MONEY Millennials

How Millennials Stalled the Housing Market Recovery

Wrecking ball hitting brick wall
Steve Bronstein—Getty Images

Millennials already have to deal with hefty debt from college, an iffy job market, and growing up in an era where MTV no longer plays music videos, but now they’re being blamed for holding back the real estate boom. Homebuilder adviser John Burns Consulting published details from a study earlier this month concluding that student loan payments will cost the housing industry 414,000 transactions this year that would have totaled $83 billion in sales.

Ouch. The ivory tower is crumbling at the foundation.

It’s been widely assumed that mounting student debt is eating away at this otherwise buoyant housing market recovery. John Burns Consulting’s study — boiled down to a free one-pager for those that aren’t paying customers that got the more thorough report — attempts to quantify the impact.

How did the adviser arrive at $83 billion? Well, we start with the 5.9 million households under the age of 40 that are paying at least $250 in student loan debt, nearly triple the 2.2 million leveraged college grads in the same predicament back in 2005. We then get to the assumption that $250 earmarked for student loan debt every month reduces the buying power of a potential homebuyer by $44,000. That’s bad, and it’s naturally worse depending on how much more than $250 a month some of these indebted students have taken on to pay back. That’s less money they can commit to a mortgage. John Burns Consulting offers up that most households paying at least $750 a month in student loan have priced themselves out of the housing market entirely.

It gets worse

The study only looked at folks between the ages of 20-40. That’s a pretty sizable lot, especially since 35% of all households in that age bracket have at least $250 a month in student debt. However, even John Burns Consulting concedes that there’s “a big chunk of households over age 40 who have student debt” as well. It’s not likely to be as bad, naturally, but it’s all incremental at this point.

This report also happens to come at a time when the housing industry is starting to flinch after a couple of years of boom and bounce. Right now everything seems great. New home sales data released this past week showed the industry’s highest monthly growth rate in more than six years. However, the near-term outlook is starting to get hazy.

Shares of KB Home KB HOME KBH 0.9834% shed more than 5% of their value on Wednesday after reporting uninspiring quarterly results. Revenue and earnings fell short of expectations, and the same can be said about its number of closings and order growth. Earlier this month it was luxury bellwether Toll Brothers TOLL BROTHERS TOL 0.1542% setting an uneasy tone after posting a year-over-year decline in the number of contracts it signed during the period and an uptick in the cancellation rate for existing home orders.

It gets better

The student debt crisis is real, and the skyrocketing costs of obtaining a postsecondary education naturally open up the debate of its necessity. However, it’s also important to remember that university grads are earning far more than those that don’t attend college.

Source: U.S. Department of Education, National Center for Education Statistics. (2014). The Condition of Education 2014 (NCES 2014-083), Annual Earnings of Young Adults.

The median of annual earnings for young adults in 2012 was $46,900 for those with a bachelor’s degree, $30,000 for those with just a high school degree or credential and $22,900 for those who did not complete high school. Those going on to grad school for advanced degrees — and that’s where student loans can really start to pile up — are at $59,600 a year.

In other words, most college grads, and especially grad school graduates, are typically better off than those that didn’t pursue higher education, even with the student loan albatross around their white-collared necks. The housing industry would be better off if colleges were cheaper or if student debt levels were lower, but the same can be said about purchasing power in general. At the end of the day, debt-saddled or not, the housing industry needs its college graduates.

MONEY

Former Federal Reserve Chair Ben Bernanke Can’t Refinance His Home

Even former central bankers can't get a loan

If you’ve failed to get a loan in this market, don’t feel too bad. Not even central bankers can catch a break–as Ben Bernanke, who chaired the Federal Reserve from 2006 through February of 2014, recently revealed that he has been unable to refinance his home.

“Just between the two of us, ” Bernanke told the moderator at a recent conference of the National Investment Center for Seniors Housing and Care, “I recently tried to refinance my mortgage and I was unsuccessful in doing so,” Bloomberg reports.

The audience laughed.

“I’m not making this up,” Bernanke insisted.

Bernanke also complained that stringent credit standards have made the process for first-time homebuyers excessively difficult, especially as economic conditions have improved. “The housing area is one area where regulation has not yet got it right,” Bernanke said. “I think the tightness of mortgage credit, lending is still probably excessive.”

As of press time, there is no word on whether current Federal Reserve Chair Janet Yellen has been denied for an auto loan.

[Bloomberg]

MONEY buying a home

How to Get Ready to Buy a Home

Checking your credit report and getting pre-approved for a mortgage are key, says Century 21 CEO Rick Davidson.

MONEY home improvement

5 Ways to Refresh Your Bathroom On a Budget

Since bathrooms are typically small spaces, even relatively simple and affordable changes can make a big impact. Here are 5 ways to update an old washroom without breaking the bank.

