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Tag: home buying

To buy or to upgrade?

A competitive housing market and aging homes mean many homeowners in Denver are tackling long-planned renovations.

According to the National Association of Homebuilders, the median age of owner occupied homes is 39 years in Colorado–and some much older than that. Aging homes mean many homeowners either want to bring their homes up to date, or they need to replace well-worn parts of their homes. And they’re taking remodeling into their own hands to make their home fit their lifestyle.

Bank of America’s Homebuyer Insights Report: Home Improvement and Equity Spotlight found 65% of younger homeowners (ages 18 to 43) and 60% of Gen X homeowners (ages 44 to 56) are likely to renovate this year, compared to 22% of older homeowners (ages 57 to 75).

Making home improvements can simultaneously help you build equity while enhancing your everyday life. In fact, twice as many respondents say they’re approaching home improvements as a means of greater enjoyment in their living space (67%) compared to those seeking to increase their home’s value (33%).

Bringing your home up to date can create a place your family can enjoy for generations to come and help build a legacy and long-term wealth.

In Denver, we’ve seen an uptick in cash-out refinance and home equity line of credit (HELOC) requests as homeowners look to tap into the equity in their homes to fund improvements to their existing homes.

According to Bank of America’s latest report, sustainability is especially important to younger generations when it comes to popular renovations. Half of younger generations want to add solar panels (51%) and energy-efficient appliances (48%) as well as use sustainable or recycled materials (43%).

And while we see so many design ideas we’d like to try, we don’t get much information when it comes to paying for all these fun changes. You might think your only options are to save for a project or rack up debt for that emergency repair, but you have a number of options to turn your dreams into a reality.

Savings

The first option that comes to mind for most homeowners is to pay for a renovation with savings. In fact, 62% of homeowners say they plan to pay for the work by using money they have saved. While this can be an effective way to finance some smaller projects, it might not be feasible for homeowners who are doing big projects such as a complete kitchen makeover. Pairing savings with other financing options can give you the funds you need to accomplish your goals.

Home Equity Line of Credit (HELOC)

One of the most valuable benefits of homeownership is the ability to borrow against the equity you build up in your home over time. With rising home prices, homeowners are accumulating wealth at a faster rate and a home equity line of credit lets you borrow against the available equity in your home up to your credit limit. You’ll then have the flexibility of a revolving credit line that can be accessed as needed.

Cash-Out Refinance

A cash-out refinance replaces your existing mortgage with a new, larger loan that includes a new interest rate and term. Pocketing the difference between your old mortgage and the new loan can provide you with funds to make home improvements.

Credit Cards

If you’re making minor updates to your home, such as repainting a wall, installing new lighting, or even purchasing appliances, using your credit card can be an effective financing option. However, for more involved projects, credit cards carry high interest rates, so you’ll want to avoid carrying a balance.

No matter how long you’ve lived in your home, the idea of customizing your space to fit your lifestyle can be both exciting and daunting. The excitement of a more functional kitchen or the satisfaction of refinished floors is too often overshadowed by the intimidating questions around money.

For big home renovation projects, doing a little homework and planning before diving in is essential.

Learn how to put a home equity line of credit to work for you with tips from Better Money Habits or by speaking to a lending specialist.

Brandon Blankenship is the Vice President, Enterprise Retail Sales Manager for Bank of America in Colorado.

Millennial first-time homebuyers are changing real estate

Over the last ten years, there has been a definitive shift in the real estate market driven largely by the millennial generation.

This consumer segment, often defined by their “access over ownership” mentality, has different priorities and spending habits than previous generations.
Millennials are now entering peak homebuying years, leaning into commitment and revolutionizing the home buying experience along the way.

Until 2015, millennials accounted for a small portion of all homeowners. Earlier this year, millennials were forecasted to make up over 51% of home buyers nationally, outnumbering the total share of homes purchased by Gen X (32%) and Baby Boomers (17%). Many were speculating the COVID 19 pandemic would derail Millennial home buying plans, however results from a recent survey indicate the COVID 19 pandemic has actually accelerated their home buying timeline.

