First time buyers


What Does Gen Y Want?
One thing real estate pros should know about Generation Y is that its members prefer to swap texts to phone calls or even e-mails. Here’s more info on the preferences of this up-and-coming group of consumers.
By Kristine Hansen
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|  May 2011

Who is Generation Y? Their exact ages aren’t easy to pin down; the start of their birth years ranges from the late 1970s to the mid-1980s, depending on your source. Perhaps the best way to describe them is in historical and cultural terms: Most of them have little to no memory of the Cold War; seminal events such as the Challenger explosion and Chernobyl; or life before computers were commonplace in offices, schools, and homes.

This generation, also referred to as Millennials, now numbers around 80 million U.S. residents. And many of them are just a few years away purchasing their first home. How can you position yourself as the real estate professional they want to work with?

They Want It All — Now

Austin, Texas-based Laura Duggan — an early adopter of texting — learned the value of communication while selling Jason Dorsey, 32, and his wife a home two years ago. Phone messages Duggan initially left for Dorsey were not immediately returned, losing valuable time in a market where hot deals on smaller-size homes are scooped up within days. Dashing off a text message, however, yielded a lightning-quick reply from Dorsey.

“They want to communicate differently than a lot of my other clients. Gen Y wants texts, not even e-mail,” says Duggan, broker-owner of West Austin Properties, who has 30 years of experience selling homes.

“Gen Y is about instant gratification: If we can’t see it on our phone, it doesn’t really exist,” explains Dorsey, who is a frequent keynote speaker on Generation Y. He’s consulted for companies like Kraft, GE, Frito-Lay, and McDonald’s. While Dorsey and his peers can easily navigate the Internet in search of data, they often don’t know how to make sense of it. Still, “it’s critical that REALTORS® position themselves to educate us and not treat us like children,” says Dorsey. “If we don’t feel like we can ask questions and be a part of the process, we’re not going to be interested.”

The Right Information

Real estate pros can help put information about a listing into context, such as how property taxes differ from a nearby city or interpreting neighborhood crime statistics, he says.

“This is a generation that takes advantage of information. They come in [to a home showing] knowing everything about the property,” says Nashville-based consultant Amy Lynch, who works with companies that want to motivate Generation Y.

Dorsey boils the home search for this group of young buyers down to this: experiences. “In Austin, people want to live near the music, the Frisbee-golf parks, and walking distances to great restaurants that are happening.” If practitioners mention certain amenities that are within walking distance of a listing, such as an independent movie theater or a hiking and biking trail, that’s going to attract the attention of Gen Y buyers.

“A lot of these kids want to be able to go out at night,” says Marcia Anderson, who sells luxury homes in Phoenix and its suburbs through The Williams Real Estate Group. Mixed-use areas filled with restaurants, bars, shops, and housing are popular with members of this generation. “A lot of times it’s the zip code that dictates [interest].”

According to Lynch, many Millennials are willing to pay more for walkability. To get this, they might sacrifice a kitchen packed with luxury appliances or a grand master-bedroom suite. Yet some of their choices are circumstantial.

“They are vastly underemployed and in debt,” Lynch says. “It’s not a generation that’s making a lot of money.” Orlando, Fla.-based real-estate firm RCLCO released a study that showed 13 percent of Generation Y carpools to work, and 7 percent walk to their job. Eighty-eight percent of them want to live in urban areas.

All About Lifestyle

Some real estate pros are putting a new spin on urban neighborhoods — where members of Generation Y typically live, or want to live — by showing homes from a bicycle seat. Four years ago, Matt Kolb launched Pedal to Properties in Boulder, Colo. It all started when a client of Kolb’s — visiting from another city and checking out properties — went back to his hotel room at night. Desiring another viewing of the homes he’d viewed earlier in the day, he rented a bicycle from the hotel and returned to those neighborhoods on two wheels instead of four.

Today, the Boulder office has 30 agents and a fleet of 60 seven-speed cruiser bicycles. It’s also been franchised to Sonoma, Calif., and Northampton, Mass. This casual approach to home shopping wins Gen Y clients over, Kolb says. “It’s four to five hours where you are smiling and laughing. When clients are in the back of my car, it’s different,” he explains. Even the route taken from the office to the home is different — Kolb typically opts for the most scenic way on a bike instead of more direct roads, as he would use in a car.

