In The Headlines

Millennial Homebuyers Head for the ‘Burbs

Millennial HomebuyersIt was only a matter of time. As millennials grow older, get married, have children, they are seeking out bigger houses and better schools. That means the suburbs. They are also weary of paying higher urban rents and watching those rents rise. Just 17% of millennials bought homes in urban or central city areas, according to an annual survey by the National Association of Realtors (NAR), which sent out a questionnaire last July to roughly 95,000 homebuyers. That urban share came down from 21% in the previous survey.

“The median age of a millennial homebuyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family,” said Lawrence Yun, chief economist for the NAR. “Even if an urban setting is where they’d like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out.”

Home prices have been rising more aggressively in the last six months. Bank of America just upped its forecast for prices this year, citing, “recent momentum, low interest rates and lean housing supply.” Rents have also been rising, but they have stabilized lately at near record highs.

The supply of homes for sale, especially in urban areas, is also a problem, and it is particularly critical at the low end, where millennials are likely to be buying. Homebuilders are not focused on first-time buyers and smaller homes because it is harder to make a profit in that segment.

In addition to high home prices, debt continues to plague buyers across the spectrum and is, in fact, delaying home buying more acutely. “While debt delayed saving for a down payment for a median of four years for all buyers, the number of years postponed increased from three years for Millennials to six years for older Boomers,” the NAR survey said.

The majority of millennials cited student loan debt as a barrier to saving for a down payment, while credit card debt was more of a problem for Gen Xers and younger baby boomers. Without stronger wage growth, debt will continue to be a burden for all buyers. “While the country continued to create more jobs, wage growth was limited. Until we see a real boost in income, rising home prices will continued to deter aspiring home buyers,” JPMorgan analysts said following the February employment report.

The desire to own is growing among the millennial generation; 48% of those surveyed said it was their primary reason for buying, up from 39% a year ago. The desire for a larger home was the highest among Gen X buyers (16%), and older boomers (at 20%) were the most likely to buy because of retirement, according to the NAR survey.


  1. – CNBC
  2. – National Association of Realtors

Lagging Soda Sales Prompt Coke to Bet Big on Milk

Lagging Soda SalesIn its quest to slake the world’s thirst, Coca-Cola is intent on making milk a billion-dollar brand—but not just any kind of milk. Coke has joined forces with a dairy cooperative to create Fairlife, which produces a filtered, high-protein, low-sugar, lactose-free designer milk also called Fairlife. It costs about $4 for a 52-ounce bottle—more than organic milk and about double what conventional milk sells for. In its first year on store shelves, Fairlife reached about $90 million in sales, giving a sizable boost to the specialty milk category, which includes milk with more calcium or no lactose.

Coke is part-owner of Fairlife through its Venturing and Emerging Brands group, which has backed Zico coconut water, Honest Tea, and Fuze juice drink. Fairlife Chief Executive Officer Steve Jones worked at Coke as chief marketing officer from 2000 to 2003. While there, he played a role in moving the beverage company beyond its Minute Maid frozen orange juice business to higher-margin products, such as Simply juice, a billion-dollar brand that has challenged market leader Tropicana—owned by rival PepsiCo—with its clear bottles. “It proved to me you can take a commodity and transform it into a dynamic high-growth category,” Jones says of Simply. “We can do the same to milk.”

Milk is only one of the latest attempts by Coke to offset declining soda consumption with healthier products. “We look at milk, honestly, as one of nature’s superfoods,” says Melanie Kahn, vice president for marketing at Fairlife. Jones is not the only former Cole executive peddling milk. Dean Foods, the largest dairy processor in the U.S., has put Greg Schwarz, a former brand manager for Coke’s Hi-C fruit drink business, in charge of its marketing. Dean has co-branded its regional milks under one umbrella called DairyPure. The drinks are hormone- and antibiotic-free. The company is releasing a lactose-free variety this year. Dean has 60 milk-processing plants around the country. “We can do local better than anybody,” Schwarz says.

Consumers, especially millennials, want animals and workers treated well without compromising taste, convenience, or quality, says Fairlife co-founder Mike McCloskey, a veterinarian turned farmer. He’s long been fixated on the comfort of cows and sustainable farming methods, such as converting manure into methane to power dairies. The dairy industry has been striking out for decades in its efforts to get people excited about milk, as cereal consumption has slowed and soy and almond milk have cut into sales. Per capita milk consumption in the U.S. fell to about 19 gallons a year in 2013, according to the U.S. Department of Agriculture. At milk’s peak, in 1945, the average American consumed about 42 gallons. Even clever advertising and marketing, including the legendary Got Milk? campaign, launched in the 1990s, did little to spur growth.

Since 2011, Dean has targeted kids and adults with its TruMoo milk, which comes in such flavors as Cookies and Cream and Chocolate Marshmallow. Parents like it because the milk contains no high-fructose corn syrup. DairyPure, on the market for about 10 months, appears to be building on TruMoo’s momentum. In the last quarter, volume sales of Dean’s branded milk rose 1.6%, compared with a 7.3% decline over the previous year, according to Sanford C. Bernstein analyst Alexia Howard. Specialty milk sales jumped 21% in 2015, up from 9% growth in 2014, largely thanks to “the launch of Coca-Cola’s high-protein Fairlife brand,” Howard says.

