A quick glance at any search results regarding millennials and their home-buying decisions will undoubtedly show a hodge podge of articles with conflicting points of view. So the question remains, are millennials buying or not? Surprisingly, the answer is: yes. But they’re buying differently than the generations before them.
As the millennial generation begins to come of age, it is becomingly increasingly obvious that they are approaching property ownership differently. This is understandable as the recession of 2008 left many under employed, and the subprime mortgage crisis had dire consequences on the market as a whole. Millennials are entering the real estate much more slowly than generations before them, for both economic and social reasons. From an economic standpoint, they are carrying far more student loan debt than ever before. About 71% of bachelor’s degree recipients graduate with loans today, which is up from 64% just 10 years ago. Additionally, the millennial generation has been heavily focused on moving into urban areas (where, from their financial standpoint, homeownership is virtually impossible).
But, the oldest members of the generation are turning 30 now, and the housing market is simultaneously beginning to find health. This means that millennials are actually looking to purchase homes.
Studies show that 35% of home buyers in 2015 were millennials, which was up 3% from 2014. These buyers had a median age of 30 years old, and were purchasing primarily single family homes within suburban areas. Based on the millennial exodus to urban centers (where they were primarily renting space in apartments), it’s very likely that millennials would like purchase homes in those urban spaces if the economy allowed for it. According Lawrence Yun, a NAR Chief Economist,
“The need for more space at an affordable price is for the most part pushing their search further out.”
According to Fortune Magazine, a survey was done to determine where millennials (ages 20-30) were looking to purchase homes. It was found that individuals were actively seeking out places where average wages and home prices worked hand in hand to make for a healthy living situation. Not surprisingly, the areas where millennials were purchasing homes were far away from the coasts, where housing cost are steadily increasing.
Currently, the most popular place amongst millennials looking to purchase homes is Utah. Not only does Utah tout some of the most affordable home prices, Utah County also has the fastest employment growth of the 342 largest counties in the United States.
National Mortgage News has pegged the following cities as the top 10 cities where millennials are buying homes:
- Ogden, Utah
- Minneapolis, Minnesota
- Raleigh, North Carolina
- Salt Lake City, Utah
- Charleston, South Carolina
- Denver, Colorado
- Washington, D.C.
- Seattle, Washington
- Austin, Texas
- Portland, Oregon
As, the millennial generation continues to age, it will be interesting to see how their buying habits develop over time.
In my last post, I started a list of things that you should absolutely consider before purchasing your first home. Buying a home is a major live achievement, and you’ll want to make sure that everything goes as smoothly as possible, so your achievement doesn’t turn into a source of deep personal and financial strife.
Let’s delve a little further into some other important things to think about before you sign on the dotted line.
Don’t Buy A Home for the View
If you’re looking at a home, and the selling point is the view, you must remind yourself that that view may not be there forever. Markets shift, renovations happen, and new properties are built all of the time; those can easily obstruct or destroy the view that you loved so much.
Protip: If you really love the view, and you have the means…..try and buy the property that makes it up. This is really only applicable in rural, undeveloped areas, but it may be possible to purchase a small plot of the land that makes up the view that you love.
What Is The Long Term Plan?
There are a few things to consider when you’re thinking long term.
- The most obvious question is whether or not you are planning to grow your family. How many kids are you planning for? Will there be enough space? Is the layout of the house kid-friendly/safe?
- If this is just a “starter” house, and you’re planning to move and rent out this house: Make sure renting is allowed. There are some homeowner associations that contractually prohibit renting, so be aware of that before you buy.
- If this is just a “starter” house, and you’re planning on selling, determine who the house will appeal to when you’re trying to sell. Is this home going to appeal only to first time buyers or will families consider it too?
You’ll want to try to invest in a home that appeals to a broad market. So, consider things like school districts, proximity to amenities, & family-friendliness when purchasing because you don’t want to end up with a house that you can’t sell or lose money on because your potential buyer-pool is limited.