MONEY First-Time Dad

What Millennials Want That Their Boomer Parents Hate

Luke Tepper
Luke looks around for the inflation that has yet to come Taylor Tepper

It is nine letters long, (not legal weed), and causes investors' blood to boil.

Inflation. We really want some inflation. Now, if possible.

Macroeconomic forces are not top of my mind all the time. A couple of weekends ago, for instance, my wife and I played poker and drank beer on our friend’s rooftop patio. Our son Luke, clad in his new miniature gondolier outfit, crawled between our legs as one person after another told us how cute he was. That night Luke held onto one of my fingers while I gave him his midnight feeding. Later my wife and I slipped into his room for a few moments to watch him sleep.

I can tell you that at no point during our perfect summer day did the word inflation pop into our heads. We went to sleep thinking just how lucky we were to have such a beautiful son, rather than dwelling on the fact that we face an inflationary climate that is hostile to the economics of our new family.

We aren’t strangers to what economists call “headwinds.” Mrs. Tepper and I graduated from the same really expensive private college in 2008, just as the nation was mired in the worst recession in 80 years. We attended college (and later graduate school) as state governments across the country drastically cut higher education spending, which meant higher costs, which meant that we incurred a combined six-figures student loan marker. And entering the job market in the teeth of negative economic growth means we’ll be playing catch-up for years and years.

Given all that we (and Americans, generally) have endured since 2008, it might seem strange that I would ask for higher inflation. When the prices of goods rise quickly, the Federal Reserve is apt to raise interest rates. Higher interest rates make it more expensive to purchase a house, or borrow for anything. Don’t I want to own a house? What’s wrong with me?

For a little bit of context, let’s back up and look at where inflation has been over the past six years. If you look at the core price index for personal consumption expenditures (or core PCE), inflation is rising at an annual rate of 1.5%. In fact ever since Lehman Brothers declared bankruptcy it has barely budged over 2%.

inflation...

Even if you look at a broader inflation metric, like the consumer price index, prices have risen at 2.1% or lower for almost two years.

What does this mean?

For one thing, wage growth has stagnated at around 2% since we left school, and job growth, while picking up lately, has been relatively slow. Weak job creation and small pay increases means that people have less money to spend, which means fewer jobs and the cycle goes round and round.

So more economic growth (spurred on by more borrowing and spending) would help alleviate low wage growth, and help us ramp up our weekly paychecks. But it would also do something else. It would help us pay down our student loan debts.

Super low inflation is bad for people who have debt. Right now Americans owe more than $1.1 trillion in student loan debt. That means people our age are receiving raises that aren’t that high and have to confront a record level of debt before their careers really get going. With so much of our take-home pay earmarked for debt service, no wonder housing isn’t a priority, or affordable, for millennials (or the Teppers).

Of course, this kind of talk scares our parents (and rich people), who own bonds and other assets designed to preserve wealth instead of create it. Having already endured years of low interest rates, they really don’t want their bond portfolio to be hit by an inflation jump.

To which I say, tough. Many boomers entered the job market as the economy was expanding and college was affordable. Their children did not.

Luke has this one toy that he loves. It’s a sort-of picture book for infants consisting of a crinkly material, and he loves nothing more than smashing the thing between his hands and feet. In 17 years, he’ll want a car—and then four years of college.

I realize that the costs of these things will rise—prices always rise. It would just be nice if our salaries rose enough to pay for them.

Taylor Tepper is a reporter at Money. His column on being a new dad, a millennial, and (pretty) broke appears weekly. More First-Time Dad:

 

MONEY home prices

WATCH: Foreign Buyers Push U.S. Home Prices Higher

From Russia, Canada, the Middle East and elsewhere, international buyers are moving in.

MONEY buying a home

7 Ways to Get Your Kid Out of Your Basement

College students slacking off and living in parents' basement
Adam Crowley—Getty Images

If your child is one of the 14% of millennials who have moved back in with their parents, here are some tips to nudge him (or her) out the door.

