Millennial Home Buying Habits
Few people predicted that the generation infamous for avocado toast and expensive coffee would be a driving force in the real estate market. However, that proved to be true in 2020. Mortgage rates dropped to historic lows in 2020 and have stayed there. This caused many who have always dreamed of a home to jump in and make their dreams a reality. Last year’s historic real estate boom was fueled by first time homebuyers. Millennials were at the center of last year’s first time homebuyer craze. Millennials accounted for about 38% of all home purchases last year, which is a large chunk of overall real estate transactions. For the first time, the much maligned millennial generation is becoming a major player in real estate markets. Like most things, they are doing it in a way that is different from previous generations. So, what are the home buying habits of millennials?
Millennials are Buying Older Homes
One of the interesting trends of millennial home buying habits has been their proclivity to buy older homes. This generation has been very concerned with embracing cookie cutter aesthetics and is looking for something that is unique. They have found it in buying older and cheaper homes. Older homes are attractive to this generation for a few different reasons. First, they are less expensive. This is important for a generation who was joining the workforce during the Great Recession of 2008 and is behind other generations in terms of building wealth. Buying an older home gives them an opportunity to own a home and then use their equity as they build it on repairs. The other big benefit of buying older homes is that they have character. Many new home developments offer tremendous excellent amenities, however, many of the houses look the same. Historical houses have unique aesthetic features.
Millennials are Buying Expensive Homes
Even though we just got done discussing how millennials purchase older homes to get houses at a discount, they are also purchasing million dollar homes. To be fair, the luxury home market exploded during the pandemic. Luxury homes are selling like hotcakes across all demographics. Historically low mortgage rates are a big reason for this trend. If you are able to get a larger and more expensive home at a low mortgage rate, then you are functionally buying it at a discount. This applies to millennial homebuyers as much as it applies to all luxury homebuyers over the past year.
There is another element to the trend of millennial homebuyers who are scooping up luxury properties. The millennial generation is jumping ahead in the traditional home buying process and eschewing the concept of a starter home. Traditionally, individuals save up to buy a smaller home, which is often referred to as a starter home. Then, as their income increases and they build equity by paying off their mortgage, they use their equity to buy a larger home. Younger generations are skipping this step altogether. It is quite common for many millennials to save up, work two jobs and do anything they can to buy a luxury home in a place they see themselves living for a long time.
Millennials are Moving to the Suburbs and Rural Areas
People tend to think of younger generations as being primarily interested in a city-centered existence. Today’s millennial homebuyers are bucking this trend and moving to suburban and rural areas in droves. This trend was already happening before the pandemic, however, the pandemic only accelerated the urban exodus. One aspect of this trend is financial. Since millennials have less savings than other generations, they are able to get more home for their money outside of cities.
Another aspect to millennials buying houses in suburban and rural areas has to do with access to nature and the outdoors. This particular generation seems to value access to outdoor activities. Whether it is hiking, mountain biking or camping, millennials want access to these activities without having to drive for hours. Rural and suburban homes also give millennials a chance to have large yards. Large yards help them pursue pastimes that have had a resurgence amongst younger Americans, such as gardening. Millennials love plants and gardening. Rural and suburban environments allow them to create elaborate gardens much easier than a cramped apartment in a major city.
Final Thoughts
The millennial generation is buying more homes than ever before and they are doing it in their own unique way. They are buying older homes, larger homes and moving away from cities. In many ways, the home buying habits of this generation should give hopes to anyone who has the dream of buying their own home. This generation is notorious for having the least amount of wealth of any of the adult generations. In fact, millennials control only 5% of the wealth in the United States. To be honest, this doesn’t seem like an optimistic fact. However, when you consider that those with the least amount of wealth still accounted for 38% of all home purchases last year, it is a point of optimism. If millennials can buy a house then anyone can buy a house.
Nobody should think that they do not have what it takes to buy a house. Anyone can get there. You might not be in a perfect situation at the current moment, but with some planning and strategic steps, you can get there. All it takes is the determination to make your dream of buying a home a reality. If you fall into this category and you would like to buy a new house, but aren’t sure how, contact us! The team at Streamline Realty can walk you through everything you need to eventually have a place of your own.
