Understanding Millennial Home Buying Trends
First time home buyers have always played an important role in the real estate market. However, according to the National Association of Realtors, among adults under 35 years old (who typically make up the first-time homebuyer market) homeownership is down to 36 percent from a high of 43 percent in 2005.
This generation, the millennials, were born between 1980 and 1995 and comprise about one-third of the total US population. Research shows that the millennials are not only buying their first homes later than previous generations, they are getting married and having children later. While this generation of young people has endured a lot of criticism directed at their late blooming ways, there are a variety of valid reasons why they may be slow to take a leap into the housing market. Let’s take a look at some of them.
- Student loans – Student loan debt is a problem for the millennials who according to Pew Research are on track to become the most educated generation in American history. A report by the College Access & Success Project indicates that the average debt for graduating seniors with student loans was $29,400 in 2012, much higher than previous generations. Having this financial burden at such a young age is likely a factor in delaying their first home purchase.
- A weak job market – The job market has not been easy for millennials. Unemployment surged from 2007 to 2009, as many millennials tried to get or stay in the labor market. And, some economists predict that we’ll have to wait until 2017 for the US job market to be back to how it was prior to 2007. These concerns likely make some millennials feel insecure about purchasing a home.
- Debt reduction priorities – Interestingly, the Pew Research Center has found that millennials are paying off their debt faster than other generations. This could be because they witnessed the effects of the housing bubble burst in 2007 and don’t want to be in the same predicament as their parents.
It’s not all bad news though. According to the National Association of Realtors, 74 percent of millennials think they’ll own a home before turning 35. Certainly having a surge in home purchases by this generation would help the housing market get back on track. However, regardless of when we start to see the upswing, originators working with these young home buyers should be sure that their approach reflects the unique concerns of this generation.
At Equity National, we are on a mission to help our partners every step of the way. Give us a call at 888-434-5500 to find out how we can help you.
By: Equity National January 13, 2015 Uncategorized
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