For most of us, leaving the nest was a rite of passage. We went to college, and then proudly headed out into the world to make our own way, while our parents turned our old room into another guest bedroom.

However, for a significant percentage of young adults, that rite of passage is now all about returning to the roost rather than flying solo. According to Gallup research, 14% of millennials (24-to-34-year-olds) have moved back in with their parents. The homeownership rate for those under age 35 was 36.2% in the first quarter of 2014, down from a historical high of 43.1% at the end of 2005, according to Census data. According to numerous economic reports on millennials, this is attributed to a weak job market, high cost of living, significant college debt, and other factors.

These kids, as well as any adult children who have decided to move back in with mom and pop are lovingly referred to as “boomerang kids.” Clearly the analogy is obvious.

For Mom and Dad, who would love to have the ‘kids across the hall’ become the ‘kids across town,’ here are seven pointers you might want to consider:

Start Charging Rent

Cut off the free ride. Yes, it sounds harsh, but you may be doing both you and your kid a favor. Managing money and a monthly budget is something that is not learned in school, and it is certainly not learned hanging out in your parent’s converted attic for free. Give your boomerang kids a real estate reality check. If the free ride comes to a screeching halt and they are paying rent, they will probably want to do it in their own apartment, closer to (or with) their friends, near downtown or a closer drive to their office. Charge rent and enforce it. Once they start getting that first-of-the-month monetary wake up call, it might shock their system enough to have them consider alternative arrangements. If they’re going to have a landlord no matter what, they’re likely to consider a new, more independent situation.

Collect Monthly Payments

Here’s another way to give them a foot out the door – but still a leg up. Start charging them monthly payments now. Let them know that they will have to come up with the monthly equivalent to local rents each month for the next six months. At the end of the six months, you will give them back all the money when they move out. That does three things: You teach them budgeting skills, you incentivize them to move, and you give them a financial helping hand on move-out day.

Be A Strict Landlord

No parties, no loud music, no guests after 10:00 pm. Keep the house rules strict. At some point, your kid is going to want to have a little independence, and some fun too. Living with a strict landlord may just be the incentive he or she needs to find a place of their own.

Set A Deadline…and Stick To It

If you can sense that your boomerang kid is riding out his or her free meal ticket under your roof as long as they can, help them visualize when that ride will end. Create a deadline for them to move out and stick to it, no matter what. It’s likely you never intended to have kids under your roof for more than two decades, so your children need to respect that…and they need to get on with their own lives. Even in a world where millennials are underemployed compared to their Gen X, Y and Baby Boomer counterparts, there are still plenty of ways for them to make a living that enables them to live with a roommate or two or three…elsewhere.

Help Them Get Organized and Overcome The Mental Hurdle

After all the financial aspects are considered, one of the biggest hurdles to making a big move is mental: it just feels overwhelming. So many things to do, buy and organize before it can actually happen. Your child may just need the expertise of someone who’s moved multiple times in their lives to talk them down off the “I’m too overwhelmed and can’t do this” ledge. Map out all the necessities and then make a list of the “nice to haves down the road” so they can see what’s an immediate need, and what can be done over the coming weeks and months.

Gift or Loan Them The Down Payment

Trulia’s latest survey showed that 50% of millennials surveyed plan go to their parents for help with the hefty down payment that’s required to purchase a home in today’s housing market. If you want your adult child up and out of your basement, consider giving them the financial head start now they need to form their own household and be independent.

Buy A Multi-Unit Investment Property

I am a huge proponent of purchasing multiunit properties, such as a duplex or triplex, because they are great investments. In the case of your “failure to launch” millennial, slot them into one of the units of your new property and rent out the others. The rental income is likely to cover much of the costs of ownership, and you’ll have a built-in property manager in the building to keep an eye on things. Plus, your boomerang kid is learning valuable management skills at the same time. It can be an investment property for you, and solve the “son or daughter is still in my basement” problem, all at the same time.

