Transcription

• Speaker #0

  All right. We are here for another episode of Millennial Money Matters with Kelly Turner.

• Speaker #1

  And Derek Mazzarella.

• Speaker #0

  We are, right, session two in the new studio. Yeah. Looking fresh still. Still looking fresh. Love the vibes. Right. We got good vibes. We got- Couches. Yeah, right. Comfy. We're comfy. It's great. It is, as we're recording this, right, this is going to, this season is coming out very soon in September. It is like the end of summer. We are in the like final countdown to school starting. and I don't, we both have kids. So how do you feel about that, Derek?

• Speaker #1

  Well, you know what? Remember those old Staples commercials where the dad was like going crazy, the most wonderful. My dad would do that every year around this time of year. And I never understood why. And now I understand exactly why. He's like, get out of the house. Let's get back in the routine. I'm sick of this.

• Speaker #0

  My kids are staying up too late. I have fed them more candy. My kids have had more candy this summer than they've ever had. Why? Why do I do this only in the summer?

• Speaker #1

  I don't know. They just, because it's just... they just keep asking for it it's like lighter later and people get confused like it's not bedtime yet like no it's actually eight o'clock at night you need to get in the bed yeah everybody's tired everybody's cranky yeah you're always like trying to fill in like different spots it's never consistent like camps don't always open or they close the weird hours like oh yeah we're gonna run the day camp till three and you're like well i work till four or five so like that's how that works okay yeah not not consistent i did have one of my kids just got back from sleepaway camp that's

• Speaker #0

  a whole adventure first time in sleepaway camp um did you get like uh letters handwritten letter he wrote one postcard that we received yesterday that was very hard to read and it said i'm writing this in the dark but i miss you thanks child um but yeah she had a good time her only complaint my bougie child was that the food was terrible oh no uh no roast duck or anything yeah there wasn't enough options for her um she told me that she ate fluffernutter sandwiches every day and i was like oh peanut butter fluff she was no i didn't like your your peanut butter. So just fluff. And I'm like, so you just ate. marshmallow crammed between two slices of bread. Awesome. And then for breakfast, she ate a muffin and a pile of bacon.

• Speaker #1

  Oh, okay. Some protein.

• Speaker #0

  Yeah. Every day. I was like, all right, this is, this is like what happens to 2025 kids though, because they're like, oh, you didn't take me to the Charles or, you know, it wasn't as good as, you know, Maggie McFly's like they want, they want the good stuff. They don't want to eat like cafeteria food. My kids are suffering this week at camp though. So right. We're at the end camp during the school year my kids eat hot lunch we are we are hot lunch people um during camp i have to make them lunch every day and there is not one thing in the world that i hate more than making lunch it is the worst so i mean yeah it's horrible annoying it's just annoying and nobody's happy itself you know yeah and nobody's happy about it nobody's happy with what you give them so all of my kids are going to open their lunch boxes today at camp to find out that i stuffed a cold piece of pizza to ziploc for them they're gonna be so jacked up though well that's the thing it's either gonna be like oh my god amazing or they're going to be like you're the worst mom ever.

• Speaker #1

  You did nothing for me. Do you even love me?

• Speaker #0

  We'll find out. We'll find out.

• Speaker #1

  So what are we talking about today?

• Speaker #0

  So today we're talking about the millennials and Gen Zers trying to buy houses. We've talked about housing a few times before, but we haven't really like dove into like who is buying houses now and what does it look like?

• Speaker #1

  This is going to be an easy episode, right? We just give a lot of money to people and there's a lot of houses available and you just put down payment on your...

• Speaker #0

  And you're good. And you're good to go. And you're good to go. So let's kind of dive into it. So like who is buying houses right now?

• Speaker #1

  Yeah, actually, because I feel like we had this conversation before we started recording. I saw something where a bunch of 70-year-olds are starting to buy houses, and it's like their first time homebuyers at 70, which seems crazy. And then it's like, well, now the average age, it seems like it's ticked up for homebuyers. So are Gen Z even buying houses at this point?

• Speaker #0

  So not at very high rates. Only 3% of buyers are Gen Z. And Gen Z is 18 to 25 right now, maybe a little bit older, depending on what you're looking at, but somewhere in that range, but only 3%.

• Speaker #1

  3%. That's a little lower than I thought. I'm not totally surprised by that because it has gotten crazy expensive in the last like three years. So basically like COVID happened when they were like, just became adults and they're like, Oh, I've got some, maybe some money to buy a house.

