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Gen X, Y buyers want bigger homes
 Friday, April 21,
2006
Reprinted from
Inman News
Generation X and
Generation Y buyers tend to spend more for their first home than baby boomers
and this represents a larger portion of their household income, according to a
Century 21 Homebuyer
Survey released this week.
On average, the impact
on the household income was 21 percent of boomers' income as compared to 25
percent of Generation X and Generation Y's household
income.
The survey also
reveals that baby boomers were driven to purchase their first home based on
family reasons, while Generation X and Y buyers are more likely to buy or have
bought a home as a 'safe investment.'
In addition,
Generation X and Y buyers tend to take longer to buy their first home as
compared to baby boomers. Today's Generation Y buyers are also purchasing first
homes at a younger age than their Generation X and baby boomer
counterparts.
The national online
survey collected responses from 1,514 U.S. home buyers and was equally
distributed among baby boomer (people born between 1946-64), Generation X (born
between 1965-78) and Generation Y (born between 1979-94) consumers. The study
was conducted by International Communications Research for franchisor Century 21
Real Estate LLC.
Today's Generation Y
first-time home buyers are younger than their Generation X and baby boomer
counterparts. The average age for first-time home buyers was 26 among Generation
Y respondents, which is three years younger than Gen-X (29) and baby boomer (29)
survey participants.
Of the survey
respondents, the average boomer polled was 51 years old, followed by Generation
X at 34 and Generation Y at 25. Among those polled, 72 percent of Generation Y
respondents were single women, followed by 56 percent of Gen-Xers and 59 percent
of baby boomers. About 25 percent of Gen-Xers surveyed are single and have not
married, compared to 5 percent of baby boomers.
Baby boomers were more
likely to have purchased a first home based on a life event, including marriage
or birth of a child. Their counterparts, Generation X and Y buyers, tend to
purchase a first home based on its appreciation value, according to the survey
responses.
'Safe investment' is a
key driver among Generation X (42 percent of survey respondents) and Generation
Y (39 percent) versus 35 percent of baby boomers who are more likely to invest
in a first home for 'family reasons.'
Baby boomers
identified price as a key concern when purchasing a home (51 percent) as
compared to Generation X (42 percent) and Generation Y (39 percent). Generation
X (8 percent) and Y (10 percent) buyers are more concerned with proximity to
work for their first home as compared to boomers (4 percent), according to the
survey.
A majority of baby
boomers (53 percent) ranked real estate brokers and agents as their primary
source for shopping for information on their first home, followed by 45 percent
of Generation X and 34 percent of Generation Y buyers. Generation Y home buyers
(42 percent) search the Internet more than their Generation X counterparts (26
percent).
About 40 percent of all survey respondents noted that the best
way to find a broker or agent was through
friends and relatives.
About 21 percent of Generation X and Y members use the Internet to find an agent
to work with for their first home purchase, while about 17 percent of baby
boomers used yard signs to find a broker or agent in their first home
purchase.
In all three groups of
buyers, the majority preferred more frequent contact from their broker or agent
when buying a first home (more than 50 percent want contact every few days),
according to the survey.
Generation Y
respondents ranked the Internet as their primary source of home-shopping
information, though it took them longer on average to purchase their first home.
Baby boomers were the quickest first-time home shoppers polled, averaging 4.3
months to buy their first home, followed by Generation X at 4.6 months and
Generation Y at 5.4 months, according to the survey.
Baby boomers (26
percent) are more likely to stay in their first home for more than 10 years as
compared to Generation X (13 percent) and Generation Y (9 percent).
Today's youngest home
buyers are more likely to live with family to save money than other groups. Of
those polled, more Generation Y buyers (22 percent) live with parents or in-laws
prior to purchasing their first home as compared to baby boomers (3 percent) and
Generation X (7 percent).
About 11 percent of
baby boomers said size is important in a dream home. About 17 percent of
Generation X buyers and 19 percent of Generation Y buyers stated that their
ideal homes are over 5,000 square feet. The average size of a dream house for
boomers is the smallest at 3,340 square feet, with Generation X at 3,840 square
feet and Generation Y at 3,810 square feet. In reality, the average size of a
first home is about 1,546 square feet, according to the 2005 National
Association of Realtors profile of home buyers and
sellers.
