Millennial Home Ownership in the Granite State

Sep 16, 2019

Many millennials are at the age when people begin thinking of purchasing their first home. This generation is distinct in their needs and challenges. We look at why millennials are buying homes, or why not, and their needs, and what they are looking for. 

This show was originally broadcast on July 10, 2019.

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Transcript:

This is a machine generated transcript, and may contain errors.

From New Hampshire Public Radio I'm Laura Knoy and this is The Exchange.

Members of the millennial generation are now at the age when Americans typically purchase their first home. But this particular group of young adults faces unique challenges. Coming of Age in the shadow of the recession may have affected their finances and their outlook on housing as a good investment. On top of that many carry high student loan debts and all face tough competition in the starter home market. From downsizing baby boomers today in exchange millennial home ownership. What this large number of potential homebuyers wants and needs and whether they're able to get it. Let's hear from you especially if you're of this generation or have millennial young adult children. What's your view of this topic. Give us a call 1 800 8 9 2 6 4 7 7. Email exchange at an NHPR.org will use Facebook or Twitter at an HP ya exchange.

Laura Knoy:
We're gonna begin with the national picture and joining us for that is Laurie Goodman co-director of the housing finance policy center at the Urban Institute which has studied millennial home ownership. She joins us from D.C. and Laurie a big welcome thank you for your time.

Laurie Goodman:
Well thanks very much for having me.

Laura Knoy:
So first off just for quick Laurie how do you define who's in this generation and who isn't. Because I keep seeing conflicting definitions.

Laurie Goodman:
Yes. So we define millennials those born between 1981 and 1997. In fact the definition is arbitrary. There's no universal definition of this group in there. Oftentimes sometimes referred to as Gen Y or echo boomers some date the group as early as 1977. Others late date the beginning of this group is late night some day as early as 1977. Others as late as 1982 the end of the group as early as 1994 as late as 2004. But we use 1981 to 1997. Wow OK. In fact the only group with an official definition is the baby is the baby boomers which are those born between 1946 and 64. None of the other generations have an official definition. And there's a lot of fuzzy math.

Laura Knoy:
Well right. I looked up a couple of those definitions and found similarly to you. But in general Laurie we're talking about young adults you know mid 20s to mid 30s. Is that right.

Laurie Goodman:
Yes.

Laura Knoy:
So your organization published a study on millennial home ownership really interesting Laurie finding that the rate was eight percentage points lower than the two previous generations when they were the same age. So we're comparing apples to apples here. What do you think the most significant factors are there. Laurie.

Laurie Goodman:
I think sort of the two most significant factors is the delay in major life events. For example getting married and having kids. So in 1990 34 percent of 18 to 34 year olds were never married. That number was 54 percent in 2017. The second major factor is this generation has a lot greater diversity in terms of race and ethnicity. In 1990 76 percent of the 18 to 34 year olds were white.

Laurie Goodman:
That was down to 60 percent by 2017. But then there are other than there are other factors that are all pay play a contributing role including credit availability. The median score of mortgage borrowers is about 730 the median score of millennials is about 640.

Laura Knoy:
What is there any noise sorry to interrupt but.

Laurie Goodman:
That means that you know great credit score usually your FICO score in particular is a critical variable and being able to get a mortgage. It basically looks at how well you pay your bills and you're sort of graded on a scale from 300 to 800. So you know the 730 is sort of the meat is sort of the median for all home buyers whereas millennials are much much lower and a lot of them have an established sort of traditional credit at all.

Laura Knoy:
Interesting. Yeah go ahead.

Laurie Goodman:
Student loan debt is very very important and student loan debt is particularly important for those who don't graduate college. Because if you graduate college you have a higher earnings that result from that. But if you don't graduate college you've got the debt without the higher earnings. So it produces a very very negative relationship for home ownership and actually for a lot of other things in life too.

Laura Knoy:
So greater racial diversity means lower levels of homeownership because non Hispanic whites have the highest homeownership levels. So the more diverse generation lorry statistically it just means there'll be fewer homeowners. That's just the way the shakeout delayed marriage and childbearing to typical incentives to buy a home. Young adults these days are doing it later. Student loan debt you talked about that. I also read Laurie about just higher rents these days making it harder to save for that down payment if you found higher rents make it.

Laurie Goodman:
Yes. Oh yes definitely higher rents make it much harder to save for the downpayment although there is a misconception as to how much downpayment you actually need there are a lot of people who think you need 20 percent down to buy a house. In fact you need like three and a half percent down or three percent down to buy a house. But certainly higher rents. And then also the there is very little sort of affordable housing supply.

Laura Knoy:
Now we'll definitely talk about that with our New Hampshire guests about the incredibly tight housing supply here in the Granite State. Another thing that jumped out at me from your report Laurie it mentions a slight attitudinal change toward home ownership with this generation what does that attitudinal change.

Laurie Goodman:
So for my generation and I'm a boomer. Homeownership was the way to build value. You didn't take vacations for years so that you could save for your first home. You didn't go out to dinner so that you could save for the first home because the homeownership was viewed as a store of value for the millennial generation that lived through the Great Recession. It's really hard for them to see homeownership in that way. So yeah. They'll take vacations that their parents never dreamed of and saving for a home just becomes a little bit less important in terms of being the store of value. They view it as a place to live. But you know for my generation it was both a place to live and a store of value.

Laura Knoy:
Well we got an e-mail from Paul who writes I find that Millennials value mobility over stability renting their primary home allows them the flexibility to move for the next job. Paul also says oddly as a realtor in a vacation market I have sold second homes to millennials who rent in the city. Paul says making investment in real estate without being tied down. So what about that.

Laura Knoy:
Paul says he's saying millennials yes value mobility of stability point is very interesting.