• Speaker #0

  Well, and the truth is the average millennial, the average first time home buyer in the market full stop is 38 right now. So that's a millennial, right? So,

• Speaker #1

  and I'm sure 20 years ago, it was probably like 21,

• Speaker #0

  25, way, way, way, way younger. So it's a millennial. So if that makes sense that Gen Z isn't buying, right? Because if they're only 25 or 26. They haven't hit 38 yet.

• Speaker #1

  Not gonna lie though, you probably don't really want a house at like 23 years old.

• Speaker #0

  Well, you say that. So I think it really depends. I love when I get 23, 24, 25 year olds buying houses. They're my favorites because I know that they already have a plan, right? You don't just stumble into that at like 23 or 24. You've got a plan. And often that plan is great for me as the lender because they're going to buy and sell a lot more houses. So it's awesome. But no, I like it a lot of when I get really young adults that are buying houses. I actually find that it's a lot of young women. very very common they're buying condos and they're like i'm gonna charge my roommate rent they're gonna pay for the mortgage i'll own this thing eventually when i find you know somebody i want to marry or be with maybe we'll buy another house and i'll keep this as an investment property yeah i'm like 10 out of 10 or you sell it and then you got a pretty nice job payment yeah proceeds exactly so great idea but that's becoming really hard for millennials and gen zers

• Speaker #1

  They're just not building enough condos. Is that one of the big issues?

• Speaker #0

  So this is, and I think we have touched on this on a past episode, but it's not that they're not building condos. It's not that they're not building houses. Nobody is building affordable condos or houses. When condos are being built, they're luxury condos. When houses are being built, they're luxury houses. So there's not a lot of like starter home stock.

• Speaker #1

  Yeah. Like I just want an 800 square foot condo that's bare bones, doesn't have like granite and whatever the fancy designer stuff is now, right?

• Speaker #0

  Yeah. And well, and then the other thing that's really impacting sort of this age group of student loans, right, is they have higher consumer debt. They have more student loans than ever before. Houses cost more than they've ever cost. But their their income hasn't really gone up accordingly. So this is really delaying the home buying milestone for them.

• Speaker #1

  So I guess why don't we take a step back? And then so in terms of having student loans, like I feel like I'm going to butcher the number. but I remember when I bought a house years ago. mortgage broker said it's like every $50 of monthly debt equates to X amount you can't borrow. I think it was like $100,000 you can't borrow,

• Speaker #0

  $50,000 you can't borrow.

• Speaker #1

  Is that ratio still around or a thing or no?

• Speaker #0

  Sort of. And student loans are very hard to plug into that equation because student loans, we calculate differently than necessarily what it looks like on paper. Part of that is because when we pull your credit for the vast majority of buyers still, Because of the COVID deferment, a lot of people's student loans report as zero dollars a month. And if you have them in any sort of deferment or income-based repayment plan or things like that, they're usually reporting as that. So we have to do fancy calculations depending on the loan program. Sometimes it's 1% of the balance. Sometimes it's a half a percent of the balance as your monthly payment. There is one that is 5% of the monthly balance divided by 12 is your monthly payment. So different loan programs have different ways that we calculate out student loans. um but truthfully it almost doesn't matter how we calculate it out if you've got 50 to 100 000 worth of student loans which is not abnormal now not at all um that can that can put a dent in what you can afford in a house yeah i mean just it's money money taken from some other place to another place right so it's every dollar you're borrowing means you can't borrow something for for that. Exactly.

• Speaker #1

  In general.

• Speaker #0

  So. Exactly. So, you know, let's talk about. affordability and intent to buy. So millennials and Gen Zers do want to buy. So that's the first thing. They are interested in this market. They want to be in this market. When I'm speaking to my millennial and Gen Z homebuyers, they're enthusiastic. Why? Well, number one, they are better educated than prior generations on homeownership because of truthfully tools like TikTok and Instagram and YouTube. They're watching videos. They're consuming content kind of around these topics. So they feel like, hey, I know what I'm doing.

• Speaker #1

  yeah, I got that. And then I got, Hey, we've got Zillow and all the other stuff where we kind of have an idea what the price of the house should be. Do you find those things are kind of accurate or not at all? I mean, every, every like real estate professionals like Zillow, they're that far off.

• Speaker #0

  We hate Zillow more than anything. The problem with Zillow is it is very far off, but I can't tell you if it's too high or too low because it's, it's a, it's a roll the dice, which it is. Um, sometimes I see Zestimates and I'm like, what in the make-believe number is this low-balled like yeah this house would sell for way more than that and then we also see the opposite where we're like on the fifth of never will this house sell for that much like this is not even remotely accurate so it's really hard and what's hard about the estimates is that people get really like hung up on them that like but the internet says my house is worth this and we're like cool this house in your neighborhood is the exact same blueprint as your house with better updates than yours and it sold three days ago for this amount so but

• Speaker #1

  the internet doesn't lie the internet doesn't lie.

