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Millennials: Yes, They Do Want to Buy a House (They Just Need Money)

By Siddharth Mariappan

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You’ve probably heard that home ownership for Millennials — those born between the early 1980s and early 2000s – has been at historic lows. And, you’ve no doubt read that the reason is Millennials prefer a mortgage-free, often car-free, apartment lifestyle over home ownership. But surveys done in the last 18 months,* including Zillow’s September 2014 Housing Confidence Index: Will Youthful Exuberance Today Mean More Sales Tomorrow? (“Zillow’s Millennial Survey”) refute that reasoning. In fact, it seems a lack of money, rather than a lack of interest, is what has kept so many Millennials from buying their first home.

Most Millennials Agree: Home Ownership is Part of the American Dream. Zillow’s Millennial Survey reveals that 65% of respondents ages 18-34 said “owning a home is necessary to live The Good Life and The American Dream,” and 46% said they believe “owning a home is necessary to being a respected member of society.” Surprisingly, that positive vision of home ownership was higher among Millennials than among older respondents.

Lack of Funds is the Big Issue. So what is the disconnect? Carrying huge student debt and waiting longer to get married—which often results in a much-needed double income—seem to be primary culprits. Here is what Zillow’s chief economist said in a December 2014 Zillow report predicting that Millennials would soon overtake GenXers as the largest group of home buyers:

“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.”

Uptick Ahead for Millennial Home Buying? So, will the rate of home ownership among Millennials escalate once they are married and create a higher family income? Probably yes, according to Zillow’s Millenial Survey, which showed that a) 35% of Millennial renters overall planned to buy within 2 years (10% within 1 year), and b) 54% of those who specifically desired home ownership planned to buy within 1-2 or 3-5 years (and 36% within 1 year). In fact, an October 2015 Forbes article, “Why We Need to Stop Blaming Millennials for Low Homeownership Rates,” reports that while home sales were down overall in the second quarter of 2015, they were up slightly for only one group: the under-35 population. This is good news for Sellers of so-called “starter homes.”

Help for First-Time Home Buyers. Coming up with a down payment and closing costs is a challenge for most first-time home buyers. But there are several government programs that can help, including one that requires as little as 3% down, and an income-based Florida bond program that offers up to $15,000 in closing costs. Additionally, many Millennials are buying homes with non-spouse co-buyers, a phenomenon I plan to address in a future post.

If you’re thinking about diving into home ownership for the first time, I can help you sort through the various programs and the home buying process, from becoming financially qualified through closing. Just give me a call at 904-570-1216 or email me at jonkbrooks@gmail.com.

*Check out Bloomberg’s “Millennials Want Houses, Just Like Everybody Else” and Money’s “What Everyone Gets Wrong About Millennials and Home Buying”.

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