Laurie Goodman:
To the mobility point is largely a fiction in the sense that this generation is actually less mobile.

Laura Knoy:
Oh wow that's really interesting.

Laurie Goodman:
So when you look. So there. So they they might value the perceived flexibility but it's not exercised. But yes you are actually saying but the second point is very well taken you do see actually people particularly in high cost cities who rent and who own who rent themselves and then own a home that they do not live in.

Laura Knoy:
One last question for you Laurie why do you think it matters if this generation has lower home ownership rates than earlier generations just looking out longterm.

Laurie Goodman:
I think actually for two reasons. Home ownership is the best single way to build wealth. When you look at people's wealth a lot of it comes through the value of their home and then you says they will Why is that. I mean home ownership is essentially an inflation hedge. When you do what you set when you buy a home you essentially take out a 30 year fixed rate mortgage and lock the single largest expense of home ownership. Your mortgage payment. Yes property taxes and maintenance go up over time. But I mean essentially your largest payment is locked and it can only go down if you prepay your mortgage. By contrast if you rent your rent is going to go up every year and is going to go up more in inflationary times. So what that allows you to do is save more easily and build wealth plus your home will go up. Plus your home is likely to go up in value over time as well.

Laura Knoy:
So this is a broader provide for your financial future. Sure. Well Laurie it's been good to talk to you. Thank you very much.

Laurie Goodman:
Thank you very much. Thanks for having me. Take care. Bye.

Laura Knoy:
That's Laurie Goodman co-director of the housing finance policy center at the Urban Institute which as we heard has studied millennial home ownership. And as we talk about millennial homeownership trends here in New Hampshire I'm joined in the studio by Ryan Hvizda realtor in Concord co-owner and founder of the Hvizda team with Keller Williams. She also serves on the New Hampshire businesses for social responsibility at the advocacy committee. And Mr. work play Advocacy Committee. And Ryan it's really nice to see you.

Ryan Hvizda:
Thank you for being here it's a pleasure to be here. Thank you Laura.

Also with us Nick Regan realtor in Bedford with the on the move Realty Group which is also part of Keller Williams and right. Nick good to meet you. Thank you for being here.

Heather McCann:
Thanks so much for having me Laura.

Laura Knoy:
And also with us Heather McCann Director of Housing Research at the New Hampshire Housing Finance Authority. And Heather welcome. Good to see you.

Heather McCann:
Thank you. Thank you so much for having me Laura.

Laura Knoy:
Well Ryan I want to start with you. As you listen to Laurie discuss her research on millennial homebuyers from the Urban Institute kind of giving us the national picture. What's your perspective here in the state. What do you hear from the younger people that you interact with Ryan.

Ryan Hvizda:
It echoes exactly what she's saying. There's I definitely have clients that rent in Concord and they have second or their first home is in the mountains that they're renting on air Bambi. I have clients that are soon to be clients that are living in shared living situations where they're paying anywhere from 600 to 900 dollars a month to share a room like a room in a shared living situation to save money for a down payment.

Ryan Hvizda:
And then people that are looking to either make that first purchase an investment purchase or there also seems to be a sense that people want their independence and their freedom and to live a little bit more in the rural areas with more privacy and more control over their land. So that's very there's the millennial buyers are have a diverse range of things that they're looking for. And so I think people think that they want mobility but they actually want to build wealth and find that place.

Ryan Hvizda:
That's their own.

That's interesting. And what you said just goes to show that you can't generalize about a huge generation of people. You said that some of the millennials you work with want their own land you know peace and quiet. What I hear time and time again is Millennials want to be close to urban centers to be able to walk to work or not have long commutes. So maybe just can't generalize about what people want.

Ryan Hvizda:
You can't because I'll sit down with the first time homebuyer and they say I don't want to see my neighbors I don't want to see. I want to be able to grow my own food and then I will sit down with an another young person they'll be like I want to walk everywhere. I don't want to lose my car. So yeah there is no generalization.

Nick Regan:
Nick what aspects of what we just heard again from the Urban Institute particularly resonate for you working as a young realtor here in Granite State.

Nick Regan:
Ok. So Ryan had some great points about you know I see a lot of people that want you know they want to be out and in nature they don't want to see their neighbors. You know everything that she said. I completely agree with a couple of things just. I wrote down here while she was speaking that I wanted to just go over is that the no credit. She said like young millennials aren't establishing credit.

Nick Regan:
And what I find you know when I get one of these millennial buyers that comes through say an open house or something I'm talking to them they're like Well I don't have 20 percent down to put on this house and it's like you have to explain to them Well you actually don't necessarily need 20 percent. The only the only thing that 20 percent does is it takes away your principle mortgage insurance the insurance that you're going to pay on your mortgage over the course of the of the loan. Where does that myth come from the 20 percent down. Honestly I have no idea. I think it's just like their parents adult them. You know maybe previous generations you know things were different I don't know I you know I'm a millennial myself so I wasn't involved in real estate back when my parents were buying a home. So and I don't even think that went back when they bought they put 20 percent down. So I PMI principal mortgage insurance has been around for a while. So I think it's just some kind of myth that you know just kind of still is out there. The world and and that damn close that that kind of was just my next topic as the downpayment is just that people just they don't know it. In some areas you're in. In New Hampshire a lot of areas qualify for no downpayment. So it's intimidating. It isn't very intimidating because like the topic I was brought up before is the high rents.

