The following is a guest article by Kris Lindhal in which he debunks millennial homebuying myths. Enjoy!
We’ve seen the statistics that home ownership hit the lowest point in almost 50 years in 2016. We’ve also heard stories that the “fickle” Millennial generation of highly educated high earners prefers urban loft living and rental apartments to suburban ranches with two-car garages and landscaped yards.
This may be true for some, but like all generalities, broad strokes miss the mark. The generation that has now reached “home-buying” age has not totally given up on a home or a secure future; even if the shape of the future will be quite different from the present.
Millennials comprise that generation born between approximately 1977 and 1995, give or take a few years in either direction. Others prefer birth years between 1980 and 2004, while still others characterize Millennials as those born after 1984; take your pick! The group, also sometimes known as Generation Y, does have some unique group characteristics. But, as a group, they are probably no more demanding, restless, unsettled or misdirected than any previous generation at the same age.
A more accurate description is possibly tied to the technology available as they grew up. There has been a rapid pace of development since they began school, attended college and applied for their first jobs. Millennials are the first generation to grow up in a world of accessible computers and cell phones. They grew up with a variety of connected devices that make any other method of connection seem out-of-date or slow. Millennials easily work remotely, attend virtual classes, and order meals that are ready by the time they arrive at an eatery. Previous generations might still be adjusting to the idea that these things aren’t just fads.
Counter to the claims in many click-bait articles, many Millennials are responsible, sensitive to other people’s needs, want to make a difference in the world, and do actually work hard to achieve their goals. It’s easy for people to point their fingers and say that this group simply doesn’t “want” things ranging anywhere from success to financial security. But what many don’t talk about is the hand that they have been dealt. A lot of decisions are made out of necessity, and understanding why can perhaps help us avoid repeating the mistakes that brought us to this point in the first place.
So, in some cases and in many locales, Millennials have taken their time to decide on their personal direction and sampled a number of differing opportunities. They have been “content” to rent in the face of the housing bubble and ensuing recession, or to remain at home while they formulated personal goals for the future. There is no hurry to make decisions about a future which is years or even decades away. In the wake of the mistakes of their parents/grandparents, some decisions are hard to justify in the short term.
Looking forward, 2017 may signal the beginning of the “great Millennial home-buying spree,” according to more than one analyst. Now that home prices seem to have somewhat stabilized and the expectation is that interest rates will be moving higher, older Millennials are more likely to see this as the time to invest in the future by becoming homeowners – many are expected to utilize first-time buyer programs such as the FHA loan. The job market has improved, economic reports are generally favorable, and more and more Millennials are marrying and planning families.
According to a CBS Money Watch report, Millennials and Baby Boomers will constitute the bulk of real estate activity for the coming year or two. One group will be buying their first home, while retirees will likely downsize and move to retirement communities.
Another interesting analysis also looks to home buying trends for 2017 with the prediction that first-time and repeat home sales will be nearly equal, mirroring the opinion that Millennials and Boomers will heavily influence the market. This report contains two additional tidbits of pertinent information. It projects that sales of condos and townhomes will account for nearly 50 percent of sales. What’s more is that suburban properties are almost equally appealing to both Boomers and Millennials.
In some American cities, this is already a fact. The Boston and Austin, Texas Markets – cities with two very different urban vibes – have both seen a tremendous surge in high-rise condominium projects, and their suburban areas also enjoy an upsurge of popularity. It seems that some of those Millennials who spent their early years living downtown wouldn’t mind the peace of suburbia. An almost equal number of retirees will trade their commutes for proximity to the culture and the business centers.
It seems plausible. Real estate professionals around the country brisk interest, but in most locales demand still outpaces supply. The signals aren’t clear for the remainder of 2017, although at least one prognosticator sees a price correction in the future, as well as higher interest rates, coupled with political uncertainty. Housing Wire, however, also names Millennials as a driving force in the housing market, pointing to research that four out of 10 members of this age group who plan home purchases this year will spend at least $500,000.