According to a report from the National Association of Realtors, millennials purchased 35% of homes sold in the US in 2016. This marked the third consecutive year where the largest group of buyers consisted of millenials. Considering 25 is the median age of millennials and 31 is the average age of first-time home buyers, it’s more than likely millennial home buyers will continue to dominate the real estate market in the coming years.
A lot is riding on where and when the majority of millennials may choose to settle down – Realtors®, home builders, urban planners, and even city and local governments, are all looking closely at this trend.
Millennials make up approximately 10% of homeowners across the US. In Zillow.com’s 2016 Group Report on Consumer Housing Trends, nearly half of millennial homeowners were located in the suburbs, while 33% were in urban locations and 20% in rural areas. The report combined US census data and survey results from over 13,000 buyers, sellers, renters, and owners.
The study also shows that out of all millennial buyers who bought a home that year, about 64% stayed in the same city, while only around 7% decided to move to a different state.
The misconception about millennial homeowners
Meanwhile, a study from Harvard’s Joint Center for Housing Studies – which uses data from the census, the Department of Housing and Urban Development, and its own analysis methods – discovered that some of the common stereotypes attached to millennial homebuyers proved false.
Among these misconceptions were that most millennials preferred urban areas and would much rather have the flexibility of renting, as homeownership comes with financial risks, especially in the wake of the housing market collapse.
Instead, study authors discovered that for young homeowners, affordability and more space were more important factors compared to location and lifestyle preferences.
The study shows that the homeownership rates for millennials were 5% higher in urban locations where median prices for homes were about 20% lower than the national median. This suggests that if millennials could afford to purchase a home, they usually bought one in low-cost markets such as St. Louis, Detroit, or Minneapolis.
Limited options in urban locations
Urban locations don’t have as many affordable real estate options for millennials, which is why many of them are buying older homes located in close-in neighborhoods. Instead of setting their sights on suburbs with newer and bigger properties and the best schools, millennials are opting for the next closest neighborhood they can afford.
The real estate industry currently revolves around an idea that may turn out to be a misconception: that millennials will eventually get married, buy a house, have kids, and relocate to the suburbs. Being fixated on this typical structure might mean suburban towns and cities are not prepared for the incoming wave of millennial homebuyers in the next several years.
Many suburban municipalities across the country don’t see the need to make efforts to make their environment more millennial-friendly, as they believe millennials are drawn to more urban areas. This may lead to corporations turning their backs on the suburbs, thinking they can’t attract qualified workers from those areas. Instead of simply thinking of ways to attract millennials who are able to pay property tax, suburban communities should also plan for the future by making sure the next generation of workers has enough incentive to stay.
If you’re planning on buying or selling a home in Bergen County, The Stacy Esser Group is the right team for the job. Give us a call at 917-621-6794, or send an email to email@example.com