Nick Regan:
They don't have the money the extra money every month to be putting you know a thousand dollars a month aside for what they think is like two or three years to be able to afford this house and you know my biggest. The biggest advice that I give to people that are first time homebuyers and their first looking and they're afraid is you want to just talk to a professional. We're all professionals. Real estate agents loan officers loan. We're all professionals so we just you know if you come to us with bad credit it's nothing to be afraid of. You know it's something you can. You can always change. It's not a permanent thing. You might have something on there that you got to work on. It's not a big deal. And then you know us as real estate agents working with first time homebuyers is just education. You know us educating them on you know OK cool you want. You wanna be able to grow your own and we'll here's what you know grow your own food on your own land. Well here's like kind of what you what you can be looking at is like these kinds of price points and things like that and you know you can turn to the internet so much for advice. But turning to a professional is always great.

Laura Knoy:
You know Heather I'd love to hear from you too and lots of interesting stuff there Nick but I definitely want to follow up on but Heather what is your research here in the Granite State shown about New Hampshire Young Adult homebuyers.

Heather McCann:
Well we typically focus on when we think of young adult homebuyers and first time homebuyers we always look at the data and we're really looking at homes that are in the under 300000 range. And so when looking at that kind of cohort of listings and prices it's been shrinking over time so not only has inventory been shrinking in New Hampshire but the amount of homes that are available under that 300000 dollar price range are very difficult to come by. And when you do come buy them there they're gone very quickly. And so it's it's really tough for people like Nick said who have questions on how to buy things and maybe aren't as confident in just making an offer right away to to be aggressive in a market where you actually have to be aggressive and know what you want and then they're also competing with older people that maybe are looking to downsize and buy these homes that are in that same price point that are maybe you know these smaller homes and so they have more liquid assets and so they are very hard to compete again.

Heather McCann:
So it's difficult.

Laura Knoy:
So how much do you think it sounds like both. How much is price the problem and how much is it supply for Granite State millennials.

Heather McCann:
So for May we have a median purchase price of about 284 so. So half the homes on the market are above that half are below four for June listings were down 10 percent from June last year.

Laura Knoy:
So down 10 percent so this is 10 percent fewer homes for sale.

Heather McCann:
Right. And so that's driving the price up. And so it's making it very difficult. We also look at as a gauge to see how quickly homes are or are going off the market an absorption rate. So if we weren't to add any more inventory how long it would take to sell off what's on the market. And so we're at about four and a half months statewide. But when you get down to some counties in the lower part of the state it gets even more aggressive. So Hillsboro is up at about a three and a half month absorption rate. And then even it gets even smaller. When you look when you're looking out those homes under 300000 it's about three months.

Laura Knoy:
Wow. So looking at statewide numbers is useful but you need to look at them with the proper lens because the picture varies from around the state.

Laura Knoy:
Exactly. Do you wanna jump in Ryan.

Ryan Hvizda:
The other challenge is that an under three hundred thousand dollar home is not move in ready. So we're looking at some type of major improvement that might have to be done. A lot of our inventory in New Hampshire can be a couple hundred years old. So not only is there the issues with caring for an older home there could be a heating system a roof the peeling paint. So you're you're buying this large asset and then you're putting 15000 dollars of work into it to make it livable. So that's also a challenge that younger people are facing when they're going to purchase that home.

Laura Knoy:
So you see on a Web site you know oh it's in my price range and then you go look at it and you know you got to tack on another 20000 dollars just to make it livable correct. Wow. That's an important point to make. What do you think about the mismatch that Heather described Ryan between what millennial homebuyers want and what's available to them again. You know it's not just price it's supply.

Ryan Hvizda:
It's one of the another. Well it's also the the supply is huge because that's driving the price. And there's a lack of new construction because the cost of build is expensive and because we're in such a low inventory rates and absorption rates. Land is expensive. So land is expensive building is expensive. And then we have this mentality in New Hampshire of Not In My Backyard. I don't want that new development. I don't want that workforce housing I don't want that affordable housing which is. Then making it difficult for people to build.

Laura Knoy:
All right. A lot more to talk about after a short break. Join us as we continue our conversation on millennial homebuyers here in New Hampshire. You can join us 1 889 2 6 4 7 7. Send us an email exchange at an HP yard dot org. What are your questions comments and of course personal experiences with this topic 1 800 8 9 2 6 4 7 7. We'll be right back.

Laura Knoy:
This is The Exchange I'm Laura Knoy today. Why Millennials are less likely to be homeowners than previous generations were at the same age. There are many factors at work as we're hearing especially a tight supply of smaller more affordable homes in New Hampshire. What's your take on this issue. Are fewer millennials not buying because they can't afford it or because the homes on the market aren't what they want. Or is this generation less interested in ownership. Let us know what you think. Send us an email exchange at an NHPR.org. Once again exchange at NHPR.org. Use Facebook or Twitter at an HP exchange or give us a call 1 800 8 9 2 6 4 7 7. We have three guests all millennials and all involved in real estate. Ryan Hvizda is here she's a realtor in Concord. Co-owner and founder of the Hvizda team with Keller Williams Nick Regan is here realtor in Bedford with the on the move Realty Group and Heather McCann Director of Housing Research at the New Hampshire Housing Finance Authority. And Heather I know you want to jump in just on some of the points that Ryan was making just before the break.

Heather McCann:
Yes. So Ryan made a great point about how there aren't many new homes being built. So when we're talking about the supply issue that plays a major factor. And so I just wanted to point out that we track the single family permits and so annually we took an annual average of the permits before the recession and after zip building permits. Yes correct. And so we're about half of where we were prior to the recession. So it just the building hasn't made it back up to where we were and at in our organization we always refer to the the five owls are the impediments to building which are the cost of lumber finding labor loans land and laws. And so the land and logs kind of go hand-in-hand. And when we talk about that we're talking about land use regulations within towns municipalities. And so we work with a lot of towns to look at their local regulations to how how to open that up to make building more feasible planning boards and zoning boards and so forth and how much housing they allow to be built exactly.

