Millennials Have Regrets

We might be seeing some whipsaw effect with today’s buyers being overly cautious. Either that, or we’ve ran out of the buyers who jump in too fast or too high, and just the deliberate ones are left:

Millennials aren’t exactly jumping for joy after purchasing their homes.

About four in 10 millennials are already homeowners, according to a new survey of over 600 millennials (age 21-34) by Bank of the West.

Yet it turns out that 68 percent of them are feeling buyer’s remorse — almost double the amount of Baby Boomers who say they have regrets.

“Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face,” says Ryan Bailey, head of Bank of the West’s retail banking.

Here are the biggest areas of remorse.

Overspending on the down payment

Roughly four in 10 millennials felt they made poor financial choices when it came to purchasing their home. Part of the problem seems to revolve around the down payment. The survey found one in three millennials dipped into their retirement accounts to pay for their homes — a trend Bailey calls “alarming.”

“Borrowing from your retirement may make sense in special circumstances, but it’s definitely not a recommendation,” Bailey tells CNBC Make It.

To keep from getting squeezed, think about what you can afford as a monthly payment, and don’t forget to include taxes and insurance in your calculations, Danielle Hale, chief economist for Realtor.com, tells CNBC Make It.

Use filters on home search sites and price alerts to make sure you’re not shopping for a home above your budget. “Don’t fall in love with something that’s already out of your price range,” Hale says.

Underestimating ongoing costs

When you buy a home, the expenses don’t stop once you move in.

Millennials understand basic costs, such heating and electric bills, but Bailey recommends also considering how much time and money it could take to mow the lawn, clean the house or deal with leaky faucet.

“When you’re a homeowner, you can’t call your landlord to fix things, so you want to make sure you have a little extra cash in the bank,” Hale says.

It’s a big transition going from renter to homeowner, so make sure to take some time to learn about the maintenance costs associated with potential homes.

Settling for something that’s not quite right

Finding the right fit is as important as having the right budget when it comes to home ownership. The survey found that about half of millennials had regrets about the home itself.

One in five said they were frustrated by damages they found after moving in, while others said they discovered the house didn’t end up working well for their family.

To avoid unexpected expenses, experts recommend getting a home inspection before finalizing the sale. “Especially if you’re a first-time buyer or new to home ownership, you may not even know what to look for, so you definitely want to have the expert on your side,” Hale says.

It can also help to nail down what you really need in a home. Make a list of your must-haves before you start looking and know what you’re willing to compromise on, Hale says. It’s currently a very competitive market, so chances are, you’re going to have to make compromises.

In fact, about two-thirds of home buyers reported compromising on some sort of home characteristic, according to a survey from the National Association of Realtors.

“The more targeted your search is,” Hale says, “the more chance you won’t waste your time or get distracted by homes that ultimately aren’t a good fit for you.” Follow this advice, and you can avoid purchasing a home that you regret.


Jonathan Butler

Hat tip to Peter who alerted me to this show featuring Jonathan Butler! Spend an evening under the stars listening to smooth jazz and doing a little something for the music department in Oceanside:


Boomer Liquidations 2

Rob Dawg is skeptical (as I have become) that boomers will be fleeing their long-time residences any time soon:

Reader Ty Webb isn’t so sure though:

For the most part, boomers own the houses, so besides the usual Big 3 reasons for selling (death, divorce, and job transfer), the boomers will be making the real estate market for the foreseeable future.  If boomers don’t sell, the inventory will remain tight.

I’ll lay off the incessant boomer drivel here after this – for at least a few days!  But first, here are excerpts from a post written by people who have real estate licenses, but I’m not sure that’s enough to be so confident about the boomer direction – so take this with a grain of salt:


Retirees move real estate

At about the age of 65, most Californians stop working full time and begin capitalizing on the benefits of social security, Medicare and their years of saving. The decision to retire is often swiftly followed by a series of lifestyle changes as retirees take advantage of their newly-increased liberty and accumulated financial power.

One of the most significant changes is the sale of the retiree’s current home and the corresponding move to a new, more compact and centralized residence with a better year-round climate or in closer proximity to family. As California’s population continues to age, senior citizens will exert increasing influence over both the housing market and every other aspect of the California economy.

Over the past twenty years, retirees have exerted minimal influence in real estate transactions, as the age group of citizens over 65 was comparatively small. The generations born between 1915 and 1935 – during the Great Depression and World War II – did not have the numbers necessary to remold the housing market in their own image. That is about to change dramatically, as the above population chart demonstrates.

