Millennials are switching from living with their parents to buying their first homes
Not that long ago, most millennials—now in their late twenties to early forties—seemed destined to live at home with their parents forever or to become perpetual renters.
Now suddenly all that is changing. Many are stepping out into the world and buying their first homes, reports Better Homes and Gardens Real Estate.
Read More »What has changed
What has changed to prompt this move to home-buying?
For one thing, today’s financial picture is significantly different than the situation just a year or two ago. At that time a number of factors came together at once to provide a perfect storm for would-be millennial homebuyers. The lockdown and restrictions imposed by the pandemic—in which many lost their jobs—as well as rocketing property prices put the millennials off any thoughts of purchasing property.
In addition, they were burdened by student loan debt and slow wage increases. All this as well as the high cost of rent drove many to return to live with their parents.
At the same time ever-higher house prices across most of the United States placed properties out of their financial reach.
Now jobs have returned, salaries have risen, and the ability to work from home has meant a house no longer needs to be within a reasonable commute of a person’s workplace.
Formidable barrier
All-time high house prices, however, remain a formidable barrier. To tackle this situation, millennials are going about purchasing their homes in a different way than their parents did, explains Chris Masiello, president and CEO of Better Homes and Gardens Real Estate The Masiello Group, which is based in Bedford, New Hampshire.
Similar to their parents, they want their piece of the American dream, he adds, but they are tackling the challenges faced by today’s market in ways that are special to their generation.
They are:
• Searching for homes online.
Instead of having to travel long distances to look for homes in person, they are able to obtain a good idea from websites what the house looks like, in what condition it is, and where it is situated. They are also, of course, able to weigh up the value of the houses in terms of cost and therefore affordability.
In that way millennials can narrow down the properties that are worth visiting. In some cases they are buying homes online without seeing the actual property for themselves, particularly if it is situated in another state.
• Obtaining and securing mortgages online.
Today’s technology enables millennials to shop around for mortgage deals that will offer the best terms in light of their personal income and expenses.
They are able to find out how much house they can afford even before they start their search for the ideal property.
• Looking for smaller homes.
Another difference from earlier generations is that they are looking for homes that are smaller. In this way they are finding houses that are less expensive and therefore more affordable.
In addition, millennials are having smaller families and therefore need fewer bedrooms. They also are more environmentally conscious and might want to cut the impact as well as the cost of heating and cooling a 2,500-square-foot home.
Another factor is that smaller homes might fit in better with their budget, experts point out. They are generally looking at homes that are about 1,700-square-feet in size. Boomers, on the other hand, who are downsizing are looking for homes that are closer to 1,900 square feet.
• Taking chances on fixer-uppers.
More affordable homes often need a lot of work on them. Millennials are figuring that is a way to get their first home.
Remains tough
It still remains tough, however, for millennials to gain a foothold in the market, says Masiello. Among the reasons are competition for smaller homes from Boomers who are downsizing along with a lack of inventory.
They need to know their budget, secure financing in advance, and work with a buyer’s agent who can notify them when an affordable option becomes available, Masiello adds.
Apparently more and more millennials are doing just that.
