We've just read an excellent recent article by finance website Nerdwallet concerning some of the myths surrounding millennial home buying.
We've known for some time, of course, that millennials (people aged 36 and under) are the largest group of home buyers, accounting for almost 40% of all house purchases in the United States.
Nonetheless, there is still a wide perception that many millennials prefer renting to buying. The Nerdwallet article certainly helps to discount this and other myths.
It's interesting to note that there are 66 million millennials living in 24 million independent households and that the median age for first time homebuyers (31) has actually barely changed in the past 40 years. That certainly challenges the view you often hear that people are buying later in life.
What's even more interesting, from a real estate perspective, is that two thirds of millennials haven't reached the median home buying age and that millennials are expected to form 20 million new households by 2025. This would seem very likely to consolidate their position as the most active market sector.
Apparently millennials rent for a median of six years before buying. Again this is a figure that stands up to the test of history when we look back at 1980 and see that the median period was five years - hardly a massive change.
Another aspect of the article that really interested us was the reasons why young renters still prefer to own a home, provided by Fannie Mae, leading provider of mortgage financing in the nation.
Here are the main motivations:
Having control over what you do with your living space - 93%
Having a sense of privacy and security - 90%
Living in a nicer home - 81%
Feeling engaged in your community - 75%
Having flexibility in future decisions - 53%
What we take away from these stats are the high percentages for most of these reasons, strongly indicating that renters are as keen to buy as they ever were. Sure, there are often financial obstacles in the way, but it seems that desire to own a place of your own, and acknowledgement of the benefits of doing so, is extremely robust.
Nerdwallet also looked at the common perception, often among millennial renters themselves, that they simply can't afford to buy a home, arguing that this often has more to do with perception than reality. While it acknowledged that a third of millennials don't reach the industry standard minimum credit rating of 620, the article also pointed out that, according to a Fannie Mae survey, 42% don't know what lenders expect of them and a massive 73% didn't know about today's low down-payment options!
It also seems that student loan debt doesn't significantly detract from home purchasing decisions either. Nerdwallet cited Zillow analysis which showed that home ownership dropped by very small percentages among graduates with significant borrowing levels acquired during their college years.
So it seems that the explosion in millennial buying is set to continue and there are plenty of myths surrounding the willingness of many renters to buy.
This is good news for millennial buyers and all sellers. Assuming we continue to see growth in our economy, there's clearly plenty of statistical evidence to suggest that the entry level of the homes market is set to continue to flourish, with consequent positive effects throughout the entire property purchasing chain.
Whether you're a millennial or not, we'd love to do all we can to help you realize the dream of home ownership, so why not contact us today to explore your options and maybe dispel a few myths in your mind.