Home Builders are Trying to Woo Millennnials in More Ways Than One

The National Association of REALTORS report "Real Estate in a Digital Age" underscores the important roll people between the ages of 25 and 35 have in the future health of the housing market. Sixty-eight percent of all first-time home buyers are part of this vital demographic. Millennials are responsible for 32 percent of all home purchases. These home buyers have a median annual income  of $84,500 and do not have the stigma of a home foreclosure in their history like many older home buyers. Banks, real estate agents, title insurance companies, and home builders target millennials as customers and clients to maintain a balanced business and remain competitive going forward in 2016. Bloomberg reports that construction companies must add more millennials as employees to handle increased demand and have a stable future.

Companies must develop new talent

Mike Lancaster is president of Frank L. Blum Construction that is headquartered in Winston-Salem, NC. Lancaster says home builders must do more than they have in the past to attract young workers. There was a time that builders would just hire young people and place them on the job site to learn the trade own their own. According to Lancaster, construction firms must attract, appreciate, and develop young talent. Blum Construction is trying to do this by starting a mentoring program. They also put more focus on training new hires. The Winston-Salem area is among the most affordable housing markets in the United States. To be ready for the increased demand for middle-class housing, Blum Construction is improving its employee benefits package to attract and keep young workers.

Builders previously preferred experienced workers

People often take things for granted. They think if they want a new home there will always be plenty to choose from. They also think that title insurance is less important when buying a new home. But, title insurance is needed on any home, and new home construction is a good indicator of the overall health of the economy. When the housing market collapsed, over 2.3  million construction workers became unemployed. The U.S. Census Bureau reports that 900,000 of those people returned to work in the same industry between 2007 and 2010. Very few of those returning workers were under the age of 35. Companies were picky about hiring and found it less costly to choose experienced workers who would not require the added effort of training. People who have worked in construction for many years are less likely to look for employment in some other sector. But, analysts suggest that another reason for the lack of young construction workers is that recent high school and college graduates with more employment options to choose from simply opt for some job that does not involve manual labor.

Fewer young people want to learn a trade

The Associated General Contractors of America (AGC) conducted a survey in September of 2015. Their research found that 79 percent of companies are having a difficult time finding hourly workers. This is especially true for jobs like welder, carpenter, mason, and other positions that require some amount of manual labor. Additionally, 55 percent of the responding companies said they are having some difficulty filling salaried positions like project manager and supervisor. Young people are Millennials prefer to communicate, work, shop, browse homes, and do as much as possible via their tablet or smartphone. Technology often allows young people to complete required tasks from any location. If they can work remotely, they will. A skilled trade requires on-site training, hands-on experience, and that the artisan be present to get the job done. The youngest generation of the work force does not see the importance of learning a skilled trade or has not yet been adequately incentivized to seek employment that requires they use their hands for something other than manipulating a keyboard.

Just as title insurance is a vital part of purchasing a home, skilled workers are, and will continue being, a vital component of the housing market and overall economy. It is a bad idea to skip purchasing title insurance to try to save a few dollars. Perhaps home builders will need to incorporate a more direct approach to attracting young workers to construction. Just pay them more.
accustomed to using technology in their everyday lives and business practices.

Older Homes Have Hidden Value Along With Hidden Costs

 When the housing market is discussed in the news, the new home start numbers and building permit numbers are used to indicate the strength or weakness of the market. Fannie Mae predicts a strong housing market for 2016 and the increase in housing starts that many Realtors have been hoping for since the United States began pulling out of the Great Recession.

Title insurance for old and new homes

Many buyers don't understand the need for Title Insurance on new constructions. Even though they are the original owner of the home, they still need Title Insurance to protect against possible hidden problems with the land or existing liens. With older homes, the need for title insurance is more clear. These homes have had many owners and possibly fell into foreclosure at some time. But these older homes can be hidden gems that still have many benefits for buyers of every age group.

Quality construction of older homes

Someone is going to say it anytime a Realtor is showing an older home to potential buyers: "They don't build them like this anymore." It is true. Homes constructed 50 or more years ago were built with old growth trees. That wood is not in ample supply these days, and the vast majority of new homes have wood from hemlock fir hybrid trees. These trees are scientifically engineered to grow quickly. However, the wood lacks the character of the wood used in older homes and does not have the same durability. A lot of wood used in new homes is what's called "construction grade." It is designed to be covered by paint.
Construction has improved in many areas over the years. Builders began incorporating features like energy-efficient windows during the energy crisis of the 1970s. Modern windows save homeowners thousands of dollars each year in energy costs and are virtually maintenance free. These multi-pane windows are metal or vinyl clad, easy to keep clean, and easy to repair if broken.
It is possible to get the best of both worlds in an older home that has been upgraded. But, potential buyers should know that most tax credits that were available for making energy-efficient improvements to existing homes have expired.

