April 2016 - Tech Revolution

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56 | 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 A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST Millennial Buyers Fleeing to the 'Burbs Flying in the face of conventional wisdom, the cohort is ditching its big-city lifestyle and settling in the suburbs. B ucking popular beliefs, the millennial gen- eration will eventually want to transition from its fast-paced, renter lifestyle into a single-family home with a mortgage, but the real surprise is where these young homebuyers are choosing to set down roots. Millennial homebuyers are growing in numbers, and more of them are purchasing single-family homes outside of urban areas in the suburbs. The 2016 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends study of 94,971 recent homebuyers, which evaluates the generational differ- ences of recent homebuyers and sellers from June 2014 to June 2015, found that the share of millenni- als buying in an urban or central city area fell to 17 percent from 21 percent a year ago in this year's survey, while only 10 percent purchased a multifamily home compared to 15 percent a year ago. The largest group of recent buy- ers was millennials (35 percent) for the third consecutive year—more than the combined amount of younger and older boomers (31 per- cent), the survey data found. The median income of millennial homebuyers was $77,400, and they typically bought a 1,720-square-foot home costing $187,400. Overall, the majority of buyers in all generations prefer to buy a home in a suburban area and younger buyers tend to favor older homes, the report said. So while urban areas may fit millennial needs as renters, they do not remain in city centers when they are ready to buy a home, according to Lawrence Yun, NAR Chief Economist. "The median age of a millen - nial homebuyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family," Yun said. "Even if an urban setting is where they'd like to buy their first home, the need for more space at an af - fordable price is for the most part pushing their search further out." Yun continued, "Furthermore, limited inventory in millennials' price range, minimal entry-level condo construction, and afford - ability pressures make buying in the city extremely difficult for most young households." Millennials are known for their tech-savvy lifestyles, but nearly all buyers predominantly used the Internet and a real estate agent while looking for a home. The study found that 87 percent of millennials and Gen-X buyers used an agent and were also the most likely to use mobile or tablet applications and mobile or tablet search engines during their search. "Supply shortages, strong com - petition, and rising home prices in today's market can make buying a home very stressful," said NAR President Tom Salomone, broker- owner of Real Estate II, Inc., in Coral Springs, Florida. "While the Internet is the initial go-to destination to search for avail - able listings, consumers want the expertise and insights of a Realtor to help them find the right home within their budget." Construction Dollars Rising With demand tracking but supply lacking, spending is at its highest rate since 2007. C onstruction dollars continue to gain trac- tion in the midst of an inventory-deprived housing market. Could the shortage of housing options be coming to an end? Spending in the construction sector rose to $1,140.8 billion in January 2016, up 10.4 percent from the January 2015 estimate of $1,033.3 billion and the high - est since October 2007, the U.S. Census Bureau of the Department of Commerce reported. Month- over-month, construction spending in January increased 1.5 percent from December's estimate of $1,123.5 billion. Private construction spending reached $831.4 billion in January, 0.5 percent above the revised December estimate of $827.3 bil - lion, the Bureau said. Residential construction came in at $433.2 billion in January, almost the same as December's estimate of $433.1 billion, while nonresiden - tial construction rose 1 percent from $394.2 billion in December to $398.2 billion in January. Recent reports have shown that increasing demand and low inventory levels are fueling home prices and are likely the driving factor of the uptick in construc - tion spending. "The steady increase in residen- tial starts in 2015 has produced a steady increase in the number of homes under construction, al- though carrying them through to completion slowed a bit as labor shortages, especially finishing car- penters, slow the ability to get fin- ishing touches done," said David Crowe, National Association of Home Builders Chief Economist and SVP. Chief Economist Jonathan Smoke noted that the housing industry needs stronger growth in construction and that the picture will only worsen if this negative trend continues. "At our current pace of activity and taking into account loss of housing stock due to disaster and dilapidation, we're building new units at less than half the pace at which we are forming house - holds," Smoke said. The housing shortage only worsens if this remains the picture. Tight supply of homes for sale and low vacan - cies will continue to be the norm and, along with that, higher rents and prices."

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