Millennials and the Housing Market

 

Throughout time, generations come and go and often are classified through various quirks and trends brought on by history and time period. The up and coming generation dubbed “millennials” is no stranger to the phenomenon of blazing a new trail in the same way that many past generations have done. Since the world is an ever changing place, millennials often find themselves in positions that older generations may not understand. There is a higher propensity for this group of 18-34-year-olds to find themselves in debt with student loans, credit card debts, and various other financial obligations despite the fact that the job market isn’t what it used to be. Because of this, many millennials have moved back in with loved ones or find homes and apartments to rent rather than putting the money down (and consequently putting down roots) on a home that they will be in for a while.

Some of the current trend toward shying away from home ownership has to do with a lack of knowledge regarding the programs available to first time home buyers. Other factors may include the idea of a fluid job market and maintaining the option of being able to move to new frontiers should different opportunities arise. Since this generation seems a bit gunshy toward buying homes currently, it stands to reason that there will soon be an uptick in real estate sales as millennials begin to settle into routines and take the steps toward putting down roots.

Because this generation has a different approach to home ownership, they are inadvertently tipping the real estate market on its ear. Buying a home becomes a quicker decision with the need to gather a lot of information in a shorter amount of time. This means that sellers have a chance to sell their home more quickly, but can also mean more work for real estate agents and owners who are looking to sell their homes without the aid of an agent. For many millennials, a home isn’t necessarily a permanent situation, so buying a home becomes a decision made in less time than members of previous generations may take.

Fear of going into debt to buy a home- especially when student loans loom heavily- is another trademark of this generation. The reasoning behind this can extend in many directions, but millennials can be quite thoughtful regarding where their money is going. Many find that renting from relatives or friends can be cost effective, though the goal behind paying to stay with friends may ultimately be to save money for a down payment.

With all this in mind, it’s understandable that homes with sleek, energy efficient, and practical designs attract the eye of younger buyers. As a generation always on the go, homes purchased by millennials are less likely to be fixer-uppers and more likely to be mostly finished homes in ideal locations. Proximity to work and entertainment has huge bearings on the type of crowd that may be interested in purchasing a specific home. Often, condos in the city are purchased because if the owner is in this age group, they see potential in their home. Living in the city sometimes offers public transportation, less commute to local eateries, and a more lively social life. An added bonus is the freedom to sublease if a job is offered in a different location.

New technologies are quite attractive to the millennial generation that grew up during the boom of electronic discoveries. Smart home advances, security systems, and eco-friendly appliances appeal to them because of the ease offered in day to day life. Being able to control various aspects of home life from a smart device can help new homeowners feel more safe and can offer perks that previously were only dreams.

A paltry 34 percent of people aged 35 and under own homes. This means that the national average for young homeowners has been dropping for a while and has many baffled. A few of the reasons included above contribute to the lower numbers of millennials buying homes, but for several in the upper ages of this group, homeownership is becoming a more desirable situation as renting can be a drag. Homeowners find that there is a freedom that comes from being able to own pets and hang photos without worrying about losing a deposit for damaging a rental property.

For anyone afraid that millennials will never move out and buy their own home, rest assured that there will likely be an upswing in the housing market. 93 percent of people who fall into this age group have mentioned that they look forward to owning a home in the future- this number is provided thanks to a survey done by Fannie Mae. Many reasons are given that denote why they haven’t already purchased, but financial stability, relationship stability, and job stability all factor into the delay.

The drive to own a home is not dormant in the eyes of the newly blossoming young adult generation. However, the timing may not be the same as it has been for older generations. With lenders looking to gain loyal customers and housing programs popping up to facilitate home ownership without as high of a down payment required, buying a home may begin to seem like a more achievable life goal. Allow some time for the market to ripen and the millennials to save their pennies and soon millennials will be dotting the globe in their newly acquired, personally owned digs.

Sources

http://realtormag.realtor.org/home-and-design/architecture-coach/article/2014/10/what-millennial-buyers-want-now

https://www.nar.realtor/field-guides/field-guide-to-millennial-home-buyers

https://www.washingtonpost.com/opinions/millennials-arent-buying-homes--good-for-them/2016/08/22/818793be-68a4-11e6-ba32-5a4bf5aad4fa_story.html?utm_term=.028af08ef995

http://time.com/money/3551773/millennials-home-buying-marriage/

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