Many have been wondering when the much anticipated move by Millennials’ into homeownership would actually take place. We know the belief in owning a home is there.
A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today. (more…)
There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family. Others may think they are too young. And still others might think their current income would never enable them to qualify for a mortgage.
We want to share what the typical first time homebuyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first time buyer:
You may not be much different than many people who have already purchased their first home.
Earlier this month, Zillow predicted that millennial buyers (under the age of 35) will become the largest group of buyers, overtaking Gen X (35-50 years old) by the end of 2015. Dr. Stan Humphries, Zillow Chief Economist, explained:
“Roughly 42 percent of millennials say they want to buy a home in the next one to five years, compared to just 31 percent of Generation X, and by the end of 2015 millennials will become the largest home-buying age group. The lack of home-buying activity from millennials thus far is decidedly not because this generation isn’t interested in homeownership, but instead because younger Americans have been delaying getting married and having children, two key drivers in the decision to buy that first home. As this generation matures, they will become a home-buying force to be reckoned with.”
Two days later, Realtor.com also projected that Millennials will be a driving force in the housing market next year. In their 2015 Housing Forecast, they claim:
“Households headed by millennials will see significant growth as a reflection of economic gains. Millennials will also drive two-thirds of household formations over the next five years. Next year’s addition of 2.75 million jobs and increased household formation will be the two key factors driving first-time buyer sales.”
Has the Millennial Home Buyer already re-entered the market?
AEI’s International Center on Housing Risk also released their first First-Time Buyer Mortgage Share Index this month. The report revealed that the percentage of first time home buyers may have been underestimated in 2014. According to the report, the percentage of first time buyers “averaged an estimated 46 percent over the 12 months ending October 2014”.
That number far exceeds other numbers reported by the National Association of Realtors and others.
The Millennial generation is growing up, finding jobs, getting married and starting families. Homeownership will definitely be the next step.
Today we are excited to have Steve Harney, the Founder & Chief Content Creator for Keeping Current Matters as our guest blogger. Steve has over 30 years experience in real estate and is a trusted & sought after speaker. Enjoy!
Last week, I was talking to a young couple I know that was about to close on their first home. They were riding the wild rollercoaster of current mortgage rate swings and were not happy about the mortgage process overall. Yet, when the conversation shifted to finally living in a home that they own, their disposition changed dramatically.
A smile came across their faces as they talked about decorating their son’s bedroom and how much he will enjoy the backyard. They talked about inviting friends over for dinner and their family over for the holidays. The more they talked, the more excited they became.
I asked them if many of their friends were also buying. I was shocked to find out that they weren’t. Why not? Their friends believed that homeownership was financially unobtainable right now. Many wanted to own but didn’t think they could afford the monthly mortgage payment. They decided to rent instead.
I said that, with interest rates and prices where they are today, owning a home might not be any more expensive than renting one. The couple agreed but said their friends were afraid; afraid they might not qualify for a loan, afraid to handle negotiations with a seller, afraid of the home buying process itself.
People should not make decisions out of fear!
I’m not saying that every young person should own a home. I am saying that anyone that is qualified and wants to buy should not be afraid of the process. I realize the process may seem daunting but realize over 10,000 homes sell every day in this country. Sit down and discuss your goals with professionals from both the real estate and mortgage industries. Get the facts. Make an informed decision. Don’t let the fear of the unknown prevent you from living the life of your dreams.
Two recently released reports indicate that both young adults (Millennials) and teenagers (Generation Z) still see homeownership as an important piece of their future success.
A report by The Demand Institute, Millennials and Their Homes: Still Seeking the American Dream, revealed that the Millennial Generation is optimistic about their financial future and still believe in homeownership. The findings were based on a survey of millennial households (ages 18 to 29).
The report predicted that:
- 8.3 million new Millennial (Gen Y) households will form in the next five years
- $1.6 trillion will be spent on home purchases by Millennials and $600 billion on rent over the next five years
Millennials optimistic about their finances and homeownership
Of those surveyed:
- 74% expect to move within the next five years
- 79% expect their financial situation to improve
- 75% believe homeownership is an important long-term goal
- 73% believe homeownership is an excellent investment
- 24% already own their home and
- An additional 60% plan to buy a home in the future
- 44% do think it would be difficult to qualify for a mortgage
What about the next generation (today’s teenagers)?
A recent survey by Better Homes and Gardens® revealed that Generation Z (teens ages 13-17) is very traditional in their views toward homeownership and is willing to sacrifice to attain the American Dream.
Findings from the survey show:
- 82% of Gen Z teens indicate that homeownership is the most important factor in achieving the American Dream.
- 89% said owning a home is part of their interpretation of the American Dream
- 97% believe they will own a home
- 77% percent chose owning a home over owning a business
It seems that the belief that homeownership as a huge part of the American Dream still beats in the hearts of the young people of this country.