• Speaker #0

  People forget to that like Zillow is not some delightful company here to help you. They're a business. They got a business model. They're there to make money. They're there to get you excited about buying a house. They're a company. They're not like your friend trying to be like, hey, your house is worth this much. That's so nice for you. That's so nice for you.

• Speaker #1

  So I guess we'll get back to it. Where do you think the tools have actually been helpful in terms of, okay, now they feel like they're more ready than other generations?

• Speaker #0

  I think what the tools are helpful about is especially... where we're using tools for education. So like Zillow, not super helpful. Zillow is great because you can like open house from your couch, right? The open house is what we used to do. You can stock your neighbor's house from your couch. Like, ooh, what does the interior look like?

• Speaker #1

  Can't say I've done that.

• Speaker #0

  We've all done that. You can look up what it lasts old for. Again, I don't do that when I meet new friends. But it's not necessarily helping educate. I will tell you, I consume a lot of content. We've talked about this before in the podcast. I'm a social media girl. I'm on Instagram. I'm on TikTok. I'm on YouTube. There is some great content out there surrounding homeownership, the math, long-term planning, how it works, how to build equity in homes, how to utilize the equity in your home to buy more homes. We did an episode on house hacking, that's sort of along those lines. younger people are coming in, like getting it, right? Getting the terms, getting like, what is the plan? I'm not just buying a roof over my head, but I'm buying an investment.

• Speaker #1

  Yeah. I've noticed there's a lot more people willing to say, Hey, look, I'm going to buy a two bedroom and rent it out. Or I'm going to, I'm going to do this for three years and then I'm going to be going here. So I think, I think this, these, you know, Gen Z and our generation have really been good about having a plan for the home and thinking through, okay, well, what does my lifetime look like in this house? Is it going to be five months or is it my forever home?

• Speaker #0

  Yeah, 100%. And I've been having that conversation with homebuyers a lot more often. The other thing that's interesting for them, though, is that when our parents were buying houses, they bought a starter home and they lived in that generally when they got married, probably up until they had like maybe kid one. And then they would move from that starter home to the next home. And then they would live in that house till their kids were in high school. And then they would sell that house. And generally for the boomer generation, that generation owned usually around three houses in their lifetime. and it makes sense right starter home mid-level home and then like the downsize the the why some are the downsize or summer because remember boomers aren't really downsizing i call them right sizing they're upsizing and then they're stuck in those is really what's happening with the boomers yeah well i've noticed to get a smaller house but it's much much nicer much nicer um millennials and gen cers are doing one of two things they're either doing like an actual almost live in investment right where they're buying a condo a smaller home a multi-family they're going to live in it but they're it's an investment property or they are skipping that stage altogether and they're going right into home number two or number three right we we are leaving our apartment and we're buying a six hundred and seven hundred thousand dollar house as our first home um and why is that well again they've delayed home ownership so their housing needs at 38 are very different than our parents housing needs at 25.

• Speaker #1

  Yeah, you're not saying, oh, I've got one kid now. Maybe I'm going to have another one. You're like, no, I've got the two kids. I've got the dog. Like, I need the room now.

• Speaker #0

  Now, I want a three-car garage. I want a lot of bathrooms. Yeah, whatever it might be.

• Speaker #1

  Yeah, plus with all the uncertainty with the interest rates, it's been like, just lock it in, get the mortgage now, and then deal with it later.

• Speaker #0

  Yeah, now you know. The other thing that's been interesting is that, you know, with that, however, first-time homebuyers are one of the smallest pieces of the market right now. They're only 24% of current homebuyers are first-time.

• Speaker #1

  Really?

• Speaker #0

  Wow. And it's again, I have a fun statistic, nearly 58% of Gen Z who started the home buying process ended up backing out.

• Speaker #1

  Wow. They've been that mad about the whole process.

• Speaker #0

  Yeah. 38% were unsuccessful in trying over the last four years.

• Speaker #1

  Imagine trying to buy a house and just having zero options.

• Speaker #0

  Well, and truthfully, I have clients that I have been working with for three or four years that they're still here. We're still hanging on. Now, why is that? Some of them, and they'll tell you admittedly so, want something very specific, and there's just not a lot of inventory. And when it comes on, it comes on fast and it's expensive. Some of it is pickiness, right? I want to be in this neighborhood. I want to be here. I want to be there. Some of it is just, especially if you have a low down payment or a low credit, and you're in maybe what's considered a less desirable, which is a term that I hate, but a less desirable loan program. it can be harder to get your offer accepted. So it's not that they're not trying and not trying a lot. It's just, they're not having success.

