The housing market can be affected by a lot of varying and moving factors. Millennials represent the current generation of first time home buyers, and their habits as a whole have had an effect on the current housing market.
Who Are Millennials?
Wikipedia defines “millennial” as an individual who was born between the years of 1980 and 1996, give or take a few years. Presently, these individuals are in their mid 20’s to late 30’s. These young adults are at the start of their careers and family structures.
What’s the Problem With Millennials?
Like many generations before, the behavior and habits of Millennials as a group is noticeably different from that of their parents. This has sometimes made the generation a target to blame for modern societal issues. No matter their media representation, when it comes to real estate it can be helpful to take note of the behavior trends that have set Millennials apart from the previous generation.
Millennials and San Marcos Real Estate
One of the biggest differences between Millennials and the generation before them is their approach to home buying. Members of Generation X were very likely to purchase their first home in their very early 20’s or even earlier. Millennials are far less likely to own a home this young. In fact, at the age of 35, only 1 out of 3 people currently own their own home, and these are the members at the older end of the millennial bracket. Almost a third of Millennials still live either with their parents in some form or with a family member.
How This Affects the Housing Market
One of the factors that pushes the housing market is demand. With Millennials pumping the brakes on buying, it decreases the over demand. Since they are not in a hurry and do not feel the social pressure to purchase and live in their own home, Millennials have taken away current home owners’ ability to ask more for their home in the selling process. But this should not make anyone fret as home equity values have been steadily rising over the past decade in spite of the Millennials’ approach to home buying.
Why Aren’t Millennials Buying?
Credit
Recent polls actually show that most Millennials have a desire to buy a house, but have not yet. One of the biggest differences between buying a house for a Millennial now and for Generation X before them is the basic requirement for getting a loan. Because of past volatility in the market, lenders require a lot from the lendees in the form of very high credit expectations and also cash on hand for a down payment. Zero down loans, while available, are not nearly as common as they were 30 years ago.
Debt
The other huge roadblock in the house buying journey for a Millennial is the cost of college and the loan APR attached to it. It was reasonable for early Generation X and Baby Boomers to attend college full time while working part time jobs on the side and expect to have their education completely or at least nearly paid off. This is no longer the case. If a Millennial goes to a state school full time with a part time job, they can still expect to owe tens of thousands of dollars by the time they graduate. They can also expect to be paying those loans off for the next couple decades. Being in debt while starting your first official job, potentially at the bottom of the business food chain, causes a lot of young people to balk at the idea of further investing hundreds of thousands of dollars into a home.
The Search for the Perfect Home
Aside from financial burden, there are many other factors that have slowed Millennials from purchasing. Because they do not feel the pressure to commit, young people feel the freedom to really take their time before they make such a large purchase. The age of information has given people the ability to shop around until they find exactly what they are looking for. And the high standard for aesthetically pleasing properties is a massive factor as well. While most Millennials want to buy, they don’t just was a house, they want the house the best suites their exact wants and needs, and they are willing to hold out until they can get it.
Ready to start your home buying journey? Contact The Damron Group REALTORS®, a real estate agency in San Marcos, TX. Our agents will be happy to help you find a home that perfectly meets your financial and aesthetic needs.