  • Pick a Pattern

    Capitol Hill by Hyde Evans Design.
    Hyde Evans Design. Courtesy of Porch.

    Hanging wallpaper can be an expensive undertaking. Not only is the paper costly, sometimes the walls need to be professionally prepped prior to application. To lower your costs, consider covering less space. Often you need pattern on only a single wall to achieve the look. Also, since wallpaper is typically sold in standard widths and by the roll, it’s possible to comparison shop numerous retailers for the best price. (Many suppliers can help you calculate how many rolls you need if you provide the wall dimensions.)

    Self-adhesive paper that is designed for high-moisture areas is best for the room, and easiest to apply.

    Pro tip: Really on a budget? Spread out the pattern and use a painted stencil or vinyl stickers that mimic a repeated pattern.

    Cost: Wallpaper starts around $30 per roll but can be as much as $300 (confirm with the retailer how many square feet each roll covers). Vinyl stickers run about $10 per sticker.

  • Frame Your Mirror

    Donald Drive by Rossington Architecture.
    Rossington Architecture. Courtesy of Porch.

    Every bathroom deserves a beautiful mirror. It will create a larger sense of space, and reflect light into the room, making it appear brighter. Yet often homes include builder-grade mirrors that are plain and lack a frame. You can upgrade such a mirror fairly easily by creating a frame around it to give it a custom look. Or take your existing frame and spray paint it for a pop of color.

    Pro tip: If your bathroom lacks space, consider replacing your existing mirror with a wall-mounted medicine cabinet.

    Cost: Use primed molding trim from the hardware store, which will be able to cut it to size. Trim is sold by the linear foot; expect to pay around $20 for an 8-foot long piece.

     

  • Add More Lighting

    City Glamour by NB Design Group, Inc.
    NB Design Group. Courtesy of Porch.

    A bathroom loses its functionality when it lacks quality lighting (and you lose your ability to gauge what you really look like). For the best results, you’ll want lighting overhead and on either side of the mirror. Make sure the fixtures are using the correct bulbs. If you choose to upgrade your fixtures, consider chandeliers and pendants, which can add elegance to a bathroom, particularly if your ceiling is tall. Just make sure any new fixtures are bathroom approved, and properly installed by an electrician who understands the correct UL listing for lights being installed in a wet zone.

    Pro tip: the best light for the bathroom is a cool, bright white or daylight bulb with a high color rendering index (CRI). This type of bulb will most accurately reflect natural daylight.

    Cost: Pendants and sconces can range from $50 to $500 and higher. Be sure to factor in the cost of hiring an electrician.

  • Freshen the Hardware

    East Hampton by Benco Construction.
    Benco Construction. Courtesy of Porch.

    Bathroom fixtures including hooks, handles, faucets and soap dispensers can be quickly and easily replaced and will give the space an updated feel. Most bathrooms look their best when all of the metals match in color and finish. Thus the sink faucet should generally coordinate with the shower and bathtub faucets; cabinet pulls, hooks, shelving brackets and towel racks also should have a similar style. What doesn’t need to perfectly coordinate: bathroom door knobs, which should generally match the door knobs of nearby rooms.

    Consider hanging new fixtures such as shallow shelving or towel racks or bars to make the space more functional.

    Pro tip: most fixtures are sold in coordinating families, which are ideal if you don’t have time to shop around or the desire to play interior designer.

    Cost: Expect to pay between $100 and $200 for a new sink faucet or a shower faucet. New cabinet pulls run from about $4 to $10 per item.

  • Brighten Your Surfaces

    Country Elegance by Walker Woodworking.
    Walker Woodworking. Courtesy of Porch.

    Time and limescale damage the glow of your sink, shower, toilet or tub. Return the items close to their original brightness by using an over-the-counter product to remove accumulated calcium or rust deposits from ceramic surfaces. Look for a cleaning solution, like this product from Lowe’s , that specifically targets calcium, lime and rust.

    If you are looking to replace the tile in your bathroom and consider yourself fairly handy, try adding a glass mosaic tile on a backsplash to create an accent.

    Pro tip: If elbow grease isn’t brightening your toilet, consider replacing the toilet with a newer model. If it was made before 1990, a new low-water use toilet may lower your water bill.

    Cost: A cleaning product to remove built-up calcium deposits runs about $10 per gallon. A new toilet starts at around $100.

    More from Porch:

    What You Need to Know Before Buying a Historic Home

    Insulation Projects: DIY or Hire A Professional?

    Anne Reagan is the editor-in-chief of home website Porch.com.

MONEY buying a home

Rupert Murdoch Wants to Sell You Your Next Home

News Corp. has acquired Move Inc., putting Murdoch's business in the thick of the online listings war.

UPDATE—3:28 P.M.