About 33 percent of
baby boomers cite the Southeast as the dream home location vs. 27 percent of
Generation X and 25 percent of Generation Y buyers.
Younger buyers are
attracted to the Northeast as the location for their dream home, the survey
revealed. About 22 percent of Generation Y and 18 percent of Generation X buyers
prefer this region, compared to 9 percent of boomers.
The Southeast and
Southwest are the two favorite regions for a second home for all groups of home
buyers surveyed. The Northeast is favored by Generation Y buyers (14 percent)
ahead of boomers (9 percent) and Generation X (11
percent).
The survey including
responses from first-time buyers in their first year of home ownership along
with active first-time home shoppers, and was conducted from March
17-31.
The Century 21 system
includes about 7,800 independently owned and operated franchised broker offices
in 42 countries and territories worldwide.
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Boomers snatch up vacation, investment
properties
Thursday, April 27,
2006
reprinted from
Innman News
By Ilyce
R. Glink
In the last three
years, a couple that I am acquainted with has bought three investment properties
in a mountain resort town about three hours from where they live.
The
first townhouse they bought was for weekend getaways, but now it will probably
more than cover its costs through summer and fall rentals, the couple reports.
One of their properties is now on the market for nearly double what the couple
paid. In fact, prices
in the 3,000-acre
community have at least doubled since it opened five years
ago.
That kind of activity
has been replicated in vacation-home areas across the country in the past few
years, according to Paul Bishop, manager of real estate research for the
National Association of Realtors.
NAR recently released
a new study that looks at the vacation- and investment-home markets. Last year,
40 percent of all homes bought were vacation homes or investment properties.
That's up 16 percent from 2004, to a record 3.34 million
homes.
"We don't have good
numbers on this, but the information we do have is a lot of the activity is from
buyers who buy one to two or more properties over the course of a year or two,"
Bishop explained. "The majority of these folks are actively in the market to buy
investment properties as opposed to people buying a one-off home to rent. They
are serious residential investors."
Bishop said the study
showed there is a clear distinction between the people who buy vacation homes
and those who buy investment properties.
"Buyers of vacation
homes look for lifestyle opportunities, and perhaps residences for retirement.
Investment property buyers want to purchase property close to their homes," he
noted. "We're talking about both groups together, and that's a pretty broad
brush. They have entirely different motivations."
The Midwest is the strongest area for second-home or
investment-property purchases, Bishop added. Donna Hofmann, a Coldwell Banker
agent located in Chesterton, Ind., says that 90 percent of her vacation- or second-home
buyers come from the Chicago metropolitan area, and 80 percent live
in the suburbs.
"Most of our buyers
want somewhere that is close to the office that they can visit on weekends and
get away from the city for awhile. Most of them are purchasing second homes in
order to turn them into a retirement home some day. They plan to move there
eventually," Hofmann said,
In Alpharetta, Ga., RE/MAX
Greater Atlanta agent Tom Zaccaro is working for a new vacation-home division
called Resort Connection, selling resort properties in the Florida panhandle to
Atlanta-area residents.
"Panama City Beach is where the big boom is now.
They're putting in an international airport. It's next to Destin, which is a big
hot spot. What's going on there are beachfront condos for $1,000 per foot," he
said, adding that "dumpy" hotels are being replaced by exclusive resort
property. "Panama
City Beach
properties are going for $425 per square foot."
Investors, Zaccaro
said, are gobbling up everything for sale.
But in Phoenix, which has been one of the hottest markets for more
than a decade, Coldwell Banker agent Ann Morgan said there appears to be an
oversupply of lower-priced homes in the outer regions of the greater Phoenix
area.
At the same time, home
prices at the upper end are growing quickly.
"Homes priced at
$400,000 a couple of years ago are now priced at $600,000. Retirees and
snowbirds are looking in Scottsdale because it's a nice, clean, safe
environment. They want the stainless steel appliances, granite tile, an updated
house and they're spending $300,000 to $400,000 without thinking about it,"
Morgan explained.
According to Bishop,
the median price of a vacation home in 2005 was $204,100, up 7.4 percent from
2004. The typical investment property cost $183,500 last year, up 24 percent
from a year earlier. Eleven percent of all homeowners own two properties, while
4 percent own three or more properties.
