Arguably, Millennials have had a big impact in the past 10 years in the real estate market. Their presence has been both in the housing market, as well as, the renting market, which affects the housing market. Millennials have been the talk of the job market for a while. And just as they’ve had an impact there, they’re footprint is being noted in the real estate market. So, one has to ask himself, are Millennials the housing market future?
According to Student Loan Hero, Houses are nearly 40% more expensive nowadays than they were 40 years ago. And while that may seem like a moderate increase, it’s important to note that the cost of homes has far outpaced wage increases. Thus, first-time homebuyers needed 23% of their income to afford an entry-level home in the 2nd quarter of 2018. Further, SmartAsset reports that in some cities, the median house price surpasses the median income to the point where it could take almost a decade to save for a 20% down payment.
The cost of education has just gotten a bit ridiculous. According to Business Insider, about 70% of recent graduates end up with about $30K in student debt. And that doesn’t include interest. This combined with the fact that rent is up 50% in the past half century and it’s no wonder they’re living with their parents longer to save up for a down payment.
Aside from the cost of homes, cost of living, and incomes for Millennials, the way in which Millennials are buying these days is a bit outside the box, if you will. For example, in some places like San Francisco where homes are just outside the reach of any normal person’s buying capability, they’re buying vacation homes instead of permanent homes. Which, in turn, creates an investment for themselves. Another thing that’s different about the Millennial home-buying experience, they’re waiting longer to buy, and therefore, are going big, looking at luxury homes instead of starter homes. Source
Whether Millennials are the housing market future is hard to say. But, given the research that suggests that they’re buying later in life, due to high costs, it would seem that now is the time when the majority of them are hitting that mark. Will the housing market see a boom in the next 10 years from Millennials buying homes? There’s definitely a good chance.