What You Need to Know About Millennials and Homeownership

Rising rents across the country are becoming a challenge for residents with a growing number of renters, 50 percent, spending more than 30 percent of their incomes on rent – a number economists with The Wall Street Journal view as “financially burdensome.” Inflation-adjusted rents rose 7 percent from 2001 to 2014, while renter household incomes fell 9 percent, creating affordability challenges for many renters. More than 21 million households are burdened by how much they pay in rent, up from fewer than 15 million in 2001. Even Atlanta, a traditionally less expensive rental market than most cities, is squeezing out lower and middle class renters.

J.D. Crowe, President of Southeast Mortgage

J.D. Crowe, President of Southeast Mortgage

“We’re not the little city in the south anymore. It’s much more expensive, especially the rental market,” said Valerie Bernardo, director of housing for the city of Atlanta.

Despite the aforementioned rising rents, millennials are having a tough time converting to homeowners from renters. Curbed reported in March that first-time homebuyers make up 32 percent of all buyers, the lowest percentage since 1987. However, the majority of millennials want to buy a home, according to Fannie Mae, for financial reasons and lifestyle reasons.

There’s a huge opportunity right now for real estate professionals to appeal to millennials who are considering homeownership if they have a broad understanding of the market they are trying to break into and knowing what is potentially holding millennials back. Here’s what you should know:

It’s Not Just About Student Debt

Although we all keep hearing that student debt is the factor inhibiting millennials from receiving the keys to their castle considering the fact that student debt has sky rocketed 56 percent in the past 10 years – an average of nearly $29,000 per borrower. However, according to NerdWallet, student debt may not be the deciding factor holding millennials back from homeownership. In fact, data reflects that homeownership actually increases for each successive level of education, even if debt is increased.

Millennials can still qualify for loans if the debt isn’t insurmountable. Fannie Mae data shows over half of young renters have debts of less than $10,000. NerdWallet’s mortgage calculator arrived on a debt-to-income ratio for millennials of 37 percent, including property tax and homeowner’s insurance, which is just above the high end of the range that guides many lenders.

Strict Credit Score Requirements are a Major Deterrent

A third of millennials aren’t meeting the industry standard credit requirement of 620, according to NerdWallet. However, other financial factors are working in favor of millennials and other hopeful homeowners. Credit standards have been easing in recent years and have yet to tighten, despite rumors. Interest rates have remained roughly flat at historic lows and median mortgage payments in December were still $380 less, on average, than before the housing market’s collapse.

Millennials with less-than-perfect credit do in fact have options such as Federal Housing Administration loans that allow applicants who have lower credit scores and small down payments to qualify for a loan, and some lenders are offering conventional loans with 97 percent financing.

The Solution

Curbed said it best when sharing advice on how to help millennials achieve homeownership: “It’s better education and a real estate industry that does a better job of explaining the options available to Millennial homeowners.”In a Fannie Mae survey, nearly half of 18-34 year olds didn’t know what lenders expected of them and 73 percent were unaware of lower down-payment options.

“Millennials — and first-time homebuyers in general — should never just assume they can’t afford a home,” said NerdWallet Mortgage Manager, Chris Ling.

By taking the time to understand millennials’ homeownership challenges, and taking the time to educate them and address their concerns, you may find yourself with a new, large group of clients ready to sign.

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Housing Inventory Curbs Atlanta Housing Growth Despite Continued Gain in Home Sales

Thanks in part to single-family home sales’ biggest gain in 24 years, last month’s Atlanta residential real estate index rose 0.3 to 7.4. This month, the Atlanta market showed improvements in home sales and home prices. However, without the impressive record-shattering statistics and the lack of housing inventory, the Cal-Culator will remain stagnant for the month of June.

calculator june 2016Housing Areas That Could Use Improvement

On June 29, the Atlanta Journal-Constitution published “It’s not just you, Atlanta’s home shortage is worst in nation,” revealing the city has the scarcest inventory of any major market in the U.S, resulting in higher prices and quicker sales. Atlanta counties’ housing inventory fluctuations range from a 25-percent decrease in inventory from May 2015 in Paulding County to a 4-percent decrease in Fulton County. Virgent Realty estimates Atlanta inventory is at a five-year low for active inventory on the market. However, one county’s inventory has actually risen 2.4 percent: Forsyth.