What's contributing to
these second-, third-, and fourth-home purchases? Bishop says it's the Baby Boom
generation (born 1946-1964) flexing its financial muscle.
"The
median age of vacation home buyers is about 52, so this is the first wave of
Baby Boomers, and about one in five is planning on using the second home they've
purchased as a primary residence
someday." Bishop
explained. "They're thinking about lifestyle issues and their future
retirement."
Past research has
shown that people aged 55 to 65 are the most active second-home buyers, followed
closely by those aged 45 to 55. Since the Baby Boomers are just turning 60, the
first wave of Boomers is just hitting their peak second-home-buying
years.
Bishop said that with
Boomer buying power, second homes could remain a large percentage of all home
purchases for the next 20 to 30 years.
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Beaches expect
a busy summer
Friday, May 26,
2006
By RYAN DEZEMBER
Staff Reporter
GULF SHORES -- Until Hurricane Ivan struck in September, the summer
of 2004 was the busiest ever on Baldwin's beaches.
Occupancy rates for condominiums along the beach peaked
at 90 percent that July; 92 percent of hotel rooms were rented that same month;
and more than $329 million in retail sales were registered June through August
in Foley, Gulf Shores and Orange Beach, according to Alabama Gulf Coast
Convention and Visitors Bureau data.
Now, heading into Memorial Day weekend and the start of
the tourist season, rental companies are reporting reservation rates that exceed
those they had prior to the start of that watershed summer two years ago.
It's looking like it's going to be great," said
Convention and Visitors Bureau President Herb Malone. "With what we've been
through the last two years, we're ready for a great weekend and a great summer."
Hurricane Ivan put a quick end to the beach season in
2004 and caused enough damage to carry over into the summer of 2005. That season
was further dampened, and reconstruction efforts slowed, by a succession of four
evacuation-forcing named storms.
More than 13,000 condominium units and hotel rooms are
ready for rent on the beach this season and, weather permitting, those in the
tourism business are predicting that most will be filled throughout the summer.
Marie Curren, director of marketing and reservations for
Brett/Robinson, said each of her firm's 1,841 condos is spoken for this weekend
and, as of late Wednesday, the real estate conglomerate's two Gulf-front hotels
had about 20 unreserved rooms between them.
Most of the 200 or so condos that Bender Realty rents
have been claimed through June, which is a good indicator of how the rest of the
summer will go, owner Bill Bender said.
"I would say that by the end of June, we'll see 80
percent occupancies," Bender said. "In July, we should exceed 90 percent."
The high occupancy rate extends beyond the beach into
Foley, where at least two new hotels are planned or under construction and the
eight there now are booked for most of the summer, said James Wood, manager of
the Holiday Inn Express on Alabama 59.
Wood said that his hotel's 83 rooms across the street
from the Tanger Outlet Center are "almost sold out -- and we will be prior to the
weekend."
The sheer volume of accommodations should improve
business for the retailers and restaurants along the beach this coming summer,
said Bill Howard, owner of the Top Shelf Restaurant & Sports Lounge, which
overlooks the public beach in Gulf Shores.
"If we can stay storm-free, I think everyone will
benefit, and we should have a better year than last year," Howard said.
At Old World Bakery & Pizza, also across from the
public beach, Melissa Downing said expectations for the summer are high.
She said that besides an increase in the available
accommodations, the beaches, roads and boardwalks have been repaired, and most
of the storm-damaged properties have been cleaned up, including an amusement
park which, when demolished, gave her eatery a view of the Gulf.
Aiding the beach's attempted resurgence will be the
completion of a host of new high-rise condominiums -- an April report said
nearly 1,500 new condo units will open this year -- and a large mixed-use
project in Orange Beach called The Wharf.
Eventually including about 1,000 condos and a million
square feet of retail space, The Wharf will open its 10,200-seat amphitheater --
along with its 15-screen movie theater and 112-foot-tall Ferris wheel -- this
weekend with a Saturday night show by country stars Hank Williams Jr. and Rhett
Akins.
The white sand and emerald-hued waters, however, will
always be the biggest draw to Baldwin's beaches, Malone said, and following
completion of a 14-mile, $26 million beach renourishment project, the sandy
vistas are as wide and plump as they've been in years.
"We've walked the beach and made sure we got every last
chunk of asphalt and debris out," Gulf Shores Public Works Director Chuck
Hamilton said earlier this week. "We have all the trash cans in place, and we're
trying to just make the place look real good for our holiday visitors."
