How a ‘Dry January’ Mindset Can Get You Closer to Buying a Home in 2024

The “dry January” challenge of giving up alcohol for a month got us thinking about kicking some other bad habits that might be holding us back.

We’re not talking about giving up carbs for a month or an afternoon latte, but the not-so-great things you might be doing as a wannabe homebuyer. Not to point fingers here, but many home shoppers fall prey to a faux pas or two when making what’s likely the most significant purchase of their lives, especially in today’s brutal housing market.

To help you get closer to your homebuying dreams, consider taking the month of January to hit the reset button and think about the strategies that aren’t working in your favor. Ready for a homebuying reset? Read on.

Bad habit No. 1: Shopping for a home above your price range

We know how tempting it is to wistfully eye houses above your price range, especially if you’re not finding anything in your budget on the listing pages. Still, wondering how you just might be able to swing a higher homebuying fund is a bad habit that could create a cash flow crisis for your budget.

There are additional upfront costs when buying a home. In addition to the sales price, you will pay for inspections, appraisals, homeowners insurance, utility deposits, and closing costs, which could add thousands to your bottom line.

So kick the habit of browsing homes beyond your budget by challenging yourself to discover hidden gems within your financial comfort zone.

Bad habit No. 2: Taking on new debt while house hunting

Finding a home can be extremely tiresome and stressful. Who can blame you for wanting to treat yourself with a little somethin’ somethin’ to lift your spirits?

Yet splurging on certain things can get homebuyers into hot water. A new pair of kicks? Go for it. A new set of wheels? Not so much.

Stay accountable by sharing your house hunting and financial goals with a trusted friend or family member. They can support and remind you of your commitment to avoid new debt until after closing.

Bad habit No. 3: Nixing a home for minor issues

Fact: Finding a home with no cosmetic issues is extremely rare. Instead of perfection, you’ll likely step into a bedroom with an off-putting mural from the ’70s that makes you cringe, or tour a house with icky carpet. And these gut reactions might make you immediately scratch a property off your list.

Instead, try visualizing what the house would look like with your decorative effort—or grab a friend who can see the potential and upsides of a home needing TLC.

If the home issues are a bit more complex, get a contractor to give you an estimate on fixing what you dislike.

Bad habit No. 4: Buying a home to fit furniture

You keep finding almost perfect houses, with one exception—your beloved soft and roomy sectional where you spent many nights cozied up with your pup watching Netflix doesn’t fit.

But please don’t nix the house and keep looking. You might want to consider a new way to handle this hurdle, as unique or sentimental as the furniture is.

Bad habit No. 5: Insulting the seller

Buying or selling a house can be highly emotional for both parties.

Buyers fall hard and fast for a house and become attached to the house. Meanwhile, sellers might have a hard time parting with their beloved home.

By cultivating an atmosphere of respect and consideration, you improve the chances of successful negotiations and build trust and goodwill with the seller, which can be invaluable when addressing any potential concerns and conducting inspections.

Bad habit No. 6: Using multiple agents

Working with a few agents to scope out as many houses as possible in a competitive market might seem like a genius idea to beat the system.

Yet while working with multiple agents is legal (unless you sign a buyer’s agent agreement), having an agent or three on speed dial doesn’t put you ahead of the curve. All real estate agents have access to the same multiple listing services, meaning you might have different agents showing you the same property.

Instead of creating headaches for yourself, interview a few agents and then choose one.

Read more at Realtor.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Millennials Collaborating to Buy Property - Would You Buy with a Friend or Three?

The affordability issues in the housing market aren’t going away for younger buyers.

The financial challenges hindering millennial homeownership have been well documented between overwhelming student loan debt and record-level home prices. However, some within the cohort are carving their own path to the American dream through teamwork.

“Affordability is a key issue for young buyers or first-time homebuyers entering into the market with limited housing inventory, so pooling incomes with a roommate becomes a really good solution for many buyers to be able to enter into the housing market,” says Jessica Lautz, vice president of Demographics and Behavioral Insights for National Association of REALTORS® (NAR).

Recent data from ATTOM Data Solutions, reported by the Wall Street Journal, suggests that the number of home and condo sales across the country by co-buyers has soared since millennials became the largest share of homebuyers in the U.S. in 2014.

The number of co-buyers with different last names increased by 771% between 2014 and 2021, according to ATTOM.

Like other market trends, the pandemic accelerated the trend, according to Lautz, who also suggests that declining marriage rates among younger generations have also contributed.