 

More on Financial Independence

4 Ways to Lighten Your Kid’s Debt Load

Is Living with Mom and Dad Starting to Cramp Your Style? Take These Steps to Independence

Taking Five Years to Earn a B.A. is Common—And Costly. Here’s How To Get Out in Four

MONEY Housing Market

Housing Market Recovery Moving Forward, Except for This One Thing

For the first time during the housing recovery, four out of five of Trulia's Housing Barometer measures are at least halfway back to normal. But young adults are still struggling to get jobs.

How We Track This Uneven Recovery
Since February 2012, Trulia’s Housing Barometer has charted how quickly the housing market is moving back to “normal” based on multiple indicators. Because the recovery is uneven, with some housing activities improving faster than others, our Barometer highlights five measures:

  1. Home-price levels relative to fundamentals (Trulia Bubble Watch)
  2. Delinquency + foreclosure rate (Black Knight, formerly LPS)
  3. Existing home sales, excluding distressed sales (National Association of Realtors, NAR)
  4. New construction starts (Census)
  5. The employment rate for 25-34 year-olds, a key age group for household formation and first-time homeownership (Bureau of Labor Statistics, BLS)

The first measure, home prices from our Bubble Watch, is a quarterly report. The other four measures are reported monthly; to reduce volatility, however, we use three-month moving averages for these measures. For each indicator, we compare the latest available data to (1) its worst reading for that indicator during the housing bust and (2) its pre-bubble “normal” level.

4 Out of 5 Measures Improve and Are At Least Halfway Home
All but one of the Housing Barometer’s five indicators have improved since last quarter, and all five have improved or remained steady since last year. Prices and the delinquency + foreclosure rate made the biggest strides:

Housing Indicators: How Far Back to Normal?
Now One quarter ago One year ago
Home price level 79% 68% 44%
Delinquency + foreclosure rate 74% 63% 53%
Existing home sales, excl. distressed 64% 61% 64%
New construction starts 50% 45% 41%
Employment rate, 25-34 year-olds 35% 39% 30%
For each indicator, we compare the latest available data to (1) its worst reading for that indicator during the housing bust and (2) its pre-bubble “normal” level.
  • Home prices continue to climb, though at a slower rate. Trulia’s Bubble Watch shows prices were 3% undervalued in 2014 Q2, compared with 15% at the worst of the housing bust; that means prices are nearly four-fifths (79%) of the way back to their “normal” level of being neither over- nor under-valued. Even better, as prices approach normal, price gains are slowing down and becoming more sustainable: for the first time in almost two years, no local market has had price gains of more than 20% year-over-year.
  • The delinquency + foreclosure rate was 74% back to normal in May, up from 63% one quarter ago. While fewer foreclosures means fewer discounted homes for sale, delinquencies and foreclosures have caused great pain for millions of households and the financial system. For the foreclosure crisis, the light at the end of the tunnel is getting brighter.
  • Existing home sales (excluding distressed) were 64% back to normal in May, up from 61% one quarter earlier. Distressed sales have plummeted as the foreclosure inventory has dried up. Non-distressed sales also stumbled from their peak last summer as higher home prices and mortgage rates reduced affordability, but in the past quarter non-distressed sales have resumed their climb.
  • New construction starts are 50% back to normal, up from 45% one quarter ago and 41% one year ago. Multi-unit starts — mostly apartment buildings — are leading the recovery: in 2014 so far, multi-unit starts accounted for 35% of all new home starts, the highest annual level in 40 years. This apartment boom started last year, and last year’s starts are now being completed, which is increasing the supply of apartments for rent.
  • Employment for young adults, however, took a step back. May’s three-month moving average shows that 75.6% of adults age 25-34 are employed, which is just 35% of the way back to normal. That’s down from 39% one quarter ago, though still an improvement from one year ago. Because young adults need jobs in order to move out of their parents’ homes, form their own households, and eventually become homeowners, the housing recovery depends on Millennials getting jobs.

What’s Missing from the Housing Recovery

First-time homebuyers are still missing from the housing recovery, making up just 27% of existing-home buyers according to NAR’s May report. That’s down a bit both from last month and from last year.

