Millenials and Living With Parents

Every day we are pleasantly surprised with the research coming forward regarding the Millennial generation. Whether it was the over-exaggeration of the student debt challenge, the misbelief that they are not yet ready to buy or the under estimation of their actual home purchases, evidence is beginning to debunk the myths many have held about this generation and home ownership. Now, one more strongly held belief is being questioned.

Do Millennials Live in their Parents Basements?

It seems not as many as once was reported. Our friends at Calculated Risk (CR) alerted us to a post by Derek Thompson in theAtlantic: The Misguided Freakout About Basement-Dwelling Millennials. The article explains that according to the Census Reports:

“It is important to note that the Current Population Survey counts students living in dormitories as living in their parents' home.”

What?!? If you live in a college dorm, the census counts you as living with your parents. Thompson has some fun with this when he explains:

“When you were adjusting to your freshman roommate, you were ‘living with your parents’. When you snagged that sweet triple with your best friends in grad housing, you were ‘living with your parents’. That one time you launched butt-rattling bottle rockets at the stroke of midnight off your fraternity roof? I hope you didn't make too much noise. After all, you were ‘living with your parents’."

The data is “Criminally Misleading”

According to Thompson, the counting of those living in college dorms as living with their parents is “criminally misleading”. He explains that part of the increase in these numbers is actually attributed to the fact that more people are attending college:

“[T]he share of 25- to 29-year-olds with a bachelor degree has grown by almost 50 percent since the early 1980s. More than 84 percent of today's 27-year-olds spend at least some time in college and now 40 percent have a bachelor's or associate's degree. More young people going to school means more young people living in dorms, which means more young people ‘living with their parents’, according to the weird Census.”

Thompson then goes on to reveal that:

"[T]he share of 18-to-24-year-olds living at home who aren't in college has declined since 1986. But the share of college students living "at home" (i.e.: in dorms, often) has increased.
So the Millennials-living-in-our-parents meme is almost entirely a result of higher college attendance.”

The Other Side of the Argument

However, Trulia’s chief economist Jed Kolko, doesn’t totally agree. In a post in response to the Thompson article, Kolko explains:

“The Current Population Survey’s (CPS) Annual Social and Economic Supplement (ASEC) counts college students who are living in dorms as living with their parents, and college enrollment has indeed gone up. But it does not follow that basement-dwelling millennials are a myth. The ASEC and other Census data show that after adjusting for college enrollment and for dormitory living, millennials were more likely to live with parents in 2012 and 2013 than at any other time for which a consistent data series is available.”

Bottom Line

There are more Millennials living with their parents than ever before. However, the numbers being quoted by some seem to be exaggerated.  Millenials can buy homes, if you are interested in making a home purchase call me directly and let's see how we can make this dream a reality, 661-702-4767.

Reasons Foreclosures Aren't Always The Best Deal

I always have clients that come to me and say I want to buy a foreclosure.  I ask why? They proceed to tell me because they are good deals!  Home foreclosures occurred in healthy real estate markets in the past, but became far more prevalent after the housing market crashed in 2007. Foreclosed properties are bank-owned homes, also referred to as real estate owned (REO) properties. Banks can foreclose on a property after 90 days of mortgage nonpayment. Homeowners default for many reasons, including loss of their jobs, unrelated financial stress or intentional nonpayment to escape severely underwater mortgages.

Regardless of why homeowners default on their mortgages, banks repossess foreclosed homes and resell properties to recuperate their losses. 

I always have clients that come to me and say I want to buy a foreclosure.  I ask why? They proceed to tell me because they are good deals! 

Read below maybe this will change your mind on why a foreclosure isn't always the 'best deal"

1. Competitive Sales

Everybody always thinks that a banks aim is to offload REO-related property taxes and liabilities as soon as possible. They  think they price properties to sell.  Do you know I just received a price on a home from a bank this week $50,000 over the last comp!  This home is not competitively priced what so ever.  Most banks are now pricing their homes competive with or above current comps.  Banks seek all-cash offers or offers from pre-approved buyers with trustworthy credit and sizable down payments. Most first-time buyers cannot compete with investors who swiftly identify quality REO homes, move quickly making enticing offers and close without financing procedures.

Additionally, if experienced real estate professionals don’t make offers on an REO property, first-time buyers are wise to avoid it, too. Investors often look for homes to flip, and even buyers shopping for fixer-uppers should carefully heed the warning of disinterested experts.

2. As-Is Condition

When you visit an REO property, they don’t have the luxury of visualizing their lifestyles in nicely-staged environments. Foreclosed homes often sit vacant on the market for a period of time before they’re even put on the market. Buyers must stay open minded to see the potential in each property. Consider too that vacant properties sometimes don’t have electricity to power lights for walk-throughs.

