How Millennials and Gen Z are Revolutionizing Homeownership with House Hacking

The latest Zillow Research, dated November 16, 2023, indicates a notable change in the housing market, especially among Millennial and Gen Z home buyers. These groups are increasingly adopting "house hacking," a strategy where parts or the entirety of a home are rented out to generate extra income. This growing trend is a key finding in Zillow’s 2023 Consumer Housing Trends Report, which offers detailed insights into the reasons and demographics of those adopting this unconventional homeownership method.

Young homebuyers, who often struggle more with affording down payments and mortgages, are leading the charge in house hacking. Zillow's data shows that over half of Millennial and Gen Z buyers consider renting out a portion of their home for income as highly important. This is a significant increase compared to 39% of all homebuyers, a figure that has risen by eight percentage points in the last two years.

Furthermore, the prospect of renting out an entire home in the future for income is most appealing to Millennials (55%) and Gen Z (51%), outpacing Gen X (36%) and Boomers plus the Silent Generation (4%). This is in stark contrast to the 43% of all successful buyers, marking a nine-percentage-point increase from 2021.

Prospective buyers, particularly those from Gen Z and Millennials, are also more inclined to value the opportunity to rent out their entire home in the future. Among Millennials, this interest stands at 64%, followed by Gen Z (56%), Gen X (51%), and Boomers plus Silent Gen (23%). This suggests a potential growth in this trend.

In terms of the affordability crisis, the report highlights its disproportionate impact on households of color. Latinx homebuyers, for instance, show a greater interest in rental income opportunities, with 51% considering renting out part of their home while living in it. This is followed by 46% of Black buyers and 40% of white buyers.

The rising trend of house hacking is a practical response to the financial hurdles of homeownership, especially for younger people. The differences across racial and generational lines emphasize the need for customized solutions to meet the changing preferences and financial strategies in housing. As house hacking becomes more popular, it's crucial for policymakers and real estate professionals to adjust to these trends and support various paths to homeownership.

The VA Loan Explained

For veterans and active-duty service members, achieving the dream of homeownership is not just a milestone but a testament to their dedication and sacrifice for their country. Thankfully, the United States Department of Veterans Affairs (VA) offers a powerful financial tool known as the VA loan, designed to assist veterans, service members, and eligible surviving spouses in obtaining affordable home financing. In this comprehensive guide, we will explore the ins and outs of VA loans to help veteran homebuyers make informed decisions about their housing future.

What Is a VA Loan?

A VA loan is a mortgage loan program specifically tailored to benefit veterans, active-duty service members, and some eligible surviving spouses. This program was established as part of the Servicemen's Readjustment Act of 1944, also known as the GI Bill of Rights, with the primary goal of helping veterans transition to civilian life. VA loans are issued by private lenders, such as banks and mortgage companies, but they are guaranteed by the VA, reducing the risk for lenders and enabling veterans to secure favorable loan terms.

Key Benefits of VA Loans

1. No Down Payment: One of the most significant advantages of VA loans is that they typically do not require a down payment, allowing veterans to finance 100% of the home's purchase price. This can significantly lower the barrier to homeownership, as most conventional loans require a substantial down payment.

2. Competitive Interest Rates: VA loans often offer competitive interest rates, which can result in lower monthly mortgage payments compared to conventional loans. Additionally, VA loans do not require private mortgage insurance (PMI), further reducing costs for borrowers.

3. Flexible Credit Requirements: While good credit is generally beneficial for any mortgage application, VA loans tend to be more forgiving of credit issues than conventional loans. Veterans with less-than-perfect credit may still qualify for a VA loan.

4. No Prepayment Penalties: Veterans can pay off their VA loans early without incurring prepayment penalties, allowing them to save on interest over the life of the loan.

5. Streamlined Refinancing: VA offers several refinancing options, such as the Interest Rate Reduction Refinance Loan (IRRRL), which simplifies the process of lowering interest rates and monthly payments on existing VA loans.

Who Is Eligible for a VA Loan?

To access VA loan benefits, you must meet specific eligibility criteria, including:

1. Military Service Requirements: You must be an active-duty service member, a veteran, a member of the National Guard or Reserves, or an eligible surviving spouse of a service member who died in the line of duty or as a result of a service-connected disability.

2. Length of Service: The duration of your service, the period during which you served, and the type of discharge you received may affect your eligibility.

3. VA Certificate of Eligibility (COE): To apply for a VA loan, you need a VA Certificate of Eligibility, which can be obtained online through the VA's eBenefits portal or by contacting the VA directly.

4. Income and Credit Requirements: While VA loans are more lenient regarding credit, lenders may still have their own credit and income requirements.

How to Apply for a VA Loan

1. Obtain Your COE: Before applying for a VA loan, secure your VA Certificate of Eligibility (COE) to prove your eligibility to lenders.

2. Find a VA-Approved Lender: Look for lenders that are approved by the VA to originate VA loans. These lenders have experience with VA loan programs and can guide you through the process.

3. Complete the Loan Application: Submit a mortgage loan application to your chosen lender, providing the necessary financial documentation and information.

4. Wait for Approval: The lender will review your application, credit history, and financial situation to determine whether you qualify for a VA loan.

5. Close the Loan: Once approved, you'll attend a closing meeting to sign the necessary paperwork and finalize your VA loan.

VA loans are a valuable resource for veterans and active-duty service members who aspire to become homeowners. These loans offer numerous benefits, including no down payment, competitive interest rates, and flexible credit requirements. If you are eligible, obtaining a VA loan can help make the dream of homeownership a reality while honoring your service to the nation. To get started, contact the VA for your Certificate of Eligibility and explore VA-approved lenders in your area. With the right information and support, you can navigate the VA loan process successfully and secure a comfortable and affordable home for you and your family.

Waterbury's 20-Acre Gem Returns to Market

Costar

Approximately 12 months after a Massachusetts-based firm acquired a 20-acre parcel of vacant commercial land near the Waterbury-Cheshire border for $5 million, the property is now back on the market.

In September of the previous year, The Shearwater Cos., a real estate investor-developer from Raynham, Massachusetts, took possession of the land at 3800 East Main St. However, in October, the property was relisted with an asking price of $7 million.

The location is situated in a highly commercialized area of Waterbury, neighboring prominent retailers such as Kohl's and Costco. This corridor boasts convenient access to Interstate 84 via two nearby interchanges, enhancing its appeal for potential development.

Once a hilly landscape, the property underwent excavation to provide the foundation for future development. It had been considered for a Walmart supercenter in the past and had recently obtained local land-use approvals for a 90,000-square-foot "last-mile" distribution center intended for e-commerce titan Amazon.

However, the Amazon distribution center plan was shelved when the company scaled back its rapid expansion in the logistics sector. Subsequently, Shearwater acquired the property.

At the time of purchase, a representative from Shearwater emphasized the site's substantial development potential and the favorable price tag compared to Massachusetts real estate, where the company had traditionally concentrated its efforts.

Joseph McGrath, Waterbury's Economic Development Director, revealed that the Massachusetts-based company had initially intended to construct a speculative warehouse space. However, this plan was hampered by rising interest rates and increased construction costs.

Nicholas Morizio, President of Colliers International in Hartford and New Haven, is responsible for marketing the property. As of Thursday morning, Morizio reported significant interest in the site, with a potential buyer scheduled to tour the property that same morning.