How has the recovery gotten this far without first-time buyers? Investors and other bargain-hunters bought homes near the bottom of the market, in late 2011, which boosted sales and home prices. Now that prices are near long-term norms – just 3% undervalued – the bargain-hunting engine is sputtering. Repeat buyers, who are trading in one home for another, are taking more of the market.

Would-be first-time homebuyers are stuck: rising prices and mortgage rates have reduced affordability before young adults have been able to recover from the jobs recession. A full recovery that includes first-time homebuyers is still years away; many young adults still need to find jobs and keep them long enough to save for a down payment and qualify for a mortgage. Until that happens, the clearest signs of recovery will be apartment construction and renter household formation, not first-time home buying, as young adults move from their parents’ homes into their own rental units.

NOTE: Trulia’s Housing Barometer tracks five measures: existing home sales excluding distressed (NAR), home prices (Trulia Bubble Watch), delinquency + foreclosure rate (Black Knight), new home starts (Census), and the employment rate for 25-34 year-olds (BLS). Also, our estimate of the “normal” share of sales that are distressed is 5%; Black Knight reports that the share was in the 3-5% range during the bubble. For each measure, we compare the latest available data to (1) the worst reading for that indicator during the housing bust and (2) its pre-bubble “normal” level. We use a three-month average to smooth volatility for the four indicators that are reported monthly (all but home prices). The latest published data are May data for the employment rate, existing home sales, new construction starts, and the delinquency + foreclosure rate; and Q2 for home prices.

See the original article, with more charts, here.

Jed Kolko is the chief economist of Trulia.

MONEY Housing Market

The Housing Market Won’t Be Undervalued Much Longer

Trulia's latest analysis shows homes in three-fourths of major U.S. cities are still undervalued, while seven are more than 10% overvalued (most in California). Even there, prices are no where near boom frothiness.

Trulia’s Bubble Watch reveals whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents. The more prices are overvalued relative to fundamentals, the closer we are to a housing bubble – and the bigger the risk of a future price crash.

Sharply rising prices aren’t necessarily a sign of a bubble; a bubble is when prices look high relative to fundamentals. Bubble watching is as much an art as it is a science because there’s no definitive measure of fundamental value. To try to put numbers on it, we look at the price-to-income ratio, the price-to-rent ratio, and prices relative to their long-term trends using multiple data sources, including the Trulia Price Monitor as a leading indicator of where home prices are heading. We then combine these various measures of fundamental value rather than relying on a single factor, because no one measure is perfect. Trulia’s first Bubble Watch report, from May 2013, explains our methodology in detail. Here’s what we found.

Home Prices are 3% Undervalued Nationally We estimate that home prices nationally are 3% undervalued in the second quarter of 2014 (2014 Q2), which is far from bubble territory. During last decade’s housing bubble, home prices soared to a level that was 39% overvalued in 2006 Q1, then dropped to being 15% undervalued in 2011 Q4. One quarter ago (2014 Q1), prices looked 5% undervalued, and one year ago (2013 Q2) prices looked 8% undervalued. This chart shows how far current prices are from a bubble:

At this pace, home prices nationally should be in line with long-term fundamentals – i.e., neither over- or undervalued – by the last quarter of 2014 or the first quarter of 2015. The good news for bubblephobes is that price gains are now slowing down while prices still look (slightly) undervalued. We’d be at greater risk of heading toward a bubble if price gains were still accelerating, but they’re not.

Even in the Bubbliest Markets, It’s Not 2006 All Over Again Eight of the 10 most overvalued housing markets are in California, with Orange County, Los Angeles, and Riverside-San Bernardino in the top four. However, they are not seeing the return of last decade’s bubble. These California markets are much less overvalued than they were at the height of the bubble. Orange County, today’s frothiest market, is just 17% overvalued now versus being 71% overvalued in 2006 Q1. Among the most overvalued markets today, only Austin looks more overvalued now (13%) than in 2006 Q1 (8%) – and that’s because Austin (and Texas generally) avoided the worst of last decade’s bubble and bust.