Further, buyers of foreclosed homes do not receive property disclosures. Since banks are unfamiliar with the history of properties, buyers accept the risk of purchasing homes with unforeseen damages. It’s unlikely that previous homeowners who couldn’t afford their mortgages were prioritizing property maintenance, leaving repairs for future owners. Buyers should hire thorough home inspectors to survey properties before making offers.

Unlike other for-sale listings, buyers cannot negotiate with sellers (banks) to make upgrades to properties before closing. Banks intentionally price properties low accounting for buyer upgrades. Buyers of foreclosures must prepare to purchase homes in as-is condition.

3. Long-Term Vacancy and Vandalism

In addition to the aforementioned vacancy concerns, some REO properties remain vacant for extended periods of time. Pipes freeze in the winter when homes aren’t heated, bursting and causing costly water damages. Rodents and even homeless transients take refuge in abandoned properties. Before making offers, buyers need to evaluate the health concerns and total costs of repairs to create livable conditions in REO homes.

Banks sometimes permit short sales when borrowers are underwater on their mortgages. Short sales occur when banks accept the resale of a property for lesser value than borrowers currently owe. Short sales are sometimes more cost-effective for banks than allowing 90 days of nonpayment followed by property marketing resale. In many cases, banks do not permit short sales resulting in disgruntled homeowners.

Upset, angry or financially stressed homeowners facing foreclosure often strip properties of removable, valuable features and even intentionally vandalize properties as retaliation. Buyers should account for the costs of replacing appliances and fixtures including dishwashers, sinks, toilets and light fixtures. A foreclosure property may not be worth the inexpensive price tag if countless big-ticket items are missing.

In all, buyers have numerous factors to consider when shopping for homes; one of the major influencers is price. REO properties may meet that objective at first glance, but the challenges of competing for a quality home, the risk of unforeseen damages, the health concerns of unkempt properties and potential costs of stripped appliances may dilute the bargain.

Reason #6 A Buyer May Dislike A Home

Some home buyers have a love-hate relationships with the properties they see. They either fall madly in love with a place, finding no faults, or are totally disgusted, even outraged that I would dare show them something so terrible. 

Sometimes, underlying a buyer’s rejection reaction are their own irrational expectations or other psychological quirks. But other times, there are hidden issues that can cause a gut reaction of hate toward a particular home.

Here is reason #6 a buyer may dislike a home.

6. Competition fears.

I recently had a buyer text me the address of a home they saw for sale, listed within their price range. A moment later I received another text from the same buyer: a note that they know they’ll never be able to afford it because of all the traffic they saw at the open house and the multiple offers they assumed would result. It’s great for buyers to have a realistic understanding of local market dynamics like whether it’s a buyer’s or a seller’s market, how long homes tend to stay on the market, whether they should expect to compete with other offers and how much above or below asking homes usually sell for.

But in a hot market this can result in buyers disqualifying themselves, mentally, from homes on which they should be making offers. Sometimes buyers trust their own knowledge too  much instead of their agents knowledge!

Identity Theft and Data Breach Update

Target’s data breach last fall compromised not only the credit/debit card information of 40 million
customers, but more importantly the personally identifying data of 70 million people. Similar
breaches recently occurred at Michael’s Crafts, Neiman Marcus, eBay, PF Chang’s, universities,
and even at the federal government. A new report from the National Consumers League indicates
that breaches are now more likely to result in actual fraud: nearly 1-in-3 breaches in 2013, up from
1-in-9 in 2010.

California created one of the first data-breach notification laws, and requires consumer notification
if email or internet passwords have been breached, and if that data breach affects more than 500
people. There were 167 breaches reported in California last year, up 20% from 2011.
Initial protection begins with requesting a free credit report each year from the three credit bureaus,
viaannualcreditreport.com. However, credit fraud makes up less than 20% of all identity fraud.
True identity theft 1.) may involve your name, address, SSN, driver’s license, medical identity, character
or criminal issues, 2.) is costly and time-consuming to resolve, (on average 55-130 hours, and
$1000-$5000 per incident), and 3.) may even require help of an attorney in another state.

Be sure to check your credit a few times a year!

Credit Myth #5 - If I Request A Copy Of My Report, My Scores Will Go Down

It is true that having too many inquiries by lenders hurts
your credit report, but how frequently you pull your own credit report has no negative impact on your score.

The inquiry will show up on your credit report but will not affect
your score in the case of monitoring it. Credit bureaus know you need to monitor your credit report, so pulling your own report is considered responsible
behavior. Do it freely!

Remember you shouldn't bother paying for your credit score because
it will be the consumer score and not the FICO score used by lender

Many people avoid purchasing a home due to credit repair issues.  This week I am going to display some great blogs written by my friend Robert Montoya who has personally helped many of my clients repair their credit issues so they can purchase a home.  If you need help, contact Robert, 818-298-6894. 