Laura Knoy:
Did you want to jump into to.

Nick Regan:
Yeah. You just made a great point where we have the older generation that may have more liquid liquid assets that are looking to purchase you know maybe they're downsizing their kids have moved out of versus a new homebuyer. So I was hosting an open house just like two three weeks ago single family home in Manchester single level ranch. You know one level living and I did notice that there was a lot of folks coming through that property that were like oh well we're looking to downsize you know our son just went off to college two years ago and you know he's out in Sacramento. So we don't need this you know 30 500 square foot house anymore. So you know if if they were to put in an offer you know if you ask me about financing they like all Well you know we'd be paying cash for this property. And so it this was you know exactly that price point was sub 300 and you know that it just rang a bell with with me because I know that I see it firsthand all the time and and I even spoke to these people about new construction and they're like you know we really like this area. I don't even remember where I was it was not too far from where I was there. But all the new homes are multi-level and we're looking for a single level. So I was like well you know so then that got us on this exact same topic of like well why aren't these builders building single level. But that's not where apparently the profit is because they're looking at the same thing as you guys of you know how much the land's costing members in the Labor and the left and and all that stuff and it's you know prob possibly just not feasible to sell that house for that little money when they're you know they need an acre minimum they need all this other stuff because it's not a city law and stuff like that.

Nick Regan:
So was a great point.

Laura Knoy:
Toward those bigger homes that you mentioned Nick and it's so interesting because when I see homes for sale around Concord a lot of them are these big homes you know people had two three kids and then the kids go off and so they don't want that big home. I just wonder Heather is anybody talking about taking those big homes and dividing them up so that you can have smaller homes but still you know nice houses near amenities that you want and so forth. Otherwise they're just kind of sitting there empty.

Heather McCann:
All right. Well there has been a lot of talk based on the new 80 80 law that just passed I think last year and so that gives people the opportunity to maybe convert a space either in their home or it's not attached or detached depending on what's allowed to either have maybe their parents live in a bigger house with an old mother in law. Yeah and you share that space to make it more affordable for maybe somebody looking to get into their first home or to rent it there. There isn't a ton of of houses available that maybe have in-laws that can help offset that cost. So I think it's a good option and I don't know how many millennials actually are aware of the law and. And doing that work to make it more feasible for them to afford a big home.

Laura Knoy:
Right. What are your thoughts on Heather's five LS and why the housing market.

Laura Knoy:
You know regular supply and demand isn't giving this group of homebuyers what it wants.

Ryan Hvizda:
Because if you make more money in the luxury side of construction costs the same amount to build a luxury house just the base of it as it is to build an affordable house. However with the finishes and the the customization the builder makes more. So the profit margins are slimmer on affordable housing and most communities will welcome a luxury house vs. affordable workforce force housing. They think that it's an impact on the schools and that it's going to bring the community down and what they forget is that workforce our workforce are our teachers the people that work at the post office at the grocery store at our restaurants. It's there's a stigma attached to our workforce but we need our workforce to have a vibrant healthy economy.

Laura Knoy:
What cities and towns Ryan do you think seem to be supplying more of what this generation wants. Because I have heard you've done a lot of shows on this. That housing is a statewide issue but it also varies a lot. Town by town.

Ryan Hvizda:
So definitely Concord has some great developers here that are I call them stakeholders that care about the culture. So they're working on it in the city as well has a lot of people that are really invested in this issue. Amherst has a really progressive building code that is supportive towards workforce housing and 55 plus.

Ryan Hvizda:
So you can have more housing in a dense place of land.

Ryan Hvizda:
You know the seacoast is very expensive. I know Portsmouth is working on it. However it's just a tough market because the entry point into Portsmouth is over 700 thousand dollars now OK.

Laura Knoy:
Well to our listeners and Kelly sent us an e-mail. Kelly says I'm 25 I live in Concord. My significant other and I pay sixteen fifty a month in rent for an apartment in Concord. Wow. We've been looking for a home to buy in downtown Concord for a year now. Everything we've looked at under 20 250000 needs major maintenance or major renovations. Most affordable homes in Concord simply aren't worth buying. Simply put we don't have the liquid assets or the time to deal with the strings attached to these homes that haven't been maintained and I think.

Laura Knoy:
Kelly thank you for the e-mail that illustrates perfectly what you guys were talking about earlier. One can't find thing in your price point and two when you do find it it needs major expensive repairs. So Kelly thank you for sharing your story. Let's go to our callers and Pat's calling in from Conway. Hi Pat. Go ahead you're on the air.

Caller:
Hi. I just wanted to call to address the downpayment issue. I actually am a mortgage banker so I'm very familiar with the issues that people have trying to get into a home. There are a program that allow for no downpayment minimal down payment. We actually are the only company in the nation. We've partnered with Fannie Mae where we have a program that it's great for Millennials because they're very tech savvy and they love doing this that they did on their own. We help them design a web page. It's like a go. It's called Home funded and it's like a Go Fund Me page and that way their friends and family and things can make small donations to that fund. And it goes directly toward their down payment and closing costs so they can come up with money that way to do all sorts of things and to get the down payment or the closing costs that they need because it can be used towards anything.

Laura Knoy:
So you're pushing back also on the narrative. Nick did this to Pat that you need 20 percent for a down payment you're saying not so. Now that. that.

Caller:
Is actually not a myth about the 20 percent down. Oh I'm probably older than all of your guests on it. When my parents bought their house there were no loans that would you could you get to buy a house for more than 80 percent loan to value. You had to put 20 percent down and that obviously has changed over the years but some people are still they pass that on to their kids and their grandkids because they've heard all the horror stories about oh this is a bad loan or that's bad or we know if you go 20 percent down you'll be safe you won't get into something scary.

