Everything YOU Need to Know to Stay Ahead of Your Competitors
April 18, 2017
Millennials Crave American Dream of Homeownership
Millennials don’t want to own homes. It’s an oft-repeated assertion that simply is NOT true.
In fact, 79% of millennial homeowners believe owning a home has a positive impact on their long-term financial picture, according to Bank of America’s second annual Homebuyer Insights Report. And a whopping 86% believe owning a home is more affordable than renting.
Young homeowners aren’t as picky and are the least likely to seek a move-in ready home among all the generations — because they don’t necessarily view their first home as their permanent residence, BofA’s head of consumer lending Steve Boland told Yahoo Finance. Sixty-eight percent of millennials surveyed view their current home as a “stepping stone” to their forever home.
An earlier survey by The Collingwood Group found Millennials were willing to sacrifice Starbucks Visits and Cable Television to finance home purchases.
“It’s fascinating that millennials want to live in the city while they’re single but want the American Dream of white picket fences and yards when they are ready to buy, according to our exclusive poll,” says The Collingwood Group Chairman Tim Rood.“That is so critical given the ambiguity and fear that millennials will get hooked on urban conveniences and abandon the suburbs, leaving baby boomers and other downsizing households in the lurch.”
The Bank of America study highlights the fact that, simply put, when millennials grow up they’re not much different from their predecessors. It found millennials are looking to purchase a home, but not taking as committed of an approach as their parents or grandparents did at the same age.
Shacking Up Saves Millennials Money
You might expect 25-year-olds in Washington to live with multiple roommates to afford to live in this high-cost city. But the visual of millennials hanging out in a crumbling group house on a stained couch leaking its stuffing is about to be shattered.
Newly designed co-living apartments bring sophistication and privacy to the group living experience. For example, instead of a moldy bathroom used by decades of transient residents, each roommate at the Oslo in Shaw in Northwest has a private bathroom with a sleek glass-enclosed shower and a private bedroom with a walk-in closet.
“When we saw that this place is brand-new and we could each have our own bedroom and bathroom, we grabbed it, especially since it was the last available apartment here,” says Garrett Lance, who has lived at the Oslo with his roommates James Arnold, Justin Griffis and Andrew Krentz for two years. All are 25.
While Lance, Griffis and Arnold knew one another before moving in together, Krentz found the Oslo and his new roommates in the time-honored way of young people today: on Craigslist. All four roommates like being close to the Shaw Metro station, about one block away, along with bars, restaurants and stores.
[The gang’s all here: Group living has grown in popularity in the D.C. area]
Developers say more co-living apartments are in the works, an idea they expect to grow given the continual need in the District and other cities for moderately priced rentals, especially for young people.
What makes the Oslo and similar developments different from other group homes is that they are newly built residences specifically designed to make it easier to live with roommates. Instead of three or four people piling into an apartment with one bathroom, these units have private space for each person, along with an open shared living area and kitchen.
Amazon CEO Jeff Bezos Redefines ‘Day 1’ Certainty for Mortgage Execs
Day 1 Certainty has been the hottest topic in the mortgage industry since Fannie Mae announced it last October. It’s a very smart program designed to transform the entire industry by driving digital mortgage adoption—lenders get relief from significant loan origination risk if they use digital mortgage processes, and of course the consumer wins because their experience is drastically simplified.
Smarter still is the ‘Day 1’ management philosophy Amazon CEO Jeff Bezos discussed in his latest shareholder letter.
Mortgage leaders are steeped short-termism because of ever-faster transaction cycles and daily rate movements that our businesses are based on. So there are critical lessons from the Bezos view that “it is always Day 1” of the company even when the company is decades into the game.
Talk about Day 1 Certainty. In an era where technology and deregulatory hope is driving more entrants into an otherwise extremely hard business, lending leaders would be wise to absorb Amazon’s brand of Day 1 Certainty.
CFPB Chief Gets a Warning on Way to Probable Run for Ohio Governor
Gary Cohn gave Richard Cordray, the head of the Consumer Financial Protection Bureau, an ultimatum over dinner a few weeks ago: Go the easy way, or go the hard way.
Cohn, President Donald Trump’s top economic adviser, had heard the rumors that Cordray wanted to run for governor in Ohio. He left dinner that night thinking that they were true, according to people familiar with the meeting. So the White House decided to hold off on firing Cordray. Trump didn’t want to cause a sensation that could boost his candidacy and juice his fundraising.
Few inside the Beltway provoke as much hostility and condemnation as the pioneering consumer watchdog, who was appointed by President Barack Obama. House Financial Services Chairman Jeb Hensarling (R-Texas), like Trump, wants him removed. Financial lobbyists fume that he’s abusing his power. Even some Democrats are unhappy that he took so long to get wise to the bad behavior of banks like Wells Fargo.
Cordray — whose five-year term expires in July 2018 — has yet to announce his political intentions, and his window for launching a gubernatorial campaign is starting to close. But whether or not Trump ultimately decides to fire him, he may already have enough political support to lead the field to replace Republican Gov. John Kasich in 2018.