• Speaker #1

  When you're competing with four or five, 20 offers. Yeah. You know, I mean, you've told me as many stories like, oh, this is the fifth house. Is the house on west seventh street or this is the,

• Speaker #0

  yeah, I know what they are. The houses, especially in Glastonbury where we live. Um, I will have people call, I will see a house come on and I'm, I'm on, have all the Zillow searches and everything that comes to my email every day. I know every house that comes on, you know, probably the 15 towns surrounding us on the daily. But I will see a house pop up in my email and I will wait because I will know that I will get 10 phone calls on that house on that day. And the people will call me like, hey, can you price up? And I'm like, one, two, three, Main Street. Sure, I can. Like, how do you know, guys? Because it's the only house that came on the market today and everybody wants to see it. But so there's definitely some frustration in this sort of demographic about, you know, like, when is it our time?

• Speaker #1

  Yeah. Well, I got a side question. You may not have the answer and we can skip it if you don't. I think say what percentage of it were corporations buying? Cause I feel like I've heard about that more in the media now.

• Speaker #0

  Okay.

• Speaker #1

  So corporations are doing it. No,

• Speaker #0

  I do not have that statistic. However, I don't think in our area that is as common as people think it is. Okay. Because you also have to see the flip side that a lot of my buyers are also sellers. Yeah. Okay. I have not had one of my sellers sell to a corporation. Okay. Never.

• Speaker #1

  I I feel like I did see that more happen in like nashville Like my wife stepbrother lives down there and we went to visit him five years ago and it was like cheap And then we went four years later. I was like, wow, everything is about is like, these are all Airbnbs.

• Speaker #0

  Yeah. And I will say, I do think that happened in some areas. We've talked about Southern Vermont a little bit. I'm licensed in Vermont. Southern Vermont for a little while was the fastest growing housing market in the country. That was an Airbnb wasteland for a little bit where it was like every house was an Airbnb. They were empty. They weren't even welcome. kept airbnbs and and it became a real problem up there um it's it's actually caused a housing crisis in vermont we could do a whole episode on that it's it's yeah a major housing crisis in the state of vermont the state of vermont tends to be a lower income state with a lot of housing issues in that like it's very rural so it could be an hour or two from your job um and there's just not a lot of inventory to purchase and then what is being purchased is being bought by by airbnbs by kind of investors and stuff like that. So it's become very problematic in some areas. Connecticut, again, a little more insular to that. We do not have a great Airbnb market here unless you're really on the shore.

• Speaker #1

  Yeah. No one's going to come here like, I got to go to Hartford.

• Speaker #0

  Yeah. So some of the corporations that have bought, we see more like fix and flips. So a company is going to buy it, they're going to fix it up, they're going to flip it. You see those signs tacked to telephone poles like, we buy houses cash. That's what those are. Those are or fix and flips. there's i don't want to say there's nothing inherently wrong with those i don't have a problem with fix and flips at all if the person who's doing it does quality work because there's the problem there's a problem you have to know who you're buying it for you want to go do research on them you want to you do really want to know that because i've seen terrible flips but if you are buying from a reputable one like there's there's a guy in glastonbury we should have him on at some point um who does great work he does great work he's a fix and flipper he does great work he He prides himself in the quality of the work that he does. And why is it important? There's a lot of people who do not want to do the work. Yeah. So they're happy to pay a premium to get the house complete. Right. So.

• Speaker #1

  Well, plus, I mean, if you think about it, all your neighbors should be happy because you're adding value to the house.

• Speaker #0

  A hundred percent.

• Speaker #1

  You know, you don't have this dumpy house now sitting in the lot.

• Speaker #0

  Yeah. With the, you know, unkempt lawn and whatever. Exactly. You know, so there's a place for those in the market, but that's really what we're seeing here as far as corporations are. What I have found really interesting is the like how to buy. Okay. for millennials and gen zers what are they doing and what i have seen at much higher rates is either communal purchases oh or large family purchases so what do i mean by communal purchases and large family purchases um 22 of gen zers bought homes with siblings siblings huh 21 expected family to participate in things like down payment so gifting from grandma mom and dad um and 34% considered living with friends and family or buying with friends and family in order to save enough to purchase.

• Speaker #1

  So how does that work when it's someone that's like not your spouse, when you guys are looking mechanically from a mortgage standpoint?

