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CNBC
6 days ago
- Business
- CNBC
Why Americans love gated communities
American gated communities have evolved to fit a variety of budgets, lifestyles and needs. They aren't just a haven for retirees or the ultra-wealthy, although those communities are still prevalent. Florida and California have the highest number of gated communities, in part because of weather and space. Retirees in particular chose Florida in the 1970s because of the lower taxes. CNBC toured three gated communities in Palm Beach County, Florida. The most desirable neighborhoods tout amenities like golf access, water access, or "concierge-style living," said Lindsey Tronolone, realtor at The Jupiter Group at Compass. "The market is changing for gated communities that have really these top-tier amenities," she said. While security remains a key and desirable feature, it's not as heavily emphasized in the U.S. as in other countries where rates of violent crime are higher. Some gates in the U.S. are manned, while others are not. "I think it's a little bit less tied to an actual need for security and more to control access to the community," said Peter Dennehy, senior vice president of consulting at John Burns Research and Consulting. Gated communities typically have Homeowners Associations that collect fees and enforce rules. There may also be additional membership dues for the use of facilities. And homes in gated communities are, on average, between 5% and 10% more expensive than similar homes in the same area, or as much as 10% to 20% in some of the most desirable cities, according to Dennehy. HOA fees for the three communities CNBC visited ranged according to upkeep and amenities; the first community, Bay Reach, has fees of between $500 and $800 monthly. The second, PGA National, requires $915 annually, plus additional dues between $76 to $950 monthly. The third, Frenchman's Reserve, asks between $2,770 and $5,050 quarterly. None of this includes membership fees. Yet these homes also tend to have higher appreciation rates. "Every HOA is different, but in the well-maintained, popular ones, that's why people keep coming back. That's why homes are selling off market quickly," said Tronolone. Watch this video to learn more.
Yahoo
6 days ago
- Business
- Yahoo
U.S. Birth Rate Slump Raises Red Flags for Future Housing Market
U.S. birth rates have fallen to 1980s levels despite a population increase of 108 million people, an eyebrow-raising new report from John Burns Research and Consulting shows. There were 3.6 million births in 2024, according to the Centers for Disease Control and Prevention, the same as in 1983. This, despite the significant population increase. And the fertility rate has dropped to 1.6 babies per woman, according to the CDC's National Center for Health Statistics, putting the U.S. on par with most European countries. What low birth rates mean for housing trends 'The most immediate effect will be fewer bedrooms needed for children, while the longer-term impact will be slower growth in potential renters and homebuyers,' John Burns economist Eric Finnigan tells While seven bedrooms might be the new four for select and wealthy enclaves, the average American will be downsizing. 'Today's housing market is out of reach for many would-be buyers, which has shifted demand towards smaller, more affordable homes,' agrees senior economic research analyst Hannah Jones. 'Additionally, younger generations may prefer homes in more central, walkable locations, and these areas tend to offer smaller homes.' While empty nesters and retirees will number 14 million-plus of the homebuyer segment by 2034, the typical entry level buyer, ages 30 to 44, will only number 3 million, according to the John Burns report. Not only that, 73% of recent buyers did not have a child under the age of 18 in their home, the highest share recorded. National Association of Realtors® deputy chief economist said that buyers with children are at an all-time low. 'So, they may not need that three-bedroom, two-bath home. They may really want a two-bedroom, one-bath home, and that's not necessarily the inventory that's out there,' she says. Additionally, the low birth rate will be a boon for landlords as more people rent and for much longer. 'Americans are waiting significantly longer to purchase homes,' says Finnigan. The typical first-time homebuyer is now 38 years old, compared with 33 only five years ago, and an average of 31 from 1993 to 2018, says the John Burns report. Of course, waiting longer to buy a house isn't all because of fewer babies to house. The skyrocketing costs of homeownership—from the national median list price being an eye-popping $440,950, to the soaring price of insurance, utilities, and property taxes, and to stubbornly high interest rates—has a lot to do with it as well. What Americans are doing instead This delayed homeownership creates increased rental demand, with 72% of renters now age 30 or older—an all-time high, says the John Burns report. 