As of July 2019, Millennials overtook Baby-Boomers as the largest living adult generation, according to estimates from the U.S. Census Bureau. While they may account for a larger share of the population than any other demographic group, Millennials have not been leading the way as a percentage of homeowners, due to a number of factors that have kept many would-be buyers on the sidelines. However, COVID-19 may be changing that story, as new data reveals that 49 percent of surveyed Millennial homebuyers are speeding up the timeline on their homeownership. We delve into the details behind what’s driving the (potentially) changing tides for Millennial homebuyers.
Low Rates
Like so much of the current home buying market, a large factor behind the uptick in Millennial homebuying interest is the low rate environment. Danielle Hale, the chief economist at realtor.com, points out that “With little to no equity to leverage, Millennial home buyers tend to take out larger loans. Historically low rates are making this more manageable, even with rising home prices.”So long as rates remain low, there’s every reason to believe more Millennials will feel comfortable pulling the trigger on that home they’ve been dreaming of.
Downpayments
Saving enough for a down payment can often be one of the largest hurdles for any homebuyer to overcome, especially for a generation saddled with historically large amounts of unpaid student loan debt. But the growing movement towards telecommuting has proved to be a boon for many Millennials allowing them to apply the savings from un-spent commuting dollars towards a potential down payment.
In a recently released survey conducted by realtor.com and HarrisX of 2,000 potential buyers, about 68 percent of respondents said shelter-in-place orders have helped them save for their down payment.
Freedom
Working remotely has become the norm. People are finding that they crave open spaces and they can work from anywhere!
State Of The Market
According to research from Zillow, millions of renters who are currently being priced out of their current market could become homeowners—in a locale of their choosing. Jeff Tucker, an economist at Zillow who authored the study, estimates a shift to remote work would give up to 2 million renters in the U.S. the option to leave expensive metropolitan areas to purchase a starter home in a cheaper city.
About 50% of the respondents reported they were looking for a home in their current city, according to the study, while more than half said they are looking for a home below the U.S. median home price of $350,000.
If you are looking for a home or a condo, call Sharon Bogetz at 847-370-9131. She will give you personalized attention and help you every step of the way. She a licensed real estate broker with Century 21 Universal Real Estate in Chicago.