• Speaker #0

  I do this a lot. So what generally happens is, right, I will get, and it's often, I guess I'm going to be, it's a lot of women. So I've talked a lot about women. It's a lot of like two women purchasing. I occasionally get guys or like a male and a female or something like that purchasing, but who aren't a spouse or aren't dating, but I see it more with two women that say, hey, I've got a pool of money. You have a pool of money. Neither of this money is enough on its own to purchase a house. We're going to live together anyway as roommates. Let's just do this. Now, how does that work? Well, you are a co-borrower one and a co-borrower two on a loan. So you're on a loan application, sort of like spouses. Spouses go horizontally. situations go vertically. What does that mean? We're not tying your credit reports together. Yeah. So when no one's tying your credit reports together, that's like a horizontal loan where everybody here is now tied to the loan together. You're sort of one loan application and another loan application that are both moving in a direction to purchase a home together. What is a little bit tricky is it does not matter who put what money in or who pays more in the mortgage, you are both owners of the home. at equal amounts.

• Speaker #1

  So if I put in, let's say for $100,000, I put in 70, you put in 30, we still own the home 50-50.

• Speaker #0

  Correct. And we say 50-50. So when you own a home, you actually both own 100-100. And I know that sounds weird,

• Speaker #1

  but you're both- That math doesn't seem to math.

• Speaker #0

  You're both 100% responsible. And therefore, you both kind of collectively own this 100%. So it's not really like a split down the middle. It's really this, it's a lot more nebulous than that. What I don't love about these purchases, and so I generally send people to attorneys to discuss this ahead of time, is that when you own a home with a spouse, there is a legal mechanism for separation of that asset. Okay. What do I mean by that? We're going to do an episode on divorce at some point. When you get divorced, you go through a legal process that determines who owns the house, who's responsible for the mortgage payment. Are we required to sell the house and split the proceeds? There's a legal mechanism here. When you own a house with a friend or an unmarried partner, there is no legal mechanism for the separation of that asset. You have to force the legal mechanism. Okay. What do I mean by force it? You kind of have to either come to an agreement. Or sue each other.

• Speaker #1

  So would you, I guess there's a couple ways I could ask this question. I guess one option, does it make sense to put it in like an LLC?

• Speaker #0

  So that is an option sometimes. I do have people do that because then same thing. Now there's like a legally binding agreement between you on who owns what share of this LLC. Now that's difficult when you're getting a residential mortgage. Okay. We can't really do that in an LLC. It's not really a business. So that's now a business.

• Speaker #1

  And then, so can you set up an agreement? Like, I'm fascinated by this now. Can you set up an agreement prior to this is like, this is our out clause. This is like, what if someone dies? Cause that's the other thing. Like, Oh, someone's disabled now.

• Speaker #0

  Yeah.

• Speaker #1

  We can't work anymore, but I, I can't make the full payment myself. So what do we do?

• Speaker #0

  Yep. That's exactly what I suggest that people do. Yeah. Is that, and, and, and it happens more with unmarried partners than anything else is I will get it. And I did it myself. My husband and I bought our house before we were married. So we were on wedlock. We never, and like no one. no one warned me about it. We were engaged. We bought it in November and got married in July. But we used the proceeds from the house that he owned by himself as our down payment. So what if something had happened? This is mine now. So it's a little bit tricky. And I do really encourage people to speak to attorneys before we even start the process. Discuss, because I'm not a lawyer.

• Speaker #1

  I'm always a big fan of knowing the outs before you get into something, especially when it comes to an asset like that.

• Speaker #0

  Oh, can you say that again? Say that one again. That's like a clip that we're going to put on Instagram.

• Speaker #1

  You have to know the outs before you get in.

• Speaker #0

  Oh, that is gold, Derek. That is gold.

• Speaker #1

  Find the exit door.

• Speaker #0

  Right? And it's true. It really is true. And friends are a little bit more complicated. We're going to talk about family in a minute, but friends are a little bit more complicated because you don't actually have an obligation to each other in any capacity. Yeah.

• Speaker #1

  You have no recourses. Let's say, hey, I'm just going to stop paying the mortgage. Well, tough. You're a hundred percent owner.

