Wealthy baby boomers are increasingly buying properties in the same housing developments as their friends, even if it means moving hundreds of miles away from the place where they first met, real estate pros tell The Wall Street Journal.

Groups of empty nesters are looking to create communities and preserve or recreate their social circles as they move to new cities. For example, seven units at the Pendry Residences in Park City, Utah, were purchased by a group of friends from the same country club in San Diego, the developer says. At Clear Creek Tahoe in Nevada, seven couples from Silicon Valley bought lots next to each other.

“They want to look for a surrogate for that kind of community support that they would have had with their family as they grew older,” Michael R. Solomon, a marketing professor at Saint Joseph’s University who’s studied the baby boomer generation, told the Journal. “It’s a support network. It’s also driven—maybe subconsciously—by wanting to avoid the specter of being stuck by yourself in a nursing home.”

More baby boomers are bypassing the continuing care communities that their parents once lived in, Solomon notes. Instead, they’re buying homes where they can age in place and targeting states that offer lower taxes and have easier access to amenities like the beach or a golf course. Once baby boomers settle in these areas, they’re asking their friends to join them. The primary reason baby boomers cite for selling their home: To purchase a similarly sized home closer to family members and friends, according to the National Association of REALTORS®’ 2021 Home Buyer and Seller Generational Trends report.

Knowing the neighbors can help people settle into a new community. Sometimes, these arrangements occur with a group of friends who pick a place together, or they can happen more by chance. For example, Tom and Lori Williams told the Journal that they weren’t planning to buy real estate until after a visit to the Coachella Valley with their friends. At the time, they lived outside of Sacramento, Calif. But soon after visiting their former friends, the Williams closed on a three-bedroom, single-story home for $1.17 million in a La Quinta, Calif., golf community outside of Palm Springs. They didn’t even bother to consider other communities or neighborhoods in the area. “It’s nice to know somebody when you’re going to a new city,” Lori Williams told the Journal. “We had an instant kind of an ‘in.’” Several other families from their old community in San Diego have since relocated and purchased in the Williams’ new neighborhood.

Watch out in Miami, Los Angeles, and Tampa, Fla.: These places can be hotbeds for termites, according to Orkin’s 2021 Top 50 Termite Cities List.

Orkin, a national pest control company, reports an uptick in termite treatments across the country over the past year.

“With people spending more time at home in 2020, termites and termite damage were likely observed more frequently than in previous years,” Orkin said in its study. “Parallel to this, 2020 held a record-breaking number of storms and hurricanes offering what termites need most in life—moisture.”

The wood-chewing insects have been blamed for causing costly damage to homes. They can also derail a real estate transaction or lead to re-negotiations if found during inspections.

Orkin compiled a list of where termites can be the most problematic. The rankings are based on where Orkin performed the most first-time customer termite treatments—for both residential and commercial properties—from February 1, 2020, to Jan. 31, 2021.

1. Miami
2. Los Angeles
3. Tampa, Fla.
4. Washington, D.C. (up two spots from 2019)
5. Atlanta
6. West Palm Beach, Fla. (+1)
7. New York (-3)
8. New Orleans (+1)
9. Orlando, Fla. (+1)
10. Dallas (+2)
11. San Francisco (-3)
12. San Diego (-1)
13. Raleigh, N.C.
14. Houston (+1)
15. Baltimore (+1)
16. Phoenix (-2)
17. Philadelphia (+2)
18. Charlotte, N.C.
19. Indianapolis (+5)
20. Greenville, N.C. (+6)
21. Nashville, Tenn. (-4)
22. Cincinnati
23. Chicago (-3)
24. Norfolk, Va. (+1)
25. Pittsburgh (+4)

To see the entire list, visit the article published on Orkin’s website.

What Lurks Outside Those Walls

Pest Protection: Termites

12 Signs That Spell Caution in a Fixer-Upper

“Weather conditions directly impact termite swarms,” says Glen Ramsey, Orkin entomologist. “Most subterranean termites swarm in the spring and summer, while dry-wood termites typically swarm in the late summer and fall.”

Property owners should beware that termites like to gravitate to wooden structures, such as porches and decks; firewood leaning against the house; soil that stays damp long-term from leaking faucets or water retention areas near the foundation; and dead trees or other landscaping near the house.

Orkin says the following are signs of a possible termite infestation:

• A temporary swarm of termites in your home, in the soil, or around the exterior of the house;
• Cracked or bubbling paint;
• Wood that sounds hollow when tapped;
• Mud tubes on the interior or exterior of walls or wooden beams;
• Discarded wings from swarmers.