Laura Knoy:
Well in part what we saw in the recession with some of these shady you know mortgage products. It's hard to blame millennials for being cautious. Maybe it's good that they're cautious when it comes to you know not jumping into a home that maybe they can't afford.

Caller:
I totally.

Caller:
Agree with you about that. I do believe that like anything there are people who are good at their job and there are people that are not so good at what people need to do is they need to make sure that whoever they work with and all the time that's needed to make sure they're 100 percent comfortable to answer the questions even if they're answering the same question with six or seven times. It doesn't mean that the buyer doesn't get it. It means the person explaining it hasn't explained it well enough so that they get it.

Laura Knoy:
Well I remember buying my first home. I am sure I ask him to explain it as least three times so it is confusing to want to jump in Ryan.

Ryan Hvizda:
Yes. One of the things that I liked to tell first time homebuyers is when you're looking for your lender and your real estate professional you want somebody that understands what you want to spend on the monthly. What is your budget for this house for the the principal interest taxes and insurance. And then what can you budget for utilities and then rule of thumb 2 dollars per square foot per year just to keep the house in the state same condition it's currently in. So factor that into your purchasing and then find a lender that every you tell them I want to spend sixteen hundred dollars no more on my pity and every single house run that house by evil lender have them do the cashflow and if you're comfortable with it then we go and see it that way you're not. You mean you could be pre-approved for four hundred thousand dollars but that monthly doesn't feel comfortable to you and it's not going to be comfortable to you in six months or a year and I'd rather have you call me in a couple years saying I've built some equity here I'm ready to upgrade or you know do a second purchase vs. I need to short sell or I need to get out of here right away because I can't live here any longer.

Laura Knoy:
Pat thank you for the call and let's take another one this is Josh in Manchester. Hi Josh you're on the air welcome.

Caller:
Hi good morning. Morning.

Caller:
I had a I had a question I kind regarding the financial reform bill. What are the challenges for me and my wife and all of them. I mean 30 years is you know overcoming that or you know when you buy a house and you are closing costs then you know there's just not a thing. There's nothing to that. It's not just. I'd like we're just going through with all the other numbers factoring. But you know there is a tradeoff right between right now and there's there's no you know number of years where you're going to break even owning your home and some of that you know is a function of what the economy is doing in the markets during which you might buy. I don't know but you've been ignoring it. I'm curious what what's the current thinking for how long a break even is for owning versus renting singer again.

Caller:
Well any old you know we don't necessarily know.

Caller:
We don't know how long we're going to stay in the current job or if we're going to have yes or you know we like the town there. There's definitely a lot of uncertainty in the generation of the whole process.

Caller:
It's a time of transition when you're like little that was a big comment there.

Laura Knoy:
Well and if I could ask you Josh do you own or rent. You said you're in your 30s so yeah.

Caller:
No. We we own a home we bought a condo in our mid 20s and then switched to a house a couple of years ago actually in the same town and we're we're down in limbo.

Laura Knoy:
Okay. Thank you very much for calling in me appreciate it. Nick what do you think you can't answer the specifics of his situation but this whole idea of does it pay off.

Laura Knoy:
Do you make money. Is there a break even point I just wonder what kind of questions you get from people that you work with about whether this investment is worth it.

Nick Regan:
Yeah. So I mean I have that discussion with myself on the daily basis. Is it worth it when I walk out of my house and I get you know I got a job to do because that's a trade off as well over renting but you know in the long run I mean like you said if you buy high and you sell low I mean you just have to just average it out. I mean it's all gonna depend obviously it is it is a risk of of purchasing and if you are able to stay you know you can just ride out that shirt that trending change of its going down you know eventually it's going to come back up.

Nick Regan:
We obviously don't know when it's going to come back up at that at that time. But if you're able to to stay. But otherwise you obviously would have to cut your losses and leave if say you had a job change or you know you had to move across the country or you know you outgrew the house and there was no option to stay. So it's it it's a very tough question to answer. I mean I definitely think that real estate is it is a safe investment. And then it is a great investment. I mean if the worst comes to worst you could always just rent that property if it's at a time and when the market is low and you can ride out the wave that way.

Laura Knoy:
Especially here in New Hampshire with a rental vacancy rates are almost zero in some.

Laura Knoy:
Go ahead Heather.

Heather McCann:
I just wanted to share my story in terms of the break even point and then going back to Ryan's point of older homes so my husband and I wanted to get back into the neighborhood that I grew up in as a kid. And it just wasn't affordable. So we actually bought a foreclosure that was vacant on the market. It was in terrible shape. And we did a rehab loan and We rehabbed it and literally replaced everything major that you could replace. And so we came out of that with a lot of equity. And so that was something post recession that my husband was really. He's like I don't want to buy a home for three hundred thousand dollars and owe three hundred thousand dollars on home. So he was very weary of that. And so it was a way to kind of make sure that we weren't going to be upside down on a home. And so it's a very long process. I think it took us about seven months to complete before we can move in but it's another option that people that are having some concerns of maybe break even points and if it's worth it to consider.

Laura Knoy:
Well and Ryan I wonder how much your generation's coming of age during the recession during the housing crash shapes their thoughts and maybe even their fears around home ownership because they have seen firsthand what can happen when the housing market crashes.

Ryan Hvizda:
I think that's one of the reasons why people are are holding off and they're renting. And I found that once we quickly move away from this single family mentality a lot of the first time homebuyers I work with I I can get them to understand that a multi-family purchase makes more sense for them. I've helped 17 first time homebuyers buy multi families over the last year and so is that like typically a duplex I mean I'm sure you black is different but family you live in one side and you rent to the radio and one of the greatest joys I have is when we leave the closing table and they're they you know they've calculated it like I'm going from sixteen hundred dollars a month in rent to maybe 300 dollars or six hundred dollars nine hundred dollars a month to own because the other person or the other two people are paying my mortgage.

