As housing prices continue to soar with no certain expectations of the housing market cooling down, many potential homebuyers are asking the question, “How can I afford it?” A sizeable portion of the general population posing this question are millennials, individuals born between 1981 and 1996. A recent survey conducted by the National Association of Realtors (NAR) found surprising information regarding this age group and their viewpoints on homeownership.
Millennials are rapidly approaching prime homebuying age. Nine out of ten respondents of a recent survey expressed a strong desire to purchase a home, with 75% reporting a time horizon of fewer than three years. As we know, the COVID-19 pandemic and the rising ability to work remotely have greatly strengthened homeownership desire. Fortunately, millennials appear noticeably engaged with the real estate world. Nearly fifty percent of survey respondents report looking at homes online a couple of times a week, and fifteen percent reported doing so every day.
Perhaps the most interesting statistic from the survey found that nearly sixty percent of respondents have the ability to work from home, and forty percent would happily move to another state for a home they could afford. Zillow recently estimated that this could produce almost two million new homeowners. This is especially relevant to areas such as the Reno/Sparks region, which has witnessed a substantial increase in out-of-state homebuyers in the past decade.
The harsh reality of the current housing situation is that many millennials’ dreams of homeownership are quickly fading out of reach. The number one barrier to realizing these dreams? Coming up with the down payment. As home prices surge with no approaching end in sight, so does the amount required to put down. Although the down payment is typically the largest upfront expense in purchasing a home, a common and misleading assumption is that the payment must be at least 20% of the purchase price. The majority of millennials (and the general public) are not aware of alternative lending options, such as FHA loans, VA loans, and conventional loans that require anywhere between zero and five percent for the down payment.
Aside from the upfront expense of purchasing a home, many millennials report the belief that home prices are simply too high to justify, and that prices are sure to fall in the near future. While it is impossible to predict the housing market, the majority of market experts state the opposite. “If people are waiting for a price decline, well, it’s not going to happen,” says chief economist Lawrence Yun of the National Association of Realtors. Yun and other economists expect to see healthy price gains of four to six percent through 2022.
Regardless of whether you’re a millennial, questions regarding lending, the real estate market, and how to accomplish the goal of home ownership can be answered by reaching out to your trusted realtor and lender. The Hughes Real Estate Group is more than happy to assist you and your family in the homebuying process.
Team, F. O. X. T. V. D. (2022, February 21). Will real estate housing market crash or cool off in 2022? experts give their 2 cents. FOX 29 News Philadelphia. Retrieved February 24, 2022, from https://www.fox29.com/news/will-real-estate-housing-market-crash-or-cool-off-in-2022-experts-give-their-2-cents
2021 home buyers and sellers generational trends report. (n.d.). Retrieved February 24, 2022, from https://www.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-gener ational-trends-03-16-2021.pdf
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