The Wave of Millennial Home Buyers is Coming
Every industry is trying to solve its own version of the “millennial riddle”.
The biggest demographic wave in history continues to crush everything in its path, leaving businesses and investors scrambling to adapt. First it hit retailers, restaurants, and media, but soon it will leave its mark on other established industries such as finance, healthcare, and real estate.
But the wave hits each sector in a different and unique way.
In the case of real estate, the millennial buying frenzy was already supposed to have kicked off – but it’s now on hold for a variety of reasons. We know that millennials still definitely want to buy homes, but the reality is that they are currently set back by challenges such as student loans, a low savings rate, and housing prices.
As a result of this unexpected lag, the home ownership rate in the United States has collapsed to record-tying low of just 62.9%.
Millennial Home Buyers are Coming, but Delayed
Today’s infographic from FirstTimeHomeFinancing shows the predicament that many millennials find themselves in: they believe that owning a home is tied to the American Dream, but lack the wherewithal to get into the market.
A whopping 65.3% of millennials associate the American Dream with buying a home – more than any other generation. However, many millennials are not able to make home ownership a reality just yet.
Why the Wave is Delayed
Despite most millennials entering their twenties and early-thirties, home ownership is still a long way out for many of them. Almost one-third (33.2%) of millennials believe they are 3-5 years out from buying a home, while another 24.4% think that they are at least five years away.
Why are they waiting? The majority of potential millennial home buyers are strapped for cash with less than $1,000 in savings. Meanwhile, the average student loan balance is $37,173 per student, which makes taking out a mortgage more challenging and less responsible.
There are other factors, too. The median age for marriage is as at a record-high, and it’s harder to enter the real estate market these days. Credit standards have changed since the Financial Crisis as well, making it more difficult to get approval.
While this is all a little bit discouraging, we do know that 91% of millennials want to be eventual homeowners. When the timing is right to make that plunge, it will send ripples throughout the market.
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