What is drawing younger homebuyers into today’s real estate market? Real estate agents and investors need to understand what is driving them, as do mortgage lenders and the government. The more that millennial buyers understand their competition and peers, the better they’ll be able to navigate the market too.
Living Costs
Zillow announced that renting has become twice as expensive as owning. In fact, new data shows how incredibly high incomes need to be in order to afford even modest rentals. At the same time, mortgage interest rates and home prices remain at incredible lows. This gap between what renters versus owners are paying to live is only widening. The decision to rent or buy now will increasingly separate and dictate how well younger generations live for the rest of their lives.
When We Were Kids
Many millennials are turning to buying houses as a way to get back the lifestyle and environment they had as kids. Many are having kids of their own now, are growing up, and are getting married. Recent surveys of buyers reflect what it is millennials are looking for in a home. Kitchens and outdoor space are among the top needs. Many of today’s buyers’ tastes are unquestionably suburban, if not bordering on rural.
The Other Benefits of Homeownership
There are many benefits associated with owning a home. Although significant, the financial perks and advantages of buying and owning real estate are only the tip of the iceberg. Homeownership can provide increased security, peace of mind, fulfillment, and can even increase the odds of children doing better in school. While many would argue that millennials are more mobile than ever, and love the freedom new technology provides, homeownership can provide the perfect balance and give them something grounded.
Real Estate Investment
It is true that many millennials might not be ready to settle down yet. Some are still exploring the planet, finding their optimal destination, or need to stay in the wind to stay employed. However, the benefits of real estate investing are undeniable. Even if they won’t be moving in yet, buying homes now can lock in great prices and rates for later, while providing additional income to fuel their other passions.
Data, Data, Data
The impact of the recent crises has been minimized, thanks to better data and more real estate education. The woes of the early 2000s would be scary if they were unpredictable and random. They aren’t. Now, homebuyers have a much better understanding of real estate cycles and what moves them. It is simply a matter of preparing for them and planning ahead.
Incomes
Millennials are now growing into their best earning years. While Fox News reports a dip in millennial startup launches, which could signal many are turning to ‘real jobs,’ others have already found success as business founders. Either way, they are now finding the confidence and financial capability to commit to homeownership and mortgages.
Availability of Home Purchase Mortgages
Mortgage guidelines have made it difficult for homebuyers to apply for a loan in recent years. However, times appear primed to change. A variety of low down payment mortgage loan programs are being revived to compliment the 100% financing options that are already on the market. With more government pressure, expect continued loosening. At the same time, credit scores are strengthening in the wake of the crisis, and young workers are seeing their credit gain traction. Ironically, landlords have become so tough on tenant screening and moving in costs that it is actually easier to get approved for a no-down-payment mortgage loan.