The COVID-19 pandemic has caused a mass disruption to the way people live and work and prompted sweeping economic fallout felt throughout the world. Global leaders are still coming to grips with the long-term impact to the real estate industry.

COVID-19 has accelerated many existing trends, including digitalization, dispersed working, and online shopping, panelists said at a webinar on Wednesday highlighting the Urban Land Institute’s newly released “Emerging Trends in Real Estate Global Outlook 2021” report.

“The industry leaders canvassed for Global Emerging Trends are hopeful of a consumer-spending-led economic recovery feeding through an uptick in real estate business in the second half of 2021,” the report notes. “But much will depend on the rollout of the vaccine and an easing of lockdown restrictions.”

The Asia Pacific region appears to be leading the recovery globally compared with many Western economies, researchers note. That has prompted more global investors to increase their allocations of capital to the region. But the U.S. is also posting growth to many of its real estate sectors and seeing some evolve to better compete in the post-pandemic world.

Here are a few of the trends highlighted in ULI’s report that are on the radar for global real estate markets:

Real estate continues to attract capital. Low interest rates are fueling interest in real estate across the globe. “Most industry leaders interviewed for this report believe the inherent attraction of real estate income is even stronger this year than in pre-COVID times,” according to the ULI report. Favorable supply-demand dynamics have led investors to increase their allocation to residential markets, a trend that has only been accelerated by the COVID-19 outbreak, the report notes.

Unknowns loom for the office sector. The office sector, however, is more difficult for real estate leaders to predict. The rise of remote working, the increasing concern for the health and wellbeing of employees, and the lessening appeal of long commutes in big cities could negatively impact leasing activity this year and next year. Many large firms could delay corporate decisions on office space, or commit to a greater reliance on remote working. Many real estate leaders do predict employees will eventually return to the office, even if in more of a “hybrid” working model. One area of growth for the office sector: flexible space. (Read more: Co-Working Spaces May Soon See a Surge in Activity) “Industry leaders predict a polarization between perceived high-quality buildings—modern and adaptable—and outdated and inflexible secondary stock that is likely to suffer from a marked decline in demand,” the report notes.

ESG tops more agendas. The impact of carbon emissions from the built environment remains a pressing issue for more companies, and they’re placing a greater emphasis on environmental, social, and governance agendas. “Though decarbonization and climate change have been rising up the agenda for years, it is only in the past 18 months that these issues have moved to the foreground of the industry’s thinking,” the ULI report notes. “So far, the pressure is coming from the providers of finance and the biggest tenants. There is, though, the expectation that governments will ramp up regulation in the coming years.” More companies are showing a greater focus on putting into place strategies with decarbonization and realizing the consequences of carbon emissions from their buildings.

Re-imagined retail. The physical brick-and-mortar retail sector has faced the increasing threat of online competition—even more so since the pandemic. But investors are not shying away from seeking out new opportunities in retail, particularly as they view some falling prices in the sector. As such, retail could be acquired and repositioned either as more usable retail formats or re-envisioned as something completely different, such as residential or urban logistics.

The following is a chart of the top issues for real estate in 2021 for the United States, according to real estate leaders surveyed by ULI.

©National Association of REALTORS®
Reprinted with permission

Homeowners may notice an increase in their property tax bills. Municipalities levied about $323 billion in property taxes on single-family homes in 2020, a 5.4% increase compared to 2019, according to ATTOM Data Solutions’ newest property tax analysis for nearly 87 million single-family homes in the U.S.

The average tax on single-family homes nationwide in 2020 was $3,719—reflecting an effective tax rate of about 1.1%. But many areas of the country faced much higher rates.

“Homeowners across the United States in 2020 got hit with the largest average property tax hike in the last four years, a sign that the cost of running local governments and public school systems rose well past the rate of inflation,” says Todd Teta, chief product officer for ATTOM Data Solutions. “The increase was twice what it was in 2019. Fortunately for recent home buyers, they have mortgages with super-low interest rates that somewhat contain the cost of homeownership. But the latest tax numbers speak loud and clear about the continuing pressure on both recent and longtime homeowners to support the rising cost of public services.”