Despite the generational lull in nuptials, that hasn’t kept buyers, particularly millennials, from pursuing homeownership. Based on NAR’s recently released 2021 Profile of Home Buyers and Sellers report, for the third consecutive year, the share of unmarried couples that purchased a home accounted for 9% of the buyer pool.

According to NAR’s data, the share of first-time buyers who were unmarried couples rose slightly to 17%.

Navigating the Trend

While co-buying isn’t a novel concept in real estate, experts and agents told RISMedia that it’s a worthwhile trend to keep an eye on, as affordability issues and student loan debt plague millennials—the largest cohort of buyers in the market.

Along with working as an agent, Nicholas Ritacco is also a co-buyer. The New York-based Corcoran agent teamed up with his roommate to buy their first home during the pandemic to escape renting.

Looking at the numbers, Ritacco says low mortgage rates since 2008—and record lows during the pandemic—presented an opportunity to finally tap into homeownership while living in or near more major metro areas.

“The affordability is in our favor, and it is time-sensitive, whether it’s two, three or five years down the line, no one can predict, but I can tell you every point we go up is pricing out somebody,” he says.

Compared with traditional buyer scenarios, Lautz suggests that agents work with their co-buying clients to identify long-term intentions for the property they are looking to buy and how they will address any life changes.

“If someone gets a job on the other side of the country, are you going to rent the room that the roommate has been living in?” Lautz asks.

Discussion over income between the clients is also essential, as Lautz notes that will become an issue when it comes time to divvy up the down payment and closing costs in very similar ways, so they are earning equity in the same way.

“Questions like that may get into the nitty-gritty, but I do think it’s important for keeping that relationship and the home-buying transaction on track as well about what is realistic and what may not be realistic.”

Having gone through it himself, Ritacco says that he also started working with friends that want to partner up to buy a home.

Part of his guidance strategy is helping his clients identify their “exit strategy” before going into a co-buying partnership. This typically involves determining how long they intend to live in the property and how they want to approach selling or renting it out when one or more parties is ready to move.

“You have to understand what your options are and what your rights are,” he says, noting that he gets “granular” with his clients when working out the details so that each party is comfortable entering into the deal from the beginning.

“It’s really about understanding every step of the process and what is expected of everybody,” Ritacco says. “It’s a joint venture. You’re just changing it from that typical investment-focused agreement to adopting it for a joint venture for a primary.”

According to agent Kate Wright at Better Home and Gardens Real Estate Metro Brokers in Atlanta, Georgia, taking a deep dive into buyer goals and expectations during an opening consultation is a helpful tool to mitigate future issues.

“That way, I know what they are looking for and what their goals are, and I can direct them toward the best avenue for pursuing the purchase,” Wright says, adding that her market has been popular among millennial buyers because of its affordability.

Wright’s pool of millennial co-buyers have already bought their first home and have joined friends to start investing in other properties.

While she admits that her pool of first-time buyers co-buying is negligible in her market, broker Shonna Peterson at the Warmack Group with Keller Willams in Seattle says that the trend is popular with the millennial investment group.

Peterson notes that investor buyers’ motivation focuses more on the numbers and turning a profit rather than living in the home primarily.

Despite the difference in approaches and desired outcomes, Peterson indicates that managing emotions is essential to navigating millennial investors.

“While they have a great grasp on the numbers, there does still tend to be an emotional component just because it’s human nature to get somewhat competitive when you know that the competition is stiff,” Peterson says.

Legal Protection

While the trend of co-buying opens doors to homeownership, it’s not without its challenges, which is why agents told RISMedia that they encourage their clients in co-buying situations to speak with legal experts.

Real estate attorney Edwin Farrow recommends hashing things out in writing before closing on a home when it comes to co-buying partnerships.

“What they’ve done is create a partnership, and partnerships can go bad,” Farrow says. “You need to know what happens in the event the partnership is dissolved, keeping in mind the fact that the bank doesn’t care that you’re friends and agreed to whatever you agreed to.”

Farrow’s co-buying clientele typically consists of unmarried couples and family members teaming up to buy homes together. He indicates that getting a better understanding of the risks and benefits of teaming up to buy a property together is vital for any buyers looking to take this route toward homeownership.

Eric Smith, a real estate attorney with Timoney Knox in Fort Washington, Pennsylvania, echoed similar sentiments, adding that the biggest problem that he notices among co-buyers is that many tend to bypass getting a written agreement before closing on their home.

