Tuesday, July 19th, 2016 and is filed under General
Mention “millennials” to some people, and what might come to mind are urban-living hipsters who hop jobs, are into sustainability and “talk” about their activities all the time on SnapChat, Twitter and Tumblr.
What might also come to mind are a group of young adults who seem to disdain homeownership for a variety of reasons. We’ve written about these reasons in the past – they range from lack of a down payment, too many student loans and a skepticism toward the American Dream of home ownership, due to the 2007-2009 financial collapse.
Yet this age group – especially at the older end – is quite serious when it comes to buying homes. In fact, when older millennials are ready to ditch the apartment and hunt for a house, the suburbs seem to have more appeal than the city centers.
This, at least, is the word from the National Association of Realtors in its annual report, “Home Buyer and Seller Generational Trend Study.[1][2]”
The report is based on data from approximately 6,500 respondents of all ages and across all geographic lines. Those who participated had to have bought a home between June 2014-June 2015. And the metrics are blowing up some stereotypes about millennials and home ownership.
For example, the report pointed out that the share of millennials buying a house in an urban area decreased to 17%, versus 21% a year ago. Additionally, fewer (10%) purchased condominiums; a drop from the 15% from the year before.
The main reason for this trend boils down to one word: Affordability.
NAR Chief Economics Lawrence Yun said that finding affordable houses in urban cores is very difficult. And while condominiums do provide ownership alternatives, Yun noted that this type of housing can be expensive as well.
Another factor in suburban preference is that the older end of the age cohort is approaching of 30, considered the median age of the millennial home buyer. As such, this is “typically the time in life where one settles down to marry and raise a family,” Yun said. “Even if an urban setting is where they’d like to buy their first home, the need for space at an affordable price is, for the most part, pushing their search further out.”
Though student debt and millennials seem to go hand-in-hand, it turns out that generation X has the higher about of student debt to pay off at $28,000, while millennials are paying off $25,000 on average. Younger baby boomers (between the ages of 51-60, had the highest student debt, at $29,100.
Yun acknowledged that he was surprised to see a higher median amount of student debt among older age cohorts. He also allowed that it could be one factor in the low housing supply over the past several years, indicating that “a segment of homeowners has decided to delay trading up or moving down, in order to pay down their debt, including from student loans.”
Basically, all age groups are prone to their stereotypes. However, upon closer look at millennials, looking below the surface can help bust some myths, especially when it comes to housing.
[1] National Association of Realtors. (2014). Home Buyer and Seller Generational Trends Study. Washington, DC: National Association of Realtors. Retrieved April 13, 2016, from http://www.realtor.org/sites/default/files/reports/2014/2014-home-buyer-and-seller-generational-trends-report-full.pdfThe report also pointed out that, for the third straight year, millennials made up the highest population of recent homebuyers, outpacing the other age groups[1][2][3].
[2] National Association of Realtors. (2015). Home Buyer and Seller Generational Trends. Washington, DC: National Association of Realtors. Retrieved April 13, 2016, from http://www.realtor.org/sites/default/files/reports/2015/2015-home-buyer-and-seller-generational-trends-2015-03-11.pdf
[3] NAR (March, 2016)
[1] National Association of Realtors. (2016, March 9). NAR Generational Survey: Millennials Increasingly Buying in Suburbn Areas. Retrieved April 13, 2016, from National Association of Realtors: http://www.realtor.org/news-releases/2016/03/nar-generational-survey-millennials-increasingly-buying-in-suburban-areas
[2] National Association of Realtors. (2016). Home Buyer and Seller Generational Trends Report. Washington, DC: National Association of Realtors. Retrieved April 13, 2016, from http://www.realtor.org/reports/home-buyer-and-seller-generational-trends
(National Association of Realtors, 2015)
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