The shadow inventory of retiree homes for sale will thus manifest itself sooner rather than later. Those homes will be key factors in the elimination of the current rigor mortis in the housing industry. Retirees generally want to sell and relocate, and most will buy new SFRs; likely more than 70% will acquire a smaller (though not necessarily less expensive) residence than the one they have left.

Historical trends in Boomer conduct will also prove true now as retirees sell their current homes, looking to find replacement properties and live freer lives. The first Boomers to retire, those on the cusp of the population boom, have somewhat higher average earnings and savings than those who will follow. Consequently, the retirees of 2008-2018 will have the most money to spend, and will often have a second or third home to live in or sell.

Those retiring after 2018 will (generally) have somewhat less money, and thus less purchasing power upon their retirement. Those who retire later will also have a greater disadvantage due to the competition from other retirees in their generation. The homes they sell will fetch lower prices, the urban condos and retirement-community dwellings will be full before they arrive and prices will be rising.

The price reduction of large suburban SFRs caused by Boomer home sales will be further aggravated by a corresponding rise in the values of the more desirable replacement homes in near urban centers. While we cannot predict with certainty which properties will be involved or just where they will be, historical and current trends give us some hints.

Homeownership is a well-entrenched habit among the Boomer generation; a fact not likely to change because of increased age. However, this does not mean retirees remain stationary.

Sooner or later they decide to move to a new location that has a better climate or is closer to other family members. With their collective savings and equity, most will have the resources to do so with ease.

Retirees have traditionally moved to smaller, more conveniently-located properties that are closer to urban centers. The U.S. Census Bureau reported in 2014 that approximately 12% of the population in California’s metropolitan areas is 65 or older.

To complicate Boomer relocation, the younger generation is better educated and more mobile, migrating with increasing frequency to the cities. Their parents are likely to follow. They will be attracted by the increased access to public transportation, the proximity to cultural and artistic institutions and (not least important) the closeness of their children and grandchildren.

Read full article here:

Link to Article

Bubbleinfo 2018

I did send yesterday’s blog post to a few Compass executives about my suggestion that we could use an educational advertising campaign to counter the lies and deceit being put forth by the scumbags.

Nobody said to shut down that stinking blog, so I think it’s all good here.

There will be improvements in our real estate service behind the scenes, but the blog will remain the same.

Do you have any content or ideas you’d like to see covered here?

I monitor the market closely and have been making more comments on twitter than I do here about current conditions.  You can follow the twitter account here, and I’ll make a point to create blog posts too:

Boomer Liquidations

It’s just a matter of whether it will be a trickle or a flood:

The preference for baby boomers to age in place has been blamed in part for lower homeownership rates among millennials, who have been forced to compete for a smaller slice of available properties on the market. But now experts warn that even just a slight change in older homeowners’ attitudes could lead to a mass sell-off that would flood certain markets.

Focusing solely on the Washington, D.C. metropolitan area, researchers at George Mason University’s Stephen S. Fuller Institute point to the significant amount of empty-nesters living in properties that might be too large for their current needs. Using Census Bureau data, the team looked at the proportion of homeowners with “extra bedrooms” around the nation’s capital, defined as the number of bedrooms in excess of people who live at each property.

Even under the researchers’ “conservative” classifications — in which a married couple in a home with three bedrooms would be considered to have one extra, despite the likelihood that two of the three were unused — the results were striking. More than a quarter of all homeowners between 2014 and 2016 were in properties that had two extra bedrooms, which works out to more than 270,000 households with at least one resident aged 50 or older.

Though the George Mason team acknowledges that older Americans in the baby boom generation typically prefer to stay put in retirement instead of downsizing, they note that it wouldn’t take much of a mindset adjustment for the cohort to create a seismic effect in certain markets.

“The significant number of older homeowners in larger homes means that even a modest shift in preferences could have an outsized impact on the housing market,” the team wrote in their report, released earlier this month. “If even three percent of homeowners aged 50+ with two or more extra bedrooms decided to sell, an additional 8,210 homes would be put on the market — the equivalent of 12.4% of all the homes sold in the Near-In Washington region in 2017.”

That works out to a 5% to 10% increase in the available homes for sale in that particular area, which includes the District itself and surrounding suburban counties in Maryland and Virginia — an effect that could potentially depress home values.

