Millennials’ and Home Ownership
Millennials are the next wave of Americans to enter the homeownership field. And a lot depends on how they perceive homeownership.
If you look at various reports about millennials, you will read everything from they are not interested in owning a home to they simply cannot afford homes today. In many ways both of these statements are true, yet we need to look at the history of homeownership to understand what is going on in the world of real estate.
The group of people we know as ‘millennials’ or generation ‘y’ was born somewhere between 1980 – 1995 to 2000. There is no precise date of when millennials were born, but what is important is the period that they grew up in.
If you think back to when this age group was coming into their own, the real estate market was unlike it had ever seen. Prior to the real estate crash of 2008, home prices were increasing at a staggering rate. People could buy homes and turn around and sell then in a relatively short period of time and make a fortune.
Because of the belief that home owners could not lose, mortgage companies had no problem giving out mortgages with what were called “no-doc loans”. “No-doc loans” did not require any supporting documentation of employment; savings, ability to pay, etc. Couple that with the teaser mortgage interest rates and we had a real estate market out of control. The straw that broke the camel’s back occurred when mortgage companies were selling the mortgages as sound bond mortgages, when in fact the bonds had little value to them. Like a tidal wave rushing to shore, the real estate market came crashing down.
This is the real estate market that millennials’ grew up in and has tainted their view of home ownership. Yet study after study clearly shows that home ownership is a high priority to that age group. Their focus is on completing education and paying down debts before taking on a mortgage. One of the other misconceptions is that the mortgage industry has been preaching that you need 20% down in order to buy a house. May be a good practice, but is not true.
Here is what I see as the future of the real estate market. There is a large group of millennials who are pent-up demand for home ownership. As these potential buyers begin to slide into the market, there will be little supply of homes available which will drive the price of homes up. As the price of homes increases, more and more sellers will list their homes resulting in a robust housing market for the next few years. It will be a slow, but steady growth.
If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® who can give you the information you need to make an informed decision.
As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.