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Homeownership

Paradigm shift: Baby boomers suffering from anxiety over paying for housing

(HOMEOWNERSHIP NEWS) A new survey conducted by the NHP Foundation, a non-profit real estate organization dedicated to “preserving America’s affordable housing” shows us that housing anxiety is multi-generational. Here’s what you need to know.

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Hyperbolized millennials

As far as pop culture can tell, making rent is a concern relegated only to frivolous millennials who spend their time finding themselves and writing memoirs of their two-ish decades of struggle and heartbreak, instead of getting real jobs. Like HBO’s Girls -Hannah Horvath got all her money from her parents until they cut her off at 25. Adam Sackler gets a check from his grandma every month. Marnie Michaels only pays for half of her Blackberry. Even the Broad City girls struggle to pay rent after they blow all their money on an exterminator, of all things.

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For better or worse, our culture expects young people recently out of college to struggle, to ask for help, and receive it. We even celebrate this period of our lives as exploratory – a time for being broke and eating ramen and finding our passions. Of course, in real life, it isn’t always so simple.

Let’s get the facts straight

For instance, your parents might be less likely to subsidize your rent if they’re among the reported one-third of baby boomers (Americans ages 53-71) who worry over making their own rent, or mortgage, or property tax bill, at least once a month.

This paradigm-shifting statistic comes out of a new survey conducted by the NHP Foundation, a non-profit real estate organization dedicated to “preserving America’s affordable housing”.

They surveyed 1000 of the 75 million American boomers, and discovered a “Housing Affordability” crisis that’s aging along with America.

“The anxiety is now multi-generational,” says NHPF CEO Richard Burns, “So we are working today to increase our stock of affordable housing to ensure that this and future generations are able to afford desirable places to live.”

Who is feeling the anxiety?

“Multi-generational” means that 42 percent of retirees, specifically, worry about housing costs daily, and nearly 65 percent of boomer parents trouble themselves at least once a month over their adult children’s ability to pay for housing.

65 percent of baby boomer parents trouble themselves at least once a month over their adult children's ability to pay for housing.Click To Tweet

This NHP survey is the third in a series of housing affordability surveys. The first targeted the general population and discovered that 75 percent were concerned about losing their housing. The second focused on millennials and determined that 76 percent compromised to find affordable housing.

According to the most recent survey, housing anxiety is strongest in the south, while boomers in the west experience this anxiety least often.

“These geographic differences demonstrate the need to tailor housing options to the unique needs of each region,” said Stefano Rumi, advisor to the NHPF and senior fellow at the Batten Center for Social Policy of the University of Virginia.

Multi-faceted anxiety

The survey also revealed a partisan divide: regarding concerns caused by the new administration, 49.96 percent related little or no anxiety, while 50.04 percent reported substantial or great anxiety. And nearly 50 percent of those surveyed believe in the power of the new administration to mitigate their housing anxiety through a guarantee of no major tax increases.

NHPF’s Burns responded, “Government measures, particularly the LIHTC (Low Income Housing Tax Credit) which gives incentives to private equity for the development of affordable housing, will continue to be vital to organizations such as ours to provide the country with stable, long-term affordable housing options.”

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Homeownership

The phrase ‘starter home’ is overrated and overused

(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.

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Just words

Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.

There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.

Grind your gears

Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.

Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?

Do you really need two living rooms?

Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.

But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.

You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?

Be content where you are

Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.

Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.

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Homeownership

The remodeling projects with best ROI that actually increase home value

(HOMEOWNERSHIP) Knowing which remodeling projects to tackle when a home is being put on the market can save a lot of wasted effort and money.

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If you’re looking to help your clients to identify which projects to tackle before putting their home on the market, look no further: the National Association of Realtors surveyed thousands of real estate agents, industry professionals, and consumers on interior and exterior house remodeling projects, and these are the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get.