Top 10 Metros Where Home Prices Are Most Overvalued
# U.S. Metro Home prices relative to fundamentals, 2014 Q2 Home prices relative to fundamentals, 2006 Q1 Year-over-year change in asking prices, May 2014
1 Orange County, CA +17% +71% 9.6%
2 Honolulu, HI +15% +41% 5.3%
3 Los Angeles, CA +15% +79% 12.7%
4 Riverside-San Bernardino, CA +13% +92% 18.8%
5 Austin, TX +13% +8% 9.7%
6 San Jose, CA +11% +58% 10.4%
7 Oakland, CA +10% +72% 14.8%
8 Ventura County, CA +9% +73% 12.6%
9 San Diego, CA +7% +69% 11.2%
10 San Francisco, CA +6% +51% 11.6%
Note: positive numbers indicate overvalued prices; negative numbers indicate undervalued, among the 100 largest metros. Click here to see the price valuation for all 100 metros: Excel or PDF.

 

Only in Akron and Cleveland are prices undervalued by more than 20%. Furthermore, in those two markets, home prices are rising below the national average of 8.0%. But in several of the most undervalued markets, including Detroit and Chicago, prices are now rising year-over-year in the double digits. But those markets are unlikely to stay on the most-undervalued list for many more quarters.

Top 10 Metros Where Home Prices Are Most Undervalued
# U.S. Metro Home prices relative to fundamentals, 2014 Q2 Home prices relative to fundamentals, 2006 Q1 Year-over-year change in asking prices, May 2014
1 Akron, OH -21% +18% 4.7%
2 Cleveland, OH -21% +18% 6.3%
3 Detroit, MI -19% +38% 15.2%
4 Dayton, OH -16% +13% 12.1%
5 Worcester, MA -15% +43% 4.4%
6 Memphis, TN-MS-AR -14% +11% 3.2%
7 Toledo, OH -14% +22% 10.0%
8 Chicago, IL -14% +36% 13.5%
9 Lakeland-Winter Haven, FL -14% +54% 3.8%
10 Providence, RI-MA -14% +52% 2.9%
Note: positive numbers indicate overvalued prices; negative numbers indicate undervalued, among the 100 largest metros. Click here to see the price valuation for all 100 metros: Excel or PDF.

 

Three-Fourths of Markets Still Undervalued Of the 100 largest metros, home prices in 76 of them look undervalued. But the number of overvalued markets – 24 – has climbed up from 19 last quarter (2014 Q1) and just 5 last year (2013 Q2). Most of the 24 overvalued markets are overvalued just a bit, with 17 overvalued by less than 10% and 7 overvalued by more than 10%. While the number of overvalued markets is rising, there remains little reason to worry about a new, widespread bubble forming. The last two years of strong price gains have been from a relatively low level and still haven’t pushed home prices nationally above our best guess of their long-term fundamental value.

See the original article with complete charts here.

Jed Kolko is the chief economist of Trulia.

MONEY Housing Market

The Housing Number That Really Matters: 2.28 Million

140623_REA_LatestinHomeSales_1
Wiskerke / Alamy

The number of homes on the market increased enough to slow down surging price gains and make it a little bit easier for buyers. Bidding wars aren't going away, though.

Home buyers worried they will be stuck in bidding wars for a scarce number of homes can relax a little bit. The number of homes for sale in May is up 6% over last year, to 2.28 million, reported the National Association of Realtors.

At the current pace, it would take 5.6 months to sell all the homes on the market. Six months is considered a healthy balance between buyers and sellers. The 5.6 number means it’s still, on average, more of a sellers’ market, but far better than late 2012 and early 2013, when there was less than a five-month supply of homes.

For May, sales continued to strengthen after a “lackluster” first quarter, said NAR economist Lawrence Yun. The median price of existing homes for the country, which includes condos, was $213,400, up 5.1% over a year ago.

But let’s get back to inventory, which has been driving much of what’s been happening in housing.

