Lender and Realtor Connections Ramping Up, Young Folks Following Affordability

By rchrisman@robchrisman.com

They told me I had type A blood, but it was a Type-O.
A dyslexic man walks into a bra.
PMS jokes aren't funny, period.
Why were the Indians here first? They had reservations.
Class trip to the Coca-Cola factory. I hope there's no pop quiz.
Energizer bunny arrested. Charged with battery.
I didn't like my beard at first. Then it grew on me.
How do you make holy water? Boil the hell out of it!
Did you hear about the cross-eyed teacher who lost her job because she couldn't control her pupils?
When you get a bladder infection, urine trouble.
What does a clock do when it's hungry? It goes back four seconds.
I wondered why the baseball was getting bigger. Then it hit me!

Plenty of first time home buyers, not necessarily millennials, use the internet to do their initial house and lender search, and then actually use an agent and a loan officer for the task. And they'll need ducats! Research by Bank of America Merrill Lynch finds millennials (per the Census Bureau born between 1982 and 2000) will inherit $40 trillion from Baby Boomers in the coming decades. Yes, Papa was a rolling stone, but he seems to have accumulated some wealth.

There were plenty of LOs and real estate agents that read the research by the Pew Research Center that published for the first time in history (well, at least back to 1880), more people in the U.S. age 18 to 34 (33%) live with their parents vs. a spouse or partner. In 1968, 56 percent of 18- to 31-year-olds owned their own homes. In 2012, that number dropped to 23 percent.

 As I've said for years, Millennials are in no hurry to marry, have kids, or save up enough money and then finance a house? It will happen eventually. Still it doesn't stop the fascination with their every move but the ones that I talk to aren't too excited about constantly being under the microscope. It's amusing that some people approach millennials as if they are a newly discovered alien species. Like every generation, they are impacted by the times, but their basic needs and desires scantily deviate from those who came before them, and will likely scantily deviate from those who will follow them.

But it seems that the crossover point where more baby boomers are retiring than millennials entering the labor force is upon us. A Bureau of Labor Statistics (BLS) analysis released in December 2015 projected labor force change for the ten years ending 2024 as being only 0.5 percent per year. Emerging Trends has sketched the big picture in previous editions. The key change in the population cohorts from 2014 to 2024 looks like this: the number of Americans in the 25-to-34-years-old age group, the prime early-career working years, will be up by 3.2 million; meanwhile, the 65-to-74-years-old age group, those most likely to exit the labor force in retirement, will be up by 9.4 million. Many organizations are having to accelerate compensation increases for new employees, but they're funding those increases by savings from attrition from among their older, higher-paid staffers.

Yes, four in 10 homebuyers start their house-hunting with an online search, per the National Association of Realtors. Consider recommending the following tools to your readers' consumers thinking about buying a home in the coming new year. What are agents seeing out there? A Bank of America Homebuyer Insights Report noted that, "Many buyers turn to social media resources like Pinterest for inspiration on the kind of home they want. In fact, 49 percent of millennials use Pinterest, 37 percent Facebook, and 33 percent Instagram for home decorating ideas. For Gen Xers, 32 percent use Pinterest, 37 percent like Facebook and 11 percent favor Instagram."

 Ellie Mae searched its Encompass database to find that Millennials and other first time home buyers are shifting to "the heartland." "A larger proportion of millennials are buying in the American heartland where prices remain broadly lower than in many markets. The largest share of millennial buyers in October was in Minneapolis (44 per cent) closely followed by Philadelphia (43 per cent), St. Louis (42 per cent), Chicago (40 per cent) and Detroit (40 per cent). Meanwhile, to the surprise of no one, Florida and California had the metros with the lowest share of millennial buyers. I imagine it is because of the average age of one state and the average cost of living in another.
"As housing prices continue to rebound, Millennials are increasingly representing a higher percentage of homeowners in the middle of the country, where they can get more home for their money," said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae.

  The percentage of those polled by Trulia who say they view homeownership as part of the American Dream fell to 72 per cent in 2016 compared to 75 per cent in 2015. This drop was steeper among young Americans (80 per cent). Although 83 per cent of millennial buyers say they intending to buy, 72 per cent are not planning to do so until late in 2018.
Saving for a down payment is the big challenge for more than half of respondents while having poor credit and rising house prices are each concerning around a third of respondents. Interest rates and mortgage rates are not a major concern.

"Will mortgage rates stifle home buying in 2017? We think not. At present, mortgage rates would have to double nationally for the cost of renting to beat the cost of buying a home," said Trulia's Chief Economist Ralph McLaughlin. "Even with the recent rate hike, homeowners appear to be far more concerned about saving for a down payment, having poor credit, and rising home prices than qualifying for a mortgage."
Builder Magazine chips in with a story on the over-studied Millennials, and trends that interest builders. "Instead of limiting their households to children, parents, and grandparents, plenty of people are going a step further, making homes with friends and even strangers. Co-housing, in which a large community lives together and shares household duties, is gaining popularity. In co-housing, individuals or families generally have their own houses, bedrooms, or apartments but share things like kitchens and community spaces. They'll commonly trade off on responsibilities like cooking and chores."
Credit Plus' newest installment of America's Mortgage News is now available and details the challenges and opportunities the Millennial demographic segment presents the mortgage industry. "The video identifies the events and technology advances that shaped them, their habits, their passions and what, exactly, makes them tick. Together, these things have direct implications on how we reach and relate to Millennials - and the effective strategies for winning their mortgage loan business."

 Shifting to the bond markets, rates aren't doing much. It's a holiday week! Monday was a day off, and Tuesday the bond market (and stock) started the day on a soft note and soft is pretty much the way it remained for the entire session. Home prices in the U.S. rose to new highs and consumer confidence hitting its highest level since August 2001. The 2-yr auction saw a high yield of 1.28%.

The S&P Case-Shiller Home Price Index was up 5.6% year-over-year in October, hitting a new high, while the 20-City Composite Home Price Index rose 5.1%. LOs know that strength in home prices reflects limited inventory for sale and is helping to drive up home equity positions for existing homeowners.

 For numbers the 10-year closed Tuesday with a yield of 2.56%. There is no economic news early today; later, at 10AM ET, we'll see Pending Home Sales, and a $34 billion 5-year note auction. The 10-year is at 2.56% this morning and agency MBS prices are unchanged.