"I like to party. And by 'party' I mean take a nap." Lots of folks are taking naps this week, but those on the production side of residential lending are talking, off the record, of being worried about huge drops in pipelines, lower applications (no MBA survey this week - it is closed), and layoffs in the first quarter. Others view the 1st quarter as giving them the opportunity to make key strategic moves. Stay tuned!

Of course, plenty of first time home buyers, not necessarily millennials, use the internet to do their initial house and lender search, and then actually use an agent and a loan officer for the task. And they'll need ducats! Research by Bank of America Merrill Lynch finds millennials (per the Census Bureau born between 1982 and 2000) will inherit $40 trillion from Baby Boomers in the coming decades. Yes, Papa was a rolling stone, but he seems to have accumulated some wealth.

There were plenty of LOs and real estate agents that read the research by the Pew Research Center that published for the first time in history (well, at least back to 1880), more people in the U.S. age 18 to 34 (33%) live with their parents vs. a spouse or partner. In 1968, 56 percent of 18- to 31-year-olds owned their own homes. In 2012, that number dropped to 23 percent.
 
They'll need some of that $40 trillion to pay rent if they're not going to take down a house. Research by S&P CoreLogic Case-Shiller finds home prices increased at a 5.5% pace vs. the prior year in September, while research by Axiometrics finds apartment rents increased at a 3.0% pace over the same period. The difference indicates renting is less expensive than buying as of that point. TransUnion projects the average mortgage debt level will reach $198,435 by the end of next year vs. $194,875 by the end of this year. The "wait-and-then-hurry-up" stage of Millennial household formation, family formation, and housing preference behavior is about to redefine demand trends for the next five to 10 years.
 
As I've said for years, Millennials are in no hurry to marry, have kids, or save up enough money and then finance a house? It will happen eventually. Still it doesn't stop the fascination with their every move but the ones that I talk to aren't too excited about constantly being under the microscope. It's amusing that some people approach millennials as if they are a newly discovered alien species. Like every generation, they are impacted by the times, but their basic needs and desires scantily deviate from those who came before them, and will likely scantily deviate from those who will follow them.
 
How to stop Millennials protesting? Here's one tongue-in-cheek idea. 
 
But it seems that the crossover point where more baby boomers are retiring than millennials entering the labor force is upon us. A Bureau of Labor Statistics (BLS) analysis released in December 2015 projected labor force change for the ten years ending 2024 as being only 0.5 percent per year. Emerging Trends has sketched the big picture in previous editions. The key change in the population cohorts from 2014 to 2024 looks like this: the number of Americans in the 25-to-34-years-old age group, the prime early-career working years, will be up by 3.2 million; meanwhile, the 65-to-74-years-old age group, those most likely to exit the labor force in retirement, will be up by 9.4 million. Many organizations are having to accelerate compensation increases for new employees, but they're funding those increases by savings from attrition from among their older, higher-paid staffers.
 
Yes, four in 10 homebuyers start their house-hunting with an online search, per the National Association of Realtors. Consider recommending the following tools to your readers' consumers thinking about buying a home in the coming new year. What are agents seeing out there? A Bank of America Homebuyer Insights Report noted that, "Many buyers turn to social media resources like Pinterest for inspiration on the kind of home they want. In fact, 49 percent of millennials use Pinterest, 37 percent Facebook, and 33 percent Instagram for home decorating ideas. For Gen Xers, 32 percent use Pinterest, 37 percent like Facebook and 11 percent favor Instagram."
 
As mentioned above, Bank of America offers up its "comprehensive online Real Estate Center can help you refine a home search or, if selling a home, it can help determine a home's estimated value. Some even provide the ancillary information about a neighborhood - like school data and walkability scores, as well as additional information on how to go about financing the home you want."
 
Bank of America also offers up a platter of down payment sources. "71% of Americans are unaware of down payment assistance programs, per NeighborWorks. Bank of America's Down Payment Resource Center offers a searchable database of more than 1,000 local and national assistance programs that can help consumers reach their down payment savings goal."
 
Not to be left behind, Trulia is offering up plenty of research on this topic. "We just released this article: It's Even Harder to Get Started. In it we discuss how first-time home buyers continue to get pinched as the number of starter homes dropped a precipitous 12.1% year-over-year. To add fuel to the fire these buyers will need 1.9% more of their income to attain their American dream.
 
Trulia writes that, "Starter homes continue to represent less than one-quarter of available inventory nationwide, while premium homes make up more than half. Starter and trade-up home inventory have tumbled 12.1% and 12.9% respectively during the last year. Affordability of starter homes has declined more than twice as much as trade-up homes and nearly four times as much as premium homes. Starter home unaffordability persists in several California markets as well as Miami."
 
Ellie Mae searched its Encompass database to find that Millennials and other first time home buyers are shifting to "the heartland." "A larger proportion of millennials are buying in the American heartland where prices remain broadly lower than in many markets. The largest share of millennial buyers in October was in Minneapolis (44 per cent) closely followed by Philadelphia (43 per cent), St. Louis (42 per cent), Chicago (40 per cent) and Detroit (40 per cent).

