There have been recently in the news regarding their desire to buy new homes, versus existing homes – what they wanted in those new homes… are the newest of first time home buyers looking for sleek condos or “quirky charm?” As it turns out, the Millennial Real Estate Trends are pretty similar to other “Empty Nester” types!
Millennials have been “missing in action” when it comes to the Real Estate Market since the end of the Great Recession. First Time Home Buyer Millennial Real Estate Trends, for our purposes, is being discussed here because I’m trying to re-enforce what they are looking for in housing… which will dictate what sort of mortgage program these first time home buyers will need!
Many economists are highlighting the fact that FHA PMI rates recently declined, making it more affordable, on a monthly basis for Millennial Real Estate buyers to qualify. Additionally, new Fannie Mae and Freddie Mac programs evolved, making it easier to come up with down payments of only 3%.
The point being made by the those looking at the Real Estate Market is that it’s time for the Millennial Real Estate Trends to reverse, and these very home buyers who have stayed intentionally on the sidelines should be quickly entering the market.
Assuming these early impressions could point to a trend, what’s driving the action? Again, the decline in interest rates has certainly played a role – however, in North Carolina, we see high rents playing a major role in moving some of this pent up demand as well. In the first time home buyer market, homes in the under $325,000 (at least from our perspective) are taking only days to sell.
**Disclosure, disclosure we’re not Real Estate Agents, not all properties are the same, etc. etc. etc.
Millennial Real Estate Trends in NC
Millennial Real Estate Trends: Party On BAE!
Millennial first time home buyers are truly into entertaining. They want a home they can show off, maybe not a “Mac-Mansion,” but also a home that functions as an entertainment space for their friends. They are looking for an outdoor space for fire pits, open floor plans for throwing parties, and a place for their ping pong, Foosball or pool table. While Generation X before them was more concerned about family friendliness, Millennials are more likely to be childless when they first buy and looking for a place to entertain. Show them how they can a throw a great party in a particular home, and they’ll likely be hooked!
- Millennial Real Estate Trends: Entrepreneur at Heart
Scratch a millennial for their Real Estate Preferences, and you are likely to find a budding entrepreneur (55% say they want to start their own business someday). Because of this, a collaborative space for working with others is essential. Not just an office, that closes off for quiet time – these guys are looking for more open space where they can sit around with others and bounce ideas around. Think “charades” with a white board, so they can record all of the ideas, and pin down the ones they want to work on first!
- Millennial Real Estate Trends: Condo Living Down Town!
The Millennial First Time Home Buyer is in love with the idea of living downtown, in the heart of the Party. Central Location is on the high priority list for most of these first time home buyers. They don’t mind asking the Bank of Mom and Dad to help fund that move, if need be – and they like the idea of First Time Home Buyer Grants, if that makes “living the dream” a quicker process! Problem with that? Many Condo projects in NC don’t have all of the Association Docs up to date, and because of that, few projects qualify for the very programs these Millennial Real Estate buyers are interested in!
Second Best? Again, like many other “empty-nester groups” the Millennial Real Estate buyer is interested in maintenance free living, so a Townhouse makes sense to them. It feels like it will fit in their budgeting practices better… but the reality is that it eats into their buying power. Because we have to count the Home Owner Association Dues against them, like any other monthly debt.
- Millennial Real Estate Trends: Looks Great From Here!
Have you been in a Starbuck’s recently and looked at the Millennial’s around you? I try not to stare, but they are all looking down at a screen. They are sharing the screen, they are INVOLVED with the screen. It goes without saying that this group relies on technology. “More than 50 percent of millennials search for homes on their phones and, among those, 26 percent end up buying a home they found that way, according to data from the National Association of Realtors.”
But, Millennial Real Estate Buyers also understand that they don’t have the experience to negotiate a contract on their own. While they might be looking for homes on their screen – they are actually FINDING homes with the help of a Real Estate Professional, which is smart!
Millennial Real Estate Trends: I’ve Been Saving
Many of the Millennial First Time Home Buyers we talk to have been saving for a home. They’ve sacrificed, and lived at home. They’ve taken the time to pay off student debt – maybe not all of it, but they have a good feel for what they can afford. Many times, these are “new” Citizens, and they are proud to be the first in their family to buy a home!
We recently had Millennial First Time Home Buyers come to us who just happened to have $2200 in cash, at their house, in a safe deposit box, that they wanted to use for a down payment on a home. They didn’t want to put it in a bank… in this case, because of their ethnic and historical distrust for banks.
We were able to show that they had legitimately been making contributions to their Parrish. The Parrish gave them the money for the down payment. We documented their contributions, and it worked.
In general, however, it is almost impossible to use large chunks of cash that you just “have” – that are not on deposit, and “seasoned” in a bank account for more than 60 days. We’ve talked to waitresses, and entertainers and hair dressers, who traditionally work in “cash” businesses, where this is a problem.
The money can be treated as a GIFT from family, but even that will need to be documented.
What Millennial First Time Home Buyers Should Know
Many of the Millennial Real Estate Buyers we talk to don’t know “what they don’t know.” Meaning, they don’t know what to ask, they don’t know who to turn to – they need lots of information. So here are a few things to consider:
- When you buy a House – you get a Raise! Uncle Sam definitely sees benefits in having homeowners, so you get to “write off” the interest you pay each month on your taxes! We advise First Time Home Buyers to see a tax professional, and consider changing your W-4 when you purchase! This way, instead of the government giving you a $2400 refund… you get a $200 RAISE! (seriously, you can bring home more each month and not owe on April 15!)!
- We offer the Mortgage Tax Credit Program. Not all Banks offer this program, we are one of the few that still do in 2015. This program actually DOES change your W-4, but it does not diminish the tax credit that you can write off each Spring. It’s an ADDITIONAL Tax Credit available for those who have been renting for the last 3 years in NC.
- You CAN get into a house with absolutely no pennies out of pocket – but it’s HARD. We would suggest that you have at least $1100 if you want to buy a house. There are really 3 buckets that your costs associated with buying the home will fall into. Down Payment, Closing Costs and the ACTUAL move. We can help with the first two – but you are going to have a few costs that you will need some cash for!
- The NC Affordable First Time Home Buyer program is open to anyone who has not owned a home as a primary residence within the last three years. This works great for folks who owned a property in another area and moved to find a job. Having that rental property does not mean that you will not qualify for the program as long as you’ve been renting for the last three years.
- The NC Mortgage Grant Program works in partnership with FHA, VA, USDA and Conventional loans. It’s an additional benefit offered to those who qualify and have been renting in NC. You might qualify for a 3% forgivable government GRANT that will help you buy a home!
- When one borrower has most of the income… the other borrower has good credit scores… there ARE options for purchasing a home. Purchase a home using FHA, and have a non-owner occupied co-borrower on the loan with the borrower who has good credit scores. If you know that you can make the payments on your own, then having a parent, or other family member, on the loan will not be a burden to them. After you’ve made 12 months of payments (and by all account mortgage interest rates will still be low a year from now) you can refinance the loan and take the family member(s) off.
So Relax! The Millennial Real Estate Trends point to more NC First Time Home Buyers ready to buy! We have the Programs that can help you do this! Buying your First Home in NC is FUN! Call Steve and Eleanor Thorne, Best Mortgage Rates in Cary NC, 919-649-5058. Connect with us on Google Plus and Facebook