'Renting is an increasingly favorable option, especially as buying a home remains prohibitively expensive. It is more affordable to rent than to buy in the vast majority of large U.S. metros, tipping the scales towards a renting preference,' says Jones. Buyers who are in the market for homes are looking for smaller, older housing stock that will be more affordable and match more with their small-family lifestyles. New construction tends to build larger. For the second quarter of 2025, the median square footage of a new construction home is 2,044 and for existing homes it's 1,794 square feet, according to data. In the first four months of 2025, newly constructed home sales numbers decreased over 20% per month, according to Cotality data. New homes now make up 12% of all home sales, a decline from 16% in early 2024. This shift is reflected in prices; since 2023, existing homes have appreciated 11%, but new homes have only appreciated 6%, Cotality data show. And beyond buying older homes, Americans are buying and thinking smaller. After all, no need for that gargantuan McMansion with only 1.6 kids. Buyers are asking for homes of 2,076 square feet in 2023 versus 2,260 square feet two decades ago, says a NAR poll. 'This trend toward a smaller size is even apparent in new builds,' says the Cotality report. 'Years of rising costs—for homeowners and for homebuilders—have weighed on home square footage.' The size of newly constructed homes fell 10 square feet per year over the last five years, according to Cotality's analysis. Savvy homebuilders will give the people what they want. Unlike a lot of builders that focus on larger homes to maximize their profit, HHHunt Homes doesn't shy away from starter homes. The builder's single-family Kinwick community homes in Richmond, VA, begin at a relatively small 1,270 square feet and max out at 2,943 square feet. 'We are listening to the community and what they need,' HHHunt Homes' marketing manager Cara Munsey tells 'The smaller and more affordable homes are what people want.' Jones agrees. 'New construction has shifted towards smaller, more affordable homes as builders look to capture shifting buyer preferences and affordability constraints,' she says. 'Many metro areas are exploring zoning changes to allow for more densely built housing, which would also shrink the typical size of newly built homes.' Older, smaller homes on the market Smaller turnkey homes priced affordably in hot markets won't be active for long. Take this two-bedroom, fully remodeled 920-square-foot house in Fresno, CA, listed at $200,000 in a market where the median price tag is $469,917. It took less than two weeks to find a buyer. The agent, Enrique Ruiz-Sanchez of Rise Realty, tells that the house had 80 showings in two weeks, 10 offers, and sold for $70,000 above-ask. 'Price below market, get the bids going, that's my strategy,' he says. 'If you saw a Mercedes on sale for $10, you'd want to buy it, wouldn't you?' What's accounting for the low birth rate? Americans are worried about multiple factors in terms of having children, including finances, health insurance, parental leave and affordable child care, Karen Guzzo, director of the Carolina Population Center at the University of North Carolina, told the Associated Press. 'Worry is not a good moment to have kids,' she said. Women are also bearing their first child much later than in years past, with the average starting age being 30. Mothers in the 1970s and early 1980s typically had their first child in their early to mid-20s, says the John Burns report. 'This trend is connected to more women attending college and getting married later,' says Finnegan, the report's author. Birth rates also slowed rapidly during the pandemic, before experiencing a mini-baby-boom in 2022, then declining again. Concerned by the slowing birth rates, the Trump administration has floated the idea of reduced costs for in vitro fertilization and a cash bonus for baby birthers. But polls say these so-called solutions ignore the fundamental fears over long-term child care costs, according to a survey by The Associated Press-NORC Center for Public Affairs Research. Related Articles EXCLUSIVE: Humble 'Fisherman's Shack' on Nantucket Sells for $2 Million Just Days After Listing $850K Nantucket 'Shack' That Looks Set To Plunge Into the Sea Is the Week's Most Popular Home Newly Constructed $19.2M Waterfront Nantucket Home That Sold Last Year May Be Demolished: 'It Seems Like It's Kind of a Waste' Solve the daily Crossword
Yahoo
20-06-2025
- Business
- Yahoo
Housing market weakness triggers Lennar to offer biggest incentives since 2009
