Millennials & Home Buying

Millennials are the largest generation in the U.S. and, according to MarketWatch, they’re the largest generation to ever enter the the housing market, currently at 17 percent. A few more facts:

  • They make up more than 30 percent of all homebuyers
  • 90 percent purchased in a major city
  • 80 percent consider home buying a good investment
  • A high percentage have a DIY attitude when it comes to research
  • Many have high student debt
  • On average it takes 12 and a half years to save for a down payment

The changing demographics of homeownership

The days it seems as if everything is changing when it comes to homeownership. According to a recent study by the Stanford Center on Longevity, millennials are waiting until 30 or so to get married. This means they are having families later and buying a home later.

Currently, the homeownership rate at age 30 is approximately 36 percent whereas 49 percent of baby boomers had purchased a home by age 30.

Of course, the reasons are many. Young adults are now saddled with an average of $30,000 in student debt, housing prices continue to rise and, although the economy remains strong, wages are not commensurate with home appreciation.


Talkin’ Millennials … Again

Millennials may not be everybody’s favorite topic – unless you’re a millennial, of course – but a new study by the credit report agency Experian has some interesting data. First of all, while 86 percent of millennials see owning a home as a sound financial investment, only 15 percent actually do so.

Part of the reason is low credit scores. While the average credit rating in the Unites States is 677, millennials between 22 and 28 have an average of 652 and older millennials age 29 to 35 have an average score of 665.

Millennial home buyers average 31 years of age with an income of $64,000 and are more prevalent in the South and West, according to the Experian study.


Those darn Millennials!

Yes, it seems as if we’re always discussing Millennials, particularly they’re home buying habits (see , , , ) and a new report by the Urban Institute highlights the differences in their home purchase timeline as compared with other generations.

According to the report, millennials had a homeownership rate of 37 percent in 2015, which is 8 percent lower than Generation X and Baby Boomers when they were between 25 and 34 years old.

Of course, the reasons cited are familiar as well: a delay in getting married and starting a family (apparently marriage increases the probability of buying a home by close to 18 percent), massive student debt and high rents, making it harder to save up for a downpayment.

Finally, the current state of housing: high demand, low inventory, rising and rising prices might have something to so with it as well.


Millennials Are Coming … to Sac & Not SF

Millennials are on the move – to Sacramento and San Jose in California – but definitely not to San Francisco!

According to a new study by SmartAsset, Sacramento and San Jose rank 3rd and 7th respectively nationwide as the cities millennials are migrating to. Overall, Seattle and Columbia, South Carolina ranked 1 & 2.

Interestingly, over two-thirds of the millennials moving to Sacramento were coming from within California.


Millennials forced to sacrifice

High prices, low supply are causing many first-time homebuyers, often millennials aged 20 to 35, to sacrifice on many of the features they value in order to purchase a home; or to give up the search all together.

A recent survey by Trulia found that 84 percent of respondents would give up features in order to live in their ideal neighborhood; 34 precent would skip the garage, 32 percent would forego the updated kitchen and 30 percent would accept less square footage. 16 percent said they wouldn’t make any concessions.

Unfortunately, even with concessions competition remains fierce and many millennials give up on the idea of buying a home or move out of the area.


Need help with the downpayment? Ask Mom & Dad

Given the high cost of real estate coupled with crippling student loan payments and it’s not surprising that 8 out of 10 millennials are having difficulty coming up with a down payment for their first home. And, given these circumstances, it’s not surprising that many millennials are turning to their parents for financial help in one way or another.

Sometimes it may be an outright gift: the National Association of Realtors says that 25 percent of home buyers under the age of 38 receive financial gifts from friends or parents to help with the downpayment.

Another 20 percent move from their parents home into their first property as they are able to save faster by living at home.


Millennials & Home Ownership

A recent article in Realty Biz News tries to explain why millennials have been slow to embrace home ownership. The four main reasons are:

  • High student debt – many millennials have student debt that far exceeds credit card debt and auto loans. They simply can’t afford to take on mortgage payments
  • Getting married later – home ownership is often associated with having a family and this is being postponed by many millennials who are often living independently or, more likely, with their parents
  • 20 percent down payment – simply out-of-reach for many
  • Living in cities – millennials feel a strong pull to the cities where rent and expenses are high, making saving for a home very difficult

Millennials Still Saving … And Saving

A recent survey reported that 80 percent of millennials – those born between 1982 and 2004 – want to own a home someday; they’re just having trouble saving for the down payment.

With the price of homes in California these days a down payment of 20 percent averages around $146,000. Figuring a savings plan of $360 per month, that comes to nearly 24 years to save what is needed.

Analysts agree that the high price of homes plus often massive student debt is forcing more and more millennials to delay home ownership.


Growing Concern with Rising Mortgage Rates

According to Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey 60 percent of those surveyed maintain confidence in the U.S. economy while 70 percent view the real estate market favorably.

On the other hand, a growing number of potential homebuyers – particularly millennials – are discouraged by rising mortgage rates and say that it may prevent them from buying a home.

Current rates are still low by historical standards – 4.02 percent for a 30-year fixed loan as of May 18, but 68 percent of millennials feel a growing sense of urgency to purchase a home as they believe that interest rates will continue to increase.