Credit Myth #4 - I Have To Pay Off My Balance In Full To Keep Scores High

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Sadly, this mistaken belief causes some consumers to make
unnecessary payments with the little money they already have.
The truth of the matter is credit bureaus have no way of knowing
whether you pay your balance in full each month or whether you make
monthly payments.

If you have the financial resources to do so, pay off your balance
each month but only to save money in the interest! But to increase
your score you need to focus on your utilization rate or in fact, it will
decrease your score by lowering and paying off your balances in full.

I should note that I have heard of cases where smaller balances and
recent activity on a credit card have boosted a person’s score enough
to give them a better interest rate on a loan.

That said, the increase is minimal. Generally speaking, always
keeping a balance is unnecessary and lenders might prefer a
zero balance. But remember…do this only if you trying to avoid
paying the monthly interest on your account and only if you are
maintaining the same pay patterns every month.

The optimal percentage to pay your outstanding credit card bills
down to is 30% if possible.

WARNING- Some lenders have been known to lower your credit
limit or even close your account after you pay off your card.

So be very cautious when paying off your accounts on a monthly
basis to save on the monthly interest fees it may not be worth it!

Many people avoid purchasing a home due to credit repair issues.  This week I am going to display some great blogs written by my friend Robert Montoya who has personally helped many of my clients repair their credit issues so they can purchase a home.  If you need help, contact Robert, 818-298-6894. 

Credit Myth #3 - Close Some Lines Of Credit

Q:If I close some of my credit card accounts, I will have a better credit score.

A: Credit experts generally agree that once you have opened accounts
you should keep them open. The reason is that as soon as you close them
then you are shutting down the continuation of building credit history.

Closing them will never help your score, and it might actually hurt your
score by lowering you overall utilization rate and shortening the average
age of your active accounts, which is one of the reasons why some not
knowing this have had a declining credit score.

Keep them open and pay your cable bill with it once a month. Then pay it in full every month to avoid interest charges. Or you can keep a small balance on it for a month or 2 then pay it off in full. The fact is that the credit bureaus do not know when you have paid off your credit card in full every month or not. They simply are more interested on your payment patterns regarding the reporting of late payments starting at 30 days since there is no grace period after this time frame.

Many people avoid purchasing a home due to credit repair issues.  This week I am going to display some great blogs written by my friend Robert Montoya who has personally helped many of my clients repair their credit issues so they can purchase a home.  If you need help, contact Robert, 818-298-6894. 

Credit Myth #2

Q:If I succeed in deleting a negative item, it will just come right back
on my credit report.

A:The credit bureaus have cleverly spread this myth through the news
media and government agencies. In truth, the credit bureaus will often
temporarily delete a negative listing if they haven’t heard from the
credit grantor after approximately thirty days.

If the credit grantor reports late, say after six weeks, and then verifies
the negative listing, the credit bureau will often reinsert the negative
listing on the credit report.

This is often known as a “soft delete.” Usually, though, the creditor
simply fails to respond and the negative listing is permanently deleted.

If the item is verified by the credit grantor, either before thirty days or
after, the account may still be challenged at some future time for
removal. If this rare action occurs you can have it removed it again by
re-disputing that item. The New Laws FACTA (Fair and Accurate Credit Transaction Act)
along side the Fair Credit Reporting Act makes it much more difficlut for this
to occur. Don’t let this change your mind about improving your credit with
credit correction services.

Many people avoid purchasing a home due to credit repair issues.  This week I am going to display some great blogs written by my friend Robert Montoya who has personally helped many of my clients repair their credit issues so they can purchase a home.  If you need help, contact Robert, 818-298-6894. 

Credit Myth #1

Here is a series of some of the most common Credit Myths that are floating around out there and clear the air on them.

There is much to discover and hope you get alot out of it. So Enjoy this Series!

Q: When I pay off a past-due account, such as a chargeoff or a collection account, it will show “paid” and will no longer be negative.

A: It is quite difficult to restore your credit without somehow satisfying your outstanding debts. However, the act of paying off a debt, in some cases, can actually hurt your credit. Negative credit is allowed to stay on the credit report for a maximum of seven years, except for bankruptcy which may remain on the credit report for ten years.

This seven year clock begins ticking on “the date of last activity” or, in other words, when the last action took place on the account. By paying an outstanding, delinquent debt you will change the account status to “paid collection,” “paid was late,” or “paid was charged off”– which will still stand out as a very negative listing. Furthermore, you will create a new date of last activity on the day you settle the account.

The seven year clock will reset and begin all over again. When you have outstanding debt, it is almost always prudent to seek professional help so that you may settle your debts without further damaging your credit. (Our firm will provide a debt settlement program in the near future.)

Many people avoid purchasing a home due to credit repair issues.  This week I am going to display some great blogs written by my friend Robert Montoya who has personally helped many of my clients repair their credit issues so they can purchase a home.  If you need help, contact Robert, 818-298-6894.