The states with the highest effective property tax rates in 2020, according to ATTOM Data Solutions’ analysis, are:

• New Jersey: 2.2%
• Illinois: 2.18%
• Texas: 2.15%
• Vermont: 1.97%
• Connecticut: 1.92%
• New Hampshire: 1.86%
• New York: 1.68%
• Pennsylvania: 1.64%
• Ohio: 1.62%
• Nebraska: 1.53%

On the other hand, the states with the lowest effective tax rates in 2020 were:

• Hawaii: 0.37%
• Alabama: 0.44%
• West Virginia: 0.51%
• Colorado: 0.54%
• Utah: 0.54%
• Tennessee: 0.59%
• Nevada: 0.6%
• Idaho: 0.61%
• Arizona: 0.62%
• Wyoming: 0.63%

Northeast metros tended to have the highest effective tax rates in the country, according to ATTOM Data Solution’s analysis. By metro level, the areas with the highest effective property taxes in 2020 were Syracuse, N.Y. (2.83%); Trenton, N.J. (2.69%); Binghamton, N.Y. (2.67%); El Paso, Texas (2.66%); and Rockford, Ill. (2.62%). Meanwhile, the lowest rates among metros in 2020 were in Honolulu, Hawaii (0.36%); Daphne-Fairhope, Ala. (0.37%); Montgomery, Ala. (0.38%); Tuscaloosa, Ala. (0.39%); and Colorado Springs, Colo. (0.42%).

By dollar amount at the state level, New Jersey had the highest average property tax on single-family homes at $9,196, followed by Connecticut at $7,395; New York at $6,628; New Hampshire at $6,596; and Massachusetts at $6,514.

On the other hand, the states with the lowest average property tax on single-family homes were Alabama at $841, followed by West Virginia at $849; Arkansas at $1,147; Tennessee at $1,202; and Mississippi at $1,241.

Competition is fierce among house hunters. For buyers in San Jose, Calif., San Francisco, and Raleigh, N.C., they should be ready to face the most competition in the nation, according to new research by LendingTree.

LendingTree ranked the 50 largest metro areas in the U.S. based on the competitiveness of their housing markets. They factored in the average down payment percentage, the share of home buyers who have credit scores above 720, and the share of home buyers who shop around for a mortgage before looking for a house. All of these categories—down payment, credit scores, and being mortgage ready—can help home buyers be in a stronger position to succeed in the heated housing market, too, the study notes.

For example, the average down payment percentage in the top 11 most competitive metros is 21%—showing that buyers are coming ready to make their offers stand out.

Beware: Your buyers could struggle to be approved for a home loan. As lenders tighten standards,  home loan approval is becoming more difficult, The Wall Street Journal reports.

The Mortgage Bankers Association reports that mortgage credit availability, which measures lenders’ willingness to approve mortgages, is at its lowest level since 2014.

“Because mortgage credit is more difficult to obtain, it is a more competitive environment overall,” Lawrence Yun, chief economist at the National Association of REALTORS®, told The Wall Street Journal.

Mortgage lenders are issuing more home loans at record levels. But those mortgages are most often going to those with stellar credit histories and borrowers willing to make large down payments. About 70% of mortgages granted in 2020 went to borrowers who had credit scores of at least 760. That is up from 61% in 2019, according to data from the Federal Reserve Bank of New York. Among borrowers with approved mortgages, the median credit score was 786 in the fourth quarter of 2020.

Lenders are being cautious in issuing loans as the housing market surges from strong homebuyer demand and higher home prices. Mortgage loan availability plunged about 35% annually in 2020. Lenders are being cautious as they look to protect themselves from making loans to borrowers who might lose their jobs amid the pandemic.

Forbearance is another fear of lenders. To receive approval for a mortgage, some borrowers are reportedly being asked to sign statements saying they have no intention of requesting forbearance after they are approved for a mortgage.

As The Wall Street Journal reports: “The meteoric growth of home prices has made some lenders reluctant to take on first-time home buyers or others they view as slightly risky. Lenders who were comfortable offering mortgages of $300,000 or $320,000 to borrowers with good-but-not-great credit histories might not be willing to lend the $350,000 or more now required to buy the same property.”

Mortgage lenders weigh multiple variables in approving applications, including the borrower’s employment history, income, credit score, and debt level.

Rejected mortgage applicants may find better luck soon, however. Credit requirements likely will loosen slightly this year as mortgage rates rise and prompt a decline in lenders’ bustling refinance business, Mike Fratantoni, the MBA’s chief economist, told The Wall Street Journal. “Since lenders aren’t being flooded with calls to refinance, more of their resources can be used to reach out to first-time buyers for purchases.”