• Speaker #0

  Yeah. And I will tell you, I had a borrower a couple of years ago. It was two friends. um who bought a house it was an interesting house it had like almost an in-law in the basement um and one of the borrowers was going to live in the in-law the other borrower was going to live in the main house they bought it 50 50 it was a whole deal and they lasted about a year and then they had a huge falling out and they were living in this house angrily at each other um the borrower who lived upstairs wanted to buy the borrower that lived downstairs out of the mortgage and out of the house they couldn't really afford it they couldn't qualify on their own for a mortgage um which was like sad news for me to tell them like hey i can't actually let you do this the guy who wanted to get out was cranky and he really wanted like equity from this house so he wasn't even just a matter of hey can you refi this it was i need you to get cash out and give me what i put into this house and half of the current equity don't have a house exactly and when you get a cash or refi you can only take up to 80 of the value so it's like a trick it was really tricky for them and that the upstairs client ended up having to have a relative co-sign on a mortgage for them take a 401k loan liquidate that pay him out they ended up like a big fight maybe police got called um lats was dramatic and and they no longer live together but it was something that i think if they had really understood um the risk involved um they maybe wouldn't have made some of the choices they made now my little disclaimer here is i tell everybody to go do this but not everybody wants to do it. they think they will be fine we've been friends for 20 years okay nothing can possibly go wrong nothing can possibly go wrong now the other flip side to this is the family purchases okay and what's a family purchase so family purchases can look very different depending on the situation i have had siblings purchase together i have had um parents and children purchasing together i have had grandma and grandchild purchasing together so it really depends i will say what i've seen most commonly as of recently as two scenarios. And one is. Kid has a family, right? We're going to use whatever. Daughter, she's married. She has two kids. They need a bigger house. They also need childcare. Mom and dad own a big house, but not where these people need to live, right? Not where the daughter needs to live. They own a big house. They want to downsize. They will sell their big house. They will take the equity. And they say like, oh, I'm going to give you this money anyway, right, when we die. They will take the money from that and they will jointly purchase a house with their child and child spouse that has enough space for everybody. And then everyone will live communally in this house. Yeah. And then it is, it's sort of us reverting back to the older multi-generational housing that our parents and grandparents may have lived in.

• Speaker #1

  Oh, yeah. My dad lived in a triple decker with his whole family.

• Speaker #0

  Yeah. So that, well, you're Italian. Um, so my,

• Speaker #1

  that meatballs for everyone seem,

• Speaker #0

  my mom, um, lived in like a six family in Hartford with like grandma over here and like some family never owned it. And yeah, everybody just, it was like six apartments that everybody was related. Yeah. That's, that's the Italian thing to do. Um, but that, that was super common. Everybody got away from that and we're sort of heading back in that direction. Why? Same reason affordability.

• Speaker #1

  Yeah. I think it's a big deal.

• Speaker #0

  Yeah. And it's both affordability for childcare. and affordability for housing. So that's probably the most common family transaction that I see. I like those. They're generally pretty easy. There is already an exit plan in place because mom and dad are going to will whatever the property over to the child anyway. So they're like, this is easy. Now we don't have to go through all of that. Cool. It can get a little bit complicated if there's another sibling or siblings who are not participatory. But I'm like, that's a problem for your estate planning attorney, not me. So please discuss it with them. Occasionally they try to talk about it with me. And then the other thing that I see a lot is siblings. And that is, I would tell you a more common thing. I see that more with brothers than I see with anybody else. Two brothers. I have had probably in the last five years, five or six of this combination, two brothers. And they are more along the lines of the investment property that we're going to live in situation. I have seen, I had two sets of brothers who bought duplexes who they each lived on one side. Um, I have had a few that have bought three bedroom condos. Um, and I, those are always interesting. I had a couple of scenarios where two brothers bought three bedroom condos, brother one lived in one bedroom, brother two lived in another bedroom. They rented out the third bedroom, third person paid the mortgage. Two brothers gain an equity, very smart or paid most of the mortgage. Yeah. So that seems to be a little bit more common, but those sort of scenarios is they're not planning on this to be a long, long-term situation. This is an alternative to renting an expensive apartment.

• Speaker #1

  Right. But you're also...

• Speaker #0

  doing it smartly because you're going to build asset you're going to hopefully be able to move out when you get the family and all the other fun stuff and you have some equity and you have some equity or the property that you're going to i think these are all creative i think they're all very resourceful um but it also is the

• Speaker #1

  lack of affordability pushes you into compromises that you maybe wouldn't have made otherwise yeah well i guess what's what's getting into it because you know obviously the affordability you look at any chart it's it's not affordable compared to almost any other generation, any other time frame. You know, I think...

• Speaker #0

  the late 80s was kind of close but still really not um like what advice would be giving gen z right now and millennials they want to buy a house honestly the top three things i would say are live with family for as long as you can that's number one um i know that's painful millennials and ten years hate that as an option but live with family for as long as you can you

• Speaker #1

  need to save the dough is it more important to have a bigger down payment nowadays than it was

• Speaker #0

  It is. It's more important to have a bigger down payment for two reasons. Number one, the more you put down, the lower your loan is and the more affordable it is. The second reason is the more you have to put down, the easier it is to get your offer accepted.

• Speaker #1

  Yeah. Because if you're coming in with a 3% FHA loan versus, hey, I put 20% down.