Some say Coke’s drive for dairy will be an uphill climb, given Fairlife’s premium pricing. “Somehow you’ve got to build a value-added case that there’s more to this,” says Ian Shackleton, an analyst at Nomura International. Coke, which holds a minority stake in Fairlife, believes its efforts will pay off. The product relies on a cold filtration system to separate the five parts of milk—water, vitamins and minerals, lactose, protein and fat—and recombine them in different recipes, changing the final product’s nutritional makeup.

Jones was semiretired when he connected with McCloskey and his wife, Sue, in 2010. He urged them to team up with Coke, which has a vast distribution network and access to hundreds of thousands of supermarket shelves across the country. Two years later, Jones helped broker the joint venture. “We needed the marketing,” McCloskey says. “We had everything except the structure to get it to consumers in every corner of the country.” Fairlife can also tap Coke for guidance on research and development, chemistry, and marketing. Its board is split between members from Coke and farmers from the cooperative. The soda giant takes a hands-off approach to the partnership, says Scott Uzzell, President and General Manager for Coke’s Venturing and Emerging Brands group. “They know dairy better than anybody,” Uzzell says. “We know consumers.”


  1. – BusinessWeek
  2. – USA Today

The Good News Is . . .

Good News • There were 5.5 million job openings in January, up from 5.28 million job openings in December, according to the Job Openings and Labor Turnover Summary (JOLTS) report. The monthly report from the Labor Department is a closely followed barometer of economic conditions, and measures job postings in different sectors. Private sector jobs, including construction and wholesale trade, saw the biggest gains during the month. Regionally, the Midwest saw an increase in job openings.

• FedEx Corp., a leading provider of transportation, e-commerce and business services, reported earnings of $2.51 per share, an increase of 24.9% over year-earlier earnings of $2.01 per share. The firm’s earnings topped the consensus estimate of analysts by $0.17. The company reported revenues of $12.7 billion, an increase of 8.0%. Management attributed the company’s results to strong revenue growth in its FedEx Ground segment, and improved operating margins in its Federal Express segment.

• TransCanada said that it would buy the Columbia Pipeline Group for $10.2 billion. The all-cash deal will make the Canadian company a major force in the distribution of natural gas produced in the northeastern United States through hydraulic fracturing, or fracking. Columbia’s largest major assets include 11,300 miles of pipelines and 286 billion cubic feet of natural gas storage facilities in the Marcellus and Utica shale gas regions, the center of northeastern fracking. Under the terms of the deal, Columbia shareholders will receive $25.50 per share.

1. – Bureau of Labor Statistics
  2. – CNBC
  3. – FedEx Corp..
  4. – NY Times Dealbook

Planning Tips

Guidelines for Effective Charitable Giving

Guidelines for Effective Charitable GivingWhen making donations to charity, you need to use your head as much as your heart nowadays to be certain you are giving to the charity that will most effectively steward your contribution. After all, you give because you want to support the cause, not pay for an organization’s overhead or peripheral activities like fundraising. Below are tips to help you be more effective in with your charitable donations. Be sure to consult with your financial advisor before committing any significant funds to a charitable organization.

Look for verifiable impact – How many people does the charity help? Does it cite metrics of success? Does it cite outside evaluations or comments by scholars or journalists that can be verified on the Web? When an organization does not back up its claims and relies on vague feel-good anecdotes, it is probably because that is all it has to offer. One option is to look at rating sites such as Charity Navigator, BBB Wise Giving Alliance, or CharityWatch. These groups provide easily comparable measures of financial efficiency, like the percentage of money spent on programs, administration and fundraising.

Narrow your giving – It is more efficient, for you and for the causes you support, if you donate to five organizations each year rather than 15. Your time and money will go further, you are more likely to understand what those five groups do and they may become long-term relationships.

Be careful when donating online – There is also the risk that if you are giving online, you may not actually be sending money to the right place. If you are online looking for a place to give, if you mistype, there are similar sites with similar names. Not all those charities are fraudulent, but even so, they may misuse your money.

Commit for the long term – When you feel confident in an organization, consider giving to it on a multi-year basis. To really see the impact of your giving, it pays to build up a relationship with the charity you support. You will feel more engaged in the progress of their programs, says Jacobs, and they will know they can count on you.

Consider a donor-advised fund – Donors receive an immediate tax deduction when they make a charitable contribution to a donor-advised fund. Deductions include up to 50% of adjusted gross income (AGI) for gifts of cash and up to 30% of AGI for gifts of appreciated securities, mutual funds, real estate and other assets. There is a five-year carry-forward deduction on gifts that exceed AGI limits.


   1. – Natl. Philanthropic Trust
  2. – Forbes
  3. – CNBC
  4. – Time
  5. –