According to recent data, home ownership rates among millennials (those born from 1981 to 1997) are rising. The U.S. Census Bureau’s Housing Vacancy Survey found that while the overall rate of homeownership was statistically unchanged from the last quarter reading, it did show that millennials were buying homes in greater numbers during the third quarter of 2018. The rate of homeownership for householders ages 35 to 44 were both up slightly. While the increases weren’t dramatic, they do indicate that millennials are overcoming their fears of buying a home.
Further proof of millennials being ready to cast off their renter status is information from the National Association of Realtors’ 2018 Home Buyer and Seller Generational Trends Report.The report found that millennials and Generation Y combined make up the largest share of homebuyers at 36 percent, continuing a trend that made those generations the largest share of homebuyers for past four years. Most notable -65 percent of those millennial and Gen Y buyers in 2018 also were first-time homebuyers.
Focusing on what is prompting millennials to buy, as well as what has made them hesitant to do so in recent years may enable your real estate business to capitalize on this upward trend.
It’s time to settle down
With college in the rear view and career security and stability front and center, many millennials might now be willing to make those life steps they delayed while sorting out their uncertainty. Marriage, kids and homeownership are among those steps.
If you’re trying to capture millennial buyers, a focus on good neighborhoods with good schools and nearby amenities, such as restaurants and entertainment, can be an excellent selling tool. Highlighting the ease of commuting (because just like everyone else, millennials don’t like being stuck in traffic) also can be a great way to get your properties on their radar.
Buying makes financial sense
As rental prices continue to rise, particularly in hip urban areas, homeownership becomes a more financially sound decision for some millennials, especially those looking for the economic freedom that will allow them to start their families and put their monthly housing expenses toward a long-term investment rather than into their landlords’ pockets.
In an opinion post at Bloomberg, Barry Ritholtz,founder of Ritholtz Wealth Management and former chief executive and director of equity research at quantitative research firm FusionIQ, wrote that “the rent-versus-own analysis no longer overwhelmingly favors becoming a tenant, as it did for a few years after housing prices had taken off. Now,rents have caught up with buying, even for entry level properties.”
Help hesitant millennial buyers see the return and rewards of buying versus renting, including an investment in their future, a place to call their own, a place to grow and many more reasons.
It’s still a big expense
Many millennials have delayed home buying because of the debt it represents, particularly if that debt is added to student loan repayments. But as Ritholtz advises in his Bloomberg piece, the low mortgage rates of recent years are rising as the Federal Reserve works to raise rates back to normal levels. That means the cost of borrowing to buy a home will be going up in the coming years and there are financial benefits to buying sooner rather than later.
And millennials want to buy; in an analysis NerdWallet found that that millennials look upon homeownership just as favorably as previous generations, but have been reticent in part because of large down payments, steep closing costs and uncertainty over how much money is required to make the move to a home of their own.
Making sure they have a firm understanding of interest rates and down payment options can make the prospect of buying less intimidating. Highlighting low down payment and low-interest loans can ease their fears, particularly for those buyers with less-than-stellar credit.
You can help them with the math by highlighting options such as FHA loans, as well as directing them to a mortgage rate calculator, such as this one from NerdWallet, that can help take the guesswork out of their future budgets.
Most importantly, while the process can be intimidating to first-time homebuyers, you can establish yourself as a valuable resource to millennials looking to purchase and help raise awareness of the options available to them as they start their journey to homeownership.