• Speaker #0

  They're going to pick the 20% down. Truthfully, not for any good reason. People think it means stronger transaction. It does not. They can fall apart at equal rates. But it is sort of a myth and rumor in housing.

• Speaker #1

  It appears to be less risky.

• Speaker #0

  It appears to be less risky, not actually less risky. But the more money you can save for a down payment, the better. And so if you are graduating from college and mom and dad say, hey, come live at home for a couple of years, and you're like, I'd rather die, please go do it. It's not a bad idea if you can handle it, if mom and dad are cool, if the location makes sense for your work and stuff, or if you're telecommuting, it's really not a bad idea. It's not a bad plan. And again, if you can stock that money away to use as a down payment, it will only help you. So that's item number one is live at home for as long as you can. Item number two is when you are renting, if you are going to rent. We see a lot of Gen Z, especially renting these luxury apartments. They're not like my first apartment was a dump.

• Speaker #1

  I had. pink floral wallpaper pink shaggy carpets yeah it's an old house it was a dump i smell my like there's light everywhere yeah it was cheap there's five of us in the house wow but it was you paid cheap rent right i mean it was back then it was 500 bucks in

• Speaker #0

  in boston

• Speaker #1

  Walpole.

• Speaker #0

  Yeah. So like that, think about what that would have been now. Right. Right. I think that's part of the problem is that they are moving instead of moving into those dumps, which do exist guys, right? Slumlords are real. You can, you can have one as your landlord. They're moving into these corporate apartment complexes with granite countertops, pools, tanning beds, gyms. I just saw one that has a car wash, like a little car wash station. That's all set up for you to wash your car, um, garages, all of this. And you're paying $3,000, $3,500 a month. Yeah.

• Speaker #1

  it's very hard to save well i think it's got about trade-offs like all right so cool you get the cool place but the trade-off is you're not going to be able to buy a house so not so you can't complain about not being able to buy a house because the market does suck but you're not doing yourself favors correct you're not doing yourself favors and the other thing i i see too is not wanting to have roommates yeah um the vast majority of my gen z and young millennial clients um

• Speaker #0

  who are coming in from a rental situation and feel pinched live alone yeah they live alone and I get it. Who doesn't want to live alone? I've had some terrible roommates. But like, am I scarred permanently from it? No, no, I'm not.

• Speaker #1

  Oh, yeah. I had a roommate that didn't pay me rent for like two months, even though he made way more money than me. Yeah. Yeah.

• Speaker #0

  And like, you know, we could talk about roommate drama, you know, like friends being brought home, parties being had that nobody discussed. Like, I get it. Like, having a roommate is not fun, but you would rather have a roommate in your 20s than in your 40s. Guys, you'd rather do it in your 20s. When life is a little bit more flexible than being in a position in your 40s where you can't afford a house and you can't afford to live and you now have roommates.

• Speaker #1

  Well, once again, trade off. Do you want to live at home with mom and dad? No. Okay. You want to live in an expensive place? You're not going to buy a house. Yeah. You're probably not going to be able to save enough. So maybe get the roommate. Maybe get out of the house. Live in a little bit more of a dump. Right.

• Speaker #0

  Live in a little bit more of a dump.

• Speaker #1

  You're young in your 20s. You should be used to being poor. You just should.

• Speaker #0

  You just should. But they're not. They're not. They make a lot of money out of school. We made no money out of school.

• Speaker #1

  Well, I made no money forever, but... I think you've got to adopt that mindset. Like, hey, the first three to five years of my working life should be to set up the next 50.

• Speaker #0

  Oh, again, Derek, we're at the gems today. That was a gem. Yeah.

• Speaker #1

  But if you sacrifice three years of your life to set up 50, I think everyone would make that trade-off. And that's kind of what we're thinking. You want to think a little long-term about this stuff because, yeah, in the moment, you may have a friend that is buying a house, you're like, how the how the hell do they buy this house? And you're like, well, maybe the parents have a ton of money in, or maybe grandpa gifted a ton of money when they were six or, you know, like, you don't know their situation. So don't compare it to them. Like, think about how you can improve your own life and like what it's going to take to get there.

• Speaker #0

  Yeah, a hundred percent. And I think, you know, as far as the advice is concerned, you know, obviously everybody's situation is different, but that's where you like sit down with a realtor. You sit down with a lender. We talk about your situation. I get people sometimes that are five years out from buying a house. Like we. We know that this isn't happening anytime soon, but they just kind of want to know, like, what is this going to look like? The other thing that if I could give Gen Z advice, especially about home buying is we've talked about credit. We've talked about credit again. We've talked about credit until we're blue in the face. Your credit is imperative for home buying. It absolutely affects affordability. The better your credit is, the more affordable it's going to be. We can talk again at length about what I actually think about that system because we know from past episodes. But it's reality. Yeah. It's game or play.