Housing Areas That Shined in June

The Atlanta Realtors Association’s most recent Market Brief found residential sales increased 3.4 percent from the previous year. Yearly price increases in Atlanta counties range between a 1.9 percent change in Cobb County to a much more staggering 15.7 percent in Paulding County.

“May sales results continue to show a healthy increase in both closed units and average sales price. Coupled with the April adjusted sales figures now reflecting a sales increase of 6.7 percent over the same time last year, the overall Atlanta market seems to be experiencing healthy growth and absorption of existing inventory,” said ARA President Lane McCormack.

National Association of Home Builder’s Housing Market Index increased a respectable four points in the South from May to June, while also increasing one point from the previous year. After the Western market, the South is leading the nation in market confidence. The HMI is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.

Lastly, CoreLogic found foreclosures decreased 15.8 percent year over year and foreclosure inventory decreased 3 percent from March 2016 – representing 54 months of consecutive year-over-year declines.

“The recovery in home prices and improved labor market have contributed to the drop in seriously delinquent rates. Over the 12 months through April, the CoreLogic Home Price Index for the U.S. rose 6.2 percent and the labor market gained 2.6 million jobs,” said Frank Nothaft, chief economist at CoreLogic.

The next Cal-Culator will be released August 9, which will hopefully reflect positive movement after a month of stagnation.

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While Inventory is Down, Increase Your Competitive Edge

It’s no secret the housing inventory shortage has been plaguing the industry for years, and the trend shows no sign of slowing down any time soon. In fact, Business Insider went as far as calling the ongoing shortage “today’s current housing crisis.” Atlanta has been especially hit hard by the inventory crunch with a 12 percent inventory decline from one year ago, according to CNBC. However, just because inventory is especially tight right now doesn’t mean families, couples and individuals should give up on their aspirations of buying their dream home.

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

So, how can hopeful borrowers who are getting quickly outbid land their dream home? A few suggestions include securing pre-approval for a mortgage, staying a step head of the competition with platforms like Zillow’s Coming Soon and taking advantage of the opportunity to leverage personal emotional appeal.

Come Qualified

Buyers who have secured pre-approval for a mortgage signal to sellers and Realtors that they are serious buyers, assuring Realtors and sellers that they won’t be wasting their time. Additionally, should the seller accept the offer, there is typically a greater chance of a successful close on the home.

While the pre-approval process may seem lengthy, considering the buyer needs to provide financial information including W2 statements, federal tax returns and bank statements, it may offer buyers the competitive edge they need to secure the home of their dreams.

Stay a Step Ahead

In 2014 Zillow announced Coming Soon ­– a sneak-peek feature that allows interested homebuyers the opportunity to preview homes that are not yet on the market, but are expected to be listed within a month. Buyers and Realtors who find a property they’re interested in on Coming Soon will be able to contact listing agents directly. The platform is designed to help buyers in areas where there is an inventory crunch and sellers who are hoping to sell their home quickly.

“By offering a glimpse into a market’s future housing inventory, home shoppers can rest assured they have the broadest possible view of the local market to find the right home, and sellers can feel confident their home is being marketed as widely as possible,” said Jeremy Wacksman, vice president of marketing and product management at Zillow.

Appeal to Emotions

Using emotion as a viable mode of persuasion stems all the way back to Aristotle’s use of ethos in 350 B.C. A modern-day model from Zillow recommends writing a personal, handwritten letter of emotional appeal to the homeowners of homes that you’re interested in. If there are multiple offers on a property it certainly wouldn’t hurt to let the homeowner know the reasons why their home is of particular interest to you and your family. Perhaps the home evokes memories from your childhood or how the home fits perfectly with your family’s lifestyle and needs.

Securing a dream home doesn’t happen overnight. If you’re becoming frustrated with the lack of inventory, rest assure your dream home is out there and with a bit of work and the right strategic tactics, such as securing pre-mortgage approval and making not only a logical monetary appeal to sellers, but also an emotional appeal, the dream of homeownership is vastly more achievable.