  • Refinishing hardwood floors. Start from the bottom to earn top dollar. Refinishing floors transform a home from worn-out and aging to vibrant and inviting, and only costs about $2500 according to the National Association of the Remodeling Industry (NARI). The project also increases a home’s value by that same amount, meaning a homeowner can recover 100 percent of the costs. Pretty sweet deal.
  • Upgrading insulation. Because it’s what’s inside that counts. This project costs about $2100 based on NARI Remodeler’s estimate and increases a home’s value by $2000 according to Realtors surveyed. That’s a 95% cost recovery.
  • Adding new wood floors. If you don’t have wood floors to refinish, add them in! This costs about $5,500 according to NARI Remodelers, and the increased sales value is $5000. A homeowner can recover 91% of costs from a new wood floor addition.
  • Replacing HVAC system. A new HVAC system adds energy efficiency and refreshes the entire home, and NARI Remodelers estimate doing so costs $7000. The increased value for sellers is $5000 according to NAR REALTORS, meaning an easy breezy 71% cost recovery for homeowners.
  • Converting a basement into a living area. Not only is this cost and space-efficient, it’s also undeniably trendy. A basement makeover costs about $36,000 according to NARI Remodelers estimate and increases value for sellers by $25,000 according to Realtors surveyed. That comes out to a cost recovery of 69%.

Which projects are the most costly?

In case you’re curious, these are some of the most expensive remodeling projects:

  • New master suite. More like master $uite – this costs about $112,500 with a cost recovery of 53%. 
  • Converting an attic into a living area. Cute idea, but also a $65,000 one with a 61% cost recovery. One might say the price is through the roof.
  • Complete kitchen renovation. This project costs an estimated $60,000 with a 67% cost recovery. Even more if you want to throw in a brick oven, and you probably do.
  • New bathroom. With an estimated cost of $50,000 and a 52% cost recovery, make sure you aren’t flushing money down the drain with your bathroom addition!

These trends change over the years, so make sure your knowledge is up to date locally since we all know local trends trump national. Hopefully today you’ve garnered some ammo to help clients better understand how to improve their home’s value!

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Homeownership

How to inform clients about well-known homebuyer scams

(HOMEOWNERSHIP) Real estate scams continue to victimize people, but Realtors are in a position to better protect homebuyers. Here are some tips.

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Despite warning after warning and news story after news story, homebuyers keep getting their money stolen in real estate wire transfer schemes. Some blame the mortgage and real estate industries for not doing enough to educate and protect their clients. Others say the people committing these crimes are getting more and more sophisticated. No matter who’s to blame, there’s no arguing that this crime is on the rise.

What exactly do these real estate scams look like? These criminals usually hack into a business’s emails, often a title company, and get all the pertinent information they need. They then steal and copy that company’s letterhead, and the email addresses, signature blocks and any other relevant information they will need to fool the homebuyer. The homebuyer then gets an email that appears to be from the title company, asking them to wire money, often tens or sometimes hundreds of thousands of dollars.

So, you’re probably wondering right now: What can I do? You want to know how to warn and protect your clients and keep your reputation intact (and avoid costly lawsuits). The following safeguarding tips can help keep cash out of cyberthieves’ hands:

1. Pick up the phone. If you’re closing on a home and receive an email with instructions on how to transfer money to your closing company or lender, take a few minutes to call your agent or broker to make sure it’s legit. Yes, this might be a bit annoying, but not as annoying as losing thousands of dollars in an email scam.

2. Be aware. These scammers usually send emails that look like the real thing. If you’re a homebuyer, look for weirdly timed emails (sent in the middle of the night) or spelling and punctuation errors. Is there a sense of urgency to the email?

3. Educate your clients. If you’re a real estate professional, make sure your clients know about this scheme. Not everyone is aware they could be a target (which is why it keeps happening). Set up a specific passcode for each client.

4. Consider using ClosingLock and asking your title company to use this technology for all of their transactions… What’s ClosingLock (previous name was BuyerDocs), you ask? This tech startup provides secure document delivery for closing companies and homebuyers. The company says it has protected more than $5 billion in wire transfers and works with big and small businesses across the country.

Scams will never be eradicated, but it is part of your job to know the current scams and how to protect transactions against shady folks.

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