MReport May 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Millennials Stricken With Homebuyers' Remorse They might have taken the final plunge and bought that home, but many young homeowners are living with regret. F irst, it took them more time to buy a home and now that they have a place to call their own, do millennials suffer from home- buyers' remorse? According to a survey, nearly two- thirds of millennial homeowners have regrets about their home pur- chase—and most of it stems from difficulties with maintaining the home they bought. Millennials also form the largest share of any gen- eration who regret their home pur- chase. The survey which was carried out between January 30 and February 1, covered 2,668 adults across age-groups. When looked across age-groups though, the survey found that overall 44 percent of homeowners had regrets about their home purchase while 56 percent were happy with their home. The most common factor that caused homeowners to regret their purchase was unexpected maintenance or hidden costs. While 18 percent of all respondents cited this as their key factors, a quarter of these respondents were millennial homeowners. "Repairs and maintenance costs are something all homeowners face. Consumers should expect to set aside 1 percent of their home's purchase price each year to keep in a savings account to cover these expenses," said Deborah Kearns, Analyst at "Budgeting early on can prevent dipping into emergency savings or going into debt to handle these added expenses." Some of the other factors that made homeowners suffer from buyers remorse included, buying a house that was too small (12 percent); buying a house that was in a bad area (8 percent); making a poor investment (7 percent); having a high monthly mortgage pay- ment (7 percent); not getting the best mortgage rate (6 percent); and buying a house that was too big (6 percent). The survey also revealed that 79 percent of Americans believed that owning a home was "a hallmark of achieving the American Dream." However, income proved to be the biggest hindrance to achieving their goal of homeownership with 51 per- cent of survey respondents who didn't own a home citing this as the key reason for not having their own home yet. Forty-one percent of respondents who don't own a home also said that they didn't buy because they couldn't afford a down payment and closing costs related to buying a home. The Outlook for Real Estate Professionals A survey examined the headwinds and opportunities for the housing industry over the next two years. R eal estate firms are optimistic about the industry's future growth, despite challenges like competition from non-traditional market participants and vir- tual firms, according to the National Association of Realtors' (NAR's) 2019 Profile of Real Estate Firms. The report, which is based on a survey of NAR's Brokers of Record membership, looked at the demographics, composi- tion, and characteristics of real estate firms from the perspec- tive of executives and managers. The report noted that 57 percent of the firms surveyed expected their profitability from all real estate activities to increase in the next year. However, they also saw competition increasing during this period. While 44 percent of firms expected competition from virtual firms to increase next year, 43 percent believed that most of the competition would come from non-traditional market participants. Keeping up with technology and hous- ing affordability were among the other challenges that real estate firms saw over the next two years. "It is clear that the real estate industry is rapidly changing, and with that comes growing competition in the market," said Bob Goldberg, NAR CEO. "NAR continues to stay ahead of the evolving trends in technology as we work with market disruptors to best serve our members and ensure they have the resources needed to be successful." Looking at affordability concerns specifically, 58 percent of firms were concerned with millennials' ability to buy a home, 46 percent with millennials' view of homeownership, and 26 percent with baby boomers retiring as real estate professionals. "Real estate firms continue to look optimistically toward the future, with a majority expecting profits to increase in the next two years," said John Smaby, President, NAR. "These trends are positive signs, particularly in our constant- ly evolving industry." The report noted that over 80 percent of real estate firms had a single office, typically with two full-time real estate licensees, down from three licensees indicated in the previ- ous report in 2017. Firms with only one office had a median brokerage sales volume of $4.2 million in 2018 (down from $4.3 million in 2016), while firms with four or more offices had a median brokerage sales volume of $100 million in 2018 (down from $235.0 million in 2016). "Repairs and maintenance costs are something all homeowners face. Consumers should expect to set aside 1 percent of their home's purchase price each year to keep in a savings account to cover these expenses." —Deborah Kearns, Analyst,

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