Home buyers take note, your next house could come courtesy of the Murdoch empire. On Tuesday, the Australian billionaire’s News Corp announced it was buying Move Inc., the real estate listings company that owns Move.com, Realtor.com, and other online listings websites, for $950 million.

While Move is hardly the market leader among listing websites—competitors Trulia and Zillow account for 71% of traffic to ComScore’s real estate category—it long claimed to be the most accurate. Thanks to an agreement with the National Association of Realtors, the company’s sites have partnerships with more than 800 multiple listings services, which provide real estate listing information as soon as a home comes on the market. Zillow and Trulia have previously been dinged for out-of-date information, and Zillow CEO Spencer Rascoff raised eyebrows when he appeared to suggest that fixing stale listings wasn’t one of the company’s top priorities. (Zillow has stressed that the CEO’s statement was taken out of context, and emphasized their constant effort to improve listings.)

But despite Move’s data advantage, and recent ad campaigns stressing its superior accuracy, taking on Trulia and Zillow has been an uphill battle. That battle became even more difficult in July, when Zillow purchased Trulia for $3.5 billion, creating an online real estate behemoth. News Corp’s entrance into the market may finally give Move the marketing muscle to fight back. News Corp. CEO Robert Thomson signalled the company’s dedication to Move’s business, stating that the acquisition would make “online real estate a powerful pillar of our portfolio.” He also indicated the company will strongly support Move’s brand. “We intend to use our media platforms and compelling content to turbo-charge traffic growth and create the most successful real estate website in the U.S.,” said Thomson.

A News Corp-powered Move might ultimately be a boon for homebuyers by reducing Zillow/Trulia’s hold on the online listings market. When Zillow’s purchase of Trulia was first announced, some worried the new company would have more leverage to charge real estate agents higher advertising fees, and that this charge might be passed on to the consumer. More robust competition may give agents more options for online advertising and reduce Zillow/Trulia’s bargaining power. However, other experts believe the News Corp. acquisition will have little real effect on consumers. Jonathan Miller, CEO of Miller Samuel Inc, told MONEY the Move acquisition is unlikely to be felt by your average house hunter.

“I think what you’re seeing is [the housing market] improve,” said Miller. “There’s more focus on the housing sector, there’s a lot of cross branding opportunities with News Corp. and their holdings with real estate, but I don’t see it having any real impact on transactions. I don’t think the consumer is going to see this.”

MONEY home improvement

This Simple Trick Makes Taking Out the Trash Easier

Taking out garbage
Corbis

You may be tempted to send your trash can to the curb if it isn't functioning well. But now that new bins often run more than $100, first try this trick to improve your current can's performance.

If you haven’t shopped for a new trash bin recently, you may not know that they’ve apparently gone high-end, with prices running as high as $150. Yet sometimes removing a trash bag from even a fancy garbage can feels like a wrestling match. It seems like the bag is stuck in the can. Turns out it’s not that you overstuffed the bag, or loaded it with brick—it’s air pressure. When a filled trash bag is in the garbage can, the sides of the bag create air pressure within the can, making it difficult to remove the bag.

Fortunately, a simple solution exists. Watch this video to learn the trick. I’m sure there are many other ways you’d rather spend $100 that don’t involve your trash.

 

 

More from Porch:

This Outlet Will Change The Way You Plug In

Open House Tips That Help You Sell Fast

 

Anne Reagan is the editor-in-chief of home website Porch.com.

MONEY home improvement

How $10,000 to $100,000 Transformed These Homes

These homeowners made every corner count with impressive top-to-bottom remodels. Here are the before-and-after photos, and the project's cost, favored by the editors' of This Old House magazine in their Search for America's Best Remodel Contest.

For the full gallery of all 20 homes, as well as additional photos of the projects shown here and more comments from the homeowners, click here for the original story at thisoldhouse.com.

MONEY buying a home

The Surprising Feature Millennials Insist on When Buying a Home

Century 21 CEO Richard Davidson explains what young, single home buyers value in a new house.

MONEY Ask the Expert

How To Stop Your Home Insurer From Cheating You

140605_AskExpert_illo
Robert A. Di Ieso, Jr.

Q: My friend had a tree fall on her house during a windstorm and told me she scored a huge insurance payout by using a public insurance adjuster. Would you explain how this works and if it’s worthwhile?

A: If you’ve ever made a home insurance claim, you’re already familiar with the standard operating procedure. The insurance company sends out an adjuster, who inspects the damage and comes up with the repair price that the company will pay to make things right. (You’ll first owe your deductible, of course.)

But that number isn’t written in stone. There’s often a negotiation over, say, whether the flooded air conditioning system gets repaired or replaced or the roof gets patched or completely redone. Also, the payout often grows as the work progresses and new costs are uncovered.