Want more housing market stories from Lance Lambert's ResiClub in your inbox? Subscribe to the ResiClub newsletter. Housing market weakness triggers Lennar to offer biggest incentives since 2009 The Trump administration is trying to bring back asbestos 3 tiny behaviors that make you the calmest person in the room There is a consensus among major publicly traded homebuilders that the spring 2025 housing market—especially in many parts of the Sun Belt, where inventory has climbed above pre-pandemic 2019 levels—was softer than they expected. While some builders have started focusing more on maintaining margins—and some have slowed their housing starts—Lennar has continued to push forward. Instead of defending short-term profitability, Lennar—America's second-largest homebuilder—is using this period of housing market softness as an opportunity to capture market share and maintain sales pace through bigger affordability adjustments. The ResiClub team reviewed Lennar's Monday earnings report and listened in on its Tuesday earnings call. Here are our top nine takeaways: According to Lennar, it has observed at least some 'softening' across all its markets this spring. Even its 'strongest' markets have lost some momentum. This aligns with ResiClub's reporting. 'All of the markets we operate in experienced some level of softening [this quarter],' Lennar co-CEO John Jaffe said on the company's June 17 earnings call. 'Even in our strongest performing markets, buyers needed the assistance of incentives. Incentives will vary across the different markets, but primarily in the form of assistance with mortgage rate buy downs.' Jaffe added: 'The markets that experienced more challenging conditions during the quarter were the Pacific Northwest markets of Seattle and Portland, the Northern California markets of the Bay Area and Sacramento, the Southwestern markets of Phoenix, Las Vegas, and Colorado, and some Eastern markets such as Raleigh, Atlanta, and Jacksonville.' Lennar's average sales price net of incentives came in at $389,000 in Q2 2025—that's down 8.7% from $426,000 in Q2 2024. And oh, boy, is Lennar spending a lot on incentives. In Q2 2025, Lennar spent an average of 13.3% of the final sales price on sales incentives, such as mortgage-rate buydowns. At that incentive rate, a home with a $450,000 sticker price would come with nearly $60,000 in incentives. According to John Burns Research and Consulting [see its historical chart here], that's the highest incentive level Lennar has offered since 2009—and it's significantly higher than Lennar's cycle low in Q2 2022, when it spent 1.5% of the final sales price on sales incentives. Earlier this year, Lennar co-CEO Stuart Miller noted: 'These are outsized [incentives] for the moment and normalized incentives should be around 5% to 6%.' Pretty much: Where and when needed—especially in pockets of Florida, Arizona, Colorado, and Texas, where active inventory has bounced back and buyers have gained leverage—Lennar is cutting net effective prices through larger incentives to find the market and keep sales rolling. The biggest net price cuts occurred in Lennar's East division—which, while it includes Florida, New Jersey, and Pennsylvania, is dominated by operations in the Sunshine State—the epicenter of housing market weakness over the past year. During the pandemic housing boom, many publicly traded homebuilders achieved record profit margins as home prices soared and buyer demand ran red hot. Once the national housing demand boom fizzled out in the summer of 2022, many large homebuilders made affordability adjustments where and when needed to maintain their sales pace. Despite some profit margin compression, almost every major homebuilder entered 2024 with gross margins still above pre-pandemic 2019 levels. However, in recent quarters, margin compression has returned—especially for Lennar. During the company's December 2024 earnings call, Lennar CFO Diane Bessette stated that the company anticipates further margin compression, with gross margins expected to range between 19.0% and 19.25% for Q1 2025. Lennar's Q1 2025 gross margin ended up being 18.7%, and its Q2 2025 gross margin on home sales came in on June 16 at 17.8%. On the June 17 earnings call, Miller said he expects Lennar's gross margin to be 18.0% in Q3 2025. As highlighted above, amid the softening market, Lennar has chosen to maintain sales pace over margin. Among the big builders, it has been the most aggressive on that front. It's now spending 13.3% of final sales price on incentives—and doing some of the biggest net effective price cuts in the Sun Belt—in order to keep sales up. 'We are not there yet, but we are certain that we are finding a floor with margin and getting close to building it back even in a softer housing market environment,' Miller said on the June 17 call. 