Around late 2011, buyers began tiptoeing back into the market, eating into the oversupply of distressed properties that had swelled post-bust. A year later, more confident buyers and an investor boom pushed the pendulum toward housing shortage. This chart shows that trend and how it’s been easing so far this year.

 

Source: National Association of Realtors

This is great news, because in some cities buyers have become so frustrated by the scarce choices that they’ve given up. Especially in hot cities (Denver, all the big cities in Texas, southern California) and in the best neighborhoods in most cities, buying a home has become about how to win a bidding war.

Even now, homes are still selling relatively quickly—the median number of days a home spent on the market in May was 47. But at least that’s six days more than a year ago, giving buyers some room to breathe.

That in turn means a slowdown in the hefty price gains that have marked the last 18 months or so of the housing recovery, but the market needs more, Yun says. “Rising inventory bodes well for slower price growth and greater affordability,” he said in a statement. But “new home construction is still needed to keep prices and housing supply healthy in the long run.”

New construction is a bit wobbly, however. Yes, builders are building more homes, but they are mostly apartments (the rental market is still going gangbusters). Builders have been slow to commit, worried about the financial health of buyers. Economist Brad Hunter of MetroStudy, which analyzes the new home industry, says consumers are still skittish, but traffic through builders’ showrooms continues to improve. So sales should rise soon, he says.

As with everything real estate, it’s all local. Construction is healthy in southern California, Texas and Florida, while Arizona and Nevada are down, Hunter notes.

And, it matters where you fall on the income spectrum. That’s another key aspect of the current housing market: Pricier homes are selling better, while the market for first-time home buyers is depressed. The percentage of first-time home buyers in the existing-home space fell again in May, to 27%, according to NAR.

In new construction, builders have begun targeting young buyers with lower-priced homes, but Hunter sees too many obstacles: high student loan debt and low employment among millennials.

Another obstacle: lending standards. The credit score needed to get a mortgage has been trending down, but very slowly. Real Estate Economy Watch, writing about an Ellie Mae report, said 32% of closed loans had an average credit score of under 700 in May, compared with 27% a year ago. The median credit score for purchases (not refinances): 755.

The median scores for FHA loans fell to 684 from 695 last year–FHA loans are favored by first-time buyers because of low down payment requirements.

The trend should draw more potential buyers off the fence, says Cameron Findlay, chief economist for Discover Home Loans. “When everyone’s talking about how difficult it is, if you’re a borrower on the cusp, you don’t bother going through the hoops and trying to apply, you just stay back,” he says. “Now they’re saying, ‘Let me see.’”

MONEY house hunt

‘It Took 3 Years To Find a Home in a Good School District:’ A Buyer’s Story

Paul and Cassie Wilcoxes' new home in the Morningside neighborhood of Atlanta. Courtesy: Zillow

The Wilcoxes struggled with the classic parents' dilemma: Move to an expensive home in a great school district, or stay put and pay for private school?

All Paul and Cassie Wilcox wanted was a home in a good school district in Atlanta. Three years, numerous house hunting drives and an emotional appeal later, the Wilcox family is finally ready to move into their new home in the Morningside neighborhood of Atlanta. This is the story of their House Hunt.

They grappled with a classic dilemma: staying in an affordable neighborhood with poor schools or moving to a good school district with pricier homes.

The neighborhood we lived in didn’t have a a great public school system. So, as soon as our son, Connor was born, we started looking for homes in neighborhoods with good public schools. There aren’t a whole lot of those in Atlanta. We considered staying where we were but private schools are expensive as college. So we decided to move out.

They settled on their neighborhood, but it took a year to find a home that suited their budget.

We would drive out to Morningside often, surveying the place and just looking at houses. Finally we figured that being in the car all the time wasn’t going to work out and we had to make up our mind. (Notes their agent Danielle Coats, “It usually takes only three to four months to find a house.”)

Be Featured Here: Tell Us Your Home Buying Story!

Financially, things came together, though it’s a stretch.

My software business took off right about the time we planned to move. That gave us the confidence that we could do it. I now work two jobs — one as a systems architect at a financial services firm and my own firm.

