There’s a common misconception that younger generations aren’t interested in homeownership. Many people point to the fact that millennials put off purchasing their first home as a reason for this belief.
Odeta Kushi, Deputy Chief Economist for First American, explains why millennials have put off certain milestones linked to homeownership. Those delays led to their homeownership rates trailing slightly behind older generations:
“Historically, millennials have delayed the critical lifestyle choices often linked to buying a first home, including getting married and having children, in order to further their education. This is clear in cross-generational comparisons of homeownership rates which show millennials lagging their generational predecessors.”
So, it’s partially true that some millennials have waited on homeownership to focus on other things in their lives – and that’s impacting certain housing market trends.
Data from the National Association of Realtors (NAR) indicates the average age of a first-time homebuyer is higher today than it’s been over the past 40 years. As the graph below shows, homebuyers today are purchasing their first home an average of 4 years later than people in the 1980s and early 1990s:But just because millennials are hitting certain milestones later in life doesn’t mean they’re not interested in becoming homeowners. The recent U.S. Census reveals a significant increase in homeownership rates for millennials and other young homebuyers.As the graph above shows, millennials are entering the market in full force, and their share of the market is growing. Based on the data, the belief that younger generations don’t want to buy homes is a misconception. In fact, the recent Capital Market Outlook report from Merrill-Lynch further drives home this point, as it specifically mentions the effect millennials are having on demand:
“Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle.”
Kushi is following the trend of millennial homeownership and puts it more simply, saying:
“. . . it’s clear that younger households (millennials!) are driving homeownership growth.”
As the largest generation, millennials’ impact on the market is growing as more and more people from that generation reach homebuying age to escape the rental rat race – and Generation Z isn’t far behind, either. That means younger generations will likely continue to drive demand in the housing market for years to come.
It’s no secret
What some first-time homebuyers don’t understand is the cost to rent vs. homeownership and the down payment required to purchase a home. I’ve had so many first-time homebuyers that come to me saying “I’m tired of paying $1,200 a month in rent”. Did you know $1,200 a month can get you a home worth about $215,000!!!! That same house would rent for about $1,500 – $1,600 a month!!! That’s a HUGE difference! As for the down payment, the whole 20% down thing is a myth. Most first-time homebuyers will use a Government-backed Rural Development loan on their first purchase because it’s ZERO money down! Are you interested in seeing what you’d qualify for? Fill out the form below to find out within 24 hours! You may surprise yourself!