Millennials can, and still want to buy homes.
While it is true the American dream of home ownership is harder to achieve than in the past, it isn’t impossible. Young adults, more than ever in the past may be delaying home ownership because of student loan debt, and fear of the stability of their young careers. But they are still buying homes, just a few years later in life than in the past.
According to data from Zillow, in the 1970’s, first time home buyers on average had rented for just 2.6 years prior to buying a home, and was about 30-years old. Today, the average first time home buyer has rented for 6-years prior to buying a home, and is three years older (33-years old).
The same data shows that in the early 1970’s, the average first time home buyer bought a home with a price 1.7 times their household income. Today, that first home costs 2.6 times their yearly income.
Clearly this data shows that it is tougher for first time buyers to save for down payment, and to afford a home. At the same time, this lines up with other delayed aspects of adulthood from years past, including getting married later in life, starting families later in life, and having fewer children.
Just like generations past, once people start having kids, they start looking for homes to raise those kids, especially if they feel secure in their young job careers. But things have changed, many people years ago could count on right out of high school having a job they could start and stay until retirement with good benefits. That just isn’t the case today. Another survey showed the average new buyer spent 4.5 years in their job field, and were at their current job for 3-years.
Most new home buyers still save their own money for down payment, which has become a bit harder with rising home prices, and high rents making it harder to save for a down payment, but the long held tradition of down payment help from Mom and Dad is still alive and well – and a very popular option.
Low mortgage rates, low down payment loans like the 3.50% down payment FHA loan, and the 3% down payment conventional loan, combined with down payment assistance programs significantly close the gap needed to buy a home.
The bottom line is there is a continued strong desire to buy among millennials. It is just that the timelines to buy that home appear to have been pushed back a few years from generations past.
If you feel you are ready to buy in MN, WI, or SD – we can help. Just click here to apply online.