Jenny Persha, a real estate pro in Madison, Wis., with Keller Williams Realty who specializes in green residential properties, has had luck marketing her home-buying services to Gen Y at street fairs and festivals — particularly if she’s got a listing a few blocks away. “Now, you’re actually having to find where the people are and how you can better serve them,” she says.

Because she’s 34 years old — fresh out of this age group — she has no trouble relating to her clients. “I feel like I’m in tune with them a little more. I can tell what questions they’re going to ask.” Sometimes she even receives leads while out with friends for a happy hour after work.

Different than previous generations, Generation Y buyers tend to view a home purchase as short-lived and not relevant beyond their current life stage. “We’re having kids later and we’re getting married later,” says Dorsey, who bought the smallest house on his block in case he and his wife want to relocate. “Long-term to us means five years. Gen Y is totally accustomed to the idea that they will be moving soon and again. We’re not tied down. That freedom is very important to us right now.”

Low-Hassle Living

What kinds of homes do Millennials want to move into? A low-maintenance house is a definite plus. “I don’t own a lawn mower,” says Dorsey, “and neither do any of my friends. This offends my father.” Instead, he and his friends rely upon a lawn service, affording them more time to relax, work late at the office, or spend time with friends. They either want to do the task quickly or be able to “outsource” it inexpensively.

Lynch agrees that Generation Y doesn’t want to spend weekends doing lawn work. “They want green spaces outside their house, to maybe put a grill, but not a large lot,” she says. A unit in a condominium with a clubhouse or a shared green space with other homes is a very attractive alternative.

Anderson noted that while swimming pools are an in-demand item for most Arizona consumers, younger buyers simply don’t want them. “They want to be able to take a vacation and not deal with that,” she says.

Whether it’s a compact ranch or a three-story urban walk-up, the layout should be conducive to entertaining and hosting — but not passing hors d’oeuvres or hosting charity benefits. Instead, this group seeks a gathering place to watch NCAA tournaments or play ping pong.

“They tend to want a ‘gathering space’ in the home, more so than fancy bedrooms and bathrooms,” Lynch says. “Y’s grew up doing things in groups all the time. Having a big house where you live with just you and your family does not appeal to them.”

Duggan was baffled when Dorsey brought friends along to view the homes he and his wife were considering buying. “Back in the day, you only brought people who would be impacted by the decision,” Duggan says. “Every generation has an idiosyncrasy. This one wants their peers’ validation that they are making a good decision.”

Get Connected

Due to this increased connection and desire for validation from peers, real estate pros should not hesitate to ask for the names of friends interested in buying a home. Using this approach, Duggan ended up taking on Dorsey’s friend as a client. Just don’t use the word “referral.” “This means something different to us than other generations,” Dorsey explains. “It reminds us of being called to detention during grade school. Instead ask, ‘Do you have any friends I can help?’ One happy Gen Y customer leads to 10 others.”

To further understand this age group, Anderson has employed her 26-year-old daughter to revamp her marketing. “Sometimes I’ll run something by her and she’ll say, ‘Oh mom, that’s so old-fashioned and boring and will never fly,’” says Anderson, who now has a blog, LinkedIn profile, Facebook page, and the ability to publish her listings on YouTube.com.

Persha affirms that’s the right approach. She finds social media like Twitter and Facebook to be the most noninvasive way to market properties. “I’d rather have it show up in their news feed than call them,” she explains.

This is exactly what Generation Y shoppers want. When they receive that message notification on their cell phones, it may be just a matter of time before they contact the real estate pro for a showing. But first, of course, they’ll investigate further, and perhaps even contact their buddies to run the idea by them.

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Home Buyer Traffic Up

                April 15, 2011  by Jed Smith, Managing Director, Quantitative Research · 2 Comments
Filed under: Home BuyersREALTORS® Confidence Index

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  • According to the latest Realtors® Confidence Index, the gap between the indices of Prospective Home Buyer Traffic and Prospective Home Seller Traffic has narrowed, with an increase in Prospective Buyer Traffic.
  • A continuation of the narrowing of the gap between buyer and seller interest would be favorable to the strengthening of real estate markets nationwide.

Where Did All the First-time Buyers Go?

In January, first-time home buyers made up 29 percent of the market, the lowest since the National Association of REALTORS® started tracking first-time buyers on a monthly basis in 2008.