Laura Knoy:
Because you're renting out the other half of your house.

Ryan Hvizda:
Correct.

Laura Knoy:
Yeah. Although then you do have to sign up to be a landlord find the right people make sure they don't do things that they're not supposed to do.

Ryan Hvizda:
With a less than A 1 percent say everything's a trade off you have to sign.

Ryan Hvizda:
I just had clients closed last week and they put their rental posting up and actually I thought they were pricing it a little high for a two bedroom. They've had 15 applications in less than 12 hours. Wow. Just like Craigslist.

Laura Knoy:
Well lots of e-mails coming in from our listeners and I'd love to share some of them with you. Courtney says I just wanted to say that I and my husband are millennials we bought our first home in Manchester in 2013 four hundred eighty thousand dollars with three point five percent down. So that's that small down payment that we talked about. And now we feel really stuck. Courtney says this three bedroom one bathroom 1000 turned 50 square foot house that was supposed to be our five year home is looking a lot more like 10 or 15 year home because childcare for two kids is astronomically expensive student loans are equal to what we spend in our mortgage and any house that we think we could afford really isn't any better than the house where we live in.

Laura Knoy:
It can be discouraging. So Courtney thank you for sharing your story. And we'll hear a lot more stories after a short break. Give us a call 1 800 8 9 2 6 4 7 7. You can send us an email like Courtney did its exchange at an NHPR.org use Facebook or Twitter. It's an HP bra exchange. More on millennial home ownership in the Granite State in just a moment. Stay with us. This is The Exchange on an HBO.

Laura Knoy:
This is The Exchange I'm Laura Knoy tomorrow in exchange. It's the weekly New Hampshire News Roundup. Join host Peter Biello for all the state news you might have missed. That's tomorrow morning live at 9:00. Today millennial home ownership in the Granite State. What this group of potential homebuyers wants and why it seems so hard for them to get it. Let's get you into our conversation we'd love your stories your perspectives on this. Send us an email exchange at an HP broad org or give us a call 1 800 8 9 2 6 4 7 7. Our guests are Ryan Hvizda realtor and Concord co-owner and founder of the visit team with Keller Williams. Nick Regan realtor in Bedford with the on the move Realty Group and Heather McCann Director of Housing Research at the New Hampshire Housing Finance Authority and all of you right back to our listeners auto sent us a note.

Laura Knoy:
He says My brother and I pooled our money together last September to buy a house in summer's worth. I graduate from college in May 2017. My graduate my brother graduated the next year. We made the choice after we both knew we want to stay in New Hampshire and found that rent for a one bedroom apartment would exceed a mortgage payment especially since we have dogs. We put 3 percent down is that 3 percent never again got a three bedroom house with a barn needs a little work but it's stuff we can learn and rent out a room to pay for making improvements. We're five minutes from downtown Dover 30 minutes from downtown Portsmouth and have a decent yard. Side question how does one need to pay for mortgage insurance to go away. I want to comment on auto situation first though because I've read about this in some of the numbers that we heard from the Urban Institute earlier. Anybody can comment on this that yes when people get married they typically that's when they buy a home. But that we are seeing more single people buying homes and more just friends buying homes brothers buying homes like auto. What do you think. Heather I'll turn to you on this.

Heather McCann:
I think it's a great option especially I know a couple of friends that have bought homes as a single person and have rented rooms out to people and it's gone well especially. They knew that they wanted the home for a while. They were single and they felt they could grow into it over time. And until then you know you can rent out some bedrooms if you're comfortable doing that and I think it's a great option of looking at kind of different solutions and opportunities in a tough housing market especially where rents are so expensive.

Laura Knoy:
Interesting. Well auto thank you for the story and it sounds like he's got a great situation there. Alex writes us he says I'm a millennial on the planning board in my town. The rest of the members of the board are older and specifically do not want younger families to move to the community. Alex says the laws and regulations regarding plot size and such are openly intended to prevent affordable homes from being built. They don't want more children in our school district because of the fear of taxes being raised. Alex says if the state funded the school system better there would be less fear of taxes being risen and I might finally get some traction in changing the mindset of my fellow board members. When you think about this Ryan I'll turn to you. We have been talking about this in New Hampshire for a long time. I am surprised given the demographic challenges given the workforce challenges that we talk about almost every single day that people still feel this way. I know young people first off.

Ryan Hvizda:
Alex thank you for serving in this capacity we need more young people to sit on these boards to help break the stigma that you're up against. Second I think that people forget that people with families spend money in communities which actually helps everybody. They're not just coming to a community to suck the life out of the town and that that that is it just totally behooves me that people think that kids coming into a community hurts a community especially in our state where the average age is I don't know what it is but I know it's high. It's not family. About 40 to corral like me these are young people here that have a more vibrant community. And I agree the way that property taxes are structured it does hurt this type of development. And I think this is one of those things that we need to change because if we're going to have a vibrant and sustainable you know New Hampshire that has a very vibrant workforce we need more housing that is diverse and is accessible for young people and even older people as they downsize.

Laura Knoy:
Well and speaking of housing diversity I did want to ask all of you about the tiny house trend. I've read a lot about this. It seems to be very popular in other parts of the country. I have not seen this taking off here in New Hampshire. Ryan anybody. Do you know about the availability of tiny houses.

Ryan Hvizda:
It's tough.

