MReport February 2020

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44 | 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 ORIGINATION The Far-Reaching Implications of California's Affordability Crisis The high cost of living is causing more than 60% of millennials to look elsewhere. A nalysis from the San Francisco Chronicle states that California's housing crisis is not just impacting homeowners, but the business community as well. "We sold our 1,310-square-foot house on a 10,000-square-foot lot for $335,000. In Oregon, we purchased a 1,408-square-foot home on two-thirds of an acre for $168,000. More houses, more property, no sales tax, much lower gas taxes, similar property tax rates. The decision was a no- brainer," said Nina Kingsley-Keller in the Chronicle's article. The author of the article, Ken Monroe, Chairman of the Family Business Association of California, said data shows 53% of Californians are considering moving because of the high cost of living. Also, 63% of millennials want to leave. "If they leave, who will be left in the workforce when the baby boomers retire?" Monroe asks. Monroe continued by saying lawmakers "must come up with real-world solutions to clear the way to build the millions of new homes and apartments our state desperately needs." "Lawmakers must realize that the government isn't going to build the 3.5 million housing units the governor has set as his goal," Monroe said. "The private sector—and their thousands of employees—are going to build them. What government officials can do is recognize that their actions over the past 40 years, no matter how well-intended, are a major reason for our shortage." He added that legislators must stop adding new mandates that increase costs. The California Environmental Quality Act requires all new homes to have solar panels, which could add between $9,000 and $10,000 to the cost of the home. Zillow previously reported that the total value of U.S. homes reached $33.6 trillion in 2019. California made up the highest share of the nation's housing value at 21.2% and 12% of its population. Texas is the next most populated state at 8.8% but accounts for just 5.9% of housing value. The home values of New York ($2.7 trillion); Florida ($2 trillion); Texas ($2 trillion); and Washington ($1 trillion) combined to exceed California's $7.1 trillion in home value. Three metros reached the trillion-dollar mark—New York ($3.2 trillion); Los Angeles ($2.5 trillion); and San Francisco ($1.6 trillion). Los Angeles was the only market to add more than a trillion dollars of housing during the decade, gaining $1.1 trillion. California was home to three of the five metros that gained the most value: San Francisco ($827 billion); New York ($657 billion); San Jose, California ($360 billion); and Seattle, Washington ($356 billion). The Gen Z Homebuyer Landscape The post-millennial generation led the way for first-time buyers during Q4. W hile the National Association of Homebuilder's latest Housing Trends Report found the share of adults looking to buy a home over the next year fell to 11% in Q 4 2019, the number of prospective first-time buyers rose to 63%. The share of first-time buy- ers rose from 53% in Q4 2018. Prospective adults looking to buy a home fell from 13% during the same quarter last year. This drop marks the fifth-consecutive year-over- year decline in the share of prospective adults looking to buy a home. The NAHB said this trend is likely spurred by low levels of housing inventory. The share of prospective homebuyers for adults has consistently fallen since Q 4 2017 when the share was 24%. The most recent figures are the second-consecutive quarter of increases for first-time buyers and is an increase from Q 4 2018's 53%. Millennials are most likely to purchase a home within the next year at 19%. The millennial genera- tion was followed by Gen Z (13%) and Gen X (12%). Just 5% of baby boomers are planning to purchase a home. While millennials are more likely to buy a home, it is Gen Z consumers who are most likely to be first-time buyers at 88%. Millennials were close behind at 78%. The share of first-time buyers drops significantly for Gen Z buy- ers 57%) and baby boomers (20%). The NAHB states that more than 60% of prospective buyers in every region are buying a home for the first time. The Northeast led the nation with 65% of first-time buyers plan- ning to buy a home. The South region followed with 64%, the West had 62%, and the Midwest had 61%. The South and the West regions led the nation in potential home sales for adults at 12%. Ten percent of adults plan to buy a home in the Northeast and 9% in the Midwest. Forty-percent of first-time buy- ers are looking to buy an existing, while 19% prefer a newly-built home. The remaining 41% would purchase both options. While millennials are more likely to buy a home, it is Gen Z consumers who are most likely to be first- time buyers

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