The Housing Market’s Effect on Millennials
Millennials are individuals who are born in the years between 1981 and 1996. They are currently between 26 and 41 years old. This generation had gotten a bad rap by their preceding generations for being irresponsible. However, as millennials are getting older and finding their way in the world, many of them are proving this myth wrong.
Some say the “baby boomer” generation is the most critical of millennials. Now, however, millennials are in the prime home-buying age and proving themselves more than capable of handling the difficult housing market for buyers. These same “irresponsible” millennials are buying homes that cost 20% more than they did a year ago.
Unfortunately, while many millennials are on the fast track to success and affording a nice suburban home despite the hot housing market, millennials that make less than a majority of their counterparts are having a hard time owning their own home.
Income inequality has a huge effect on millennials.
Struggles that lower-income millennials face when trying to purchase a home:
Demand for housing is increasing
Supply is too low for the demand
Student loan debt
Rising gas prices
Cost of living is dramatically increasing
As resilient as millennials may be, inflation rates and low supply make it difficult for many millennials to have the motivation to work hard if their future looks bleak. Furthermore, student loans repayments will begin soon, and many millennials will once again have another bill to pay.
New housing trends are emerging for the millennials who can afford to be picky when looking for a home, and some old trends are sticking.
A few important features that are trending when millennials are looking for a home:
Millennials are known for finding purpose and having hobbies. Not surprisingly, millennials are searching for more outdoor and indoor spaces to explore these hobbies more. Source: NAR
Millennials desire a home in the suburbs more than in the cities. The percentage of millennials that live in the suburbs increased to 48% in the year 2020. Source: Cowen
Updated kitchens and bathrooms are important to millennials as they spend more on these household areas than previous generations. Source: NKBA
Also, not surprisingly, according to real estate experts, millennials want move-in-ready homes. Source: Yahoo
Smart and energy-efficient homes are convenient and save money. In this economy, saving money is incredibly important, especially for millennials living paycheck to paycheck. Smart energy-efficient homes are taking over the real estate market as millennials flock to purchase them. Source: USGBC+
Millennials also look for reliability in an agent when looking for a home. If the agent doesn’t have a website or online presence and good reviews, they are more likely not to trust the agent. Source: dotloop
According to The Mortgage Reports, housing experts are predicting that the housing market will remain strong for the remainder of 2022, and there will be a slight increase in the price of homes (around 5%). Additionally, mortgage rates will likely increase, potentially faster than expected.
This is unfortunate news for homebuyers hoping for a decrease in 2022 home prices. Unfortunately, we will likely not see an increase in the average home price for the rest of the year. Additionally, since prices will likely slightly increase throughout the remainder of the year, it may not be wise to hold off on purchasing a home if you are planning on doing so by the end of the year, as interest rates are also still at historic lows.
Millennials are more responsible than people assume. Many of them are becoming first-time homeowners (or trying their best) during a crazy time for buyers in the real estate market. It is time to give millennials the respect they deserve and acknowledge that they are human beings who are just trying their best like everyone else.