Ryan Hvizda:
Well I saw that the draft of the bill that went to legislation before it turned into a study and it was very loose on the language around regulations of the water systems and septic. So I think we need to. Kind of when they do this study they definitely have to be more creative in thinking about how is are we thinking tiny houses that are mobile are just small homes on smaller lots and are. Are we going to change the standards of what we're looking at for a well and septic or can there be lots sharing a septic sharing a well like there has to be more creative thinking because that's what we're up against. Well how many years.

Laura Knoy:
Yeah. Have you sold any tiny houses snake in your area.

Nick Regan:
I have not sold any tiny houses, no.

Laura Knoy:
Are there only tiny houses in your area.

Nick Regan:
I have not seen its own house for sale.

Laura Knoy:
OK because I hear about this you know everywhere but it does always seem to be in other parts of the country so Heather any thoughts there.

Heather McCann:
I know that there was back to Ryan's point challenges with trying to make things work in New Hampshire especially if it's mobile. And so I think there is some sorting out some some issues with that and trying to make something work. I think people always think millennials want a tiny home and then back to Ryan's point earlier I think there may be a group that would be interested but not everybody wants a tiny home so I think it would serve a specific group of people in and I think it's good to think of different types of housing. We should have a wide variety of housing in the state for people to choose from and not just these big four bedroom homes.

Laura Knoy:
Well I'm one of you mentioned earlier you know the assumption is or the image of millennial homebuyers is that they all want small houses walking distance downtown and I think one of you said earlier not necessarily some people want to not see neighbors and be able to grow their own food by the way on the tiny houses and I know it's sort of on hold here in New Hampshire. This is a topic that we will cover down the road at least one show if not two. So listeners if you have thoughts or experiences with the tiny house topic you can send them in to exchange at NH PR dot org. Alex wrote us a note. Alex says I'm a millennial working in the lending industry. I know the ins and outs of all my possible finance options and I have a decent amount set aside in my for one K when the time came to buy a home. Still there was Alex says no way I could have purchased a home on my own. Honestly I live with my parents and just save money which was embarrassing. Eventually I found the right person and it wasn't until she and I got married that we could afford to buy our first home. Alex says I had everything going for me a good job great credit some money set aside knowledge of the whole process none of it mattered. It takes at least two people to afford an apartment let alone a house. I don't know how any of my peers could possibly do it on their own. Alex thank you so much for that call. And he mentions his parents. Now it sounds like he didn't get help paying for a house from his parents. But I have read and I wonder what you guys think maybe you Nick how much help millennials are getting from their parents. I read about a trend called co buying for example.

Nick Regan:
So I mean instead of cosigning they basically just call buy it. So it's like a car loan if you don't have the credit you you essentially cosign like you guarantee that loan. But when you purchase a home you just you call buy it. So basically they're on title they're on or they're on the financing but not necessarily the title. So there was a there was a good point that he made there are regarding multiple people being able to afford a house. So I just recently closed on property. The current owners rented it back and so they just charged them one month of their mortgage. So after you know all the papers were signed and everything and everyone was gone I went I left with by sellers and they're like how are these folks you know afford this like because these people are retired on a fixed income you know they had good good jobs good careers and they were what they had to cut that check for what would be their mortgage. And they're like how are they going to afford that like I know that they have good jobs but that is a lot of money. And and I was like I mean their lender worked it out and we have no obviously I have no idea how much money they make. But he was he just made that comment to me like I wouldn't have been able to afford that at their age kind of like Ghana thing. So I mean it's a great play I mean when I bought my house I bought it with the intentions of having roommates I three years later still remain. So it just makes life a lot easier.

Laura Knoy:
Well when you hear the frustration in Alex e-mail and I'll turn to Ryan but anybody jump in just feeling like you know he has everything right going on the job the good credit and so forth and still he feels like it's impossible. What sort of sunshine Can you shine on this giving people who are listening a little bit of hope that yeah if you get creative you can do this first.

Ryan Hvizda:
I think if you are paying and you thing over a thousand dollars a month in rent just go and speak to a lender today and get pre-approved. That does not mean you're committed to working with that lender. You are not committed to the home buying process but it will give you the idea of what you need to do to prepare to purchase.

Laura Knoy:
So you're kind of ready to go if all right. Driving down the road you see something real.

Ryan Hvizda:
Lots of people just pickup purchase price and start. Shopping on Zillow and then they want to go see the house and then they'll get they'll be OK. I'll get pre-approved after I find my house. Like first the house is gonna be gone. Back to this land. I don't even know if you can afford that house. Don't you want to if you can only afford a Honda Civic. You should not be shopping on a Porsche budget. So that's this. First off just every millennial out there just go meet with the lender even if you have a bad credit score they're not going to judge you if they're a great lender. They're actually going to say OK here's your six months plan here's your year plan here's your two year plan like here's the plan you need a plan. So that's one thing. Second of all around parents helping there's also this Gift Fund. Parents can do a letter that says their child will not have to pay them back.

Ryan Hvizda:
So a lot of people access property that way. And then there's also the USD a r d loan and the V.A. loan which is 0 percent down. So there are definitely options to access homes.

Laura Knoy:
What kind of financing tools are you working with. Heather at the New Hampshire Housing Finance Authority especially for younger buyers.

Heather McCann:
Yes. So we we have a very unique program where we offer cash assistance to buyers to help with their down payment and closing costs. We also offer what's called a homebuyer tax credit so every year they can get a credit on their taxes to help make things maybe a little more affordable. We also have homebuyer education and resources on our website which is go New Hampshire housing dot com. So there's some webinars and stuff so they can go through the process and just get a feel for what they might need to get ready for and what it's going to be like. And then for people that maybe have bought a house and and could be in over their head we also have some counseling services and that's home help. New Hampshire dot org.