While Cordray might look unpopular in Washington, in Ohio he has a far different reputation. If he does run, he could be the only Democratic candidate with the chops to defeat a strong Republican opponent.
Meanwhile, Cordray’s life in Washington isn’t easy. During five hours of congressional testimony in early April, he took a beating from Republican lawmakers for being too hard on banks, car dealers, credit unions, payday lenders, everybody. Then he took a beating for being too easy on them. “Asleep at the wheel!” said Rep. Ann Wagner (R-Mo.). There were snide remarks, accusations, and a subpoena.
“Boy, they really hate you, don’t they?” said Rep. Michael Capuano (D-Mass.), a Cordray ally who went on to defend the beleaguered regulator.
Yet back home, even bankers like him.
“We have no quarrel with Rich,” said Jeff Quayle, senior vice president of government relations at the Ohio Bankers League. “He was given an incredibly hard job to do, starting a new agency from scratch. That was bound to lead to conflict.”
Banker love is no small thing in Ohio, a financial hub that has given rise to industry powerhouses. JPMorgan Chase & Co. is one of the largest employers in Columbus. In Cincinnati, U.S. Bank, Fifth Third Bank and PNC Bank towers mark the skyline.
During a break from his punishing Financial Services Committee hearing on April 5, Cordray was asked to explain his popularity with Ohio bankers. He had a ready answer.
“They know me,” he told POLITICO. “I’m sincere. I’m trying to do the right thing.” Then, like the practiced politician that he is, he ticked off his pro-business successes as state treasurer and attorney general. He volunteered that Ohio auto dealers like him, too.
Robots Will Build Your Next Home, Saving Labor Costs
The future of homebuilding depends on more people like Cyndicy Yarborough, a 26-year-old former Wal-Mart clerk with no background in construction.
At Blueprint Robotics in Baltimore, she works in a factory that builds houses like cars, on an assembly line, using robots that fire thousands of nails into studs each day and never miss. Yarborough operates a machine that lifts floors and walls and packs them onto a flatbed truck, the final step before delivery to a development site where they’ll be pieced together.
“I like being a part of something new, on the cutting edge,” said Yarborough, a single mother who took the job at Blueprint last May.
Builders hire the factories to manufacture homes in sections, which are transported on trucks, then laid down on foundations by cranes, like giant Legos. Sometimes the modules are fully framed rooms, complete with tile showers and gourmet kitchens.
“This has to be the wave of the future — I don’t know how we solve the labor shortage otherwise,” said John Burns, an Irvine, California-based homebuilding consultant. “What drives modular construction is the ability to build the house more cost-effectively.”
U.S. homebuilders say the labor crunch is their biggest challenge, and that it’s pushing costs up as much as 5.2 percent on average, according to National Association of Home Builders/Wells Fargo surveys last year. President Donald Trump’s proposals to crack down on undocumented workers may further squeeze the industry, one heavily dependent on immigrant labor.
The idea of transporting homes in prefabricated sections has roots in the early 1900s, when homesteaders could buy kits from a Sears, Roebuck & Co. catalog for assembly on their newly acquired plots of land. In the 1980s and 1990s, it became increasingly popular to build lower-cost homes in factories, according to Gary Fleisher, who runs a blog for the industry called Modularhomecoach.com.
Labor costs are more favorable for factory construction, according to David Reed, vice president of Champion’s modular division. Workers make about $15 to $20 an hour in rural Pennsylvania. That compares with $50 to $100 an hour in the markets the manufacturers serve, like New York’s Hudson Valley, and the Washington, D.C., area, Reed said.
Builder Kris Megna works with Champion to create houses as large as 10,000 square feet (930 square meters) in the pricey suburbs of Boston. Megna, 31, who founded Dreamline Modular Homes in 2010, said almost any custom design is possible, even though the modules can’t be much bigger than 60 feet by 16 feet (18 meters by 5 meters). Walls between sections can be knocked down for open-concept kitchens, and cutouts can create vaulted ceilings, he said.
“The house is 60 percent complete when it arrives, and that means 60 percent of the headaches of building are gone,” Megna said.
For less-expensive homes with smaller margins for developers, transportation costs can eat up the savings of going modular. Federal restrictions also limit the size of each box, or section of home being moved, which can mean more on-site construction. There’s also the stigma, modular manufacturers say, that connects them to the industry’s oldest relative.
“Often when we exhibit a model home at trade shows, I will hear comments like ‘This is nice for a trailer,’” said Biggs of Ritz-Craft. “Our homes are far from it, and in many ways higher-quality than those built on site.”
The Voice of Housing is a mortgage industry portal published by the Collingwood Group.
Contributors include former Ginnie Mae CEO Joe Murin, former FHA Commissioner Brian Montgomery,
Collingwood Group Managing Director Tim Rood and other housing professionals.
About The Collingwood Group
The Collingwood Group is a top mortgage industry advisory group based in Washingtion, DC. Collingwood's
expertise spans all aspects of Agency, non-Agency and FHA/VA housing financing programs and Ginnie Mae
securitization activities, among others.