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Atlanta Residential Real Estate Index Reflects Steady Gains in Housing

Georgia may be going through its traditional summer dry season, but there’s certainly nothing dry about the housing industry. Last month’s Cal-Culator, Atlanta’s residential real estate index, rose 0.1. This month, the index will jump an additional 0.3 to hit 7.4. Home sales shattered a decades long record, and positive data emerged regarding home prices, construction starts and foreclosures. Continue reading

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Top Summer Reading Choices for Real Estate Pros

Summer is just around the corner and with the market traditionally heating up this time of year, many real estate professionals may find themselves too busy to pick up a good book. For those occasional days when you find yourself relaxing on the beach or stretched out on a lounge chair by the pool, we’ve narrowed down your search with a list of top summer reading picks for real estate pros.

J.D. Crowe, President of Southeast Mortgage

J.D. Crowe, President of Southeast Mortgage

While these certainly aren’t required reading, our top picks are packed with information, insight and tips to keep you on top of your game whether you’re sitting at your desk or relaxing on the beach.

National Mortgage Professional Magazine

If you’re looking for a traditional magazine you can flip through on the sand, look no further than  National Mortgage Professional Magazine. The robust magazine, and its website, offer endless articles on everything real estate including compliance, marketing, trends, servicing, residential, commercial, originations and more. They also take select contributed content if you’re looking for a place to publish your Thought Leadership. A yearly subscription is $69 and will provide you with enough reading material for every season.


A more modern, millennial-fueled online publication is Curbed. Curbed is “all things home from interior design and architecture to home tech, renovations, tiny houses, prefab and real estate.” You won’t find any drab generic news updates here. Curbed covers 15 U.S. cities, including Atlanta, with each city having its own website. Each city website features stories about their respective city along with top stories from other cities. Fascinating Atlanta headlines include:

  • Extreme Heat: How Urban Design Needs to Adapt to Rising Temperatures
  • Is Virginia-Highland Affordability Bastion on Chopping Block?
  • Juxtapositions: South Downtown Atlanta Then & Now

Bookmark Curbed on your Kindle and you may find yourself falling down a rabbit hole of the most expensive tiny homes in Atlanta while waves are touching your toes.

Your Local Paper

In case you haven’t noticed, newspapers and other traditional media outlets are adapting to the ways people consume media. If you’re turned off by the idea of flipping through newspapers, there are other ways to stay on top of   vital information relative to your particular region including tuning into   social media influencers and blogs. For example, Atlanta Business Chronicle’s Real Talk blog provides more digestible information about Atlanta real estate, rather than long form articles that are often only appealing to commercial real estate executives.

It’s absolutely vital you stay in the know about the local real estate market in order to speak confidently about the market with your clients. You can be sure your competitors are keeping up with the latest market news and updates and so should you, whether it’s done at the beach, your desk or on a staycation.

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A Stagnant Spring for Atlanta Real Estate

The Cal-Culator, Atlanta’s residential real estate index, has remained stagnant for the month of April. The index rose 0.1 in March to 7.1, where it will stay for another month. The Atlanta housing industry has been negatively affected by a lack of inventory, including hits to home prices and home sales, despite a receptive economy. Continue reading

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Spring Traditions are Here in the Atlanta Housing Market

Pollen isn’t the only indicator spring has arrived. The traditional spring upturn of the housing industry has struck. Median home prices, closed transactions and average days on the market are all moving in positive directions – even if inventory continues to be sparse in the area – to bring the Cal-Culator to 7.1 for March. Continue reading

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Homeowners: Go Green This Earth Day

With Earth Day fast approaching on April 22, now is a great time to begin thinking about “going green,” or even greener, with your home. Regardless of whether you live in a condominium or an expansive home with a lot of acreage, there are plenty of affordable ways to leave a greener footprint while being a good steward of our planet’s resources, all while saving you money in the long run. Continue reading

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Americans Weigh In: What is the “Ideal Residence?”

In recent years, especially in Atlanta and to the interest of millennials, there has been a shift in what many consider the ideal residence. With a renewed focus on the convenience of walkability within urban life and a shift away from suburban sprawl, has suburban life taken a back seat to the growing popularity of urbanization? Despite the lure and convenience of city living suburbia still reigns, according to the National Association of Realtors. Continue reading

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Atlanta Housing Dips Slightly in February

Despite having an extra day to capitalize on productivity in February, the Atlanta housing market dipped slightly last month due to declines in home sales and housing confidence, though inventory levels and home prices have shown improvements. As a result, the Cal-Culator, Atlanta’s residential real estate index, dropped marginally from 7.0 to 6.9. Continue reading

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