Hand in Hand: Technology & Real Estate Agents

Technology might be vastly improving how potential customers search for their future home, but it certainly isn’t replacing real estate agents.

A housing consumer study released by Harris Insights found that 90% of consumers use real estate agents to buy and sell their homes – this is up 5% from the last study in 2014. The study surveyed 1,000 people who had recently bought or sold a home within the past six months.

And although there have been fears of new technology and younger generations (ahem, Millennials) replacing real estate agents, it looks like 91% of purchasers aged 18 to 34 used real estate agents in their transaction. Gen Xers were at 94% in the study, with Baby Boomers falling at 81%.

It seems as though education also plays a role in whether a real estate agent is used. 94% with a college degree reported using a real estate agent, versus those with a high school diploma at 83%.

While real estate agents are still very much in the game, technology is still an important player. 92% of consumers looked at websites to research about real estate agents and homes. Technology seems to be playing the role of researcher and familiarizer, while the real estate agent comes out as the validation in choosing and finalizing their research.

If you’re looking to stay in touch with the latest real estate news, check out Alliance’s blog for more updates.

Housing Discrimination’s Trojan Horse: Social Media

Facebook, Pinterest, Instagram, and Snapchat – distracting you from work and going to bed since 2004.

Social Media can do more than just occupy your day – Facebook has been under fire for sustaining algorithms that conceivably keep certain demographics from seeing particular advertisements.

Lisa Rice, president and CEO of the National Fair Housing Alliance (NFHA), spoke at the session “Fair Housing, Social Media, and Equality,” during the Relators® Conference & Expo in Boston on November 1st. Rice explained that “housing discrimination is playing out in the form of hidden online calculations that companies can use to exclude certain populations from viewing residential real estate ads online.”

The NFHA, along with other housing groups, filed a lawsuit earlier in the year against Facebook. While Facebook has, since August, removed more than 5,000 targeting options from its advertising platform, Rice believes that technology still can serve as a tool for discrimination against equal access to housing.

Social media, although offering various platforms for entertainment and enjoyment, can be used unfairly. The NFHA is still working with Facebook to ensure that its housing ad tool complies with the Fair Housing Act.

It’s Just a Bunch of Hocus Pocus: Saving for a Down Payment

The Sanderson Sisters certainly didn’t have to worry about down payments – but a new study shows that aspiring homeowners undeniably have to.

In the past 30 years plenty has changed in terms of housing prices.

Zillow released research that reveals prospective homeowners trying to reach a 20% down payment will need to save on average for about 7.2 years – an extra year and a half than it was back in 1988. Even if a buyer’s saving rate matched that of a buyer decades ago, they still wouldn’t be in the ball park of placing that high of a down payment.

Looking specifically at millennials, one can begin to understand why they’ve had a harder time entering the housing market. Zillow’s report shows that 46% of first-time homebuyers use their savings to put down on a home – compared to 35% of repeat buyers. Millennials are spending more on student loans and rent prices than past generations, and their opportunities to save for a home consequently dwindle.

While it is taking longer for millennials to reach their down payment goal, millennials in their thirties with a college degree and student debt account for 33% of homeowners – so, there is still potential – just slower potential.

Maybe we can blame the Sanderson Sisters for putting a spell on the housing market?

It’s Alive, It’s Alive! – Digital Mortgages Awaken a New Real Estate Market

We are living in a new digital era – and mortgage applications are morphing into new creations.

This past Tuesday at the Mortgage Bankers Association Annual Meeting in Washington D.C., representatives from Wells Fargo and Bank of America spoke about their new digital mortgage application process that began in January.

They stated that already more than a quarter of mortgage applications are coming through the digital channel; According to Wells Fargo, 28% of the bank’s mortgage applications came through digitally just this past September, while Bank of America expects 50% of its applications to be digital by this coming year.

Both representatives claim that loan officers will act as more of an advisor – customers seem to be enjoying the accessibility of the process and being able to decide how much of the application they are wanting to do online before reaching for help – if they choose to.

Bank of America is also looking at implementing the artificial intelligence-driven virtual assistant, Erica, into the mortgage process going forward.

With the awakening of new digital platforms, the real estate market will have to transform into what clients want.

The Price of Location

What’s it called when you live near amenities, walk or take public transportation to work, and spend less than 30% of your monthly income on housing costs?

It’s called an imaginary place, unfortunately.

Suburbs, city center, or country side? These areas are vastly different in lifestyle, but not so much in price. Surprising, right?

Zillow just released an article detailing new research focusing on the U.S. household income and what homeowners should expect to pay each month. While it might not be shocking to know that city centers are the costly areas to purchase a home, the suburbs don’t seem to be offering that much of a price break.

Experts advise on spending no more than 30% of your income on housing costs – but a renting household in the city can expect to pay more than that, about 36.8% of their income. The suburbs roughly come out to 31.8% of income; with rural areas dropping to 23.9% of income.

