Millennials Want in On Home Buying, But is it Feasible?

While baby boomers once dominated the housing market, aging Millennials are now taking over as the leaders of first-time home buying, the Memphis Business Journal reports.

Individuals between the ages of 20 and 30 currently make up the majority of home buyers in the United States, as shown by data from the National Association of REALTORS.

“Their buying power is huge,” said Jessica Lautz, NAR’s managing director of survey research.

Specifically, Millennials account for two-thirds of the estimated 618,000 single-family housing starts or newly constructed homes being built. Most Millennials are moving from metropolitan areas to the suburbs when looking for a new home.

Yet the recent increase in multifamily development has led developers to ask the question: when will these renters will officially become buyers? This is the result of student loan debt and slow income growth being major problems for this generation to overcome before moving from renting to buying.

“You have this huge demographic bubble of Millennials, and the big question is are they going to follow traditional generation trends and buy homes after a few years of renting? So far they aren’t, so that big question mark is will it have a big impact on the industry,” said Rick Haughey of the National Multifamily Housing Council.

However, as Haughy’s organization is on the lookout for increasing rents nationwide to drive more people towards buying homes, according to The M Report, a steady rise in rent may be doing just that.

A survey of 750 buyers from Redfin from the first quarter of 2016 found that 25% of home buyers are mainly influenced by a rise in rent, while another 29% blamed personal life events as the cause. The previous quarter, the shares were 21% and 25% respectively.

Unfortunately, a simultaneous rise in home prices has made affordability a concern for 25% of those surveyed, a 1% decrease from 26% in the fourth quarter of 2015.

Another 20% are worried over the availability of new homes as well, with 16% concerned over competition. About 9% had no concerns over buying a home.

Rising mortgage rates also caused unease with 67% of buyers noting mortgage rates as an important or very important factor in their to decision to buy.

Even so, home buyer sentiment remains positive, as 33% of respondents reported they are more inclined to purchase a home this year as compared to 2015. Fully 31% stated feeling urgency to buy before prices or mortgage rates rise significantly.

Leave a Reply