Laura Knoy:
Speaking of being in over your head one study that I looked at from a financial research organization found some buyer's remorse among young adult homebuyers. They didn't realize all the expenses associated with homeownership and some of you've alluded to this earlier not just the sticker price which is easy to see but the home insurance the property taxes the repairs the upkeep. What do you think Nick. How well are these factors understood especially by those younger first time homebuyers.

Laura Knoy:
So it's not just that monthly mortgage.

Nick Regan:
Yeah absolutely not. So you know just I'll just use myself as an example when I bought my house I had no idea. Like what. You know the electric bill is going to look like every month you know I had a rough idea of like what a new roof might cost and things like that. So you know some home inspectors that I actually use. They they they set a really good precedent of this of setting that price of being like they give them like a folder in that folder it's like you know if the house is equipped with your air conditioner Here's roughly what it will cost you to replace the air conditioner. Here's roughly what it's going to cost to replace this roof because it's you know let's say the roof square footage is 18 on the square feet it's typically you know whatever dollars per square foot. So that way they have like that material right from the beginning. So it's a reality check. Exactly. And so you know they can read it but once they've got to cut that check for it. You know obviously it's a little different. But what I was due for all my listings is get like the monthly costs of all their services so if they have water and sewer electric and cable like just the way these people have an idea like OK my mortgage is going to be sixteen hundred dollars.

Nick Regan:
These people obviously my electric bill is not going be the same but these people have been spending 200 dollars a month on electric. These people have been spending you know one hundred and fifty dollars on cable just to get you a general idea of what it's roughly going to cost you because yeah I mean that's that's my number one thing when I'm working with people like Ryan had said earlier I don't care how much you can afford it's how much you're comfortable paying per month because that's ultimately what it's going to come down to is how much you can afford every month because like she said I don't want to get a call in two or three years like they're there. I'm like well it's because they're under water and they can't afford it or their house poor they can't afford to go out on a vacation. Right. Buy in you know afford to you know put their kid in daycare because obviously you know looking forward how to think about things like that. Right.

Laura Knoy:
So don't jump in Ryan on how well understood those other factors are how transparent they are. Whose responsibility is it to make sure that that first time buyer really gets it's not just about the monthly mortgage it's about a lot more than that.

Ryan Hvizda:
Fortunately that's hard because I guess one thing we didn't talk about is that the millennial buyer is more Internet savvy so they're actually doing so much research on their own but they're Googling articles that are very generous like written generally that are not specific to our market. So even though you can self inform yourself please find a professional language that actually cares about you and cares about what you want to spend because if somebody's just trying to sell you something you can feel that right away. But if somebody really wants to help you they're going to ask you questions they're going to ask you about your goals there and ask you about how you want to live and then they're going to help you achieve that.

Laura Knoy:
And a realtor doesn't want to put you in a house you can't afford because correct. That's just a problem. Correct down the road. Got an email from Cody who says I just recently bought a house in Manchester. I split it with friends and we bought a two family were renting out the other apartment so splitting the mortgage three ways and having the rental income helps keep it affordable. I wonder if your guests have any similar stories of friends going in on an investment I think Nick you said a moment ago that's what you're doing right.

Nick Regan:
No. That's just how I. I bought a house a single mom who bought a house and you're doing it. That is actually a great way to go about it. You know in the future if one of these these friends you know wants to move on you know they find a significant other or they just want to buy their next investment property you know it's it's very easy to get themselves out of that situation and you know that's it's an awesome way to to start out your your financial success.

Laura Knoy:
Well Cody thank you for the e-mail and good luck to you and Heather to you. Just last question what small trends are you noticing right now with this issue here in New Hampshire that you think might develop into bigger trends what's sort of lurking on the horizon. Good or bad.

Heather McCann:
Well so one thing that's coming back into light right now is interest rates are dropping. And so I don't know if a lot of people were expecting that especially Millennials because we had seen them climb up and I think a lot of people were like I need to buy a house now before interest rates get so high and now they're coming back down so I'm thinking that that is going to give some people a little opportunity to breathe a little bit and say you know what I can do my research do my homework see what I qualify for. Interest rates are dropping a little bit. And so it's not that big rush to like buy a home before it gets the interest rates get too high for somebody.

Ryan Hvizda:
Well it's interesting how about you Ryan. What do you sort of looking at.

Laura Knoy:
That isn't a big enough trend right now to really talk about it or write about it but something that you think might start to emerge.

Ryan Hvizda:
Energy independent construction like we have the knowledge and that the concepts on how to build houses that are not dependent on fossil fuels. So why aren't we doing it.

Laura Knoy:
How about unique city looking at down the road.

Nick Regan:
I mean it's just affordability. You know Are wages going to go up substantially our president purchase price is going to come down. So it's it's gonna be very interesting to see what what unfolds.

Laura Knoy:
All right. All of you. Thank you very much for being here Nick Reagan it was good to meet you. Thank you.

Nick Regan:
Thanks so much for having me Laura.

Laura Knoy:
That's Nick Regan realtor in Bedford with the on the move Realty Group Heather Good to see you. Thank you to you.

Heather McCann:
Thanks Laura.

Laura Knoy:
Heather McCann Director of Housing Research at the New Hampshire Housing Finance Authority and Ryan Hvizda. Good to see you too. Thank you.

Ryan Hvizda:
Thank you.

Laura Knoy:
Ryan Hvizda a realtor in Concord co-owner and founder of the visit team. You're listening to The Exchange on New Hampshire Public Radio.

The views expressed in this program are those of the individuals and not those of NH PR its board of trustees or its underwriters. If you'd liked what you heard spread the word give us a review on Apple podcasts to help other listeners find us. Thanks.