If the partnership doesn’t end amicably, Smith says a written agreement could save buyers “tens of thousands of dollars in attorney fees” if their friendship or relationship dissolves and they end up selling the property.

“In the end, it will be costly to prove that the person who paid the down money is entitled to get it all back or any of it back,” he says.

By default, Smith says tenants in common (TIC) is the route that clients take. The option gives each property owner an “undivided interest of the whole thing in equal shares.”

“It essentially means that each owns a slice of the pie,” Smith says, adding that shares can be passed on to an heir in the event of a death.

A joint tenancy with the right of survivorship is another route, Smith explains, noting that each partner owns the whole property together, and the last of them to die would keep everything.

“You could also imagine a circumstance where you might have a number of people who buy a piece of property as legitimate business partners,” Smith says.

He thinks the best option is to buy with an entity—like a limited liability company—so parties can have an operating agreement for the property.

“It just makes it easier to manage,” Smith opines.

Keep reading!

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Generation rent is looking to become generation buy

Generation Z is just entering the housing market, but their impact will be felt across the real estate industry.

Why? Because they value owning a home. In fact, according to a Realtor.com Gen Z Survey, 72% of those surveyed plan on buying a home in the next five years. And, like the millennials, they found a prime opportunity to save for a down payment during COVID-19, when they were able to curb spending. 

A Zillow survey of Gen Z (ages 18-26) and millennials (ages 27-40) showed that 83% saved money in at least one spending category during the pandemic. Almost three million have moved back home since spring 2020, according to Zillow. When asked what they plan to do with the cash, some 59% plan to use their savings for a down payment on a home.

Jonathon Aper, a Gen Z college grad who works in finance, recently purchased a home in North Texas. The pandemic lockdowns allowed them to save by cutting expenses like entertainment. Working from home meant lower gas bills, as well. Aper and his wife were looking for homes to meet the needs of an expanding family. They settled on a pre-owned home and planned to invest in renovating and reconditioning the house. Aper sympathizes with fellow Gen Zers and Millennials who are struggling to find a house in this market. 

Rising prices make it challenging to find something affordable. “The best advice I can give to Gen Zers is to hang in there. You’re not going to get [the home with] your first offer. It usually doesn’t happen that way,” he said. 

“Nowadays, houses are off the market so fast, your real estate agent [can’t] sit there and [say], ‘Hey, I’ve got these three houses for you to take a look at today. Let’s go ahead and plan a time.’ You have to do your research on realtor.com, Zillow, and reach out to your real estate agent and say, ‘Let’s look at this tonight!’ Otherwise, they’re going to be [gone]. The process is very fast.” 

What’s holding them back?

According to the Realtor.com survey, the holdback for Gen Z to purchase a home is job stability. Nearly half of those surveyed are employed. Some 45% of Gen Zers are already saving to buy a home, and 75% did not leave their current living situations to save on rent. Another 17% of those who did move only saved money to put toward a down payment. 

What’s the rush to buy a house, and what are the concerns that Gen Zers are facing? 

• 50% want more room for growing families.

• 49% see themselves living in the suburbs, while 19% said they prefer the space.

• Half are concerned about the economy and job stability.

• 43% of those can’t afford desired neighborhoods

• 34% are still in college.

Rachel Stults, the deputy editor of Realtor.com, said affordability is the key for most Gen Zers. They want to know they can get a good home and build on it later. 

“From exploring metros that offer both jobs and more affordable housing to saving for a down payment, Gen Z homebuyers know how crucial it is to have a financial leg up when it comes time to buy. If they can learn anything from the experience of the millennial generation before them, it’s the importance of laying the groundwork so that they can act quickly on a home in their budget. Prospective buyers should also plan for what they’ll do if mortgage rates increase or other housing market conditions change quickly, particularly coming out of the pandemic. In short, whether they plan to buy in two years or ten years, prospective Gen Z homeowners should be thinking several steps ahead.” 

Who’s influencing decisions?

According to Zillow, when it comes to the decision-making process for purchasing a home, including the financial aspects and deciding on home features, most millennials and Gen Zers reported discussing their housing decisions with their parents (71%) and friends (61%). Half discussed their housing decisions with their siblings, while not quite a third (29%) discussed them with their grandparents. They were least likely to report discussing their housing decisions with their social media followers — only 16% reported doing so.

Among millennials and Gen Zers who already own a home or have tried to buy one, most reported that the opinion of a significant other (60%) or parent (54%) influenced them not to buy a particular home. A smaller number of those surveyed (38%) said the same about a friend’s opinion.

