Big Cities vs. Secondary Markets: Where to Buy?

Big Cities vs. Secondary Markets Where to BuyAtlanta, Charlotte, New York and Los Angeles are always on the real estate radar because of big ticket sales and good media coverage. The secondary markets – those markets without the celebrity undertones – may actually be better deals. With the price of borrowing money rising and occupation rates dropping in primary markets, places like Nashville and Birmingham are looking better to investors.

Where Are the Secondary Markets?

A secondary market is generally defined as a mid size or large city that has recorded an uptick in growth in the immediate past. They do not have quite the economic clout or media presence of a primary market, although they may rival each other in terms of population.

Generally, the influx of new attention for a secondary market will be from young professionals. These are people who are upwardly mobile and seeking new forms of skilled employment. This is what has driven the markets of cities like San Antonio, San Jose, San Diego, Phoenix and Philadelphia to new heights in recent years.

What Do Experts Think?

Experts believe that primary markets have topped out for the time being. With occupancy rates dropping from highs in the lower 90 percentiles, primary markets are just too saturated for their own good. Landlords in these areas are more unwilling to lower rents in these areas, because there are usually more high income earners established there who want to stay in the area to keep a legacy job or maintain a family.

Rising real estate prices and interest rates also put the primary housing market out of the reach of many outsiders. Researchers have found that doing real estate business in a secondary market can provide an investor with a 16% premium. The cost of real estate itself is around 38% lower. So are the costs of maintaining a property (energy costs 22% lower; labor costs 14% lower).

The New Primary Markets?

With respect to income, secondary market housing prices are up to 45% more affordable. Individuals notice this, and so do commercial investors and developers. This is why the mad rush to cities like Phoenix and San Diego will be red hot for the next few years, say investors, even in relation to established cities like Los Angeles and New York.

No matter where you are looking to purchase your new home, it is essential that you rely on your trusted mortgage professional to explore your financing options. Finding out how much you can afford can be a key element in deciding which market could be the best fit for you.

5 Trends Shaping Green Homes

5 Trends Shaping Green HomesThink green home design is a fad? Well, think again. Sustainable home designs are gaining popularity at a breakneck speed. In 2017, green homes accounted for more than 60 percent of family home builder’s portfolios, according to a survey conducted by the National Association of Home Builders.

But what is really driving green home designs? In this post, we explore five trends shaping sustainable homes.

1. Energy Efficiency 

Home designs that cater to consumers’ need to reduce utility bills continue taking center stage. From net-zero energy homes to energy conserving products, home buyers want to save money. Moving forward, industry experts predict that ultra-efficient building designs like net-zero-energy or passive home designs will continue dominating the industry.

2. Health 

Most home buyers are more aware of the dangers of chemicals than before. As such, most of them are seeking non-toxic interior products. The manufacturing industry trend is leaning towards healthier materials. As the demand rises and prices stabilize, these products are more likely to be game changers. Most home designs will probably focus on eliminating troublesome chemicals such as VOC paints and phthalate free flooring.

3. Home Performance And Monitoring 

Home energy audits are major factors considered by consumers, and home performance is key. Some cities like Austin expect new homes to undergo performance tests before recommendation for resale.

Energy software programs allow home builders and remodelers to monitor how slight changes in home designs can save thousands of dollars in utility bills. Homeowners are also benefiting from energy monitoring devices to track their household energy consumption.

4. Water Efficiency 

80 percent of American states anticipate water shortages in a few years, says a Government Accountability Office survey. Therefore, wise water usage is becoming crucial as consumers demand for water efficient homes. Most builders are already getting their homes HERS Rated as consumers look for ways to save dollars from rising water prices.

5. Biophilic Home Designs 

Nature is beneficial to us biologically, physically and psychologically. However, in the last century, home designs separated us from nature. Today, biophilic designs (connected to nature) strive to reverse that by integrating nature into homes. Modern building can capture the sun’s movement using windows, architectural details and patterns, connecting us to the season, time of day and our inner biorhythms.

If you are in the market for a green home, be sure to contact your trusted mortgage professional for a financing pre-approval!

3 Millennial Home-Buying Trends Sellers Should Know

3 Millennial Home-Buying Trends Sellers Should KnowAfter five consecutive years of Millennials outpacing all other home-buying demographics, sellers would be wise to wrap their thinking around what makes this generation tick.

According to a 2018 Home Buyer and Seller Generational Trends research study, Millennials purchased more than one-third of all homes in 2017. With home purchases totaling approximately 36 percent of the market in 2018, this class of buyer has increased its market share from 34 percent in 2017.

Taken as a whole, the previously formidable Baby Boomers ranging from 52-70 years old enjoyed only a 32-percent market share. GenXers declined from 28 percent in 2017 to 26 percent in 2018.

With the relatively young Millennials still not fully engaged in the real estate market, expectations are that this group could set the tone for decades.

Millennials Have Improved Buying Power

If you accept the Pew Research Centre definition of Millennials, then they were born between 1981 and 1996. That means the entire population is currently at or past the age of college graduation.

Other research indicates that they enjoy an average annual income that has trended up from $82,000 in 2017 to $88,000 in 2018. That means their overall income outran the estimated inflation rate of about 2.1 percent. Not every group can boast that claim.

With the older end of the group now over 30 years old and the younger swath advancing into careers, sellers may want to plan for spare-no-expense Millennial buyers. The average home they purchased in 2017 was $205,000. In 2018, the average rose to $220,000. They apparently are not shy about spending more on a house they like.

Single Millennial Women Are Buying More Homes

Young single females are making a run at home-buying supremacy. According to recent data, single women purchased approximately 18 percent of all homes in 2017. The figure is more than double that of single males, although married couples remain in the top spot.

The average age of single female buyers stands at 28 years old, and their home loans exceeded $175,000. Appraised values reportedly topped $210,000. Sellers may want to consider a more single female-oriented aesthetic moving forward.

Millennials Willing To Pay For More Space

There are two telling reasons why many Millennials are inclined to bypass traditional starter homes and pay for larger ones.

The first reason goes to the age of the older Millennials. At about 36 years old, they entered into adulthood during a painful economic period. High unemployment and a sluggish economy persuaded older Millennials to either wait or hunker down in a small starter home. That group now has equity in the property or money in the bank. With a hot economy and rising wages, larger homes make affordable sense.

Younger Millennials, by contrast, are entering the workforce during a full-blown economic revival. Jobs are plentiful, and employers are competing with wages to secure workers. The robust economic landscape allows many young professionals to afford larger homes. With that in mind, sellers may want to upgrade outdoor patios and consider taking down a wall or two to create an open floor plan.

If you are a homeowner interested in listing a property, speak with a real estate professional about what Millennials in your area want in a home. Millennial home buyers are changing the industry. If you are a Millennial in the market for a property, be sure to contact us for a pre-approval!