Then they had to win the actual house.

It’s a very competitive area. We knew we had to make an aggressive offer and offered full price only to find out that we were up against four all-cash offers. We decided to write a nice letter to the seller, who was a kind, elderly woman. We told her that we wanted our son to go a good school and make the home special and raise our family there. And, it worked. We got a response in 10 days and another two weeks to close.

The list price was $469,900 and I was able to put down 28% of that.

They actually sold their house in October (for $245,000) and had to rent for three months while working on the new home.

Properties in Morningside have a good resale value. I know that if I were to sell my house tomorrow, I’ll make a profit.

More House Hunts:
‘At 27, I’m the First of My Friends to Own a Home’
‘I Have $1M in Investments and I Couldn’t Get a Mortgage’

MONEY Rentals

Rent Too $@#% High? These 7 Tips Can Get You a Better Deal

Jimmy McMillan, The Rent is Too Damn High guy
There are better ways to lower your rent than running for Governor of New York. David Shankbone

Rents are surging across the nation, but you don't need to join the "Rent is Too Damn High" party to get a discount.

Renters who aren’t leasing space under a rock have probably noticed prices are kind of insane lately. Since last year, rents are up everywhere (in some cities, over 10%), and an average 2-bedroom in a major city could cost as much as $3,550 a month.

Short of running for political office, how can you cut your rent bill from impossible to merely outrageous? We’ve got a couple of tips.

1. Have low realistic expectations

The economy is getting better, more people are going back to work, and most of them are renting. That means there’s a huge clamor for condos, especially in major metropolitan areas, and landlords can set their prices accordingly. Gary Malin, president of the New York City brokerage firm Citi Habitats, warns waiting for an out-of-this-world deal in a hot area is a sure way to end up with no place to live.

Instead of looking for a huge bargain, he suggests, try to negotiate somewhere between $25-100 off your monthly rent. (Talk in dollars, not percentages, so your landlord doesn’t have to break out a calculator.) In San Francisco, 50 bucks off might just be a 1% discount on a typical two-bedroom’s monthly bill, but over a year it works out to $600 in savings. That’s not nothing.

2. Show the landlord how awesome you are

How awesome you are as a tenant, that is. Someone with solid financials who will sign quickly can land a discount even in tight markets, Malin says.

Build a strong application by including all the necessary paperwork and emphasizing your strengths (current employment and great credit can go a long way). Complimenting the apartment doesn’t hurt. Include references from previous landlords: Niccole Schreck of Rent.com says letters from past property owners attesting to your amazingness can win your new lessor’s confidence—and maybe a bargain as well.

Try this: owners of smaller complexes have the most to lose if tenants don’t pay up. If you can show you’re a prize, you might nab a better deal in buildings with fewer units.

3. Go by the numbers

When asking for a discount, approach the landlord “intellectually, not emotionally,” Malin says. Translation: no sob stories. Instead, do your research and show the property manager why you should get a better rate. Schreck advises renters to look up the prices of other units in the neighborhood (use Rent.com and similar sites) and make notes of the amenities other buildings offer, like gyms or laundry rooms. If surrounding real estate rents for less or offers more perks, use that to your advantage.

4. Be flexible about location, location, location

Jason Kaczmarczyk, partner at the Boston-based Encore Realty, says he saves clients thousands by steering them from the sought-after Brookline neighborhood to the more affordable Cleveland Circle. The kicker? Cleveland Circle is just feet from the Brookline town limits—and it has free parking.

To find a cheaper area, use your commute time to create a list of all the neighborhoods where you could feasibly live. At Trulia.com, enter where you work and generate a map of your city, color-coded by shortest travel time. From there, look for lower-priced parts of town.

5. Wait for winter

The summer months are the No. 1 season for new leases, meaning huge competition and high rates. Once temperatures drop, so do prices, as landlords get antsy. Consider subletting for the summer and starting your search in October or November. Malin says landlords who don’t rent a unit by Thanksgiving might cut rent by up to 10% to avoid the risk it will sit empty until January.