In a healthy market, first-time buyers generally make up 40 percent to 45 percent of all purchasers. So with low interest rates and falling housing prices, why are first-time home buyers sitting on the sidelines?

A USA Today article highlighted some of the factors that have first-time home buyers skittish about the market:

Tougher lending standards: Some first-timer buyers can’t meet credit or employment history requirements, Guy Cecala, publisher of Inside Mortgage Finance, told USA Today. Lenders also are requiring higher credit scores and some want higher down payments that are shutting out more first-timers. The best loan terms usually require 20 percent down payment or more, says Greg McBride, senior analyst at Bankrate.com.

Expired tax credits: Federal incentives that included lures for first-time buyers gave a big boost to home sales in 2009 and 2010. But with those tax credits now expired, first-time buyers aren’t as eager to jump in to the housing market.

Competition from cash buyers: NAR reports that cash buyers accounted for a record-reaching 33 percent of existing-home sales in February. Sellers like cash deals because those transactions are more likely to close, says Jerry Abbott of Grupe Real Estate in Stockton, Calif. As such, competing against these cash buyers has left some first-time home buyers out.

Source: “First-time Home Buyers Getting Shut Out,” USA Today (March 28, 2011)

More resources:

Handouts for Buyers and Sellers

Home Builder Confidence Slips

Home builder confidence fell to 13 in August, the third straight month that builders have felt that conditions were declining — and the worst measurement since March 2009.

“Buyers just aren’t stepping up to the plate,” writes Mike Larson, real estate analyst with Weiss Research. “Unless and until the job market improves, we are simply not going to get any traction in the housing market.”

Sentiments lower than 50 indicate negativity. The last time the index climbed above 50 was in April 2006.

Source: Associated Press, Alan Zibel (08/16/2010)

Top News

More move, but not long distance- USA Today – – More Americans moved last year than in the previous year, but most didn’t go far, a sign that foreclosures and housing costs are still keeping people close to home.

States: Let taxpayers cover your mortgage – CNN Money – – NEW YORK (CNNMoney.com) — Unemployed? Owe more on your mortgage than your home is worth? Your state might one day pay your mortgage

Market News

Mortgage rates hit lowest levels of the year – MarketWatch – – Mortgage rates fell to their lowest levels of the year, and rates on 5-year adjustable-rate mortgages hit a record low, according to Freddie Mac’s weekly survey of conforming mortgage rates, released on Thursday

5/12/2010 Refinance Applications Surge, Purchase Applications Drop in Latest MBA Weekly Survey »
Mortgage Bankers Association – – Welcome to MBA. The Refinance Index increased 14.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 9.5 percent from one week earlier. 

Home prices fall, but key markets improve – Bankrate.com – – Nationwide home prices were down slightly in the first quarter when compared to the same time last year, according to the National Association of Realtors’ latest quarterly survey. 

Home foreclosure rate posts first annual decline in five years – USA Today – – Foreclosure filings dropped 2% in April from a year ago, the first annual decrease in more than five years, according to a report out Thursday. HOME PRICES: May drop as tax credit expires CHARTS: Housing market’s rise, fall and rebound 

Maryland Governor Signs Power of Sale Law – DSNews.com – – Maryland Gov. Martin O’Malley has signed a new law establishing that a power of sale is valid in existing and future deeds of trust originally granted to a corporate trustee. 

Technology News

Google and Verizon building iPad competitor – Fortune – – McAdam, in an , said that tablets are part of the “next big wave of opportunities,” and that “work on a tablet is part of a deepening relationship between the largest U.S. wireless carrier and Google

Other News

Game Changing Ideas Help Realtors® Respond to Challenging Real Estate Market – REALTOR Magazine – – The National Association of Realtors® has selected 14 winning ideas from its “Game Changers Challenge” to create innovative programs that help Realtor® associations and their members respond to and excel in today’s challenging real estate

Green practices conflict with homeowners association rules – USA Today – – Early last year, Larry Lohrman, a homeowner in Salem, Ore., decided to try to cut his energy consumption by installing solar panels on his roof. He researched the panels, hired an installer and put a down payment on a 3,000-watt solar installation 

Recovery Requires Reshaping the Real Estate Industry, Say Realtors® – REALTOR Magazine – – While the fragile housing market has begun to stabilize, the economy and real estate industry still face many challenges on the way to a full 