Still, the researchers note that in the hot Washington, D.C. market, there’s a significant pool of eager buyers: George Mason found nearly 70,000 rental households where the head resident was younger than 50 and took in at least $150,000 per year, along with a significant crop of homeowners with no extra bedrooms who may be looking to expand into bigger properties.

“As a result, the near-term housing market has the potential to be more dynamic than in past years,” the team concludes. “Some longtime owners who wish to sell may have difficulty attaining the price gains they witnessed in their neighborhoods during recent years, when inventory was limited — especially if their neighborhood has a large number of longtime owners who put their homes on the market at once.”

Link to Article

Compass, Day One

The discussion about affiliating with Compass included trying to predict the future of the market, and realtors in general.

Historically, there has been a lack of widespread advertising because the realtor business was mostly mom-and-pop operations.  But now that big money is here, the advertising has grown.  Zillow has nailed it with their heart-felt messaging, which is appreciated by all.

But Purplebricks is running ads like this, and I think they are starting to have a negative impact on the industry in general:

Unfortunately we don’t have a truth meter or quality checker in this country, so people can say whatever they want, no matter how harmful to the consumer.

The problems with this series of commercials – they try to make you think:

  1. All realtors are the same.
  2. All houses sell for the same price, regardless of agent.
  3. You should shop for an agent based on cost.

These lies have been around for years, but this is the first time we’ve seen millions of dollars spent on TV ads to spread them.

I doubt they are going to make many consumers go to Purplebricks and pay up front for service (which is not mentioned in ad), but the damage to the consumer’s subconscious mind is being done.

The truth:

  1. Realtors, and the services they provide, are all different.
  2. The sales price of a house depends on who is selling it.
  3. Consumers should investigate what they are getting for the money.

I’m hoping that Compass will assist us with spreading the truth about selling homes.  Klinge Realty having a bigger corporate presence is a start, but some institutional advertising to re-affirm the truth would be helpful too.  I haven’t seen any Compass TV ads yet, but an educational advertising campaign would be very helpful for us, and the industry.


Two things I found impressive in my first day at Compass:

  1. Compass has recruited 168 top San Diego agents since opening in January.
  2. The Compass CEO, Robert Reffkin, called me to welcome us aboard.

Selling homes is an individual sport, so I know that the benefits of being with Compass will be determined by what I do with them.  Stay tuned!

Klinge Realty Powered By Compass

When I first started selling homes, most brokerages were mom & pop offices on the local corner.  Man, how times have changed.

Now, venture capital is flooding the industry, and some outsiders flush with cash are trying to convince you that cheaper is better – without describing the services provided, other than to call it ‘full service’, making it sound sufficient.

Consumers deserve a legitimate full-service option.

They deserve the option to choose a company who hires full-service agents and then supports them with modern, high-tech resources to deliver an unparalleled consumer experience.

Compass is committed to full-service realtors – and is working with $800 million in venture capital to build the team, and provide the high-tech support.

Starting today, we are affiliating with Compass to improve our services and build our presence using their agent resources.

I did not sell my company to Compass; instead we are a branch office with our same address, phone numbers, blog, etc.

The reasons:

  1. The Compass resources will help us expand and better define our services.
  2. Having a luxury brand name will help me attract new clients who are unfamiliar with us.
  3. We want to grow as a team, and being affiliated with Compass will help us attract better people.
  4. With Kayla moving to NYC, I’m hoping that the marketing support from Compass will help bridge the gap.
  5. I want plenty of distance between me and the discounters – not sure I’ll get that without a bigger and better corporate presence backed with VC.

Compass is backed by Goldman Sachs, SoftBank and others, and is hiring full-service realtors and brokerages throughout the country.  The goal is to have 20% market share in the top 20 cities by 2020.

My ultimate goal has always been to create a full-service brokerage that the kids can take over.  Teaming up with Compass looks like the best way to improve our brand and build a practice for the future!

Kayla Is Moving to NYC!

Kayla has dreamed of moving to New York City for years, and has friends who have moved there already.  In our annual Christmas letter last year, she told everyone that she planned to move to Manhattan in 2018 – and she’s doing it!

She has amassed five solid years of experience here, and is ready for a new challenge.  She passed her New York real estate license test this week, and will be joining a successful realtor team in Manhattan next month.

While it will be devastating to not be around her every day to enjoy her sass and wit, we will carry on with our own adventures here, and enjoy watching from afar – and taking an occasional trip there ourselves.

I am incredibly proud of you Kayla, and love that you have the guts to pursue your dreams.  It is a big step, but I know you can handle it!

Donna said it best:

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