Off-season renters are also twice as likely to find “move-in incentives” such as paying brokerage fees, a free month’s rent, or complimentary gym membership. Some landlords prefer these over discounts, and Schreck says they’re typically easier to negotiate.

Keep in mind though: it’s no fun to move in the snow.

6. Read the lease agreement

We know you’re excited, but rushing through your lease can cost you bigtime. As MONEY’s Amanda Gengler writes, a recent Rent.com survey found that 26% of renters lost their entire security deposit. She recommends checking the fine print—painting your apartment or putting holes in the walls might be off limits—and making sure anything the landlord tells you in person (“of COURSE you can have a cat!”) is in writing, attached to the lease if necessary. Check that the utility bills included in your rent match the landlord’s promises.

7. Offer to sign a longer lease

The one thing landlords hate most is vacancies, and signing for longer means your property owner won’t have to worry about filling your apartment for an additional year. This may not work in hot spots like New York City, as landlords prefer to reassess market conditions at the end of every year and decide whether (read: how much) to raise rent.

But in slower markets with more vacancies, a longer lease can earn you some concessions. Rent.com has a list of the 10 fastest growing cities (ie. places people actually want to live) with above average vacancy rates to help you decide if you should use this tactic.

More: Rents Just Won’t Stop Going Up

MONEY Housing Market

The Future’s Most Walkable Cities: Prepare to Be Surprised

061417_REA_boston
Urbanization of next-door neighbor Cambridge is one of the chief reasons Boston's walkability is on the rise. Boston Harbor Association—Boston Harbor Association

Walkable urban places are the cities of the future, a new study says. And where will those be? New York, Boston? Try Miami and Phoenix. No, we're not kidding.

If you live in Washington D.C., New York City or Boston and your legs are your main mode of transport, this won’t be news to you: These three cities rank among the country’s most walkable large cities, and they are destined to remain so.

After those top three, watch out: Cities known more for suburban sprawl and traffic jams have new development planned that will shoot them up into the top scores as “walkable urban place,” or, WalkUPs, as researchers at George Washington University and advocacy group Smart Growth America call them.

Miami, Detroit, Denver, and Tampa will vault into the new Top 10 large WalkUPs, according to a new study released today. Atlanta, Los Angeles and Phoenix will also take a big leap forward. Future rankings are based on things like planned investment in public transportation and commercial clusters.

jefferson memorial
D.C. ranks No. 1. Its suburbs are as walkable as the central city. Destination DC—Destination DC

“The WalkUPs are witnessing the end of sprawl,” said Christopher Leinberger, a professor of urban real estate at George Washington University School of Business. “This is a change in how we built the country in the 20th century.” Suburban sprawl, he argues, has constrained the country’s economic growth.

Walkable urban places, sometimes referred to as urban burbs, have high concentrations of college-educated adults and demonstrate a strong correlation between urban development, education and economic growth. Office rents in urbanized areas, for example, command a 74% premium over suburban. (Researchers focused on the 30 largest metropolitan areas because they comprise 46% of the U.S. population and 58% of the country’s GDP.)

And homeowners, take note: Walkability and proximity to shopping, restaurants and work are becoming increasingly important to buyers, especially young buyers. Research has shown that increases in measures of walkability such as WalkScore translate into increased property values.

Today’s Top 15 Walkable Cities

1. Washington, D.C.
2. New York City
3. Boston
4. San Francisco
5. Chicago
6. Seattle
7. Portland, Ore.
8. Atlanta
9. Pittsburgh
10. Cleveland
11. Baltimore
12. Miami
13. Philadelphia
14. Denver
15. Houston
Least Walkable: Tampa, Phoenix, Orlando

The Future’s Most Walkable Cities

1. Boston
2. Washington, D.C.
3. New York City
4. Miami
5. Atlanta
6. Seattle
7. San Francisco
8. Detroit
9. Denver
10. Tampa
11. Los Angeles
12. Phoenix
13. Houston
14. Portland
15. Chicago
Least Walkable: San Diego, Kansas City, San Antonio

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser