Generation Y expected to drive the real estate market
over next decade
Many of them wear
multiple piercings, own cell phones that take pictures and they're
even more technologically savvy than their older brothers and sisters
of Generation X.
They're Generation
Y — and many of them are going to be your customers very soon.
The label "Gen Y"
roughly refers to those born between 1979 through today. And at 60
million strong, more than three times the size of Generation X,
they're the biggest thing to hit the American scene since the 72
million baby boomers.
Real estate experts
like Rick Davis, President of the Homeownership Alliance, a coalition
of professional associations dedicated to expanding homeownership,
predict that Generation Y is one group that will drive home sales over
the next decade. And enough of them are buying homes already. The
number of sales to buyers under the age of 25 rose to 345,000 in 2003,
up 20 percent from 287,000 in 2001, according to the National
Association of REALTORS®' (NAR) statistics. Sales to that age group
outpaced home sales in general, which rose 15 percent from 2001 to
2003.
There are a lot of
factors playing into this trend. Of course, we can thank the low
interest rates and flexible loan options for much of the growth in
this age group. But there's also been an increase in homeownership
education efforts by the media, the Department of Housing and Urban
Development (HUD) and realty firms.
Further, there's
more awareness nowadays of the investment and tax break advantages of
owning one's own home. Plus, many of them are just plain tired of
seeing their money disappear in rent each month.
Some of them do run
into problems getting qualified for loans. Thanks to easily accessible
credit and the abundance of electronic toys, gadgets, clothes and
other products marketed specifically to them, Generation Y is the
group with the most debt in the U.S. In fact, a recent Federal Reserve
survey of consumer finances found that the average credit-card debt
among young adults (ages 18 to 24) was $2,985, more than double 1992's
debt. Among 25- to 34-year-olds, the average credit-card debt was more
than $4,000.
And qualifying for a mortgage can be particularly difficult in areas with
soaring home prices like Southern California where the median price for an
existing single-family home in San Diego is about $567,000, according
to the California Association of REALTORS®. While that surge in
property values is building equity for their homeowner parents, many
Gen Yers are having a hard time finding the cash to enter the market
and many of them are forced to live at home.
But in some cases,
mom and dad can help foot the bill for their Generation Y child's
home. Some parents qualify for the Federal Housing Administration's
(FHA) so-called "kiddie condo" program, which allows a 3 percent down
payment and tax break if they cosign a mortgage for their
college-enrolled children. Parents see the home as an investment that
will pay off more than shelling out $300 to $400 a month for a dorm
room or apartment rent.
No matter what
their financial status may be currently, Gen Yers tend to have lofty
financial and personal goals and fully expect to meet them, according
to the book, In Managing Generation Y, by Bruce Tulgan and
Carolyn A. Martin, Ph.D. In fact, most surveys of Gen Yers report that
they expect to earn very high salaries by the time they are 30 years
of age. And with high salaries come big houses with big mortgages.
Self audits
safeguard mortgage brokerages from DOL investigations
The Wage and Hour
division of the U.S. Department of Labor (DOL) is investigating
several mortgage brokerage firms throughout Western Pennsylvania and
Western Virginia for possible violations of federal wage and hours
laws, according to a notice issued by the DOL.
The notice was sent to mortgage brokerages
to inform them
of the situation and offer “assistance in complying with the law.”
A violator
of the laws often must pay substantial back wages owed to his current
and former employees.
The Wage and Hour
division administers the Fair Labor Standards Act (FLSA), which
requires that
non-exempt
workers (usually employees who are paid hourly) be paid at least
minimum wage (currently $5.15 per hour) and
receive overtime pay for hours worked in excess of 40 in a
work week at a rate not less than time and one-half their regular rates
of pay.
The notice
outlines several common mortgage industry violations of the law, such
as:
-
Failure to guarantee minimum wage
to loan officers for all hours worked each pay period, regardless of
the level of earnings in prior or subsequent periods. Loan officers
are entitled to receive minimum wage pay even if they're employed on
a commission basis.
-
Failure to pay overtime premiums
to non-exempt employees who work more than 40 hours a work. Loan
officers and loan processors are entitled to overtime pay even if
they are employed on a salaried basis.
-
Failure to accurately record all
hours worked by employees.
The notice comes
on the heels of the DOL's
clarification
of its overtime regulations, which cleared up some gray
areas for those in the financial services industry. The revised rules
exempted
loan officers from overtime pay eligibility to make the rules
regarding overtime pay more consistent with industry practice.
In reaction to the
heightened awareness of overtime rights and responsibilities caused by
the new regulations, the National Association of Mortgage Brokers (NAMB)
advises mortgage industry employers to conduct self audits to
determine whether their employees are properly classified as receiving
overtime or not receiving overtime.