'As the current market softness unfolded, we focused on consistent [sales] volume by matching our production pace with our sales pace.' Miller added: 'Although some have questioned why we have maintained volume rather than protect our margin, we are very clear and steadfast on our strategy. Historically, we protected margin as market conditions stalled, and we generally led the way in protecting short-term profitability. But we learned through those times that once we step backwards and lose momentum, it becomes increasingly more and more difficult to restart and recapture volume. The machine slows and does not restart easily. We have concluded that by maintaining volume, we can create new efficiencies and new solutions that are durable for the future and will result in meaningful long-term efficiencies in our cost structure.' Lennar's Q2 2025 division-level performance was relatively steady once you account for its February 10 acquisition of Rausch Coleman Homes, which largely explains the sharp year-over-year jump in the South Central division. The Western division was a bit softer, reflecting broader cooling trends across many Western housing markets over the past six months. In contrast, Lennar saw a bit more growth in its Eastern division, particularly in Florida. Why? It's likely that Lennar's earlier and more aggressive discounting in Florida is now paying off, attracting buyers who are still encountering resale sellers resisting the shifted pricing environment in their local neighborhoods. 'With respect to the question regarding tariffs, consistent with our commentary last quarter, we have had no impact to date on our costs from tariffs,' Lennar's Jaffe said on the earnings call. 'We work closely with the supply chain to prepare for alternative sourcing if it becomes necessary as well as the expectation that our trade partners will work with us to mitigate and offset cost impacts should they present themselves.' 'Initially, many in the housing market held on to the hope that higher interest rates were temporary, expecting inflation to subside and rates to drift back to lower levels. However, this expectation has not materialized,' Miller said on the June 17 call. 'Looking ahead, there's little evidence to support expectations of materially lower interest rates in the near term. As a result, elevated interest rates have solidified as the new normal. The environment is about recognizing that short supply is keeping prices higher and that only lower prices enabled by lower cost structures will define affordability.' This post originally appeared at to get the Fast Company newsletter:
Yahoo
09-03-2025
- Business
- Yahoo
Boomers are setting up a showdown with millennials, aging in place and plunking down hundreds of thousands on renovating their homes
The housing world is a bit of a generational war zone, mostly between baby boomers and millennials. Baby boomers make up more than a third of all homeowners, and more than half don't even have a mortgage, Eric Finnigan, vice president of demographics for John Burns Research and Consulting, previously told Fortune. So in our current environment, where mortgage rates skyrocketed from historic lows throughout the pandemic to a more than two-decade high in October 2023, being mortgage-free is like hitting the mother lode. It's partly why boomers aren't moving—because why give up no mortgage rate, or a substantially lower one, for one that's in the 6% to 7% range, plus a higher monthly payment? On the other hand, some millennials, who haven't even bought their first home, are looking at a much different housing market than before the start of the pandemic—one where the salary needed to buy a starter home has almost doubled, the cost of owning a home is the highest on record, and low inventory levels are much more dire. And baby boomers are sitting on particularly large homes that millennials who are starting families need. A 2024 Redfin analysis from found empty-nest boomers own 28% of the country's largest homes, those with three bedrooms or more; and millennials with kids own only 14%. As mentioned earlier, there's simply no financial incentive for the former group to let go of their homes. But it wasn't always this way. 'The landscape has transformed over the last decade: 10 years ago, young families were just as likely as empty nesters to own large homes,' the analysis read. Last year, existing home sales fell to their lowest level in almost three decades; nobody was selling their home or buying. And apart from there being no financial incentive to sell, boomers are aging in place because they can. In doing so, they're remodeling and improving their current homes—not only for safety but to live comfortably and luxuriously, Finnigan previously explained. For some baby boomers, the idea of renovating their family home—albeit likely too big for their empty nesting—is much more appealing than moving. Plus, there's a housing crisis for baby boomers who try to move with a shortage of retirement homes. More than half of them have no plans to move, although the majority of them have lived in their current homes for more than a decade, according to a 2024 report by home improvement company Leaf Home and Morning Consult. And some baby boomers have spent tens of thousands of dollars—and in some cases hundreds of thousands of dollars—on home renovations to make their homes feel more updated, comfortable, and safe for aging. A Californian couple in their seventies, Brenda Edwards and her husband, spent more than $100,000 on home renovations to accommodate a wheelchair in case they ever need one. 