 

Big Push on Capitol Hill for Real Estate Reforms
Several thousand NAR members are meeting with members of Congress this week to advocate for a stronger FHA, disaster insurance reforms, and other legislative priorities.
Read more >
Goal: RPR Access for All Members Before 2012
NAR CEO Dale Stinton provided an update on the Realtors Property Resource at the Midyear Legislative Meetings & Trade Expo in Washington, D.C., on Tuesday.
Read more >
Transparency Needed for Stable Financial System
Institutional secrecy, whether intended or not, made it difficult to get good data and understand risk prior to the financial system meltdown.
Read more >
How to Keep the Housing Recovery Going
Leading thinkers in real estate share their views of what it will take to get the market back on track: Higher loan limits, less negative media, and not too much government intervention.
Read more >
National Delinquency Rate Decreased 1.7%
Home owners who are currently upside down on their mortgages may be less inclined to join the ranks of defaulters, says a TransUnion executive.
Read more >
10 Cities with Lowest Rates of Home Equity
Despite generally rising home prices, home equity continues to fall in many areas where real estate values are weak and unemployment is high.
Read more >
Mortgage Volume Down After Tax Credit
Demand for purchase applications dropped 9.5 percent last week, even though rates fell to their lowest level since Mid-March, according to the Mortgage Bankers Association.
Read more >

 

Two Fronts
By most measures the economy is on the mend. Does that mean housing is as well? In his commentary this month NAR Chief Economist Lawrence Yun says the answer depends on two potentially big support factors: Jobs and Confidence. Read more.

Single Women – A Significant Market

The most recent NAR Profile of Home Buyers and Sellers indicates that single women account for a significant share of home buyers. Indeed, these home purchasers represent the second largest share of adult households who purchase homes. Research Economist Jessica Lautz takes a look at this market and how single female buyers differ from other home purchasers. Read more.

Making Sense of Economic Data

Lifestyle, family, and the enjoyment of owning one’s own home are important considerations for consumers when deciding to purchase a home. Obviously buyers will look at price, availability and trends. But changes in the economy – and potential changes as well – play a roll in a buyer’s decision. We’re bombarded daily with the latest economic data. What economic indicators are the most significant for real estate and for real estate professionals and their clients? Jed Smith, NAR’s Managing Director of Quantitative Research gives us an overview. Read more.

Keeping “Up to Date” with Research Update

Beginning in June, another a new feature will make its debut in Real Estate Insights. Research Update will be a regular column in this newsletter, and will provide information about developments in the real estate industry, current NAR Research studies, as well as links to other insightful information. Meredith Dunn of NAR Research Communications provides a sneak peak at what you will find in Research Update. Read more.

Pending Home Sales

Pending Home Sales rose in February, showing a healthy gain from January as well as from a year ago. NAR’s Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and was 17.3 percent above February 2009 when it was 83.2. All regions of the country posted year-over-year gains, and all regions except the West registered monthly increases. Read more.

Copyright © 2009 NATIONAL ASSOCIATION OF REALTORS®. Reproduction or reprinting in any form is prohibited without written permission. Editorial questions and requests to reprint articles should be directed to Meredith Dunn via e-mail at data@realtors.org.

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In This Issue

Monitor

Check out this snapshot of monthly housing indicators.

Economic Commentary

Steady economic growth of near 3 percent this year and next year will accompany job growth of about 2 million each year from 2011 – such job growth will boost existing-home sales to 5.5 million in 2010 and to 5.7 million in 2011.

Using NAR Research

Beginning in June, we will premiere a new feature in Real Estate Insights: Research Update.

In Focus

The home purchase decision is about lifestyle, family, hopes, and the future. However, the economic side is clearly important.

Market Intelligence

Single females make up one-quarter of the first-time buyer population and 17 percent of the repeat buyer population.

Existing-Home Sales

Existing-home sales declined slightly in February, with modest gains in the Northeast and Midwest offset by softer sales in the South and West

Archives

See previous issues.

New from NAR Research

NAR’s 2010 Midyear Meetings

While attending NAR’s Midyear Meeting in May, be sure to take advantage of the informative sessions from NAR Research. For locations of these informative sessions, check your Midyear Conference program.

For more information >

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