A “public” adjuster is a professional you can hire to help you through this process for a large (say, over $40,000) homeowner’s claim. “Maybe the insurance company wants to patch the spot where the vinyl siding got torn, but there’s no way to find an exact match for the siding, so you’d wind up with an obvious patch,” says David Barrack, of the National Association of Public Insurance Adjusters. “A public adjuster would push for complete siding replacement so the repair is invisible.” Similarly, public adjusters dig behind leaks, he says, for evidence of rot, soggy insulation and mold that some insurance company adjusters might not pursue when writing up a claim.

In short, a public adjuster seeks to maximize your claim.

But there’s a downside. Since the public adjuster is working for you, the cost is born by you—typically 10 percent of the claim total. Giving up $10,000 on a $100,000 claim takes a pretty big bite out of your project budget. So unless you simply don’t have the time—or you’re finding your insurer to be highly unreasonable about your claim—it’s usually a better financial move to handle the back-and-forth yourself. “You don’t need to know anything about home construction or materials pricing,” says Jeanne Salvatore, of the Insurance Information Institute. “Your contractor is an expert who’s already on site, working for you, and he certainly knows what needs to be done and how much it’s going to cost.”

 

Got a question for Josh? We’d love to hear it. Please send submissions to realestate@moneymail.com.

MONEY home improvement

Transform Your Closet For as Little as $150

organized closet
Jules Frazier—Getty Images

There's a good chance your closet has plenty of space- for improvement. Fortunately, a revamp may not cost as much as you think.

Walk through a big box home store these days and you’ll probably feel a tinge of closet envy. Right next to the gorgeous kitchens and bathroom models today you’ll likely encounter display closets showcasing numerous arrays of shelves, drawers and rods, not to mention hangers, baskets, bins and other gizmos to keep shelves tidy and shoes organized. Every sweater and pair of pumps can be retrieved within seconds in these modern closets.

So what is your best option to bring your closet up to par? Should you buy the materials and create a more functional space yourself, or hire one of the many professionals now available to tackle the job for you?

Take a look at these complete closet projects to get inspiration as well a sense of costs. Then consider these factors.

Do-It-Yourself

Best for: If you have a level, a cordless drill, and a tape measure, most homeowners with basic skills can handle a small closet remodel project. Buying a pre-made DIY closet system, which can include rods, shelves and drawers, from a home retailer is the simplest option. You’d be surprised at how much more you can fit into a typical five by two feet space by simply, say, putting in dual rods and adding another shelf. Updating your closet doors with a fresh coat of paint or new doors can also be a fairly easy task.

Cost: Taking on the project yourself means you can escape paying labor costs, which can total as much as the parts. When estimating your DIY cost factor in all of the materials, furniture and customized items, as well as any tools or equipment, you may need to complete the work.

You’ll pay anywhere from $150 for a basic set-up including a rod and adjustable metal shelving to more than $1000 for a space with customized features, like vinyl-coated wire systems or wood veneers and painted finishes. Organizing kits including drawer cubbies and shoe dividers can be found for around $350 and higher. Want new bifold doors? Standard models cost anywhere from $45 to $300.

Hire a Pro

Best for: Let the professional closet remodelers handle your project if you aren’t sure whether, say, a walk-in or drop closet is best for the room, or you want to customize your storage space for your tie or shoe collection. A pro should also be brought in if you are looking at moving or adding walls or installing electrical systems. A contractor can address permits, lighting, and ventilation needs, a few things you may overlook when doing it yourself. For example, if your remodel involves altering your structure, or adding electrical or plumbing for a washer and dryer, you may need to obtain a permit before the work begins. A professional closet remodeler or contractor familiar with the permit process can handle it for you. The pro may also be able to suggest ways to make the most of the existing space without having to do major construction, thereby saving you time and money.

Bonus: the contractor or designer can work with you to set a schedule that adjusts around your personal life, and can complete the project in less time than if you attempt to squeeze in an hour here and there on nights and weekends.

Cost: Professional closet remodelers usually charge per project but some charge an hourly rate, typically between $50 and $150 an hour, depending on the job and the pro. You may find that some designers require a deposit, which is generally a percentage of the project.

The total tab for a larger space, such as a walk-in closet, can run between $1,200 to $3,000 or more for both materials and labor. This may not include any structural work such as moving walls, adding lighting or installing new doors. Ask several contractors for in-home estimates. And make a trip to Salvation Army or Goodwill- with anything you or your spouse hasn’t donned in the last year or two- before the overhaul begins. One thing all model closets seem to have in common is few items.

 

More from Porch:

6 Ways To Keep Your Closet Remodel Within Budget

What You Need To Know Before Buying A Historic Home

 

Anne Reagan is the editor-in-chief of home improvement website Porch.com.

 

 

 

 

 

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