Other difficulties with existing homes

Older homes have those tiny bathrooms and small kitchens. People like being comfortable in every room of their home these days. Even mobile homes and homes in the lower prices ranges have luxurious bathrooms and kitchens with islands, plenty of counter space and outlets for small appliances. Buyers need to consider possible structural limitations to remodeling older homes. And a complete upgrade of the electrical system is often necessary.

Some things that can't be changed

Many millennials prefer being located near the city and are willing to trade having a spacious yard for having the convenient location. The municipal parks are enough recreational space for them. For home buyers who have a large lot with existing shade trees as a top priority, older homes are probably their only option. Homes that are more than 40 years old have trees in the yard that are over 40 years old. These stately trees are a mixed blessing. They do provide a canopy of shade to keep the house cool and enhance the enjoyment of outdoor activities, but they produce a large quantity of gutter-clogging leaves and the large limbs can be a liability. Each year these old trees damage homes (and neighbor's homes) when they succumb to high winds or loose limbs due to disease. Like people, trees are more prone to disease as they get older.

Upfront savings can cost a lot over time

Many first-time buyers are anxious to get as much house as they can possibly afford. A new construction will cost about 15 percent to 30 percent more than an older home with comparable square footage. But, the new home comes with adequate insulation and a new, highly efficient HVAC system to save on monthly bills. It will have vinyl exterior that does not require painting and new appliances.
Novice buyers often take on more than they can handle when they buy an older home with the intention of doing much of the needed work themselves. According to the NAR report Real Estate in a Digital Age, 68 percent of first-time buyers are millennials and 32 percent of all home buyers are between the ages of 25 and 34. With the vast majority of first-time home buyers being young professionals with busy lives, older homes are typically the right choice for just a small percentage of buyers who understand the costs and responsibilities that come with them.

The Importance of a Proper List Price

Who makes the decision about list price and sales price? The home's owner.

Who suffers when the list price is too high? Everybody: the seller, their agent, the buyer's agent, the buyers. An improper list price can cause problems at every point of the transaction. Even when (if) buyers and sellers reach an agreement on price, an appraisal for less than the contract price creates headaches for everyone. One of the most difficult and often unpleasant responsibilities for listing agents is having an honest and direct discussion about the market value of the seller's home.

Sellers must understand market value
Market value is often less than the seller's perceived value of their home. Spending thousands of dollars and hundreds of hours on a water feature in the backyard does not necessarily increase the home's value by the amount invested. It can increase the home's appeal, but not always the value. Market value is different than the assessed value for taxes.
The National Tax Payers Union (NTU) reports that about 60 percent of all properties in the United States are assessed at an amount above their current market value.
Market value is determined by homes that have sold recently in the area. How far the home is from things like schools, shopping, medical services, and work centers also factor in. The impact of future construction projects and road development should also be considered. The local economy is perhaps the most influential factor in a home's market value. Despite the recent housing market crash, it is still difficult for many home owners to accept that real estate values do not always go up year-after-year.

Home value estimators
There are several online Home Value Estimators. While technology has improved the lives of Realtors in many ways, these automatic home value estimators often make their jobs more difficult. Without actually naming any of the available online options, some are better than others, but there is a huge error rate with all of them. For individual sellers, the disparities between these computer generated estimates and an informed opinion of value from a knowledgeable agent are often significant.
When agents discuss market value with their clients, they must learn to incorporate the tax assessed value and estimate from online estimators into the discussion. They can encourage the sellers to view these things as a starting point and to use all available information together for making an informed decision about their listing price.

Why listing price is important
A larger pool of potential buyers: Most interest and activity takes place in the first few weeks a home is listed in the MLS. To maximize the exposure to ready, willing, and able buyers, it is crucial that the price is not too high. Even in a seller's market, qualified buyers should be viewed a valuable. A high list price can instantly scare away potential buyers and result in the home remaining on the market longer than it should.
The price directly impacts days on market: There is no need to add wording like "bring all offers" and "highly motivated seller" when the list price of a home is competitive. Buyers often have spent several weeks or months comparing homes and prices in the area. They know how much house they can get for the same price elsewhere. When a home has an unreasonably high list price, contract negotiations typically take longer and are more contentious. This leads to a reluctance by both parties in working together for a successful closing.
Some sellers are not going to get the sales price they hoped to achieve. As a result, they often resent every penny that is deducted from the sales price (namely the real estate agent's commission) and lowers their net proceeds. When they are prepared well in advance of the negotiations and closing, they have time to understand and accept that reality. They make the decision. A tactful and honest Realtor will go over a reasonable estimate of market value prior to listing the home. Otherwise, the seller can feel misled, trapped, and forced into a situation they do not like.