Around the time when millennials were criticized for their love of pink and avocados, a myth began to emerge that the 18-36 age group are uninterested in buying homes. While there are many reasons why this misperception exists, the truth is, millennials are just as interested in making this life-changing investment as previous generations were. Millennials are the largest adult generation of homebuyers, however just a few years ago studies found that 36 percent of them were still living in their parent’s home. This statistic can be explained by several financial difficulties the eldest millennials faced as they started exploring buying a home. First, the U.S. economy tanked between 2008 and 2012. This financial crisis led to many foreclosures, and millennials seriously doubted the value of owning a home. Because the financial crisis was caused in part by subprime loans, lenders became stricter in their standards on first time buyers. The share of households that owned their own homes dropped from a high 69 percent in June 2004 to a low of 62 percent in June 2016. Millennials in particular were also racked with a combination of high student loan debt and lower earnings in general. For millennials, it made more sense to pursue higher paying jobs in cities where rent was lower than the cost of buying a home. As the economy improved, so has the interest in home buying among millennials. More jobs are available and wages have increased. Mortgage data now shows the age group represents about 45 percent of all purchase loans. Rents are skyrocketing in cities and college towns, making it more financially beneficial to own a home instead of rent. The age group in general is older than they were at the peak of the financial crisis, and they are now exploring finding a stable location to raise a family. Some cities such as Grand Rapids, Michigan and Minneapolis-St. Paul are seeing nearly half of their population of homebuyers comprised of millennials. The emergence of the sharing economy has led to the myth that millennials were averse to actually buying something. Companies like Uber and Lyft gave people the option to share car rides with others. Airbnb has made its success in sharing rooms or entire homes. Shared work spaces have opened, and new websites are making it easier for the age group to buy or trade used clothing. But millennials are still showing a nearly universal interest in making big purchases. Studies show that close to 88 percent of millennials wish to own a home. And 75 percent of millennials who don’t already have a car definitely have a strong interest in owning one. While the age group is buying houses at a higher rate, millennials are still facing challenges in the market. First, the amount of starter homes available is dropping. A recent Zillow report found there were 3 percent fewer homes on the market in spring 2017 compared to the same time last year. While homes were at rock bottom prices five years ago, home values over the past year have risen 7 percent. And while the economy has improved, wages are still not high enough to balance the weight of student debt with the cost of putting down a down payment for a new home. Still, with all of the challenges millennials face the future of home buying is looking bright. Wages seem poised to steadily increase over the next year. Also, local governments are creating new policies to combat the rising costs of rent. There are more resources available for students to manage their debt as well, so the age group can save for tomorrow instead of spend for today. Home ownership is on the upswing, and millennials are leading it. Are you a millenial? Do you want to join your contemporaries and be a home owner? Call Zach Larichiuta today and see how he and his Lucy Lending Team can get you on your way to home ownership! Zach and the Lucy Lending Team 843-469-9010 [email protected] www.charlestonmortgagelender.com #millenials #fthb #homeowner #homeownership #homebuyers #charleston #realestate #local #trusted #expert #lender #mortgage #financing #zachlarichiuta #lucylendingteam
MYTH: MILLENIALS AREN’T BUYING HOMES