Zillow’s research forecasts that there will be 6.4 million more households formed by 2025 due to a huge wave of millennials now hitting their mid-to-late 30s, aging into their homebuying years. About a third (32%) of Gen Zers and millennials reported that some friends have already purchased a home. 

For now, homebuying is a continuous struggle for Gen Z. It’s an unpredictable market that requires a balance of aggression and patience without overpaying for a home.  (Real Trends)

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Homeownership Rate Increased During the Pandemic, According to the U.S. Census

• The Q2 2020 U.S. homeownership rate was 67.9%, up from 64.1% in Q2 2019 and up from 65.3% in Q1 2020, according to the U.S. Census Bureau.

• The homeownership rate among the age group 35 to 44 increased 4.9 percentage points during the second quarter to 64.3%. This age group experienced the highest gains in homeownership in the second quarter of the year.

• All regions saw an uptick in homeownership rate. The South was the region with the highest gains in homeownership, where it climbed to 71.1%.

• Both rental and homeowner vacancy rates dropped ­in spring showing how strong housing demand is during the pandemic.

The Census Bureau released the Residential Vacancies and Homeownership report for Q2 2020.  According to the release, the homeownership rate increased to 67.9% by nearly 4 percentage points compared to a year earlier1. Low mortgage rates is one of the main reason that the homeownership rate was strong in the second quarter although the coronavirus outbreak.

In addition, the report looks deeper at trends among households with incomes below the national family median, which was nearly $77,000 in 2018. It is interesting to see that homeownership in this group also increased in the second quarter to 55.2% from 50.0% a year earlier. This is a very promising indicator for the real estate market. Compared to pre-recession levels, more low-income households became homeowners during the pandemic.

Homeownership Trends by Age

Homeownership rates rose in all age groups in the second quarter of 2020. Specifically, these gains continue to be concentrated among Millennial and Gen Xer households, though the share of seniors who own their home remains the highest of all age groups.

See the homeownership rate by age group:

Homeownership Trends by Race/Ethnicity

Black homeownership rates continue to increase, elevating their share of households living in owner-occupied units to 47%. Specifically, Black households experienced the highest gains in homeownership rates among any other race. The homeownership rate increased by 6.4% from 40.6% in Q2 2019 to 47% in Q2 2020. In comparison, homeownership rates for White households increased 2.9% in Q2 2020 compared to a year earlier. However, the gap in homeownership rate between White and Black households remains nearly 30 percentage points.

See here the homeownership rates by race/ethnicity:

This was one of the most anticipated reports since it reflects the impact of COVID-19 on housing demand. However, there are some serious questions about the accuracy of this survey. It is likely the results in the second quarter are distorted by the pandemic. Specifically, in-person interviews were suspended for the duration of the second quarter and replaced with telephone interview attempts when contact information was available. As a result, the response rate was lower in this report than the average response rates for April, May, and June 2019. Thus, the current report might show the trend, but we should exercise caution when using the absolute numbers of homeownership rates.

1 This is the non-seasonally adjusted figure for the homeownership rate. Homeownership rate increases by 0.01% on average between the first and second quarters of the year.

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Oklahoma City Named Top City Where People Spend the Least on Housing

In comparison to other cities across the country, individuals can purchase a home with space for the entire family without breaking the bank in Oklahoma City.

SmartAsset recently completed a study evaluating the housing costs of 50 different cities across the nation. According to their study, “the median monthly housing costs for homeowners and renters in Oklahoma City total $916.” At less than $1,000 a month, people spend only 19.81% of the median annual household income on their housing costs, leaving just over 80% of their income available for other lifestyle choices.

Oklahoma City’s monthly housing costs are half of what individuals pay in Boston, where residents spend the most on housing. The Midwest and West seem to be the best options for affordable housing. The other 10 cities identified through the study as places where people spend the least on housing include “Omaha, Nebraska; Kansas City, Missouri; Columbus, Ohio; and Indianapolis, Indiana. Meanwhile, Albuquerque, New Mexico and Tucson, Arizona.”

Regardless of where you live in the U.S. and whether it offers the least or most costly options for housing, it’s a big part of an individual’s livelihood. SmartAsset suggests a few tips for managing housing costs, which include: “make a plan,” “see if buying is a better option,” and “consider professional help.” With the current status of the housing market, these tips may be especially beneficial.

Read more about the study and SmartAsset’s tips through the original article here.

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