings and having an impact on sales, according to members. About 47 percent of respondents reported longer closing times compared to a year ago, up from 37 percent in the October 2015 survey.  It typically took another 40 days to close a sale, up from 35 days in July 2015.

2. Condo financing: REALTORS® continued to report difficulty in obtaining financing for condominium unit purchases because many condominiums are not FHA or GSE eligible. Read more.

3. Tight inventories: A smaller number of homes for sale across the country are limiting choices for buyers and pushing prices up, decreasing housing affordability. REALTORS® particularly reported low inventory of properties in the lower price range and for those that are move-in ready.

4. Tight credit: Stringent credit standards continue to affect sales, particularly for first-time home buyers who are still struggling to qualify for financing, according to the REALTORS® surveyed. “Credit profiles that fail to meet tighter underwriting standards are conditions that continue to work against first-time home buyers,” according to the report.

5. Appraisal issues: “Late” and “low” appraisal valuations was also cited by REALTORS® as being problematic in transactions.

Source: National Association of REALTORS
http://www.realtor.org/reports/realtors-confidence-index

Selling a home in 2016? Here's what you need to know

Selling a home can be a stressful experience.

If you expect to put your home on the block at some point in 2016, here are some key factors for you to keep in mind before you address issues and concerns to make the best possible deal.

It's a seller's market ...

Many homeowners remember the fallout that the housing bust had on real-estate prices. Even though most investors think of the financial crisis as having hit its peak in 2008 and early 2009, it took three more years for home prices to hit bottom.

Yet since early 2012, prices have climbed higher, and the Case-Shiller National Home Price Index is coming within spitting distance of matching its highs from 2006 and 2007.

Where you live is a key factor in determining just how much of a seller's market you can expect. Hot markets like San Francisco have seen some housing-boom-era practices return to favor, with many reports of bidding wars that result in offers well above the asking price.

By contrast, areas where economic prospects are less favorable have never fully recovered from the housing bust. The more lucrative a region's economic future appears to be, the easier you can expect it to be to sell a home.

... but mortgages could get more expensive

One key factor in how much sellers receive for their homes is how much buyers can afford. Low mortgage rates have helped fuel price increases in recent years.

But some now fear that with the Federal Reserve having begun a new cycle of rate increases, a move higher for mortgage rates could make homes less affordable.

So far, the tiny quarter-point boost that the Fed made in mid-December hasn't pushed mortgage rates appreciably higher. Historically, though, tightening has generally led to increased rates on mortgage loans. Sellers need to be prepared for greater difficulty for prospective buyers trying to get financing.

Tax benefits still favor home sales

The biggest tax break for ordinary taxpayers is still the exclusion on capital gains for the sale of a personal residence. Single taxpayers can exclude up to $250,000 in gains from the sale of a home from tax, and joint filers get a double-sized exclusion of $500,000.

To qualify, you have to meet a couple of tests. First, the property in question has to be your main home. In addition, to get the full exclusion, you have to have lived in the home for at least 24 months in the past five years.

You can't have claimed a home-sale exclusion on tax returns for the previous two years. In some cases, partial exclusions are available, but getting specific tax advice from your accountant or tax professional is essential to make sure you're aware of all the tax implications of a home sale.

Get help at the right price

Most homeowners use a real-estate agent to help market and sell their homes. Historically, the typical 6% commission on home sales was sacrosanct, but some agents have increasingly been willing to negotiate lower commissions for their services.

Flat-fee brokerages have also popped up, offering a fixed cost that sellers can count on that's often lower than the percentage-based commission would be.

The issue raises a huge debate in the real-estate community, with full-service agents arguing that they fully earn their commissions by bringing in more potential buyers and eventually getting higher sale prices.

Yet with some agencies offering incentives to buyers and sellers that reduce net commission costs, sellers should realize that they have leverage in coming up with a deal that works for them.

Selling a home is a monumental event, and it can introduce a number of complicated financial considerations. Being aware of those considerations and making a plan to deal with them will help the selling process go a lot more smoothly.

Source: CNN Money, Dan Caplinger
http://money.cnn.com/2015/12/24/news/economy/selling-home-housing-market/index.html?iid=Lead