Millennials’ early hesitation towards homeownership and subsequent pivot has been attributed to student debt, lower incomes and lack of affordability.

So HOW are millennials changing real estate?

A Tech-First Approach

As early-adopters, millennials are tech natives and crave instant information and communication. It is no surprise that the generation that invented “swipe right” has embraced tech in the homebuying process.

According to a recent NAR Home Buyer and Seller Generational Trends Report, 98% of older millennials searched online during their home search highlighting the increasing importance of tech in the current real estate market. Other reports also indicate that millennials are spending more time researching properties online, looking at images and listing videos, and are being more discerning in the homes they decide to tour in person.

Responding to this trend, brokerages are creating digital platforms and experiences for homebuyers to search for their next property. Companies such as Homie offers a home search experience in a real estate app and website, empowering home buyers to search, view, schedule tours and, when the time is right, connect to a dedicated local agent to access one-on-one, personalized support.

It’s all about lifestyle A recent report from Zillow highlights that an increasing number of millennials are buying in the suburbs rather than in big cities or more rural areas. They’re seeking an urban lifestyle with proximity to culturally-fulfilling town centers, restaurants, nightlife, and easy access to a variety of transportation options.

While proximity to a metro area and space are important to millennials, so is the desire to find a home that is conducive to their physical and mental well-being. Eco-friendly materials, areas to workout and meditate, and open-plan living spaces to entertain friends at home represent an extension of their lifestyle and values and often appear on millennials’ home buying “wish lists”.

The COVID-19 pandemic has had a significant impact on the idea of “home.” For many millennials, their home has become the office, gym and school. With millennials working remotely for the first time—and for the foreseeable future—finding a comfortable home is vital.

They Value Transparency

Having spent their formative years living through major world events such as the rise of WikiLeaks, environmental destruction, and questionable political transparency, millennials are inherently (and understandably) skeptical about the world around them. Studies show that as a consumer group they’re more likely than previous generations to research exhaustively before committing to large purchases, and value transparency and social impact when establishing loyalty to brands.

Fraught with what many could argue are deceiving practices and commission structures, it is no wonder millennials are now taking issue with many aspects of the real estate industry as they shift—en masse—from renting to homeownership.

A recent survey of 1,000 millennial Americans found that 42% believed it was free to use a buyer’s agent when purchasing a home and several studies indicate many millennials don’t realize that commissions are negotiable. As these realizations filter through to the new generation of home buyers, it is becoming increasingly evident that delivering on transparency is a key factor in winning the trust of the millennial real estate client.

They’re buying without a 20% down payment

For a generation already affected by record-high student loans and rising costs of living, the “ideal” down payment of 20% is increasingly unattainable. Reports show that Millennials are entering into homeownership with significantly lower down payments. The 2020 Home Buyers and Sellers Generational Trends Report shows that the median down payment for younger millennials is currently 8%.

The ever-informed millennial segment is finding ways to enter the housing game without a significant amount of cash to put down. While previous generations were weary of buying a home without a 20% deposit, savvy millennials are utilizing various tactics to ensure they are not financially disadvantaged long-term including leveraging the success of the real estate market to bring their home loans into a better loan-to-value ratio to reduce their PMI and working with mortgage brokers that guarantee they’ll beat a competitor’s locked-in estimate. Information is crucial to getting the best deal and millennials know where to find it.

Millennials are making moves, and reshaping the housing market in new and interesting ways. Many companies with a stake in the real estate ecosystem are pivoting, realizing they may miss out on the purchasing power of an entire generation if they fail to adapt. The good news for all generations is that this “millennial revolution” is reshaping the real estate industry in a positive way, and it is evolving into a more consumer centric model than ever before.

Img 3949[2] Melissa Millan is a millennial and the General Manager of Homie Colorado, a real estate company changing the way real estate is bought and sold by eliminating high fees and commissions. To learn more, visit www.homie.com/Colorado.