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According to a survey conducted by the California Association of Realtors, millennials still value homeownership but claim that it may take a while before they purchase a home.
Out of all the 1000 millennials aged 18 to 24 years who were part of the 2014 California Millennial Survey, 54 percent gave the importance of homeownership a rating of 8 or higher on a scale of 1 to 10 while 50 percent claim that they’re planning to buy a home within the next five years. Furthermore, privacy, freedom with to do whatever they want with their property as well as homeownership satisfaction are the three biggest advantages they see when you own a home.
“Millennials do see homeownership as an important objective,” President of the Silicon Valley Association of Realtors David Tonna said. “They may delay it for a few years, but it’s a fact of life that most of the young adults today will settle down and have families and will want a home of their own.”
Additionally, about 59 percent of the respondents claim that the housing crisis didn’t change their outlook on homeownership as an excellent investment. The same number also expect home prices to increase within a year while 63 percent think that it’ll be higher in 5 years.
Out of all the millennial renters, 76 percent claim that they still couldn’t afford to purchase a home at this time mainly because of financial issues. Student debt didn’t seemed to be a obstacle to homeownership since one of out two millennial renters claim that it didn’t prevented them from getting home loan.
If homes prices become affordable now, 36 percent of the respondents claim that they’ll be encouraged to purchase a home, 16 percent said they’d be motivated once they have the required down payment while 15 percent claim an improvement in their current financial situation will push them to homeownership.
Lastly, most of the millennials in the survey that rather than purchasing homes in urban areas, they prefer single-family homes on large lots located in the suburbs. Two out of three of the respondents are planning to buy a single-family detached house while 12 percent want a townhouse or condominium.
Even though the number of first-time homebuyers reached its lowest level in 30 years, real estate professionals continue to be optimistic about the comeback of homeownership.
In the recent 2014 Realtors Conference and Expo held last November 7 to 10, 2014, in New Orleans, Louisiana, a panel of real estate experts talked about the different faces of American homebuyers and their possible effects to the housing market.
“Among primary residence homebuyers, the demographics have shifted dramatically, especially among first-time homebuyers, whose share of the market has dropped to its lowest level in decades,” panelist and director of member and consumer survey research for the National Association of Realtors (NAR) Jessica Lautz said, “We have also seen an increase in the median age and income of the average buyer, as well as in multigenerational household formations as adult children and elderly family members move back in with their families.”
One major discussion during the expo was the current condition of millennial homeownership. Young adults are being held back from ownership because of the inventory shortage, the strict credit rules, and the lower than average incomes but the real estate speakers believe that all these are just temporary as the economy fights its way to stability.
“It’s not that young people don’t want to purchase homes, it’s that they are delaying the purchase,” VP of research for the National Housing Conference Lisa Sturtevant said. “Many of the reasons millennials are not forming households or making purchases are economic, so as the economy improves, we should see this group become more of a force in the housing market.”
Chief Economist for Realtor.com Jonathan Smoke agreed to Sturtevant’s statement saying that 37 percent of the homebuyers last summer were the millennials and that they’re expected to account for about two-thirds of homeownership in the succeeding years. Furthermore, he also shared that more than half of the adults between the age of 21 to 34 visited real estate websites and used real-estate related mobile applications from June to September 2014.
During the Realtor University Richard J. Rosenthal Center For Real Estate Studies Forum held recently, realtors from different parts of the country attended and gathered to talk about the effects of changing homebuyer demographics on the housing market.
“Among primary residence homebuyers, the demographics have shifted dramatically, especially among first-time homebuyers, whose share of the market has dropped to its lowest level in decades,” said to Jessica Lautz, director of member and consumer survey research for the National Association of Realtors.
“We have also seen an increase in the median age and income of the average buyer, as well ask multigenerational household formations as adult children and elderly family members move back in with their families,” she added.
One of the most popular topics discussed in the forum was adult millennials, individuals who are within 18 to 33 years old. This year, such age group experienced a 60 percent increase in job growth that the US overall with their unemployment rate falling by 6 percent. Such positive growth and the increase in economic opportunities should motivate the millennials to purchase homes in the succeeding years.
“Millennials are the largest generation of people in the U.S. and represent 60 percent of first-time homebuyers,” Chief Economist For Realtor Jonathan Smoke said. “They are also more likely than any other group to purchase a home in the next year.”
Economists saw that most of the buyers where kept out of the market due to drop in inventory, difficulty in getting credit and lower than average income. However, these are just temporary hindrances.
It’s not that young people don’t want to purchase homes, it’s that they are delayed the purchase,” Vice President of Research For the National Housing Conference Lisa Sturtevant said. “Many of the reasons millennials are not forming households or making purchases are economic, so as the economy improves, we should see this group become more of a force in the housing market.”
However, Smoke claims that its a misperception that millennials not still not in the market. “They represented 37 percent of home shoppers this summer, and over the next 5 years his generation will make up two-thirds of household formations, Smoke said. “Between June and September 2014, over half of adults aged 21-34 visited real estate websites or mobile apps. And this is the cusp – get ready for the millennials wave to drive the housing market for decades.”
But baby boomers will be competing with the millennials in the dominion of the housing market. “With millennials searching for new homes, baby boomers downsizing and groups with historically lower incomes all entering the market, an increased demand for smaller, less expensive homes will begin to merge,” Sturtevant said.
RealtyTrac, a real estate information company, recently analyzed data from the Census Bureau and they were able to track the migration patterns of millennials from 2007 to 2013. As you can see from the map and the information these generation y buyers are on the move to the Charlotte area with a 32 percent increase in recent years.
Daren Blomquist, Vice President of RealtyTrac, was quoted saying “The millennial generation is the key to a sustained real estate recovery. Naturally, millenials are attracted to markets with good job prospects and low unemployment but that tend to have high rental rates and high home appreciation.”
With the exponential amount of jobs being added and the establishment of major sports teams, Charlotte is becoming an appealing location for many recent college graduates to either move to or move back to.
According to a new report released this week from The Demand Institute, Millennials and Their Homes: Still Seeking the American Dream, millennials are expected to make the move to the suburbs within the next 5 years. In fact, Millennials are expected to form 8.3 million households over the next five years and by 2018 they are projected to spend $1.6 trillion on home purchases.
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Millennials, an abbreviation for millennial generation, refer to individuals who were born between 1980 and 2000, approximately. They are sometimes referred to as “Generation Y” and are the children of the post World War II baby boomer generation.
They hold the key to our future economic success and housing market. They are tech savvy, all about social media and are socially conscious. If you’re looking to sell your home to a millennial, it is important to flex to their style when marketing to them.
Below are a few facts you should know about millennials:
Still want more facts and insights on millennials? Tune into our radio show, How’s the Market: Real Estate. Real Answers, today from 5-6 PM on 1110 WBT. We will be talking with two millennials who just recently purchased their own home and condo.