'We felt comfortable,' Edwards told the Associated Press about why they wanted to stay instead of move. 'We have a pool. We have a spa. We just put a lot of love and effort into this yard. We want to stay.' Plus, 'it would be too hard to purchase anything else' since their house was nearly completely paid off, she said. Many baby boomer homeowners are 'opting to upgrade their current homes for the long haul,' Marine Sargsyan, chief economist at home renovation and design site Houzz, told Fortune, rather than deal with higher mortgage rates. So much so that baby boomers lead renovation activity across all generations, according to the site's 2024 Houzz & Home Study released in March. 'We're seeing a growing trend toward universal design elements in kitchens and bathrooms specifically as homeowners ready their homes to age in place,' Sargsyan said. 'Changes include wheelchair-accessible pathways, additional lighting, pull-out cabinets, rounded countertops, non-slip flooring, and grab bars.' Leaf Home also reports seeing an uptick in demand for walk-in showers and tubs as well as stairlifts, making homes more accessible for aging generations. 'We expect to see an increase in boomers' desire to make improvements for their homes to remain comfortable and safe,' Nina George, chief growth officer at Leaf Home, told Fortune. But some baby boomers are selling and some millennials are buying homes. Millennials surpassed baby boomers as the largest generation of homebuyers, according to the National Association of Realtors. 'The generational tug-of-war between millennials and baby boomers continued this year, with millennials rebounding to capture the largest share of homebuyers,' NAR's deputy chief economist and vice president of research, Jessica Lautz, said alongside a recent generational trends report. A version of this story was published on on June 6, 2024. This story was originally featured on
Yahoo
05-02-2025
- Business
- Yahoo
Trump's tariffs will raise the roof on home prices
Homes – the most expensive item most Americans ever buy – are about to get even pricier if the Trump administration's proposed tariffs take effect. An analysis from John Burns Research and Consulting, which focuses on the housing industry, estimates the cost of a newly-constructed home will increase by nearly 5% if the White House's proposed tariffs are implemented.. That's about $21,000 on the median-priced new home. While the Trump administration paused proposed 25% levies on Canada and Mexico for at least a month, a 10% tariff on goods imported from China took effect Monday. '(Tariffs) are going to be an affordability shock if they come through,' said Matthew Saunders, senior vice president of building products research at the company. Residential construction requires many ingredients. In most categories, the vast majority of the supplies come from the trading partners targeted this month. Roughly 60% of all hardware comes from China, Canada, and Mexico, according to Saunders' analysis. Nearly three-quarters of the sawmill wood products come from Canada. And perhaps surprisingly, the U.S. imports more major household appliances from Mexico, by dollar amount, than from China. While 5% may not sound like a lot, some context is crucial. The median price of a new home in December 2024 was $427,000, according to the Census Bureau. That's up 30% in five years – and mortgage rates now are roughly double what they were just before the pandemic period. More: Housing market rewind: Home sales drop in 2024 to level not seen since the '90s And tariffs may also have some knock-on effects, Saunders noted. For example, domestic suppliers of materials are likely to hike their prices in line with those from tariff-affected countries simply because they can. The simmering trade war with Canada is also likely to impact the supply of lumber in the longer run, said Stinson Dean, an investor who runs Deacon Lumber. 'The bigger problem is the long term effect of making sawmill operations in Canada unviable because of their increased cost to do business in the U.S.,' Dean told USA TODAY. 'We don't need that much lumber right now because of the state of the housing market, but eventually that'll change, and we'll need all the lumber we can get.' When consumer demand for new homes perks up – likely when mortgage rates fall significantly – the production capacity won't be there, he said. 'You don't even have to implement the tariff. The threat of the tariff has already done the damage to potential increases in supply.' Higher costs for building materials also exacerbate severe labor shortages in the construction industry, Saunders added. Many homebuilders won't be able to swallow all of the additional costs, and at some point consumers won't be able to afford to buy. 'In terms of immigration, potential deportations, tariffs, these are all adding to what's already an unsupportable environment,' he said. This article originally appeared on USA TODAY: Housing costs will take a hit from Trump's tariffs