It’s a little less brutal for homebuyers – an urban area can expect to pay 26.5% of their income; rural and suburb areas 20.2%.

It seems as though if you’re wanting to make a dent on your savings, the rural areas are the place to be. However, your lifestyle, and what you’re looking for in terms of commute, living space, and finances, will play the final role in wherever your decision falls.

It’s All in the Family – Helping the Next Generation Become Homeowners

It seems as though your kids will pick up more than just your good looks and personality as they grow up – they also seem to fall in step with the same homeownership goals as you.

The Urban Institute, a nonpartisan think tank, released new research that shows if Mom and / or Dad are homeowners – instead of renters – their children becoming a homeowner increases by 8.4%.

The family’s net worth was also studied; 14% of millennials are homeowners with their parent’s net worth of $10,000, while 36% of millennials own a home with their parent’s net worth of $300,000 or more.

While this is incredibly promising, most new homeowners need guidance in the world of real estate. If one or all of your children are wanting to buy a home, you might want to think about giving them some housing market life lessons – like how to build good credit and why it matters and the breakdown of all the costs it takes to own a home.

The American dream of owning a home hasn’t faded – it’s just taking longer to get there. Luckily, if you’re a parent that owns a home, your kid might already be trying to follow in your footsteps and have their own place to call home.

Fraudulent Activity in Real Estate

Whatcha gonna do when the hackers come for you?

According to the FBI, the Internet Crime Complaint Center saw a 480% increase in the number of complaints submitted last year within the real estate industry. 2017 alone saw online scammers steal almost $1 billion from real estate purchase transactions.

Cybercrime against the real estate market is real – it’s always important to keep a wary eye out for those red flags.

So what is the primary threat? Essentially, a lot of it comes down to real estate agents’ email accounts being hacked and compromised. These scammers are intercepting important documents and wire transfers; these hackers are able to communicate directly with the client and reroute funds without the agent knowing what is taking place.

So what are some of the things that can be done to avoid cybercrime?

You should always be aware of what you’re opening and clicking on in your email. If something looks suspicious, work out the conversation over the phone instead – and of course, never click on those skeptical links.

So, don’t let the bad boys come for you while you complete those real estate transactions.

There’s No Place like the City

Toto’s definitely not in Kansas anymore.

Rural areas are dwindling as more and more residents move into cities. According to a recent report from Trulia, metros have seen a commanding growth in jobs and home prices, while rural areas have been dwindling.

While this trend began well before the recession, the study shows that the move to metro areas have increased in recent years. The theory comes from people withdrawing from isolated areas and gathering in more of a weightier employment center.

As most homebuyers have seen, this has put an incredible amount of pressure on the housing demand in cities. Trulia’s report found that home values in the largest metro areas from mid-2012 to mid-2018 grew 53.1%, whereas rural counties saw a 27.9% increase in home value.

A population rise in cities = a mismatched market for homebuyers. Home values have been steadily increasing in these metro areas, with very little construction making headway. Luxury homes seem to still be available, but homebuyers looking for starter homes in the city are feeling the pinch.

There’s no place like home – and to many – finding a home in the city has been quite the challenge.

A Rise in Home Value and a Latte, Please

Coffee: it does more than just help you get out of bed in the morning – it also helps your home value.

A recent study released by Harvard Business School found that when a Starbucks pops up in your neighborhood, your home can increase by 0.5% within a year.

The conclusions from the study pinpoint how the expansion of restaurants, bars, cafés, grocery stores, and Starbucks chains can be a sign of gentrification. However, the study argues that these openings don’t necessarily attract affluent residents – but rather, how these openings mesh in with the neighborhood.

The study explains, “The most natural hypothesis to us is that restaurants respond to exogenous changes in neighborhood composition, not that restaurant availability is driving neighborhood change.”

If you’re a realtor, or in the process of thinking about selling your home, it might be worth seeing what new construction might be coming near the neighborhood. It’s important to know how to market your home to potential buyers, and if the neighborhood is changing, your approach might need to change.

And who knows? You might just see a spike in caffeine and home value.

2020 Brings Clear Vision – and a New Real Estate Market

It seems as though economists are quite convinced of their upcoming vision for the year 2020.

The housing market is still a seller’s paradise – with slow construction and aging-in-place homeowners, buyers are having to seriously compete for the house of their dreams.

According to real estate economists surveyed by Zillow and Pulsenomics LLC, the industry won’t switch to a buyer’s market until at least 2020. About 75% of 100 economists agree with the statement.

Some signs that the market is still favoring sellers: inventory dropping and home value appreciation rising. The data also shows that home values are expected to rise to an additional 5.9% at the end of 2018.

We’ll have to wait to see if their predictions are correct; but as for now, it looks like sellers will be holding the cards for a little while longer.