Across the bay on Dauphin Island, which was hit much
harder than Baldwin's beaches by Hurricane Katrina in late August, the tourism
forecast is looking up, but not quite as rosy as in Gulf Shores and Orange
Beach.
Dauphin Island Mayor Jeff Collier said that despite lingering storm
damage there, the town's public beach is open, nine of the 18 holes on the
Isle Dauphine golf course are playable, and attractions, such as
historic Fort Gaines and the Dauphin Island Sea Lab and Estuarium, are ready
for visitors.
"We'll be a little short on rentals," the mayor said.
"That'll be our biggest problem right now."
Though new condos have recently entered the rental pool,
many private homes haven't been repaired to the point that they can house
tourists, Collier said.
"Certainly we encourage people to come over," he said.
"For the most part, we're open."
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Research: Boomers
feed second-home boom
By Kenneth R.
Harney/ The Nations Housing
Sunday, May 28, 2006 - Updated: 02:03 AM
EST
If youre thinking about
buying a second home, youre part of a major transformation under way in the
real estate market.
New
research by economist Keunwon Chung of the National Association of Realtors
shows the number of second homes Americans buy each year doubled between 2000
and 2004.
Chung recently studied federal data on hundreds of thousands of second-home
mortgages taken out during the period.
He
believes baby boomers cashing out equity from primary homes are buying second
places as vacation, retirement or investment properties.
Chung also cites some
largely unexpected effects of a 1997 tax-law change on home-ownership profits.
Before the 1997 amendment, Americans who sold primary homes often faced big
capital-gains taxes.
Avoiding
this levy usually involved rolling over proceeds from one houses sale into
purchase of a new place costing as much or more as the old one.
But thanks to the 1997 law change, married couples can now usually pocket
$500,000 of home-sale profits tax-free. (Singles can exempt $250,000).
Chung said the 1997 amendment meant homeowners did not have to buy expensive
(replacement) homes anymore.
Instead,
many people now downsize out of big suburban houses and into condos - often
using some of the leftover sale proceeds to purchase second homes.
Chungs
study suggests this trend is hot right now - and likely to stay that way for
years to come.
He
found that in 2000, Americans bought 405,000 second homes - 8.6 percent of all
properties purchases using a mortgage.
But
by 2004, total U.S. second-home sales had
more than doubled to 881,000, accounting for 14.2 percent of all home loans
issued.
Whos
buying second homes?
Primarily
baby boomers - especially those with above-average incomes, according to Chung.
He
found that while the average primary-home buyer had $61,000 of annual household
income in 2004, the average second-home purchaser earned $102,000.
Part of such folks interest in second homes apparently revolves around
diversifying their assets.
After all, Chung said, U.S. home prices rose 55
percent on average between 2000 and 2004 - a period when the Standard &
Poors 500 stock index fell 15 percent.
As an investment choice, the housing market presented an attractive
alternative to stocks for investors, Chung said.
Where are Americans investing their second-home dollars?
Chung
found that 11 states and the District of
Columbia have seen
exceptionally high second-home purchases in recent years. [continue]
Not surprisingly,
Hawaii leads the list, with
second homes making up 27 percent of every purchase mortgage taken out in
2000-2004.
Florida places No. 2, with
second homes making up nearly one sale in five there.
Other
popular states: Arizona (where second-home
purchases made up 18 percent of all mortgages taken out),
Nevada (17 percent),
Idaho (13 percent),
New
Mexico (12 percent) and a tie
between Utah and the
District of
Columbia (10 percent in each
locale).
California and
Washington state tie for eighth
place, with second-home sales there making up 9 percent of purchase loans.
Rounding
out the top 12: a tie between Maryland and
Virginia (8 percent in both
states).
How
long can the second-home boom continue?
As long as boomers remain in their peak earning years and . . . can afford
second homes for vacation purposes or as investment vehicles, Chung said. For
the next decade, baby boomers will continue to drive housing markets -
particularly the second-home segment.
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Housing
boom will not end in a crash, says Harvard
Markets seldom disappoint both bulls and bears
for long. But over the coming years the US housing market looks likely to do just that,
according to a study by Harvard University. After the slump of the early 1990s and the
surge of the past five years, the housing market might prove an anti-climax to
all concerned. The long period of stagnation forecast by the survey would
disappoint homeowners who expect big price rises but also those who missed the
boat and have been hoping for a crash.
