In recent years, experts have focused on millennials becoming the largest new wave of first-time homebuyers. Real estate professionals have adopted new technology and social media marketing in hopes of hoping to hook this generation (currently ages 25-40) and filling their lead funnel with new prospects. The good news is, we know they still believe owning a home is a valued investment and part of the American Dream.
The problem? The housing market, in its current state of limited inventory and extreme competition, makes buying a home a big challenge.
For example, baby boomers, who were born between 1946 and 1964 and are currently between the ages of 57-77, still represent a large share of current buyers. Along with Generation X and others, they’re defining a “new era” of real estate caused only in part by the coronavirus pandemic.
We’ve known for some time that, compared to their parents, millennials have put off buying a house until later in life. As real estate professionals, we obviously hate to see this generation forced to rent longer than they should have to, but until inventories catch up with demand, that could be the case.
Even before the COVID pandemic, we were seeing buyers move from the cities to the suburbs, where prices are normally cheaper and families can purchase larger homes with more space.
We’ve seen that move accelerate over the last 12 months, creating a new trend brought on by remote work and low interest rates. As people have grown accustomed to working remotely, caring little about commutes and gas money, living in more remote areas has suddenly become an option. Homes must now be more adaptable for the entire family, allowing for separate spaces for work and studying. While an end to the pandemic may be within sight now, some experts are predicting that many will not return to a normal office space and may continue to work and Zoom from home.
The challenges of the previous year have helped many recognize the value of not commuting and maintaining greater work-life flexibility. A house’s potential to do all things for the family, no matter what may come our way, will be extremely important now and in the future.
Low Mortgage Rates & Home Equity
Several new home equity programs have become available in the last couple of years that allow a homeowner to take out lines of credit against their home equity, freeing up cash for them to spend on needs and even wants. And because COVID-19 threw the breaks on leisure travel and vacations, visits to restaurants and theaters, and other activities, many consumers who maintained employment were able to save money.
While some will spend the cash frivolously, many baby boomers and other generations are preparing for their future, investing that savings in a new home, a second or third home, or even in investment properties. We’ve even seen some who purchase a “Zoom home,” a getaway house that allows you to work while enjoying new scenery.
Obviously, this is problematic as it further shrinks an already small inventory of homes available on the market.
Millennials May Wait, But They’ll Do What It Takes
Needless to say, it’s been a difficult year for so many, emotionally and financially. Millennials, many already burdened with student loan debt and stagnant wage increases, were certainly not spared from the financial impact of the pandemic.
Surveys have shown that many millennials have had to put off buying a house because they’ve been unable to save for a down payment, had to dip into their savings, or because they’ve lost their job.
We know it may take some time for our country to fully recover from the impacts of the coronavirus, and that goes for millennials too.
Life certainly looks different today than most of us anticipated, leaving many of us to sideline plans and aspirations until we’re back on stable footing. For a portion of millennials, this has meant delaying the move to a new home and starting a family ... but all indications show that they will get there eventually.
In fact, this generation has proven to be determined to do what it takes to buy a house. For example, surveys show that millennials are settling for smaller homes, asking relatives for help with down payments, moving outside popular markets, and putting offers on homes that will need considerable work and renovation. They’re making it work.
As this “new era” of housing continues, for the foreseeable future, real estate professionals are determined to help this outstanding generation realize their dream of homeownership.