Millennials Are Fueling The Current Sizzling Real Estate Market
People under the age of 34 are not only buying homes like never before but moving to the suburbs and starting families too.
Ever wondered why the hosts of home improvement shows seem to be getting progressively younger, along with the fresh-faced couples getting their new properties made over? That’s because the TV Networks have done their homework and concluded the same thing that Zillow found in a recent survey — that millennials are fueling the currently sizzling real estate market.
According to the real estate listings site, in April there were three percent fewer homes on the market than there were a year ago and they are spending less time on the market with bidding wars breaking out like grills in the summertime. Hot markets include Seattle, Denver and Sacremento where houses may only stay on the market for an average of 54 days (it is 103 nationally, down from 144 in 2010). What’s more, the average age of people now able to afford homes around the country is 33. Millennial territory. They make up 56 percent of America’s first time home buyers and 43 percent of all home buyers over all.
Many millennials in good paying jobs for the first time, with student loans eaten into. They are enjoying the first flush of cash and often tend to overestimate what they can afford. This is fueled in part by home improvement TV shows, generating an optimism of what they feel they can do with their house, forgoing the “starter home” for the already started home, because of the competition.
“One of the things that we find is that millennials are looking for affordability, but because it’s such an issue, and competition is so high, and so many of those low-end homes are renting rather than being available for sale, they tend to be skipping starter homes and looking for something larger,” Skylar Olsen, Zillow’s senior managing economist, told Business Insider. “It’s so hard to buy a home that the idea of buying a home just to move five years later doesn’t seem like a viable option.”
Unlike baby boomers who are downsizing, millennials are possibly looking for properties with a viewpoint to starting a family. They’ve ended up looking for the same kind of home. Both are eyeing affordability and homes just under 2,000 square feet but because of their demographics and ascendant career trajectories, it’s millennials who have energized the market.
“Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” says Doug Duncan, senior vice president and chief economist at Fannie Mae old CNBC.
However, the limited number of homes available have meant that even qualified buyers are forced stay on the sidelines and rent. It’s meant, in order to buy a house a change in priorities is happening. Younger buyers are, for the first time, venturing away from their urban core and buying in the suburbs, usually a step that happens once a family is in tow. And it turns that is also happening at a faster rate than before.
Almost half of millennial buyers had at least one child, according to the 2017 Home Buyer and Seller Generational report released recently by the National Association of Realtors. That is up from 45 percent last year and 43 percent two years ago. Children are the primary driver of homeownership.
“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” said Lawrence Yun, chief economist at the Realtors. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families.”
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