Millennials Slouch Toward Home Ownership

Long presumed to have less interest in the non-stop consumption of goods that underpins the American economy, millennials might not be different after all, according to a new study out this month from the Federal Reserve. Their spending habits are a lot like the generations that came before them—they just have less money at this point in their lives, the Fed found. The group (born between 1981 and 1997) has fallen behind because many of them came of age during the financial crisis.
The Fed’s findings are grounded in an analysis of spending, income, debt, net worth, and demographic factors among different generations. And although millennials spend freely on luxury cars and clothing, housing and food (avocado toast wasn’t specifically tracked) are 2 areas where millennials have spent less than previous generations, with the younger cohort paying more for education.
Millennials are at somewhat of a full-stop when it comes to saving for a home, with most swimming in student loan and credit card debt. Consequently, their prospects for buying a home—and having a 20% down payment to do so—are next to impossible, unless parents or grandparents contribute some hard-earned cash to their home buying efforts.
At least now relatives know what to get their millennial family members for Christmas.

Color Me Profitable

The restorative power of a fresh coat of paint should not be underestimated—but who knew the right color could fetch as much as $6,271 more for a home than expected? In a report out this week, Zillow analyzed 135,000 photos from homes sold around the country between 2010 and May 2018. Black or charcoal front doors produced that top $6K+ premium. Light taupe living rooms netted $2,793 more than homes with white or other color walls, and light blue bathrooms cashed-out at $2,786 more.
Although Pantone’s Color of the Year is “Ultra Violet” (deep purple), Zillow says no to dramatic colors: Red kitchens knocked an alarming $2,310 off sales, dark brown dining rooms sliced $1,684, and sunny yellow exteriors melted $3,408 from sale prices. However, Greige (a blend of light gray and warm beige) netted sellers $3,496 (used inside or out).
While choosing the wrong color can dent a sale, a sterile bleached look might be the biggest loser. Zillow reports that bathrooms painted an unadulterated white sold for an average of $4,035 less than bathrooms with off-white or eggshell hues.

Existing Home Sales on the Rise

A report out this week says sales of previously owned U.S. homes rose in October for the first time in 7 months. But the market remains relatively soft, with sales down 5.1% from a year earlier, the biggest drop since 2014. The report from the National Assn. of Realtors (NAR) said that the annual rate of existing-home sales increased to 5.22 million from the previous month; economists had predicted 5.2 million. The median sales price rose 3.8% from a year earlier, while the inventory of available homes expanded 2.8%, the 3rd straight increase.
Other reports this week gave a mixed picture of the sector: Sentiment among homebuilders dropped the most since 2014 in November amid pessimism over both current and future demand, while government data showed housing starts rebounding slightly in October. Federal Reserve officials are still expected to raise interest rates in December for the 4th time this year and continue tightening in 2019, as consumer spending is seen remaining solid.
At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, below the 5 months’-supply mark that NAR consider consistent with a tight market. Existing home sales account for about 90% of the market and are calculated when a contract closes. The remainder of the market is made up of new-home sales, which are a timelier indicator as they’re tabulated when contracts get signed.



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State Voters Reject More Rent Control

Proposition 10, a ballot measure to expand rent control in California, was decisively rejected by voters Tuesday in a victory for the state’s landlords who spent millions to defeat it. The campaign was one of the most expensive initiative battles in California history with more than $104 million in total fundraising. With Prop 10’s failure, a statewide ban on most new forms of rent control remains in effect.
The losing side pitched to voters that, as housing purchase prices continue to outpace affordability, 9.5 million renters—more than half of California’s tenant population—are burdened by high rents, spending at least 30% of their income on housing. Had the initiative passed, local governments would have been free to add new restrictions on rents, something Los Angeles, Santa Monica, Berkeley, and other cities were considering.
Despite Proposition 10’s defeat, rent control is likely to remain in the spotlight. Residents in Sacramento, the state’s sixth-largest city, have qualified a 2020 initiative that would implement rent controls on the city’s older apartment buildings. Democrat Gavin Newsom, who was elected governor on Tuesday, opposed Proposition 10, but has said the state “should have stronger protections for tenants.”