Meanwhile, to the surprise of no one, Florida and California had the metros with the lowest share of millennial buyers. I imagine it is because of the average age of one state and the average cost of living in another.
"As housing prices continue to rebound, Millennials are increasingly representing a higher percentage of homeowners in the middle of the country, where they can get more home for their money," said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae.

The percentage of those polled by Trulia who say they view homeownership as part of the American Dream fell to 72 per cent in 2016 compared to 75 per cent in 2015. This drop was steeper among young Americans (80 per cent). Although 83 per cent of millennial buyers say they intending to buy, 72 per cent are not planning to do so until late in 2018.

Saving for a down payment is the big challenge for more than half of respondents while having poor credit and rising house prices are each concerning around a third of respondents. Interest rates and mortgage rates are not a major concern.

"Will mortgage rates stifle home buying in 2017? We think not. At present, mortgage rates would have to double nationally for the cost of renting to beat the cost of buying a home," said Trulia's Chief Economist Ralph McLaughlin. "Even with the recent rate hike, homeowners appear to be far more concerned about saving for a down payment, having poor credit, and rising home prices than qualifying for a mortgage."
 
Builder Magazine chips in with a story on the over-studied Millennials, and trends that interest builders. "Instead of limiting their households to children, parents, and grandparents, plenty of people are going a step further, making homes with friends and even strangers. Co-housing, in which a large community lives together and shares household duties, is gaining popularity. In co-housing, individuals or families generally have their own houses, bedrooms, or apartments but share things like kitchens and community spaces. They'll commonly trade off on responsibilities like cooking and chores."

Credit Plus' newest installment of America's Mortgage News is now available and details the challenges and opportunities the Millennial demographic segment presents the mortgage industry. "The video identifies the events and technology advances that shaped them, their habits, their passions and what, exactly, makes them tick. Together, these things have direct implications on how we reach and relate to Millennials - and the effective strategies for winning their mortgage loan business."
 
Shifting to the bond markets, rates aren't doing much. It's a holiday week! Monday was a day off, and Tuesday the bond market (and stock) started the day on a soft note and soft is pretty much the way it remained for the entire session. Home prices in the U.S. rose to new highs and consumer confidence hitting its highest level since August 2001. The 2-yr auction saw a high yield of 1.28%.
 
The S&P Case-Shiller Home Price Index was up 5.6% year-over-year in October, hitting a new high, while the 20-City Composite Home Price Index rose 5.1%. LOs know that strength in home prices reflects limited inventory for sale and is helping to drive up home equity positions for existing homeowners. 
 
For numbers the 10-year closed Tuesday with a yield of 2.56%. There is no economic news early today; later, at 10AM ET, we'll see Pending Home Sales, and a $34 billion 5-year note auction. The 10-year is at 2.56% this morning and agency MBS prices are unchanged.

Jobs and Announcements

The group at SocialSurvey isn't doing too much napping, and they are hiring a Mortgage Industry RVP for their West and Southeast Regions. SocialSurvey provides a platform for our clients to collect customer feedback, share it on social media, boost SEO, retention, recruiting, and social proof. "With over 10,000 users in the first year of business, this is a great opportunity for somebody with the right experience and contacts. If you can get us the meetings, we can help make you a rock-star. SocialSurvey is offering salary, commission and equity to the right candidate. If this is fit for you, or you know somebody, send confidential resume and contact info to CEO Scott Harris."

Fannie Mae has an immediate opening for a Relationship Manager in its Pasadena, CA office. This role is responsible for end-to-end customer relationship experience and overall performance for a defined portfolio of accounts. Together with the Customer Delivery Team Leader, the Relationship Manager will design and develop the over-arching account strategy for each customer within the territory and occupies a pivotal role on the customer delivery team. The ideal candidate must possess the skills to mobilize core team members to successful execution of the defined strategy, has 10-12 years of mortgage experience, including customer relationship management, capital markets, and credit risk exposure. Must be skilled in oral and written communications with C-Level executives. Travel is required. Confidential inquiries should be submitted to Cathy Wilkes, Vice President, Customer Delivery Team Leader.

Detroit-based In-House Realty, sister company of Quicken Loans, announced it has agreed to purchase the Toronto-based technology group and its proprietary technology platform from OpenHouse Realty, a Santa Monica, California-based residential real estate company. "'In an effort to eliminate the complexities and stress that can sometimes accompany buying or selling a home, we are focused on combining online home search, obtaining a mortgage and connecting with an agent into a more seamless experience for consumers,' said Doug Seabolt, In-House Realty CEO. The acquisition ofOpenHouse Realty, and its home and real estate agent search technology platform, will further strengthen In-House Realty's core business of matching home buyers and sellers with qualified pre-screened agents across the country, providing them a superior real estate experience."

Quicken is not alone. Bank of America certainly has tapped into the real estate biz, and its clients can use a comprehensive online Real Estate Center that can help refine a home search. BofA's site ties in to Xome, which "In addition to searching for a house online, it lets consumers buy one online, too. In return for using the platform, customers will be offered a minimum of 1 percent back on their purchase or sale, or roughly, $2,500 on a $250,000 home."