• Speaker #1

  Yeah.

• Speaker #0

  So if you can work on that in your early 20s, it will set you up for more long-term success. It is a distinct difference for people, especially once they get into their 30s. They're like, oh, I'm ready to buy a home. And I pull credit. And I'm like, OK, you have a 600 credit score. You can barely qualify. And your rate is going to be horrific. And if they were to rewind themselves five or six years and make different choices, those choices wouldn't have been that painful. Right. They just didn't know better.

• Speaker #1

  Don't buy that thing.

• Speaker #0

  Don't buy the thing. Don't rack. Don't.

• Speaker #1

  Maybe do one less drink at the bar. You know, don't buy shots for everyone.

• Speaker #0

  Don't buy shots for everyone. True. That's a good rule of thumb all the time, guys. Don't buy shots for everybody.

• Speaker #1

  No one's like, oh my God, a shot. Yes.

• Speaker #0

  Yes. It does not help.

• Speaker #1

  People are totally fine if you don't buy the shots. Everyone's totally fine if you don't.

• Speaker #0

  Yeah. It does help you buy a house. It also doesn't help you have a great night. So don't buy shots for everybody.

• Speaker #1

  And it goes too quick.

• Speaker #0

  Yeah. It goes too quick. But I will say Gen Z and millennials are optimistic. Okay. They're optimistic. I have a fund. 60% of millennial non-homeowners are optimistic about buying in the future. Far higher than 38% of the boomer non-owners. So if you're a boomer and you currently don't own a home, you actually feel worse about it than Gen Z. Because you also know what affordable housing looked like.

• Speaker #1

  Yeah.

• Speaker #0

  You missed the boat several times. You missed it. The boats. Where I've seen memes and stuff that people are like, if I could rewind time to eighth grade, what would I want to do? People are like, buy houses. If I could go back to eighth grade, I would use my lunch money to buy a house. We didn't really have a choice when it was cheap, but like boomers did. They did. Boomers had choices. So, you know, I think it's really that. people eventually you're gonna buy a house however gen z is considered the least financially responsible oh no the least financial 57 percent um are considered financially irresponsible i don't know who said this i wonder how that compared in like the same time frame to previous generations i bet we're all equally as dumb i would probably agree with that i do think we probably are equally as dumb millennials i actually would guesstimate we're probably dumber because we had less information available to us yeah i think we were probably dumber and if i think about my Eve.

• Speaker #1

  friends i love you all um i some of us made really don't i made really dumb choices yeah i'm sure even the boomers probably like like looking back though they probably it was so much harder to buy stuff back then you actually have cash yeah go to the bank physically right hey yeah go to a department store so you're not just like oh clicking something and buying them yeah well and that's it it is so much easier for us to spend our money than ever before um

• Speaker #0

  so i think my like sort of wrap up and final thought on this is that like despite the challenges home buying um can work for you you have to be a little innovative yeah you have to be willing to maybe make some sacrifices um and i get it nobody wants to do that but it is kind of a fact of life what are those sacrifices it could be no shots at the bar um it could be working two jobs it could be living at home it could be buying a less desirable house in a less desirable neighborhood in a less desirable housing situation maybe you need to do maintenance on a house and you need to fix it up and like that's your your paint but i also think that like That's not really that different from prior generations. No. Just the attitude is different around it. That's really... Our parents did not have the option to live in luxury apartments. Luxury apartments didn't exist. So for them, it was the dump they owned versus the dump they didn't own. Yeah. What are you going to pick? For us, it is hard, right? I'm going to leave my beautiful air-conditioned two-bedroom luxury apartment to go live in a three-family house with no air conditioning that smells like cat pee. What am I going to choose? But choose buying a house later on.

• Speaker #1

  which is the cappy guys yeah it's the cat who's the cappy if there's like choose the cat i say this my i had an apartment that stunk like cappy i have i don't own cats and it drove me insane that's so weird don't i i guess i would just say to wrap it up would be have alignment with your financial goals and your priorities and what you value and if you are buying a house just to buy a house you're probably buying it for the wrong reason see

• Speaker #0

  also excellent so yeah so gen z and millennials you can buy houses might need to be creative You have some stuff working against you, but it doesn't have to stay that way.

• Speaker #1

  Yep. Won't be that way forever.

• Speaker #0

  Nope. Won't be that way forever.

• Speaker #1

  All right. See you next time. All right. Like and subscribe.

• Speaker #2

  The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.