"Although housing prices are stretched, it is
hard to see the catalyst for a crisis in the market," says Nicolas Retsinas,
director of the Joint Center for Housing Studies at Harvard. "The
overvaluation looks pretty well balanced by longer term supports for house
prices, so we may just see a few years with little action. Houses will revert to
being something to live in rather than money makers."
The study begins with some sobering
observations about the record run in the
US housing market. Over the past five years house
prices have outstripped income growth more than sixfold the median home now
costs more than four times median household income in 49 out of 145 metropolitan
areas in the US, a record. In 14 metropolitan areas, the
median house is now worth more than six times median income. Last year saw the
average house price shoot up 9.4 per cent the biggest rise in the average
house price since records started more than 40 years ago.
Financial strains on US home-owners have been
mounting. The number of Americans devoting more than half of their incomes to
housing climbed by 1.9m to 15.6m in the three years to 2004. To bridge the gap
between sluggish earnings growth and speedy house price growth, ever more
Americans have been tempted by riskier flexible-rate mortgage products. More
than a third of loans last year were at adjustable rates and may rebound on
their holders if interest rates continue to climb. Even more reckless buyers,
about 10 per cent last year, opted for payment-option mortgages which do not
require full payment of the interest costs.
So why will non-homeowners be deprived of the
crash they have been waiting for? The strongest underlying support for the
market comes from accelerating household formation. Demand is being driven not
only by population growth but by household fragmentation, as couples divorce or
children leave home. Immigration has been a still stronger force over the past
decade 12.6m new households were formed in the
US. Over the next 10 years the pace of household
formation will accelerate to 14.6m, according to the
Joint Center for Housing Studies. "Even if
America decided to close the borders now, we would
still see the lagged effects of previous waves of immigration," said Mr
Retsinas. "Many of those that came to
America earlier are only now in a position to buy
property. As it is, we don't believe there will be any slowdown in
immigration."
The Harvard study also argues that there are
fewer points of vulnerability than during previous housing market downturns. The
macroeconomic outlook for the US is uncertain but no mainstream economists are
predicting the kind of surge in unemployment or leap in interest rates that
would prick the housing bubble. In spite of the shift towards flexible rate
mortgages, 75 per cent of mortgage holders have 30-year fixed rate loans and are
therefore largely invulnerable to rising rates. A third of households own their
homes outright. Nor are many likely to suffer from negative equity should rising
interest rates or unemployment drive up defaults about 94 per cent of
home-owners have equity of more than 10 per cent.
Over-development has also been less of a
problem than in the past, the study says. Price declines associated with
episodes of big job losses alone average 4.5 per cent, while those occurring
around periods of over-building alone average 8.3 per cent, it says.
Not everyone concurs, however. Many economists
say national figures are deceptive, since they obscure pockets of extreme
over-valuation in property prices and greater vulnerability to rising rates.
Others point to evidence of overbuilding in recent years. Residential investment
has risen to 6 per cent of gross domestic product its highest level in 50
years and much higher than the average of 4.75 per cent.
The Harvard study concedes that even a slowing
housing market could take a heavy toll on growth, as Americans become less able
to use their houses as ATM machines and less employment is created by
homebuilding. Provided the slowdown is gradual, as Harvard expects, this could
help rebalance the US economy, reducing demand for imports and so
stemming the growth of the trade deficit.
Copyright 2006 Financial Times
June 13,
2006
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FROM: HOUSING
PREDICTOR,
Independent real estate market forecasts, FEB
12, 2008
The Mobile economy is the
healthiest it has been since 1990. Housing prices are still on the rise and
should remain that way through 2008 with forecast appreciation of 4.4% for the
year.
Mobile has seen many new residents
from Louisiana move to the area. The micro boom has topped that of World War
II’s, which was the last real big boom for the region.
However, the subprime problem will
begin to slowly creep into the Mobile market to further slow home sales.
Condo preconstruction is beginning
to pick up again in Gulf Shores, which had slowed as a result of the hurricane.
But tourists have returned to the beaches in mass and life has begun to get good
for the tourists business in Gulf Shores along the gulf coast.
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