The Millennial Role in the Housing Market in 2018
There has been a lot of talk about the millennial role in the 2018 housing market. Some say they are saving it, while others say they are destroying it. What gives? A millennial is a young adult aged 38-24, they make up the largest population in our country at 45 million. In 2000-2016 median home prices increased by 29% but young adult per capita incomes only increased by 1%. Millennials are also earning less than Generation X at $61,003 in 2018 and Gen X’ers , grossing $63,365 in 1998.
32% of millennials live at home with their parents, which has also caused an interesting trend of some millennial home buyers skipping their starter homes and moving into a more glamorous home or a “forever home” as their first home and they are able to do so after all the money they have saved from shacking up with the ‘rents. Some are choosing this route not by choice, but because of the slim pickings. Record low housing supplies are rapidly driving up the prices – especially for millennials looking to buy starter homes. 1/3 of millennial home buyers spent an average of $16,510 more than their highest desired amount.
How are millennials able to buy under these harsh conditions? It has a lot to do with millennial’s lifestyle choices, beliefs and goals. Yes, millennials are guilty of paying $1,000 for an iPhone and “ballin’ on a budget” – going on lavish vacations and brunching every weekend, also while living paycheck to paycheck and having thousands and thousands of dollars in student debt ($25,000 is the median). This is a reason that people claim millenailas are ruining the housing market, because of the wealth gap they have created between them and generation X and the baby boomers. The average amount of years a millennial spends on saving for a 20% down payment is 10 years. Millennials today also have different beliefs than the generations ahead. They rank education and economic success as a greater importance than getting married and starting a family. Marriage is the number one motive for people to buy a home, so go figure. Also, the percentage of young women aged 25-34 who are homemakers fell from 43% in their parent’s generations to 14%. 1 in 2 millennials also have a “side hustle”- A side job from their career, whether it’s selling online on amazon or Ebay, driving Ubers by night or baby sitting- bringing in an average of $250 more a month. Also, many millennials are moving away from their expensive home towns to states like Alabama, where the cost of living and home are much cheaper. Birmingham, Alabama has seen the highest increase in millennial home buying this past year.
While some believe they are destined to be the “generation of renters”, they actually make up 34% of the entire home buying pool and of that 34%, only 66% were first time buyers. The average number of years a millennial owns a home is six, compared to the rest at ten years. This shows that in true millennial fashion many of them do not view home ownership as something permanent. This also means for investors and real estate agents, the millennial home buyers could very well be a repeat client in just a few years. In 2020, it is predicted that there will be a spike of millennial home buyers because many millennial turn 30 in 2020 (peak of this generations birth was in 1990).
Home buyers, sellers and real estate agents also need to be up to date with the latest technology trends in the housing market in order to appease millenials. 58% of millienal home buyers found the home they ended up buying on a mobile device. They were also the number one buying group out of previous generations to purchase from a realtor as 74% say they wanted help in the process. This is great news for investors and real estate agents! The top qualities that millennials described were most important in their home purchase are: big kitchens, as they consider a kitchen the room their guests will hang out in the most, vs. a living room or “family room” as previous generations deemed the most important location. An open floor plans is also more important than number of rooms. Many millennials are having children later and less in general compared to their parent’s and grandparent’s generations. They are preferring updated kitchen and bath, home offices, new and sustainable technology and an ideal location to cut commute times. Based off that information you would think they are buying more in Urban areas, but in reality they are buying in suburban areas more. So, if you are looking to sell your home, keep this in mind! Whether you think they are improving or destroying the housing market it is important for home sellers, investors and real estate agents to cater to our millennial buyers!
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